Working Capital Loan Contract
EXHIBIT
10.7
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Borrower
(party A):
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Hubei
Winner Textiles Co., Ltd.
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|
Address
(location):
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Xx.00
Xxxxx Xxxxxxx Xxxx, Xxxxxx Town, Tianmen
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|
Legal
Representative:
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Xx.
Xxxxxxxx Xx
|
|
Lender
(party B):
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Tianmen
Branch of Industrial & Commercial Bank of China
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|
Address:
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No.
22 (Middle)
Luyv Avenue, Jinglin
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|
Legal
Representative (Person-in-charge):
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Xx.
Xxxxxxx Xxxxx
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Whereas
Party A has applied to Party B for a loan for the purpose as specified in Clause
2.1 of this Contract and Party B agrees to provide such loan to Party A. After
friendly negotiations, the Parties enter into this Contract subject to the
following terms and in accordance with relevant laws and regulations:
| 1. |
TYPE
OF LOAN
|
| 1.1 |
The
type of Loan is short-term working capital
loan.
|
| 2. |
PURPOSE
OF THE LOAN
|
| 2.1 |
The
Loan shall be used as capital for purchase of raw materials only.
|
| 2.2 |
Party
A shall not change the purpose of the Loan without written consent
from
Party B.
|
| 3. |
AMOUNT
AND TERM OF THE LOAN
|
| 3.1 |
The
amount of the Loan is RMB Four
Million.
|
| 3.2 |
The
Loan is granted for a term of 12 months commencing from October
20th,
2005 to October 16th,
2006.
|
| 3.3 |
Party
A should withdraw the Loan in one trenche according to Clause 3.2
of this
Contract. Under special circumstances and with written consent from
Party
B, Party A can withdraw the Loan 7 days in advance or delay. The
drawdown
date and maturity date of the Loan shall be the dates prescribed
on the
relevant certificate of indebtedness.
|
-1-
| 4. |
INTEREST
RATE AND INTEREST
|
| 4.1 |
Interest
of the Loan is calculated daily from the drawdown date and paid monthly
on
the 20th
day of each month. Principal is paid off on maturity date with all
due
interest.
|
| 4.2 |
The
interest rate of the Loan under this Contract is fixed rate per annum
of
5.58%, which shall not be adjusted during the valid
period.
|
| 4.3 |
If
the People’s Bank of China adjusts the lending rate during the term of the
Loan and such adjustment is applicable to the Loan, Party B is entitled
to
calculate interest on the Loan at the interest rate and in the method
after the adjustment without informing Party
A.
|
| 5. |
CAPITAL
SOURCE FOR REPAYMENT AND REPAYMENT
WAY
|
| 5.1 |
Party
A shall repay the Loan with (but not restrained to) its sales
amount;
|
| 5.2 |
Under
no circumstances is Party A entitled to refuse to fulfill its repayment
obligations under this Contract by quoting Clause 5.1 of this
Contract.
|
| 5.3 |
Party
A should pay interest and repay principal of the Loan in one trenche
on
October 16th
2006.
|
| 5.4 |
Party
A should deposit in the account opened with Party B the due interest
or
principal before interest settlement date or principal repayment
date and
authorize Party B to deduct such amount from Party A’s account on the
agreed interest settlement date or principal repayment
date.
|
| 6. |
GUARANTEE
CLAUSE
|
| 6.1 |
The
way of guarantee for the loan under this Contract is
mortgage.
|
| 6.2 |
Party
A is obligated to assist Party B and procure that Party B signs the
mortgage contract numbered 18090100-2005 Nian Xxxx Xxxx (Di) No.0006
with
the mortgagor.
|
| 6.3 |
In
case of occurrence of changes which have a negative impact upon Party
B’s
creditor’s right, Party B is entitled to urge Party A to provide other
security to the satisfaction of Party
B.
|
| 7. |
RIGHTS
AND OBLIGATIONS OF BOTH
PARTIES
|
| 7.1 |
Party
A shall have the following rights and
obligations:
|
| § |
to
draw down and use the Loan according to this
Contract;
|
| § |
if
Party A repays the Loan before maturity date, it shall obtain prior
written consent from Party B and shall compensate Party B against
the
losses for expected income and relevant
expenses;
|
| § |
to
bear all expenses incurred under this
Contract;
|
| § |
it
shall notify Party B at least 30 days in advance of any activities
that
would have a negative impact upon Party B’s ability to realize its rights
such as joint operation, merger, restructuring, sale of material
asset,
etc. and obtain Party B’s written consent, otherwise, Party A is not
allowed to carry out the afore mentioned activity before repayment
of the
Loan;
|
| § |
to
notify Party B of any changes like location, contact address, business
scope, legal representative and other commercial register items within
7
days after these changes;
|
| § |
it
shall notify Party B immediately the occurrence of any event that
will
affect its normal operation or solvency under this contract, such
as (but
not restrain to) severe economic dispute, bankruptcy, financial
deterioration etc;
|
| § |
In
case of it winding up, dissolution, suspension of operation, revoke
of
business license, Party A should notify Party B of such events within
5
days after their occurrence and undertake to repay the principal
and
interest immediately.
|
| § |
Others
as agreed.
|
-2-
| 7.2 |
Party
B shall have the following rights and
obligations:
|
| § |
to
require Party A to provide all materials related to the
Loan;
|
| § |
to
deduct the principal, interest, compound interest, penalty interest
and
other due expenses relating to the Loan under this Contract directly
from
Party B’s account in accordance with the provisions of this Contract or
relevant law;
|
| § |
in
case of Party A’s evasion of Party B’s monitoring, default in payment for
due principal or interest and other severe breach of the Contract,
Party B
is entitled to impose credit penalty against Party A, notify relevant
departments or entities of such breach and put up payment demand
notice on
public media;
|
| § |
to
provide loan to Party A in time according to the provisions of the
Contract (except for the delays due to Party A’s
reason);
|
| § |
to
keep confidential of the information and materials provided by Party
A..
|
| 8. |
LIABILITY
FOR DEFAULT
|
| 8.1 |
The
Parties shall fulfill their obligations under the Contract, otherwise,
the
default party should take breach of contract
liabilities..
|
| 8.2 |
If
Party A fails to draw down loan from Party B in accordance with Clause
3.3
of the Contract, Party B is entitled to charge penalty for breach
of
contract by charging interest daily at the interest rate stipulated
in the
Contract.
|
| 8.3 |
If
Party B fails to provide the Loan for Party A in accordance with
Clause
3.3 of the Contract,. Party A is entitled to charge penalty for breach
of
contract by charging interest daily at the interest rate stipulated
in the
Contract
|
| 8.4 |
If
Party A repays the Loan before the maturity date without getting
Party B’s
written consent, Party B is entitled to charge interest for the term
and
at the interest rate stipulated in the
Contract.
|
| 8.5 |
If
Party A fails to make timely payment for the principal and interest
of the
Loan under this Contract, Party B is entitled to urge Party A to
repay in
a given period, it’s also entitled to counteract all accounts Party A has
opened with ICBC and all its affiliates and charge interest on the
default
amount at the interest rate equaling to 1.5 times of the normal loan
interest rate. Party B is also entitled to charge interest on overdue
interest at the interest rate equaling to 1.5 times of the normal
loan
interest rate.
|
| 8.6 |
If
Party A does not use the Loan for the purpose prescribed in this
Contract,
Party B is entitled to terminate drawdown of the Loan and withdraw
part or
all of the Loan before the due date, or terminate the Contract. Party
B is
also entitled to charge interest for the misused amount at the interest
rate equaling to 1.5 times of the normal loan interest rate based
on
misused days. Interest shall also be charged on overdue interest
at the
interest rate equaling to 1.5 times of the normal loan interest
rate.
|
| 8.7 |
During
the valid period of this Contract, Party B is entitled to charge
on
overdue interest rate at the loan interest rate. After the validity
of
this Contract, Party B is entitled to charge on overdue interest
at the
rate in compliance with Clause 8.5.
|
| 8.8 |
If
event of breach of contract prescribed in Clause 8.5 and 8.6 occur
simultaneously, Party B should impose penalty based on the breach
which is
more severe instead of based on both
events.
|
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| 8.9 |
If
Party A is found to have been in any of the following situations,
it
should rectify and take measures to the satisfaction of Party B
within 7
days after receipt of Party B’s notice, otherwise Party B is entitled to
withdraw part or all of the Loan before due date; In the situation
where
Party B is unable to do so, Party B is entitled to charge interest
at the
interest rate applicable to over due
loan.
|
| § |
Party
A provides false materials to or withholds true important facts of
balance
sheet, income sheet and other financial materials from Party
B;
|
| § |
Party
A refuses to accept or evades Party B’s supervision over its use of the
Loan and related operations and financial
activities;
|
| § |
Party
A transfers or disposes its material assets without getting Party
B’s
consent;
|
| § |
The
major part or all of Party A’s assets are possessed by a third party,
taken over by designated client or consigner, detained or frozen,
and such
may cause sever loss to Party B;
|
| § |
Party
A is in situation of contracted operation, restructuring, merger,
division, capital decrease, material assets transfer, etc, without
getting
Party B’s consent and such situation may impair Party B’s creditor’s
rights;
|
| § |
Party
A changes its location, postal address, business scope, legal
representative and other registration items or invest a considerable
amount in a third party and such change may impair or threaten to
impair
Party B’s creditor’s rights;
|
| § |
Party
A suffers is involved in sever economic dispute or suffers sever
financial
deterioration which will impair or threaten Party B’s creditor’s
rights;
|
| § |
any
other circumstances which may impair or threaten to impair Party
B’s
creditor’s rights.
|
| 9. |
EFFECTIVENESS,
MODIFICATION AND TERMINATION OF THE
CONTRACT
|
| 9.1 |
This
Contract shall come into effect upon signing and stamping by both
parties
and upon effectiveness of the guarantee contract in present of guarantee.
This Contract shall remain effective until the date on which all
principal, interest, penalty interest, breach of contract compensation
and
other due expenses under the Contract are paid off..
|
| 9.2 |
If
Party A is found to have been in any of the following situations,
Party B
is entitled to terminate the Contract, and demand Party A to repay
the
principal and interest under this Contract before the due date and
compensate for Party B’s losses:
|
| § |
Party
A is in the situation of winding up, dissolution, suspension of operation,
revoking or cancellation of its business
license;
|
| § |
Changes
occur relating to the guarantee under this Contract which will have
an
adverse impact on Party B’s creditor’s right, and Party A fail to provide
extra guarantee as required by Party
B;
|
| § |
Not
repay the principal or interest on time or misuse of the Loan or
other
severe breach of the Contract.
|
| 9.3 |
If
Party A wishes to renew the Loan, it should provide written application
together with the written consent of the guarantor for the renewal
to
Party B 30 days before the expiry date. If Party B agrees to renew
the
Loan, the Parties shall enter into an agreement for extension of
the Loan
contract. This Contract shall be performed continuously before the
agreement for extension is signed.
|
| 9.4 |
After
this Contract comes into effect, neither party shall modify, amend
or
terminate this Contract before the due date unless otherwise stated
in the
Contract. This contract may be modified and terminated upon a written
agreement between Party A and B through negotiations.
|
| 10. |
SETTLEMENT
OF DISPUTES
|
Any
dispute between the Parties A and B in connection with the performance of this
Contract may be settled through consultations. In case no settlement can be
reached, any of the Parties may submit the dispute to the People’s court of the
territory where Party B is located.
| 11. |
OTHER
AGREEMENTS REACHED
|
| 12. |
SUPPLEMENTARY
ARTICLES
|
| 12.1 |
Attachments
of this Contract constitute an integral part of this Contract and
shall
have the same legal force with the main part of this
Contract.
|
| 12.2 |
During
the performance of this Contract, if certain drawdown date or repayment
date is not a bank working date, such date shall be postponed to
the
working date following it.
|
| 12.3 |
This
contract is executed in two counterparts with each party holding
one copy
and they are of the same legal
force.
|
|
Party
A (OFFICIAL SEAL):
|
Party
B: (OFFICIAL SEAL)
|
|
Hubei
Winner Textile Co., Ltd.
|
ICBC
Tianmen Branch
|
|
Legal
representative:
|
Legal
representative (signatory):
|
|
Xx.
Xxxxxxxx Xx
|
Xx.
Xxxxxxx Xxxxx
|
|
Date:
October 20, 2005
|
Date:
October 20, 2005
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