*ST Middle Velvet (000982): Litigation Related Matters Notice

Stock Code: 000982 securities short: *ST velvet notice number: 2019-127

Ningxia BOC cashmere Limited by Share Ltd and its controlling shareholder and controlling shareholder's notice of litigation matters

All members of the company and the board of directors guarantee the authenticity, accuracy and completeness of the information disclosure. There is no false record, misleading statement or major omission.

One, Ningxia Bank of China, Limited by Share Ltd, controlling shareholder matters related to litigation

1. Litigants

Plaintiff: Chifeng Ping Ping Investment Management Co., Ltd., address: Linxi Town, Linxi County, Chifeng, the Inner Mongolia Autonomous Region, legal representative: Zheng Wenjie, chairman.

Defendant 1: Ningxia BOC cashmere industry International Group Co., Ltd., address: the Ningxia Hui Autonomous Region, Yinchuan City, Lingwu City, East Tower Town 2 village, legal representative: Ma Sheng Ming, chairman of the board.

Defendant 2: Wuzhong Zhongxing Cashmere Industry Co., Ltd., address: Shang Qiao village, Shanghai Bridge Street office, Wuzhong City, the Ningxia Hui Autonomous Region, legal representative: Ma Zongshuai, manager.

Defendant 3: Ma Shengguo

Defendant 4: Inner Mongolia Tong Yi Rong Holdings Limited, address: Linxi Town, Linxi County, Chifeng, Inner Mongolia. Legal representative: Liu Jiguo, chairman.

Defendant 5: Ningxia cashmere cashmere Limited by Share Ltd, address: Lingwu ecological textile park, Yinchuan, the Ningxia Hui Autonomous Region (north side of south 2nd Ring Road, Lingwu City, east of two road), legal representative: Shen Chen, chairman of the company.

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

In March 14, 2017, the plaintiff, Chifeng Shuang Ping Investment Management Co., Ltd. (hereinafter referred to as Chifeng Shuang Ping company) signed the "plush free sales contract" with the defendant, Ningxia BOC cashmere industry Limited by Share Ltd (hereinafter referred to as Bank of China), Inner Mongolia Tong Yi Rong Holdings Limited (hereinafter referred to as Tong Yi Rong company), Ningxia Zhong Yin Rong International Group Co., Ltd. (hereinafter referred to as Bank of China International) and Ma Sheng Guo. According to the contract, the defendant, Bank of China AG, purchased from the plaintiff about 80 tons of no fluff, the price was 630 thousand yuan per ton, the delivery was delivered on a separate basis, the buyer made the purchase and assumed the freight, the buyer paid a deposit of 10% according to the batch payment, the balance was settled within three months after the sight of the balance, and the payment was paid at 5/10000 of the total amount payable according to the total payable amount, and the contract at the same time.

Agreed on related matters. Defendant Tong Yi Rong company, Bank of China International, and Ma Sheng Guo provide joint and several liability guaranty guarantee for the defendant, Bank of China AG to fulfill this contractual obligation.

After the signing of the contract for the sale of non Plush goods, the plaintiff began supplying No Plush to the defendant bank of China Ag from March 17, 2017. Until August 19, 2017, the defendant, Bank of China AG, seized 9 kilograms of 80000 kg of fluff in Tong Yi Rong company, and the plaintiff fully fulfilled the contractual obligations of supply. Since then, the two sides have agreed to continue to cooperate in accordance with the relevant agreement of the "No Plush sales contract". As of September 15, 2017, the plaintiff provided 23 times to the defendant bank of China joint stock company for 171842.86 kilograms without plush, and the total price was 101834849.5 yuan. The defendant, Bank of China AG, paid 26 yuan to the plaintiff 70104632.2 yuan from March 17, 2017 to March 22, 2018, and owed 31730217.30 yuan to the plaintiff. The defendant has paid 17 times in the payment of the goods, and the defendant shall pay the plaintiff 9195792.61 yuan from the date of the payment from August 15, 2019 to the plaintiff in accordance with the agreement stipulated in the contract that the delay payment shall be paid according to the standard of 5/10000 of the day.

In December 4, 2017, the defendant, Bank of China AG, on the basis of assets reorganization, filed the application for debt transfer to the plaintiff, applying for the transfer of debts owed to the plaintiff's non fluffy loan principal and the related contractual obligations transferred by the defendant, BOC International Company. On the same day, the defendant, Bank of China International, issued a letter of undertaking to undertake the debt and guarantee repayment to the plaintiff, undertook and promised to repay the plaintiff's debt in time and in full in accordance with the contract, and bear the corresponding contractual obligations. In view of the fact that BoC is a major shareholder of the Bank of China Ag and major shareholders of the Bank of China International Bank of China, in conjunction with the commitments made by the Bank of China International Corporation, taking into account the cooperation relationship between the parties, the plaintiff made a "reply to debt transfer" on December 5th, insisting on the debts and related contractual obligations owed to the plaintiff's payment owed by the Bank of China Ag in December 5th.

Since then, the plaintiff has repeatedly urged the Bank of China International Bank to pay a late payment. The defendant, BOC International, paid 5 million yuan to the plaintiff in April 27, 2018. So far, the Plaintiff still owed 26730217.30 yuan. In June 2018, in the course of the plaintiff's urgent payment, the defendant Wuzhong Zhongxing Wool Industry Co., Ltd. (hereinafter referred to as Zhong Xing Rong) Co., Ltd. voluntarily provided the plaintiff with the mortgage guarantee. In June 12th, the plaintiff signed the "movable property floating charge contract" with the defendant bank of China International and zhongxingrong company. The Zhongxing cement company had its own mechanical equipment, including the A186F type cover plate comber 56, the turbine l platform, the middle air conditioning l group and the sorting sieve 20 groups. Raw materials, including Mongolia's no wool about 15 tons, Mongolia's original cashmere 300 tons, and the planned purchase of 30 tons of no plush, were mortgaged.

Continue. On the same day, the three party of the original defendant and the defendant also signed the real estate mortgage contract. Zhongxing cashmere Co., Ltd. used the real estate certificate No. 00060863, 00060864, and 00067061 as its own property, and the state land use right of the "Wu Guoyong (2014) 60012nd, Wu Guoyong (2014) 60014th" was set up. In June 15th, the real estate mortgage registration procedure was carried out in accordance with the law. In the mortgage contract, the defendant, Bank of China International Company, promised the plaintiff that 50% of the total amount of the loan, interest, liquidated damages and so on should be paid to the plaintiff before July 30, 2018, and the other 50% would be paid in August 15th. In fact, the defendant, Bank of China International, did not honour its promise and did not pay any money to the plaintiff. In April 2019, when the plaintiff again urged the above arrears, the defendant, BOC International and Ma Sheng, renewed their promise to the plaintiff. Before May 31st, the former secured 11 tons of fluff and another part of the plush sale without plush, which guaranteed that the plaintiff should be paid at a price of not less than 20 million yuan, but has not yet fulfilled it. According to the relevant legal provisions and contractual stipulations, the defendant, Bank of China International, as the transferee of debt and contractual obligations, should pay the plaintiff the above payment, interest and breach of contract damages; the defendant Zhongxing cashmere company provides mortgage guarantee with its own assets, the plaintiff is the mortgage-holder, and the legal person has the right to pay the first priority in the proceeds of the discount, auction or sale of the mortgaged property. The defendant, Bank of China Ag and BOC International Company are related companies, and all parties concerned are aware and fully agree on the transfer of the above obligations and contractual obligations. In accordance with relevant laws and regulations, the joint and several guarantor of the guarantor as the contract stipulates that they shall be jointly liable to the above payment, interest and penalty. The plaintiff has been repeatedly delayed by the plaintiff, and the plaintiff has no choice but to appeal to the people's court. The plaintiff's claim is supported by the plaintiff.

3. Litigation request

(1) the people's court is required to order the defendant, Ningxia BOC cashmere International Group Limited, to pay the plaintiff No Plush sales 26730217.30 yuan immediately, and to pay 5/10000 yuan to the plaintiff at the rate of 5/10000 days from August 15, 2019 to 9195792.61 yuan.

(2) the defendant ordered the Ningxia Bank of China International Group Co., Ltd. to pay the above payment as the base. According to the standard of 5/10000, the plaintiff should pay the liquidated damages from August 16, 2019 to the day when all the payments were paid.

(3) the defendant Ma Shengguo, Inner Mongolia Tong Yi Rong Holdings Limited and the Limited by Share Ltd of the Bank of China (cashmere) in Ningxia are required to jointly and severally pay the principal, interest and liquidated damages for the above non Plush loans.

(4) the plaintiff shall have the right to pay the first priority of the proceeds from the discount, auction or sale of the real estate, machinery and equipment, raw materials, etc., which are mortgaged by the Zhongxin Industry Co., Ltd., Wuzhong City, the defendant.

(5) to order the defendant to bear the lawyer's fee of 180000 yuan.

(6) the defendant shall bear the cost of litigation in this case.

4, the latest progress of the above cases

In November 26, 2019, the company received the court hearing of the above cases. The civil ruling of the intermediate people's Court of Chifeng, the Inner Mongolia Autonomous Region (2019), 176 of the 04 early Republic of China, ruled as follows:

In the case of plaintiff Chifeng double Ping Investment Management Co., Ltd. and defendant Ningxia Zhongyin cashmere International Group Co., Ltd., Wuzhong Zhongxing Cashmere Industry Co., Ltd., Ma Shengguo, Inner Mongolia Tong Yi Rong Holdings Limited, and Ningxia Zhongyin cashmere Limited by Share Ltd, the plaintiff, Chifeng double Ping Investment Management Co., Ltd. applied for withdrawal of the prosecution of Ningxia silver cashmere industry Limited by Share Ltd.

The court held that the plaintiff applied for withdrawal of the prosecution of the Limited by Share Ltd of the Ningxia BOC cashmere industry, without violating the law and without prejudice to the interests of the third party. In accordance with the provisions of the 145th paragraph 1 and 154th, paragraph 1 (five) of the Civil Procedure Law of the people's Republic of China, the following are the following:

The plaintiff granted the plaintiff Chifeng Shuang Ping Investment Management Co., Ltd. to withdraw the prosecution of the Limited by Share Ltd in Ningxia, the Bank of China.

Two, Ningxia Bank of China cashmere industry Limited by Share Ltd Holdings subsidiary Ningxia Bank of China Duncan Clothing Co., Ltd. litigation matters

1. Litigants

Plaintiff: Chifeng Ping Ping Investment Management Co., Ltd., address: Linxi Town, Linxi County, Chifeng, the Inner Mongolia Autonomous Region, legal representative: Zheng Wenjie.

Defendant 1: Ningxia Bank of China Duncan Clothing Co., Ltd., residence: the Ningxia Hui Autonomous Region Yinchuan Lingwu ecological textile park (Lingwu south two Ring Road North via two Road East), legal representative: Shi Lei, company manager.

Defendant 2: Inner Mongolia Tong Yi Rong Holdings Limited, address: Linxi Town, Linxi County, Chifeng, Inner Mongolia, legal representative: Liu Jiguo, chairman.

Defendant 3: Ningxia cashmere cashmere Limited by Share Ltd, address: Lingwu ecological textile park, Yinchuan, the Ningxia Hui Autonomous Region (north side of south 2nd Ring Road, Lingwu City, east of two road), legal representative: Shen Chen, chairman of the company.

Defendant 4: Ningxia BOC cashmere industry International Group Co., Ltd., address: the Ningxia Hui Autonomous Region, Yinchuan City, Lingwu City, East Tower Town 2 village, legal representative: Ma Sheng Ming, chairman of the board. Defendant 5: Ma Shengguo, defendant 6: Wuzhong Zhongxing Cashmere Industry Co., Ltd., address: Shang Qiao village, Shanghai Bridge Street office, Wuzhong City, the Ningxia Hui Autonomous Region, legal representative: Ma Zongshuai, manager.

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

　　2017年5月8日，原告與寧夏中銀鄧肯服飾有限公司(以下簡稱中銀鄧肯公司)、內蒙古統壹絨業控股有限公司(以下簡稱統壹絨業公司)、寧夏中銀絨業股份有限公司(以下簡稱中銀股份公司)、寧夏中銀絨業國際集團有限公司(以下簡稱中銀國際公司)、馬生國簽訂了《無毛絨銷售合同》，合同約定，被告中銀鄧肯公司向原告購買無毛絨約1000噸；價格根據購買時的市場價格雙方協商確定；分批次在統壹絨業公司廠區交貨，購買方自提并承擔運輸費用；按批次交納貨款額10%的定金，余款見票滿三個月后結清，賬期內甲方(被告中銀鄧肯公司)按照0.7%的利率承擔利息；逾期付款，則按照應付貨款總額的日萬分之五支付違約金；如本合同任何一方違約致使本合同部分不能履行或者不能完全履行，由違約方按照不能履行合同對應的貨款總額X10%的金額向守約方支付違約金；合同同時 Agreed on related matters. Defendant Tong Yi Rong company, Bank of China AG, BOC International, and Ma Sheng state provide joint guarantee of guaranty for the defendant, Bank of China Duncan Co., in fulfilling this contractual obligation.

In May 18, 2017, the plaintiff signed a supplementary agreement with the defendant, BOC Duncan company and Tong Yi Rong company, "the contract for the sale of plush free products". The agreement was made that the defendant, the Bank of China, Duncan, purchased 100 tons of Mongolia cashmere from the plaintiff at the price of 530 thousand yuan per ton. In July 20th, the three parties signed the supplementary agreement on "No Plush sales contract" again, and agreed that the defendant, Bank of China Duncan, purchased 80 tons of homemade white plush at the price of 640 thousand yuan per ton. According to the price of 660 thousand yuan per ton, the plaintiff purchased 20 tons of domestic white, white and no Plush in accordance with the price of 660 thousand yuan per ton.

In the course of performance after the signing of the above contract and supplementary agreement, the defendant, Bank of China Duncan, did not pay a deposit of 10% of the amount paid according to the agreed terms, nor did it collect the goods at the agreed time. Only in September 27, 2017 and November 27th, two vehicles were assigned to be transported, and 33124.94 tons of goods were collected from the factory of Tong Yi Rong company, and the total price was 20219461.20 yuan. The plaintiff sold no plush and did not pay the goods in accordance with the agreement. Only in January 25, 2018, the plaintiff paid 911694.31 yuan to the plaintiff, and the remaining 19307766.89 yuan huge amount of money had not been paid. According to the standard of 0.7% of the monthly interest rate stipulated in the contract, the defendant shall pay the plaintiff 424608.69 yuan (20219461.20 yuan XO.7%X3 months) of the interest on the goods within three months, and pay 5512525.94 yuan to the plaintiff from the date of self payment from August 15, 2019 to August 15, 2019. The defendant, Bank of China, Duncan, neither paid the deposit in accordance with the agreement, and at the same time failed to pay the amount of the plaintiff's huge payment, which constituted a substantive breach of contract, which led to the fact that the contract purpose of the plaintiff without Plush sale could not be realized. According to the relevant provisions of the contract law, in conjunction with the contract, "if any part of the contract fails to perform or fails to perform fully because of any breach of the contract, the breach party shall pay the penalty for breach of contract to the claimant in accordance with the sum of X10% of the total amount of the corresponding contract. The total amount of the gross sales contracted by the two parties is about 1000 tons, while the defendant actually performs more than 33 tons. According to the part of the 965 portion of the contract which is not fulfilled, the minimum price per ton is 530 thousand yuan. The defendant, the Bank of China Duncan company, shall pay the plaintiff a penalty of 51 million 145 thousand yuan to make up for the loss of the plaintiff's interests after the full performance of the contract. In December 4, 2017, in the course of assets reorganization of the Bank of China, the defendant, Bank of China International, issued the undertaking to undertake the debt and guarantee repayment for the plaintiff. He promised and guaranteed that in accordance with the contract, he would repay the debts and related contractual obligations of the defendant, BOC AG and the Bank of China Duncan company, which owed the plaintiff 51037984.19 yuan in the amount of no fine goods, and the related contractual obligations in full and in time. This commitment was the unilateral commitment of the defendant, the Bank of China International Company to join the defendant, the Bank of China, Duncan, which owed the plaintiff the interest, the interest and the repayment of the liquidated damages. Therefore, the defendant, Bank of China International Inc. and Bank of China Duncan Co., should jointly repay the plaintiff's above payment, interest and breach of contract damages according to law. The defendant Zhongzhong Textile Co., Ltd. of Wuzhong City (hereinafter referred to as Zhong Xing Rong) Co., Ltd. voluntarily provided the plaintiff with the mortgage guarantee. In June 12, 2018, the plaintiff signed the "movable property floating charge contract" with the defendant bank of China International and Zhongxing Corp. The Zhongxing industry company owned its own mechanical equipment, including the A186F type cover plate comber 56, the turbine 1 units, the central air conditioning l group and the sorting sieve 20. Raw materials, including Mongolia's no wool about 15 tons, Mongolia original velvet 300 tons, and planned to purchase 30 tons of Mongolia's no plush, were mortgaged and registered on the same day. On the same day, the three party of the original defendant and the defendant also signed the real estate mortgage contract. Zhongxing cashmere Co., Ltd. used the real estate certificate No. 00060863, 00060864, and 00067061 as its own property, and the state land use right of the "Wu Guoyong (2014) 60012nd, Wu Guoyong (2014) 60014th" was set up, and it was held in accordance with the law in June 15th.

The registration of real estate mortgage has been made. The relevant international law stipulates that the plaintiff has the right to discount, auction or sell off the proceeds of the mortgaged property. In the mortgage contract, the defendant, Bank of China International Company, promised the plaintiff that 50% of the total amount of the loan, interest, liquidated damages and so on should be paid to the plaintiff before July 30, 2018, and the other 50% would be paid in August 15th. In fact, the defendant, Bank of China International, did not honour its promise and did not pay any money to the plaintiff.

In April 2019, when the plaintiff again urged the above arrears, the defendant, BOC International and Ma Sheng, renewed their promise to the plaintiff. Before May 31st, the former secured 11 tons of fluff, and some partial Plush free sales were sold, and the plaintiff was paid back at the selling price, but it has not yet been fulfilled. According to the relevant legal provisions and contractual stipulations, the defendant, BOC International, joined the Bank of China Duncan to repay the debts of the plaintiff. It should repay the plaintiff's payment, interest and breach of contract damages with the Bank of China Duncan company. The guarantor of the above debts of the defendants Tong Yi Rong company, Bank of China AG, Bank of China International Corporation, and the Bank of China, the Bank of Malaysia, should be jointly and severally liable for the above debts. The defendant Zhongxing cashmere company provides mortgage guarantee with its own assets, and the plaintiff is the mortgage-holder. He has the right to pay compensation in advance according to the law. The above payment, interest and penalty for breach of contract have been repeatedly delayed by the plaintiff. The defendant has been delayed. The plaintiff has no choice but to appeal to the people's court.

3. Litigation request

(1) the people's court shall request the people's court to terminate the "plush free sales contract" signed between the plaintiff and the defendant, Ningxia Bank of China Duncan Clothing Co., Ltd. in May 8, 2017, and the supplementary agreement on "No Plush sales contract" signed in May 18, 2017 and July 20, 2017.

(2) decree that the defendant Ningxia Bank of China Duncan Clothing Co., Ltd. and Ningxia BOC cashmere International Group Co., Ltd. immediately paid the plaintiff 19307766.89 yuan for the sale of no Plush sales, and the interest rate was 424608.69 yuan in accordance with the standard of 0.7% monthly interest rate. According to the 5/10000 standard of the day, the amount of default payment from the day of self payment to August 15, 2019 was 5512525.94 yuan, totaling 25244901.52 yuan.

(3) the defendant, Ningxia Bank of China Duncan clothing Limited, ordered the defendant to pay 51145000 yuan to the plaintiff in accordance with the "no gross sales contract" stipulated in the "no amount of gross X10% of the corresponding contract".

(4) to order the defendant, Ningxia BOC Duncan Garments Co., Ltd. and Ningxia BOC cashmere industry International Group Co., Ltd. as the base for the payment payable, and to pay the plaintiff the payment of deferred payment from August 16, 2019 to the date of payment of all the goods in accordance with the standard of 5/10000.

(5) to order the defendant to bear the lawyer's fee of 280000 yuan.

(6) decree the defendant Inner Mongolia Tong Yi Rong Holdings Limited, the Ningxia Zhong Yin cashmere industry Limited by Share Ltd, Ningxia BOC cashmere International Group Co., Ltd. and Ma Sheng state jointly and severally reimburse the above No Plush loan principal, interest in the account, penalty for breach of contract, and attorney fees.

(7) the plaintiff shall have the right to pay the first priority of the proceeds from the discount, auction or sale of the real estate, machinery and equipment, raw materials, etc., which are mortgaged by the Zhongxin Industry Co., Ltd., Wuzhong City, the defendant.

(8) the defendant shall bear the cost of litigation in this case.

4, the latest progress of the above cases

In November 26, 2019, the company received the court hearing of the above cases. The civil ruling of the intermediate people's Court of Chifeng, the Inner Mongolia Autonomous Region (2019), 177 of the 04 early Republic of China, ruled as follows:

In the case of plaintiff Chifeng double Ping Investment Management Co., Ltd. and defendant Ningxia Zhongyin Duncan Garments Co., Ltd., Inner Mongolia Tong Yi Rong Holdings Limited, Ningxia Zhongyin cashmere Limited by Share Ltd, Ningxia Zhongyin cashmere industry International Group Co., Ltd., Ma Shengguo, Wuzhong Zhongxing cashmere Co., Ltd., the plaintiff Chifeng double investment Management Co., Ltd. applied for withdrawal of the prosecution of Ningxia silver cashmere industry Limited by Share Ltd.

The court held that the plaintiff applied for withdrawal of the prosecution of the Limited by Share Ltd of the Ningxia BOC cashmere industry, without violating the law and without prejudice to the interests of the third party. In accordance with the provisions of the 145th paragraph 1 and 154th, paragraph 1 (five) of the Civil Procedure Law of the people's Republic of China, the following are the following:

The plaintiff granted the plaintiff Chifeng Shuang Ping Investment Management Co., Ltd. to withdraw the prosecution of the Limited by Share Ltd in Ningxia, the Bank of China.

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.

In the two cases mentioned above, the plaintiff of Chifeng Shuang Ping Investment Management Co., Ltd. has withdrawn the action against the company. Therefore, the litigation of this announcement has no effect on the company's current profits or subsequent profits. BOC Duncan will calculate the estimated liabilities in the limit of the amount involved, and will be determined according to the litigation result in the future.

Five. Reference documents

1. Subpoena, civil complaint and notice of constituent members of collegiate bench.

2, the Inner Mongolia Autonomous Region Chifeng intermediate people's court civil ruling (2019) 04, 176, early Republic of China;

3, the Inner Mongolia Autonomous Region Chifeng intermediate people's court civil ruling (2019) 04, 177 in the early Republic of China.

Notice hereby.

The board of Limited by Share Ltd of Ningxia BOC cashmere industry

Two November 29th 19