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Exhibit 10.1
LOAN FACILITY
between
LESHAN-PHOENIX SEMICONDUCTOR COMPANY LIMITED
and
INDUSTRIAL AND COMMERCIAL BANK OF CHINA
LESHAN BRANCH
NOVEMBER 17, 2000
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Loan Facility
Exhibit A Foreign Exchange Loan Contract
Exhibit B Renminbi Loan Contract
Exhibit C Mortgage Contract
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EXECUTION VERSION
THIS LOAN FACILITY (together with the Appendices hereto, this "Facility") is
entered into on November 17, 2000 by
Leshan-Phoenix Semiconductor Company Limited, a Sino-foreign equity joint
venture limited liability company duly organized and existing under the
laws of the People's Republic of China ("China") with its registered
address at 00X, Xxxx Xxxxxx'x Xxxx, Xxxxxx Xxxx, Xxxxxxx, Xxxxx ("Party
A"); and
Industrial and Commercial Bank of China, Leshan City Branch, acting through
its office at 4, Zi Xxx Xxx Street, Central District, Leshan City, Sichuan,
China ("Party B").
WHEREAS Party A has requested Party B to extend a certain loan facility to it
and Party B is willing to do so on the terms and conditions set forth herein.
NOW it is therefore agreed as follows:
1. Loan Amount and Draw-down
1.1 Subject to the terms and conditions of this Facility, Party B hereby
agrees to make available to Party A a loan facility in an amount equal
to Twenty Million US Dollars (US$20,000,000), such amount to be
divided into two separate loan facilities, one of RMB33,200,000 (the
"RMB Portion") and one of US$16,000,000 (the "US$ Portion" and
together with the RMB Portion, the "Loan Facility").
1.2 Party A may draw down funds under the Loan Facility from time to time
for a period of six months following the date of this Facility. Party
A will provide Party B with written notice of its intent to draw down
funds under this Facility not less than seven business days prior to
the date of such a draw-down. The maximum amount that may be borrowed
in single-draw-down under the US$ Portion shall be less than
US$4,000,000 and less than RMB15,000,000 under the RMB Portion. The
total amount outstanding at any time under all draw-downs under this
Facility may exceed the US$ equivalent of US$4,000,000, but shall at
all times be less than the US$ equivalent of US$20,000,000. (For all
purposes of determining the US$ equivalent of any RMB amount in
respect of this Facility, the exchange rate of US$1:RMB8.3 shall be
used.)
1.3 At the time of each draw-down, Party A and Party B shall execute a
loan contract substantially in the form of Exhibit A (for draw-downs
under the US$ Portion) and Exhibit B (for draw-downs under the RMB
Portion) (each, a "Loan Contract"), at least seven business days prior
to the proposed date of such draw-down.
2. Interest and Fees
2.1 Interest on each draw-down in US$ will accrue at a rate not to be
higher than the base interest rate charged by Party B for six-year
term loans adjusted every six months (as such rate is published by
Party B's Head Office) as of the date Party A provides notice of its
intent to make a draw-down in US$. Interest on
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each draw-down in RMB will accrue at a rate not to be higher than the base
interest rate for six-year term loans adjusted once every year (as
published by the People's Bank of China) as of the date Party A provides
notice of its intent to make a draw-down in RMB. The specific interest rate
applicable to each draw-down shall be listed in the relevant Loan Contract.
2.2 Interest on the amount of each draw-down will be paid quarterly in arrears
on the 20th day of the last month of each calendar quarter. Payments of
interest will be made in the currency of the draw-down to which such
payment of interest relates. If any payment of interest is not made when
due, interest will accrue on such unpaid interest at the interest rate
applicable to that draw-down.
2.3 Neither this Facility nor any draw-down will be subject to any
documentation fee, origination fee or other fee imposed by Party B. The
loan will not be subject to prepayment fees or termination fees, provided
that Party A will be required to provide 15 business day's advance notice
of any prepayment.
3. Repayment and Prepayment
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3.1 The principal of each draw-down will be due on the third anniversary of the
Loan Contract for such draw-down. Party A will repay the principal amount
of each draw-down as a single repayment. All repayments of principal will
be made in the currency of the draw-down to which such repayment or payment
of interest relates.
3.2 At the request of Party A, such request to be delivered to Party B not
later than five business days prior to the due date of such draw-down, the
term for repayment of any draw-down will be extended by Party B for an
additional period not to exceed three years. All such extensions of
maturity on the same terms applied at the time of the original draw-down.
3.3 Party A shall repay the loan and interest thereon using its sales revenue,
cash freed up from depreciation, profit and other revenue.
3.4 Upon 15 business days' prior written notice to Party B, Party A may prepay
any draw-down in whole or in part; provided, that such prepayment shall be
accompanied by payment of all accrued interest to but excluding the date of
such prepayment.
4. Security
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4.1 At the time each Loan Contract entered into, Party A shall identify and
grant a security interest in certain of its equipment, the book-value (as
recorded on the records of Party A) of which shall be 142.5% of the amount of
such Loan Contract, to Party B. The value of all property securing the Loan
Facility will not at any time exceed the equivalent of US$28,500,000. The terms
and form of security interest shall be provided in a separate agreement
substantially in the form of Exhibit C to be signed by the parties.
5. Others
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5.1 Each of Party A and Party B represents and warrants to each other that:
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(a) It possesses full power and authority to enter into this Facility
and to perform its obligations hereunder.
(b) It is in compliance with all material laws, rules, regulations,
decrees and orders, and all interpretations thereof, of all
governmental authorities having jurisdiction over it, its
business, finances, operations or its properties.
(c) Its representative, whose signature is affixed hereto, has been
fully authorized to sign on its behalf pursuant to a valid power
of attorney or as evidenced by a valid legal representative
certificate.
5.2 This Facility shall become effective upon its execution by the parties
hereto.
5.3 All exhibits hereto shall form an integral part of this Facility.
5.4 In the event of any conflict between this Facility, any Loan Contract
and any security agreement relating to any Loan Contract, this
Facility shall take precedence.
5.5 Any amendment or supplement to this Facility shall be made by a
written agreement signed by each of the parties.
5.6 This Facility consists of an English language version and a Chinese
language version, both of which have been examined and confirmed by
the partes to be identical in all material respects. The English and
Chinese language versions shall have the same legal effect. In the
event of any discrepancy between the English and Chinese language
versions, the parties shall consult to reach an agreement on the
discrepancy based on the principle of equality and mutual
understanding. If no agreement is reached through consultation within
30 days of the first such consultation, the dispute shall be submitted
for exclusive and final settlement before the China International
Economic and Trade Arbitration Commission. This Facility is executed
in 4 originals in the English language and 4 originals in the Chinese
language, and each party shall retain 2 originals of each language.
IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
representatives to execute this Facility on the date first above written.
LEASHAN-PHOENIX SEMICONDUCTOR COMPANY LIMITED
By: /s/
Name:
Title: Authorized Representative
INDUSTRIAL & COMMERCIAL BANK OF CHINA, LESHAN CITY BRANCH
By: /s/
Name:
Title: Authorized Representative
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Exhibit A
Contract Number: _______
FOREIGN EXCHANGE LOAN CONTRACT
BORROWER (PARTY A): LESHAN-PHOENIX SEMICONDUCTOR COMPANY LIMITED
Residence (Address): 00X, Xxxx Xxxxxx'x Xxxx, Xxxxxx Xxxx, Xxxxxxx
Xxxxxxxx, Xxxxx
Legal Representative:
LENDER (PARTY B): INDUSTRIAL & COMMERCIAL BANK OF CHINA, LESHAN
CITY BRANCH
Residence (Address): 4, Zi Xxx Xxx Xxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxx
Xxxx, Xxxxxxx Xxxxxxxx, Xxxxx
Legal Representative
(Person in Charge):
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TABLE OF CONTENT
ARTICLE 1 TYPE OF THE LOAN ................................................... 1
ARTICLE 2 USE OF PROCEEDS .................................................... 1
ARTICLE 3 CURRENCY, AMOUNT AND TERM OF THE LOAN .............................. 1
ARTICLE 4 INTEREST RATE AND COMPUTATION OF INTEREST .......................... 2
ARTICLE 5 SOURCES OF REPAYMENT FUNDS, MANNER OF REPAYMENT .................... 2
ARTICLE 6 SECURITY ........................................................... 3
ARTICLE 7 RIGHTS AND OBLIGATIONS OF EACH PARTY ............................... 3
ARTICLE 8 LIABILITY FOR BREACH OF CONTRACT ................................... 5
ARTICLE 9 EFFECT, CHANGE, CANCELLATION AND TERMINATION OF THE CONTRACT ....... 6
ARTICLE 10 SETTLEMENT OF DISPUTES ............................................ 7
ARTICLE 11 MISCELLANEOUS ..................................................... 7
ARTICLE 12 ADDITIONAL PROVISIONS ............................................. 7
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Party A has applied for a loan from Party B for the purpose described in Section
2.1. Party B has agreed to provide the loan to Party A. In order to specify the
rights and obligations of each party, in accordance with the Contract Law, the
Lending General Provisions and other relevant laws & regulations and after
discussion conducted on a basis of equality, Party A and Party B conclude this
Contract:
ARTICLE 1
TYPE OF THE LOAN
1.1. The loan under this Contract is a medium term loan.
ARTICLE 2
USE OF PROCEEDS
2.1. The proceeds of the loan under this Contract shall be used for payments
relating to Party A's operations.
2.2. Party A shall not change the usage of the loan proceeds provided under
this Contract without the written consent of Party B.
ARTICLE 3
CURRENCY, AMOUNT AND TERM OF THE LOAN
3.1. The currency of the loan under this Contract shall be US Dollars and the
amount shall be three million (in words) US$3,000,000 (numbers). (In the
event any amount in words is different from that in numbers, the amount
in words shall prevail. This same rule shall apply throughout this
Contract.)
3.2. The term of the loan under this Contract shall be 36 months, from Dec.
13, 2000 (date/month/year) to Dec. 12, 2003 (date/month/year).
3.3. Party A shall draw-down the loan in one lump sum on the first date of the
term pursuant to Section 3.2 of this Contract; in case of special
circumstance, the draw-down date can be moved up or delayed up to seven
days with the written consent of Party B. The actual date of the
draw-down and the date of repayment shall be the dates recorded in the
receipt for the loan [signed] by Party A and Party B. The loan receipt
and the draw-down voucher shall be an integral part of this Contract.
Except for the dates, if there are any other discrepancies between other
records and this Contract, this Contract shall prevail.
3.4. Party A shall register this loan in local office of the State
Administration of Foreign Exchange and submit a copy of such registration
to Party B in order to draw-down the loan.
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ARTICLE 4
INTEREST RATE AND COMPUTATION OF INTEREST
4.1. The interest rate and computation of interest for the loan under this
Contract shall be as follows:
4.1.1. Party B's floating interest rate applicable for loans of six years,
adjusted every six months shall be applied to the loan under this
Contract.
4.1.2. The interest rate of the 1st six-month period shall be ____% per
annum.
4.1.3. The interest rates of the 2nd and all subsequent six-month periods
will be determined by Party B according to its then prevailing
interest rates for similar loans. Party A will be notified in
writing within thirty days after any change in the interest rate.
However, the delivery or non-delivery of such notice shall not
affect the implementation of this Contract and any changes in the
interest rate.
4.1.4. Interest on the loan under this Contract shall be accrue on a daily
basis and be payable on the 20th day of the last month of each
calendar quarter.
4.1.5. Interest shall accrue from the date of draw-down. The final payment
of accrued interest shall be paid together with repayment of the
principal amount of the loan.
ARTICLE 5
SOURCES OF REPAYMENT FUNDS, MANNER OF REPAYMENT
5.1. The source of funds which Party A will use for the repayment of both
principal and interest of the loan shall include, but is not limited to:
5.1.1. Sales revenue, depreciation and profit;
5.1.2. Other revenue.
5.2. Notwithstanding any agreement on the source of Party A's funds for
repayment in any other contracts to which Party A is party, such agreement
shall not affect Party A's performance of its repayment obligation under
this Contract. In any case, Party A shall not rely on Section 5.1 in order
to refuse to perform its repayment obligation under this Contract.
5.3. Party A shall timely pay all accrued interests as provided under this
Contract and repay the principal of the loan when due.
5.4. Before the date on which any payment of interest or repayment of principal
provided in this Contract is due, Party A shall deposit sufficient funds in
its bank account at Party B and authorize Party B to deduct such amount
from Party A's account on the date on which such payment of interest or
repayment of principal is due.
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ARTICLE 6
SECURITY
6.1. The form of security for the loan under this Contract shall be a mortgage.
6.2. PARTY A AND PARTY B SHALL CONCLUDE A SECURITY AGREEMENT (No. ) for the
specific security described under this Contract.
6.3. In the event of a change in the value of the security under this Contract
has had a material adverse effect on Party B's creditor rights, Party A
shall, upon notice by Party B, provide additional security so that the
total value of security is equal to the value prior to such change.
ARTICLE 7
RIGHTS AND OBLIGATIONS OF EACH PARTY
7.1. Rights and Obligations of Party A.
7.1.1. Party A shall draw and use the loan in accordance with the term
and usage provided in this Contract;
7.1.2. Party A shall not prepay the loan without providing Party B with
fifteen days' written notice of its intention to prepay;
7.1.3. Party A shall be responsible for the truthfulness, accuracy and
completeness of all the materials provided by Party A in
connection with the application for the loan;
7.1.4. Party A shall voluntarily accept Party B's investigation,
supervision and monitoring of the use of the loan under this
Contract pursuant to laws and regulations, administrative rules
and industrial practice;
7.1.5. Party A shall actively coordinate with Party B's investigation,
supervision and monitoring of Party A's manufacturing, operations
and financial status and provide Party B with profit & loss
statement, balance sheet and other financial information which it
prepares in the ordinary course of business for any relevant
period;
7.1.6. Party A shall repay the principal and pay the interest for the
loan as provided in this Contract;
7.1.7. Party A shall pay relevant costs which arise under this Contract,
including, but not limited to, the expenses of a notary,
authentication, appraisal and registration fees which are
required by applicable laws and regulations, administrative rules
and industrial practice;
7.1.8. Party A shall, within three days after its receipt of any
repayment reminder sent by Party B via mail or other methods,
send back an acknowledgement of receipt to Party B via mail;
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7.1.9. In the event Party A proposes to be engaged in activities such as
changing its corporate structure into a company limited by
shares, beginning joint operations with another entity, merger, a
material acquisition, entering into an equity joint venture,
spin-off or split-off, a reduction in its registered capital,
equity transfers, transfer of material assets, contracting and
leasing of its operation (as a whole) or any other action which
will be significant enough to affect the realization of Party B's
rights under this Contract, Party A shall notify Party B at least
thirty days prior to undertaking such activities and obtain Party
B's written consent prior to taking such action. Otherwise Party
A shall not engage in any of the above activities before its debt
under this Contract is repaid in full;
7.1.10. Party A shall notify Party B in writing of any change in its
business registration items, such as location, mailing address,
business scope, legal representatives etc. within seven days of
such change;
7.1.11. Party A shall notify immediately Party B in writing of any events
which may threaten Party A's normal business or have material
adverse effect on Party A's ability to perform its repayment
obligations under this Contract, including, but not limited to,
material economic disputes, bankruptcy, deterioration of
financial condition, etc.;
7.1.12. In the event Party A's business is closed, dissolved, suspended
for restructuring, or its business license is revoked or
cancelled, Party A shall notify Party B in writing within five
days of such event and the parties shall try to work out a new
schedule for the repayment of principal and payment of interest.
7.2 Rights and Obligations of Party B
7.2.1. Party B shall have the right to request Party A to provide all
information relevant to this loan;
7.2.2. Party B shall have the right to deduct from Party A's account
with Party B the principal, interest, interest on interest,
penalty interest and all other expenses payable as provided in
this Contract or as required by laws and regulations;
7.2.3. In case Party A evades Party B's supervision or delays the
repayment of principal or payment of interest, thus committing a
material breach of this Contract, Party B shall have the right to
apply lending sanctions against Party A (for example, not to
provide additional loans to Party A).
7.2.4. Party B shall provide the full amount of the loan to Party A on
schedule as provided in this Contract (unless the delay is caused
by Party A).
7.2.5. Party B shall keep confidential all the documents, materials and
information provided by Party A relating to its borrowing,
financial condition, production, operations, etc. unless
otherwise provided in this Contract or required by laws and
regulations.
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ARTICLE 8
LIABILITY FOR BREACH OF CONTRACT
8.1. After this Contract becomes effective, each of the Party A and Party B
shall perform its obligations as provided under this Contract. Any party
who fails to perform all or part of its obligations as provided under this
Contract shall be liable for its breach of the Contract in accordance with
law.
8.2. If Party A fails to draw-down the loan as provided in Section 3.3 of this
Contract, Party B shall have the right to charge penalty interest on the
delayed amount compounded daily payable in arrears at the interest rate
provided in this Contract.
8.3. If Party B fails to execute and provide the loan as provided in Section 3.3
of this Contract, Party B shall pay penalty interest on the delayed amount
compounded daily payable in arrears at the interest rate proved in this
Contract.
8.4. Party B shall the right to charge interest based on the term and interest
rate provided under this Contract if Party A prepays the loan under this
Contract without fifteen days' advance notice to Party B.
8.5. If Party A fails to repay any principal or pay any interest on the loan
when due under this Contract, Party B shall have the right to establish a
schedule for repayment, deduct the amount due from any of Party A's bank
accounts with Party B, and concurrently charge on the overdue amount
additional interest at a rate which is 20% of the interest rate under this
Contract and charge interest calculated at a compound rate on the overdue
interest.
8.6. If Party A fails to use the loan for the purposes specified under this
Contract, Party B shall have the right to accelerate part or all of the
loan amount or terminate the Contract, and to charge on the amount and
duration of unauthorized use an additional interest which is 50% of the
interest rate under this Contract and charge compound rate on the overdue
interest.
8.7. If the events of breach described in Section 8.5 and 8.6 occur concurrently
in connection with Party A's use of the loan, Party B may select the
penalty provided by either, but not both, sections.
8.8. In the event any of the following events occur, Party A shall within seven
days after receipt of Party B's notice of such an event correct the noticed
event and provide remedy satisfactory to Party B. Otherwise, Part B shall
have the right to accelerate part or all of the loan amount. In the event
Party B accelerates the loan but does not receive prompt payment from Party
A, Party B shall charge penalty interest at the same rate applied to the
overdue amount on a daily basis.
8.8.1. Party A provides false balance sheet, profit & loss statement or
other financial information or holds back material information
therein;
8.8.2. Party A refuses Party B's monitoring of the use of loan proceeds,
its relevant manufacturing, operations or financial activities;
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8.8.3. Party A transfers or disposes of, or threatens to transfer or
dispose of, substantial part of its assets without Party B's
consent;
8.8.4. All or a substantial part of Party A's assets are possessed by
other creditors, taken over by designated trustees, receivers or
similar personnel or its assets are detained or frozen, and such
action may be expected to cause material loss to Party B;
8.8.5. The security of Party B's creditor rights is threatened as a result
of Party A, without Party B's consent, engaging in activities such
as changing its corporate structure into a company limited by
shares, beginning joint operations with another party, merger,
entering into a material acquisition, entering into an equity joint
venture, spin-off or split-off, making a reduction in its
registered capital, conducting an equity transfer, contracting and
leasing its operation (as a whole) or other action significant
enough to affect the realization of Party B's rights;
8.8.6. Party A changes its business registration items such as location,
mailing address, business scope, legal representative, or makes
significant external investment, which seriously affects or
threatens the realization of Party B's creditor rights;
8.8.7. Party A is involved in any material economic disputes or its
financial condition is materially deteriorating, and such
deterioration seriously affects or threatens the realization of
Party B's creditor rights;
8.8.8. Any other material event which may threaten the realization of
Party B's creditor rights under the Contract, or cause material
loss to Party B.
ARTICLE 9
EFFECT, CHANGE, CANCELLATION AND TERMINATION OF THE CONTRACT
9.1. This Contract shall be effective upon the execution and affixing of the
company seal of both parties. If a security contract is required, this
Contract shall become effective when such security contract becomes
effective. This Contract shall terminate on the date when the principal,
interest, compound interest, penalty interest, default penalty and all
other payable expenses under this Contract are fully paid.
9.2. In the event any of the following events occurs, Party B shall have the
right to terminate this Contract, and require Party A to accelerate
repayment of all principal and payment of interest of the loan and
compensate for Party B's losses:
9.2.1. Party A's business is closed, dissolved, suspended for
restructuring, or its business license is revoked or cancelled;
9.2.2. The change in the security under this Contract has had an adverse
effect on Party B's creditor rights and Party A fails to provide
other security required by Party B;
9.2.3. Other material breach by Party A of this Contract.
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9.3. If Party A provides Party B with a written request to extend the term of
this loan thirty days before the due date for repayment of the principal
as provided under Section 3.2., the due date for the loan shall be
extended and the parties shall execute an extension agreement. This
Contract shall remain in effect, mutatis mutandi, until the extension
agreement is executed by both parties.
9.4. Except as otherwise provided under this Contract, neither Party A nor
Party B may change or terminate this Contract without the consent of the
other party. If there is indeed a need to change or terminate this
Contract, Party A and Party B shall discuss and reach an agreement in
writing. This Contract shall remain effective until the parties execute a
written agreement reflecting such change or termination.
ARTICLE 10
SETTLEMENT OF DISPUTES
10.1. In the event a dispute arises between Party A and Party B in connection
with the implementation of this Contract, the parties shall attempt to
settle such dispute through consultations. If no settlement is reached
through consultations within thirty days of the first consultation, the
dispute shall be settled in accordance with Section 10.1.1:
10.1.1. Such dispute shall be submitted for exclusive and final
settlement before the China International Economic and Trade
Arbitration Commission ("CIETAC") in accordance with the CIETAC
rules in effect at the time such dispute is submitted to it,
which rules are deemed to be incorporated by reference into this
Section. Arbitration shall take place in at CIETAC, Beijing,
China. The arbitration award shall be non-appealable, final and
binding on the parties. Unless otherwise specified in the
arbitration award, the costs of the proceeding shall be borne by
the losing party.
ARTICLE 11
MISCELLANEOUS
11.1. In the event of any conflict between this Contract and the
Loan Facility,
the
Loan Facility shall take precedence.
ARTICLE 12
ADDITIONAL PROVISIONS
12.1. The appendices to this Contract shall form an integral part of this
Contract and shall have the same force and effect as this Contract
itself.
12.2. In connection with the implementation of this Contract, if any of the
date for draw-down or repayment is not a banking business day, then such
date shall be extended to the following banking business day.
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Party A (corporate chop): Party B (corporate chop):
Legal Representative: Legal Representative (Person in Charge):
(or Authorized Representative) (or Authorized Representative)
(date/month/year) (date/month/year)
[LESHAN-PHOENIX SEMICONDUCTOR /s/
CO. LTD. SEAL]
/s/ /s/
Nov. 17, 2000
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Exhibit B
Contract Number: 66
RENMINBI LOAN CONTRACT
BORROWER (PARTY A): LESHAN-PHOENIX SEMICONDUCTOR COMPANY LIMITED
Residence (Address): 00X, Xxxx Xxxxxx'x Xxxx, Xxxxxx Xxxx,
Xxxxxxx Xxxxxxxx, Xxxxx
Legal Representative:
LENDER (PARTY B): INDUSTRIAL & COMMERCIAL BANK OF CHINA,
LESHAN CITY BRANCH
Residence (Address): 4, Zi Xxx Xxx Xxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxx Xxxx,
Xxxxxxx Xxxxxxxx, Xxxxx
Legal Representative
(Person in Charge):
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TABLE OF CONTENT
ARTICLE 1 TYPE OF THE LOAN ................................................ 1
ARTICLE 2 USE OF PROCEEDS ................................................. 1
ARTICLE 3 CURRENCY, AMOUNT AND TERM OF THE LOAN ........................... 1
ARTICLE 4 INTEREST RATE AND COMPUTATION OF INTEREST ....................... 1
ARTICLE 5 SOURCES OF REPAYMENT FUNDS, MANNER OF REPAYMENT ................. 2
ARTICLE 6 SECURITY ........................................................ 2
ARTICLE 7 RIGHTS AND OBLIGATIONS OF EACH PARTY ............................ 3
ARTICLE 8 LIABILITY FOR BREACH OF CONTRACT ................................ 4
ARTICLE 9 EFFECT, CHANGE, CANCELLATION AND TERMINATION OF THE CONTRACT .... 6
ARTICLE 10 SETTLEMENT OF DISPUTES ......................................... 7
ARTICLE 11 MISCELLANEOUS .................................................. 7
ARTICLE 12 ADDITIONAL PROVISIONS .......................................... 7
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Party A has applied for a loan from Party B for the purpose described in
Section 2.1. Party B has agreed to provide the loan to Party A. In order to
specify the rights and obligations of each party, in accordance with the
Contract Law, the Lending General Provisions and other relevant laws &
regulations and after discussion conducted on a basis of equality, Party A and
Party B conclude this Contract:
ARTICLE I
TYPE OF THE LOAN
1.1. The loan under this Contract is a medium term loan.
ARTICLE 2
USE OF PROCEEDS
2.1. The proceeds of the loan under this Contract shall be used for payments
relating to Party A's operations.
2.2. Party A shall not change the usage of the loan proceeds provided under
this Contract without the written consent by Party B.
ARTICLE 3
CURRENCY, AMOUNT AND TERM OF THE LOAN
3.1. The currency of the loan under this Contract shall be Renminbi and the
amount shall be four million (in words) 4,000,000 (numbers). (In the event
any amount in words is different from that in numbers, the amount in words
shall prevail. This same rule shall apply throughout this Contract).
3.2. The term of the loan under this Contract shall be 36 months, from Dec 14,
2000 (date/month/year) to Dec 13, 2003 (date/month/year).
3.3. Party A shall draw-down the loan in one lump sum on the first date of the
term pursuant to Section 3.2 of this Contract; in case of special
circumstance, the draw-down date can be moved up or delayed up to seven
days with the written consent of Party B. The actual date of the draw-down
and the date of repayment shall be the dates recorded in the receipt for
the loan [signed] by Party A and Party B. The loan receipt and the
draw-down voucher shall be an integral part of this Contract. Except for
the dates, if there are any other discrepancies between other records and
this Contract, this Contract shall prevail.
ARTICLE 4
INTEREST RATE AND COMPUTATION OF INTEREST
4.1. The interest rate and computation of interest for the loan under this
Contract shall be as follows:
4.1.1. The interest rate applicable for loans of six years (as published
by the People's Bank of China), adjusted once every year shall be
applied to the
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loan under this Contract.
4.1.2. The interest rate of the first period shall be 6.125% per annum.
4.1.3. The interest rates of the second and all subsequent periods will
be determined by Party B according to its then prevailing
interest rates for similar loans. Party A will be notified in
writing within thirty days after any change in the interest rate.
However, the delivery or non-delivery of such notice shall not
affect the implementation of this Contract and any changes in the
interest rate.
4.1.4. Interest on the loan under this Contract shall be accrue on a
daily basis and be payable on the 20th day of the last month of
each calendar quarter.
4.1.5. Interest shall accrue from the date of draw-down. The final
payment of accrued interest shall be paid together with repayment
of the principal amount of the loan.
ARTICLE 5
SOURCES OF REPAYMENT FUNDS, MANNER OF REPAYMENT
5.1. The source of funds which Party A will use for the repayment of both
principal and interest of the loan shall include, but is not limited to:
5.1.1. Sales revenue, depreciation and profit;
5.1.2. Other revenue.
5.2. Notwithstanding any agreement on the source of Party A's funds for
repayment in any other contracts to which Party A is party, such
agreement shall not affect Party A's performance of its repayment
obligation under this Contract. In any case, Party A shall not rely on
Section 5.1 in order to refuse to perform its repayment obligation under
this Contract.
5.3. Party A shall timely pay all accrued interests as provided under this
Contract and repay the principal of the loan when due.
5.4. Before the date on which any payment of interest or repayment of
principal provided in this Contract is due, Party A shall deposit
sufficient funds in its bank account at Party B and authorize Party B to
deduct such amount from Party A's account on the date on which such
payment of interest or repayment of principal is due.
ARTICLE 6
SECURITY
6.1. The form of security for the loan under this Contract shall be a
mortgage.
6.2. Party A and Party B shall conclude a security agreement (No. 66) for the
specific security described under this Contract.
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6.3. In the event of a change in the value of the security under this Contract
has had a material adverse effect on Party B's creditor rights, Party A
shall, upon notice by Party B, provide additional security so that the
total value of security is equal to the value prior to such change.
ARTICLE 7
RIGHTS AND OBLIGATIONS OF EACH PARTY
7.1. Rights and Obligations of Party A.
7.1.1. Party A shall draw and use the loan in accordance with the term
and usage provided in this Contract;
7.1.2. Party A shall not prepay the loan without providing Party B with
fifteen days' written notice of its intention to prepay;
7.1.3. Party A shall be responsible for the truthfulness, accuracy and
completeness of all the materials provided by Party A in
connection with the application for the loan;
7.1.4. Party A shall voluntarily accept Party B's investigation,
supervision and monitoring of the use of the loan under this
Contract pursuant to laws and regulations, administrative rules
and industrial practice;
7.1.5. Party A shall actively coordinate with Party B's investigation,
supervision and monitoring of Party A's manufacturing, operations
and financial status and provide Party B with profit & loss
statement, balance sheet and other financial information which it
prepares in the ordinary course of business for any relevant
period;
7.1.6. Party A shall repay the principal and pay the interest for the
loan as provided in this Contract;
7.1.7. Party A shall pay relevant costs which arise under this Contract,
including, but not limited to, the expenses of a notary,
authentication, appraisal and registration fees which are
required by applicable laws and regulations administrative rules
and industrial practice;
7.1.8. Party A shall, within three days after its receipt of any
repayment reminder sent by Party B via mail or other methods,
send back an acknowledgement of receipt to Party B via mail;
7.1.9. In the event Party A proposes to be engaged in activities such as
changing its corporate structure into a company limited by
shares, beginning joint operations with another entity, merger, a
material acquisition, entering into an equity joint venture,
spin-off or split-off, a reduction in its registered capital,
equity transfers, transfer of material assets, contracting and
leasing of its operation (as a whole) or any other action which
will be significant enough to affect the realization of Party B's
rights under this Contract, Party A shall notify Party B at least
thirty days prior to undertaking such activities and
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obtain Party B's written consent prior to taking such action.
Otherwise Party A shall not engage in any of the above activities
before its debt under this Contract is repaid in full;
7.1.10. Party A shall notify Party B in writing of any change in its
business registration items, such as location, mailing address,
business scope, legal representatives etc. within seven days of
such change;
7.1.11. Party A shall notify immediately Party B in writing of any events
which may threaten Party A's normal business or have material
adverse effect on Party A's ability to perform its repayment
obligations under this Contract, including, but not limited to,
material economic disputes, bankruptcy, deterioration of
financial condition, etc.;
7.1.12. In the event Party A's business is closed, dissolved, suspended
for restructuring, or its business license is revoked or
cancelled, Party A shall notify Party B in writing within five
days of such event and the parties shall try to work out a new
schedule for the repayment of principal and payment of interest.
7.2. Rights and Obligations of Party B
7.2.1. Party B shall have the right to request Party A to provide all
information relevant to this loan;
7.2.2. Party B shall have the right to deduct from Party A's account
with Party B the principal, interest, interest on interest,
penalty interest and all other expenses payable as provided in
this Contract or as required by laws and regulations;
7.2.3. In case Party A evades Party B's supervision or delays the
repayment of principal or payment of interest, thus committing a
material breach of this Contract, Party B shall have the right to
apply lending sanctions against Party A (for example, not
providing additional loans to Party A).
7.2.4. Party B shall provide the full amount of the loan to Party A on
schedule as provided in this Contract (unless the delay is caused
by Party A).
7.2.5. Party B shall keep confidential all the documents, materials and
information provided by Party A relating to its borrowing,
financial condition, production, operation, etc. unless otherwise
provided in this Contract or required by laws and regulations.
ARTICLE 8
LIABILITY FOR BREACH OF CONTRACT
8.1. After this Contract becomes effective, each of the Party A and Party B
shall perform its obligations as provided under this Contract. Any party
who fails to perform all or part of its obligations as provided under this
Contract shall be liable for its breach of the Contract in accordance with
law.
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8.2. If Party A fails to draw-down the loan as provided in Section 3.3 of this
Contract, Party B shall have the right to charge penalty interest on the
delayed amount compounded daily payable in arrears at the interest rate
provided in this Contract.
8.3. If Party B fails to execute and provide the loan as provided in Section 3.3
of this Contract, Party B shall pay penalty interest on the delayed amount
compounded daily payable in arrears at the interest rate provided in this
Contract.
8.4. Party B shall the right to charge interest based on the term and interest
rate provided under this Contract if Party A prepays the loan under this
Contract without fifteen days' advance notice to Party B.
8.5. If Party A fails to repay any principal or pay any interest on the loan
when due under this Contract, Party B shall have the right to establish a
schedule for repayment, deduct the amount due from any of Party A's bank
accounts with Party B, and concurrently charge on the overdue amount
additional interest at a rate which is 20% of the interest rate under this
Contract and charge interest calculated at a compound rate on the overdue
interest.
8.6. If Party A fails to use the loan for the purposes specified under this
Contract, Party B shall have the right to accelerate part or all of the
loan amount or terminate the Contract, and to charge on the amount and
duration of unauthorized use an additional interest which is 50% of the
interest rate under this Contract and charge compound rate on the overdue
interest.
8.7. If the events of breach described in Section 8.5 and 8.6 occur concurrently
in connection with Party A's use of the loan, Party B may select the
penalty provided by either, but not both, sections.
8.8. In the event any of the following events occur, Party A shall within seven
days after receipt of Party B's notice of such an event correct the noticed
event an provide remedy satisfactory to Party B. Otherwise, Party B shall
have the right to accelerate part or all of the loan amount. In the event
Party B accelerates the loan but does not receive prompt payment from Party
A, Party B shall charge penalty interest at the same rate applied to the
overdue amount on a daily basis.
8.8.1. Party A provides false balance sheet, profit & loss statement or
other financial information or holds back material information
therein;
8.8.2. Party A refuses Part B's monitoring of the use of loan proceeds,
its relevant manufacturing, operations or financial activities;
8.8.3. Party A transfers or disposes of, or threatens to transfer or
dispose of, substantial part of its assets without Party B's
consent;
8.8.4. All or a substantial part of Party A's assets are possessed by
other creditors, taken over by designated trustees, receivers or
similar personnel or its assets are detained or frozen, and such
action may be expected to cause material loss to Party B;
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8.8.5. The security of Party B's creditor rights is threatened as a result
of Party A, without Party B's consent, engaging in activities such
as changing its corporate structure into a company limited by
shares, beginning joint operations with another party, merger,
entering into a material acquisition, entering into an equity joint
venture, spin-off or split-off, making a reduction in its
registered capital, conducting an equity transfer, contracting and
leasing its operation (as a whole) or other action significant
enough to affect the realization of Party B's rights;
8.8.6. Party A changes its business registration items such as location,
mailing address, business scope, legal representative, or makes
significant external investment, which seriously affects or
threatens the realization of Party B's creditor rights;
8.8.7. Party A is involved in any material economic disputes or its
financial condition is materially deteriorating, and such
deterioration seriously affects or threatens the realization of
Party B's creditor rights;
8.8.8. Any other material event which may threaten the realization of
Party B's creditor rights under the Contract, or cause material
loss to Party B.
ARTICLE 9
EFFECT, CHANGE, CANCELLATION AND TERMINATION OF THE CONTRACT
9.1. This Contract shall be effective upon the execution and affixing of the
company seal of both parties. If a security contract is required, this
Contract shall become effective when such security contract becomes
effective. This Contract shall terminate on the date when the principal,
interest, compound interest, penalty interest, default penalty and all
other payable expenses under this Contract are fully paid.
9.2. In the event any of the following events occurs, Party B shall have the
right to terminate this Contract, and require Party A to accelerate
repayment of all principal and payment of interest of the loan and
compensate for Party B's losses:
9.2.1. Party A's business is closed, dissolved, suspended for
restructuring, or its business license is revoked or cancelled;
9.2.2. The change in the security under this Contract has had an adverse
effect on Party B's creditor rights and Party A fails to provide
other security required by Party B;
9.2.3. Other material breach by Party A of this Contract.
9.3. If Party A provides Party B with a written request to extend the term of
this loan thirty days before the due date for repayment of the principal as
provided under Section 3.2., the due date for the loan shall be extended
and the parties shall execute an extension agreement. This Contract shall
remain in effect, mutatis mutandi, until the extension agreement is
executed by both parties.
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9.4. Except as otherwise provided under this Contract, neither Party A nor
Party B may change or terminate this Contract without the consent of the
other party. If there is indeed a need to change or terminate this
Contract, Party A and Party B shall discuss and reach an agreement in
writing. This Contract shall remain effective until the parties execute a
written agreement reflecting such change or termination.
ARTICLE 10
SETTLEMENT OF DISPUTES
10.1. In the event a dispute arises between Party A and Party B in connection
with the implementation of this Contract, the parties shall attempt to
settle such dispute through consultations. If no settlement is reached
through consultations within thirty days of the first consultation, the
dispute shall be settled in accordance with Section 10.1.1:
10.1.1. Such dispute shall be submitted for exclusive and final
settlement before the China International Economic and Trade
Arbitration Commission ("CIETAC") in accordance with the CIETAC
rules in effect at the time such dispute is submitted to it,
which rules are deemed to be incorporated by reference into this
Section. Arbitration shall take place in at CIETAC, Beijing,
China. The arbitration award shall be non-appealable, final and
binding on the parties. Unless otherwise specified in the
arbitration award, the costs of the proceeding shall be borne by
the losing party.
ARTICLE 11
MISCELLANEOUS
11.1. In the event of any conflict between this Contract and the Loan Facility,
the Loan Facility shall take precedence.
ARTICLE 12
ADDITIONAL PROVISIONS
12.1. The appendices to this Contract shall form an integral part of this
Contract and shall have the same force and effect as this Contract
itself.
12.2. In connection with the implementation of this Contract, if any of the
date for draw-down or repayment is not a banking business day, then such
date shall be extended to the following banking business day.
Party A (corporatechop): Party B (corporatechop):
Legal Representative: Legal Representative (Person in Charge):
(or Authorized Representative) (or Authorized Representative)
(date/month/year) (date/month/year)
/s/ (namechop)
[LESHAN-PHOENIX SEMICONDUCTOR /s/
COMPANY LIMITED]
2000.12.1 2000.12.1
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Exhibit C
Contract No.----
MORTGAGE CONTRACT
Mortgagor (Party A): Leashan-Phoenix Semiconductor Company Limited
Residence (Address):
Legal Representative:
Mortgage (Party B): Industrial & Commercial Bank of China, Leshan City
Branch
Residence (Address):
Legal Representative (Person in Charge):
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TABLE OF CONTENTS
ARTICLE 1 REPRESENTATIONS AND WARRANTIES OF PARTY A...................1
ARTICLE 2 TYPE AND AMOUNT OF THE CREDIT COVERED BY THE SECURITY.......1
ARTICLE 3 TERM OF BORROWER'S DEBT UNDER THE MAIN CONTRACT.............1
ARTICLE 4 SCOPE OF MORTGAGE...........................................2
ARTICLE 5 MORTGAGED ASSETS............................................2
ARTICLE 6 REGISTRATION OF MORTGAGE....................................2
ARTICLE 7 POSSESSION OF THE MORTGAGED ASSETS..........................2
ARTICLE 8 INSURANCE...................................................3
ARTICLE 9 EXERCISE RIGHT OVER MORTGAGE................................3
ARTICLE 10 RIGHTS AND OBLIGATIONS OF PARTY A...........................3
ARTICLE 11 RIGHTS AND OBLIGATIONS OF PARTY B...........................5
ARTICLE 12 LIABILITY FOR BREACH OF CONTRACT............................5
ARTICLE 13 EFFECT, CHANGE, CANCELLATION AND TERMINATION OF THE
CONTRACT....................................................6
ARTICLE 14 SETTLEMENT OF DISPUTES......................................6
ARTICLE 15 OTHER AGREEMENTS BY THE PARTIES.............................6
ARTICLE 16 APPENDICES..................................................7
ARTICLE 17 ADDITIONAL PROVISIONS.......................................7
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To ensure the exercise of Party B's rights under the loan contract No. (----)
(hereinafter "Main Contract") signed by Party A Leshan Phoenix Semiconductor
Co. Ltd. and Party B Industrial & Commercial Bank of China Leshan City Branch
on Nov. 17, 2000 (date/month/year), Party A wishes to provide a mortgage. In
order to specify the rights and obligations of each party, in accordance with
the Contract Law, the Security Law and other relevant laws and regulations and
after discussions conducted on a basis of equality, Party A and Party B
conclude this Contract:
ARTICLE 1
REPRESENTATIONS AND WARRANTIES OF PARTY A
1.1. It is the sole, valid and legitimate owner (or operator authorized by the
State) of the assets mortgaged under the Contract. There is no pending
disputes over the ownership or operation rights of the mortgaged assets.
1.2. It understands the use of proceeds of loan by the borrower under the Main
Contract and is willing to provide a mortgage. All of its representations
under this Contract are true.
1.3. It has made sufficient and reasonable explanation of any defects in the
mortgaged assets under this Contract.
1.4. The mortgaged assets under this Contract are eligible for mortgage
according to law.
1.5. The mortgage under this Contract is not in violation of any restrictions
applicable to Party A.
1.6. The mortgaged assets under this Contract are not under any seal-up,
detention or custody arrangement under law.
1.7. If all or part of the mortgaged assets under this Contract are to be
leased, it shall notify the leasees of the mortgage arrangement and report
the status of the leasing to Party B in writing.
ARTICLE 2
TYPE AND AMOUNT OF THE CREDIT COVERED BY THE SECURITY
2.1. The creditor's rights covered by Party A's mortgage shall be the loans in
RMB and foreign currencies Three Million US Dollars (US$3,000,000) under
the Main Contract.
ARTICLE 3
TERM OF BORROWER'S DEBT UNDER THE MAIN CONTRACT
3.1. The term of the loan under the Main Contract shall be 36 months, from Dec.
13, 2000 (date/month/year) to Dec. 12, 2003 (date/month/year). The term
shall be as provided in the Main Contract.
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ARTICLE 4
SCOPE OF MORTGAGE
4.1. The scope of the debt secured by the mortgage provided by Party A shall
include: all principal, interest, compound interest, penalty interest,
default penalty, compensation payment, expenses for realizing the mortgage
right and all other expenses payable under the Main Contract.
ARTICLE 5
MORTGAGED ASSETS
5.1. Mortgaged assets are listed in the List of Mortgaged Assets.
5.2. The value assigned to the mortgaged assets in the List of Mortgaged Assets
shall not constitute the basis for the evaluation on the mortgaged assets
to be conducted by Party B under Article 9 of this Contract, or form any
restriction to Party B's exercise of its rights under the mortgage.
5.3. Certificates or other documents evidencing ownership of the mortgaged
assets shall be confirmed and sealed off by the parties and placed with
Party B for safe-keeping, unless otherwise required by laws and
regulations.
ARTICLE 6
REGISTRATION OF MORTGAGE
6.1. If required by relevant laws and regulations or agreed upon by the parties,
the parties shall register the mortgage with the relevant registration
office within 15 days after the execution of this Contract.
6.2. If there is any change in the items under the registration that according
to applicable law requires a change in registration, the parties shall
adjust the registration to reflect such change with the relevant
registration office within 15 days after the occurrence of such change.
ARTICLE 7
POSSESSION OF THE MORTGAGED ASSETS
7.1. Party A shall retain possession of the mortgaged assets under this
Contract. While the mortgaged assets are in its possession, Party A shall
maintain the mortgaged assets and shall not use the mortgaged assets in any
unreasonable manner to cause a decrease in their value. Party B shall have
the right to supervise the use of the mortgaged assets.
7.2. In the event of damage to or loss of the mortgaged assets, Party A shall
promptly notify Party B and immediately take measures to prevent their
further deterioration. Party A shall also provide Party B with certificates
issued by relevant department in charge evidencing the cause of any damage
to or loss of the mortgaged assets.
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ARTICLE 8
INSURANCE
8.1. Party A shall purchase insurance covering basic risks from relevant
insurance institutions for the mortgaged assets, within 15 days after
the execution of this Contract. The duration of insurance coverage
shall not be shorter than that of this Contract and the amount of the
insurance shall not be less than the principle and interest of the
loans under the Main Contract.
8.2. Party A shall list Party B in the relevant insurance policies as
primary beneficiary. The insurance policies shall not contain any
provisions restricting Party B's rights or interests.
8.3. During the term of this Contract, Party A shall not suspend or cancel
the insurance described in Section 8.1 for any reason. In the event
such insurance is terminated, Party B shall have the right to purchase
insurance on behalf of and at the expense of Party A.
8.4. In the event a loss covered under the insurance policies is suffered
by the mortgaged assets during the term of this Contract, all
insurance compensation shall be used as mortgaged assets, or be used
to restore the value of the mortgaged assets with consent by Party B.
ARTICLE 9
EXERCISE OF RIGHT OVER MORTGAGE
9.1. If it exercises its right of mortgage, Party B shall have the right,
upon consultation with Party A, reasonably to determine the value of
the mortgaged assets, using an independent appraisal agent of good
reputation, so as to set off the debt owed by the borrower under the
Main Contract, or to auction or otherwise sell the mortgaged assets to
receive payment on a priority basis, provided, however, that in any
sale of the mortgaged assets by Party B, Party A or any affiliate of
Party A shall have a right of first refusal to make such purchase on
the same terms as any other buyer offering to purchase the mortgaged
assets being sold.
9.2. In the event Party B disposes of the mortgaged assets as provided
under Section 9.1, Party A shall provide assistance and shall not
create any obstacles.
ARTICLE 10
RIGHTS AND OBLIGATIONS OF PARTY A
10.1. After this Contract becomes effective, Party A shall not, without the
written consent by Party B, subject the mortgaged assets under this
Contract to any other mortgage or pledge, or lease, transfer or give
away the mortgaged assets to any third party.
10.2. After this Contract becomes effective, in the event Party B transfers
its creditor rights to a third party in accordance with law, Party A
shall continue to be responsible for providing the mortgage as
required under this Contract.
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10.3. In the event any action of Party A will result in a decrease in the
value of the mortgaged assets, Party A shall stop such action. In the
event the value of the mortgaged assets decreases due to such action,
Party A shall have the obligation to restore the value of the
mortgaged assets or provide additional security of corresponding
value.
10.4. In the event of the value of any mortgaged assets decreases without
the fault of Party A, Party A shall use any compensation it receives
to provide security to Party B. Any mortgaged assets the value of
which does not decrease shall remain as security to Party B.
10.5. In the event the mortgaged assets are taken over by the State for its
construction need, any compensation obtained by Party A from the State
shall remain as security to Party B.
10.6. Party A shall pay relevant costs which arise under this Contract,
including, but not limited to, legal fees, property insurance
premiums, expenses of authentication, appraisal, registration,
transfer, safe-keeping and litigation which are required by applicable
laws and regulations.
10.7. Party A shall duly implement its obligation under this Contract in the
event of changes such as spin-off, merger, change of corporate
structure into a company limited by shares, etc. after this Contract
becomes effective.
10.8. In the event the mortgage right is, or threatened to be, infringed by
any third party, Party A shall notify Party B promptly and assist
Party B in preventing such infringement.
10.9. Party A shall notify Party B in writing of any of the following:
10.9.1. Change in its operational structure, such as beginning joint
operations with another entity, merger, spin-off or
split-off, changing its corporate structure into a company
limited by shares, contracting and leasing of its operation
(as a whole), entering into an equity or a cooperative joint
venture with foreign investors, etc.;
10.9.2. Change in its business scope, registered capital or equity
holding;
10.9.3. Material economic disputes;
10.9.4. Disputes over the ownership of the mortgaged assets;
10.9.5. Bankruptcy, closing, dissolution, suspension for
restructuring or revocation or cancellation of its business
license; and
10.9.6. Change in its residence, telephone number, legal
representative.
10.10. Party A shall notify Party B in writing of any of the events listed in
10.9.1 or 10.9.2 at least 30 days prior to the occurrence of such
event and within 15 days of any events listed in 10.9.3 through
10.9.6.
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10.11. The borrower under the Main Contract shall have the right to request
the termination of the mortgage under this Contract upon full
repayment of debt under the Main Contract and Party B shall promptly
comply with such request.
ARTICLE 11
RIGHTS AND OBLIGATIONS OF PARTY B
11.1. Party B shall have the right to dispose of the mortgaged assets if
Party A fails to repay any principal, pay interest or other expenses
as due under the Main Contract.
11.2. Party B shall have the right to dispose of the mortgaged assets in
advance and receive payment from the proceeds of such disposal if any
of the following events occurs:
11.2.1. Party B terminates the Main Contract as provided therein or
in accordance with relevant laws and regulations prior to
the repayment of amounts due under the Main Contract from
Party A;
11.2.2. Party B accelerates the loan as provided under the Main
Contract and fails to realize all or part of its rights as a
creditor.
11.3. Party B shall have the right to request Party A's assistance in
preventing any infringement of Party B's mortgage right by any third
party.
11.4. In the event it transfers its rights as a creditor during the term of
this Contract, Party B shall notify Party A promptly.
11.5. In the event Party B disposes of the mortgaged assets under this
Contract and following repayment of amounts owed by Party A under this
Contract and the Main Contract, Party B has proceeds in excess of such
amount, Party B shall promptly return the surplus to Party A.
ARTICLE 12
LIABILITY FOR BREACH OF CONTRACT
12.1. In the event the representations and warranties made by Party A in
Article 1 of this Contract are false and as a result Party B suffers a
loss, Party A shall compensate Party B for such loss.
12.2. After this Contract becomes effective, each of the parties shall
fulfil its obligations hereunder. If either party fails to fulfil all
or part of its obligations provided under this Contract, such party
shall be responsible for its breach and compensate the other party for
any loss caused by such breach.
12.3. In the event this Contract becomes void due to the fault of either
party, the party in fault shall be responsible for any loss suffered
by the other party as provided under this Contract.
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ARTICLE 13
EFFECT, CHANGE, CANCELLATION AND TERMINATION OF THE CONTRACT
13.1. This Contract shall be effective upon the execution and affixing of the
company seals of both parties. Provided, however, that if registration of
the mortgage is required under applicable law, this Contract shall become
effective when such registration of the mortgage is completed. This
Contract shall terminate on the date when the principal, interest,
compound interest, penalty interest, default penalty, damages, expenses
in realizing creditor rights and all other payable expenses under the
Main Contract are fully paid.
13.2. This Contract is independent from the Main Contract. All obligations
under this Contract shall not be affected by any breach by any party
under the Main Contract.
13.3. Except as otherwise provided under this Contract, neither Party A nor
Party B may change or terminate this Contract without the consent of the
other party. If there is a need to change or terminate this Contract,
Party A and Party B shall discuss and reach an agreement regarding such
change and execute a written agreement documenting the change. This
Contract shall remain in full force until such a written agreement is
executed. Any change or termination to this Contract shall be made in
accordance with such written agreement executed by the parties.
ARTICLE 14
SETTLEMENT OF DISPUTES
14.1. In the event a dispute arises between Party A and Party B in connection
with the implementation of this Contract, the parties shall attempt to
settle such dispute through consultations. If no settlement is reached
through consultations within 30 days of the first such consultation, the
dispute shall be settled in accordance with Section 14.1.1:
14.1.1. Such dispute shall be submitted for exclusive and final
settlement before the China International Economic and Trade
Arbitration Commission ("CIETAC") in accordance with the CIETAC
rules in effect at the time such dispute is submitted to it,
which rules are deemed to be incorporated by reference into this
Section. Arbitration shall take place at CIETAC, Beijing, China.
The arbitration award shall be non-appealable, final and binding
on the parties. Unless otherwise specified in the arbitration
award, the costs of the proceeding shall be borne by the losing
party.
ARTICLE 15
OTHER AGREEMENTS BY THE PARTIES
15.1. The value of the mortgaged assets under this Contract shall not at any
time exceed the lessor of (i) 142.5% of the outstanding balance under the
Main Contract and (ii) the RMB equivalent of US$28,500,000.
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