Unassociated Document


    
      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)

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    
      	 
      	 	 
      	 
      
	
              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:

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    
      	
              ·  

            	
              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.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    (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.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    (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.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    (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.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    (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.

    


    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    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

    


    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    


    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.

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    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)

    


    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    


    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)


    


    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

    


    
      
        	
                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

              


      

      
        
          
          

        

        
          21