SECURITY AGREEMENT
(Translation)
THIS SECURITY AGREEMENT (this
“Agreement”), is entered into and made
effective as of November 10, 2009, by and between the following parities,
serving as an exhibit to a loan agreement, dated November 10th,
2009 (the “Loan
Agreement”).
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1.
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Xxxxxx
Xxxxxxx (the “Lender”), a citizen of the People’s Republic of China, Rm
302, No 16 Xxx Xxx Jing, Xxxx Xxx Road,
Guangzhou
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2.
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Dongguan
CHDITN Printing Co., Ltd. (the "Borrower"), a corporation organized under
the laws of the People’s Republic China, with headquarters at No.6
Economic Zone, Wushaliwu, Xxxxx’an Town, Dongguang, Guangzhou Province,
China.
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In
accordance to the terms and conditions in the Loan Agreement, the Lender hereby
agrees to provide the Borrower with a loan of total two million three hundreds
twenty one thousands and three hundred fifty China Xxxx (CNY￥2,321,350) (the
“Loan”).
NOW,
THEREFORE, the Borrower hereby grants to the Lender a first priority security
interest in and to the pledged property until the satisfaction of the
Obligations in connection with the Loan, as defined herein below.
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1.
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The
Borrower agrees to pay off any payables overdue under the Loan Agreement
(the “Liabilities”), timely and unconditionally, upon receiving a written
notice from the Lender.
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2.
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Pursuant
to Item 1, the Borrower shall pay off the Liabilities upon receiving a
written notice from the Lender. The Borrower shall pay interest incurred
from any overdue balance during the period from the written notice date
through the paid date. The interest shall be calculated based on the
default interest rate as defined in Item 19 of the Loan Agreement, and
compounded per month.
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3.
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In
addition to the Liabilities secured hereby pursuant to Item 1, the
Borrower shall indemnify, unconditionally and irrevocably, any losses from
the Lender due to the Borrower’s late payments or failure in executing the
Loan Agreement. In the event that the Liability secured pursuant to Item 1
void, unenforceable, or unexecuted, the indemnification pursuant to Item 3
shall survive and enforceable to the
Borrower.
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4.
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The
Borrower agrees to secure the Liabilities by the properties in his title
as a pledge, including but not
limited:
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（a）
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All
the real properties and the attachments on the
land;
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（b）
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All
the machines and equipments, vehicles and other personal
properties;
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（c）
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All
the using rights to the land, building and the attachments on the
land;
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（d）
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All
the using rights to the machines and equipments, vehicles and other
properties;
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（e）
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All
the using right to the subcontracted land, with the owners’ consent
regarding the pledge;
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（f）
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Any
other properties available to be
pledged.
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5.
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The
Loan shall be secured by the common shares of Décor Products International
Inc. (Symbol: DCRD.OB) (the “Shares”) held by the Borrower, the
certificates of which shall be delivered to JPF Securities Law, LLC., a
legal firm assigned by the Lender. The Lender shall have a lien on the
Shares pursuant to the security law of the People’s Republic of China.
When the Event of Default occurred, the Lender shall have the preemptive
right to the Shares.
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6.
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The
Borrower agrees and affirms that the written notice stating the amount and
due date of the Liabilities, signed by the Lender, or his assignee, is
enforceable to the Borrower, with the exception that the mistakes in the
written notice are material.
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7.
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All
the responsibilities and obligations pursuant to this Agreement shall not
be released, reduced or changed due to the
followings:
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（a）
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The
extension or postponement of the payments approved by the
Lender;
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（b）
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In
case of the pendency of any liquidation or bankruptcy to the Borrower;
and/or,
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（c）
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The
Lender holds the lien, security or guaranty of the Loan;
and/or,
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（d）
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The
Lender’s rights to recourse, execute, waive, surrender, release or change,
pursuant to the Loan Agreement and this Agreement, (including waive any
premises or other conditions pursuant to the Loan Agreement);
and/or,
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（e）
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All
the liabilities pursuant to the Loan Agreement and this Agreement become
illegitimate, void or unenforceable, or the signatures on the Loan
Agreement and this Agreement are invalid,
and/or,
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（f）
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Any
other events not included in this Item but will cause the Borrower’s
obligations to be released, reduced or
changed.
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In the
events of amendment to and/or changes in the Loan Agreement, which will increase
the Borrower’s responsibilities and liabilities, the Lender shall receive the
confirmation from the Borrower to effectuate the amendment and/or
change.
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8.
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The
Borrower announce herein to the
Lender:
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（a）
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The
Borrower is a corporation duly organized and validly existing under the
laws of the People’s Republic of China and has all requisite corporate
power to own, operate and lease its properties and assets and to carry on
its business;
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（b）
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The
Borrower has the full right, power and authority to sign and execute the
obligations pursuant to this
Agreement;
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（c）
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This
Agreement shall be effective simultaneously upon signing the Loan
Agreement. This Agreement shall be a binding agreement to the Borrower and
enforceable pursuant to the laws of the People’s Republic of
China;
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（d）
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Upon
signing and/or executing this Agreement, the Borrower shall not (i)
violate or offend against any law or regulations or articles of
incorporation and by-laws of the Borrower; or (ii) violate or offend
against any covenant or agreement or binding instrument to the Borrower or
any of his assets; or (iii) exceed the authority granted to the
Borrower in connection with the loan or security obligations (no matter
due to articles of incorporation of Borrower or other agreement), or
exceed the authority of board of director of the
Borrower;
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（e）
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Neither
shall the Borrower have any late payments of the principal and interests
of other loans nor any events of default occur in any covenant, trust
agreement or other documents signed by the
Borrower.
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（f）
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No
any legal proceedings against the Borrower or his assets occurs in any
court, arbitration or government agency, which may have significant impact
on the Borrower’s finance, business, asset or other
situation.
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（g）
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Except
for the preferred debt defined by the laws, all the obligations to the
Borrower pursuant to this Agreement are direct and unconditional, which
shall be equivalent to the unsecured debt at any
time.
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（h）
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The
Borrower shall not violate, fail to execute, or offend any loan agreements
upon signing this Agreement, which has negative effect on the
Borrower.
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（i）
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The
Borrower has disclosed, in full and accuracy, to the Lender his material
liabilities existing as of the signing date of this
Agreement.
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（j）
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The
latest audit report provided by the Borrower to the Lender shall be
prepared in compliance with the laws of People’s Republic of China and in
conformity with the generally accepted accounting principles in the United
States of America. The audited financial statements along with the
footnotes represent the actual financial status of the Borrower during the
period in the report. There is no material change in operation, business,
assets, liabilities or others matters
thereafter.
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（k）
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There
are no material liabilities or any unrealized losses or estimated losses
incurred and undisclosed in the latest audit
report.
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（l）
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All
the information of the Borrower provided to the Lender are true, complete
and accurate (no matter provided pursuant to the terms under this
Agreement)
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（m）
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All
the payments made by the Borrower pursuant to this Agreement shall not be
reduced due to taxes or reverses to the
taxes.
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9.
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The
Borrower states, guarantees and acknowledges herein to the Lender that,
within the valid period of this
Agreement:
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（a）
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Each
statement pursuant to Item 6 shall be true and accurate in terms of the
facts, with respect to the current existing fact and
situation;
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（b）
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The
Borrower shall maintain and operate his business in an appropriate and
effective way;
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（c）
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The
Borrower shall deliver the Lender a copy of his audited financial
statements, verified by any of his directors, within 30 days after the
fiscal year end.
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（d）
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The
Borrower shall deliver the Lender any applicable financial information or
other information upon the reasonable request from the
Lender.
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（e）
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The
Borrower shall notify the Lender promptly in connection with any
unexpected events that will have impact on the Borrower’s ability to
execute this Agreement.
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（f）
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The
Borrower shall maintain and execute all the rights and obligations
pursuant to this Agreement, receive the required approval and keep it up
to date to ensure the validity and effectiveness of this Agreement, and
comply with the related regulations, conditions and limitations (if
any).
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（g）
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The
Borrower shall not pledge, sell or transfer all or majority of his assets
without a written consent from the Lender (regardless of in one time or
multiple times, direct or indirect, at the specific time or over a
period).
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（h）
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The
Borrower shall not acquire or merger with any other corporations
or individuals without a written consent from the
Lender.
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（i）
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The
Borrower shall not make any significant changes in the business model
without a written consent from the Lender, regardless of the changes due
to sale, transfer, acquisition or other transaction, in one time or
multiple times, direct or indirect, at the specific time or over a
period.
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（j）
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The
Borrower shall not buy back or decrease the outstanding and issued shares
or distribute his capital or assets to shareholders without a written
consent from the Lender.
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10.
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The
Borrower shall take the obligations pursuant to this Agreement
independently. Any third party agrees to proved the Borrower with a pledge
or security agreements in connection with this Agreement, this Agreement
shall stay individually and shall not be affected by such security
agreements or pledges.
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11.
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Borrower
shall make all the payments set forth in this Agreement to the Lender,
without offsetting nor counter-claiming any amount owed to the Borrower,
nor deducting any existing or future taxes and fees, nor reserving any
funds due to taxes.
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12.
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The
security pursuant to this Agreement is continuous and irrevocable and
valid until all the payables pursuant to the Loan Agreement are paid in
full by the Borrower. However, the obligations of the Borrower would be
reduced pro rata in according to the payments to the Loan and be released
until the principal and interests of the Loan are paid in full. This
Agreement shall be deemed to be an additional security to the Loan, and
shall not be used as security or pledge of the Lender’s any other existing
or future Loan. The Borrower acknowledges and agrees that Lender shall be
entitled to collect the loan or execute this Agreement without involving a
third party or file a lawsuit.
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13.
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In
the event that any provisions of this Agreement are considered illegal,
invalid, or unenforceable, such provisions shall be removed from this
Agreement. The invalidity or unenforceability shall be attached solely to
such provisions and the remaining provisions of this Agreement shall
survive.
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14.
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Any
expenses incurred due to collecting the overdue payments pursuant to this
Agreement shall be indemnified by the Borrower. The Borrower shall make
the payments in full and on time upon receiving a written notice from the
Lender.
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15.
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（a）
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All
of the rights and obligations pursuant to this Agreement are binding to
both parties, including their successors or assignees, respectively. The
Borrower shall not transfer any rights, interests or obligations herein to
any third parties.
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（b）
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In
the event that the Lender transfers all or part of his rights pursuant to
the Loan Agreement to a third party, the Lender’s right pursuant to this
Agreement shall be transferred pro rata to the transferee, and the
transferee shall be considered as the Lender defined in this
Agreement.
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（c）
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Any
statements, guaranty, acknowledgements and arrangements made by the
Borrower pursuant to this Agreement shall not be affected by the Lender’s
transfer, regardless of his rights in the Loan Agreement or in this
Agreement. Any changes in the Lender’s name, or merge, or acquisition will
not change the Borrower’s obligation pursuant to this
Agreement.
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16.
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（a）
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Any
notice, requirement or other communications pursuant to this Agreement
shall be in writing and delivered to the following addresses via courier
or certified mail, any changes in the address shall have 3 days prior
notice.
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Xxxxxx,
Xxxxxxx
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Address:
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Rm
302, No 16 Xxx Xxx Jing, Xxxx Xxx Road, Guangzhou,
P.R.China
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Tel: (0000) 000-00000000
Fax: (0000)
000-00000000
Dongguan
CHDITN Printing Co.,Ltd
Address: No. 6 Economic Zone, Wushaliwu, Xxxxx’an
Town
Dongguan,
Guangdong Province, China
Attention: Xx. Xxx Xxx Xxxxx, President
Tel: (0000)
0000-0000
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（b）
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Any
notice, requirement or other communications pursuant to this Agreement
shall be delivered upon (1) a recipient’s signature is obtained if via
courier; (2) two (2) days after the certified mail is
dropped.
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17.
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（a）
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All
of the covenants and obligations contained herein shall not be amended,
waived, modified or terminated by oral or other forms, unless confirmed in
writing by Lender and Borrower.
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（b）
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The
Lender delays or fails at any time or times hereafter to exercise any
rights shall not waive the rights of the Lender pursuant to this
Agreement. Any rights or powers exercised by the Lender in particular
events shall not waive or affect any other rights or powers in the future.
The Lender could exercise the rights, powers and compensation arrangements
simultaneously, respectively, or accumulatively, thus will not eliminate
the rights of Lender and other compensations pursuant to the
laws.
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18.
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This
Agreement shall be governed by and interpreted in accordance with the laws
of the People’s Republic of China regardless of the principles of conflict
of laws. The parties further agree that any action between them
shall be heard in the courts in the People’s Republic of China and
expressly consent to the jurisdiction and venue of the courts in the
People’s Republic of China. This consent would not undermine or limit the
rights or powers conferred by the region for Lenders and Borrowers or its
assets in any jurisdiction.
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19.
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This
Security Agreement is written in Chinese with one or more counterparts,
each of which shall be constitute the same instrument for Borrower and
Lender.
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Lender:
Xxxxxx
Xxxxxxx (stamped)
Authorized
representatives (signature)
Date:
10th
November, 2009
Borrower:
Dongguan
CHDITN Printing Co., Ltd (Stamped)
Authorized
Representatives: Xxx Xxx Sheng(signature)
Date:
10th
November, 2009
