Loan Agreement
Exhibit
10.12
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(Important
Notice: The Borrower please carefully read the agreement, especially
the
clauses with ▲▲xxxx. Should the Borrower have any question, please request
the Lender to clarify immediately.)
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The
Borrower: Danyang Lihua Electron Co., Ltd
Legal
Representative (responsible person):
Business
Address:
Correspondence
Address:
The
Lender: Bank of Communications Xxxx Xxxxx Branch
Legal
Representative (responsible person):
Business
Address:
Correspondence
Address:
WHEREAS
the Borrower is borrowing from the Lender, for clarifying and confirming the
parties’ rights and obligations, after negotiation, the Borrower and the Lender
hereby agree as follows:
Article
1
Facility
1.
Currency: RMB
2.
Amount: Three Million
3.
Purpose: Purchase of Material
4.
Borrowing Period: from August 26, 2008 to November 25, 2008
Article
2
Interest Rate and Calculation
2.1
The
interest Rate hereunder is
RMB
fixed rate, during the borrowing period is ( year month)
√RMB
floating rate. The interest rate is the benchmark interest rate for the period
of one year or less than one year announced by the People’s Bank of China
(hereinafter PBC)at the time the agreement becomes effective upwardly floats
20%. During the period of the agreement, in the case the PBC adjusts the
benchmark interest rate, the Lender is entitled to adjust the borrowing interest
rate accordingly. The upward (downward) floating percentage is not changed.
The
adjusted interest rate is adopted from the date the PBC adjusts the benchmark
interest rate. In the event the PBC benchmark interest rate becomes the floating
rate or is canceled after the adjustment, the borrowing interest rate shall
be
negotiated by the parties herein, but the adjusted borrowing interest rate
shall
not be lower than the borrowing interest rate applied then. In the case after
month
from the PBC adjusted the benchmark interest rate, the parties have not reached
the agreement to the borrowing interest rate, the Lender may declare the full
amount of the facility is due immediately.
(foreign
currency), the interest rate:
.
2.2
Daily
interest =monthly interest / 30, monthly interest =yearly interest/
12.
2.3
Calculation
| 2.3.1 |
Ordinary
interest =the borrowing interest rate hereunder ×the lunched amount× the
drawdown days. The drawdown days are from the date the facility
is
launched to the due date.
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2.3.2
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The
punitive interest for deferral and the misappropriation of the
facility
funds shall be calculated by the deferral days and the amount of
the
misappropriated funds. In the event the facility currency is RMB,
the
deferral interest rate is the borrowing interest rate hereunder
upwardly
floating 50%, the punitive interest for misappropriation is the
borrowing
interest rate hereunder upwardly floating 100%. In the case the
floating
rate facility defers or is misappropriated after the PBC adjusts
the
benchmark interest rate, the Lender is entitled to adjust the deferral
and
punitive interest rates accordingly. The adjusted deferral and
punitive
interest rates are applied since the PBC adjusted the benchmark
interest
rate. In the event the facility currency is foreign currency, the
punitive
interest rate is the borrowing interest rate hereunder upwardly
floating .
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2.4
The
settlement of the interest under this agreement is the (2) method
specified below. The unpaid interest shall repaid with the unpaid principal
when
due. The settlement day is the interest payment date:
(1)
The
20th
day in
the last month of every quarter.
(2)
The
20th
day of
every month.
2.5
Other
interest covenants: (N/A)
Article
3
Launch and Repayment
3.1
The
Borrower shall complete relevant procedures at least three bank business days
before drawing down, and be in compliance with the launch plan set forth
below:
Launch Date Launch Amount
Year Month Day Amount
Year Month Day Amount
Year Month Day Amount
Year Month Day Amount
▲▲3.2
Before the following conditions are completely fulfilled, the Lender is entitled
not to launch the facility:
| (1) |
The
Borrower has completed the relevant legal procedures, such as obtaining
governmental permissions, approvals, registrations, and other procedures
as requested by the Lender, and the aforesaid permissions, approvals
and
registrations are continuously
effective.
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(2)
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The
guarantee agreements hereunder (if any) have become effective and
continuously effective. In the event the Borrower provides collaterals
for
pledge agreements or mortgage agreements, the secured interests
have been
registered and continuously
effective.
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(3)
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No
material adverse change in the Borrower’s business operations and
financial conditions.
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| (4) |
The
Borrower does not breach the agreement
.
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3.3
The
actual launch date and launch amount are specified in the borrowing
certificate.
| 3.4 |
The
Borrower shall repay the facility in accordance with the maturity
date set
forth in Article 1.4 and the plan set forth below. In the case
the
maturity date set forth in the borrowing certificate and in the
agreement
is inconsistent, the borrowing certificate shall
control.
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Repayment Date Repayment Amount
Year Month Day Amount
Year Month Day Amount
Year Month Day Amount
Year Month Day Amount
▲▲3.5
Without the Lender’s written consent, the Borrower shall not prepay the loan.
▲▲Article
4 The Borrower’s Representations and Warranties
| 4.1 |
The
Borrower is legally incorporated and continues, and has all necessary
legal capacity to perform the obligations hereunder and assume civil
liabilities on its own behalf.
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| 4.2 |
The
Borrower shall sign and perform this agreement with its true intention,
and obtain all necessary consents, approvals and authorizations without
any legal defect.
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| 4.3 |
Any
document, financial report, material and information provided by
the
Borrower during signing and performing this agreement shall be authentic,
accurate integrated and valid. The Borrower shall not conceal any
information could affect its financial condition and repayment
ability.
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| 4.4 |
The
Borrower shall not be the guarantee’s shareholder or the actual control
person specified in the Company Law, and has no plan to become the
guarantee’s shareholder or actual control
person.
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Article
5
The Lender’s Rights and Obligations
| 5.1 |
The
Lender is entitled to collect the principal, the interest (including
the
compound interest, the punitive interest for deferral and
misappropriation), the unpaid expenses, and to exercise other rights
in
accordance with laws and the
agreement.
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| 5.2 |
Except
as otherwise specified in laws or regulations or in the agreement,
without
the Borrower’s consent, the Lender shall not disclose the Borrower’s trade
secrets, or financial, business operation and any other information
the
Borrower has requested to keep confidential to any third-party institution
or individual.
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Article
6
The Borrower’s Obligations
| 6.1 |
The
Borrower shall repay the principal and the accrued interest hereunder
in
accordance with the schedule, amount, and currency set forth in the
agreement.
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| 6.2 |
The
Borrower shall not misappropriate the facility funds
hereunder.
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▲▲6.3
The
Borrower shall assume all relevant expenses, including but not limited to
notary, appraisal, and registration fees.
▲▲6.4
The
Borrower shall be in compliance with the business custom regarding the loan
business and related operations, including but not limited to the followings:
actively cooperates with the Lender’s investigation and supervision to its
compliance with the purpose hereunder; promptly provides financial reports
and
other materials and information; and represents and warrants the authenticity,
the accuracy and the integrity of the information provided
herein.
▲▲6.5
In
the event the Borrower will engage in the followings, the Borrower shall send
the thirty-day written notice to the Lender, and shall not take any action
before repaying the principal and the accrued interest hereunder or providing
the acceptable repayment plan to the Lender:
| (1) |
To
sell, gift, lease, lend, transfer, mortgage, pledge or dispose the
whole
or most part of assets or material
assets;
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| (2) |
Material
change occurs or will occur in its operation system or share-holding
system, including but not limited to outsource, lease, conversion
to
corporation system, conversion to share-holding system, sale of the
company, co-operating business, merger, acquisition, joint venture,
split,
setting up subsidiaries, and asset
transfer.
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▲▲6.6
The
Borrower shall send a seven-day written notice to the Lender before the
followings occur or could occur:
| (1) |
The
Borrower revises the Article of Incorporation, changes the company
name,
legal representatives (responsible persons), the business address,
the
correspondence address, its business scope or other business registration
items, makes material decisions with regard to the financial or human
resource matters.
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| (2) |
The
Borrower or the guarantee plans to file bankruptcy or has been filed
bankruptcy by its creditors.
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| (3) |
The
Borrower involves in material lawsuits, arbitrations, executive actions,
or its material assets or the collaterals hereunder are
seized.
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| (4) |
The
Borrower provides guarantees to a third party, and such guarantees
cause
material adverse effects to the Borrower’s economic condition, financial
condition or performance of the obligations
hereunder.
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| (5) |
The
Borrower reaches agreements could cause material effects to its business
operations and financial
conditions.
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| (6) |
The
Borrower or the guarantor ceases productions, suspends business,
is
dissolved, is undergoing reformation, is
revoked or abolished business
license.
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| (7) |
The
Borrower or the guarantor or its legal representatives (responsible
persons) or executive officials engage in illegal activities or do
not
comply the applicable securities exchange
regulations.
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| (8) |
The
Borrower’s business operation encounters difficulties, its financial
conditions worsen or other events could cause adverse effects on
the
Borrower’s business operations, financial conditions, repayment abilities
or economic conditions.
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| (9) |
The
Borrower engages in the transactions with its related parties, and
the
amounts of such transactions reach or excess 10% of its most recently
audited net assets.
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| (10) |
Before
the Borrower repays the borrowing hereunder in full, it becomes or
could
become the guarantor’s shareholder or the actual control person defined in
accordance with the Company Law.
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| ▲▲6.7 |
In
the case any change in the guarantee hereunder causes adverse effects
to
the Lender’s rights and interests, the Borrower shall upon the Lender’s
request, immediately provides other acceptable guarantees to the
Lender.
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The
change set forth in this Article is including but not limited to, the guarantor
carries out mergers and splits, ceases productions, suspends business, is
dissolved, is undergoing reformation, is revoked or abolished the business
license, files or to be filed by others the bankruptcy; the material change
in
the guarantor’s business operations or financial conditions occur; the guarantor
involves in material law suits, arbitrations, executive actions or its material
assets are seized; the value of the collaterals hereunder is impaired or could
be impaired or the collaterals are seized, the guarantor or its legal
representatives (responsible persons) or executive officials engage in illegal
actions or do not comply laws or securities exchange regulations; in the case
the guarantor is individual, the guarantor is missing, dead (or declared to
be
dead); the guarantor is not in compliance with the guarantee agreement; disputes
occur between the guarantor and the Lender; the guarantor requests to terminate
the guarantee agreement; the guarantee agreement is not effective or is invalid
or is cancelled; the registration of the pledge or the mortgage is not completed
or is invalid; or any other event affects the Lender’s rights and interests
hereunder.
Article
7
Other Covenants (N/A)
Article
8
Acceleration of the Facility
In
the
case any of the followings occur, the Lender is entitled to cease launching
the
facility funds the Borrower has not drawn down yet, and at its discretion to
declare the part or the full amount of the unpaid principal becomes due and
payable, and the Borrower shall repay the entire unpaid principal and accrued
interests immediately.
(1)
The
Borrower’s representations and warranties under the Article 4 are
false;
(2)
The
Borrower breaches the agreement;
(3)
Any
of the events specified in the Article 6.6 occurs, and the Lender believes
such
an event will affect its rights and interests hereunder;
(4)
The
Borrower defers its performances under other agreements between the Lender,
and
does not amend such deferrals or non-performances upon the Lender’s
requests.
Article
9
Breach
| 9.1 |
In
the event the Borrower does not repay the full amount of the principal,
the accrued interests on schedule, or misappropriates the facility
funds,
the Borrower shall pay the Lender the default interest calculated
in
accordance with the method for the punitive interest for the deferral
or
the misappropriation, and shall pay the compound interest against
the
unpaid interest.
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| 9.2 |
In
the event the Borrower does not repay the full amount of the principal,
the accrued interests on schedule, the Borrower shall assume the
collection fees, law suit or arbitration fees, seizure fees, public
announcement fees, exercise fees, counsel fees, travel expenses and
other
expenses arising out of and related to the fulfillment of the Lender’s
rights and interests hereunder.
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| 9.3 |
In
the event the Borrower avoids the Lender’s supervision, does not repay the
principal and the accrued interest on schedule, or maliciously breach
the
agreement, the Lender is entitled to report to the competent authority
and
to disclose such events via news
media.
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Article
10 Withdrawal Covenant
| 10.1 |
The
Borrower authorizes the Lender to withdraw the principal, the accrued
interest, the punitive interest, the compound interest or other expenses
form any of its accounts at the
Lender.
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| 10.2 |
After
the Lender withdraw funds pursuant to the Article 10.1, it shall
notify
the Borrower the account, from which it withdraw funds, the loan
agreement
number, the borrowing certificate number, the withdrawal amount and
the
residual of the account.
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| 10.3 |
In
the case the withdrawal amount is inadequate for repaying the Borrower’s
debts in full, the withdrawal funds shall be first to set off the
unpaid
expenses. In the case the deferral days for repaying the principal
and the
interest is less than 90 days, the residual after being to set off
the
expenses shall be first to set off the unpaid interest, the punitive
interest or the compound interest, and then to set off the principal;
in
the case the deferral days for repaying the principal and the interest
is
more than 90 days, the residual after being to set off the expenses
shall
be first to set off the unpaid principal, and then to set off the
unpaid
interest, punitive interest, or the compound
interest.
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| 10.4 |
In
the event the currency of the withdrawal funds is inconsistent with
the
currency of the unpaid debts, the amount of setting off the debts
shall be
calculated in accordance with the foreign exchange rate announced
by the
Lender.
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Article
11 Dispute Resolution
Any
dispute arising out of or related to the agreement shall be submitted to the
court, in which the Lender resides. During the dispute, each party shall
continuously perform the clauses not in disputes.
Article
12 Miscellaneousness
| 12.1 |
The
borrowing certificate and relevant documents and information confirmed
by
the parties constitute an undividable part of this
agreement.
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| 12.2 |
The
agreement becomes effective after the Borrower’s legal representative
(responsible person) or authorized person signs (or seals) and fixes
the
corporate chop on the agreement, and the Lender’s responsible person or
authorized person signs (or seals) and fixes the business unit chop
on the
agreement.
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| 12.3 |
This
agreement is to be written up in three original copies with the Borrower,
the Lender and the Guarantor, and the three parties shall each hold
one
original copy, which shall have same legal
effects.
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The
Borrower has thoroughly read the clauses above, the Lender has provided
relevant explanations to the Borrower. The Borrower has no objections
to
all contents of the agreement.
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The
Borrower:
Legal
Representative(responsible person):
The
Lender:
Responsible
Person or Authorized person:
Date:
August 26, 2008
