Exhibit 10.12
RMB Loan Contract
China Construction Bank
Hei Longjiang Branch
Contract Number:2006016
Loan Type: Short-term Loan of Industrial Circulating Funds
Borrower (Party A): Hei Longjiang ▇▇▇ ▇▇ Dairy Co., Ltd.
Address: ▇▇. ▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇
Postal code:164800
Juristic Person (Principal): Leng Youbin
Telephone: ▇▇▇▇-▇▇▇▇▇▇▇
Fax:▇▇▇▇-▇▇▇▇▇▇▇
Loaner (Party B): Qi Qihaer Branch of China Construction Bank Co., Ltd.
Address: ▇▇. ▇▇▇, ▇▇▇▇ ▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Postal code: 161005
Principal: Nie Chuanling
Telephone: ▇▇▇▇▇▇▇
Fax: ▇▇▇▇▇▇▇
Borrower (hereafter Party A for short): Hei Longjiang ▇▇▇ ▇▇ 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 15 million RMB from Party B.
Item Two Purpose of Loans
Party A will use the loans as circulating funds for production.
Item Three Loan Period
According to this contract, the loan period is six months; that is, from
August 29th, 2006 to February 29th, 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 5.115 percent. 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 ▇▇▇ ▇▇
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 10.23%.
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 ▇▇▇ ▇▇
Dairy Co., Ltd. exceed the time limit, the Penalty Interest
Rate should be the first of the following terms:
a. Capital Rate, that is 7.6725 percent
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 ▇▇▇ ▇▇ 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:
___________________________________________
ii. Party B will release the loans _____ 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 five 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): ▇▇▇ ▇▇ Dairy Co., Ltd, Baiquan Town
Principal or authorized agency
(signature):______________________________
August 29th, 2006
Party B (seal): Qi Qihaer Branch of China Construction Bank Co.,
Ltd.
Principal or authorized agency (signature): Lv Desheng
August 29th, 2006