Exhibit 10.19
 
Renminbi Loan Agreement

Between
Dalian Chuming Group Co. Ltd
(Borrower)

And

East Asia Bank (China) Co. Ltd. Dalian Branch
(Lender)

Executed in Dalian on October 22, 2009

(This is a translation intended for reference only)
 
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Article I
 
Definitions
3
Article II
 
Loan Amount
4
Article III
 
Withdrawal and Use Method of the Loan
4
Article IV
 
Purpose of the Loan
5
Article V
 
Term of the Loan Amount
5
Article VI
 
Interest Rate and Calculation and Payment of Interest
6
Article VII
 
Repayment and Prepayment of the Loan
7
Article VIII
 
Guarantee Measures
9
Article IX
 
Preconditions of the Loan
9
Article X
 
Other Loan Conditions
10
Article XI
 
Lender’s Rights and Obligations
11
Article XII
 
Borrower’s Representations and Warranties
11
Article XIII
 
Default and Rights of Inassured Pleading Event
14
Article XIV
 
Waiver of Rights
16
Article XV
 
Transfer
17
Article XVI
 
Applicable Law and Legal Jurisdiction
17
Article XVII
 
Notices
17
Article XVIII   
 
Fees
  18
Article XIX
 
Effectuation of Agreement
18
Article XX
 
Term
19

 
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Whereas the Borrower (see Attachment 1) applies to the Lender (see Attachment 2)
for a loan to meet the needs of its business development, the two parties,
through negotiation, have entered into this Agreement as follows:
 
Article I Definitions

Unless otherwise provided for, the following terms herein have the definitions
as follows:

1.           Guarantor shall mean SHI Huashan (“Individual Guarantor”) and
Dalian Chuming Group Co. Ltd (“Corporate Guarantor”) who provide unconditional,
irrevocable and jointly and severally liable guarantee for the Borrower to
ensure the on-schedule and complete performance of the Borrower’s obligations
hereunder.

2.           Default and the Right of Inassured Pleading Event shall mean events
and situations expressly specified in Article XIII herein.

3.           Financing Document shall mean each or any of the following
documents:
 
(1) This Agreement and the related legal guarantee documents
 
(2) Any supplemental document to that referenced in Section I.3.(1) (including
but not limited to potential, irrevocable notice of withdrawal and direct
withholding authorization);
 
(3) All other agreements, contracts, documents and supplements thereto
associated with the loan specified herein, and any other document which is
jointly specified by the Borrower and the Lender as financing document.

4.           Arrears shall mean all the past due and outstanding amounts owed to
the Lender by the Borrower under the Financing Document, including but not
limited to loan principal and interest, compound interest, penalty interest,
default interest, loss compensation, fees incurred from establishing and
performance of the Financing Document (including fees payable to a third party);
and fee and expenses incurred by the Lender n protecting and realizing any right
under the Financing Document (including but not limited to actually incurred
litigation fees, property security fees, enforcement fees, legal presentation
fees, transportation and business travel expenses).  The said litigation fees,
property security fees, enforcement fees herein shall be evidenced by the proofs
issued by the presiding court, and the said legal presentation fees,
transportation and business travel expenses shall be evidenced by the actual
invoice of payment by the Lender and by the corresponding invoice of attorney
fees.  Any arrears other than the loan principal and interest shall be assessed
a penalty interest at the penalty interest rate provided for herein starting
from each amount’s past due date (meaning the payment due date notified by the
Lender) and/or the time of actual occurrence of the related fees and expense
(meaning the time of making such advances by the Lender).  Interest shall be
assessed on the arrears under the Financing Document until the date of their
actual pay off to the Lender, and shall be assessed on their daily cumulative
amount.
 
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5.           Bank Business Day shall mean the days on which the Lender is open
for business.

6.           Day/Month/Year shall mean the Day/Month/Year of a calendar year.

7.           Chinese Law shall mean the laws, statutes and regulations which are
current and to be amended from time to time or most recently promulgated in the
People’s Republic of China (excluding the regions of Hong Kong, Macau and
Taiwan).
 
Article II Loan Amount
 
Pursuant to the provisions herein and upon the satisfaction of the conditions
provided for in Article IX herein, the Lender agrees to provide a loan in the
amount of RMB Fifteen Million (RMB 15,000,000.00).
 
Article III Withdrawal and Use Method of the Loan
 
1.           Upon the effectuation hereof and the satisfaction of all the
conditions provided for in Article IX herein, the Borrower may withdraw the loan
amount.

2.           The valid period for the first withdrawal is six months staring
form the date of execution hereof.

3.           The Borrower may make separate withdrawals against the loan amount
herein; however no withdrawal can be for an amount less than RMB one million
(RMB 1,000.000.00) and each withdrawal must be for an amount in the even
multiple number of RMB one million (RMB 1,000.000.00).

4.           The Borrower must submit its executed, irrevocable notice of
withdrawal (see Attachment 3 for details) to make withdrawal at the Lender’s
location.  The notice of withdrawal must be received by the Lender 5 Bank
Business Days prior to the date of withdrawal.  The date of withdrawal must be
on a Bank Business Day.  The notice of withdrawal must specify the term of use,
i.e., twelve months, for the amount of withdrawal.  If the term of use for
certain withdrawal is different from that stated above, the Lender shall make a
decision at its discretion.   If the term of use for certain withdrawal exceeds
the term of the loan amount provided for in Article V herein, the Lender shall
also issue a special approval.

5.           The Lender shall have the right to determine the Borrower’s actual
date, amount and period of withdrawal according to the situation of market
changes.  The date of withdrawal shall be the actual date of issuance of the
loan.  The Lender may unilaterally make adjustment to the interest rate on the
portion of the loan amount that has not been withdrawn according to the
situation of market changes.
 
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6.           The Borrower may submit one or more applications for extension to
the Lender with respect to each use of the loan, and application for extension
must be approved by the Lender.  Application for extension must be submitted in
written notice to the Lender at least five Bank Business Days prior to each
repayment due date, and the extended term of use for the loan amount must comply
with the regulations regarding loan extension from People’s Bank of China, and
must be accompanied by the acknowledgement document to be executed from the
Borrower to the Lender.  If the term of extension of the use for the loan amount
exceeds the expiration date of the term of the loan amount, the Lender shall
issue special approval.
 
Article IV Purpose of the Loan
 
The purpose of the loan hereunder is: to meet the Borrower’s need to purchase
raw material and its need for daily operation capital.  Without the Lender’s
written consent, the Borrower shall not appropriate the loan for other purposes
for any reason.  The Lender shall not used the loan amount on any real estate
project other than the purpose stipulated herein, shall not invest the loan
amount in the securities market, shall not use the loan amount in any equity
interest investment in violation of rules and regulations, and shall not use the
loan amount in other businesses into which the State policies forbid the inflow
of credit loan funds.

The Borrower shall bear the default liability for any violation of the provision
above.
 
Article V Term of the Loan Amount
 
1.           The term of the loan amount (see Article II herein) provided by the
Lender to the Borrower shall be a period of ten years starting from the date of
execution hereof, i.e., from October 22, 2009 to October 21, 2019; with the
exception of the circumstances below and of the alteration of other provisions
herein, this Agreement need not be supplemented or amended or be terminated
prior to expiration of the term.
 
(1) During the term of the loan amount, the Lender has the right to conduct an
annual review of the loan amount based on the Borrower’s credit worthiness; and
if the Lender, upon completion of the said annual review, decides to terminate
the provision of the loan amount to the Borrower, then the loan amount hereunder
become immediately due (based on the Lender’s written notification), and the
Borrower shall immediately repay the principal and interest of the entire loan
amount and all the associated fees to the Lender.
 
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(2) If the Lender decides to continue the provision of the loan to the Borrower
after making certain adjustment to the loan amount stipulated herein, the
Borrower must enter into a supplemental agreement hereto with the Lender
regarding the adjusted loan amount corresponding to the changes of the
provisions herein (including but not limited to changes to the term of the loan
amount).  Based on the result of the Lender’s review of the Borrower’s credit
worthiness and on the Borrower’s financing need, the Lender and the Borrower may
enter into one or more supplemental agreements based hereon.

2.           The Borrower’s term of the each amount of withdrawal against the
loan amount shall be based the information recorded in the withdrawal document
(“Irrevocable Notice of Withdrawal”) approved by the Lender separately at each
time of withdrawal.

3.           Any supplemental agreement hereto and all the withdrawal documents
provided by the Borrower to the Lender during the entire term of the loan amount
constitute the valid component parts hereto and shall have the equal effect as
that hereof.

4.           During the term of the loan amount, if the Borrower has three
defaults described in Article XIII herein or if there are three occurrence of
uncontestable events, the Lender may, in consideration of the actual
circumstances, demand the Borrower to repay immediately, in part or in entirety,
the loan principal and interest, penalty interest, compound interest and all
other arrears and associated fees.

5.           During the term of the loan amount, if the Borrower fails to
conduct the annual audit, or the Borrower has conducted the annual audit but
fails to pass the audit, according to the rules of the Lender’s headquarters,
the Lender may, according to the actual circumstances, reduce or cancel any
unreleased portion of the loan amount, or demand the Borrower to repay
immediately, in part or in entirety, the loan principal and interest, and all
other arrears and associated fees.

6.           During the term of the loan amount, the Lender has the right to,
according to its own situation of funds, arranged the Borrower’s actual time of
withdrawal, loan amount and the term thereof but must notify the Borrower
promptly in writing.
 
Article VI Interest Rate and Calculation and Payment of Interest
 
1.           Loan interest rate: the rate is based the term of use for each
withdrawal recorded in the Notice of Withdrawal under the loan amount and is
floated upward 10% from the base loan interest of the People’s Bank of China for
the same period that corresponds to the date of withdrawal.  Any extension of
the term of the loan approved by the Lender is calculated cumulatively, and, if
the cumulatively extended term reaches the term level of a new loan interest
rate, the interest rate is calculated based on the legal rate for the same loan
level on the date of extension from the date of extension; if not, the interest
rate is calculated based on the legal rate for the original loan level.  If
there is a base rate adjustment made by the People’s Bank of China during the
term of use for each withdrawal, the loan interest rate hereunder shall be
adjusted according to the new legal rate every 6 month after the date of release
of the loan amount (if there is not a same calendar day in that month, then the
adjustment day shall be the last calendar day of that month).
 
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Due to factors of market changes and of changes of law, statutes and rules and
regulations, the Lender also has the right to unilaterally adjust loan interest
rate, and the adjustment date shall be rate adjustment date provided for above,
but the Lender must notify the Borrower of the adjusted loan rate in writing; if
the Borrower does not consent to such adjustment, then the Borrower must
immediately repay all of the loan principal and interest.

2.           The loan interest is calculated daily on the basis of 360 days of
each year, starting on the date of withdrawal, and the interest is settled and
must be paid monthly.  If an interest payment date falls on the non Bank
Business Day, it is sequentially postponed to the next Bank Business Day.  The
last interest payment date shall be the expiration date of the term of the loan
amount.

3.           If the Borrower fails to repay the loan according to the schedule
stipulated herein, the penalty rate shall be at the rate 50% over the loan rate
recorded in Section 1 of this article starting from the past due date of the
Borrower’s payment until the full repayment of the loan principal and
interest.  If the Borrower fails to make interest payment on time, the penalty
rate (same as above) is compounded until its settlement.  If the Borrower fails
to use the loan for the purpose stipulated in Article IV herein, the penalty
rate shall be at the rate 100% over the loan rate recorded in Section 1 of this
article starting from the date of the Borrower’s failure to use the loan for the
purpose stipulated in Article IV herein until the full repayment of the loan
principal and interest; the penalty rate hereunder will be adjusted at the same
time when the adjustment is made to the loan rate hereunder.

4.           The Lender ahs the right to demand the repayment of penalty and
compounded interest as a separate debt obligation.
 
Article VII Repayment and Prepayment of the Loan
 
Repayment
 
1. Each withdrawal of loan amount by the Borrower shall be repaid on time
according to the term stipulated in the corresponding notice of withdrawal, and,
upon full and on-time repayment of the loan amount due, the Borrower may request
anew additional loan request during the term of the loan amount, but the
remaining loan amount shall not exceed the total loan amount hereunder.

If the repayment amount from the Borrower is less than the amount due to the
Lender, then it constitutes default, and the Lender then has the right pursuant
to the remedial measures provided for hereunder to protect its contractual
interest; the repayment of the amount items to be made by the Borrower shall be
in the following order:
 
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·  
All the fees associated with the loan;

·  
Penalty interest (if any)

·  
Loan interest;

·  
Loan principal

And the Lender has the right to change the above order.

2.           The loan principal, interest and all the associated fees to be
repaid by the Borrower are all calculated and settled in Renminbi.

3.           The Borrower must establish a general account with the Lender or,
upon the Lender’s approval, with another financial institution and/or an fund
escrow account.  The Borrower hereby irrevocably authorize the Lender to deduct,
from any account the Borrower has established with the Lender, the amount owed
by the Borrower that is due under the Financing Document.  If the deduction by
the Lender caused an overdraft or an increase of overdraft in the said account,
the Borrower shall all the relevant liabilities.

4.           The Borrower shall not offset or counterclaim any portion in the
amount used to satisfy the Lender.  If, pursuant to the current and future
applicable Chinese law, the amount repaid by the Borrower to the Lender is
levied any tax and/or fees, such tax and/or fees shall be paid by the Borrower,
so as to ensure that the loan amount issued by the Lender and its interest will
be repaid in full.

Prepayment
 
1.           Upon prior approval by the Lender, the Borrower may prepay, in part
or in entirety, the loan amount on the interest payment date.  The Borrower must
have already repaid all the amount due prior to the date of prepayment, and must
notify the Lender in writing no less than fourteen Bank Business Days prior to
the prepayment date; the prepayment notice must specify the date and the amount
prepayment, and, upon the approval by the Lender, the prepayment notice becomes
irrevocable.

2.           The lowest amount for each prepayment amount is RMB one million
(RMB 1,000.000.00) and each prepayment must be for an amount in the even
multiple number of RMB one million (RMB 1,000.000.00) (except the remaining
balance after the prepayment).

3.           The amount prepaid may be requested again during the term of the
loan amount, but the total loan amount remaining shall not exceed the total loan
amount hereunder.

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Article VIII Guarantee Measures
 
1.           The guarantor provides irrevocable and severally liable guarantee
on the entire amount owed by the Borrower under the Financing Document and the
scope of the severally liable guarantee is the amount owed under the Financing
Document.

2.           The Borrower provides pledges to the Lender a certificate of
deposit in the amount of RMB five million (RMB 5,000,000.00) as guarantee on the
amount owed under the Financing Document; the pledged certificate of deposit
must be placed in the safekeeping of the Lender.

3.           The guarantor’s guarantee shall not affect the Lender’s right to
the assets/properties under the pledge, nor shall it be affected by the Lender’s
such right.  The guarantor, in order to assume its guarantor’s responsibility,
voluntarily waive all the first contest right in connection with this guarantee,
including the right to demand the Lender to first exercise its right to the
assets/properties under the pledge.
 
Article IX Preconditions of the Loan
 
The Borrower, prior to making any withdrawal, must provide to the Lender the
following documents and must satisfy the following conditions; otherwise the
Lender shall have no obligation to provide any loan to the Borrower:

1.           Copies of the Borrower’s operation permit certified to be authentic
and valid, its Article of Association, Capital verification report, organization
code certificate and other documents regarding the incorporation of the company;

2.           The executive director’s resolution from the Borrower certified to
be authentic and valid, resolution approving the terms and conditions herein
regarding the loan application to the Lender, and all documents in connection
with this loan executed by the authorized representative.  The identity document
and signature sample of the executive director certified to be authentic and
valid, and the identity document and signature sample of the authorized
representative.

3.           Copies of the Corporate Guarantor’s operation permit certified to
be authentic and valid, its Article of Association, Capital verification report,
organization code certificate and other documents regarding the incorporation of
the company;

4.           The board of directors’ resolution from the Corporate Guarantor
certified to be authentic and valid, resolution approving the terms and
conditions herein regarding the company’s irrevocable and severally liable
guarantee on the full loan amount issued by the Lender to the Borrower, and all
documents in connection with this guarantee executed by the authorized
representative.  The list of the members of the Corporate Guarantor’s board
certified to be authentic and valid, the identity document and signature sample
of the members of the Corporate Guarantor’s board, and the identity document and
signature sample of the authorized representative.
 
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5.           The copies of the Individual Guarantor’s identity document
certified to be authentic and valid and copies of his property certificate(s);

6.           All legal documents associated with this loan, including but not
limited to this Agreement, guarantee agreement, pledge agreement, must have been
duly executed and have become legally effective;

7.           The pledge of the certificate of deposit  required hereby has
become valid and effective;

8.           The Borrower has established a general account in Renminbi with the
Lender;

9.           The Borrower has paid all the fees due pursuant to the provisions
herein;

10.           The Borrower has provided all the documents evidencing the use of
the actual loan is consistent with the purpose of the loan (including but not
limited to loan prepayment proof, purchase agreements and invoices);

11.           The Borrower/Corporate Guarantor has provided valid “Bank Credit
Registration Inquiry System Loan Card” issued by the People’s Bank of China and
its pass code, and the result of inquiry on the Loan Card is satisfactory to the
Lender.

12.           The Borrower/Corporate Guarantor has provided inquiry on its
registration filed with the Industry and Commerce Bureau, and the result of the
inquiry on the registration complies with the Lender’s requirements;

13.           The legal opinion, satisfactory to the Lender, on the loan amount
under the Financing Document and each of the guarantee measure, issued by the
legal counsel acknowledged by the Lender;

14.           The Borrower has already obtained all the government approval
documents regarding this loan arrangement;

15.           Other documents, certificates and materials provided by the
Borrower as deemed reasonably required and requested by the Lender.
 
Article X Other Loan Conditions
 
When the Borrower makes withdrawal requests pursuant to the provisions herein,
the Lender’s obligation to issue the loan is additionally predicated on:
 
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1.           There has been no actual occurrence, or as determined by the
Lender, no occurrence of any default and any right of inassured pleading event;

2.           The Borrower’s representations and warranties made in the Financing
Document are still authentic and accurate as of the date of withdrawal;

3.           The Borrower has paid all the fees under the Financing Document;

4.           The Borrower must report to the Lender the situation of all of its
affiliate transactions involving 10% or more of its assets (including but not
limited to the relationship with the affiliates, the nature, amount and the
corresponding proportion of the transaction, its pricing policies (including
cashless transaction or transaction involving symbolic cash amount)).
 
Article XI Lender’s Rights and Obligations
 
1.           Upon effectuation hereof, the Lender must fulfill its
responsibilities pursuant to the provision herein and issue the loan amount on
time.

2.           Within the scope stipulated in the Financing Document, the Lender
has full recourse with regard to the Borrower’s debts and debt obligations.

3.           The Lender ahs the right to inspect, supervise the situation in
which the loan is used, and review the Borrower’s operation material; provided,
however, that the Lender shall not reveal any of the Borrower’s commercial
secrets and shall not interfere with the Borrower’s normal business activities.
 
Article XII Borrower’s Representations and Warranties
 
1.           The Borrower represents:
 
(1) The Borrower the lawful existing business legal person registered and
incorporated in accordance with the Chinese law, and have obtained all the
required government organization certificates and approvals which are complete
and valid.
 
(2) The Borrower has completed all the necessary approval procedures regarding
the execution and performance hereof.  Its loan activities pursuant hereto will
not cause any violation of other agreements, contracts to which it is a party or
of any commitments and warranties it had made unilaterally.
 
(3) This Agreement, upon execution, shall become legitimate, valid and binding
to both parties.  The Borrower’s loan activities pursuant hereto will not cause
any violation of any law, statutes, rules and regulations of the People’s
Republic of China or of other State approved documents.
 
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(4) Except the cases indicated to the Lender in writing prior to the execution
hereof by both parties, the Borrower has no pending, or is not aware of
potential, law suits or claims in any courts, arbitration organization or
government agencies against itself that will affect its ability to carry out
this Agreement.
 
(5) All the information provided by the Borrower to the Lender during the course
of negotiation and execution of this Agreement is substantially true, accurate
and complete, with no omission of any potentially misleading material facts or
contents [sic].
 
 (6) Within the scope known to or foreseeable by the Borrower, there is no fact
disclosed in writing to the Lender that may affect its ability to perform this
Agreement.
 
 (7) The audited financial report provided by the Borrower to the Lender
truthfully reflect its financial and tax situation of the time and there has
been no material adverse change.
 
(8) Except the cases indicated to the Lender in writing prior to the execution
hereof, the Borrower, in its operation activities, has no default, with regard
to any of the contracts and agreements (including this one) entered into as a
party with other parties or to any commitments or warranties made unilaterally,
that will affect its ability to fulfill its debt obligations.
 
(9) The Borrower represents: its production operations are in compliance with
the State energy saving and waste reduction regulations.

2.           The Borrower’s warranties:
 
(1) The Borrower will repay the loan principal and interest and pay all the
relevant fees on schedule in accordance with the provisions under Financing
Document.
 
(2) The Borrower will, within 90 days after end of each accounting year, provide
its annual reports (including balance sheets and profit and loss statements),
made by the accounting firm approved by the Lender in accordance with Chinese
accounting principles, and its semi-annual internal financial information,
operation situation, financial reports and the annually reviewed loan card to
the Lender for review; and provide, within 120 days after end of each accounting
year, its financial report audited by an  accountant registered in China to the
Lender.
 
(3)  The will strictly comply with and implement the provisions, conditions and
rules of its Article of Incorporation, and adopt all necessary and appropriate
measures to ensure the Borrower’s legitimate operation and existence.
 
(4) The Borrower will strictly comply with the provisions of the law and
statutes of the PRC and make all tax and fees due and will not use deduct any
amount from the loan principal and interest and fees payable to the Lender for
taxes of any type, prepaid tax or withholding.
 
(5) The Borrower will strictly comply with and carry out the obligations under
any contracts or agreement entered into as a party with other parties, make
payments of amounts payable on time and the relevant taxes, and upon the
Lender’s demand, provide proof of payment of amount and taxes payable to the
Lender, and take necessary action and legal measures to protect its legal
interests in order to ensure the repayment of the loan amount hereunder.
 
(6) Upon obtaining knowledge of occurrence or potential occurrence of default or
the right of inassured pleading event described in the Financing Document, the
Borrower must immediately notify the Lender.
 
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(7) When involved in any litigation, arbitration or disputes, the Borrower must
immediately notify the Lender, and provide from time to time all the information
and material as reasonably requested by the Lender.
 
(8) The Borrower must maintain proper accounting books and financial records all
the time and record all the receivables and payables in accordance with the
accounting principals used in PRC.
 
(9) In order to ensure that the Lender can exercise fully all the rights
provided for under the Financing Document, the Borrower must, at the Lender’s
instruction, immediately take actions and measure deemed necessary by the
Lender, and execute and provide to the Lender documents deemed necessary by the
Lender.
 
(10) The Borrower agrees that, if during the term of the loan amount, it fails
to fulfill the commitment regarding energy saving and waste reduction or its
operation is considered by the State energy saving and waste reduction
authorities to have serious problems of waste and pollution, the Lender has the
right to suspend the release of the loan amount or to demand the repayment of
part or all of the loan amount already issued in advance.
 
(11) The Borrower promises that it will accept the Lender’s examination and
supervision of the loan use situation and of relevant operation and financial
activities.  Upon prior notice to the Borrower, the Lender’s authorized
representative has the right to examine the Borrower’s operation material during
a reasonable time, enter the Borrower’s site of operation to inspect the
operation situation and the Borrower’s assets; provided, however, that he shall
not reveal any of the Borrower’s commercial secrets and interfere with the
Borrower’s normal operation activities.
 
(12) The Borrower must notify in writing the Lender the replacement of its key
management officers including (but not limited to executive directors, general
managers, director consultants and managing accountants within 14 days, and the
Lender may demand the Borrower to repay immediately all the outstanding loan, if
the Lender has disputes with such personnel changes.
 
(13) The Borrower promises that it will continuously maintain its business
entity during the term of the loan amount and, without prior consent from the
Lender, will not change its business name and its registered trade mark.
 
(14) Without prior consent from the Lender, the major shareholders of the
Guarantor and the Borrower shall not have any change.
 
(15) During the term of the loan amount, without prior consent from the Lender,
the Borrower shall not return shareholders’ loan.  If the Lender consents in
writing to such return, then the debt obligations under the Financing Document
is superior to those of the Borrower’s shareholders.
 
(16) If the Borrower engages in contract or lease operation, shareholding
restructuring, joint operation, merger and acquisition, joint capital, spin-off,
reduction of capital, equity changes, transfer of major assets and other actions
that will sufficiently impact the Lender’s realization of its interests, the
Borrower must notify the Lender in writing no less than 30 days in advance and
obtain the written consent from the Lender; otherwise the Borrower cannot engage
in any of the aforementioned activities before the repayment of all the debts.
 
(17) During the term of the loan amount, without prior consent from the Lender,
the Borrower may not encumber the pledged items hereunder with other pledge
rights, may not raise debt in any other form with any third party; may not
declare and distribute dividend; may not change its equity structure or transfer
or pledge its equity; may not change its business name; may not transfer,
change, reduce its registered capital; may not change the methods of profit
distribution and assumption of risk and loss.  If the Lender consents in writing
to the Borrower’s distribution of dividend, then the outstanding loan under the
Financing Document is superior to the Borrower’s shareholder dividend.
 
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(18) The Borrower agrees that it shall have the confidentiality obligation with
regard to the Lender’s commercial secrets and other confidential information
obtained during the course of this project, will not reveal them in any form or
make public to any third party, and will not use such information for its or any
other’s interests.  If the Borrower violates this obligation, the Lender has the
right to immediately terminate this Agreement and, in the event of any loss, the
Lender has the right to demand compensation from the Borrower.  The violation by
the Borrower’s employees will be considered violation by the Borrower.
 
Article XIII Default and Rights of Inassured Pleading Event
 
1. The occurrence of any of the following events, whether or not its cause is
within the control of the Borrower/the Guarantor or of any other person,
immediately constitutes default and the rights of inassured pleading event:
 
(1) The Borrower fails to make payment of any loan amount due according to the
provisions herein and those in other documents and the payment has been past due
for more than 3 Bank Business Days.
 
(2) As reasonably determined by the Lender and evidenced by relevant written
documents, the Borrower has materially violated any of its obligations and
warranties provided for herein or in other relevant documents hereunder.
 
(3) The Borrower has materially violated any of its obligations and warranties
provided for herein or in other relevant documents hereunder and, if such
violation is deemed by the Lender rectifiable or is believed by the Lender to be
actually rectifiable, the Borrower has failed to satisfactorily make
rectification within 30 days as requested by the Lender’s rectification
proposal.
 
(4) The Borrower has submitted irrevocable notice of withdrawal but fails to
make withdrawal of the amount as specified on time.
 
(5) The representations and warranties made by the Borrower herein turned out to
be inauthentic or inaccurate, based on the financial reports and documents
provided to the Lender, in any parts of content, or has provided false material
or withheld material operation and financial facts.
 
(6) As determined by the Lender, the Borrower has violated other contracts or
agreements, causing the prepayment of the loan amount to the Lender.
 
(7) The Borrower’s financial situation has deteriorated, or is deemed by the
Lender to be likely to deteriorate or the Borrower has been in the situation of
dissolution, liquidation, bankruptcy, restructuring or reorganization, unless
such action has been previously approved or acknowledged by the Lender.
 
(8) The Borrower has suspended or ceased, or as determined by the Lender to be
likely to suspend or cease, its operation.
 
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(9) Any authorization, approval, acknowledgement, consent, filing, registration,
certificate (if any) or any other similar document required for the Borrower to
fulfill any of its obligations hereunder or under other relevant documents has
been partially or completely changed or revoked, causing, in the judgment of the
Lender, material adverse affect on the Borrower’s ability to fulfill obligation
stipulated herein or in other document.
 
(10) The Borrower has changed the purpose of the loan without the consent of the
Lender and has misappropriate the loan or has used the loan to engage in illegal
transactions or to cause violations.
 
(11) The Borrower has used false contract with its affiliates and has used
receivable invoices that has no actual trade background and account receivables
and other debt rights to obtain discount, make pledge, secure funds and loan.
 
(12) The Borrower has refused to accept the Lender’s supervision and inspection
of the situation of its use of the loan and of its operation and financial
activities.
 
(13) The Borrower has been involved in major merger and acquisition, repurchase
organization, which are believed by the Lender to be likely to affect the
security of the loan.
 
(14) The Borrower intentionally circumvents the Lender’s creditor rights through
affiliate transactions.
 
(15) The Borrower has violated, or is likely to violate, “The PRC Environment
Protection Law” and other relevant environment protection laws, statutes,
regulations and industry rules, which in the Lender’s judgment are likely to
affect the security of the loan.
 
(16) The Borrower has failed to reach the targets regarding energy saving and
waste reduction or its operation is considered by the State energy saving and
waste reduction authorities to have serious problems of waste and pollution
 
(17) The Guarantor’s major assets have been, or in the judgment of the Lender
are likely to be, seized or frozen, its financial situation has deteriorated, or
it is in the situation of dissolution, liquidation, bankruptcy, restructuring or
reorganization, or its pledged assets/properties have been seized or frozen, or
in any situation that are in violation of or adverse to its obligation to
fulfill it guarantee responsibilities and, in the judgment of the Lender, are
likely to affect the security of the loan.

2. Upon the occurrence of one or more default and right of inassured pleading
event mentioned above, the Lender has the right to demand the Borrower/the
Guarantor to actively take effective measures within 30 days eliminate and
compensate any loss or potential resulting from the Borrower/the Guarantor’s
default.

3. In the event of default by the Borrower, the Lender has the right to take
some or all of the measure below:
 
(1) Suspend and cancel immediately all of the loan amount that has not been used
by the Borrower.
 
(2) Dissolve this Agreement.
 
(3) Declare all of the loan amount already issued (including interest)
immediately due, and demand at the same time the Borrower to repay in full or in
part the principal already issued and interest, penalty and compound interests
(see Article XI Section 4 herein) and the relevant fees.
 
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(4) Demand the Borrower to assume the penalty equivalent to five percent (5%) of
the loan amount that has not been withdrawn on time as specified due to the
Borrower’s failure to make such withdrawal in accordance with its irrevocable
notice of withdrawal.
 
(5) With no prior notice to the Borrower, directly deduct any amount (including
but not limited to deposits, amount wired out or received, amount withheld as
payment of taxes on its behalf or amount in escrow, etc; hereinafter “Such
Amount”) in the individual or joint account(s) established by the Borrower with
the Lender, East Asia Bank (China) Co. Ltd headquarters or any of its branches
to offset the Borrower’s debt obligations.  If the exercise of      the Lender’s
right to offset the Borrower’s debt cause an overdraft or an increase of
overdraft in the said accounts, or cause Such Amount to be insufficient for the
Borrower to fulfill its debt obligations to the third party or to pay its taxes
and fees, the Borrower shall bear the legal responsibility and all the
consequences arising from such action.
 
(6) Take other necessary action to protect all of its rights under the Financing
Document, including but not limited to appealing to the People’s court of
competent jurisdiction to deduct loan principal and interest, penalty interest
and other relevant fees from the deposit accounts established by the Borrower
with other financial institutions
 
(7) To exercise the Lender’s right conferred by various guarantees set forth in
Article VIII herein.
 
(8) Either of the two parties has the right to submit any disputes in connection
herewith or related hereto to the court for resolution.
 
4. Upon the occurrence of any of default and the rights of inassured pleading
events set forth in the Article, in addition to the Borrower’s obligation to
repay the loan according to the provisions herein, the Borrower must also bear
responsibility to compensate the Lender for all the fees and loss arising from
the occurrence of such default and right of inassured pleading event and for all
the legal fees and expenses resulting from the Lender’s claim.
 
Article XIV Waiver of Rights
 
The Lender’s failure of exercising, or postponement to exercise, any right under
the Financing Document shall not be construed as the Lender’s waiver of such
right.  The exercise of any individual right or partial exercise of any right
shall not preclude the further exercise of such right or the exercise of other
parts of the right.  If, at any time any provision in the Financing Document in
any parts is deemed by the applicable law to be in violation of law, invalid or
unenforceable, such situation shall not affect or impair the exercise right
under any other legal document, and shall not affect or impair the validity,
effectiveness and enforceability of any other legal provisions; nor shall it
affect or impair validity, effectiveness and enforceability of the other
provisions under the Financing Document pursuant to the applicable law.

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Article XV Transfer
 
1. The provisions herein regarding each party’s rights and obligations are
effective to each party’s successor and binding, however, without prior written
consent from the Lender, the Borrower may not transfer its rights and
obligations hereunder in part or in entirety, to a third party.

2. The Lender may at any time transfer its rights and obligations hereunder in
part or in entirety, to a third party, without the need to obtain prior consent
from the Borrower. The Lender may provide the potential transferee all the
information and material regarding this Agreement or the parties hereto in its
possession.
 
Article XVI Applicable Law and Legal Jurisdiction
 
1. The Applicable Law
 
The applicable law to this Agreement is the PRC law.  If the PRC law does not
contain relevant regulations, the industry general practices shall apply.

2. Legal jurisdiction
 
(1) Either of the two parties has the right to submit the disputes to
litigation, the PRC domestic people’s court in the jurisdiction of the Lender’s
business location has the sole jurisdiction.
 
Article XVII Notices
 
1. Unless otherwise stipulated, all notices must be issued in
writing.  Electronic transmission and faxes, upon transmittal, mails (including
ordinary mail registered mail and express mail) 7 days after their being posted,
and mails delivered by courier, upon being handed over, should be deemed
received by the other party.

2. All the notices hereunder shall be delivered to the following addresses; if
either party changes its address, the said party must notify the other parties
hereto in writing 15 days in advance.  If the party that changed its address
fails to notify the other parties hereto, causing the failure of any written
notices to be delivered promptly and correctly, the said party shall bear all
the resulting consequences and legal responsibilities.

The Borrower: Dalian Chuming Group Co. Ltd
Mail Address: 9 Xinyi Street, Ganjingzi District, Dalian
Recipient: MA Fengqin
Fax: 0411-86716688
Telephone: 0411-8671655

The Lender: East Asia Bank (China) Co. Ltd. Dalian Branch
Mail Address: East Asia Bank Building, Top Floor and 2nd Floor 7 Renmin Road,
Zhongshan District, Dalian
Recipient: YU He
Fax: 0411-82641910
Telephone: 0411-82808222

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Article XVIII   Fees
 
1. The Borrower must, before making the first withdrawal, make a one-time loan
arrangement fee equivalent to 0.1% of the loan amount to the Lender .  On each
anniversary day of the date of effectuation of the Agreement, the Borrower must
pay the Lender the annual review fee equivalent to 0.1% of the loan amount.

2. The Borrower must make payment for the current and probable future fees as
follows:
 
(1) Reasonable fee incurred during the course of agreement negotiation,
drafting, execution and certification, including but not limited to fees for
assessment of the pledged items, accounting fee, attorney fee, agreement
verification fee, and agreement registration fee.
 
(2) In the event of the Borrower's default, all the fees and expenses actually
incurred by the Lender in the course of realizing its creditor's right,
including but not limited to  transportation expenses, litigation fee,
litigation security fee, enforcement fee, and attorney representation fee.
 
(3) All the taxes associated herewith including but not limited to contract
stamp fees.  The Borrower must ensure that the repayment of the loan and other
expenses does not include any or some of the above fees that must be paid by the
Borrower.

3. The Borrower must not, when making repayments of all the amount under the
Financing Document (including but not limited to: loan principal and interest,
penalty interest and other associated reasonable fees), make any deduction or
withholding of any taxes, except the taxes that the Borrower must allow the
Lender to withhold when making repayment according to the law.  If the Borrower
must deduct any taxes or must make other withholding when making repayment of
any loan amount under the Financing Document, the Borrower must increase the
amount of payment to ensure that the net amount received by the Lender is equal
to the amount that the Lender should receive without any some deductions or
withholdings.  The Borrower must the pay the aforementioned increased amount
within 10 days upon receiving the written notice from the Lender or within 10
days after the occurrence of such withholding (which ever is earlier) in full
and in one payment.
 
Article XIX Effectuation of Agreement
 
The Agreement shall become effective upon execution by the legal
representative/responsible person or authorized representative and application
of the company seal of each of the two parties.  The attachments hereto are the
inseparable parts hereof and have the same legal effect as this Agreement.
 
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Article XX Other Matters
 
(1) The headings herein are used for convenience of reference and shall have no
legal effect when used in the interpretation hereof.

(2) The Guarantor herein is plural and each bears joint and several guarantee
liability with the other.

(3) Pursuant to the applicable laws, statutes and the regulations of the
compliance documents or the requirements of financial regulatory authorities,
the Lender has the right to provide the information about this Agreement and all
other relevant information to the credit database of the People's Bank of China
or other credit database established in accordance with the law; and the Lender
also has the right to make inquiry about the Borrower in the credit database of
the People's Bank of China or other credit database established in accordance
with the law for the purpose of execution and fulfillment of this Agreement.

(4) This Agreement is drafted and adopted by the two parties on the equal basis
through amicable discussion.  The interpretation hereof should not consider any
assumptions and rules and such assumptions and rules should not be construed or
interpreted unfavorably toward the party requesting, or causing the drafting ,
this agreement.

(5) This Agreement shall not be amended without written consent from the
Borrower and the Lender and, if there are other matters to be covered, the two
parties hereto may enter into a supplemental agreement.

(6) This Agreement has one set of two copies, with one to the Borrower and one
to the Lender, and both copies have the save legal effect.

(The space below is left intentionally blank)

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Execution Page

Lender: East Asia Bank (China) Co. Ltd. Dalian Branch (Seal)

Responsible Person/Legal Representative: (Signature illegible)

Borrower: Dalian Chuming Food Co. Ltd. (Seal)

Responsible Person/Legal Representative: MA Fengqin (Signature)
 

The Guarantor acknowledges and understands all of the contents herein and
voluntarily provide jointly and severally liable guarantee for the Borrower
specified herein.  In addition, the Guarantor expresses complete understanding
of the nature and consequence of the said guarantee and represents that the
aforementioned guarantee has not been the result of the influence or direction
from any party or anyone and that the Guarantor will seek legal opinion from
independent counsel when necessary.

Guarantor: SHI Huashan

Signature: (signature)

Guarantor:  Dalian Chuming Group Co. Ltd (seal)

Legal/authorized Representative: (SHI Huashan, signature)

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Attachment 1
     
1. Name:
Dalian Chuming Group Co. Ltd
2: Registration number:
Dalian ICE No. 2102001108634
3. Registered address:
9 Xinyi Street, Ganjingzi District, Dalian
4. Legal representative:
MA Fengqin
    Position:
Executive Director
5: Telephone:
0411-86716585
   
Attachment 2
     
1. Name:
East Asia Bank (China) Co. Ltd. Dalian Branch
2: Registration number:
Registration N. 210000500006040
3. Registered address:
7 Renmin Road, Zhongshan District, Dalian
4. Legal representative:
CAI Li
    Position:
Branch President
5: Telephone:
0411-82808222

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