Loan Contract of Current Assets Agricultural Development Bank of China

10.1

The Borrower has the right to learn about the credit policy and interest rate policy from the Lender.

10.2

The Borrower has the right to draw and use the loan according to the period and purpose agreed by the Contract. It shall also guarantee that the loan shall not be used for the investment of fixed assets and equity interest, and it shall not be involved in the security market, futures market or the field and purpose prohibited by the state, or other purposes prohibited or limited by the laws and regulations.

10.3

The Borrower has the right to apply for extending the period to the Lender if it meets the Lender’s regulation.

10.4

The Borrower has the right to require the Lender to keep the material and information related to debt, finance, production and operation provided by it confidential, unless otherwise stipulated by laws and regulations or agreed by the Contract.

10.5

The Borrower shall ensure that the material provided during loan reviewing shall be true, accurate, complete and valid and there are no false records, material omission or misleading statement.

10.6

The Borrower shall provide the true, complete, legal and valid documents, materials and information like the financial accounting statements to the Lender according to the Lender’s requirements every one month, and accept and coordinate with the Lender’s checking and inspection on its production & operation, material inventory, financial situation and loan usage situation.

10.7

The Borrower shall open and appoint the special capital withdrawal account at the Lender’s place, with the account No. of 20334160000100000234821, which is used for receiving the responding sales revenue or planned repayment capital; if required by the Lender, the Borrower shall sign the special account supervision agreement with the Lender, to provide the capital flow situations of the account timely, and it shall accept the supervision on the account by the Lender. The account supervision agreement shall be regarded as the supplement of this Contract.

10.8

The Borrower shall pay the principal and interest timely according to agreements in the Contract.

10.9

The Borrower shall guarantee to observe the following regulations on financial index restriction during the Contract term;

10.9.1

The asset-liability ratio of the Borrower shall not exceed 70%;

10.10

The Borrower shall promise and accept the Lender for the inspection and supervision for the loan usage with regards to the account analysis, certificate inspection, spot investigation, and it shall summarize the loan usage situation every one month according to the requirements of the Lender, and offer the loan capital usage records and materials.

10.11

Within the valid term of the Contract, if the Borrower has any change on name, legal representative (principal), domicile, mailing address, contact number, business scope, relationship of administrative subordination, Articles of Association and internal structure, it shall notify the Lender in written within 15 days since the date of change.

10.12

Within the valid term of the Contract, if the Borrower provides guaranty to the debts of the other person or makes mortgage and pledge to the third person based on its main properties, it shall notify the Lender in written 30 days in advance and obtains the written permission of the Lender.

10.13

If the Borrower has any material related transactions with its controlling shareholder and other related companies (including but not limit to material related purchase and sales contract, lease, raw material supply and money flow), or its related party relationship has any change, or the operation or financial situation of its controlling shareholder and other related companies has serious crisis, the Borrower shall notify the Lender in written within 3 days after the date of occurrence.

10.14

Within the valid term of the Contract, if the Borrower has contracting, lease, shareholding reform, joint operation, separation, merge (acquisition), joint capital (cooperation), capital reduction, ownership change, asset transfer or disposal, major external investment or other behaviors influencing the realization of the creditor's rights of the Lender, it shall notify the Lender in written 30 days in advance and perform the debts paying responsibility under the Contract agreed by the Lender in written, or provide other legal and valid guaranty approved by the Lender in written; otherwise, it shall not have the above behavior before paying off all debts under the Contract.

10.15

If the Borrower has severe difficulties in production and operation, deteriorative financial situation, involves in material economic disputes or any other lawsuit, arbitration or criminal and administrative penalty having material adverse consequences on its operation or property status, or the major part or all of its properties are occupied by other creditors, or took over by the designated trustee, receiver or the similar person, or its properties are seized or frozen, which may cause serious loss on the Lender, the Borrower shall notify the Lender in written within 3 days after the date of occurrence and take the protective measures that ensures repayment of loan principal and interest and all other expenses under the Contract on a timely basis according to the requirements of the Lender.

10.16

Within the valid term of the Contract, if the Borrower stops production, closes business, suspends business to bring up to standard, cancels registration, is revoked the business license and cancelled, files or is filed for bankruptcy or dissolution, the Borrower shall notify the Lender in written within 3 days after the date of occurrence and ensure to repay the principle and interest of the loan according to the written requirements of the Lender, or provide the protective measures of the creditor’s rights approved by the Lender in written.

10.17

If the guaranty is adopted by the loan under the Contract and the guaranty has change having adverse effect on the creditor’s rights of the Lender, the Borrower shall additionally provide other legal and valid guaranty approved by the Lender in written according to the requirements of the Lender.

10.18

The Borrower shall assume expenses of lawyer service, insurance, transportation, appraisal, registration, keeping, verification and notarization related to the Contract and the guaranty under the Contract.

11.1

The Lender has the right to check and supervise the Borrower’s production and operation, financial activities, project construction, material inventory and usage of loan, and has the right to require the Borrower to provide the relevant document, material and information like financial accounting statements every one month.

11.2

The Lender has the right to directly charge the loan principal, interest, penalty interest, overdue interest, compound interest and other accrued expenses shall be paid by the Borrower from the account of the Borrower according to the agreement of the Contract.

11.3

If the Borrower escapes the Lender’s supervision, defaults the loan principal and interest or has other severe noncompliance, the Lender has the right to perform credit sanctions, notify the relevant department or unit, and announce to recover through the news media.

11.4

The Lender shall offer the loan in full to the Borrower on time according to the Contract, except the delay caused by the Borrower.

11.5

The Lender shall keep the material and information related to debt, finance, production and operation provided by the Borrower confidential, unless otherwise stipulated by laws and regulations or agreed by the Contract.

11.6

When handling the payment entrustment, the Lender only review formally the relevant materials like payment target information and financing purpose certificates; if the materials provided by the Borrower are false, inaccurate and incomplete, or the loan account appointed by the Borrower or the payment target is frozen or stopped the payment, which causes that the Lender fails to complete the entrustment payment in accordance with the Borrower’s entrustment, the Lender shall assume no responsibilities, and it shall not affect the repayment obligations of the Lender occurred under this Contract.

11.7

The Lender has right to participate in the activities that affect the creditor’s right like large amounts of financing, asset selling and acquisition, division, shareholding reform and bankruptcy liquidation.

11.8

The Lender has right to adopt the reasonable measures in accordance with the mandatory or instructive regulations and instructions of the Bank Administration and Management Department as well as the Lender’s obligations, and the Lender may not notify the Borrower or ask for the written permission of the Lender.

11.9

If the Lender fails to perform or partially perform or delay the performance of any rights under this Contract, which will not waive or change this right or other rights, and will not affect the further performance of the rights or other rights.

11.10

If the Lender changes name, domicile and mailing address within the valid term of the Contract, it shall notify the Borrower in written within 15 days since the change date.

12.1

After the Contract taking effect, the Borrower and the Lender shall fulfill the obligations agreed by the Contract. If any party fails to fulfill or completely fulfill the obligations agreed by the Contract, it shall assume the liability for breach of contract according to the law.

12.2

If the Borrower fails to handle and draw the loan according to the Contract, it shall pay the overdue liquidated damage to the Lender at the loan interest rate agreed by the Contract according to the breach amount and days.

12.3

If the Borrower fulfills the obligations under the Contract and the Lender fails to handle and offer the loan according to the Contract, the Lender shall pay the overdue liquidated damage to the Borrower at the loan interest rate agreed by the Contract according to the breach amount and days.

12.4

If the Borrower repays the loan under the Contract in advance without written permission of the Lender, the Borrower shall pay the liquidated damage to the Lender at the loan interest rate agreed by the Contract according to the breach amount and days.

12.5

If the Borrower fails to repay the loan on time, the Lender has the right to require the Borrower to repay within a definite time, and directly charge the loan principal and interest owed from any account of the Borrower opened in the Lender; meanwhile, the Lender can charge the interest to the overdue loan according to the penalty interest rate since the overdue date and charge the compound interest to the interest not paid on time according to the penalty interest rate.

12.6

If the Borrower fails to use the loan according to the Contract, the Lender has the right to stop offering loan, recover the loan in advance or terminate the Contract, and has the right to charge the interest to the loan illegally used by the Borrower according to the penalty interest rate since the date of breach, and charge the compound interest to the interest not paid on time according to the penalty interest rate.

12.7

The Lender has the right to stop offering loan, withdraw the loan not drew by the Borrower or recover partial or all loans in advance if the Borrower has one of the following conditions; if the loan cannot be recovered, the liquidated damage shall be charged according to penalty interest rate of the overdue loan daily:

12.7.1

The Borrower provides any false loan review information that conceal any important fact, or provides false balance sheet, income statement and other financial accounting materials that conceal any important fact;

12.7.2

The Borrower violates agreement;

12.7.3

The Borrower violates agreement on Item 10.6 of Article 10 in the Contract;

12.7.4

The Borrower violates agreement on Item 10.7 of Article 10 in the Contract, or the capital withdrawal situation meets the conditions agreed in Item 8.4 of Article 8;

12.7.5

The Borrower breaks the restriction on the financial index agreed in Item 10.9 of Article 10;

12.7.6

The Borrower violates the Contract agreement to avoid the entrusted payment of Lender by means of breaking up the whole into pieces;

12.7.7

The Borrower violates agreement on Item 10.10 of Article 10 in the Contract;

12.7.8

The Borrower violates agreement on Item 10.11 of Article 10 in the Contract, which has impact or threaten on the creditor's rights safety of the Lender;

12.7.9

The Borrower violates agreement on Item 10.12 of Article 10 in the Contract;

12.7.10

The Borrower violates agreement on Item 10.13 of Article 10 in the Contract, which influences the safety of creditor's rights;

12.7.11

The Borrower violates agreement on Item 10.14 of Article 10 in the Contract;

12.7.12

The Borrower violates agreement on Item 10.15 of Article 10 in the Contract;

12.7.13

The Borrower violates agreement on Item 10.16 of Article 10 in the Contract;

12.7.14

The Borrower violates agreement on Item 10.17 of Article 10 in the Contract;

12.7.15

Any other situations may threaten the creditor's rights realization of the Lender or cause heavy loss of the Lender.

12.8

If the Borrower breaks the Contract and the Lender takes legal actions like lawsuit and arbitration to realize the creditor’s rights, the attorney fee, travel expense and other expenses for realizing creditor’s rights paid by the Lender shall be assumed by the Borrower.

13.1

The Contract shall take effect after being signed and sealed by the Lender and the Borrower.

13.2

If the Borrower cannot repay the loan on time and it needs to extend the period, it shall apply for extending the period to the Lender in written 20 working days before the expiration of the loan term agreed in the Contract; and if it is guaranteed, the Borrower shall also provide the written opinion that the Guarantor agrees to continue to guarantee or provide other legal and valid guaranty accepted by the Lender. The agreement on extending loan term shall be signed after the Lender approving to agree.

13.3

The Lender has the right to terminate the Contract and require the Borrower to repay the principal and interest of the loan under the Contract in advance and compensate for the loss if Party B:

13.3.1

Violates agreement on Item 10.14 of Article10 in the Contract;

13.3.2

Violates agreement on Item 10.15 of Article 10 in the Contract;

13.3.3

Violates agreement on Item 10.16 of Article 10 in the Contract;

13.3.4

Violates agreement on Item 10.17 of Article 10 in the Contract, which seriously affects or threatens the creditor’s right;

13.3.5

Fails to pay the loan interest according to the Contract for 3 months continuously or 3 months accumulatively;

13.3.6

Has other severe noncompliance.

13.4

After the Contract taking effect, any party of the Borrower and the Lender shall not change or terminate the Contract arbitrarily, otherwise agreed by the Contract. If it needs to change or terminate the Contract, it shall notify the other party in written and sign the written agreement after the negotiation of both parties.

13.5

Any invalid articles or the articles that cannot be performed in the Contract will not affect the validity and performability or other articles, and will not affect the effect of the entire Contract.

14.1.1

Appeal to the local People’s Court of the Lender.

14.1.2

Submit to the           /           arbitration committee (the arbitration place is         /              ), and it shall be arbitrated according to the current and valid arbitration rules of the committee when applying for arbitration.

14.2

During the period of lawsuit or arbitration, clauses of the Contract unrelated to the dispute shall be performed continuously.

15.1

15.2

15.3

16.1

Except the separate agreements, the Borrower and Lender shall deliver all the notifications to the other party in written form. Any typewriting and telegraph delivered to the post office sent by the Lender to the Borrower shall be regarded as being delivered to the Borrower..

16.2

The attachment of the Contract is an integral part of the Contract, covering same legal effect with the Contract.

16.3

If a certain drawing or payment day is non-statutory working day during performing the Contract, it shall be postponed to next statutory working day.

16.4

In accordance with the relevant laws, regulations or the requirements of financial supervision organ, the Lender has right to provide the information related to the Contract or other information to the credit system of the People’s Bank of China and other legally-established credit information database, for the inquiry and using of applicable organs and individuals. For the purpose of this Contract, the Lender has right to inquire the relevant information through the credit system of the People’s Bank of China and other legally-established credit information database.

16.5

The Contract has three copies, with the Borrower , the Lender and the Guarantor holding one respectively, with the same legal effect.

Borrower (Seal): Bozhou Xinghe

Pharmaceutical Co., Ltd.

Lender (Seal): Bozhou Branch of Agricultural

Development Bank of China

Legal representative (principal) or the

authorized agent: Han Lingzhi

Legal representative (principal) or the

authorized agent: Wang Dengshan