Yayi International Inc.: Exhibit10.1 - Filed by newsfilecorp.com






Exhibit 10.1

Loan Agreement 

(English Translation) 

Borrower: Milkgoat (China) Goat Dairy Co., Ltd. 

Lender: Tianjin Nankai Branch, Bank of Beijing Co., Ltd. 

Date: January 6, 2011




Terms of Loan Agreement 

Borrower: Milkgoat (China) Goat Dairy Co., Ltd.
Legal
representative/ principal: Li Liu 

Lender (Bank of Beijing ): Tianjin NanKai Branch, Bank of
Beijing Co., Ltd.
Legal representative/ principal: Mo Zhao 

In accordance with laws and rules of the People’s Republic of
China and on the basis of fairness, through negotiation, the parties reached the
following agreements: 

A Related Agreement (fill in if applicable):

This Related Agreement was signed by ____________________
acting as the Lender and the ________________ acting as the
Borrower.

B Amount and Period of the Loan:

B.1 Loan currency under this Agreement is RMB, loan
amount is RMB 10,000,000

B.2 The term of this Agreement begins at the first withdrawal
date and ends on 12 months after such date. 

B.3 The final maturity date of the loan is the date set forth
in Section B.2.

C Interest Rate (“v” means applicable, “x” means not
applicable, following is the same.)

C.1 If the loan currency under this Agreement is RMB, then the
interest rate is executed based on the benchmark interest rate as of the date of
first withdrawal: [ x ]interest rate goes up [5%][ x ] interest rate floats
down[ %]. The interest rate under this Agreement is floating in accordance with
Section 2.4 during the loan period.

C.2 If the loan currency under this Agreement is foreign
currency, the interest rate among ______ months is decided by with the base on
the HIBOR (applicable to Hong Kong dollars) or LIBOR (applicable to other
foreign currency), and the added basic point is not less than ( __BP),
the specific details refers to the record in the loan certificate approved by
Bank of Beijing.

C.3 The interest rate in the loan periods is floating
accordingly with Section 2.4 under this Agreement.

D Withdrawal Plan, Loan Usage, Account Supervision

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D.1 The Borrower may withdraw the principal within 3 days from
the Agreement date 

The specific withdrawal plan as following: withdrawal RMB
10,000,000 by January 6, 2011 

D.2 The usage of the loan by the Borrower under this
Contract:

[ x ] (c) The Borrower has the full discretion to disburse the
entire loan principal, and should report to Bank of Beijing about the
disbursement of loan principal regularly (i.e., each month).

D.3 The loan shall be transferred to the account of the
Borrower with Bank of Beijing with the Account No. ______________ (The account
can be changed with the consent of Borrower and Bank of Beijing, the changed
bank account should be reflected in the loan certificates.) The Borrower should
use this bank account to pay and accept the inspection and supervision from Bank
of Beijing.

D.4 The Account No. ____________________ is opened by the
Borrower with Tianjin Nankai Branch, Bank of Beijing with
Milkgoat (China) Goat Dairy Co., Ltd. as the account holder. This is a
capital deposit account (changeable with the consent of Bank of Beijing).The
Borrower should provide capital deposit and account transactions information to
Bank of Beijing regularly (each month) and covenant to cooperate with the
supervision of Bank of Beijing.

D.5 Bank of Beijing shall inspect, monitor and manage the above
account according to this Agreement. 

E Use of Loan

Supplemental Working Capital

F Principal Repayment Plan

Repay all the principals before maturity date, amortization of
principal as per the below agreements during the loan period:

[ x ] Repaid in a lump sum at the maturity date

[ x ] Equal monthly principal repayments, repayment of
principal one time on the date of 21st every month

[ x ] Equal quarterly principal repayments, repayment of
principal one time on the date 21st of the last month of each quarter


[ x ] Installment repayment as per the following plan, the loan
certificate shall prevail approved by the agreement of Bank of Beijing 

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G Interest Repayment Plan 

Pay off all outstanding interests by the maturity date,
amortization of interest as per the following agreements during the loan
period

[ x ] Monthly interest payment on an exact date (on the
21st date every month)

[ x ] Quarterly interest payment on an exact date (on the
21st date of the last month of each quarter)

[ x ] Interest payment on the next day of the corresponding day
of the past month, corresponding day means the same day as of every month
(referring to the last day of the current month if there exists no corresponding
day as the past month)

[ x ] Interest payment on the next day of the corresponding day
of the last month of every quarter, corresponding day means the same day as the
last month of each quarter (referring to the last day of the current month if
there exists no corresponding day as that of last month)

K The Major Financial Covenants of the Borrower:

(a) The ratio of tangible net assets(capital stock paid-up plus capital fund) to gross
liabilities exceeds [ ] 

(b) Minimum net assets not less than RMB( capital letter) [
] 

(c) Annual total pre-tax profit not less than RMB(capital
letter) [ ] 

(d) The ratio of current assets to current liabilities (i.e.
current ratio) not less than [ ] 

(e) The ratio of profit before tax to interest expense
(interest coverage ratio) not less than [ ]

M Security Interest (subject to security documents)

[ x ] Guaranty, guarantor’s name: Huaxia Jingu Guaranty Co.,
Ltd. 

[ ] Pledge, pledgor’s name _________

[ ] Mortgage guarantee, mortgagor’s name _________

[ ] Others, can be found in the special convention column under
this Agreement or related security documents.

N Expenses:

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N.1 Compensation of prepayment =prepaid principalx[ % ]
(annual compensation rate) x the number of years of loan left without
prepayment

N.2 The Borrower should pay loan arrangement fees at RMB_______
(capital letter) to Bank of Beijing within ______ days after the Agreement date
(not late than the first withdrawal date).

	U Appendix (loan, loan certificate and the
      following appendixes are the integral parts of this Agreement) 
	 
	 


W Notarization for Compulsory Enforcement

[ x ] Execute the compulsory enforcement notarization agreement
and complete notarization within _____ days of the Agreement[

 x ] There is no need to have a compulsory enforcement
notarization for this Agreement.

	X Special Agreement: 
	 
	 
	 
	 


Y The Borrower hereby Acknowledges:

The Bank of Beijing has reminded the Borrower to pay attention
to terms about related rights and obligations and fully demonstrated and
illustrated this Agreement, the amendments and supplements (if any) approved by
the two Parties have been written in the special convention column or
supplemental agreements; the Borrower completely understands and agrees with all
the content including terms of loan agreement, basic terms and contract appendix
after fully reviewing and negotiating with Bank of Beijing without any questions
or objections.

Z Signatures of the Parties:

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The Borrower (company seal): 

Legal representative or authorized representative: /s/ Li
Liu 

Bank of Beijing (company seal): 

Main principal or authorized representative: /s/ Mo
Zhao

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Loan Agreement Basic Items 

1. Definitions

	1.1 	
      In this AGREEMENT, the following terms shall have the
      respective definitions set forth in this Section
1.1.



This CONTRACT: includes the entire below documents: Terms of
Loan Agreement, Loan Agreement Basic Items, loan certificate signed by both
parties, other contract appendix listed in Section U and other documents legally
regulate both parties’ rights and obligation (include but not limited
supplementary agreement, letter of undertaking). 

Benchmark Loan Rate: refers to the RMB benchmark loan rate
announced by the People’s Bank of China of the same period (if this benchmark
loan rate of the same period has been canceled, refers to the interest rate
complying with laws announced by Bank of Beijing); benchmark loan rate of the
same period refers to the benchmark interest rate corresponding to the loan term
stipulated in Section B. 

LIBOR (HIBOR): refers to The London (Hong Kong) Interbank
Offered Rate released by Reuters or Bloomberg and other financial
telecommunication terminals at 11:00am London (Hong Kong) time on the same day,
if no rate data above available on that day, refers to the rate released on
latest day.

Security Document: refers to any guaranty contract, security
terms, conditions letter created in security and signed or agreed by guarantor.


Trustee Payment: means Bank of Beijing shall transfer the loan
principal to the Borrower counterparties meeting the purpose of this AGREEMENT
through the Borrower’s account according to the withdrawal application and
payment order of the Borrower’s.

Discretionary Payment: means the Borrower shall discretionarily
pay the loan to Borrower counterparties meeting the purpose of this AGREEMENT
after Bank of Beijing granting the loan to the Borrower’s account according to
the withdrawal application and payment order of the Borrower’s.

Laws and Regulations: means applicable laws, administrative
regulations and the judicial interpretation of the Supreme People’s Court in the
territory of the People’s Republic of China except Hong Kong, Macao and
Taiwan.

Finance Regulations: means the regulations, rules and orders
released and implemented by the People’ Bank of China, foreign exchange
authority and banking supervision authority.

Business Day: refers to any days commercial banks opening
general corporate banking business in cities which Bank of Beijing located,
excluding legal festivals and holidays, weekends (Saturday and Sunday), but
including the weekend provisionally designated as working days by the
government.

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1.2 In any documents under this AGREEMENT or created based on
this AGREEMENT, terms that have been defined in this AGREEMENT have the same
definition in those documents if no other clear explanations in those documents.


2. Loan

2.1 The loan currency, amount and period in this AGREEMENT
refer to Section B. The amount of each loan refers to the record in loan
certificate; loan certificate is part of this AGREEMENT. 

2.2 The Borrower can drawdown during the period agreed in
Section D in this AGREEMENT. The change of drawdown plan needs approval from
Bank of Beijing, the un-drawdown amount within the loan after expiration time
will be canceled automatically. The Borrower has to meet below requirements
(except for the conditions Bank of Beijing decides to waive) when apply for
drawdown, otherwise, Bank of Beijing has no obligation to issue loan.

1) Security document in Section M of this AGREEMENT has been
agreed, signed and registered;

2) The Borrower has set up the account and completed other
related procedure reasonably required by Bank of Beijing, has submitted
explanatory documents and evidence on capital expenditure purpose and capital
expenditure plan, which reviewed by Bank of Beijing. If the AGREEMENT is under
the credit line described in Section A, this AGREEMENT must retain enough
facility to draw for the Borrower;

3) No violation of the AGREEMENT from the Borrower, no
violation of the security document from the guarantor;

4) No significant negative impact on each Party when executing
this AGREEMENT from laws and regulations, financial regulation and governmental
credit policy, no forbiddance or limitation on loan issue and drawdown of this
AGREEMENT from laws and regulations, financial regulation and governmental
credit policy;

5) Other conditions agreed in this AGREEMENT and designated by
laws and financial regulations.

2.3 Bank of Beijing should grant the loan within 3 business
days once the Borrower meets the requirements. Once the loan has been
transferred to the Borrower’s account, which will be regarded as the drawdown
and usage of the Borrower, that day will be recorded as the drawdown day and be
the record day to calculate loan interest rate based on the AGREEMENT. When this
drawdown executed from time to time, each withdrawal will be started to
calculate loan interest on the execution day based on the benchmark loan rate on
that day and the floating interest rate designated by Section C of this
AGREEMENT. 

The loan shall be used with the adoption of trustee payment of
Bank of Beijing, (i) The Borrower should 

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submit complete business contract and related transaction
materials at least three days in advance (or other time limits reasonably
requested by Bank of Beijing), then Bank of Beijing shall verify whether all the
submitted materials comply with the AGREEMENT before issuing the loan. Bank of
Beijing shall record and transfer the loan to Borrower counterparties through
the Borrower’s account after Bank of Beijing’s agreement (there is no need to
provide voucher of clearing for another transaction for the Borrower). (ii) The
Borrower is responsible to loan delay or trustee payment delay causing by
submitting incomplete , not qualified or not timely documents or existing
reasonable disputed points. (iii) When there happens some accounts not the fault
of Bank of Beijing, such as the Borrower account status is not normal,
incomplete and inadequate transaction counterpart account information provided
by the Borrower or inter-bank payment systems or settlement systems, resulting
in failure payment or transaction to the transaction counterpart account when
the loan is transferred to the Borrower’s account, then the Borrower should bear
all the loss like handling charge settlement, loan interest, other loss and
delay. However Bank of Beijing should try and work hard to handle paid
procedures of Borrower transaction counterpart account or remain in the Borrower
account or pending subjects and inform the Borrower to handle procedures.

The loan shall be used in a discretionary payment way by the
Borrower. The Borrower should provide loan usage plan according to the
requirement of Bank of Beijing, and report loan payment status regularly to Bank
of Beijing as per Section D under this AGREEMENT after loan origination. Bank of
Beijing has the rights to examine if the loan payments comply with the AGREEMENT
through ways like analyzing account, identifying funds transfer certificate and
field investigation while the Borrower should cooperate with it.

Bank of Beijing has the right to monitor related account and
the usage of account funds through ways like rejecting checks sale, not dealing
with deposit and withdrawal, not opening online banking or phone bank.

Bank of Beijing has the right to require to change the usage
pattern of the loan when facing Borrower credit decline, poor profit ability of
the main business, unusual usage of loan, the Borrower should accept and
cooperate with Bank of Beijing meanwhile. 

2.4 The loan of this AGREEMENT is floating interest rate loan;
the floating interest settlement shall be the following: (i) For RMB loan, the
interest of this AGREEMENT is applied on the benchmark loan rate at the same
time and the floating interest rate described in Clause C.1 of this AGREEMENT,
with the adjustment of the benchmark loan rate at the same period, the interest
will be calculated on multi-stage basis. (ii) For foreign currency loan, the
interest of this AGREEMENT is applied on the corresponding currency LIBOR
(HIBOR) interest rate on last second day of foreign currency market opening
business before the interest execution day plus floating benchmark rate (1% in
100 basic points) regulated in Section C in this AGREEMENT; above automatic
adjustment should not be regarded as revise to this AGREEMENT. When contract
interest rate converts to daily rate from annual rate, the Hong Kong currency
rate shall apply on 365 days for one year, other foreign currency rate and RMB
rate shall apply on 360 days for one year. 

2.5 The Borrower should guarantee the loan usage is accordance
with the loan usage descried in Section E, 

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and guarantee the above usage will not violate any laws and
regulations and finance regulation, the Borrower warrants the loan will not be
applied to fixed assets, stock equity and other investments, not be applied to
any projects and business which are prohibited from using commercial bank loans
by laws, regulations and financial regulations. The Borrower needs to get
written approval from Bank of Beijing in the event of change of loan usage. The
Borrower warrants that the transaction documents, transaction counterpart status
information provided to Bank of Beijing are true, complete, legally effective
and are in accordance with the usage stipulated in this AGREEMENT.

2.6 The Borrower should repay the loan principal as agreed on
Section F in this AGREEMENT, and repay the loan interest as agreed on Section G
in this AGREEMENT; each of the interest payment date (including) to the next
interest payment date (excluding) constitute a interest period (the first
interest period starts from the withdrawal day, the last interest period ends at
the day loan principal dues); the related interest should be repaid when each
installment of loan principals repaid, the entire loan principals, related
interests and other payables should be repaid on the last due date. In case of
legal holidays, the Borrower should deposit enough amounts at the account in
advance for Bank of Beijing to deduct it on that day or the first working day
extended accordingly, the interest will continue to be calculated during
extension period. 

2.7 To repay the loan on time, the Borrower should open and
maintain an account in Bank of Beijing as described in the beginning of this
AGREEMENT ( if account number suffers changes, the changed account number should
continue to apply this AGREEMENT), and deposit the related repayment amount at
the account for Bank of Beijing deduction, the Borrower can also make transfer
to Bank of Beijing account for repayment and notice related transfer reference
number to Bank of Beijing in time. Bank of Beijing has the right to deduct the
unpaid due amount from all accounts opened at business institutions of Bank of
Beijing, and inform the Borrower in bank statement and other types of notice
after deduction. 

2.8 Bank statement generated internally in Bank of Beijing
should be the valid evidence for loan issue and principal and interests
repayment if no other ample opposite evidence. 

3. Prepayment and extension

3.1 The loan cannot be prepaid within withdrawal period. Both
parties should negotiate to consent if the Borrower requires for prepayment
after withdrawal period; the Borrower must submit irrevocable written
application to Bank of Beijing 30 days in advance, to explain the loan principal
amount of prepayment and left loan principal payment plan; after Bank of
Beijing’s review and agreement, the Borrower should execute prepayment on
prepayment date and pay prepayment compensation regulated in Section N of this
AGREEMENT to Bank of Beijing (the prepayment annual number should be the result
the actual days number from prepayment date to agreed loan due date divided by
365, keep two digitals after point), and repay the entire interests related to
the prepayment principal and repay other related payables, the left principal
should be repaid subject to the new plan agreed by Bank of Beijing (the latest
repayment day should not be late than latest due day), if no new repayment plans
submitted by the Borrower or agreed by both parties, reverse order repayment
(prepayment amount shall be firstly used for repaying latest due 

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amount) shall be executed; the contract interest rate shall not
be impacted by the prepayment and the new repayment period agreed on the new
repayment plan.

3.2 If the Borrower requires for extension, the Borrower must
submit written extension application to Bank of Beijing at least 30 days prior
to the maturity date, to explain repayment plan after extension, upon Bank of
Beijing’s approval and the Borrower’s satisfaction to related requirements of
Bank of Beijing, both parties sign extension agreement and go through extension
procedure based on the agreement. If disagree from Bank of Beijing regarding
extension or no extension agreement signed by both parties, the Borrower should
repay the loan based on the AGREEMENT. 

3.3 Bank of Beijing has the right to request the Borrower to
repay the loan in advance according to the recoup fund conditions (including but
not limited to funds the Borrower planned to repay returned in advance,
available liquidity of the Borrower’s are so sufficient that it can meet the
normal fund requirement after being repaid in advance). When receiving the early
prepayment notice from Bank of Beijing, the Borrower should repay the loan
quickly as per the requirements of loan principal and interest appointed by Bank
of Beijing. 

4 Representations and Warranties 

4.1 Each Party warrants and represents to the other Party: 

(1) It has the qualification and ability to enter into and
perform this AGREEMENT, the signature represents the party has acquired the full
authorization and can represent the party to sign this AGREEMENT.

(2) The execution and performance of this AGREEMENT does not
violate any regulations including organizational documents, laws, financial
regulations and other legal documents should be complied with; the Party has
obtained any necessary internal and external authorization, licensing and
completed registration procedures, and this AGREEMENT has the legally binding
and law enforcement power to the Party.

4.2 The Borrower covenants and agrees to perform the duties
before the completion of this AGREEMENT:

(1) The Borrower is and will be legally and validly existing
and operating continuously, will promptly process annual inspection and other
legal procedures. The Borrower will provide faithful and complete financial and
operating conditions and other contract related material information to the Bank
of Beijing before execution of this AGREEMENT and each withdrawal
application.

(2) Has adequate and legal repayment sources matches with the
repayment plan, has adequate debt paying capability.

(3) Legally compliant operation and management, comply with
requirements of environmental protection 

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laws and regulations, tax payment requirements and other
regulations; timely, legally and efficiently acquire the necessary approval and
certified documents.

(4) Provide complete, true and effective materials to Bank of
Beijing timely, cooperate with Bank of Beijing and let Bank of Beijing proceed
loan payment management, post-lending management and related inspection, accept
and positively cooperate with the Bank of Beijing, let Bank of Beijing inspect
and supervise the Borrower’s financial and operational conditions as well as
loan usage under this AGREEMENT. It includes but not limits to:

(i) As per the requirements of Bank of Beijing, the Borrower
should reasonably illustrate the capital flows of each loan and provide related
payment documents and payment basis, to certify it is compliant with this
AGREEMENT.

(ii) Provide audited complete financial statements (including
remarks), audit report to Bank of Beijing before the end of April, also provide
balance sheet, income statement, cash flow statement, and attested copies of the
financial statements at the first month of each quarter (should provide audited
complete statements and audit report if the Borrower has audited half-year or
quarterly financial statements) of the end of last quarter.

(5) Adhere to the principles of honesty and trustworthiness,
all the application documents, financial statements and other documents and
information provided to Bank of Beijing should be true, complete, legal, and
effective. There is no fraud, material omissions and materially misleading.

(6) If the Borrower plans to consolidate, divide, reduce its
registered capital, apply for rectification of business, being taken over,
dissolution, bankruptcy or other events impacting the existence of the principal
part or persist operation, or proceed stock transfer, invest abroad, substantial
increase in debt financing, the Borrower should notice in writing to Bank of
Beijing at least 30 days in advance and acquire the written consent of Bank of
Beijing. If the third party of the executive/judicial institutions command the
Borrower to close the business, be taken over, dissolved or bankrupted, suspend,
or cancel the business license of the main business or principal business, then
the Borrower should notice in writing to Bank of Beijing quickly (not later than
3 working days), and take measures to remedy. 

(7) the Borrower shall provide written notice to Bank of
Beijing as soon as possible but in no event later than five business days after
the Borrower changes its business registration, its top ten shareholders,
directors, chief financial officer or mailing address. 

(8) the Borrower shall inform and obtain prior written consent
from Bank of Beijing when it provides security interest to third party (or debt
undertaking and other arrangements with security function), or enter into
partnership or subcontracting with third party, or waive its materials
creditor’s rights, or acquisition and restructuring, or assign of its major
business or other enter into similar transactions with possibility of
undermining its debt repayment ability or other material and adverse events
affecting the debt paying ability. 

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(9) the Borrower shall timely provide written notice to Bank of
Beijing for its related transactions with total amount reaching or exceeding ten
percent of its net assets which shall include the relationship of transaction
parties, transaction purpose and nature, transaction amount or relevant
proportion, pricing standards (including the transactions with notional amount
or without any price), and so on. The related parties and related transactions
shall be defined by the Chinese accounting standards applicable to the Borrower
or the international accounting standards. The Borrower shall not draw out its
registered capital or make fake transactions to fraudulently obtain bank loan or
facility, or to escape from debt by transferring its assets, or conducting
related transactions or other unjustifiable transactions to significant impair
its debt repayment ability.

(10) the Borrower shall always comply with its warranties under
Section K and properly maintain relevant financial criteria within stipulated
scope (as calculated by the Chinese accounting standards applicable to the
Borrower or the international accounting standards). 

(11) the Borrower shall not distribute bonds or dividend to its
shareholders where its net profit is zero or minus after taxation, or profit
after tax is insufficient to compensate its accumulated losses, or its profit
before tax is insufficient to repay the next installment of loan principal and
interest.

(12) the Borrower shall provide Bank of Beijing with agreed
security under Section M before the first drawdown date as the latest time
(specifically refer to the security documents), and the Borrower undertakes to
maintain the pledge ratio and mortgage ratio within the stipulated range in the
security documents (if any). The Borrower is fully aware of, agree with and
accept the clauses and contents of the security documents and guaranties that
relevant security interests provided to the Bank of Beijing under relevant
security documents are legally valid and enforceable.

5. Taxes and Expenses

The Borrower and the Bank of Beijing bear the stamp duty tax
individually and respectively under this AGREEMENT. The taxes levied by the
governmental bodies and administrative charges, notarization fees (if any) and
security fees (if any) shall be borne by the Borrower except for the taxes and
expenses statutorily borne by the Bank of Beijing. In addition, the Borrower
shall pay loan arrangement fee to the Bank of Beijing pursuant to Section N.2 of
this AGREEMENT.

6. Defaults and Remedies

6.1 The occurrence of any one or more than one events below
constitutes the Borrower’s event of default.

	(1) 	
      The Borrower fails to use the loan as stipulated or fails
      to pay the loan or to pay the principal, interest or other payables in
      full or in time as stipulated in this AGREEMENT.

	 	 
	(2) 	
      The loan application or application withdrawal documents
      or other material representations or



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      statements are fraud, untrue, materially misleading, or
      the Borrower fails to (or expressly states or indicates by its act that it
      will not) properly fulfill its undertakings, warranties, obligations and
      duties under this AGREEMENT.

	 	 
	(3) 	
      Any guarantor fails to completely or properly fulfill its
      undertakings, guarantees, obligations or liabilities in the security
      documents, or the occurrence of other event of default under the security
      documents, or the mortgaged property/pledged property (if any) suffers
      damage or loss or title transfer or freezing/seizing/enforcement, or
      either the security documents or the Bank of Beijing’s security interest
      therein becomes invalid or be revoked/dissolved without the prior consent
      from the Bank of Beijing.

	 	 
	(4) 	
      The Borrower’s any important financing, security,
      compensation or other debt liability could not be performed when due; or
      its major business or business permit is suspended or deregistered; or it
      goes into the procedure of business rectification or being taken over or
      dissolution or bankruptcy.

	 	 
	(5) 	
      The Borrower’s financial or operation condition
      encounters significant negative change or generates unsound credit record,
      or is subject to any administrative penalties or disputes affecting its
      ability of repaying debts or performing this AGREEMENT, or there occurs
      other events seriously affecting the Bank of Beijing ‘s creditor’s rights
      or security interest.



6.2 When failing to make full repayment to any due principal
and/or interest and/or other payables, the Borrower shall pay the penalty
interest on the outstanding amount calculated by 50% in addition to the
contracted interest rate (the “Default Interest Rate”) on daily basis.

Where the Borrower’s usage of loan is in breach of this
AGREEMENT or the laws and financial regulations, it shall make full repayment of
the used principal and accrued interest immediately and also pay the penalty
interest on the misused portion of loan calculated by 100% adding to the
contracted interest rate (the “Misusage Default Interest Rate”) on a daily basis
during the misusage period. Where the loan is both overdue and in misusage, the
Misusage Default Interest Rate shall be applied. Such default interest shall not
prejudice other rights and remedies enjoyed by the Bank of Beijing.

6.3 When the event of default occurs, the Bank of Beijing has
the right to exercise its remedial rights according to this AGREEMENT and/or any
laws, regulations and financial regulations, including but not limited to claim
for Borrower’s rectification, amendment of loan usage, ceasing of providing
drawdown, penalty interest, charging default interest, exercising security
rights, acceleration of loan partially or fully, urging repayment by public
announcement, loss compensation and for compensation on the costs and expenses
accrued from exercising its creditor’s right and security right (including but
not limited to litigation/arbitration fees, estimation/verification/auction
fees, attorney fee, evidence collection fee, travel cost and other reasonable
expenses generated).

6.4 When the currency of money paid/compensated by the Borrower
or third party is different from the currency of money owed by the Borrower, the
Bank of Beijing could apply relevant exchange rate to make relevant conversion
to offset the debts. The exchange loss and cost shall be borne by the Borrower,
and the Borrower is obliged to cooperate with the Bank to conduct such
conversion.

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6.5 The Bank of Beijing shall use the money resumed to offset
the debts in the order as follows:

(1) the costs and expenses occurred from exercising creditor’s
right or security right and other expenses to the account of the Borrower; (2)
compensation and default penalty; (3) default interest; (4) loan interest; (5)
loan principal; (6) other payables of the Borrowers. However, the Bank of
Beijing is entitled to change the aforementioned order, and when the Borrower
owes several overdue debts to the bank, the Bank of Beijing could determine the
sequence of repayments to such debts.

6.6 If a party encountered Force Majeure event and
provided the other Party with certificate of the Force Majeure event
issued by competent authority within five business days upon occurrence of such
event, it could be exempted from the default liability. For the avoidance of
doubt, although the Borrower’s default liability could be exempt due to the
Force Majeure, it is still obliged to pay the principal and interest and
the cost and expenses of the Lender’s exercising creditor right and security
right.

7. Applicable Law and Dispute Resolution 

7.1 This AGREEMENT is governed by PRC laws and regulations. All
disputes under this AGREEMENT or in relation shall be firstly settled by
friendly consultation; and, if not workable, then the dispute shall be submitted
to the People’s Court with the jurisdiction in the area where the Bank of
Beijing is domiciled.

7.2 The matters of applicable law and dispute resolution
concerning the security interest shall be subject to written agreement in the
security documents. If there are no provisions in the security documents
addressing such matters, the PRC laws and regulations shall be applicable and
dispute thereunder shall be submitted to the People’s Court where the Bank of
Beijing is domiciled.

8. Miscellaneous 

8.1 This AGREEMENT is the specific business contract under the
related contract (if any) as described in Section A. Any issue not stipulated in
this AGREEMENT is subject to relevant agreement in the related contract. If
there are any discrepancies, this AGREEMENT shall prevail. Where there is any
discrepancy between other clauses of this AGREEMENT and Section X, Section X
shall prevail. The appendixes listed in Section U are parts of this AGREEMENT.
Where there is any discrepancy between the main part of this AGREEMENT and the
appendixes, the latter shall prevail.

8.2 Any document or notice sent by a Party to the other Party
is subject to the following rules: (1) if delivery by itself or any its agent,
the date of signature on receipt by the receiving party shall be the delivery
date; (2) if mail or registered mail is used, the delivery date shall be the
third day following the mailing day; (3) if other post method is adopted, the
seventh day shall be the delivery day following the mailing day. If the delivery
date determined by aforesaid rules is distinct from the actual receipt or
signature day, the earlier day shall be the delivery day. To avoid
misunderstanding, the parties confirm 

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that upon the request of the Bank of Beijing, the Borrower
shall cause its own person to make delivery to the authorized person of the Bank
of Beijing. If any party changed its contact information, it shall timely notify
the other Party. Otherwise, the previous contact method shall be deemed as
effective by the other party.

8.3 The Bank of Beijing may pass the information relating to
this AGREEMENT to the credit reference system or database maintained by relevant
governmental authority.

8.4 Unless otherwise stipulated in this AGREEMENT, any Party
shall bear confidentiality obligation to the other Party with regard to the
commercial secrets obtained during the negotiation and performance of this
AGREEMENT and other nonpublic information informed confidentially by the other
Party before such information becomes public. One Party shall not disclose such
information to the public or any third party without written consent from the
other Party, provided that, one Party’s disclosure as required by laws and
regulations or order from authority or stock exchange rules or to its auditor,
financial/legal adviser, or other agency for the purpose of this AGREEMENT (the
party shall require such persons receiving information to undertake
confidentiality obligation) shall not be deemed as breach of this AGREEMENT.

8.5 The effectiveness of this AGREEMENT is independent from the
security interest documents, related contracts (if any) and any other
agreement/contract/covenants. That any clause or content of this AGREEMENT
becomes revocable or invalid shall not affect the effectiveness of the other
clauses or contents of this AGREEMENT. 

8.6 This AGREEMENT is entered into between the Borrower and the
Bank of Beijing on the contract date and in the place of the domicile of the
Bank of Beijing and becomes effective upon the signatures by the parties’ legal
representatives or responsible persons or authorized signatories as well as
affixation of their company seals. This AGREEMENT is in three originals (more
originals will be executed for the notarization or security interest
registration purpose if in need). The Bank of Beijing holds two originals and
the Borrower holds another one. Each original shall be equally effective. If
there is any security interest provider, the Borrower shall be responsible to
provide it a copy of this AGREEMENT, but the failure of Borrower to do so shall
not impact the Bank of Beijing’s creditor right and security interest.

(Intentionally left blank below)

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