Yayi International Inc.: Exhibit 10.1 - Filed by newsfilecorp.com






Exhibit 10.1 

Working Capital Loan Agreement 
(English Translation)


The Borrower (Party A): Tianjin Yayi Industrial Co., Ltd.


The Lender (Party B): Tianjin Bank, Shaoxing Dao Branch


According to Section 2.1 herein, Party A applies for a loan
from Party B. In order to set forth the obligations and rights of both parties,
after negotiation, Party A and Party B reach the following agreement (this
“Agreement”) in accordance with the Contract Law and other laws and regulations.


Article One – Type of the Loan 

	1.1. 	The loan under this Agreement is a (medium-term or short-term) working
      capital loan. 


Article Two – Use of the Loan 

	2.1 	The loan under this Agreement is to be used to purchase raw materials.
    
	 	 
	2.2. 	The loan under this Agreement shall not be used to invest in fixed
      assets, stock or used in the business areas prohibited by the State.

	 	 
	2.3. 	Without Party B’s written consent, Party A may not change the use of
      the loan under this Agreement. 


Article Three - Amount and Term of the Loan 

	3.1. 	The amount of the loan under this Agreement is RMB 20,000,000. 
	 	 
	3.2. 	The term of the loan under this Agreement is 12 months, from November
      4, 2010 through November 3, 2011. 


Article Four – Interest Rate and Calculation 

	4.1. 	The interest under this Agreement shall be calculated based on the
      actual period beginning on the date when the loan is drawn down and ending
      on the date the loan is fully paid off (daily interest rate = annual
      interest rate/360). The loan interest shall be calculated each quarter and
      the settlement date is the 20th of the last month of each
      quarter. 
	 	 
	4.2. 	The annual interest rate of the Loan under this Agreement is a fixed
      rate of 6.672%, which will not be adjusted within the term of the Agreement. 






Article Five – Condition to Withdrawn and Arrangement 

	5.1. 	Before Party A may draw down the loan each time, it shall meet the
      following conditions: 



	 	5.1.1 	The guarantee agreement is validly and legally existing; 
	 	 	 
	 	5.1.2 	It has submitted the application for withdrawn to Party B according to
      this Agreement; 
	 	 	 
	 	5.1.3 	There is no default existing under this Agreement; 
	 	 	 
	 	5.1.4 	It has provided other relevant materials pursuant to Party B’s
      request. 



	5.2. 	Party B shall disburse the loan to
      Party A’s account with Party B according to the application letter
      provided by Party A. 


Article Six – Source of Funds for Repayment and Repayment
Method 

	6.1. 	The source of funds to be used to repay the loan by Party A is, but
      not limited to: Operating income 
	 	 
	6.2. 	Party A’s obligations under other agreements in respect of the source
      of funds to be used to repay loans shall not affect Party A’s obligation
      to repay the loan under this Agreement. 
	 	 
	6.3. 	Party A has the obligations under this Agreement to pay off the
      principal and the accrued interests in accordance with this Agreement.
  
	 	 
		6.3.1 Party A shall pay off the principal fully on the maturity date.
    


Article Seven – Guarantee 

	7.1. 	The loan is secured by guarantee. 
	 	 
	7.2. 	Party A has the obligation to assist Party B and cause Party B and the
      guarantor to enter into a guarantee agreement with the reference number
      1402010010. 
	 	 
	7.3. 	If there is any change of the guarantee under this Agreement, which
      may be detrimental to Party B, upon Party B’s notice, Party A shall
      provide other guarantee to Party B’s satisfaction. 


Article Eight - Rights and Obligations of the Parties 

	8.1 	Rights and Obligations of Party A: 



	 	8.1.1 	Is entitled to acquire and use the loan amount pursuant to this
      Agreement; 
	 	 	 
	 	8.1.2 	Without Party B’s written consent, Party A may not prepay the loan;
  
	 	 	 
	 	8.1.3 	Provide true, complete and valid materials to Party B; 
	 	 	 
	 	8.1.4 	Assist Party B’s management on the loan withdrawn, post-loan issues
      and other inspections; 
	 	 	 
	 	8.1.5 	Assist Party B’s inspections on the production, operation and
      accounting matters; provide relevant balance sheets and other documents; 







	 	8.1.6 	Pay off principal and accrued interests of this loan according to this
      Agreement; 
	 	 	 
	 	8.1.7 	Be responsible for the expenses incurred under this Agreement,
      including but not limited to, expense in connection with public
      notarization, appraisal, assessment and registration; 
	 	 	 
	 	8.1.8 	Within three days after receiving accounts receivable documents,
      return the receipt; 
	 	 	 
	 	8.1.9 	Give a 30-day notice to Party B and obtain Party B’s written consent,
      before Party A conducts the following activities: investment in a third
      party, materially increasing the debt financing, sub-contracting, lease,
      transformation into stock company, cooperation, merger, acquisition,
      setting up joint-venture, spin-off, reducing registered capital, material
      assets transfer and other activities that may affect the exercise of Party
      B’s rights hereunder. 
	 	 	 
	 	8.1.10 	Within 7 days after the following activities: change the domicile;
      mailing address; business scope; legal representative. 
	 	 	 
	 	8.1.11 	Notify Party B in a written form promptly upon occurrence of any other
      situations that may materially adversely affect Party A’s performance of
      its repayment obligation under this Agreement other than the behaviors
      provided hereinabove, but not limited to, being involved in major
      litigation, bankruptcy, deterioration of financial status. 
	 	 	 
	 	8.1.12 	Within 5 days after the occurrence of the following events: suspension
      of production, recession of business, cancellation of registration,
      revocation of its business license. 



	8.2 	Rights and Obligations of Party B: 



	 	8.2.1 	Is entitled to request Party A to provide all materials relating to
      this loan; 
	 	 	 
	 	8.2.2 	Withhold and collect from any of Party A’s accounts directly when
      retrieving or retrieving loan principal, interest, default interest,
      compound interest, and other expenses payable by Party A pursuant to this
      Agreement; 
	 	 	 
	 	8.2.3 	Impose credit sanctions, report to relevant government authorities or
      media in the event that Party A tries to avoid Party B’s inspection, delay
      in paying off principal and accrued interests or other material breaching
      activities; 
	 	 	 
	 	8.2.4 	Shall issue the loan amount to the Borrower in full as scheduled
      pursuant to this Agreement. 
	 	 	 
	 	8.2.5 	Keep the documents provided by Party A relating to Party A’s debt,
      financial status, productions and business confidential other than
      required laws or this Agreement; 
	 	 	 
	 	8.2.6 	Accelerate the loan according to Party A’s repayment.



Article Nine – Liability for Breach of Contract 

	9.1 	Upon the execution of this Agreement, both parties shall fulfill their
      respective obligations under this Agreement. The party that fails to
      fulfill its obligations under this Agreement shall be responsible for the
      liabilities for breach of contract. 







	9.2 	In the event that Party A prepays the loan without Party B’s written
      consent, Party B has the right to request the payment of interest as if
      the loan were paid off according to the schedule under this Agreement.
  
	 	 
	9.3 	If Party A fails to repay the principal and the accrued interest
      within the term provided in this Agreement, Party B has the right to
      request Party A to pay off the overdue within a certain period of time.
      Party A authorizes Party B to deduct an amount of deposit equal to the
      overdue loan from Party A’s accounts with Party B and charge a penalty
      interest 50% higher than the applicable interest rate provided in this
      Agreement on the overdue loan principal and charge compound interest on
      accrued interest payable. 
	 	 
	9.4 	If Party A fails to use the loan for the purposes provided in this
      Agreement, Party B has the right to suspend the loan, accelerate part or
      all of the outstanding loan balance or terminate this Agreement. Party A
      shall charge a penalty interest of 100 percent higher than the applicable
      interest rate provided in this Agreement on the part of loan that is
      misused starting from the occurrence of such misuse. 
	 	 
	9.5 	If Party A fails to repay the accrued interest for two payments during
      the term of this Agreement, Party B has the right to accelerate part or
      all of the outstanding loan balance. 
	 	 
	9.6 	Party B has the right to accelerate part or all of the outstanding
      loan balance if any of the following activities of Party A occurs:
  



	 	9.6.1 	Party A provides balance sheets and other financial data which are
      untrue or with material omission; 
	 	 	 
	 	9.6.2 	Does not cooperate or refuse to accept the inspection by Party B
      relating to the business operation and financial activities of Party A;
  
	 	 	 
	 	9.6.3 	Without Party B’s consent, transfer or otherwise dispose, or threaten
      to transfer or dispose Party A’s material assets; 
	 	 	 
	 	9.6.4 	Substantially all or all of the assets of Party A are possessed by
      third party creditors or their designees, and may cause material adverse
      impact on Party B; 
	 	 	 
	 	9.6.5 	Without Party B’s consent, sub-contracting, lease, transformation into
      stock company, cooperation, merger, acquisition, setting up joint-venture,
      spin-off, reducing registered capital, material assets transfer and other
      activities that may materially adversely affect the exercise of Party B’s
      rights hereunder. 
	 	 	 
	 	9.6.6 	change of the domicile, mailing address, business scope or legal
      representative of Party A that may materially adversely affect the
      exercise of Party B’s rights hereunder; 
	 	 	 
	 	9.6.7 	be involved in major litigations or deterioration of financial status
      of Party A that may materially adversely affect the exercise of Party B’s
      rights hereunder; 
	 	 	 
	 	9.6.8 	other activities that may materially adversely affect the exercise of
      Party B’s rights hereunder. 


Article Ten – Effectiveness of the Agreement, Amendment, and
Termination 

	10.1 	This Agreement becomes effective upon the execution of each party’s
      legal representative and affixing seals of each party. If the loan is
      guaranteed by a guarantee agreement, this Agreement becomes effective upon
      the execution of the guarantee agreement. 
	 	 
	10.2 	Party B has the right to terminate this Agreement and request Party A
      to repay the outstanding loan balance and accrued
      interest, if any of the following occurs: 







		10.2.1 	Party A fails to repay the loan
      according to the schedule under this Agreement; 
		 	 
		10.2.2 	Party A breaches its covenants; 
		 	 
		10.2.3 	Party A does not complies with the
      agreed financial targets; 
		 	 
		10.2.4 	Party A materially breaches this
      Agreement; 
		 	
  
		10.2.5 	The business operations of Party A is
      suspended, or Party A is dissolved, or its business license is revoked;
  
		 	 
	 	10.2.6 	Party A fails to provide other guarantees
      approved by Party B if the guarantee provided under this Agreement has
      changed and may adversely affect Party B’s rights; 
		 	 
	 	10.2.7 	Party A fails to notify Party B within 5 days
      after the occurrence of the following activity or fail to provide other
      guarantees approved by Party B: the guarantor of the loan under this
      Agreement is in the following situations, such as suspension of
      production, recession of business, cancelation of registration, its
      business license being revoked, bankruptcy, and suffering operating
      losses, resulting in the loss of all or part of its ability to provide
      guaranty for the loan; 
		 	
  
		10.2.8 	other material breach of contract
  



	10.3 	If Party A intends to extend the term of this Agreement, it shall
      submit the extension application 30 days before the expiration of this
      Agreement. Upon the consent of Party B and the execution of the extension
      agreement, the extension of the loan will become effective. 
	 	 
	10.4 	After this Agreement becomes effective, any party may not terminate
      the contract or amend the contract without other party’s consent.
  


Article Eleven – Dispute Settlement 

	11.1. 	If any dispute arises in the process that Party A and B implement this
      Agreement, both parties shall first try to solve the dispute through
      negotiation; if no such negotiation is successful, the parties shall
      submit the dispute to the local court where Party B has the domicile.
  


Article Twelve – Other Provisions that the Parties Have Agreed
Upon 

12.1 _____________________________________
12.2
_____________________________________
12.3
_____________________________________


Article Thirteen – Others 

	13.1. 	Any appendix attached to this Agreement is an integrated part of this
      Agreement and shall have the same legal effect as this Agreement. 
	 	 
	13.2. 	In the course of implementing this Agreement, if the date on which a
      party intends to draw the loan or repay the loan falls on a non-business
      day, such activity shall be conducted on the next business day. 







	 	 
	13.3. 	This Agreement is executed with three copies. Each of
      Party A, Party B and the Guarantor holds one copy and each has the same
      legal effect. 



	Party A (company seal): 	Party B (company seal): 
	Legal representative: /s/ Li Liu 	Legal representative: 
	Date: November 4, 2010