Loan Contract
EXHIBIT
10.23
Loan
Contract
Contract
No.: Year 2005 Shang Zi No. 1005470040
Lender:
Shenzhen Xxxxxxxx Xxxxxx of China Merchants Bank ("Party
A")
Borrower:
Winner Industries (Shenzhen) Co., Ltd. ("Party B")
Legal
Representative: Xxxxxxxx
Xx
Whereas
Party B has applied to Party A for working capital loan for the purpose of
turnover of working capital (the "Loan")
and,
upon examinations, Party A has agreed to grant the Loan to Party B. Parties
A
and B, after thorough negotiations, hereby enter into this Contract subject
to
the following terms and conditions and in accordance with relevant laws and
regulations:
| 1. |
TYPE
OF THE LOAN
|
The
type
of the Loan is working capital loan.
| 2. |
CURRENCY
AND AMOUNT OF THE LOAN
|
The
Loan
is RMB 2,5,000,000 yuan only.
| 3. |
PURPOSE
OF THE LOAN
|
The
Loan
shall be used for turnover of working capital only. Party B shall not change
the
purpose of the Loan without written consent from Party A.
| 4. |
TERM
OF THE LOAN
|
The
Loan
is granted for a term of 6 months, commencing from August 31st,
2005 to
February 28th,
2006.
If the actual drawdown date of the Loan is different from the above-mentioned
commencement date, the commencement and maturity dates of the Loan shall be
the
dates prescribed in the relevant certificate of indebtedness.
| 5. |
INTEREST
RATE AND INTEREST
|
| 5.1 |
Interest
rate: Interest of the Loan is calculated at the rate of 5.22 % per
annum.
|
The
interest rate of the Loan shall be finally confirmed by the rate stated on
the
certificate of indebtedness.
If
Party
B changes the purpose of the Loan, Party A is entitled to charge interest on
the
misused portion of the Loan at the rate equaling to 2 times of the normal Loan
interest rate based on misused days.
If
Party
B fails to repay the Loan before the due date, Party A is entitled to charge
interest on the amount in default at the rate equaling to 1.5 times of the
normal Loan interest rate.
If
both
events above-mentioned occur simultaneously, Party B should impose penalty
based
on the breach which is more severe instead of based on both events.
If
the
People’s Bank of China changes the lending rate during the term of the Loan, the
interest of the Loan shall be calculated in accordance with the provisions
relating to such change.
-1-
| 5.2 |
Calculation
of interest: Interest shall accrue from the drawdown date of the
Loan on
the basis of the actual amount granted and the actual days elapsed
and
shall be calculated once a month at the 20th day of each
month.
|
| 5.3 |
Payment
of interest: Party B shall pay the interest on each interest calculation
date. Party A may deduct the interest directly from Party B’s deposit
account. If Party B fails to pay the interest by the time prescribed,
Party A is entitled to charge compound interest on the interest in
default.
|
| 6. |
GUARANTEE
CLAUSE
|
| 6.1 |
The
principal and interest of the Loan and all other relevant expenses
hereunder shall be guaranteed by Winner Medical & Textile Ltd.
Jingmen, Winner Medical & Textile Ltd. Tianmen, Winner Medical &
Textile Ltd. Yichang and Xx. Xxxxxxxx Xx under an Irrevocable Letter
of
Guarantee issued in favor of Party A;
and
|
| 6.2 |
The
Loan under this Contract shall be secured by the collateral, i.e.,
real
properties, to which Winner Industries (Shenzhen) Co., Ltd. has title
and
the two parties shall enter into a Mortgage Contract
separately.
|
| 7. |
RIGHTS
AND OBLIGATIONS OF PARTY B
|
| 7.1 |
Party
B shall have the following rights:
|
| 7.1.1 |
To
draw down and use the whole of the Loan according to this
Contract;
|
| 7.1.2 |
To
refuse to accept any conditions other than those set forth
herein;
|
| 7.1.3 |
To
assign the debts to a third party after obtaining consent from Party
A.
|
| 7.2 |
Party
B shall undertake the following
obligations:
|
| 7.2.1 |
It
shall provide such true documents and materials as Party A requires
and
the information on all its bank accounts, including the banks with
which
Party B maintains such accounts, the account numbers and the balances
of
its deposits and loans, and it shall also give cooperation in Party
A's
investigations, reviews and
examinations;
|
| 7.2.2 |
It
shall accept Party A’s supervision over its use of credit facilities,
operations and financial
activities;
|
| 7.2.3 |
It
shall use the Loan for the purpose prescribed in this
Contract;
|
| 7.2.4 |
It
shall make timely and full payment of the principal and interest
of the
Loan as agreed herein;
|
| 7.2.5 |
It
shall obtain written consent from Party A before transferring the
debts
hereunder, in whole or in part, to a third
party;
|
| 7.2.6 |
It
shall forthwith notify Party A of any occurrence of the following
events
and make every effort to take measures, on Party A's demand, for
securing
timely and full payment of the principal and interest of the Loan
and all
other relevant expenses hereunder:
|
| 7.2.6.1 |
It
suffers grave financial loss, asset damage or other financial
distress;
|
| 7.2.6.2 |
It
offers a loan or guarantee or puts its property (right) in mortgage
(pledge), for the benefits of a third party or to keep that party
harmless
to any loss;
|
| 7.2.6.3 |
Occurrence
of changes like amalgamation (merger), division, reorganization,
equity
(cooperative) joint venture, transfer of equity, transformation into
shareholding company, etc.;
|
| 7.2.6.4 |
It
winds up its business, has its business license revoked or cancelled,
has
filed or been presented the bankruptcy or dissolution petition and
so
forth;
|
| 7.2.6.5 |
Its
controlling shareholder and other affiliates suffer great difficulty
in
business or financial condition which affects its normal
operation;
|
| 7.2.6.6 |
It
concludes material connected transactions with its controlling shareholder
and other affiliates which affect its normal
operation;
|
| 7.2.6.7 |
It
is involved in any litigation or arbitration or imposed on any criminal
or
administrative penalty, having material adverse effects on its business
or
property;
|
| 7.2.6.8 |
Other
material events which are likely to affect its solvency take
place.
|
-2-
| 8. |
RIGHTS
AND OBLIGATIONS OF PARTY A
|
| 8.1 |
Party
A shall have the following rights:
|
| 8.1.1 |
To
require Party B to make payment of the principal and interest of
the Loan
when they become due;
|
| 8.1.2 |
To
require Party B to provide any information relating to the
Loan;
|
| 8.1.3 |
To
look into the operations and financial activities of Party
B;
|
| 8.1.4 |
To
supervise Party B on its usage of the Loan for the purpose prescribed
herein;
|
| 8.1.5 |
To
deduct the principal and interest of the Loan directly from Party
B’s
account;
|
| 8.1.6 |
To
require Party B to prepay the Loan before due date or stop Party
B from
making further drawdown in accordance with the provisions hereof
if Party
B is in default of performance of its obligations
hereunder;
|
| 8.1.7 |
To
require Party B to pay in full the principal and interest of the
Loan and
all other relevant expenses hereunder immediately, to transfer all
the
debts hereunder to an assignee acceptable to Party A, or to
provide/increase security acceptable to Party A if Party B is found
to
have been in any of the situations specified in Clause
7.2.6.
|
| 8.2 |
Party
A shall undertake the following
obligations:
|
| 8.2.1 |
To
grant the Loan to Party B upon the terms stated in this
Contract;
|
| 8.2.2 |
To
keep Party B’s indebtedness, financial, production and operational
conditions confidential unless otherwise required by
law.
|
| 9. |
PARTY
B HEREBY WARRANTS THAT:
|
| 9.1 |
It
is an enterprise duly established and lawfully existing in accordance
with
the laws of China with the status of enterprise legal person and
the full
capacity of civil disposition to execute and perform this
Contract;
|
| 9.2 |
It
executes and performs this Contract with proper authorization from
its
board of directors or any other
authority;
|
| 9.3 |
All
the documents, information and instruments it has provided concerning
itself, the guarantor, the mortgagor (the pledgor) and the security
(the
collateral) are true, accurate, complete and valid, and do not contain
any
material mistakes with reference to the facts or omit any material
facts;
|
| 9.4 |
At
the time of signing of this Contract, there is no litigation, arbitration
or criminal or administrative penalty which has material adverse
effects
on Party B or its major assets, nor the occurrence of such litigation,
arbitration or criminal or administrative penalty is expected during
performance of this Contract, and Party B shall forthwith notify
Party A
of any occurrence of such litigation, arbitration or criminal or
administrative penalty;
|
| 9.5 |
It
will keep its operations in full compliance with the national laws
and
regulations, conduct business within the business scope prescribed
in its
Business License for Enterprise Legal Person, and keep the registration
of
enterprise (legal person) in force by going through the annual examination
formalities;
|
| 9.6 |
It
will maintain or improve its current operation and management, and
ensure
that its existing assets remain stable or appreciate in value; it
will not
waive its claim for the matured liabilities and dispose of its existing
major assets for no consideration or in other improper
manners;
|
| 9.7 |
At
the time of signing of this Contract, there occurs no material event
which
will affect Party B's performance of its obligations
hereunder.
|
| 10. |
PRE-REPAYMENT
|
| 10.1 |
With
the prior consent from Party A, Party B is allowed to make
pre-repayment;
|
| 10.2 |
Notwithstanding
any pre-repayment by Party B, the interest shall be calculated pursuant
to
the provisions of this Contract.
|
| 11. |
EXTENSION
OF THE LOAN
|
If
Party
B needs to procure extension of the Loan on its failure to repay the Loan
hereunder when it becomes due, it shall apply in writing to Party A one month
before the expiry date of this Contract. If Party A agrees to extend the Loan
after examinations, Parties A and B shall enter into an agreement for extension
of the loan contract separately. If Party A does not agree to do so, this
Contract shall remain in force. Party B shall pay the utilized portion of the
Loan and the interests thereon in accordance with the provisions of this
Contract.
| 12. |
EXPENSES
|
All
expenses arising from matters relating to this Contract, such as investigation
of creditworthiness, examination and notarization, and all expenses incurred
by
Party A in enforcing its claims on Party B's failure to pay the principal and
interest of the Loan and other expenses payable hereunder when they become
due,
such as attorney’s fees, costs of the action and travel expenses, shall be borne
by Party B. Party A is entitled to deduct such expenses directly from the
accounts of Party B. In case of deficiency, Party B guarantees to make such
payment in full as Party A may specify by notice without production of any
proof
by Party A.
-3-
| 13. |
EVENTS
OF DEFAULT AND HANDLING
|
| 13.1 |
If
Party B is found to have been in any of the following situations,
it shall
be deemed as an occurrence of events of
default:
|
| 13.1.1 |
In
violation of Clause 7.2.1 hereof, Party B provides false materials
to or
withholds true important facts from Party A or does not give cooperation
in Party A's investigations, reviews and examinations, and it fails
to
remedy such default within the reasonable period specified by Party
A and
such default is considered to be material;
|
| 13.1.2 |
In
violation of Clause 7.2.2 hereof, Party B refuses to accept or evades
Party A’s supervision over its use of credit facilities, operations and
financial activities and such default is considered to be
material;
|
| 13.1.3 |
In
violation of Clause 7.2.3 hereof, Party B does not use the Loan for
the
purpose prescribed herein and such default is considered to be
material;
|
| 13.1.4 |
In
violation of Clause 7.2.4 hereof, Party B fails to make timely and
full
payment of the principal and interest of the Loan as agreed
herein;
|
| 13.1.5 |
In
violation of Clause 7.2.5 hereof, Party B transfers the debts hereunder
to
a third party without authorization, impairing the benefits of Party
A;
|
| 13.1.6 |
In
violation of Clause 7.2.6 hereof, Party B fails to promptly notify
Party A
of any occurrence of the events prescribed therein or it fails to
take
measures for further securing payment of the debts hereunder as required
by Party A after having knowledge of such occurrence or Party A considers
that the Loan is insecure;
|
| 13.1.7 |
Party
B is in violation of Clauses 9.1, 9.2 and 9.4 hereof which impair
Party
A’s benefits or in violation of Clauses 9.3, 9.5, 9.6, and 9.7 hereof,
Party B fails to remedy its default immediately on demand of Party
A which
impair Party A's benefits;
|
| 13.1.8 |
Party
B is in other situations that may, in the opinion of Party A, affect
Party
A's legal interests.
|
| 13.2 |
If
the guarantor is found to have been in any of the following situations,
which Party A considers that it is likely to affect the capability
of the
guarantor to perform its obligations under the guarantee and requires
the
guarantor to eliminate such adverse effects, or requires Party B
to
increase or change the terms of guarantee, but the guarantor and
Party B
fail to do so, it shall be deemed as an occurrence of events of
default:
|
| 13.2.1 |
Any
of the events similar to those described in Clause 7.2.6 hereof
occurs;
|
| 13.2.2 |
The
guarantor has concealed the information on its capability to undertake
the
obligations of the guarantee or has not obtained authorization from
the
authority when executing the Irrevocable Letter of
Guarantee;
|
| 13.2.3 |
The
guarantor fails to keep the registration in force by going through
the
annual examination formalities;
|
| 13.2.4 |
The
guarantor neglects to manage and enforce its claim for the matured
liabilities, or disposes of its existing major assets for no
considerations or in other improper
manners.
|
| 13.3 |
If
the mortgagor (or the pledgor) is found to have been in any of the
following situations, which Party A considers that the creation of
mortgage (or pledge) is likely to end in failure or the value of
the
security (or the collateral) is likely to have a fall, and requires
the
mortgagor (or the pledgor) to eliminate such adverse effects, or
requires
Party B to increase or change the terms of guarantee, but the mortgagor
(or the pledgor) and Party B fail to do so, it shall be deemed as
an
occurrence of events of default:
|
| 13.3.1 |
The
mortgagor (or the pledgor) has no title to or right to dispose of
the
security (or the collateral), or such title or right is in
dispute;
|
| 13.3.2 |
The
mortgagor (or the pledgor) conceals the facts that the security (or
the
collateral) is jointly owned, leased, distrained or taken
over;
|
| 13.3.3 |
Without
prior written consent from Party A, the mortgagor transfers, leases
out,
places a second mortgage on the security or disposes of the security
in
any other improper manner;
|
| 13.3.4 |
The
mortgagor fails to keep the security in safe custody or to maintain
and
repair the security properly, leading to substantial depreciation
of the
value of the security; or the mortgagor's actions jeopardize the
security
directly, leading to a fall in the value of the security, or the
mortgagor
fails to keep the security insured as required by Party A during
the
continuance of the mortgage.
|
| 13.4 |
Should
any of the events of default described in Clauses 13.1, 13.2 and
13.3
occurs, Party A is entitled to take the following measures separately
or
simultaneously and Party B shall not raise any objection
thereto:
|
| 13.4.1 |
To
stop releasing the agreed and unused
Loan;
|
| 13.4.2 |
To
declare the principal and interest of the Loan granted and relevant
expenses immediately due and
payable;
|
| 13.4.3 |
To
satisfy all the debts hereunder by deducting the same directly from
Party
B’s settlement account or other
accounts;
|
| 13.4.4 |
To
make recourse pursuant to Clause 16
hereof.
|
| 14. |
MODIFICATION
AND TERMINATION
|
This
Contract may be modified and terminated upon a written agreement between Parties
A and B through negotiations. This Contract shall remain in force so long as
no
agreement has been reached. Neither party shall modify, amend or terminate
this
Contract without authorization.
-4-
| 15. |
MISCELLANEOUS
|
| 15.1 |
During
the valid period of this Contract, no relaxation, forbearance or
indulgence by Party A in enforcing any of its interests or rights
hereunder against any events of default or delay of Party B shall
prejudice, affect or restrict Party A’s interests and rights as a creditor
under this Contract and the relevant laws and regulations, nor shall
it be
taken as Party A’s approval to or permission of any events of default, or
operate as waiver of its rights to take actions against existing
or future
defaults.
|
| 15.2 |
Should
this Contract or any provisions hereof become invalid under the law
for
whatsoever reasons, Party B shall continue to fulfill all its obligations
to make payment. In such event, Party A is entitled to terminate
this
Contract and demand immediate payment of the principal and interest
of the
Loan and other relevant expenses hereunder from Party
B.
|
| 15.3 |
Each
notice and demand to be given by Parties A and B hereunder shall
be made
in writing. Such notice or demand shall be deemed to have been duly
served
on Party B once the same is sent by telex, by telegram or to the
post
office.
|
| 15.4 |
The
certificate of indebtedness of the Loan and any supplemental written
agreement entered into between Parties A and B through negotiations
in
respect of the matters not covered herein or changes shall serve
as the
schedule(s) to this Contract and constitute an inseparable part of
this
Contract.
|
| 16. |
APPLICABLE
LAW AND SETTLEMENT OF
DISPUTES
|
| 16.1 |
The
execution, construction and settlement of disputes of this Contract
shall
be governed by the laws of the People’s Republic of China. The interests
of Parties A and B are protected by the laws of the People’s Republic of
China.
|
| 16.2 |
Any
dispute between Parties A and B in connection with the performance
of this
Contract may be settled by the two parties through negotiations.
In case
no settlement can be reached through negotiations, any of the Parties
may
submit the dispute to the People’s Court of the territory where Party A is
located
|
| 16.3 |
Having
completed the formalities of notarization by Parties A and B for
the
enforcement of this Contract, Party A may directly apply to the People's
Court of competent jurisdiction for enforcement with a view to claiming
for the debts due and owed by Party B
hereunder.
|
| 17. |
EFFECTIVENESS
OF THE CONTRACT
|
| 17.1 |
This
Contract shall take effect upon affixing the signatures and official
seals
by the authorized signatories of the two parties and completion of
formalities of guarantee as described in Clause 6 hereof. This Contract
shall remain effective until the date on which the principal and
interest
of the Loan and all other relevant expenses hereunder are settled
in full.
|
| 17.2 |
This
Contract is executed in 5 counterparts with each having the same
force.
Party A, Party B and the guarantors each holds one thereof.
|
|
PARTY
A: (OFFICIAL SEAL)
|
PARTY
B: (OFFICIAL SEAL)
|
|
Shenzhen
Xxxxxxxx Xxxxxx of China Merchants Bank
|
Winner
Industries (Shenzhen) Co., Ltd.
|
|
AUTHORIZED
SIGNATORY:
|
AUTHORIZED
SIGNATORY: Xxxxxxxx Xx
|
|
DATE:
August 31st, 2005
|
DATE:
August 31st, 2005
|
|
-5-
|
|
