Document:

Exhibit 10.5

 

BANK OF JILIN

 

Mortgage Contract

 

 

The Mortgagor: Jilin Cathay Industrial Biotech Co., Ltd.

 

The Mortgagee:                   

 

 

No. Bank of Jilin               Branch 2009 Mortgage 2009-3-025

 

 

Mortgage Contract

 

The Mortgagor: Jilin Cathay Industrial Biotech Co., Ltd.

 

Business license No.: 220200400000472

 

Legal representative/responsible person: Zhang Qixian

 

Domicile: 10/R, 16/F, Torch Mansion, No. 6 Shenzhen Street, Hi-Tech Zone, Jilin    Zip code:                 

 

Opening bank and account: Jilin Branch, Bank of Communications, 222511501018010013375

 

Tel: 0432-6562157            Fax:

 

(Other relevant information)                                 

 

The Mortgagee:  Jilin Jiangbei Branch, Bank of Jilin Co., Ltd.

 

Legal representative/responsible person:  Li Chengcheng

 

Domicile: No. 67 Xiangtan Street, Longtan District, Jilin City Zip code: 132022

 

Tel: 0432-3038986  Fax: 0432-3022987

 

To guarantee the discharge of the liabilities under the principal contract as set forth in Clause 1 hereof, the Mortgagor is willing to, for the claim of the Mortgagee, create mortgage security over the properties legally owned by it and contained in the List of Mortgaged Properties attached hereto. Both Parties enter into this Contract through equal consultation. Except as otherwise agreed in this Contract, the terms and expressions used herein shall have the same meanings ascribed thereto in the principal contract.

 

Clause 1 Principal Contract

 

The principal contract of this Contract shall be Item 1 of the following:

 

1.               The RMB Loan Contract No. Bank of Jilin Jiangbei Branch 2009 Mortgage 2009-3-025 signed by the Mortgagee and Jilin Cathay Industrial Biotech Co., Ltd. and any revisions or additions thereto.

 

2.               The credit line agreement No.                         signed by the Mortgagee and                 .

 

3.                                                  .

 

1

 

Clause 2 Principal Claim

 

The claim under the principal contract shall constitute the principal claim hereunder, including loan principal, interests thereon (including statutory interests, agreed-upon interests, compound interests and penalty interests), liquidated damages, damages, the expenses for realizing the claim (including but not limited to litigation fees, attorney fees, notarization fees and enforcement fees) and the losses and other expenses suffered by the Mortgagee due to default of the Debtor (the guaranteed person).

 

Clause 3 Mortgaged Properties

 

The relevant information on the mortgaged properties is set forth in the List of Mortgaged Properties attached hereto.

 

If the mortgaged properties are damaged, lost or expropriated within the mortgage period, the Mortgagee may have the priority to be discharged from the insurance benefits, indemnities or compensation obtained therefrom. If the time limit for discharge of the guaranteed claim does not expire, such insurance benefits, indemnities or compensation may be submitted to the competent authorities.

 

Clause 4 Registration of Mortgage

 

If the procedures for registration of mortgage are required according to law, the Mortgagor and the Mortgagee shall, within 7 days upon signing this Contract, handle the procedures for registration of mortgage with the competent registration authorities.

 

If the procedures for change in registration are required according to law in case of any change in the registered matters, the Mortgagor and the Mortgagee shall, within 7 days upon such change, handle the procedures for change in registration with the competent registration authorities.

 

Clause 5 Possession and Maintenance of the Mortgaged Properties

 

The mortgaged properties hereunder shall be subject to the possession and maintenance by the Mortgagor, but all ownership certificates of the mortgaged properties shall be delivered to the Mortgagee. The Mortgagor agrees to permit the Mortgagee and any entity or person appointed by the Mortgagee to inspect the mortgaged properties from time to time and provide appropriate assistance therefor.

 

The Mortgagor shall properly keep, protect and maintain the mortgaged properties, take appropriate measures to ensure the safety and integrity of the mortgaged properties. If any repair is required for the mortgaged properties, the Mortgagor shall timely do so at its own expenses.

 

Without written consent of the Mortgagee, the Mortgagor shall not transfer, lease, lend, invest in kind, change, rebuild or otherwise dispose of the mortgaged properties in whole or

 

2

 

in part. The proceeds from disposal of the mortgaged properties, upon the written consent of the Mortgagee, shall be used to discharge the claim in advance or submit to the third party as designated by the Mortgagee.

 

Clause 6 Decrease in the Value of the Mortgaged Properties

 

If any act of the Mortgagor will decrease the value of the mortgaged properties before the principal claim hereunder is fully discharged, the Mortgagee may require the Mortgagor to stop its act. In case of decrease in the mortgaged properties, the Mortgagee may require the Mortgagor to restore the value of the mortgaged properties, or provide additional securities equivalent to the decreased value and acceptable to the Mortgagee. If the Mortgagor fails to restore the value of the mortgaged properties and to provide additional securities, the Mortgagee may require the Debtor to discharge the debt in advance. If the Debtor fails to do so as required by the Mortgagee, the Mortgagee may exercise its mortgage right.

 

If the mortgaged properties are lost or devalued duet to natural disasters, accidents or tort or otherwise, the Mortgagor shall immediately take measures to prevent the losses from being expanded and immediately notify the Mortgagee thereof.

 

Clause 7 Fruits

 

If the mortgaged properties are seized by the people’s court according to law because of the Debtor’s failure to discharge the claim due or occurrence of other circumstances for realization of mortgage right as agreed in this Contract, the Mortgagee may collect the natural or legal fruits of the mortgaged properties from the date of such seizure, except the Mortgagee fails to notify the obligator who shall pay the legal fruits.

 

The fruits above shall firstly be used to discharge the expenses for collecting such fruits.

 

Clause 8 Insurance of the Mortgaged Properties (Select 1 of the following: 1. applicable, 2. not applicable. )

 

The Mortgagor shall effect the insurance for the mortgaged properties with the insurer and according to the coverage and insurance term as determined through consultation with the Mortgagee. The limit of insurance shall not be less than the appraised value of the mortgaged properties, and the provisions in the policy shall conform to the requirements of the Mortgagee and shall contain no limitations that may damage the rights and interests of the Mortgagee. The Mortgagee shall be the sole beneficiary under the insurance contract. If the mortgaged properties are damaged or lost within the mortgage period, the Mortgagee may have the priority to be discharged from the insurance benefits obtained therefrom.

 

Before the principal claim hereunder is fully discharged, the Mortgagor shall not suspend, terminate, revise or change the policy for any reason, and shall take all reasonable and necessary measures to maintain the insurances hereunder in full force and effect. If the Mortgagor violates the said provisions, the Mortgagee may continue to effect insurance for the mortgaged properties, at the insurance premium of the Mortgagor.

 

3

 

The original of the insurance policy shall be kept by the Mortgagee until the principal claim hereunder is fully discharged.

 

In case of occurrence of insured accident regarding the mortgaged properties within the valid term of this Contract, the insurance benefits shall, as the mortgaged properties, be used to discharge the claim of the Mortgagee or submitted to the competent authorities, or used to restore the value of the mortgaged properties as agreed by the Mortgagee.

 

Clause 9 Security Liability

 

If the Debtor fails to make repayment to the Mortgagee by any regular repayment date or earlier repayment date under the principal contract, the Mortgagee may exercise its mortgage right according to law and pursuant to this Contract.

 

“Regular repayment date” as referred to above shall mean the date, as agreed in the principal contract, of repayment of the principal, payment of the interests thereon or payment of any amounts by the Debtor to the Mortgagee according to the principal contract. “Earlier repayment date” as referred to above shall mean the date of repayment in advance as proposed by the Debtor and approved by the Mortgagee, and the date of recovery in advance of the principal and interests and/or other amounts claimed by the Mortgagee against the Debtor pursuant to the principal contract.

 

Clause 10 Time Period for Exercise of Mortgage Right

 

After the security liability is established, the Mortgagee shall exercise its mortgage right within the limitation of actions for the principal claim.

 

If the principal claim will be discharged in installments, the Mortgagee shall exercise its mortgage right prior to expiration of the limitation of actions calculated based on the last installment of the claim.

 

Clause 11 Realization of Mortgage Right

 

After the security liability is established, the Mortgagee shall be entitled to convert the mortgaged properties into money to offset the principal claim or have priority in satisfying its principal claim from the proceeds of auction or sale of the mortgaged properties, through agreement with the Mortgagor. If both Parties fail to reach an agreement, the Mortgagee may request the people’s court to auction or sell the mortgaged properties according to law.

 

After the expenses for disposing of the mortgaged properties and the expenses payable by the Mortgagor to the Mortgagee hereunder are paid in priority from the proceeds obtained from disposal of the mortgaged properties, the balance thereof shall be used to discharge the principal claim.

 

4

 

In case of concurrent existence of other securities in rem or guarantees for the principal claim besides the mortgage hereunder, the Mortgagee’s rights hereunder and their exercise shall not be affected thereby and the Mortgagor shall not counter the Mortgagee by virtue thereof.

 

Clause 12 Relationship between this Contract and the Principal Contract

 

If the parties to the principal contract terminate the principal contract or cause the principal contract to expire in advance, the Mortgagor shall bear the security liability for the claim already accrued under the principal contract.

 

The Mortgagor agrees that, the parties to the principal contract may, without consent of the Mortgagor, amend the provisions contained in the principal contract unless any change in the concerned amount, term or otherwise will increase the amount of the principal claim or extend the term of the principal contract, and in such case, the Mortgagor shall still bear the security liability for the amended principal contract within the scope of the mortgaged properties.

 

If, for any of the said amendments requiring consent from the Mortgagor pursuant to this Contract, the written consent is not obtained from the Mortgagor or the Mortgagor refuses to agree to such amendment, the Mortgagor will not bear the security liability for increased amount of the principal claim, and the time period for exercise of the mortgage right shall be the originally agreed time period although the time limit for performance under the principal contract is extended.

 

If other mortgagees are entitled to mortgage right over the mortgaged properties hereunder, any of the said amendment made without written consent of other mortgagees shall not adversely affect other mortgagees.

 

The Mortgagee may, without consent from the Mortgagor, entrust other branches of the Bank of Jilin to exercise the rights or perform the obligations under the principal contract in whole or in part or transfer the claim under the principal contract to any third party, and in such case, the security liability of the Mortgagor shall not be reduced or exempted, and the Mortgagor shall assist the Mortgagee and such third party to properly handle the procedures for change or registration as required by law.

 

Clause 13 Representations and Undertakings

 

The Mortgagor makes the following representations and undertakings:

 

1. The Mortgagor has full capacity of civil rights and acts required for execution and performance of this Contract, and has legal ownership of or the right to dispose of the mortgaged properties. In case of non-natural person, the Mortgagor shall be registered according to law and validly existing;

 

5

 

2. There are no co-owners over the mortgaged properties, or the written consents on mortgage have been obtained by the Mortgagor from the co-owners, if any. The Mortgagor agrees to deliver such written consents (if any) to the Mortgagee prior to signing of this Contract;

 

3. The Mortgagor has fully understood the contents of the principal contract, its execution and performance of this Contract represents its true declaration of will, and it has obtained legal and valid authorization according to its articles of association or other internal constitutions;

 

If the Mortgagor, as a company, is not the Debtor under the principal contract, the security provided by it has been approved by resolution adopted by the board of meeting, shareholders’ meeting or shareholders’ general meeting according its articles of association; if the total amount of securities and the amount of single security are limited in its articles of association, the security hereunder does not exceed the said limit.

 

Execution and performance of this Contract will not violate any contract, agreement or other legal instruments binding upon the Mortgagor; the Mortgagor has obtained any approval, permit, filing or registration required for the mortgage hereunder;

 

4. All documents and materials provided by the Mortgagor to the Mortgagee are accurate, true, complete and valid;

 

5. The Mortgagor does not conceal with the Mortgagee any security interests existing over the mortgaged properties as of the date of signing this Contract;

 

6. If additional security interest will be created over the mortgaged properties, the mortgaged properties are sealed up or are involved into major litigation or arbitration, the Mortgagor shall notify the Mortgagee within one week thereafter; and

 

7. In case the mortgaged properties are construction in progress, the Mortgagor acknowledges that no third parties have any priority for repayment against such mortgaged properties; if any third party has the said priority, the Mortgagor shall cause such third party to issue a written statement on waiver of such priority, which shall be delivered to the Mortgagee.

 

Clause 14 Disclosure of Affiliates and Affiliated Transactions in the Mortgagor’s Group

 

It is agreed by both Parties, Item 1 of the following provisions shall apply:

 

1. The Mortgagor does not fall into the category of group client as determined by the Mortgagee in accordance with the Guidelines on the Management of Risks of Credits Granted by Commercial Banks to Group Clients (“the Guidelines”).

 

2. The Mortgagor falls into the category of group client as determined by the Mortgagee in accordance with the Guidelines. The Mortgagor shall timely inform the Mortgagee of any affiliated transaction involving more than 10% of its net assets, including the affiliated

 

6

 

relationship between the parties in transaction, the project, nature, amount and proportion of the transaction and the pricing policy (including those without price or merely with nominal price).

 

Clause 15 Event of Breach and Liability for Breach

 

Any of the following events shall constitute or be deemed as an event of breach of the Mortgagor hereunder:

 

1. The Mortgagor, in violation of the provisions contained herein, transfers, leases, lends, invests in kind, changes, rebuilds or otherwise disposes of in whole or in part the mortgaged properties without approval by the Mortgagee;

 

2. The Mortgagor prevents in any way the Mortgagee from disposing of the mortgaged properties according to law and pursuant to this Contract;

 

3. The Mortgagor fails to provide relevant securities to the satisfaction of the Mortgagee in case of devaluation of the mortgaged properties as descried in Clause 6 hereof;

 

4. Any representation made by the Mortgagor herein is untrue, or any undertaking made by it herein is violated by it;

 

5. The Mortgagor violates other provisions regarding the rights and obligations of the parties as agreed herein;

 

6. The Mortgagor stops its business operation or is dissolved or cancelled or is bankrupt; or

 

7. The Mortgagor has any breach under other contracts between it and the Mortgagee or other branches of the bank of Jilin.

 

In case of occurrence of any event of breach above, the Mortgagee may take one or more of the following measures as the case may be:

 

1. Require the Mortgagor to rectify its breach within a stipulated time limit;

 

2. Reduce, suspend or terminate the credit line in whole or in part granted to the Mortgagor;

 

3. Suspend or terminate in whole or in part acceptance of any business application under other contracts between the Mortgagor and the Mortgagee, and suspend or terminate in whole or in part any extension of loan not extended and handling of any bond not handled;

 

4. Declare acceleration of maturity of any loan principal, interests thereon and other payables outstanding in whole or in part under other contracts between the Mortgagor and the Mortgagee, and require the Mortgagor to immediately repay all loan principals already extended, interests thereon and other payables;

 

7

 

5. Terminate this Contract and terminate other contracts between the Mortgagor and the Mortgagee in whole or in part;

 

6. Require the Mortgagor to indemnify the Mortgagee the losses caused by the Mortgagor’s breach;

 

7. Exercise the mortgage right; and

 

8. Seek other lawful remedies deemed as necessary and practicable by the Mortgagee.

 

Clause 16 Reservation of Rights

 

No failure by either party to exercise any or all rights hereunder or require the other party to perform or bear its obligations or liabilities in whole or in part shall operate as waiver by such party of such rights, obligations or liabilities.

 

No grace, extension of time or delay in exercise of any rights by either party shall affect any rights available hereunder or at law, nor operate as a waiver of such rights.

 

Clause 17 Amendment, Modification and Termination

 

This contract may be amended or modified only upon a written agreement reached by both Parties through negotiation; any amendment or modification so made shall be of equal legal effect as this Contract.

 

Except as otherwise stipulated by laws or regulations or agreed by both Parties, invalidity of any provisions of this Contract shall not affect the legal validity of the remaining provisions.

 

Clause 18 Applicable Law and Dispute Resolution

 

This contract shall be governed by the law of the P.R.C.

 

Any dispute arising out of performance of this Contract may be solved firstly by both Parties through consultation. If such dispute cannot be solved through consultation, it is agreed by both Parties the same dispute resolution method as that agreed in the principal contract shall apply.

 

Pending the dispute, the provisions hereof other than those under dispute shall continue to be performed if they are not affected by the dispute.

 

Clause 19 Enforcement

 

The Mortgagor is willing to be subject to enforcement in case the borrower or the Mortgagor fails to perform or fully perform its obligations as agreed herein.

 

8

 

Clause 20 Expenses

 

Except as otherwise required by law or as otherwise agreed by both Parties, the Mortgagor shall solely bear all fees and expense (including attorney fees) arising out of execution, performance and dispute resolution of this Contract.

 

Clause 21 Appendixes

 

The following appendixes and other attachments as mutually confirmed by both Parties shall have the same legal validity as this Contract:

 

1. List of Mortgaged Properties

2.                                          .

 

Clause 22 Miscellaneous

 

1. Without written consent of the Mortgagee, the Mortgagor shall not assign or transfer any of its rights or obligations hereunder to any third party.

 

2. It is agreed by the Mortgagor that, the Mortgagee may, as required by its business, entrust other branches of the Bank of Jilin to perform this Contract. Other branches of the Bank of Jilin as authorized by the Mortgagee may exercise all right hereunder, and may bring a lawsuit with the court and apply for any dispute hereunder.

 

3. Without prejudice to other provisions contained herein, this Contract shall be binding upon and inure to the benefits of each party and its successors and assigns.

 

4. Except as otherwise agreed, the domicile of each party as stated in this Contract shall be the address for its communication and contact; and in case of any change in the said address, it shall notify in writing the other party thereof within one week upon such change.

 

5. All headings and business’s names in this Contract are only for reference, and shall not affect the interpretation of the provisions and rights and obligations contained herein.

 

Clause 23 Effective of this Contract and Creation of the Mortgage Right

 

This contract shall become effective from the date when it is signed by the legal representative, responsible person or authorized representative of each party and affixed with the common seal of each party; however, if the procedures for registration of mortgage are required according to law, this Contract shall become effective from the date when such procedures are properly handled. In case the Mortgagor is a natural person, this Contract shall be signed by the Mortgagor in person and the consent of the co-owners of the mortgaged properties (if any) shall be obtained.

 

The mortgage right shall be established when this Contract becomes effective; however, if the procedures for registration of mortgage are required according to law, the mortgage right shall be established when such procedures are properly handled.

 

9

 

This contract shall be executed in six originals, of which each party and the Debtor shall hold           respectively, each being of equal legal effect.

 

 

	
Legal   representative or authorized representative:
    	
 
    
	
 
    	
 
    
	
By:   
    	
/s/ Zhang Qixian
    	
 
    
	
 
    	
 
    
	
For and on behalf   of
    	
 
    
	
 
    	
 
    
	
The Mortgagor   (seal): Jilin Cathay Industrial Biotech   Co., Ltd.
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
August 24,   2009
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Legal   representative or authorized representative:
    	
 
    
	
 
    	
 
    
	
By:  
    	
/s/ Li Chengcheng
    	
 
    
	
 
    	
 
    
	
For and on behalf   of
    	
 
    
	
 
    	
 
    
	
The Mortgagee   (seal): Jilin Jiangbei Branch, Bank of   Jilin Co., Ltd.
    	
 
    
	
 
    	
 
    
	
August 24,   2009
    	
 
    

 

10

 

Appendix:

 

List of Mortgaged Properties

 

	
Name of
   mortgaged
   properties
    	
 
    	
Quantity
    	
 
    	
Appraised value
    	
 
    	
Ownership/right to use
    (Ownership certificate
   No.)
    	
 
    	
Registration
   authority
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

11

 

BANK OF JILIN

 

 

Guarantee Contract

 

 

The Guarantor: Shandong Cathay Biotechnology Co., Ltd.

 

 

The Creditor:                

 

 

No. Bank of Jilin                Branch 2009 Guarantee 2009-3-025

 

 

Guarantee Contract

 

The Guarantor: Shandong Cathay Biotechnology Co., Ltd.

 

Business license No.: 370800400000142

 

Legal representative/responsible person: Du Yijun

 

Domicile: Waihuan Road East, South to National Highway 327, Hi-Tech Development Zone, Jining  Zip Code:      

 

Opening bank and account: Jining High & New Tech Industries Development Zone Branch, Bank of Agriculture, 498101040008521

 

	
Tel: 0537-2080023
    	
Fax:                            
    	
 
    

 

(Other relevant information)

 

The Creditor: Jilin Jiangbei Branch, Bank of Jilin Co., Ltd.

 

Legal representative/responsible person:  Li Chengcheng

 

Domicile: No. 67 Xiangtan Street, Longtan District, Jilin City  Zip code:132022

 

Tel: 0432-3038986  Fax:0432-3022987

 

To guarantee the discharge of the debt under the principal contract as described in Clause 1 hereof, the Guarantor is willing to provide the guarantee to the Creditor. Both parties reach this Contract through equal consultation. Except as otherwise agreed in this Contract, the terms and expressions used herein shall have the same meaning as ascribed to them in the principal contract.

 

 

Clause 1 Principal Contract

 

The principal contract of this Contract shall be Item 1 of the following:

 

1. The RMB Loan Contract No. Bank of Jilin Jiangbei Branch 2009 Mortgage 2009-3-025 signed by the Creditor and Jilin Cathay Industrial Biotech Co., Ltd. and any revisions or addition thereto.

 

2. The Credit Line Agreement No.                         signed by the Creditor and                 .

 

3.                                          .

 

1

 

Clause 2 Principal Claim

 

The claim under the principal contract shall constitute the principal claim hereunder, including loan principal, interests thereon (including statutory interests, agreed interests, compound interests and penalty interests), liquidated damages, damages, the expenses for realizing the claim (including but not limited to litigation fees, attorney fees, notarization fees and enforcement fees) and the losses and other expenses suffered by the Creditor due to default of the Debtor.

 

Clause 3 Method of Guarantee

 

The guarantee method hereunder shall be Item 1 of the following (Item 1 shall be deemed to have been selected if the blank is not filled).

 

1. Joint and several guarantee;

 

2. General guarantee.

 

Clause 4 Guarantee Liability

 

If the Debtor fails to make repayment to the Creditor by any regular repayment date or earlier repayment date under the principal contract, the Creditor may require the Guarantor to bear the guarantee liability.

 

“Regular repayment date” as referred to above shall mean the date, as agreed in the principal contract, of repayment of the principal, payment of the interests thereon or payment of any amounts by the Debtor to the Creditor according to the principal contract. “Earlier repayment date” as referred to above shall mean the date of repayment in advance as proposed by the Debtor and approved by the Creditor and the date of recovery in advance of the principal and interests and/or other amounts claimed by the Creditor against the Debtor pursuant to the principal contract.

 

In case of concurrent existence of other securities in rem or guarantees for the principal claim besides the guarantee hereunder, the Creditor’s rights hereunder and their exercise shall not be affected thereby and the Guarantor shall not counter the Creditor by virtue thereof. The Creditor may elect to realize its claim by other securities in rem or guarantees, or require the Guarantor hereunder to bear the guarantee liability.

 

Clause 5 Term of Guarantee

 

The term of guarantee hereunder shall be two years from expiration of the time limit for discharge of the principal claim.

 

2

 

Clause 6 Limitation of Actions for the Guaranteed Debt

 

In case the principal claim is not discharged, and the Creditor under the joint and several guarantee requires the Guarantor to bear guarantee liability before the expiry date of guarantee term as agreed in Clause 5 hereof, the limitation of actions for the guaranteed debt shall be calculated upon the date from which the Creditor requires the Guarantor to bear guarantee liability.

 

If the Creditor under general guarantee files lawsuit or applies for arbitration on the Debtor before the expiry date of the guarantee term as agreed in Clause 5 hereof, the limitation of actions for the guaranteed debt shall be calculated from the effective date of the judgment or arbitration.

 

Clause 7 Relationship between this Contract and the Principal Contract

 

If the parties to the principal contract terminate the principal contract or cause the principal contract to expire in advance, the Guarantor shall bear the guarantee liability for the claim already accrued under the principal contract.

 

The parties to the principal contract may, without consent of the Guarantor, change the provisions contained in the principal contract through agreement, except change in amount, term or otherwise that will increase the amount of the principal claim or extend the term of the principal contract, and in such case, the Guarantor shall still bear the guarantee liability for the changed principal contract.

 

If, for any of the said changes requiring consent from the Guarantor pursuant to this Contract, the written consent is not obtained from the Guarantor or the Guarantor refuses to agree to such change, the Guarantor will not bear the guarantee liability for increased amount of the principal claim, and the term of guarantee shall be the originally agreed time period although the time limit for performance under the principal contract is extended.

 

The Creditor may, without consent from the Guarantor, entrust other branches of the Bank of Jilin to exercise the rights or perform the obligations under the principal contract in whole or in part or transfer the principal claim under the principal contract to any third party, and in such case, the guarantee liability of the Guarantor shall not be reduced or exempted.

 

The validity of this Contract is independent from the principal contract, and the validity of this Contract shall not be affected in case the principal contract becomes null and void. If the principal contract is held null and void, the Guarantor shall still bear the guarantee liability for the debts accrued from the borrower’s obligation to return the properties or indemnify the losses.

 

This contract shall not be governed by the provision on “borrowing a new loan to repay old one” in the judicial interpretation on the security law, and hence the liability of the Guarantor shall not be exempted thereby.

 

3

 

Clause 8 Insurance (select 2 of the following: 1. applicable; or 2. not applicable.)

 

If the Guarantor is a natural person, he shall effect the personal accident insurance with the insurer acceptable to the Creditor with the insurance limit not less than the total amount of the principal claim and the Creditor being indicated as the sole beneficiary.

 

The Guarantor shall deliver the original of the policy to the Creditor within                 days upon effectiveness of this Contract. The Guarantor shall not suspend the insurance for any reason before the lone principal, interests thereon and expenses under the principal contract are fully discharged. If the Guarantor suspends the insurance, the Creditor may renew or effect the insurance for the Guarantor, at the insurance premium of the Guarantor. The Guarantor shall be liable for any loss caused by suspension of the insurance.

 

In case of occurrence of any insured accident, the Guarantor and/or its heir shall notify in writing the Creditor thereof within 3 days after it knows or should know the accident; the Guarantor shall be liable for any losses caused by its failure to timely notify the Creditor or timely bring a claim or perform its obligations under the policy.

 

Except as otherwise agreed, the insurance benefits shall firstly be used to pay the loan principal, interests thereon and other expenses payable. Except as otherwise agreed, the insurance benefits shall firstly be used to pay the loan principal, interests thereon and other expenses payable under the principal contract. if the time limit for discharge of the guaranteed claim does not expire, the insurance benefits shall be used to discharge the claim of the Creditor in advance or submitted to the competent authorities.

 

Clause 9 Representations and Undertakings

 

The Guarantor makes the following representations and undertakings:

 

1. The Guarantor has full capacity of civil rights and acts required for execution and performance of this Contract. In case of non-natural person, the Guarantor shall be registered according to law and validly existing;

 

2. The Guarantor has fully understood the contents of the principal contract, its execution and performance of this Contract represents its true declaration of will, and it has obtained legal and valid authorization according to its articles of association or other internal constitutions;

 

If the Guarantor is a company, the guarantee provided by it has been approved by resolution adopted by the board of meeting, shareholders’ meeting or shareholders’ general meeting according its articles of association; if the total amount of securities and the amount of single security are limited in its articles of association, the guarantee hereunder does not exceed the said limit.

 

The legal representative or authorized signatory is legally and validly authorized by the company to sign this Contract on behalf of the Guarantor; execution and performance of this

 

4

 

Contract will not violate any contract, agreement or other legal instruments binding upon the Guarantor.

 

3. All documents and materials provided by the Guarantor to the Creditor are accurate, true, complete and valid;

 

4. The Guarantor agrees to be subject to the examination and supervision conducted by the Creditor regarding its production and operation and financial standing, and to provide assistance and cooperation to the Creditor;

 

5. There are no major debts to be borne by the Guarantor as of the date of signing this Contract that are not disclosed by the Guarantor to the Creditor;

 

6.  if the Guarantor has any circumstances that may affect its financial standing and ability of performance, including but not limited to any division, merger, association, joint venture with foreign investors, cooperation, contracted operation, reorganization, restructure or plan on listing or other changes in its form of business operation , decrease in registered capital, transfer of major assets or equity, assumption of major debts, dissolution, cancellation,  or petition for bankruptcy by or against it, or it is involved into major litigation or arbitration,  it shall notify the Creditor thereof within one week upon occurrence of such circumstances.

 

Clause 10 Disclosure of Affiliates and Affiliated Transactions in the Guarantor’s Group

 

It is agreed by both Parties, Item 1 of the following provisions shall apply:

 

1. The Guarantor does not fall into the category of group client as determined by the Creditor in accordance with the Guidelines on the Management of Risks of Credits Granted by Commercial Banks to Group Clients (“the Guidelines”).

 

2. The Guarantor falls into the category of group client as determined by the Creditor in accordance with the Guidelines. The Guarantor shall timely inform the Creditor of any affiliated transaction involving 10% or more of its net assets, including the affiliated relationship between the parties in transaction, the project, nature, amount and proportion of the transaction and the pricing policy (including those without price or with nominal price).

 

Clause 11 Event of Breach and Liability for Breach

 

Any of the following events shall constitute an event of breach of the Guarantor hereunder:

 

1. The Guarantor fails to perform its guarantee liability timely pursuant to this Contract;

 

2. Any representation made by the Guarantor herein is untrue, or any undertaking made by it herein is violated by it;

 

3. The financial standing and ability of performance of the Guarantor are seriously affected by any event as described in paragraph 6 of Clause 9 hereof;

 

5

 

4. The Guarantor stops its business operation or is dissolved or cancelled or is bankrupt;

 

5. The Guarantor violates other provisions regarding the rights and obligations of the parties as agreed herein;

 

6. The Guarantor has any breach under other contracts between it and the Creditor or other branches of the Bank of Jilin;

 

In case of occurrence of any event of breach above, the Creditor may take one or more of the following measures as the case may be:

 

1. Require the Guarantor to rectify its breach within a stipulated time limit and timely bear the guarantee liability;

 

2. Reduce, suspend or terminate the credit line in whole or in part granted to the Guarantor;

 

3. Suspend or terminate in whole or in part acceptance of any business application under other contracts between the Guarantor and the Creditor, and suspend or terminate in whole or in part any extension of loan not extended and handling of any bond not handled;

 

4. Declare acceleration of maturity of any loan principal, interests thereon and other payables outstanding in whole or in part under other contracts between the Guarantor and the Creditor, and require the Guarantor to immediately repay all loan principals already extended, interests thereon and other payables;

 

5. Require the Guarantor to indemnify the Creditor the losses caused by the Guarantor’s breach;

 

6. Only with prior or subsequent notice, transfer any amounts in the accounts opened by the Guarantor with the Creditor to discharge the debts owed by the Guarantor to the Creditor in whole or in part. In such case, any unmatured amounts in such accounts shall be deemed mature. If the currency of such accounts is different from the currency used by the Creditor in its business, the amount in such accounts shall be converted at the quoted exchange rate applicable to the Creditor; and

 

7. Seek other lawful remedies deemed as necessary and practicable by the Creditor.

 

Article 12 Reservation of Rights

 

No failure by either party to exercise any or all rights hereunder or require the other party to perform or bear its obligations or liabilities in whole or in part shall operate as waiver by such party of such rights, obligations or liabilities.

 

No grace, extension of time or delay in exercise of any rights by either party shall affect any rights available hereunder or at law, nor operate as waiver of such rights.

 

6

 

Article 13 Amendment, Modification and Termination

 

This contract may be amended or modified only upon a written agreement reached by both Parties through negotiation; any amendment or modification so made shall have the same legal validity as this Contract.

 

Except as otherwise stipulated by laws or regulations or agreed by both Parties, invalidity of any provisions of this Contract shall not affect the legal validity of the remaining provisions.

 

Article 14 Applicable Law and Dispute Resolution

 

This Contract shall be governed by the law of the P.R.C.

 

Any dispute arising out of performance of this Contract may be solved firstly by both Parties through consultation. If such dispute cannot be solved through consultation, it is agreed by both Parties the dispute resolution method the same as that agreed in the principal contract shall apply.

 

Pending the dispute, the provisions hereof other than those under dispute shall continue to be performed if they are not affected by the dispute.

 

Clause 15 Enforcement

 

The Guarantor is willing to be subject to enforcement in case the borrower or the Guarantor fails to perform or fully perform its obligations as agreed herein.

 

Article16 Expenses

 

Except as otherwise required by law or as otherwise agreed by both Parties, the Guarantor shall solely bear all fees and expense (including attorney fees) arising out of execution, performance and dispute resolution of this Contract.

 

Article 17 Appendixes

 

The appendixes as mutually confirmed by both Parties shall have the same legal validity as this Contract:

 

1.                                      ;

 

2.                                      ;

 

3.                                      .

 

7

 

Article 18 Miscellaneous

 

1. Without written consent of the Creditor, the Guarantor shall not assign or transfer any of its rights or obligations hereunder to any third party.

 

2. It is agreed by the Guarantor that, the Creditor may, as required by its business, entrust other branches of the Bank of Jilin to perform this Contract. Other branches of the Bank of Jilin as authorized by the Creditor may exercise all right hereunder, and may bring a lawsuit with the court and apply for any dispute hereunder.

 

3. Without prejudice to other provisions contained herein, this Contract shall be binding upon and inure to the benefits of each party and its successors and assigns.

 

4. Except as otherwise agreed, the domicile of each party as stated in this Contract shall be the address for its communication and contact; and in case of any change in the said address, it shall notify in writing the other party thereof within one week upon such change.

 

5. All headings and business’s names in this Contract are only for reference, and shall not affect the interpretation of the provisions and rights and obligations contained herein.

 

Article 19 Effectiveness

 

This contract shall become effective immediately after it is signed by the legal representative, responsible person or authorized representative of each party and affixed with the seal of each party. In case the Guarantor is a natural person, this Contract shall be signed by it in person and the consent of the co-owners of its properties (if any) shall be obtained.

 

This contract shall be executed in quadruplicate, of which each party and the borrower shall holds two respectively, each being of equal legal effect.

 

 

	
Legal   representative/responsible person:
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/ Du Yijun
    	
 
    
	
 
    	
 
    
	
For and on behalf   of
    	
 
    
	
 
    	
 
    
	
The Guarantor (seal): Shandong Cathay Biotechnology Co., Ltd.
    	
 
    
	
 
    	
 
    
	
August 24,   2009
    	
 
    
			

 

8

 

	
Legal   representative/responsible person:
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/ Li Chengcheng
    	
 
    
	
 
    	
 
    
	
For and on behalf   of
    	
 
    
	
 
    	
 
    
	
The Creditor (seal):  Jilin Jiangbei Branch, Bank of Jilin   Co., Ltd.
    	
 
    
	
 
    	
 
    
	
August 24,   2009
    	
 
    
			

 

9

 

BANK OF JILIN

 

Guarantee Contract

 

 

The Guarantor: Shandong Cathay Industrial Biotech Co., Ltd.

 

The Creditor:               

 

 

No. Bank of Jilin                    Branch 2009 Guarantee 2009-3-025

 

 

Guarantee Contract

 

The Guarantor: Shandong Cathay Industrial Biotech Co., Ltd.

 

Business license No.: 370800400002767

 

Legal representative/responsible person: SAMIR TAYEB DAJANI

 

Domicile: Waihuan Road East, South to National Highway 327, Hi-Tech Development Zone, Jining  Zip Code:          

 

Opening bank and account: Jining Guhuai Road Branch, Bank of Construction, 37001683808050148557

 

Tel: 0537-2080023                 Fax:          

 

(Other relevant information)                    

 

The Creditor:  Jilin Jiangbei Branch, Bank of Jilin Co., Ltd.

 

Legal representative/responsible person:  Li Chengcheng

 

Domicile: No. 67 Xiangtan Street, Longtan District, Jilin City  Zip code:132022

 

Tel: 0432-3038986                 Fax: 0432-3022987

 

To guarantee the discharge of the debt under the principal contract as described in Clause 1 hereof, the Guarantor is willing to provide the guarantee to the Creditor. Both parties reach this Contract through equal consultation. Except as otherwise agreed in this Contract, the terms and expressions used herein shall have the same meaning as ascribed to them in the principal contract.

 

Clause 1 Principal Contract

 

The principal contract of this Contract shall be Item 1 of the following:

 

1. The RMB Loan Contract No. Bank of Jilin Jiangbei Branch 2009 Mortgage 2009-3-025 signed by the Creditor and Jilin Cathay Industrial Biotech Co., Ltd. and any revisions or addition thereto.

 

2. The Credit Line Agreement No.                         signed by the Creditor and                 .

 

1

 

3.                                          .

 

Clause 2 Principal Claim

 

The claim under the principal contract shall constitute the principal claim hereunder, including loan principal, interests thereon (including statutory interests, agreed interests, compound interests and penalty interests), liquidated damages, damages, the expenses for realizing the claim (including but not limited to litigation fees, attorney fees, notarization fees and enforcement fees) and the losses and other expenses suffered by the Creditor due to default of the Debtor.

 

Clause 3 Method of Guarantee

 

The guarantee method hereunder shall be Item 1 of the following (Item 1 shall be deemed to have been selected if the blank is not filled).

 

1. Joint and several guarantee;

 

2. General guarantee.

 

Clause 4 Guarantee Liability

 

If the Debtor fails to make repayment to the Creditor by any regular repayment date or earlier repayment date under the principal contract, the Creditor may require the Guarantor to bear the guarantee liability.

 

“Regular repayment date” as referred to above shall mean the date, as agreed in the principal contract, of repayment of the principal, payment of the interests thereon or payment of any amounts by the Debtor to the Creditor according to the principal contract. “Earlier repayment date” as referred to above shall mean the date of repayment in advance as proposed by the Debtor and approved by the Creditor and the date of recovery in advance of the principal and interests and/or other amounts claimed by the Creditor against the Debtor pursuant to the principal contract.

 

In case of concurrent existence of other securities in rem or guarantees for the principal claim besides the guarantee hereunder, the Creditor’s rights hereunder and their exercise shall not be affected thereby and the Guarantor shall not counter the Creditor by virtue thereof. The Creditor may elect to realize its claim by other securities in rem or guarantees, or require the Guarantor hereunder to bear the guarantee liability.

 

Clause 5 Term of Guarantee

 

The term of guarantee hereunder shall be two years from expiration of the time limit for discharge of the principal claim.

 

2

 

Clause 6 Limitation of Actions for the Guaranteed Debt

 

In case the principal claim is not discharged, and the Creditor under the joint and several guarantee requires the Guarantor to bear guarantee liability before the expiry date of guarantee term as agreed in Clause 5 hereof, the limitation of actions for the guaranteed debt shall be calculated upon the date from which the Creditor requires the Guarantor to bear guarantee liability.

 

If the Creditor under general guarantee files lawsuit or applies for arbitration on the Debtor before the expiry date of the guarantee term as agreed in Clause 5 hereof, the limitation of actions for the guaranteed debt shall be calculated from the effective date of the judgment or arbitration.

 

Clause 7 Relationship between this Contract and the Principal Contract

 

If the parties to the principal contract terminate the principal contract or cause the principal contract to expire in advance, the Guarantor shall bear the guarantee liability for the claim already accrued under the principal contract.

 

The parties to the principal contract may, without consent of the Guarantor, change the provisions contained in the principal contract through agreement, except change in amount, term or otherwise that will increase the amount of the principal claim or extend the term of the principal contract, and in such case, the Guarantor shall still bear the guarantee liability for the changed principal contract.

 

If, for any of the said changes requiring consent from the Guarantor pursuant to this Contract, the written consent is not obtained from the Guarantor or the Guarantor refuses to agree to such change, the Guarantor will not bear the guarantee liability for increased amount of the principal claim, and the term of guarantee shall be the originally agreed time period although the time limit for performance under the principal contract is extended.

 

The Creditor may, without consent from the Guarantor, entrust other branches of the Bank of Jilin to exercise the rights or perform the obligations under the principal contract in whole or in part or transfer the principal claim under the principal contract to any third party, and in such case, the guarantee liability of the Guarantor shall not be reduced or exempted.

 

The validity of this Contract is independent from the principal contract, and the validity of this Contract shall not be affected in case the principal contract becomes null and void. If the principal contract is held null and void, the Guarantor shall still bear the guarantee liability for the debts accrued from the borrower’s obligation to return the properties or indemnify the losses.

 

This contract shall not be governed by the provision on “borrowing a new loan to repay old one” in the judicial interpretation on the security law, and hence the liability of the Guarantor shall not be exempted thereby.

 

3

 

Clause 8 Insurance (select 2 of the following: 1. applicable; or 2. not applicable.)

 

If the Guarantor is a natural person, he shall effect the personal accident insurance with the insurer acceptable to the Creditor with the insurance limit not less than the total amount of the principal claim and the Creditor being indicated as the sole beneficiary.

 

The Guarantor shall deliver the original of the policy to the Creditor within            days upon effectiveness of this Contract. The Guarantor shall not suspend the insurance for any reason before the lone principal, interests thereon and expenses under the principal contract are fully discharged. If the Guarantor suspends the insurance, the Creditor may renew or effect the insurance for the Guarantor, at the insurance premium of the Guarantor. The Guarantor shall be liable for any loss caused by suspension of the insurance.

 

In case of occurrence of any insured accident, the Guarantor and/or its heir shall notify in writing the Creditor thereof within 3 days after it knows or should know the accident; the Guarantor shall be liable for any losses caused by its failure to timely notify the Creditor or timely bring a claim or perform its obligations under the policy.

 

Except as otherwise agreed, the insurance benefits shall firstly be used to pay the loan principal, interests thereon and other expenses payable. Except as otherwise agreed, the insurance benefits shall firstly be used to pay the loan principal, interests thereon and other expenses payable under the principal contract. if the time limit for discharge of the guaranteed claim does not expire, the insurance benefits shall be used to discharge the claim of the Creditor in advance or submitted to the competent authorities.

 

Clause 9 Representations and Undertakings

 

The Guarantor makes the following representations and undertakings:

 

1. The Guarantor has full capacity of civil rights and acts required for execution and performance of this Contract. In case of non-natural person, the Guarantor shall be registered according to law and validly existing;

 

2. The Guarantor has fully understood the contents of the principal contract, its execution and performance of this Contract represents its true declaration of will, and it has obtained legal and valid authorization according to its articles of association or other internal constitutions;

 

If the Guarantor is a company, the guarantee provided by it has been approved by resolution adopted by the board of meeting, shareholders’ meeting or shareholders’ general meeting according its articles of association; if the total amount of securities and the amount of single security are limited in its articles of association, the guarantee hereunder does not exceed the said limit.

 

The legal representative or authorized signatory is legally and validly authorized by the company to sign this Contract on behalf of the Guarantor; execution and performance of this

 

4

 

Contract will not violate any contract, agreement or other legal instruments binding upon the Guarantor.

 

3. All documents and materials provided by the Guarantor to the Creditor are accurate, true, complete and valid;

 

4. The Guarantor agrees to be subject to the examination and supervision conducted by the Creditor regarding its production and operation and financial standing, and to provide assistance and cooperation to the Creditor;

 

5. There are no major debts to be borne by the Guarantor as of the date of signing this Contract that are not disclosed by the Guarantor to the Creditor;

 

6.  if the Guarantor has any circumstances that may affect its financial standing and ability of performance, including but not limited to any division, merger, association, joint venture with foreign investors, cooperation, contracted operation, reorganization, restructure or plan on listing or other changes in its form of business operation , decrease in registered capital, transfer of major assets or equity, assumption of major debts, dissolution, cancellation,  or petition for bankruptcy by or against it, or it is involved into major litigation or arbitration,  it shall notify the Creditor thereof within one week upon occurrence of such circumstances.

 

Clause 10 Disclosure of Affiliates and Affiliated Transactions in the Guarantor’s Group

 

It is agreed by both Parties, Item 1 of the following provisions shall apply:

 

1. The Guarantor does not fall into the category of group client as determined by the Creditor in accordance with the Guidelines on the Management of Risks of Credits Granted by Commercial Banks to Group Clients (“the Guidelines”).

 

2. The Guarantor falls into the category of group client as determined by the Creditor in accordance with the Guidelines. The Guarantor shall timely inform the Creditor of any affiliated transaction involving 10% or more of its net assets, including the affiliated relationship between the parties in transaction, the project, nature, amount and proportion of the transaction and the pricing policy (including those without price or with nominal price).

 

Clause 11 Event of Breach and Liability for Breach

 

Any of the following events shall constitute an event of breach of the Guarantor hereunder:

 

1. The Guarantor fails to perform its guarantee liability timely pursuant to this Contract;

 

2. Any representation made by the Guarantor herein is untrue, or any undertaking made by it herein is violated by it;

 

3. The financial standing and ability of performance of the Guarantor are seriously affected by any event as described in paragraph 6 of Clause 9 hereof;

 

5

 

4. The Guarantor stops its business operation or is dissolved or cancelled or is bankrupt;

 

5. The Guarantor violates other provisions regarding the rights and obligations of the parties as agreed herein;

 

6. The Guarantor has any breach under other contracts between it and the Creditor or other branches of the Bank of Jilin;

 

In case of occurrence of any event of breach above, the Creditor may take one or more of the following measures as the case may be:

 

1. Require the Guarantor to rectify its breach within a stipulated time limit and timely bear the guarantee liability;

 

2. Reduce, suspend or terminate the credit line in whole or in part granted to the Guarantor;

 

3. Suspend or terminate in whole or in part acceptance of any business application under other contracts between the Guarantor and the Creditor, and suspend or terminate in whole or in part any extension of loan not extended and handling of any bond not handled;

 

4. Declare acceleration of maturity of any loan principal, interests thereon and other payables outstanding in whole or in part under other contracts between the Guarantor and the Creditor, and require the Guarantor to immediately repay all loan principals already extended, interests thereon and other payables;

 

5. Require the Guarantor to indemnify the Creditor the losses caused by the Guarantor’s breach;

 

6. Only with prior or subsequent notice, transfer any amounts in the accounts opened by the Guarantor with the Creditor to discharge the debts owed by the Guarantor to the Creditor in whole or in part. In such case, any unmatured amounts in such accounts shall be deemed mature. If the currency of such accounts is different from the currency used by the Creditor in its business, the amount in such accounts shall be converted at the quoted exchange rate applicable to the Creditor; and

 

7. Seek other lawful remedies deemed as necessary and practicable by the Creditor.

 

Clause 12 Reservation of Rights

 

No failure by either party to exercise any or all rights hereunder or require the other party to perform or bear its obligations or liabilities in whole or in part shall operate as waiver by such party of such rights, obligations or liabilities.

 

No grace, extension of time or delay in exercise of any rights by either party shall affect any rights available hereunder or at law, nor operate as waiver of such rights.

 

6

 

Clause 13 Amendment, Modification and Termination

 

This contract may be amended or modified only upon a written agreement reached by both Parties through negotiation; any amendment or modification so made shall have the same legal validity as this Contract.

 

Except as otherwise stipulated by laws or regulations or agreed by both Parties, invalidity of any provisions of this Contract shall not affect the legal validity of the remaining provisions.

 

Clause 14 Applicable Law and Dispute Resolution

 

This Contract shall be governed by the law of the P.R.C.

 

Any dispute arising out of performance of this Contract may be solved firstly by both Parties through consultation. If such dispute cannot be solved through consultation, it is agreed by both Parties the dispute resolution method the same as that agreed in the principal contract shall apply.

 

Pending the dispute, the provisions hereof other than those under dispute shall continue to be performed if they are not affected by the dispute.

 

Clause 15 Enforcement

 

The Guarantor is willing to be subject to enforcement in case the borrower or the Guarantor fails to perform or fully perform its obligations as agreed herein.

 

Clause16 Expenses

 

Except as otherwise required by law or as otherwise agreed by both Parties, the Guarantor shall solely bear all fees and expense (including attorney fees) arising out of execution, performance and dispute resolution of this Contract.

 

Clause 17 Appendixes

 

The appendixes as mutually confirmed by both Parties shall have the same legal validity as this Contract:

 

1.                                      ;

 

2.                                      ;

 

3.                                      .

 

7

 

Clause 18 Miscellaneous

 

1. Without written consent of the Creditor, the Guarantor shall not assign or transfer any of its rights or obligations hereunder to any third party.

 

2. It is agreed by the Guarantor that, the Creditor may, as required by its business, entrust other branches of the Bank of Jilin to perform this Contract. Other branches of the Bank of Jilin as authorized by the Creditor may exercise all right hereunder, and may bring a lawsuit with the court and apply for any dispute hereunder.

 

3. Without prejudice to other provisions contained herein, this Contract shall be binding upon and inure to the benefits of each party and its successors and assigns.

 

4. Except as otherwise agreed, the domicile of each party as stated in this Contract shall be the address for its communication and contact; and in case of any change in the said address, it shall notify in writing the other party thereof within one week upon such change.

 

5. All headings and business’s names in this Contract are only for reference, and shall not affect the interpretation of the provisions and rights and obligations contained herein.

 

Clause 19 Effectiveness

 

This contract shall become effective immediately after it is signed by the legal representative, responsible person or authorized representative of each party and affixed with the seal of each party. In case the Guarantor is a natural person, this Contract shall be signed by it in person and the consent of the co-owners of its properties (if any) shall be obtained.

 

This contract shall be executed in quadruplicate, of which each party and the borrower shall holds two respectively, each being of equal legal effect.

 

 

Legal representative/responsible person:

 

	
By:
    	
/s/ SAMIR TAYEB DAJANI
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
For and on behalf   of
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
The Guarantor   (seal): Shandong Cathay Industrial Biotech Co., Ltd.
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
August 24,   2009
    	
 
    	
 
    

 

8

 

Legal representative/responsible person:

 

	
By:
    	
/s/ Li Chengcheng
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
For and on behalf   of
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
The Creditor   (seal): Jilin Jiangbei Branch, Bank of Jilin Co., Ltd.
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
August 24,   2009
    	
 
    	
 
    

 

9ex10-18.htm

Exhibit 10.18

Employment Agreement

This employment agreement (“Agreement”) is entered into as of September 13, 2010 (“Execution Date”) by and between China Swine Genetics, Inc. (“Company”), a Delaware corporation with business address at 19 West 44th Street, New York, New York, and Mr. Paul Yu Chiu Li (“Executive”), a US citizen (passport #210950430).

Based on the principles of equality and through amicable negotiation, both parties agree to enter into this agreement for the appointment of Executive as Chief Financial Officer (“CFO”) of the Company.

	
1.

	
Appointment

The Company hereby employs the Executive as the CFO of the Company, such employment to become effective as of the date following the date when the Company’s annual report on Form 10-K for its 2010 fiscal year is filed with the U.S. Securities and Exchange Commission (“Effectiveness Date”).

	
2.

	
Remuneration

a. The Company shall pay Executive base monthly salary of RMB 50,000 for the first year; base monthly salary of RMB 58,333 for the second year; and base monthly salary of RMB 66,667 is for the third year. The Executive’s base salary shall be subject to annual review by the Board of Directors of the Company (or a committee thereof) (the “Board”) and withholding and other applicable taxes.

 

b. Subject to the approval by the Board, the Company agrees to grant to the Executive options (hereinafter “Options”) to acquire, at an exercise price equals to $0.1 per share, 60,273 shares of the Company’s common stock with 1/3 vesting on each of the first, second and third anniversaries of the Execution Date, provided that the Executive is employed by the Company on such date. The vested option will be exercisable at any time for a period of three years commencing on the date of vest. If this Agreement is terminated within 3 years of the Effective Date for any reason, any unexercised Options shall immediately be forfeited.

c. The Executive will be based in both NYC, USA and Beijing, PRC with no less than three (3) months in each city per year. The Company will reimburse the Executive air tickets related to business conducted on behalf of and approved by the Company. The Executive selects NYC as his home base and shall pay for the lodging during his stay in NYC while the Company will bear the lodging expense in Beijing. The Company shall pay or reimburse the Executive, upon a proper accounting and presentation of appropriate documentation for reasonable travel expenses and disbursements incurred by him in the course of the performance of his duties under this Agreement in accordance with the normal policy of the Company for senior executives from time to time in effect.

 

d. The Company will provide basic office equipments including laptop for the Executive in both NYC and Beijing office necessary to conduct business on behalf of the Company.

	
3.

	
Responsibilities of the Executive

a.    The Executive shall use his best efforts, skills and abilities to promote and protect the interests of the Company and devote his entire working time and energies to the business and affairs of the Company. The Executive shall regularly (and no less frequently than weekly) report to the Chief Executive Officer of the Company on all of his activities and shall maintain close and regular contact with the Company’s accounting and finance personnel.   Executive shall, at all times, conduct himself in a professional manner and adhere to the standards, ethical obligations, rules, policies, regulations and procedures of the Company which are presently in force or which may be established from time to time by the Company.  Executive shall take no action that violates any law, rule or regulation whatsoever while acting in his capacity as employee.  Executive shall, at all times, act in a fiduciary capacity for the Company and acknowledges the Company is relying upon and placing trust in Executive. Executive accepts the fiduciary responsibilities and trust placed in Executive by the Company.

 

  

1

  

 

    b.    During the Term, the Executive shall serve as Chief Financial Officer of the Company, reporting to the Chief Executive Officer of the Company (the “Chief Executive Officer”), and shall perform duties consistent with the position of a chief financial officer of a U.S. publicly-listed corporation with operations in the People’s Republic of China.  Without limiting the generality of the foregoing, the Executive shall, under the supervision and direction of the Chief Executive Officer:

(i)Serve and execute all applicable documents, filings and reports as the principal accounting officer of the Company for purposes of the Company’s filings with the U.S. Securities and Exchange Commission (the “SEC”) and, in connection therewith, be responsible, in coordination with the Company’s existing accounting personnel, for: (A) all accounting and financial reporting and controls of the Company and its wholly-owned subsidiaries and (B) all financial related disclosure controls of the Company and its wholly-owned subsidiaries;

 (ii) Oversee all aspects of the Company’s annual audit, including communications and interactions with the Company’s independent registered accounting firm, the of Board of Directors of the Company (the “Board”) or any designated audit committee thereof, the Chief Executive Officer and the Company’s outside legal counsel;

 (iii) Oversee the preparation and filing of the Company’s annual and quarterly financial statements and related SEC reports (including the Management’s Discussion and Analysis of Financial Condition and Results of Operations contained therein) in conformance with all SEC rules and regulations and generally accepting accounting principles (“GAAP”) of the United States of America;

 (iv) Oversee the conversion of the Company’s financial statements from Chinese GAAP to U.S. GAAP;

(v) Design and implement relevant provisions of the Sarbanes-Oxley Act, and ensure the corporate internal governance in compliance with the relevant provisions of the U.S. securities laws and applicable stock market regulations;

(vi) Work with the Company’s other accounting and finance personnel to implement the finance function of the Company, including the preparation or review of budgets, projections and financial analyses;

(vii) Assist the Company in its communications with the SEC and all other applicable regulatory authorities;

 (viii) Assist Company executives with the preparation and implement of a strategic acquisition program and provide financial consultation and support for the Company’s acquisition initiatives;

(ix) During the Employment Term, the Executive shall lead and coordinate the Company’s investor relations activities which shall include, but is not limited to, communications with investors, analysts and media, and the Company’s public disclosure, and shall implement and monitor the corporate governance of the Company in compliance with all applicable laws and regulations. The Executive shall work in conjunction with other members of the executive management team to support the Company’s business growth;

(iix) Assist the Chief Executive Officer in communications with the investment community.  Prepare road show presentations for the Company or introduce the Company to potential investors at meetings; and

(xi) Provide training to the senior management and financial staffs of the Company.

 

  

2

  

c.     Executive further agrees that he will, without any additional compensation thereof, serve in such executive officer capacities with respect to the Company and any present or future subsidiaries and affiliated corporations and divisions as may from time to time be reasonably designated by the Chief Executive Officer or the Board.

4. Agreements of the Executive.

In order to induce the Company to enter into this Agreement, the Executive hereby agrees as follows:

a.           No Other Agreements. Executive represents and warrants to the Company that the execution and delivery of this Agreement, compliance with the terms herein contained and Executive’s employment by the Company will not violate or cause a breach of any contract, agreement or fiduciary relationship to which Executive is a party, including, without limitation, any restrictive covenants binding Executive to a prior employer.

 

b.           Confidentiality. Executive shall never: (A) disclose any Confidential Information; or (B) directly or indirectly give or permit any person or entity to have access to any Confidential Information; or (C) make any use, commercial or otherwise, of any Confidential Information, except solely as reasonably required to perform Executive’s employment duties with the Company and solely for the benefit of the Company.  “Confidential Information” means all confidential and proprietary of, about, or relating to the Company and the Company’s business, including, without limitation, any and all documents received or generated by Executive or the Company, existing and potential customer lists, trade secrets (as defined under applicable state law), pricing, financial, corporate, and personnel information, customer data, methods of operation, business plans, techniques, prototypes, sketches, drawings, models, inventions, know-how, processes, apparatus, software programs, computer codes, source codes, equipment, algorithms, source documents, formulae, methods, data, descriptions relating to current, future, and proposed products and services, information concerning research, experimental work, development, specifications, engineering, procurement requirements, purchasing, agents and suppliers, business forecasts, marketing plans and information received from third parties (including customers) that is subject to a duty on Executive’s part to maintain its confidentiality.  Confidential Information does not include information that is generally known to the public, provided it is generally known to the public other than as a result of disclosure of such information by Executive in violation of this Agreement.  Upon termination of his employment with the Company, the Executive shall return to the Company all documents, photographs, recorded or memory devices, papers and other property relating to the Company, containing Confidential Information, together with any copies thereof, and shall not retain any copies (either hard copy or electronic) of any Confidential Information.

 

c.           Return of Company Property. Executive agrees that all Company Property (as defined below) is solely the property of the Company and Executive waives and relinquishes any and all interests or property rights he may have therein in favor of the Company.  Executive shall immediately return all of the Company Property to the Company at such other location as may be directed by the Company upon: (A) the Company’s request at any time; and (B) upon the termination of Executive’s employment.  “Company Property” includes, but is not limited to: (X) records relating to customers, former customers, prospective customers and confidential information in whatever form they exist, and by whomever prepared, including, but not limited to, notes of Executive; (Y) tangible embodiments of or containing Work Product or confidential information; and (Z) tangible and intangible property pertaining to the Company’s business or arising out of or used by Executive in the performance of his duties for the Company.  

 

d.           Disparaging Statements. In order to protect the goodwill of the Company and its affiliates, to the fullest extent permitted by law, the Executive, both during and after the term of this Agreement, agrees not to publicly criticize, denigrate or otherwise disparage any of the Company, its subsidiaries or affiliates, and each such entity’s employees, officers, directors, consultants, other service providers, products, processes, policies, practices, standards of business conduct, or areas or techniques of research, manufacturing, or marketing.  In order to protect the business reputation of the Executive, to the fullest extent permitted by law, the Company, both during and after the term of this Agreement, agrees not to publicly criticize, denigrate, or otherwise disparage the Executive.  Nothing in this subsection shall prevent the Executive or the Company from cooperating in any governmental proceeding or from providing truthful testimony pursuant to a legally-issued subpoena.  The Executive promises to provide the Company with written notice of any request to so cooperate or provide testimony within five (5) days of being requested to do so, along with a copy of any such request, and the Company agrees to similarly provide the Executive with such notice.

 

  

3

  

       e.           Assignment of Work Product. Executive acknowledges and agrees that: (A) all Work Product (as defined below) shall be deemed a work for hire; and (B) he hereby assigns all of his intellectual property and other rights in all other Work Product to the Company.  All right, title and interest in and to, and the right to pursue protection for, Work Product shall vest solely with the Company. Upon request by the Company, Executive shall use reasonable efforts, at no additional expense, to assist the Company in securing any intellectual property protection for such Work Product and shall execute all documents reasonably necessary to effect an assignment as contemplated herein. Executive hereby appoints the Company’s President or Chairman of the Board if there is no President, with full authority in the place and stead of Executive and in the name of the Executive or otherwise, from time to time in the Company’s discretion, to take any action and to execute any instrument which the Company may deem necessary or advisable to accomplish the purposes of this subsection.  Executive hereby acknowledges that such power of attorney and proxy are coupled with an interest and are irrevocable.  No license is granted to Executive in, to or under any Work Product or other intellectual property (including, but not limited to, patents, trade secrets, copyrighted materials and trademarks) owned, licensed or otherwise assertable by Executive by express or implied grant, estoppel or otherwise, except for a limited right to use any such intellectual property solely in the performance of Executive’s employment duties and solely for the benefit of the Company.  All benefits from the use of any such intellectual property, including Work Product, shall inure solely to the Company.  The Executive will not use any Work Product (as defined below), the rights to which are owned by any former employer of the Executive or other person from whom the Executive has not obtained all required rights, and all Work Product developed by the Executive while employed with the Company shall be original to the Executive or developed in corroboration with other employees of the Company, and shall not infringe upon the intellectual property rights of any third party. “Work Product” means all tangible or intangible works: (X) (1) created, produced or modified during or in connection with Executive’s employment by the Company; or (2) which are related to, or that can be utilized in, the Company Business; and (Y) that could qualify as the subject matter of a copyright, patent, trade secret or any other form of intellectual property; and shall include, without limitation, all work produced by or for the benefit of the Company, any affiliate of the Company, or any customers, former customers and prospective customers of the Company.

 

f.            Non-competition and Non-solicitation

In consideration of the salary paid to the Executive by the Company, the Executive agree that during the term of the Employment and for a period of three (3) years following the termination of the Employment for whatever reason:

 

	
a.

	
The Executive will not approach clients, customers or contacts of the Company or other persons or entities introduced to the Executive in the Executive’s capacity as a representative of the Company for the purposes of doing business with such persons or entities which will harm the business relationship between the Company and such persons and/or entities;

	
b.

	
unless expressly consented to by the Company, the Executive will not assume employment with or provide services as a director or otherwise for any Competitor (as defined below), or engage, whether as principal, partner, licensor or otherwise, in any Competitor;

	
c.

	
unless expressly consented to by the Company, the Executive will not seek directly or indirectly, by the offer of alternative employment or other inducement whatsoever, to solicit the services of any employee of the Company employed as at or after the date of such termination, or in the year preceding such termination.

	
d.

	
have any equity or other ownership interest in, or become a director or manager of, or be otherwise associated with, or engaged or employed by, any customer, prospect or former customer of the Company or their subsidiary or parent entities or affiliates in any job or career that relates to or concerns any activity substantially similar, in whole or in part, to the Company’s business.

As used herein, “Competitor” refers to any business or activity which competes, directly or indirectly, with or carries on the business of the Company, or any business activity substantially similar to the Company’s business, as constituted from time to time.

 

  

4

  

g.            Enforcement. The Executive acknowledges and agrees that the covenants contained herein are reasonable, that valid consideration has been and will be received and that the agreements set forth herein are the result of arms-length negotiations between the parties hereto.  The Executive recognizes that the provisions of this Section 4 are vitally important to the continuing welfare of the Company and its affiliates and that any violation of this Section 4 could result in irreparable harm to the Company and its affiliates for which money damages would constitute a totally inadequate remedy.  Accordingly, in the event of any such violation by the Executive, the Company and its affiliates, in addition to any other remedies they may have, shall have the right to institute and maintain a proceeding to compel specific performance thereof or to obtain an injunction or other equitable relief restraining any action by the Executive in violation of this Section 4 without posting any bond therefor or demonstrating actual damages, and Executive will not claim as a defense thereto that the Company has an adequate remedy at law or require the posting of bond. If any of the restrictions or activities contained in this Section 4 shall for any reason be held by a court of competent jurisdiction to be excessively broad as to duration, geographical scope, activity or subject, such restrictions shall be construed so as thereafter to be limited or reduced to be enforceable to the extent compatible with the applicable law; it being understood that by the execution of this Agreement the parties hereto regard such restrictions as reasonable and compatible with their respective rights.  Executive acknowledges that injunctive relief may be granted immediately upon the commencement of any such action without notice to Executive and in addition Company may recover monetary damages.

h.           Separate Agreement.  The parties hereto further agree that the provisions of Section 4 are separate from and independent of the remainder of this Agreement and that Section 4 is specifically enforceable by the Company notwithstanding any claim made by Executive against the Company.  The terms of this Section 4 shall survive termination of this Agreement.

	
5.

	
  Responsibilities of the Company

	 	 
	
a.

	
The Executive shall have been delegated appropriate authority to carry out its duties.

	
  b.

	
The Executive shall have the right to participate in the mandatory social security insurance programs.

 

	
6.

	
  Term of this Agreement

This Agreement shall have a term from the date hereof until September 6, 2013 unless earlier terminated pursuant to the terms hereof (the “Employment Term”). This Agreement is renewable with mutual consent by both parties.

       7. Amendment

This Agreement may not be amended, modified or changed (in whole or in part), except by a formal, definitive written agreement expressly referring to this Agreement, which agreement is executed by both of the parties hereto.

       8. Termination of the Agreement

 a. By the Company. The Company may terminate the Employment for Cause, at any time, without notice or remuneration, or for any other reason or no reason on thirty (30) days prior written notice to the Executive. “Cause” shall mean (1) the Executive is convicted or pleads guilty to a felony or to an act of fraud, misappropriation or embezzlement, (2) the Executive has been negligent or acted dishonestly to the detriment of the Company, (3) the Executive has engaged in actions amounting to gross negligence, misconduct, malfeasance, disloyalty, dishonesty or a breach of trust against the Company or failed to perform his or her duties hereunder and such failure continues after the Executive is afforded a reasonable opportunity to cure such failure, (4) the Executive’s intentional perpetration, participation in or attempted perpetration of fraud or other willful misconduct on the Company or its subsidiaries or affiliates; (5) the Executive has died, or (6) the Executive has a disability which shall mean a physical or mental impairment which, as reasonably determined by the Board renders Executive unable for a period of two (2) months to perform substantially his duties hereunder.

 

  

5

  

 b. By the Executive. By giving three months’ prior written notice, the Executive may resign prior to the expiration of the Agreement.

 c. Notice of Termination. Any termination of the Executive’s employment under this Agreement shall be communicated by written notice of termination from the terminating party to the other party. The notice of termination shall indicate the specific provision(s) of this Agreement relied upon in effecting the termination.

 

 

9. Notices. All notices, requests, demands and other communications provided in connection with this Agreement shall be in writing and shall be deemed to have been duly given at the time when hand delivered, delivered by express courier, or sent by facsimile transmission (with receipt confirmed by the sender’s transmitting device) in accordance with the contact information provided below or such other contact information as the parties may have duly provided by notice.

	  	
if to the Company

	  	  
	  	
With a copy to

	  	  
	  
	  	
if to the Executive

	  	  
	  	  

or such other address as may be designated in writing hereafter, in the same manner, by such Party.

10.   Miscellaneous Provisions

	
  

	
        a. This Agreement embodies the entire understanding of the parties hereof, and supersedes all other oral or written agreements or understandings between them regarding the subject matter hereof.  No other agreements, representations or understandings (whether oral or written) which are not expressly set forth in this Agreement have been made or entered into by either party with respect to the subject matter of this Agreement.

	
  

	
        b. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect. If any provision of this Agreement shall be adjudged by any court of competent jurisdiction to be invalid or unenforceable for any reason, such judgment shall not affect, impair or invalidate the remainder of this Agreement, which shall remain in full force and effect and the parties will act in good faith to seek to amend this Agreement so as to render the invalid or unenforceable provisions valid and enforceable while retaining the original intent and meaning of such provision to the maximum extent possible.  No waiver of any of the provisions of this Agreement, whether by conduct or otherwise, in any one or more instances, shall be deemed or be construed as a further, continuing or subsequent waiver of any such provision or as a waiver of any other provision of this Agreement.  No failure to exercise and no delay in exercising any right, remedy or power hereunder will preclude any other or further exercise of any other right, remedy or power provided herein or by law or in equity.

 

 

 

  

6

  

	
  

	
c. This Agreement and all rights and obligations of the Executive hereunder are personal to the Executive and may not be transferred or assigned by the Executive at any time. The Company may assign its rights under this Agreement to any entity that assumes the Company’s obligations hereunder in connection with any sale or transfer of all or a substantial portion of the Company’s assets to such entity.

	
  

	
        d. The headings of the paragraphs contained in this Agreement are for reference purposes only and shall not in any way affect the meaning or interpretation of any provision of this Agreement.

	
  

	
        e. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

	
  

	 

	
  

	
       f. Executive shall hold the Company and its officers, directors, other employees, contractors and agents harmless from and against all claims, obligations, losses, damages, liabilities, fines, costs and expenses (including, without limitation, reasonable attorney’s fees pretrial, trial and appellate) arising out of or incurred as a result of or in connection with: (A) Executive’s failure to meet his or her obligations to the Company; (B) Executive’s breach of any covenant, warranty or representation set forth in this Agreement; and (C) Executive’s negligent, fraudulent or illegal acts.  The Company shall hold Executive harmless from and against all claims, obligations, losses, damages, liabilities, fines, costs and expenses (including, without limitation, reasonable attorney’s fees pretrial, trial and appellate) arising out of or incurred as a result of or in connection with: (A) the Company’s failure to meet its obligations to Executive hereunder, and (B) the Company’s breach of any covenant, warranty or representation set forth in this Agreement.

	
  

	
        gj. This Agreement shall be construed and governed under and by the laws of the State of New York, USA.  Executive agrees that exclusive venue for any legal action authorized hereunder shall be in the state or ferdeal courts located in the State of New York, city of New York.

	
  

	
       h. The Executive shall provide his reasonable cooperation in connection with any action or proceeding (or any appeal from any action or proceeding) which relates to events occurring during the Executive’s employment hereunder, but only to the extent the Company requests such cooperation with reasonable advance notice to the Executive and in respect of such periods of time as shall not unreasonably interfere with the Executive’s ability to perform his duties with any subsequent employer; provided, however, the Company shall pay any reasonable travel, lodging and related expenses that the Executive may incur in connection with providing all such cooperation, to the extent approved by the Company prior to incurring such expenses.

SIGNATURE PAGE FOLLOWS

 

  

7

  

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

COMPANY

CHINA SWINE GENETICS, INC.

By: _____________

Name: Zhenyu Shang

Title:  Chief Executive Officer

EXECUTIVE

________________

 

 

 

8

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00192-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00192-of-00352.parquet"}]]