*ST Zhong Rong (000982): Administrator's Notice On Company Litigation

Stock Code: 000982 securities short: *ST velvet notice number: 2019-93

Notice of Ningxia Bank of China Limited by Share Ltd manager on company litigation

1. The basic situation of the acceptance of this litigation matter.

The Limited by Share Ltd of Ningxia cashmere industry (hereinafter referred to as "the company") received the subpoena, civil complaint, proof of proof, and notification of the action delivered by the Jinfeng District People's Court of Yinchuan, the Ningxia Hui Autonomous Region (hereinafter referred to as "Jinfeng District Court") in September 5, 2019.

Two. The basic situation of litigation matters.

1. Litigants

Plaintiff: Ningxia guarantee Group Co., Ltd., residence: Ningxia, Yinchuan, Jinfeng District, Xinchang West Road, purple gold flower business center C block 10-11 floor, legal representative: Hu Jianzhong.

Defendant 1: Ningxia cashmere cashmere Limited by Share Ltd, residence: Ningxia Lingwu ecological textile park (south of the two ring road north of Lingwu City via two Road East), legal representative: Shen Chen.

Defendant 2: Ningxia Bank of China Duncan Clothing Co., Ltd., residence in Ningxia Lingwu City cashmere ecological textile park (Lingwu City south two Ring Road North via two Road East), the legal representative: Shi Lei.

Defendant 3: Ningxia Zhong Yin cashmere industry International Group Co., Ltd., the place of residence: Lingwu ecological textile park in Ningxia (south of the two ring road north of Lingwu City, two way East), the legal representative: Ma Sheng Ming.

Defendant 4: Ma Sheng Guo.

Defendant 5: Ma Sheng Ming. Defendant 6: Li Weidong.

2. Facts and reasons stated in the original statement of the case.

　　2015年12月30日，被告寧夏中銀絨業股份有限公司(下稱中銀絨業公司)、寧夏中銀鄧肯服飾有限公司(下稱中銀鄧肯公司)與國開發展基金有限公司(下稱國開基金公司)簽訂了編號為6410201506100000144號《國開發展基金投資合同》(下稱《投資合同》)，約定由國開基金公司向被告中銀鄧肯公司增資6,500萬元，持股比例24.1%，投資期限8年，用于被告中銀鄧肯公司的“3萬綻精紡高支特種亞麻紗、1300萬米高檔亞麻面料建設項目”；并由被告中銀鄧肯公司根據《投資合同》約定的投資收益率逐年向國開基金公司支付投資收益，同時由被告中銀絨業公司為該投資收益的支付承擔補足義務；另在上述項目建設期滿后，被告中銀絨業公司必須按約定回購國開基金公司持有被告中銀鄧肯公司24.1%的股權。 In response to the obligation of the defendant, cashmere company, to carry out the above repurchase stock rights, the obligation to pay the share repurchase price, the payment of investment income supplement and other funds to fulfill the obligations, the plaintiff shall apply to the state fund company to provide joint and several liability guarantee. In December 30, 2015, the plaintiff signed a contract with the defendant, Bank of China (cashmere) Co., Ltd. [2015] Ningbo 287, the contract of entrustment guarantee, and agreed to provide joint and several liability guaranty guarantee from the plaintiff for the above repurchase stock, the obligation to pay the share repurchase price, the payment of the proceeds of the share repurchase, and the supplement of other funds, etc., and agreed that the Bank of the cashmere company of the defendant should, within two days after the signing of the investment contract, comply with the terms of the investment contract.

0.8% of the total investment will pay the guaranty fee to the plaintiff on a yearly basis. If the investment period is more than one year, for the other investment years after the first year, the defendant company should pay the annual guarantee fee to the plaintiff on the 7 day before the start date of the investment year according to the current investment balance and the agreed guarantee rate. If the payment obligation is not fulfilled according to the contract, a penalty shall be paid to the plaintiff on the basis of the total amount of 5 of the total amount of the outstanding guarantee. After the signing of the entrusted guarantee contract, the plaintiff signed a guaranty contract with the state open fund company No. 641020506100000144 for the investment contract of the State Development Fund, and performed the guaranty liability according to law.

In response to the plaintiff's previous guarantee provided by the Bank of China cashmere company, the defendant, Bank of China Duncan Clothing Co., Ltd., Ningxia Bank of China International Group Co., Ltd., Ma Shengming, Ma Shengguo and Li Weidong, respectively, provided joint and several liability to the plaintiff to counter the guarantee. Meanwhile, the defendant Ningxia Bank of China International Group Co., Ltd., with its 21 million 280 thousand stake in the Bank of Ningxia, Limited by Share Ltd, provided the plaintiff with a pledge against equity. In December 30, 2015, the defendants respectively signed the guaranty counter guarantee contract and the right pledge reverse guarantee contract with the plaintiff. In the contract, the amount of repurchase price paid by the Bank of China under the investment contract, the supplement of the investment income, the corresponding compensation, the corresponding compensation, the liquidated damages, the damages and the cost of the plaintiff's realization of the creditor's rights, as well as the guarantee fees, liquidated damages and other damages paid by the defendant to the plaintiff, should be agreed in the terms of the anti guarantee scope. At the same time, the pledge of Ningxia Bank of China cashmere International Group Co., Ltd. has been registered for pledge. After the above contract was signed, the defendant, cashmere company, paid a total of 1898720 yuan to the plaintiff only for the first year and the two and third guarantee years in accordance with the contract of the entrusted security contract. However, since the date of the fourth guarantee year (that is, from December 30, 2018 to December 29, 2019), it has not paid the guaranty fee to the plaintiff. Another reason is the defendant.

The company has been prosecuted by several financial institutions, triggering a breach of contract under the investment contract, and issuing a repurchase stock notice to its plaintiff and its plaintiff on August 2018 21, demanding that it buy shares in advance. After the issuance of the notice, the state open fund company deducted the 6500000 yuan of the defendant's cashmere company, and in October 10, 2018, the plaintiff's 6500000 yuan deposit was deducted from the plaintiff, which was used to pay part of the equity repurchase charge of the company in charge of the Bank of China. Up to now, the plaintiff has been compensated by the Bank of China cashmere company for the repurchase amount of 6500000 yuan, and the investment balance of the state open fund company in the Bank of China, Duncan, is 40670000 yuan. According to the plaintiff, the guarantor has fulfilled the obligation of guaranty in accordance with the agreement of the entrustment guarantee contract. The defendant, the cashmere company, should pay a guarantee fee of 325360 yuan for the fourth guarantee year (i.e. from December 30, 2018 to December 29, 2019) based on the remaining investment of 40670000 yuan, and shall bear the penalty for breach of the guarantee payment. In this case, the plaintiff has calculated the default penalty for the unpaid guarantee fee from 4 to 5 of the total amount of the guarantee fee. After 6500000 yuan of compensation, the plaintiff has the right to ask the defendant, the Bank of China, to repay all the compensation and overdue interest and liquidated damages, and has the right to request the counter guarantor to undertake the liquidation liability. However, after the plaintiff has collected it, all the defendants refuse to perform the obligation of repayment. To sum up, the behaviors of the six defendants have violated the contract stipulations and the relevant laws and regulations, which seriously infringed the plaintiff's legitimate rights and interests.

3. Plaintiff's claim

1. ordered the defendant, the Ningxia Limited by Share Ltd, to repay the amount of the debt that the plaintiff compensated for it was 6500000 yuan and the interest on the overdue payment from October 11, 2018 to the date of the actual debt repayment (calculated according to the benchmark lending rate of the PBOC).

2. ordered the defendant, Ningxia cashmere industry Limited by Share Ltd, to pay liquidated damages to the plaintiff.

650000 yuan (based on 10% of the plaintiff's guarantee amount).

3. ordered the defendant Ningxia cashmere industry Limited by Share Ltd to pay the guaranty fee of 325360 yuan to the plaintiff and 26733.75 yuan of liquidated damages arising from overdue payment of the guarantee fee (from December 23, 2018 to June 11, 2019 <170 days, 325360 yuan x4.35%x4/360x170=26733.75), and to pay the penalty for the day from June 12, 2019 to the actual payment of the guarantee fee (calculated on the basis of 4 times / day of the benchmark lending rate of the PBOC for the same period).

4. decree the defendant Ningxia Bank of China Duncan Clothing Co., Ltd., Ningxia BOC cashmere industry International Group Co., Ltd., Ma Sheng Ming, Ma Shengguo, Li Weidong on the above, two, three claims in all the debts involved to the plaintiff shall be jointly and severally liable.

5. the plaintiff ordered the plaintiff to have the priority of claim for the 21 million 280 thousand shares of Bank of Ningxia, Ningxia bank, which pledge the above-mentioned first, two and three litigation claims to the defendant bank of Ningxia cashmere industry International Group Co., Ltd.

6. the legal costs, preservation fees and related reasonable expenses of the case shall be borne by the six defendants.

Three. Other litigation and arbitration matters

As of the date of this announcement, no major litigation or arbitration matters should be disclosed and not disclosed by the company and the controlling shareholder.

Four. The possible impact of this announcement on the company's current profits or future profits.

The company entered the bankruptcy reorganization process in July 9, 2019. The plaintiff of the plaintiff Ningxia guaranty Group Limited has declared the claim to the manager according to law. The manager is currently examining the plaintiff's declaration of creditor's rights. The company will, in accordance with the accounting standards for enterprises, and other relevant provisions.

The principal and interest are included in liabilities and financial expenses, and the fees for accepting cases, compound interest and penalty interest will affect the performance of the company after the execution of the case. We invite investors to pay attention to investment risk.

Five. Reference documents

"Summons", "civil complaint", "proof of proof, respondent notice" and so on. Notice hereby.

Ningxia silver cashmere Limited by Share Ltd Manager

Two September 7th 19