Domestic Letter of Credit Financing Master Agreement

 

(Contract No. 2012DY-120501)

 

(This is a Summary Translation for Reference Only)

 

Party A:           Inner Mongolia Yongye Nongfeng Biotechnology Co., Ltd.

Legal Representative:

 

Party B:           CITIC Bank Corporation Limited (CITIC), Hohhot Branch

Legal Representative: SUN Xiaofan

 

Place of Execution: Hohhot Branch Date of Execution: December 5, 2012

 

To further strengthen the business relationship between Party A and Party B,
Party B agrees to provide domestic letter of credit financing service to Party
A, and Party A and Party B have entered into the following agreement, which
serves as the basis for all specific financing business documents to be entered
into between Party A and Party B and as the pre-condition for all domestic
letter of credit financing services provided by Party B.

 

Article 1              The amount of the domestic letter of credit financing
hereunder (the “Amount”) refers to type 2 of the following:

 

(1)         (N/A)

 

(2)         The Amount of the domestic letter of credit financing for which
Party A can summit application to Party B during the term of the use is: One
Hundred Fifty Million (¥150,000,000.00) in RMB. The term of use for this Amount
starts from December 2012 to June ___, 2013. The cumulative total of domestic
letter of credit financing used by Party A at any time during the term cannot
exceed this Amount. And Party A may apply for using any repaid amount. Any
balance of the Amount not used will be automatically cancelled upon the
expiration of the term. Party A must apply for using any portion of the Amount
within the effective term of use and the starting date of use must not be later
than the expiration of the term of use. If the term of use is adjusted, such
expiration date will be the expiration date after such adjustment.

 

(3)         (N/A)

 

 

 

 

Article 2              If Party B, after conducting review, determines that the
domestic letter of credit financing service that Party A applies for is low-risk
financing service, Party B may provide relevant domestic letter of credit
financing service to Party A without using the Amount of the domestic letter of
credit financing mentioned above.

 

Article 3              The domestic letter of credit financing services
hereunder for which Party A may apply include:

 

(1)         Establishment of letter of credit: i.e., immediate payment letter of
credit and deferred payment letter of credit;

 

(2)         Domestic letter of credit financing;

 

(3)         Domestic letter of credit negotiated payment;

 

(4)         Domestic letter of credit package loan;

 

(5)         Domestic letter of credit loan discount;

 

(6)         Domestic letter of credit loan buy-out;

 

(7)         Others (please specify): ____________

 

Article 4              To apply for any domestic letter of credit financing
service set forth in Article 3, Party A must provide specific business documents
for each service at Party B’s request; such specific business documents mean
such documents that establish contractual relationship between Party A and Party
B regarding financing services, including but not limited to application letter,
letter of promise, guarantee contract and other business documents issued by
Party B or by agents designated by Party B.

 

Party B must review Party A’s application in accordance with this agreement and
with any business management policies and credit assessment requirements then
adopted by Party B and decides whether to approve Party A’s application.

 

Article 5              The amount of any specific domestic letter of credit
financing service hereunder will be specified in the specific business document
for any such service, provided it does not violate the provisions of Article 1.
If the amount is not specified in such specific business document, it will be
calculated based on the amount of principal provided by Party B for that
specific domestic letter of credit financing service or the principal provided
by Party B in the form of a letter of credit starting from the date that such
service is used.

 

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Article 6              To ensure the repayment of the debt created hereunder,
the type 4 of the following guarantee methods are adopted; such guarantee
contract shall be the inseparable part of this agreement.

 

(1)         (N/A)

 

(2)         Pledge Guarantee: “Maximum Amount Pledge Contract” (contract number
1011122001) with Inner Mongolia Yongye Nongfeng Biotechnology Co., Ltd. as
Pledgor and Party B as Pledgee;

 

(3)         Pledge Guarantee: “Maximum Amount Unfixed Assets” and “Rights Pledge
Contract” (contract numbers 1011122001, 2012DY-P120501, 2012DY-P120502 and
2012DY-P120503) with Inner Mongolia Yongye Nongfeng Biotechnology Co., Ltd.,
LIANG Tiejun, BAI Min and WANG Peng as Pledgors, respectively, and Party B as
Pledgee;

 

(4)         (N/A).

 

Party B shall have the right to request that Party A provide other effective
guarantees, based on the situation of any specific service.

 

Article 7              Party A hereby agrees to provide the following pledge as
the continuous guarantee on all de the debts and obligations generated hereunder
with Party B having the pledgee’s right.

 

(1)         All the merchandise that have currently been delivered or will be
delivered to Party B, or to Party B’s agents, by Party A or by any party for
Party A’s benefit or at Party A’s instruction;

 

(2)         All the merchandise and the associated notes, package or other
transportation receipts, bills of lading, warehouse receipts and all other
documents of rights and other receipts including all associated goods that have
currently been deposited or will be deposited by Party A with Party B (whether
for safekeeping or otherwise).

 

Article 8              Party A must hand over all notes issued or endorsed by
Party A, all such notes, package or other transportation receipts bill of
lading, warehouse receipts, documents or receipts, invoices and other notes
issued by dock companies or warehouses to Party B as pledge guarantee for the
debts hereunder.

 

Article 9              Party B shall have the right to modify the requirements
of the guarantee on Party A’s use of the Amount of the domestic letter of credit
financing hereunder based on Party B’s business policy changes and its
determination of Party B’s repayment ability, including but not limited to
requesting Party A to provide additional security, guarantee or pledged assets.
Party A must promptly execute all relevant guarantee contracts and complete all
necessary procedures for such guarantee at Party B’s request.

 

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Article 10            If any provisions regarding guarantees are inconsistent
with those under any specific guarantee contract, the latter shall prevail.

 

Article 11            Unless otherwise specified herein or in any specific
business document, the interest on the amount used by any specific service
hereunder will be calculated by using this formula: the actual number of days of
any amount used times the amount of financing times the daily rate. The daily
rate is equal to annual rate divided by 360 and is to be specified in the
specific business document for such relevant service.

 

If Party A has recovered certain funds prior to the expiration of the term of
any specific service, Party A may use such funds, and Party B shall have the
right to require Party B to use such funds, to repay in advance the
corresponding principal and interest of that service.

 

If Party A makes repayment in advance, Party B shall have the right to charge a
one-time default fee based on this calculation formula: default fee = amount
repaid in advance x the balance of the term of financing x interest rate
specified x fee rate.

 

Article 12            If Party A fails to repay the principal and interest and
other relevant amount in accordance with the provisions hereunder and under any
specific service document, Party B shall have the right to charge past-due
penalty interest until the complete repayment of such principal and interest.
The past-due penalty interest is an additional 100% of the interest rate
specified in any specific service document.

 

Article 13            If Party A fails to pay interest on time, Party B shall
have the right to charge a compound interest based on the number of days that
such interest payment is past due.

 

Article 14            If the People’s Bank of China adjust its benchmark lending
rate during the term of this agreement and such benchmark lending rate is
applicable to any service hereunder, Party B shall have the right to determine
the interest rate in any new loan contract after such adjustment, without the
need for any new agreement between the two parties.

 

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Article 15             The fees payable by Party A to Party B hereunder include,
without limitation, the following:

 

(1)          The fees incurred by Party B in the course of pursuing the related
parties to recover the amount under any letter of credit, promissory note,
guarantee or pledge in connection with any financing services hereunder;

 

(2)          The fees and expenses incurred in conducting appraisal,
registration and certification in connection with any financing services
hereunder.

 

Article 16             Party A’s Representations and Warranties

 

16.1       Party A is a legal person established in accordance with the law and
has the capacity and power to conduct civil activities and other actions
necessary for the execution and perform of this contract and to bear civil
responsibility for its actions. The representative or agent who executes,
delivers and performs the afore-mentioned documents on behalf of Party A has
obtained all due approval and authorization and has the right to engage in the
afore-mentioned activities;

 

16.2       All the documents, financial statements and representations provided
in accordance with the law at Party B’s request in connection with this loan are
valid, legal, truthful, accurate and complete. All the financial reports and
other material regarding Party A’s operations provided by Party A to Party B
accurately reflect Party A’s financial and operation situations as of the dates
of such reports and material, and there have been no material adverse changes
since such dates;

 

16.3       At the time of the execution of this agreement, there are no events
of default (set forth in Article 23) occurring or continuing, and Party A has
not violated any law, regulation, statutes, judgments, determination and any
previsions of any agreement/contract to which Party A is a party that are
applicable to Party A or Party A’s assets. The execution and performance of this
agreement or any document hereunder will not cause any default under any other
agreements or contracts;

 

16.4       At the time of the execution of this agreement, there are no
litigation, arbitration, enforcement or other judicial/administrative procedures
that may, in Party B’s reasonable judgment, adversely affect Party A’s ability
to perform this agreement or fulfill its obligations under any other documents
in connection with this agreement;

 

16.5       All the trades on which each specific financing service hereunder is
based are authentic and valid and the trade documents (contracts, notes, tax
documents and other information) provided in connection with Party A’s
application are authentic, complete, accurate and valid;

 

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16.6        Party A must completely perform its obligations hereunder and all
the commitments, guarantees, obligations and responsibilities under other
specific service documents hereunder;

 

16.7        Party A will promise to obtain all government approval,
authorization and permit necessary for the domestic letter of credit financing
service hereunder and ensure that such approval, authorization and permit remain
valid and effective;

 

16.8        Before the full repayment of all the debts hereunder, if there is
occurrence of any litigation or legal proceedings, or any event, that will have
adverse impact on the performance of Party A’s obligations hereunder, Party A
must notify Party B in writing within 5 days after the occurrence or likely
occurrence of such event and, to the extent allowed by law, adopt remedial
measures or enter into corresponding agreements to protect Party B’s interest.

 

16.9        Party A must carefully read all the conditions and provisions in the
financing service application document and fill out such applications that meet
Party B’s requirements; Party A will be responsible for any loss or liabilities
as a result of any errors and inaccuracies.

 

16.10      Without prior written consent from Party B, Party A will not transfer
any receipts, invoices or merchandise hereunder, establish any guarantee on such
receipts, invoices or merchandise or dispose of them by any other means.

 

Article 17             Once Party B buys out, or applies discounting or
negotiated payment to, the relevant notes and claims hereunder and makes actual
payment of any amount for such buy-out or discounted/negotiated payment, Party
B, before issuing any letter or credit for payment, will become the proper
holder and transferee of such notes/claims, obtain the corresponding bills of
lading and other documents of ownership, and will have the right to exercise any
rights specified in such bills of lading and other documents of ownership; Party
B will have the right to dispose of such notes/claims at its discretion and
Party A must execute and take any document and action deemed necessary by Party
B.

 

Article 18             If Party A provides such notes and claims or merchandise
represented by such notes and claims to Party B as guarantee on the domestic
letter of credit financing service provided by Party B, Party B will then have
the pledgee’s right regarding notes and claims or merchandise represented by
such notes and claims. Party B shall have the right to request Party A to
complete all legal and regulatory procedures, including registration and
delivery, in connection with such notes and claims, and the right to dispose of
such notes and claims or merchandise represented by such notes and claims.

 

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Article 19             With the exception of the domestic letter of credit
buy-out of claims set forth in Article 3, upon the occurrence of any of the
following under other domestic letter of credit financing service, Party B shall
have the right to cash out, sell, transfer or dispose of all or some of the
notes and claims or merchandise represented by such notes and claims at its
discretion at the price it determines to be appropriate, without the need for
taking legal proceedings or other actions against Party A or any other party.
Party B shall not bear any responsibility for any loss resulting from such sale,
transfer or disposition:

 

19.1        Any party that has the obligation to make payment has defaulted;

 

19.2        Party A fails to fully repay all the debts owed to Party B or
violates any of the provisions herein;

 

19.3        Party A or any party that has the obligation for payment regarding
any notes fails to make payments, or faces bankruptcy liquidation or is the
target of any enforcement action regarding its assets;

 

19.4        Occurrence or likely occurrence of any litigation that may harm
Party B’s interests in such notes and claims or merchandise represented by such
notes and claims;

 

19.5        Other events that in Party B’s judgment are the reason for Party B
to sell or dispose of such notes and claims or merchandise represented by such
notes and claims.

 

Article 20             With the exception of the domestic letter of credit
buy-out of claims set forth in Article 3, Party B may, with regard to other
domestic letter of credit financing service, apply the proceeds from the
disposition of such notes and claims or merchandise to the debts owed by Party A
in the repayment order set forth in Article 25. If such proceeds are
insufficient for the full repayment, Party A must immediately make up the
balance.

 

Article 21             With regard to the domestic letter of credit buy-out of
claims set forth in Article 3, upon the occurrence of any of the following,
Party B shall have the right to cash out, sell, transfer or dispose of all or
some of the notes and claims or merchandise represented by such notes and claims
at its discretion at the price it determines to be appropriate, without the need
for taking legal proceedings or other actions against Party A or any other
party. Party B shall not bear any responsibility for any loss resulting from
such sale, transfer or disposition. If such proceeds are insufficient for the
full repayment, Party A must immediately make up the balance:

 

(1)          The trades represented by such notes are inauthentic or are in
violation of the State law and statutes;

 

(2)          The claims represented by such notes are forged;

 

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(3)          There is any stop-payment order, court order for freeze or
suspension regarding the letter of credit concerning such claims transferred or
any similar judicial proceedings that cause Party B to be unable to receive
payment from the issuer of such letter of credit.

 

Article 22             Party A hereby authorizes Party B to:

 

22.1        Execute, deliver, improve and take such notes or actions on behalf
of Party A or in Party A’s name in order to perform Party A’s obligations
hereunder or to protect Party B’s guarantee rights hereunder; Party B may
designate any other party as Party B’s agent or representative and grant any of
the rights Party B hereunder to such party or agent;

 

22.2        Make arrangements with the seller, transportation carrier, warehouse
manager and/or other relevant party, and have the right (but not obligation) to
pay all the transportation fee, warehouse fee, dock fee and other expenses on
behalf of Party A and Party A shall be responsible for such fees and expenses;

 

22.3        Notify other relevant parties regarding Party B’s rights or
interests in such notes and/or merchandise;

 

22.4        Take other measures that Party B deems to be necessary to protect
Party B’s interests in such notes and/or merchandise.

 

Article 23             The occurrence of any of the following will be considered
an event of breach on the part of Party A:

 

23.1        Party A fails to repay in full the debt due (including principal and
interest) according to the repayment schedule, or fails to transfer the
corresponding amount in full on the payment date into the account designated by
Party B in accordance with the provisions of the specific financing documents
hereunder;

 

23.2        Party A fails to use the amount of financing in accordance with the
provisions herein or in any specific service document hereunder;

 

23.3        Party A’s representations and warranties herein or any document or
information provided to Party B in connection with this agreement are proved to
be false or inaccurate; or Party A fails to perform any promise,
responsibilities or obligations hereunder;

 

23.4        Party A is unable to repay any debt under other loan or credit
agreements with other third parties, or is in breach of such other loan or
credit agreements, or any such debts under such other loan or credit agreements
are declared due ahead of schedule;

 

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23.5        Occurrence of other major events (including but not limited to
deterioration of Party A’s operations and financial conditions, major litigation
or legal proceedings against Party A, major changes in the condition of the
market in which Party A operates or major industry policy changes that will have
an adverse effect on Party B’s business) that, in Party B’s judgment, will
materially harm Party B’s interests hereunder;

 

23.6        Any guarantor is in breach of the guarantee contract; or

 

23.7        Other events or activities that will have an adverse effect on Party
B’s claims or pledgee’s rights.

 

Article 24             Upon the occurrence of any of the event set for in
Article 23, Party B shall have the right to take all or some of the following
measures:

 

24.1        Adjust the amount, revolving basis and term of the credit amount
hereunder or even suspend the use of such amount;

 

24.2        Adjust the scope of trades for which the domestic letter of credit
financing may be used;

 

24.3        Declare all debts generated directly or indirectly from this
agreement due and demand immediate repayment from Party A;

 

24.4        Exercise its right under the guarantee contract;

 

24.5        Demand that Party A provide additional guarantee (in the form of
guarantee, pledge or mortgage);

 

24.6        Deduct deductions from any account set up by Party A with Party B or
Party B’s subsidiaries to offset directly any amount payable to Party B
hereunder;

 

24.7        Take other legal measures allow by law to protect its interest
hereunder.

 

Article 25             Any proceeds from Party B’s exercise of its rights
hereunder will be used to satisfy Party B’s claims in the following order: (1)
fees incurred in the exercise of Party B’s claims and rights under the guarantee
contract; (2) other fees and expenses payable to Party B; (3) compound interest
and penalty interest; (4) interest; (5) loan principal; and (6) other amount
payable.

 

Party B shall have the right to change the above repayment order in accordance
with the law.

 

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Article 26             Party A must make payments for all amounts due and
payable in accordance with the provisions hereunder or under the specific
service document under this agreement.

 

Article 27             None of the amount payable by Party A hereunder can be
used for offset, advance or discount or be attached with any condition.

 

Article 28 Party A acknowledges that Party A must reimburse all the reasonable
fees and expenses (including but not limited to legal fees, litigation fees,
appraisal and auction fees and insurance fees) incurred in the exercise or
realization of the claims hereunder or under any guarantee contract.

 

Article 29             Party A agrees and authorizes Party B to use any amount
in the account set up by Party A with Party B or with Party B’s subsidiaries to
offset any debts owed by Party A to Party B. If such offsets require the
conversion of one currency to another, Party B will make such conversion at the
legally determined exchange rate.

 

Article 30             Any of the provisions herein is independent of others. If
one or some of the provisions herein become invalid or unenforceable, the
validity or enforceability of other provisions shall not be affected. If, during
the term of this agreement, any government department or regulatory agency
promulgate, amend or annual certain law, statutes or regulations, causing any
provision herein to be inconsistent or in conflict with such law, statutes or
regulations, corresponding revisions must be made to this agreement.

 

Article 31             If any provision herein is inconsistent with any
provision in any other written agreement regarding the domestic letter of credit
financing service hereunder, the provisions in such other written agreement
shall prevail.

 

Article 32             The failure to exercise, or the delay in the exercising,
of any right hereunder by one party must not be considered a waiver of such
right and will not affect any obligation hereunder by the other party.

 

Article 33             All the obligations of both parties hereto have
survivability and shall be binding to the successor, assign, agent, receiver and
the entity resulting from any merger, reorganization or name change of each
respective party.

 

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Article 34             Notices

 

34.1        All the notices, requests, instructions or other documents must be
issued in writing and be delivered to the address or number listed on the first
page of this agreement (or such address or number that the receiving party
provides to the sending party at least 5 days in advance).

 

34.2        Such notices, requests, instructions or other documents shall be
considered delivered:

 

(1)         On the actual delivery date if delivered by courier or express
service;

 

(2)         At the time when the sender receives fax confirmation if sent by
fax;

 

(3)         On the fifth business day if posted by ordinary mail.

 

Article 35             Applicable Law and Resolution of Dispute

 

35.1        This agreement and all other service documents are governed by the
law of the People’s Republic of China and must be interpreted accordingly;

 

35.2        All disputes must be resolved through consultation between the two
parties; if such consultation fails, either party may submit such disputes to
the court at Party B’s location for resolution.

 

Article 36             Transfer

 

36.1        Without Party B’s prior written consent, Party A must not transfer
any of its rights or obligations hereunder to a third party and must not
establish any guarantee or other encumbrances on such rights or obligations;

 

36.2        Party B may transfer its interest hereunder or under any specific
service document under this agreement or under any relevant guarantee contract
to a third party, establish guarantee thereupon or establish trust. Party B will
use the appropriate method to notify Party A of such action, and Party A must
continue the performance of its obligations hereunder.

 

Article 37             Effectuation, Modification and Dissolution

 

37.1        This agreement shall become effective upon execution by the
respective representatives of the parties hereto;

 

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37.2        Other matters not covered herein may be provided in a supplemental
agreement between the two parties. All appendices, amendments or supplements
hereto shall be the inseparable part of this agreement and shall have the same
legal effect.

 

37.3        This agreement will terminate:

 

(1)          Upon expiration of the term of this credit facility or of any
specific service;

 

(2)          Upon termination by any party in accordance with the provisions
herein or upon mutual agreement;

 

Article 38             Other Provisions

 

(None)

 

Party A: (Seal or Special Business Seal)     /seal/   Inner Mongolia Yongye
Nongfeng Biotechnology Co., Ltd.

Legal Representative:  /s/ WU Zishen

 

Party B: (Seal or Special Business Seal)   /seal/ CITIC Bank Corporation Limited
(CITIC), Hohhot Branch,   Hohhot Branch

Legal Representative:  /s/ SUN Xiaofan

 

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