Working Capital Loan Contract by alicejenny

VIEWS: 13 PAGES: 9

									                       Working Capital Loan Contract


Borrower: Yangzhou Yalian Steel Pipe Co., Ltd.
Registered address: No. 66, Shuangtang West Rd., Yangzhou
Tel.: 051487755293
Fax.: 051487755293
Legal representative/Person in charge: Xia Xu

Lender: Agricultural Bank of China
Legal Address: No. 41, Wenchangzhong Rd. , Yangzhou
Tel.: 051487331082
Fax.: 051487331082
Legal representative/Person in charge: Chuanlin Yang

The two parties reached this Contract according to applicable laws and regulations of
China, with terms and conditions set as below.

Article 1. Definitions
Unless otherwise specified in this Contract, the following terms refer to:
1.1 Loan term: means either the term of total loan amount or the term of a single loan.
    The term of total loan refers to the period starting from the day of the first single
    loan release to the day specified in the total loan contract on which the Borrower
    shall repay the principles and interests of all the loan. The term of a single loan
    refers to the period starting from the day of the release to the day agreed by the
    Borrower to repay the principles and interests of this loan.
1.2 Loan amount: refers to the principle amount that lender could grant to the
    Borrower during the effective period specified in this contract. The loan amount
    can be revolved during the effective period and within the total amount, however,
    the total amount applied by the Borrower and outstanding loan balance under this
    contract shall not exceed the cap agreed. The unused loan is automatically
    terminated when the effective term is ended.
1.3 Electronic self-help channels: it means the Online Banking, Phone banking, Cash
    Management Services and other electronic channels that the lender could provide
    to the Borrower for withdrawing money under the self-help revolving credit.
1.4 Day: it refers to the working day. When the last day of a period falls on national
    holiday/weekends, the liability that shall be performed on such day can be
    postponed to the first working day after this national holidays/weekends.
1.5 LIBOR/HIBOR: refers to the corresponding interbank offered rate of
    London/Hong Kong two working days before the withdrawing day announced by
    the Reuters.
1.6 Laws and Regulations: it refers to any law, administrative regulations, local
    regulations, rules, interpretations and other rules with legal validity.
Article 2: Commitments by Borrower
2.1 The loan application is compliance with laws and regulations: the Borrower is
duly established in accordance with law, approved by relevant government institutions
and registered as a legal entity or other eligible entities to apply for credits; the
Borrower shall be reliable and creditable, without any material black mark; the loan
purpose and repayment sources shall be clear and legitimate; the Borrower shall not
have any other illegal situations that against laws and regulations.
2.2 Contract conclusion behavior shall be flawless: to conclude a contract or perform
its obligations under this contract, the Borrower has fulfilled necessary procedures in
accordance with laws or Articles of Association of the company; the signatory or
sealed person shall be the legal representative/person in charge or authorized
representative; the Borrower shall actively cooperate with the lender to handles the
procedures related with approval, registration and documentation of the contract; the
Borrower shall not have any other situations that affect the validity of the contract.
2.3 Guarantee of this contract shall be legitimate: the Borrower assures that the
guarantor have fulfilled necessary procedures in accordance with laws or Articles of
Association to conclude a contract or perform its obligations under this contract; the
guarantor has the right to offer this guarantee; the signatory or sealed person on the
guarantee contract shall be the legal representative/person in charge or authorized
representative; the Borrower shall urge the guarantor to actively cooperate with the
lender to handles the procedures related with approval, registration and
documentation of the guarantee contract as well as the recording procedure of the
guarantee; the guarantor shall not have any other situations that affect the validity of
the contract, or other significant negative situations.
2.4 The Borrower shall perform this contract in good faith: the Borrower shall use the
loan as agreed term, purpose and ways in accordance with the law, and not use the
loan for any illegal purpose; the Borrower shall actively cooperate with relevant
national institutions and the lender to carry out loan payment management, post-loan
management and related inspections; the Borrower shall repay the loan in full and on
time in accordance with the contract, and not evade debts by any means; the Borrower
shall get prior permission of the lender before making foreign investment,
significantly adding debt financing, combination, separation, equity transfer and other
material events; the lender has the right to recover its loan according to the capital
return of the Borrower; the Borrower shall notify the lender in time when there is any
significant negative situation which would affect its loan repayment capability; the
Borrower shall not have any other situations that violate the obligations stipulated in
the contract.
2.5 The Borrower does not conceal any events that could possibly affect its financial
position and loan repayment capabilities, including but not limited to any lawsuit,
arbitration, other administrative procedures and claims.
2.6 The files and documentation related with the Borrower, guarantor, and shareholder
shall be true, complete, accurate, legitimate and effective.
Article 3: Basic terms and conditions
3.1 Loan pattern: single loan of RMB 27 million to be released on Dec. 15, 2011. The
loan term is 6 months

3.2 Loan purpose: working capital loan

3.3 Interest rate, penalty interest and compound interest
3.3.1 Interest rate: the prevailing benchmark rate that the Peoples’ Bank of China
publishes at the loan drawdown date for specific loan level where the loan the
Borrower obtained from the Lender on that day belongs to for the period, and plus 0%.
The rate shall be fixed rate.

3.3.2 Interest accrual and settlement
3.3.2.1 The interest is payable monthly in arrears and shall be paid on 20 th of each
month. All outstanding payable interest shall be paid off together with the last
principal installment repayment if such principal repayment does not fall on the
interest settlement day.
3.3.2.2 For the loan with fixed interest rate, the interest payable shall be calculated
based on such fixed rate.
3.3.2.3 If the loan maturity date falls on statutory holiday or weekends, the loan
repayment can be deferred to the first business date following the holiday and
weekends. Under this circumstance, the accrued interest shall be calculated according
to the agreed interest rate.

3.3.3 Penalty Interest
3.3.3.1 Any overdue principal will be subject to a penalty of up floating the interest
rate it bears by 50% for every 30 days as of the violation date. For loans in RMB
currency with fixed interest rate, if the People’s Bank of China increases the
applicable benchmark rate during the violation period, the penalty interest rate will be
adjusted accordingly at the same day.
3.3.3.2 If the Borrower uses the loan for other purpose, the Lender has the right to
impose a 100% penalty rate on the fund so used starting from the violation date, until
all the principal and accrued interest are repaid.
3.3.3.3 In the event of both circumstances mentioned above, the higher penalty rate
shall prevail.

3.3.4 Compound interest
Any overdue interest payment will be subject to monthly accrued compound interest
starting from the violation date, and the compound interest will be calculated based on
either the agreed fixed interest rate if such violation is before the loan maturity date or
the agreed penalty interest rate for overdue repayment if such violation is after the
loan maturity date.

3.4 Drawdown and loan release
3.4.1 Preconditions for drawdown
3.4.1.1 The Borrower shall fulfill following conditions in order to draw the loan
(1) The Borrower has the qualification required to apply for a loan; and its decision
making or competent authority has passed the resolution, and any necessary approval
required from any other departments or authorities has been obtained.
(2) The Borrower has finished the required security procedures required by the Lender,
and the security is legal and effective.
(3) The loan purpose is in compliance with applicable laws and regulations as well as
contract and agreement.
(4) The commitments made by the Borrower is true and effective at the time of
drawdown.
3.4.1.2 If the Borrower fails to fulfill the foregoing said conditions within 3 months as
of the execution of the Contract, the Lender is entitled to terminate this Contract.
Under this circumstance, the Borrower has 7days to raise an objection.

3.4.2 Drawdown
3.4.2.1 Working capital loan
3.4.2.1.1 Based on the actual working capital demand, the Borrower will draw the
RMB27 million loan on Dec. 15th, 2012.
3.4.2.1.2 If the Borrower wants to modify its loan drawdown plan, a 3-day prior
application is required, and the modification is subject to the Lender’s approval. If the
Borrower fails to draw the loan according to the agreed plan, the Lender may cancel
all or partial of the undrawn loan, and re-consider the release of the undrawn loan and
the drawdown conditions.

3.4.2.2 NA
3.4.2.3 NA

3.4.3. Loan payment
3.4.3.1 Entrusted payment
3.4.3.1.1 The entrusted payment can be applied if the payee is confirmed and the
single payment amount exceeds RMB 27 million or equivalent foreign currency.
3.4.3.1.2 In order to implement the entrusted payment, the Borrower shall furnish
supporting documents as contract, invoices and/or voucher required by the Lender.
3.4.3.1.3 If the Borrower wants to defer or withdraw the entrusted payment, a prior
written application is required, and in the process the loan is subject to interest.
3.4.3.1.4 There should be no second conditions for the entrusted payment, except
otherwise agreed by the two parties, the Lender has no obligation to inform the
Borrower of proceeding with the entrusted payment, deferred payment, payment
cancelation or Resumption
3.4.3.1.5 If the entrusted payment is applicable, the Lender has the right to restrict the
on-line banking, telephone banking and other non-bank counter payment function of
the account relating to the Loan
3.4.3.2 Self payment
Except the conditions provided in 3.4.3.1.1 and 4.1.1, self payment is allowed after
the loan is released into the Borrower’s account. However, the Borrower should
update the Lender the capital payment, and provide relevant supporting document and
material as per the Lender.
3.4.3.3 The Lender may re-negotiate the loan release and payment condition with the
Borrower or stop the loan release and payment provided that the Borrower suffers
weakened credit status, or fails to use the loan as agreed, or provide fake materials.

3.4.4 Drawdown repayment
3.4.4.1 In the event that the drawdown amount exceeds the actual capital demand by
the Borrower or the transaction payment by the Borrower has been returned due to
non-Lender’s reason, the Borrower is obligated to repay such exceeded amount or the
returned payment.
3.4.4.2 In the event that loan is used for other purpose other than the agreed purpose,
the Lender shall have the right to call back the fund that used for other purpose.
3.4.4.3 The above mentioned fund is subject to interest before it is repaid by the
Borrower, which shall be calculated and settled according to 3.3.3 and 3.3.2.

3.5 financial index supervision
In the event of following, the Borrower shall take actions satisfactory to the Lender to
ease the Lender’s concern; otherwise, the Lender may carry out remedies as per
article 5.3.
(1) The assets liabilities ratio exceeds 70%;
(2) The contingent liability exceeds the net assets;
(3) The cash flow from operation is negative for 2 years in a row;

3.6 Account supervision
3.6.1 The capital collection account of the Borrower:
Beneficiary: Yangzhou Yalian Steel Pipe Co., Ltd.
Account No.: 10158301040209233
3.6.2 As requested by the Lender, the Borrower is obligated to provide the
reconciliation statement of the capital collection account.1

3.7 Loan repayment
3.7.1 Repayment method
3.7.1.1 The Borrower shall deposit the principal and interest payable into the account
designated by the Lender before the due date, and irrevocably authorize the Lender to
deduct the principal and interest receivable from that account.
3.7.1.2 If the Borrower fails to repay the due liabilities, the Lender shall have the right
to deduct relevant principal and interest receivable from any account that the
Borrower opened at the Lender or any other branch of Agricultural Bank of China.
3.7.1.3 In the event that the Lender exercises its right of offset, the Borrower will
have 7 days to raise an objection.
3.7.2 Repayment sequence
Except otherwise agreed, if the repayment the Borrower made cannot cover all the
due liabilities, the Lender will have the right to determine the repayment/offset
priorities of due principal, interest, penalty interest, compound interest and other due
liabilities with such repayment.

3.7.3 Prepayment
The Borrower is allowed to prepay the loan when the principal amount to be prepaid
exceeds RMB 1 millon, and under this circumstance, the interest shall be calculated
based on the actual loan occupation term and agreed interest rate. However, a written
application is required for any prepayment.
Any outstanding loan shall continue to bear the agreed interest rate.

3.7.4 Loan renewal
The Borrower is allowed to defer the loan repayment if it applies for the extension 15
days prior to the due date and obtain the approval of the Lender. Under this
circumstance, a separate loan renewal agreement is required.

3.8 Vouchers and receipts from the bank
Any voucher and receipts from the bank shall be the integral part of this Contract, and
in the event of any information conflicts between this Contract and the vouchers and
receipts, the latter shall prevail.

3.9 Security & guarantee
The loan under this Contract is secured and guaranteed by the pledge, and a maximum
guarantee agreement (No. 32100420110038135) has been signed for this.

3.10 Rights and obligations
3.10.1 Rights and obligations of the Borrower
(1) Draw the loan according to the terms and conditions of this Contract;
(2) Repay the due principal and interest timely
(3) Use the loan for the agreed purpose
(4) Provide support with respect to the review and supervision by the Lender, and
furnish requested information and material timely as per the Lender;
(5) The Borrower is obligated to advise the Lender the following and obtain the prior
approval:
- Any material transactions or changes, as M&A, JV, major assets transfer, shock
issuance, investment, financing, bankruptcy, etc.
- Any material guarantee/pledge commitment that might affect its ability to repay the
loan;
- Any other adverse situations that might affect its ability to repay the loan
(6) The Borrower shall inform the Lender of any of the followings within 5 days:
- The Borrower and its legal representative, senior officer or controller involves in
illegal activities.
- Stop production, shut-down, cancellation, etc.
- Challenged by difficult financial and/or operational condition.
- Any other material adverse situation.
(7) The Borrower shall inform the Lender of any of the followings within 7 days
- Changes to the company control/ownership, senior officer and company
organizations;
- Changes of the company name, company address, business scope or licensed
business;
- Increase registered capital, modify the article of association to a large extent;
- Other matters that might affect its ability to perform the obligations;
(8) The Borrower shall not involve in any activity or program that will harm the
Lender’s interest;
(9) The Borrower shall assume all the attorney fee, insurance, freight fee, evaluation,
file, storage, appraisal and notary fee relating to the loan security/guarantee.
(10) Other rights and obligations granted or imposed by laws and regulations as well
as agreed by the two parties.

3.10.2 Rights and obligations of the Lender
(1) Release the loan timely;
(2) Has the right to supervise the operational and financial condition, inventory and of
the Borrower and loan use, and request related document, material and information;
(3) In the event of any situation that, in the Lender’s discretion, might weaken or
adversely affect the Borrower’s ability to perform its obligation, the Lender has the
right to require the Borrower to take necessary actions to ease its concern.
(4) Other rights and obligations granted or imposed by laws and regulations as well as
agreed by the two parties.

3.10. 3 other obligations of the two parties
3.10. 3. 1 Confidentiality obligation;
3.10. 3. 2 provide necessary assistance in good faith after the Contact is terminated

Article 4 Supplementary terms and conditions
4.1 The Loan is subject to interest and the agreed interest rate shall apply during the
period that the loan is restricted from use by the Borrower, if applicable.
4.2 Before any qualified loan use, the Borrower is obligated to inform the Lender of
any and all investigation, restriction or enforce deduction by competent authority (ies),
or claim(s) against it by any other third parties, timely, if any.

Article 5 Legal liabilities
5.1 Any of the following will be deemed as breach by the Borrower
(1) Fail to perform its obligations under this Contract;
(2) Fail to fulfill the commitment it made in article 2;
(3) Unwilling to repay the liabilities;
(4) Fail to fulfill its obligations under other agreement reached by two parties;
(5) Any other default;

5.2, in the event of any of following, the Lender will have the right to terminate this
Contract and other agreement reached by the two parties:
(1) Default by the Borrower or guarantor;
(2) Material adverse change with respect to the repayment ability of the Borrower and
guarantor;
(3) Any potential damages or value decrease of the pledge;
(4) Policy adjustment that might threaten the loan recovery;
(4) Any other material default by the Borrower against other creditors;
(6) Situations where enable the termination of the Contact according to laws and
regulations;
For any of the above termination cause, the Borrower will have 7 days to raise an
objection;

5.3 In the event of 5.1 and/or 5.2, the Lender shall have the right to take following
action as remedy:
(1) Request the borrower to correct its default, and take necessary actions that
satisfactory to the Lender to ease the concern;
(2) Charge penalty interest and compound interest if the Borrower fails to use the loan
as agreed;
(3) Reduce the loan amount, cancel or stop the loan release.
(4) Excise its right of offset;
(5) Request the Borrower to indemnify the losses and undertake legal responsibilities;
(6) Take actions to protect its assets;
(7) Disclose the default by Borrower to the public;

5.4 Any attorney fee, travel expense, evaluation fee and other fee relating to legal
actions and proceedings as a result of the Borrower’s default shall under the
responsibility of the Borrower;
5.5 Under the circumstance that the Borrower performs its agreed obligation and the
Lender fails to release the loan timely and sufficiently, it shall indemnify the
Borrower for the losses.

Article 6: Miscellaneous
6.1 Either party is obligated to inform the other party of its latest contact information,
including address, telephone number and fax number, etc.
6.2 The Lender or the Agricultural Bank of China has the right to authorize or entrust
other branches to takeover and perform the rights and obligations under this Contract.
6.3 The Lender has the right to disclose relevant information of this Contact or the
Borrower to competent department or organization according to applicable laws and
regulation, and will not be responsible for any consequences as a result of relying on
or using the information by any third party.
6.4 In the event that the Lender is unable to perform this Contract or certain
provisions of this Contact as a result of new policies and law or modification to
current laws and policies, the Lender has the right to cancel the unreleased loan.
6.5 Any right of the Lender under this Contact shall not be affected by it failing to
perform all or part of its rights under this Contract or deferring the right performance.

6.6 Disputes Settlement
Any dispute failing to be solved by the parties through negotiation shall be submitted
to the local court that has jurisdiction over the Lender.

6.7 Validity of the Contract
6.7.1This Contract shall bear the signatures (or personal seals) of the legal
representatives or authorized signatories of both parties, accompanying the company
seals to become effective.
6.7.2 Signed at: Yangzhou, Jiangsu Province
6.7.3 Any unaddressed issue shall be discussed and determined by the two parties.
6.7.4 This Contract shall be executed in 3 counterparts, of which shall be held
separately by the Borrower, the Lender and the guarantor as an original.




Borrower (Company Seal)


Legal Representative/person in charge:


(or Authorized representative)


                                                               Dec 15th, 2011


Lender (Company Seal)


Legal Representative/person in charge:

(or Authorized representative)
                                                               Dec 15th, 2011

								
To top