Exhibit 10.11
RMB Loan Contract
Borrower (hereafter Party A for short): Hei Longjiang Xxx Xx Dairy Co., Ltd.
Loaner (hereafter Party B for short)): Qi Qihaer Branch of China Construction
Bank Co., Ltd.
Party A applies for loans from Party B and Party B agrees. According to
laws and regulations, Party A and Party B have agreed on this contract after
negotiation for further observation.
Item One Amount of Loans
Party A obtains a loan of 25 million RMB from Party B.
Item Two Purpose of Loans
Party A will use the loans as revolving circulating funds
Item Three Loan Period
According to this contract, the loan period is one year; that is, from
July 5th, 2006 to July 5th, 2007.
If the loan period in this contract does not conform to that in the loan
receipts, the dates for the first loan in the loan receipt are to be the
reference. The loan receipts are to be part of this contract. They have the same
lawful effect as this contract.
Item Four The Loan Interest Rate, Penalty Interest, Interest Accrual and
Interest Settlement
Loan Interest Rate
I. The loan interest rate of this contract is MONTHLY RATE , and the
rate is the first of the following terms:
i. Capital Rate, that is 5.3625%. And the rate holds the line
before the release of the first loan.
ii. Floating Rate, that is _____ percent (up/down) of Basis Rate.
The floating rate will be adjusted every _____ month from the
first day of loan period.
II. Penalty Interest
i.The Penalty Interest Rate of this contract is monthly rate.
ii. After the signing of this contract and before the release of the first
loan, if it happens that the Hei Longjiang Xxx Xx Dairy Co., Ltd. Use the
loan in other ways not according to the contract, the Penalty Interest
Rate should be the first of the following terms:
a. Capital Rate, that is 10.725%.
b. Floating Rate, that is _____ percent (up/down) of Basis Rate.
The floating rate will be adjusted every _____ months from the first
day of loan period.
iii. After the signing of this contract and before the release of the
first loan, if it happens that the Hei Longjiang Xxx Xx Dairy Co., Ltd.
exceed the time limit, the Penalty Interest Rate should be the first of
the following terms:
a. Capital Rate, that is 8.0438%.
b. Floating Rate, that is _____ percent (up/down) of Basis Rate.
The floating rate will be adjusted every _____ months from the first
day of loan period.
III. The adjustment of interest rates and the methods of interest accrual
are conducted according to the regulations of People's Bank of
China. During the period of this contract, if People's Bank of China
adjusts some of its regulations which are subjected to the loans in
this contract, Party B can conduct according to the adjusted
regulations of People's Bank of China without notifying Party A.
IV. The loan interest will be calculated from the day that the loan
transfer to the Hei Longjiang Xxx Xx Dairy Co., Ltd.. The loan
interest of this contract is daily rate.
V. The loan interest is counted from the day the loans are transferred
to the account of Party A. The interest accrual of the loans in this
contract is counted daily. The interest is settled in month
(month/quarter). The day for interest settlement is the 20th of
every month (month/the last month in the quarter). The daily
interest rate is one thirtieth of the monthly interest.
Item Five Release and Distribution of Loans
I. Pre-conditions for Releasing Loans
i. Unless Party B wholly or party abandons its rights, Party B
has the obligation to release loans only under the following
pre-conditions:
(i) Party A has completed all relevant authorizations,
registrations, payments and other lawful procedures
concerning the loans in this contract according to the
laws and regulations;
(ii) The guarantee contract or other guarantee methods are
effective according to the demand of Party B;
(iii) Party A has not contravened to the items in this
contract;
(iv) Pre-conditions for other loan release agreed by both
parties:
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ii. Party B will release the loans five work days after Party A
fulfills the above-mentioned pre-conditions.
II. The Purpose of Loans
i. ___date___month____year, sum ____;
ii. ___date___month____year, sum ____;
iii. ___date___month____year, sum ____;
iv. ___date___month____year, sum ____;
v. ___date___month____year, sum ____;
vi. ___date___month____year, sum ____;
Item Six Repayment
I. Principles of Repayment
i. As for un-repaid loans overdue over 90 days, un-repaid loans
with overdue interest over 90 days, loans overdue for less
than 90 days except that Party A has stopped production or the
project involving the loans, and loans stipulated by laws and
regulations, Party A should repay the principal first and then
the interest;
ii. As for loans different from those stated in i, Party A should
repay the interest first and then the principal. The interest
should be wholly repaid with the complete repayment of
principal.
II. Payment of interest
Party A will pay the due interest to Party B on the day of interest settlement.
The first day of paying interest is the first day of interest settlement after
the release of loans. The interest and the principal are to be repaid at the
last repayment.
III. Plan for Repaying the Principal
Party A should repay the principal according to the following plans:
i. ___date___month____year, sum ____;
ii. ___date___month____year, sum ____;
iii. ___date___month____year, sum ____;
iv. ___date___month____year, sum ____;
v. ___date___month____year, sum ____;
vi. ___date___month____year, sum ____;
IV. Methods of Repayment
Before the day of repayment fixed in the contract, Party A should store enough
funds to repay the sum of that period and transfer the money to the account
opened up by Party B; or Party A can transfer money from other accounts on the
day of repayment. If Party A fails to repay on time, Party B has the right to
take the same sum from the account of Party A at China Construction Bank.
V. Repayment in Advance
i. If Party A repays the interest in advance, he only has to
inform Party B;
ii. If Party A repays the principal in advance, he is to apply in
written form to Party B thirty work days in advance. If
Party B agrees, Party A can repay part of or the whole
principal in advance;
If Party A repays in advance, the interest is counted
according to the actual days of loans and the interest rate
regulated in Item Four of this contract.
If Party A repays in advance and agrees to pay Party B the
compensation, the compensation is point one percent of the
principal plus the number of days in advance.
If Party A pays in installment and pays in advance part of the
principal, Party A is to repay in the adverse order of the
repayment plan. After the repayment in advance, the un-repaid
loans are to be done according to the loan interest rate of
this contract.
Item Seven Guarantee of Loans
If the loans are guaranteed, there are the following second
ways of guarantee:
I. Guarantee;
II. Mortgage;
III. Pledge;
IV. Standby letter of credit;
V. Credit insurance;
VI. Other types:_____
Item Eight Party A's Rights and Obligations
I. Party A's Rights
i. Party A has the right to demand Party B to release the loans
according to the contract;
ii. Party A has the right to utilize the loans according to the
contract;
iii. Party A has the right to apply for an exhibition period of loans
from Party B under the agreed conditions of Party B;
iv. Party A has the right to demand Party B to classify the financial
documents and commercial classified information concerning
production and management that Party A provides, except those
stipulated by laws and regulations.
II. Party A's Obligations
i. Party A is to provide documents about financial affairs and
conditions of production and management according to Party B's
requirement, including, but not exclusively, the chart of assets
liabilities of the last quarter and the profit and loss by the end
of the last quarter (income and expenditure chart for enterprises),
which are provided to Party B within twenty work days in the first
month of every quarter. Party A is also to provide the chart of cash
circulation of the year at the end of the year, and to be
responsible for the authenticity, integrity and validity of the
documents;
ii. Party A is to utilize the loans according to the contract without
any supplanting or embezzlement of the loans;
iii. Party A is to cooperate actively with and accept self-consciously
Party B's examination and supervision of its production, management,
financial activities, and the application of loans in the contract;
iv. Party A is to repay the principal and interest on time according to
the contract;
v. Before completely repaying the principal and interest of the loans
from Party B, Party A and its investors are not to remove the loans
or transfer assets in order to avoid the liabilities to Party B;
vi. Party A is not to guarantee for the third party with the assets
formed by the loans in this contract without first obtaining the
consent of Part B;
vii. During the period of this contract, Party A is to notify Party B in
written form to obtains the authorization if Party A intends to
guarantee for others' liabilities which may affect its repaying
capability in this contract;
viii. Party A is to provide Party B with authorized ways of guarantee in
time if the guarantor of this contract partly or completely loses
its capability of guarantee for the loans due to production
closedown, out of business, registration logout, license revocation,
bankruptcy, discharge or losses in operation, or the reduction of
values, accidental destruction and losses of mortgages and pledges
guaranteed for the loans in the contract;
ix. During the period of the contract, Party A is to inform Party B in
time if Party A changes its name, the juristic person (principal),
address, business scope or registered assets;
x. During the period of the contract, Party A is to inform Party B in
written form ninety days in advance for authorization if Party A has
contracts, lease, changes in the joint-stock system, pools,
incorporation, annexation, abruption, joint venture, application for
shutout coordination, for disbandment and for bankruptcy, which may
affect the realization of the creditor's rights. Party A is also to
fulfill the repayment and guarantee of the loans in the contract;
xi. During the period of this contract, Party A is to inform Party B in
written form immediately if Party A has production shutdown, out of
business, registration logout, license revocation, if the juristic
person or principal breaks the law, if it is involved in significant
lawsuits, if severe difficulties occur in production and management,
and if the financial status deteriorates, which may cause adverse
effects to the obligation of repayment in the contract. Party A is
also to fulfill the repayment and guarantee of the loans in the
contract;
xii. Party A is to undertake the expenditures of lawyers, insurance,
evaluation, registration, safekeeping, authentication, notarization
and so on related to the guarantee in the contract and items of the
contract.
Item Nine Party B's Rights and Obligations
I. Party B's Rights
i. Party B has the right to know Party A's activities of production,
management and financial affairs, and to demand Party A to provide
documents about planned statistics, financial accountant charts and
so on;
ii. Party B has the right to deduct any funds of Party A's account at
China Construction Bank as for any repayment that Party A should
give to Party B in this contract.
II. Party B's Obligations
i. Party B is to release the loans on time according to the contract,
except for delays on Party A's side;
ii. Party B is to classify the financial documents and commercial
classified information concerning production and management that
Party A provides, except those stipulated by laws and regulations.
Item Ten Responsibilities for Breach of Faith
I. Instances of Breach of Faith
i. Party A's Breach of Faith
(i). Party A fails to provide authentic, integrate and valid documents
about financial affairs, production and management and so on
according to Party B's requirement;
(ii). Party A fails to utilize the loans according to the agreement;
(iii). Party A fails to repay the principal and interest on time;
(iv). Party A refuses or interrupts with Party B's examination and
supervision on the application of the loans;
(v). Party A transfers the assets and removes the loans to avoid the
liabilities;
(vi). Party A fails to repay the liabilities on time due to the
deteriorating business and financial status, or is or is to be
involved in significant lawsuits, arbitration or other legal
entanglements, which, according to Party B, may have affected the
rights of Party B in this contract;
(vii). Party A's liabilities may have affected the fulfillment of its
obligations to Party B in the contract;
(viii). Party A fails to fulfill other due liabilities to the Construction
Bank;
(ix). During the period of the contract, Party A carries out changes in
business methods or mechanism like contracts, lease, incorporation,
annexation, joint venture, abruption, pool and changes in the
joint-stock system, which, according to Party B, may have affected
or damaged its rights in the contract;
(x). Other instances which, according to Party B, may affect the
realization of the creditor's rights;
(xi). Party A violates other obligations in the contract.
ii. If the following cases occur to the guarantor and Party A fails to
provide a new guarantee required by Party B, then Party A violates
the contract:
(i) The guarantor has contracts, lease, incorporation, annexation,
joint venture, abruption, pool and changes in the joint-stock
system, bankruptcy, discharge and so on, which may affect the
guarantor's responsibility for guarantee.
(ii) The guarantor provides guarantee beyond its capability to the
third party;
(iii) The guarantor loses or may lose its guarantee ability;
(iv) Other instances of breach on the guarantors for the guarantee
of the contract.
iii. If the following cases occur to the mortgager and Party A fails to
provide a new guarantee required by Party B, then Party A violates
the contract:
(i). The mortgager fails to transact insurances for mortgaged property
according to the requirement of Party B, or fails to dispose
insurance compensation after the insured accidents according to the
mortgage contract;
(ii). The mortgager fails to dispose insurance compensation according to
the mortgage contract for the damage, losses and reduction of values
of mortgaged property due to the conducts of the third party;
(iii). The mortgager donates, transfers, rents, mortgages repeatedly,
relocates or disposes the mortgaged property in other ways without
obtaining written authorizations from Party B;
(iv). The mortgager fails to dispose the funds from transacting mortgaged
property according to the mortgage contract after obtaining Party
B's consent;
(v). The damage, losses and reduction of values of mortgaged property may
affect the repayment of liabilities in this contract, but the
mortgager fails to restore the value of mortgaged property in time
or to provide other guarantees authorized by Party B;
(vi). Other instances of breach on the mortgagers in the mortgage
contract.
iv. If the following cases occur to the pledgor and Party A fails to
provide a new guarantee required by Party B, then Party A violates
the contract:
(i). The pledgor fails to transact insurances for pledged property
according to the requirement of Party B, or fails to dispose
insurance compensation after the insured accidents according to the
pledge contract;
(ii). The pledgor fails to dispose damage compensation according to the
pledge contract for the damage, losses and reduction of values of
pledged property due to the conducts of the third party;
(iii). The pledgor fails to dispose the funds from transacting pledged
property according to the pledge contract after obtaining Party B's
consent;
(iv). The damage, losses and reduction of values of pledged property may
affect the repayment of liabilities in this contract, but the
pledgor fails to restore the value of pledged property in time or to
provide other guarantees authorized by Party B;
(v). Other instances of breach on the pledgors in the pledge contract.
iv. If the guarantee contract or other ways of guarantee are
ineffective, invalid or discharged, or if the guarantor partly or
wholly loses the guarantee capability or refuses to fulfill the
obligation to guarantee, and if Party A fails to provide a new
guarantee according to the requirement of Party B, then Party A
violates the contract.
II. Responding Methods to Breach of Faith
If the instances of breach of faith from i to iv occur, Party B has the
right to conduct one or several of the following privileges:
i. Stop the release of loans; announce that the loans are about to
mature, and demand Party A to repay immediately all the principal,
interest and expenses in the contract.
ii. Take liquidated damages from Party A for 0.05 percent of the
principal.
iii. If Party A fails to utilize the loans according to the contract,
take interest of the embezzled money according to the regulations of
People's Bank of China.
iv. Before the period of the loans, take compound interest of the
un-repaid interest in time according to the prescribed methods of
interest rate and interest settlement in Item Four of the contract.
v. As for past due loans, take interest and compound interest of the
un-repaid principal and interest from Party A (including part of or
the whole overdue principal and interest declared by Party B),
according to the prescribed methods of interest settlement of
overdue interest rate at People's Bank of China and in this
contract. The overdue loans are those which Party A fails to repay
on time or which Party A fails to repay according to the repayment
plan in this contract.
vi. Deduct any funds of Party A's account at China Construction Bank.
vii. Demand Party A to provide a new guarantee for all the liabilities in
the contract according to the requirement of Party B.
viii. Fulfill the right to guarantee.
ix. Annul the contract.
Item Eleven Other Agreements
I. _____________;
II. _____________;
III. _____________;
IV. _____________;
Item Twelve Settlement of Disputes in the Contract
Disputes in the fulfillment of the contract can be settled through
negotiation. If negotiation fails, the following first method can be
applied:
I. Implead at Party B's local people's court.
II. Appeal to the ____Arbitration Committee (the place for arbitration
is ___). Arbitrate according to valid arbitrating regulations at the
application for arbitration. The result of arbitration is final and
has sanctions on both parties.
During the period of lawsuit or arbitration, undisputed items in the
contract are to be fulfilled.
Item Thirteen Contract to Take Effect
This contract is to be signed by the juristic person (principal) or
authorized agency and sealed with cachets (if Party A is the natural
person, he only needs to sign it). It is also to be signed by the
principal or authorized agency for Party B, and sealed with cachets;
Item Eighteen There are eight copies of this contract.
Item Nineteen Declared Clauses
I. Party A should be familiar with the business and authorization
scopes of Party B;
II. Party A has read all the items of the contract and paid special
attention to the items in bold letters in the contract. According to
the requirement of Party A, Party B has made elaborations on some
items in the contract. Party A should be familiar with the meaning
of the items of the contract and the legal consequences.
Party A (seal): Xxx Xx Dairy Co., Ltd, Baiquan Town
Principal or authorized agency (signature): Leng Youbin
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July 5th, 2006
Party B (seal): Qi Qihaer Branch of China Construction Bank Co., Ltd.
Principal or authorized agency (signature): Lv Desheng
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July 5th, 2006
