EXHIBIT 10.75
RMB Loan Contract
Contract No.: 2006-01
Type of Loan: Fixed Asset Loan
Borrower (Party A): Libbey Glassware (China) Company Limited
Address: Room 407, EDA Administrative Committee, Youyi Road, Langfang Economic
Development Area
Post Code: 065001
Legal Representative (Person in Charge): Xxx Xxxxxx
Fax: 0000-0000000
Telephone: 0000-0000000
Lender (Party B): China Construction Bank Corporation Langfang Economic
Development Area Sub-branch
Address: Xx. 0 Xxxxxxx Xxxxxx, Xxxxxxxx Economic Development Area
Post Code: 065001
Person in Charge: Xx Xxx
Fax: 0316 - 0000000
Telephone: 0316 - 0000000
Borrower (hereinafter referred to as Party A): Libbey Glassware (China) Company
Limited Lender (hereinafter referred to as Party B): China Construction Bank
Corporation Langfang Economic Development Area Sub-branch
Party A applies to Party B for a loan which Party B agrees to grant. Under
relevant laws and regulations concerned, Party A and Party B agree to make this
contract in order to execute and fulfill this contract jointly.
Article 1 Amount of Loan
Party A borrows from Party B (in words) RMB two hundred fifty million (RMB 250
million).
Article 2 Purposes of Loan
The loan will be used for a glassware manufacturing facility project with an
annual capacity of 27,000 tons.
Article 3 Term of Loan
The term of the loan stipulated in this contract is eight (8) years, namely from
23rd January 2006 until 22nd January 2014.
If the starting date of the term of loan under this contract is inconsistent
with the loan redeposit receipts, the recorded date in the loan redeposit
receipts for the first advance shall be the starting date. The loan redeposit
receipts are parts of this contract, and have the same legal effect as this
contract.
Article 4 Loan Interest Rate, Penalty Interest Rate, Interest Calculation and
Interest Accrual
1. Loan Interest Rate
The loan interest rate under this contract will be per annum, and the interest
rate is variable interest rate as further delineated in Item b below:
a. Fixed Interest Rate, namely ____, the interest rate keeps unchanged during
the term of the loan;
b. Variable Interest Rate, namely floating downward by 10% based on the level of
the base interest rate, which, from the value date onwards, shall be subject to
adjustment every 12 months. The interest rate adjustment date is the
corresponding date of the value date in that month, and if there isn't a
corresponding date in that month, the last day of the month will be the interest
rate adjustment date.
2. Penalty Interest Rate
A. The penalty interest rate is per annum.
B. If Party A does not use the loan for the purposes stipulated in this
contract, penalty interest rate will be charged at variable interest rate as
delineated in Item b below:
a. Fixed Interest Rate, namely ____;
b. Variable Interest Rate, namely floating upward by 100% based on the level of
the base interest rate, and which, from the value date onwards, shall be subject
to adjustment every 12 months. The interest rate adjustment date for penalty
interest is the corresponding date of the value date in that month, and if there
isn't a corresponding date in that month, the last day of the month will be the
penalty interest rate adjustment date for penalty interest.
C. The penalty interest rate for overdue loan under this contract is variable
interest rate as further delineated in Item b below:
a. Fixed Interest Rate, namely ____;
b. Variable Interest Rate, namely floating upward by 50 % based on the level of
the base interest rate, and which, from the value date onwards, shall be subject
to adjustment every 12 months. The interest rate adjustment date for the penalty
interest is the corresponding date of the value date in that month, and if there
isn't a corresponding date in that month, the last day of the month will be the
penalty interest rate adjustment date for the penalty interest.
3. The value date mentioned in this Article is the date when the first loan
advance under this contract is deposited into the account of Party A.
When the first loan advance under this contract is made, the base interest rate
is the loan interest rate announced by the People's Bank of China on the value
date for similar loans; henceforth, when loan interest rate or penalty interest
rate is adjusted according to the aforementioned stipulation, the base interest
rate is the loan interest rate announced by the People's Bank of China at the
adjustment date for similar loans; If the People's Bank of China has stopped
announcing loan interest rate for similar loans, the base interest rate is the
loan interest rate applicable at the adjustment date which is recognized by the
banking business or which is the normal loan interest rate for similar loans,
unless the two parties have agreed otherwise
4. The interest hereunder is calculated from the first day when the loan is
redeposited into the account of Party A. The loan interest under this contract
is calculated daily, daily interest rate= monthly interest rate/30=annual
interest rate/360. If Party A can not make interest payment on time, a compound
interest will be charged starting from the following day.
5. Interest Accrual
A. If a fixed interest rate is applied, to accrue the interest, the interest
will be calculated according to the stipulated interest rate. If variable
interest rate is applied, the interest will be calculated according to the
decided interest rate of each floating period; if the interest rate floats
several times during a single interest accrual period, the interest of each
floating period shall be first calculated and the interest of the interest
accrual period will be calculated at the interest accrual date by aggregating
the interest of each floating period within such interest accrual period.
B. The interest of the loan under this contract is accrued quarterly, the
accrual date is the 20th day of the last month of each quarter.
Article 5 Release of Funds and Utilization
1. The Precondition for Release of Funds
A. Party B is not obliged to release funds until the following preconditions are
fulfilled, unless Party B waives the preconditions in whole or in part:
a. Party A finishes the processes of approval, registration, delivery and other
due processes related to the loan under this contract, according to laws and
regulations concerned;
b. If security is to be provided under this contract, the guaranty contract or
other security should fulfill the requirement of Party B and should be
effective;
c. Party A doesn't have any event of default stipulated in this contract;
d. Other preconditions as agreed between the Parties for release of funds under
the Loan:
1). The registered capital of XXX 00 million is in place, i.e.
(1) Party A shall provide a valuation report to be prepared by Price Water House
Coopers in the United States confirming the value of the total amount of project
capital spent by Libbey Inc or its affiliates outside China. Price Water House
Coopers office in China shall translate the report into Chinese and confirm the
Chinese translation is consistent with the English version before the same is
forwarded to Party B by post. The total amount of project capital spent by
Libbey Inc. or its affiliates outside China shall include but not limited to
machines, machinery, equipment, technology, furnace materials and controls,
computer software, related services, engineering and design services, transport
and transportation, and the book value of equipment which are spent by Libbey
Inc. or any of its affiliate in the contemplation for sale or contribution to
Party A in connection with the basis of Loan as well as the amount of all other
expenses incurred in connection with such machines, machinery, equipment and
technology.
(2) The total amount spent by Party A on Libbey's investment in China.
(3) Party A shall deposit the difference between the total project capital of 19
million and capital spent within and outside China as stated in (1) and (2)
above in cash into the capital account opened by Party A with Party B, before
signing of the loan agreement.
2). Party A shall open all its accounts with Party B and any use of loan
proceeds shall be monitored and supervised by Party B. If Party A has to open
other accounts with other banks due to business development needs, Party A shall
obtain the consent from Party B in advance.
B. Party B shall release the funds under the loan within 3 bank working day(s)
following the date when Party A fulfills all the aforementioned preconditions.
2. Loan Utilization Plan
a. ____ year ____ month ____day amount________;
b. ____ year ____ month ____day amount________;
c. ____ year ____ month ____day amount________;
d. ____ year ____ month ____day amount________;
e. ____ year ____ month ____day amount________;
f. ____ year ____ month ____day amount________;
Article 6 Repayment
1. The Principle of Repayment
All repayments by Party A hereunder shall be made in accordance with the
following principle.
1). Repay the loan principal first before paying the interest, if the loan
principal is more than 90 days overdue, or the loan interest is more than 90
days overdue, or if Party A's operations have ceased or the project funded with
the loan has been stopped even if the loan is not overdue or is overdue by less
than 90 days; or for loans as otherwise specified under relevant laws and
regulations.
2). Pay the interest first before repaying the loan principal, and any
outstanding interest shall be paid on at the date of full discharge of the
principal, for cases other than that specified in the above paragraph.
2. Payment of Interest
Party A shall pay due interest to Party A at the interest accrual date. The
first interest payment date is the first interest accrual date following release
of the funds. At the time of the last repayment, the interest shall be paid
together with the principal.
3. Principal Repayment Plan
Party A shall repay the principal according to the following plan:
a. 20 July 2012 amount: RMB 30million;
b. 20 December 2012 amount: RMB 40million;
c. 20 July 2013 amount: RMB 60million;
d. 20 December 2013 amount: RMB 60million
e. 20 January 2014 amount: RMB60million;
4. Means of Repayment
Before the repayment date stipulated in this contract is due, Party A shall
deposit enough money in the account opened by Party B and automatically transfer
the due repayment of that period to make loan repayment, or transfer money from
other accounts to make loan repayment on the repayment date stipulated in this
contract; if Party A doesn't make loan repayment on time, Party B is entitled to
transfer money from the accounts opened by Party A in China Construction Bank
systems.
5. Prepayment
A. If Party A desires to make prepayment of interest, it only needs to notify
Party B in advance.
B. If Party A desires to make prepayment of loan principal, it shall submit a
written application to Party B 20 bank's working days in advance. With the
consent of Party B, Party A can prepay the principal in whole or in part.
If Party A makes prepayment of loan principal, the interest is calculated
according to the number of days of loan utilization and the loan interest rates
stipulated in Article 4 of this contract.
If Party A makes prepayment of loan principal, Party A agrees to pay
compensation to Party B. Compensation=the prepaid principal amount *1%*prepaid
month(s), where any period less than a full month shall be deemed as a full
month.
If Party A makes repayment in installments, and it prepays part of the
loan principal, the prepayment shall be made in reverse order to the repayment
plan. After the prepayment is made, the outstanding principal shall be repaid at
the loan interest rate stipulated in this contract.
Article 7 Security for the Loan
In case of a secured loan, the forms of security shall be Items 1 as delineated
below:
1. Guarantee
2. Mortgage
3. Pledge
4. Standby Letter of Credit
5. Credit Insurance
6. Others:____
Article 8 Rights and Obligations of Party A
1. Rights of Party A
A. Party A is entitled to require Party B to release the funds in accordance
with _____ contractual terms;
B. Party A is entitled to utilize the loan in accordance with the purpose
specified under contractual terms;
C. Party A is entitled to apply to Party B for an extension under the
conditions stipulated by Party B;
D. Party A is entitled to require Party B to treat confidentially the
financial information and business secret used in its production and
operations which Party A provides to Party B, unless it's stipulated
otherwise in laws and regulations.
2. The Obligations of Party A
A. Party A shall provide related financial accounting information and production
and operations information as required by Party B, including, but not limited
to, providing to Party B within the first thirty (30) banking days of the first
month of every quarter the balance sheet as of the end of last quarter, profit
and loss statement (statement of revenues and expenditures for public
institutions) as of the end of last quarter, providing statement of cash flow of
the year at the end of every year, and take responsibility for the truthfulness,
completeness and validity of the information provided.
B. Party A must use the loan in accordance with the stipulations of this
Contract and the loan shall not be diverted to any other purpose;
C. Party A shall actively cooperate with Party B in accepting Party B's
inspection and supervision on Party A's production, operation and financial
events, and the use of the loan under this contract;
D. Party A shall make principal repayment and interest payment on time in
accordance with contractual terms;
E. Party A and its investors shall not surreptitiously withdraw funds or
transfer assets to evade debts to Party B;
F. Before full discharge of the loan principal and interest hereunder, Party A
shall not provide without the consent of Party B any security for any third
party with the assets generated through the use of the loan under this contract.
G. If during the term of this Contract Party A wants to provide any security for
any third party which may affect Party A's repayment capability hereunder, Party
A shall notify Party B in written form in advance and seek the consent of Party
B;
H. If the guarantor under this contract stops production, goes out of business,
nullifies its registration, is revoked business license, goes bankrupt, is
revoked or has deficit in operation, and thus loses part or all of its
corresponding guaranty ability under this loan contract, or if the value of
guaranty or the object of pledge under this loan contract is reduced, destroyed
accidentally or lost, Party A shall provide in a timely manner other means of
security acceptable by Party B;
I. During the period of this contract, if Party A changes its name, its legal
representative (person in charge), address, business scope, registered capital,
etc., Party A shall notify Party B in time;
J. During the period of this contract, in case that Party A experiences any
change which will affect the fulfillment of Party B's creditor's rights, such as
tendering for a contract, leasing, shareholding reorganization, joint
operations, merger, acquisition, spin-off, establishing joint venture, applying
for stopping doing business for internal rectification, filing for dissolution
or bankruptcy etc., Party A shall notify Party B thirty (30) days in advance in
written form, seek Party B's consent and procure new sources for the payment of
the loan under this contract or provide new security as required by Party B.
K. During the period of this contract, in case that Party A experiences any
change which will have serious negative impacts on the repayment obligations
under this contract, such as stopping production, going out of business,
nullifying its registration, being revoked business license, its legal
representative or person in charge engaging in illegal acts, being involved in
important lawsuits, having serious difficulties in production and operation,
having deteriorating financial problems etc. Party A shall notify Party B
immediately in writing and procure new sources for payment of the loan under
this contract or provide new security as required by Party B;
L. Party A shall pay all expenses in connection with the contract and the
security under this contract, such as legal fee, insurance fee, certification
fee, registration fee, storage cost, appraisal cost, notarial fee, etc.
Article 9 The Rights and Obligations of Party B
1. The Rights of Party B
A. Party B is entitled to be kept informed of the production and operation and
the financial conditions of Party A, and is entitled to require Party A to
provide related planning statistics, financial statements and other documents;
B. Party B is entitled to transfer from the account opened by Party A in China
Construction Bank system any sum of money which Party A should pay Party B under
the Contract, no matter what kind of currency it is in.
2. The Obligations of Party B
A. Party B shall release the funds to Party A on time and in full in accordance
with contractual terms, unless it's delayed by Party A;
B. Treat confidential the related financial information and business secret used
in production and operation provided by Party A, unless otherwise stipulated in
laws and regulations.
Article 10 Default Responsibilities
1. Events of Default
A. Default of Party A
a. Party A does not provide truthful, complete and valid financial accounting
information, production and operation information and other related information
as required by Party B;
b. Party A does not use the loan for the purposes stipulated by the two parties;
c. Party A does not repay the principal and interest of the loan on time;
d. Party A refuses or impedes any inspection and supervision by Party B over the
use of loan;
e. Party A transfer assets, withdraw capital, in order to evade debts;
f. Party A has a deteriorating operation and financial situation, can not repay
due debts, or is involved or will be involved in important lawsuits or
arbitration proceedings or has other legal disputes, which Party B believes may
affect or jeopardize, or has already affected or jeopardized the rights and
interests of Party B under this contract;
g. Party A has any other debt which has already affected or may affect the
fulfillment of its obligations to Party B under this contract;
h. Party A does not fulfill any other due debts to China Construction Bank;
i. During the period of this contract, Party A changes the pattern of management
or the management structure by means of tendering for a contract, leasing,
merger, acquisition, establishing joint venture, spin-off, joint operations,
shareholding reorganization, which Party B believes may affect or jeopardize, or
has already affected or jeopardized the rights and interests of Party B under
this contract;
j. Any other event considered by Party B to be sufficient to affect fulfillment
of the debts;
k. Party A violates other stipulated obligations under this contract.
B. If the following events occur to the guarantor, and Party A can not provide
new security as required by Party B, it will be deemed as breach of contract by
Party A:
a. The guarantor has an event which will be sufficient to affect the guarantor's
joint guarantee liability, such as tendering for a contract, leasing, merger and
acquisition, establishing joint venture, spin-off, joint operations,
shareholding reorganization, going bankrupt, being revoked;
b. The guarantor provides a security for any third party in excess of its
capacity;
c. The guarantor loses or may lose its capacity as a guarantor.
d. Other events of default of the guarantor stipulated in the guaranty contract.
C. If the following events occur to the mortgagor, and Party A can not provide
new security as required by Party B, it will be deemed as breach of contract by
Party A:
a. The Mortgagor does not effect insurance over the collateral as required by
Party B, or does not distribute the insurance compensation in accordance with
the terms of the mortgage contract after an insurance accident happens;
b. The collateral is destroyed, vanished or depreciated due to events caused by
any third party, and the mortgager does not distribute the compensation in
accordance with the terms of the mortgage contract;
c. The mortgagor donates, transfers, leases, re-mortgages, moves or otherwise
disposes the collateral, without written consent of Party B;
d. The mortgagor disposes the collateral with the consent of Party B, but does
not distribute the disposal proceeds in accordance with the terms of the
mortgage contract;
e. The collateral is destroyed, vanished or depreciated, which is sufficient to
affect repayment of the debts under the contract, and the mortgagor does not
recover the value of the collateral in time, or does not provide other security
acceptable by Party B;
f. Other events of default of the mortgagor stipulated in the mortgage contract.
D. If the following events occur to the xxxxxxx, and Party A can not provide new
security as required by Party B, it will be deemed as breach of contract by
Party A:
a. The xxxxxxx does effect insurance over the collateral as required by Party B,
or does not distribute the insurance compensation in accordance with the terms
of the pledge contract after an insurance accident happens;
b. The collateral is destroyed, lost or depreciated due to events caused by any
third party, and the xxxxxxx does not distribute the compensation in accordance
with the terms of the pledge contract;
c. The xxxxxxx disposes the collateral with the consent of Party B, but does not
distribute the disposal proceeds in accordance with the terms of the pledge
contract;
d. The collateral is destroyed, vanished or depreciated, which will be
sufficient to affect repayment of the principal and interest of the debts under
the contract, and the xxxxxxx does not recover the value of the collateral, or
does not provide other security acceptable by Party B;
e. Other events of default of the xxxxxxx stipulated in the pledge contract.
E. If the guarantee contract or other means of guarantee does not take effect,
is void or is revoked, or the guarantor partly or wholly loses its guarantee
capacity or refuses to perform its guarantee obligations, and Party A does not
procure new security as required by Party B, it will be deemed as breach of
contract by Party A.
2. Remedies for Default
Party B is entitled to exercise one or several of the following rights if the
events of default stipulated in (A) to (E) above occurs:
A. Stop releasing any fund, declares that the loan is immediately due and
payable, and requires immediate repayment of all the principal, interests and
expenses, whether due or not, under this contract.
B. Charge liquidated damages for breach of contract from Party A, which is 5%
of the loan principal.
C. If Party A fails to use the loan for the purposes under this contract, Party
B shall charge interest and compound interest over the amount diverted by Party
A from the day when the loan is diverted for purposes other than those specified
herein till the day when the principal and interest are fully repaid, according
to the penalty interest rate and accrual of interest stipulated in this
contract.
D. Before the loan becomes due, Party B shall charge compound interest on the
interest which Party A fails to pay on time, according to the loan interest rate
and accrual of interest stipulated in Article 4 of this contract.
E. If the loan is overdue, Party B shall charge interest and compound interest
on the principal and interest which Party A fails to repay on time (including
the loan principal and interest declared by Party B to be due and payable
immediately) from the overdue day till the day when the principal and interest
are repaid in full, according to the penalty interest rate and accrual of
interest stipulated in this contract. If Party A fails to repay on time or
according to the installment repayment schedule stipulated in this contract, it
shall be deemed as an overdue loan.
F. Transfer money from the accounts opened by Party A with China Construction
Bank system, no matter what kind of currency it is in.
G. Require that Party A provide new security acceptable by Party B for all the
debts under this
contract.
H. Exercise the guaranty rights.
I. Terminate the contract.
Article 11 Other agreements reached upon by and between parties.
1. Libbey Inc. shall provide a joint liability repayment guarantee for the Loan
and shall issue a Guarantee Contract (Contract No. 2006-01). Upon completion of
the project, finalization of titles to the plants and equipment and normal
operation of the equipment and machinery and when Party A's operations have
generated profits and its net operating cash flow is positive, a mortgage shall
be processed, subject to consent of Party B, to substitute the above security in
an amount equal to the mortgage value. Subject to satisfaction of reasonable
conditions approved by Party B, the mortgage over land use right and buildings
may be processed earlier to substitute the above security in an amount equal to
the mortgage value.
2. The Loan hereunder shall take priority in terms of repayment to any
shareholder loan.
3. With regard to Article 5(2), the following shall be added: "The loan shall be
drawn down in 8 installments before 31st March 2007 and each drawdown shall be
no less than RMB10 million."
4. With regard to Article 8 (2) A, Party A shall provide Party B with an annual
report no later than 28th February in the following year.
5. With regard to Article 10(1) (A) (c) and (h), the following shall be
inserted:
"Within 10 working days upon the Loan principal and interest have become due and
payable, Party B shall not act on the remedies available to it under Article 10
(2) (A) against Party A".
6. With regard to Article 10(1) (A) (f), the following shall be inserted:
"The word 'affect' or 'jeopardize' as referenced herein shall be understood to
mean that it will render Party A unable to discharge any indebtedness that will
become due and payable soon".
7. Party A shall cover insurance in an insurance company accepted by Party B
(whose acceptance shall not be unreasonably withheld) for equipments,
engineering construction, transportation and risk during the operation of the
project related to the items or trade of the loan. The insured amount shall be
no lower than the principal of loan, and it shall provide in the special
representation clause of the insurance policy that the first beneficiary shall
be China Construction Bank Corporation Langfang Economic Development Area
Sub-branch. Party A shall deliver the original copy of the insurance policy to
Party B in ninety (90) days as of the effective date of the Contract. Party A is
not allowed to terminate the insurance by any reason before the principal,
interests and charges are repaid. If Party A terminates the insurance, Party B
has the right to renew the insurance or cover insurance instead of Party A, and
Party A shall assume the charge. Party A shall be responsible for all loss
suffered by Party B due to the termination of insurance.
Party A shall notify Party B in written form in five (5) business days after
knowing the occurrence of insured accident, and claim for compensation to the
underwriter according to relative stipulation in the insurance policy; Party A
shall bear all losses caused by Party A's failure to notify or claim
compensation in time, or failure to fulfil the obligation under the items of the
insurance policy.
Insurance indemnity shall be used to repay the principal and interest of loan
and other payable expenditures first, but Party B can decide whether the
insurance indemnity will be applied on project or trade supported by the loan
according to the conditions of the project; the insufficiency of
insurance indemnity which fails to repay the principal and interest shall not be
taken as the excuse of exemption of payable debt of Party A.
Article 12 Resolution of Contract Dispute
Any dispute between Party A and Party B arising in the performance of this
Contract shall be settled by the both Parties through consultation; if it can
not be settled through negotiation, it may be settled through arbitration as
delineated in Item 2 below:
1. Bring an action at the people's court where Party B is located.
2. Submit to China International Economic and Trade Arbitration Commission (in
Beijing) for arbitration according to its rules effective at the time of
arbitration application. The arbitration adjudication is final, and has binding
effects on the two parties. During the legal proceedings or arbitration
proceedings, the terms of the contract not involved in the disputes shall still
be fulfilled.
Article 13 The Effectiveness of the Contract
The contract takes effect from and after the legal representative (person in
charge) or agent of Party A signs and affixes its official seal, and the person
in charge or agent of Party B signs and affixes its official seal.
Article 14 This Contract is prepared in eight (8) original copies.
Article 15 Terms to Declare
1. Party A knows clearly the business scope and extent of authority of Party
B.
2. Party A has read all the terms of this contract. As required by Party A,
Party B has made explanations to relative terms of this contract. Party A
is all familiar with and fully understand the meaning of the terms of this
contract and the corresponding legal consequences.
3. Party A is authorized to execute this Contract.
Party A (official seal):
------------------------------------------
Legal Representative (Person in Charge) or
Authorized Agent (signature):
Year Month Day
Party B (official seal):
------------------------------------------
Person in Charge or
Authorized Agent (signature):
Year Month Day
