Court Accepts Lawsuit of Subsidiary

In January 2008, Zhejiang Orient Zhiyuan Investment Co., Ltd. (ZOZI), a subsidiary of the company, signed an entrusted loan contract with Hangzhou Modern United Investment Co., Ltd. Accordingly, ZOZI provided an RMB 18 mln entrusted loan with its own funds for Hangzhou Modern. Concurrently, both parties signed an equity pledge contract, asserting that the 6.1 mln shares of Hangzhou Tian-Mu-Shan Pharm. Enterp. Co., Ltd., currently held by Hangzhou Modern, would be pledged to ZOZI.

In addition, ZOZI signed guarantee contracts with Modern United Holding Group Co., Ltd., Zhang Pengfei and Zhao Jun.

However, as Hangzhou Modern failed to repay the loan and generated interest by the stipulated deadline, ZOZI has filed with the People's Court of Jianggan District in Hangzhou, Zhejiang Province, to sue Hangzhou Modern. On 18 Sept 2008, ZOZI received a notice from the court stating that the case has been accepted.

Board of Directors
19 Sept 2008


Source: Shanghai Stock Exchange

Date: 22 Sept 2008

CN01/RL/JL/BT/KM