Exhibit 10.3


 


THE MAXIMUM MORTGAGE CONTRACT


 


AGRICULTURAL DEVELOPMENT BANK OF CHINA


 

















 


Mortgagor (in full): Daqing Borun
Biology Science and Technology Co., Ltd


 


Business License Number: 230606100202936


 


Legal Representative (Main Responsible Officer): Wang
Jinmiao


 


Address: Jubao Village, Zhusan Township, Datong District,
Daqing


 


Postal code: 163000


 


Bank of Basic Deposit Account and Account Number: Datong
Branch of Daqing Commercial Bank with the Account No. 09020120218000105


 


Tel and Fax: 0459-6989217


 


Mortgagee (in full): [] Branch of
Agricultural Development Bank of China


 


Legal Representative (Main Responsible Officer): Wang
Weidong


 


Address: Jianshe Road, [] District, Daqing City, Hei
Longjiang Province


 


Postal code: 163316


 


Tel and Fax: 0459-6297123


 


In order to ensure the proper performance of the
obligation of Daqing Borun Biology Science and Technology Co., Ltd (hereafter
referred to as “Debtor”) under several business contracts (hereafter referred to as “Principal Contracts”),
which were entered into between and by the Debtor and the Mortgagee, within the
period provided in the Article 1 hereunder and within the limitation of
the maximum amount of credit, to guarantee the realization of the credit of the
Mortgagee, the Mortgagor is willing to provide security guarantees to the
Mortgagee. To specify the rights and obligations of the both parties, the
Mortgagor and Mortgagee enter into this Mortgage contract upon consensus
through the consultation on the basis of equality in accordance with Contract Law
of People’s Republic of China, Security Law of People’s Republic of China and
other relevant laws and regulations.


 


Article 1                               Type and Amount of the Principal Credit to be Secured


 


1.1         The principal credit to be secured hereunder refers to the credit, commencing
from August 26, 2009 to August 25, 2010, formed when the Debtor
managed the agreed business operation under the Principal Contracts at the
Creditor’s, the maximum amount of the principal is RMB (in words)
13,500,000.00. The aforementioned period shall only refer to the execution date
of the contracts excluding due time of the debt.


 


1.2         The business type of principal credit to be secured hereunder, which
includes short-term grain loans to the leading enterprises, shall comply with
the provisions under this Principal Contracts.


 

















 


Article 2                               Duration
of the Performance of the Liabilities by the Debtor


 


Duration shall be provided in the Principal Contracts
respectively.


 


Article 3                               Security Scope


 


3.1         The scope to be secured hereunder shall include the principal, interest,
compound interest, default interest, liquidated damages, damage awards and
expenses incurred due to the realization of credit by the creditor and all
other sums, including but not limited to expenses or fees of litigation,
arbitration, property preservation, assessment, auction, execution, transfer
and agency.


 


3.2         Regardless of whether there is the guarantee of real right under the
credit secured, the Mortgagor shall fully bear joint and several liabilities in
accordance with the type and amount of the principal credit provided in the Article 1
hereunder.


 


Article 4                               Mortgage Property


 


4.1         The Mortgagor, of its own free will, mortgages to the Mortgagee all the
properties listed in the Mortgage List hereunder, which shall constitute integral
parts hereof.


 


4.2         The agreements with respect of the value of the mortgage properties under
the Mortgage List shall not be regarded as the assessment basis when such
mortgage properties are disposed and shall not constitute any constraint on the
mortgagee regarding the enforcement of the mortgage right. The final value of
the mortgage properties shall be subject to the net income of the actual
disposal of the mortgage properties when such mortgage right is realized.


 


Article 5                               Effectiveness of the Mortgage Right


 


The effectiveness of the mortgage right hereunder shall
govern the ancillary components, accessory rights, subrogated rights,
affiliated things, compounds, processed things and fructus.


 


Article 6                               Mortgage Registration


 


6.1         Should the mortgage properties hereunder be subject to the mortgage
registration in accordance with laws and regulations, the Mortgagor shall,
within fifteen (15) days after the execution of this Mortgage Contract, go to
the competent authorities to handle the mortgage registration along together
with the Mortgagee.


 


6.2         In the event the mortgage properties hereunder are not subject to the
mortgage registration, however the two parties hereto voluntarily are willing
to manage the mortgage registration, the Mortgagor shall, within fifteen (15)
days after the execution of


 

















 


this Mortgage Contract, go to the competent authorities to
handle the mortgage registration along together with the Mortgagee.


 


6.3         Where any changes occur to the items under the mortgage registration and
such changes are subject to the registration of alteration, the Mortgagor
shall, within fifteen (15) days after the alteration of the items under
mortgage registration, go to the competent authorities to handle the mortgage
registration of alteration along together with the Mortgagee.


 


Article 7                               Occupation and Keeping of the Mortgaged Property


 


7.1         The certificates of mortgage rights hereunder, the original copies of the
mortgage registration documentation and other materials relating to the
mortgaged properties shall be kept by the Mortgagee after confirmation by the
Mortgagor and Mortgagee. The mortgagee shall keep such certificates and
documents of mortgage rights appropriately. If, due to the improper care, such
certificates and documents of mortgage rights are damaged or lost, the
post-registration fees shall be borne by the Mortgagee.


 


7.2         The Mortgagor shall keep the mortgaged properties properly and maintain
the mortgage properties intact, and shall accept supervision and inspection of
the Mortgagee at any time.


 


7.3         Without the prior written consent of the Mortgagee, the Mortgagor shall
not donate, alienate, lease, re-mortgage, pledge or otherwise dispose of the
Mortgaged properties hereunder by any means. Where a mortgagor alienates, upon
the prior written consent of the mortgagee, the mortgaged properties, the money
generated from such alienation shall be used to pay off debts to the Mortgagee
in advance or be deposited to a bank account designated by the Mortgagee with
the purpose of assuring the performance of the obligations under the Principal
Contract continuously.


 


7.4         In case the mortgaged properties are damaged or lost, the Mortgagor shall
promptly take measures so as to prevent the expansion of the losses thereof and
shall, at the same time, notice the Mortgagee. The insurance benefits and
compensatory payment arising from or in connection with such losses shall be
used to pay off principal debts to the Mortgagee in advance or be deposited to
a bank account designated by the Mortgagee with the purpose of assuring the
performance of the obligations under the Principal Contract continuously.


 


7.5         In case the value of the mortgaged properties reduces, the Mortgagor
shall resume such mortgaged properties to the original value status or provide
the necessary guarantee equal to the reduced value upon the confirmation of the
Mortgagee. In case any such request of the Mortgagee is refused, the Mortgagee
shall be entitled to exercise the mortgage right in advance. In case there are
still losses after the excise of the mortgage right in advance, the Mortgagor
shall undertake the compensation liabilities. Should the Mortgagor be
indemnified against the losses in relation to the reduced value of the
mortgaged properties, the Mortgagor shall provide security to the Mortgagee
within the


 

















 


extent of the indemnity that it has thus obtained. The
part of the mortgaged properties that have not reduced shall still constitute
the security of the Principal Contract.


 


7.6              In the event that the mortgaged properties are expropriated as the needs
of the state construction, the compensation thereof obtained by the Mortgagor
shall be used to pay off debts to the Mortgagee in advance or be deposited to a
bank account designated by the Mortgagee with the purpose of assuring the
performance of the obligations under the Principal Contract continuously.


 


Article 8                               Mortgage Insurance


 


8.1              The mortgagor shall, within fifteen (15) days after the execution of this
contract, go to relevant insurance institutions to make the mortgaged
properties, which are considered by the Mortgagee as necessary and have access
to the property insurance, covered by the property insurance in favor of the
Mortgagee as the first beneficiary subject to the requirements of the Mortgagee
with respect to the insurance type and amount. The period of the insurance
shall not be shorter than of the performance period of this contract and the
insurance amount shall not less than the principal and interest of the loan
under the Principal Contract.


 


8.2              The mortgagor shall deliver to the Mortgagee the original copies of the
insurance policies, which shall not include the provisions that constrain the
rights and benefits of the Mortgagee.


 


8.3              The Mortgagor shall not cancel or otherwise terminate the insurance for
any reason during the period of this contract. In case the Mortgagor cancels or
otherwise terminates the insurance, the Mortgagee shall be entitled on their
behalf to purchase the insurance with all cost thus incurred to be borne by the
Mortgagor.


 


8.4              During the period of this contract, if insurance accidents occur to the
mortgaged properties, the insurance compensation thereof obtained by the
Mortgagor shall be used to pay off debts to the Mortgagee in advance or be
deposited to a bank account designated by the Mortgagee with the purpose of
assuring the performance of the obligations under the Principal Contract
continuously.


 


Article 9                               Enforcement of Mortgage Right


 


9.1              Upon the expiration of the duration of the debts under the Principal
Contract, or in case the credits secured by the maximum mortgage is confirmed,
or when the Mortgagee requires to pay-off the credits under the Principal
Contract in advance, should the Debtor fail to pay-off the principal and
interest as well as all other expenses, the Mortgagee shall be entitled to
auction or sell the mortgaged properties and be paid back first through the
payment arising from such activities, or, through the consultation with the
Mortgagor, realize its rights through converting the mortgaged properties into money.


 


9.2              Should the Mortgagee
fail to be paid when the Principal Contract is terminated by the


 

















 


Mortgagee in accordance with the provisions therein or
laws and regulations, the Mortgagee shall be entitled to auction or sell the
mortgaged properties and be paid back first through the payment arising from
such activities, or, through the consultation with the Mortgagor, realize its
rights through converting the mortgaged properties into money.


 


9.3              The part of payment incurred due to the disposition of the mortgaged
properties hereunder exceeding the principal and interest and all other
relevant expenses shall be attributed to the Mortgagee.


 


9.4              When the Mortgagee disposes the mortgaged properties hereunder the
Mortgagor shall offer proper cooperation and shall not set any obstacle.


 


Article 10                        Representations and Warranties of the Mortgagor


 


10.1        The Mortgagor understands and agrees any and all provisions hereof and,
of its own will, provides the security for the Debtor. All the declaration of
intention hereunder is true.


 


10.2        The Mortgagor is the complete, valid and legal owner of the mortgaged
properties hereunder or the authorized business operator by the government and
no any dispute regarding the ownership or the rights of business operation
exists upon the mortgaged properties. Such properties are free to be mortgaged
in compliance with laws and regulations without being subject to any
limitations, upon which no such circumstances as cancellation from use,
detention, custody, lease, tax or construction cost in default or other
circumstances that may impact the realization of the mortgage right of the
Mortgagee exist.


 


10.3        Should the Principal Contract be the Bank Acceptance Agreement, the
Mortgagor undertakes that any disputes arising from or in connection with the
bills or otherwise disputes occurring to the Debtor, the holder of the
acceptance bills, endorser or other relevant persons shall not jeopardize the
security liabilities borne by the Mortgagor to the Mortgagee in compliance with
this contract.


 


10.4        The Mortgagor shall notice the Mortgagee in writing in the event the
following issues occur:


 


10.4.1                  In case
that there are modifications with respect to the business operation system,
including but not limited to contracting mechanism, lease, joint operation,
merger, separation, joint stock enterprise reform, cooperation with foreign
investors and so on, or business scope or registered capital modifications,
shareholding changes, the Mortgagor shall notice the Mortgagee at least fifty
(50) days in advance.


 


10.4.2                  In case
that there are significant economic disputes or disputes with respect to the
ownership or preservation measures upon the mortgaged properties, bankruptcy,
business close, dissolution, business cancellation and reorganization, cancellation
of business license or changes of address,


 

















 


telephones and legal representatives, the Mortgagor shall
notice the Mortgagee within five (5) days since the occurrence of the
aforementioned issues.


 


10.5             Provided that the issues referred in Article 10.4.1 or some other
issues occur to the Mortgagor during the valid period of this Contract, the
Mortgagor shall undertake the security liabilities hereunder continuously.


 


10.6             In the event that the Debtor fails to perform the obligations, regardless
of whether the Mortgagee possesses other security rights upon the credits under
the Principal Contract, the Mortgagee shall be entitled to require the
Mortgagor to bear the security obligations to the extent of the security
hereunder.


 


10.7             In case that the mortgage right suffers or potentially will suffer the
damages incurred from any other third party, the Mortgagor shall notice
immediately or assist the Mortgagee to avoid such damages.


 


10.8             Should the agreement regarding the modification of this contract be
reached between the Mortgagor and the Mortgagee, except for the extension of
this contract or the increase of the credit under the Principal Contract, the
Mortgagor shall still be liable for the security obligations within the extent
of the obligations hereunder without being subject to the agreement of the
Mortgagor.


 


10.9             All the relevant expenses hereunder, including but not limited to fees of
legal counsel, identification, notarization, assessment, registration,
transfer, custody or litigation shall be borne by the Mortgagor.


 


Article 11                        Default Liabilities


 


11.1             Once this contract comes into effective, both parties hereunder shall
perform such liabilities as agreed under this contract. Any party, which fails
to perform such liabilities hereof or perform such liabilities incompletely as
agreed under this contract, shall bear the liabilities for breach of this
contract.


 


11.2             The Mortgagor shall indemnify the Mortgagee for all the economic losses
incurred due to the false representations declared by the Mortgagor in the Article 10.1
and 10.2 hereunder.


 


11.3             In the event that this contract becomes invalid not caused by the faults
of the Mortgagee, the Mortgagor and the Debtor shall bear the joint and several
liabilities to indemnify the Mortgagee for all the economic losses. In case
that the Mortgagor and the Debtor fail to undertake the joint and several
liabilities, the Mortgagee shall be entitled to dispose of the mortgaged
properties and be paid first within the extent of the suffered economic losses.


 


Article 12                        Effectiveness, Modification, and Termination of Contract


 


12.1        This contract
shall enter into effective on the date
when both parties sign and stamp on


 

















 


it. Should the mortgage registration is required in
compliance with laws and regulations it becomes valid upon the mortgage
registration.


 


12.2        Upon the effectiveness of this contract, except as otherwise provided,
neither the Mortgagor nor the Mortgagee could modify or terminate this contract
without the prior consent of the other party. Provided that the modifications
or the termination of this contract is needed, the notice shall be delivered in
writing and the written agreements in respect thereof shall be reached upon
consensus through the negotiation between two parties.


 


Article 13                        Resolution of Disputes


 


13.1        Any disputes arising out of, or in connection with the execution of this
contract shall be settled through the consultations between two parties; where
the agreements fail to be reached through such consultation, such disputes shall
be settled through the following ways as provided under Article 13.1.1:


 


13.1.1                  Instituting
a legal proceeding to the People’s court located at the premise of the
Mortgagee.


 


13.1.2                  Submitting
to [    ] commission of arbitration with the arbitration premise
at [    ] in accordance with the arbitration rules at
that time.


 


Article 14                        Miscellaneous


 


14.1        During the valid period of this contract, prior to the confirmation of
the maximum mortgage security, provided that the Mortgagee assigns any part of
the principal credit in compliance with laws, the Mortgagor shall still
undertake the liabilities of maximum mortgage security to the extent of the
original mortgage security.


 


14.2 [    ]


 


14.3 [    ]


 


Article 15                        Supplementary


 


15.1        Except as otherwise provided hereunder, all the notices between the
Mortgagor and Mortgagee shall be delivered in writing. Upon any of the telexes
and telegrams are sent, or the postal letters are delivered to the post offices
by the Mortgagee to the Mortgagor, such telexes, telegrams and postal letters
shall be deemed as reached by the Mortgagor.


 


15.2        The appendix hereto shall constitute integral parts hereof and shall be
as valid and effective as this contract.


 


15.3        The contract is
executed in quadruplicate. Each party hereto shall hold one (1) counterpart.
The other two counterparts shall be submitted to the Housing Management


 

















 


Bureau
and Land Resources Bureau for each respectively. Each counterpart has equally
authentic.


 


Article 16                                        Special Instructions


 


The Mortgagee has reminded the Mortgagor of understanding
the provisions hereunder comprehensively and accurately and made explanations
regarding the relevant provisions according to the requirements of the
Mortgagor. There is no any discrepancy in connection with the understanding of
the provisions hereof between the two parties.


 


 




	
  The Mortgagor (seal)

  	
   

  	
  The Mortgagee (seal)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Legal Representative (Main Responsible Officer) or
  Authorized Agent:

  	
   

  	
  Legal Representative (Main Responsible Officer)
  Authorized Agent:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Authorized Person

  	
   

  	
  /s/ Authorized Person

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date: September 30, 2008

  	
   

  	
  Date: September 30, 2008

  






 















 


List of Collateral


 


	
  To:Agricultual Development

  	
   

  	
   

  	
   

  
	
  Bank of China

  	
   

  	
  Submission Date : August, 2009

  	
  Unit: RMB

  



 


	
  Land
  Owner

  	
   

  	
  Land User

  	
   

  	
  Land Use

  Certificate

  Available?

  	
   

  	
  Land Area(m1)

  	
   

  	
  Land Use Type

  (Grant,Allocate,Le

  ase)

  	
   

  	
  Collateral

  Value

  	
   

  	
  Pricing per

  Unit

  	
   

  	
  Collateral Rate

  	
   

  	
  Location

  	
   

  	
  Collateral Loan

  Amount

  	
   

  
	
  Stated-Owned

  	
   

  	
  Daqing Borun Biotechnology Co., Ltd

  	
   

  	
  Yes

  	
   

  	
  61432.8

  	
   

  	
  Grant

  	
   

  	
  7433368.8

  	
   

  	
  121

  	
   

  	
  50

  	
  %

  	
  Daqing City,  Datong District

  	
   

  	
  3000000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  7433368.8

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  3,000,000.00

  	
   

  



 


	
  Property Owner

  	
   

  	
  Name of
  the

  Building (Application)

  	
   

  	
  Property

  Certifiacte

  Available?

  	
   

  	
  Building
  Area

  	
   

  	
  Pricing
  Per Unit

  	
   

  	
  Bulinging

  Structure

  	
   

  	
  Completion

  Time

  	
   

  	
  Collateral

  Value

  	
   

  	
  Collateral
  Rate

  	
   

  	
  Collateral
  Loan

  Amount

  	
   

  
	
   

  	
   

  	
  Zi
  Di No.NA352401 Office  Building

  	
   

  	
  Yes

  	
   

  	
  2769.35

  	
   

  	
  1654.5215

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  4581949

  	
   

  	
  0.5

  	
   

  	
  2250000

  	
   

  
	
   

  	
   

  	
  Zi
  Di No.NA352402 Workshop

  	
   

  	
  Yes

  	
   

  	
  2106.08

  	
   

  	
  1341.2786

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  2824840

  	
   

  	
  0.5

  	
   

  	
  1400000

  	
   

  
	
   

  	
   

  	
  Zi
  Di No.NA352413 Workshop

  	
   

  	
  Yes

  	
   

  	
  4281.48

  	
   

  	
  1341.2785

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  5742657

  	
   

  	
  0.5

  	
   

  	
  2800000

  	
   

  
	
   

  	
   

  	
  Zi
  Di No.NA352411 Workshop

  	
   

  	
  Yes

  	
   

  	
  1771.35

  	
   

  	
  1341.2787

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  2375874

  	
   

  	
  0.5

  	
   

  	
  1100000

  	
   

  
	
   

  	
   

  	
  Zi
  Di No.NA352408 Workshop

  	
   

  	
  Yes

  	
   

  	
  580.02

  	
   

  	
  1089.9279

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  632180

  	
   

  	
  0.5

  	
   

  	
  300000

  	
   

  
	
   

  	
   

  	
  Zi
  Di No.NA352405 Boiler Plant

  	
   

  	
  Yes

  	
   

  	
  3694.99

  	
   

  	
  1351.6207

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  4994225

  	
   

  	
  0.5

  	
   

  	
  2400000

  	
   

  
	
   

  	
   

  	
  Zi
  Di No.NA352399 Canteen

  	
   

  	
  Yes

  	
   

  	
  474.58

  	
   

  	
  1122.9150

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  532913

  	
   

  	
  0.5

  	
   

  	
  250000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  21684638

  	
   

  	
   

  	
   

  	
  10500000