Mortgage Agreement (This document is an English summary from the original Chinese version)
EXHIBIT
10.3
(This
document is an English summary from the original Chinese version)
The
Mortgagor:
Jinzhou
Halla Electrical Equipment Co., Ltd.
The
Mortgagee:
Bank of
China (Jinzhou Tiebei Branch)
In
order
to ensure the performance of one or several credit agreements entered or to
be
entered into between the Mortgagor and the Mortgagee, the Mortgagor hereby
enters into this agreement (the “Agreement”) with the Mortgagee and grants the
Mortgagee security interests on certain of its properties to secure its
obligations under those credit agreements. All terms have the meaning as defined
in the credit agreements unless otherwise provided herein.
Section
1
Credit Facility Agreements
The
Agreement is entered into pursuant to one or several Credit Facility Agreements
entered or to be entered into by the Mortgagor and Mortgagee between September
27, 2007 and September 24, 2008, and any other agreements now or hereafter
entered into in connection with the Credit Facility Agreements (collectively,
the “Credit Facility Agreements”).
The
Mortgagee hereby confirms that it shall provide the credit facility to the
Mortgagor pursuant to the Credit Facility Agreements and permit the Mortgagor,
subject to the terms of the Credit Facility Agreement, to use the credit
facilities for the use of RMB short-term loan, foreign currency short-term
loan,
bank’s acceptance xxxx and settlement.
Section
2
Security Scope
The
obligations covered by the Agreement are: the outstanding loan obligations
up to
XXX 00 million owed by the Mortgagor to the Mortgagee incurred during September
27, 2007 to September 24, 2008 (the “Secured Obligations”).
The
Secured Obligations shall include all principal, interest, damage and related
costs (including, but not limited to attorney’s fee, notarization fee and
execution fee, etc.).
Section
3
Secured Liabilities
Should
the Mortgagor default for failing to make mortgage payments due under the Credit
Facility Agreements, the Mortgagee has the right to foreclose on the
collateral.
Section 4 Settlement Date
The
settlement date for the Secured Obligations shall be the earlier of (i)
September 24, 2008 as provided in Section 2; or (ii) the date when the amount
of
the Secured Obligation can be determined pursuant to the applicable laws.
Section
5
Collaterals
The
assessed value of the collateral is RMB 93.75 million. If at any time before
the
full repayment of the Secured Obligations, the total value of the collateral
decreases and is insufficient to secure all Secured Obligations, the Mortgagee
shall have the rights to request the Mortgagor to recover the value of the
collaterals or provide additional collaterals acceptable to the Mortgagee with
value equals to the decreased value.
In
case
the collaterals are the properties of which the circulation is restricted,
the
Mortgagor shall coordinate with the Mortgagee to go through examination,
approval and registration formalities in accordance with the stipulations by
law.
If
the
value of the collaterals decreases due to natural disaster, unexpected events,
torts or other reasons, the Mortgagor shall take necessary actions to prevent
further damage and shall provide written notice to the Mortgagee promptly.
Section
6
Possession of the Collaterals
The
collateral under the Agreement shall be possessed by the Mortgagor but the
title
and other ownership documents shall be possessed by the Mortgagee. The Mortgagor
agrees to accept and effectively coordinate the examination to the collateral
by
the Mortgagee and its delegated organizations and individuals at any time.
The
Mortgagor shall properly keep and maintain the collateral and take effective
measures to safeguard the safety and completeness of the collateral. The
collateral shall not be transferred, lend, leased, or disposed by the Mortgagor
without prior written consent of the Mortgagee, otherwise the Mortgagee is
entitled to declare such activities to be invalid and take the remedies
specified under section 12.
Section
7
Insurance for the Collaterals
The
Mortgagor shall insure the collateral with an insurer in such manner and for
a
term agreed upon by the Mortgagor and the Mortgagee. The coverage for the
insurance shall be no less than the book value of the collaterals. The insurance
policy shall comply with the requirements of the Mortgagee and contain no
restrictive clauses which impair the interests of the Mortgagee.
Before
repaying off the Secured Obligations, the Mortgagor shall not cease, terminate
or amend the insurance policy by any reasons and shall take all reasonable
and
necessary measures to maintain the validity of the insurance policy. In case
the
Mortgagor fails to purchase insurance for the collaterals or breaches the
aforesaid stipulation, the Mortgagee is entitled to purchase insurance or
continue to purchase insurance for the collaterals. In such occasion, the
insurance fee shall be borne by the Mortgagor.
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Within 10 days after execution of the Agreement, the Mortgagor shall provide the Mortgagee the original of the insurance policy for the collaterals and transfer the insurance rights to the Mortgagee.
In
case
the collaterals include any machinery equipments which have not been installed,
after completion of installation of those equipments, the Mortgagor shall handle
insurance formalities for those equipments according to stipulations under
this
Section.
Section
8
Mortgage Registration
The
Mortgagor shall make the necessary filing with the relevant government authority
for registration of the collaterals within ten days after the Agreement is
entered into. After filing the registration formalities for the collaterals,
the
Mortgagor shall provide the duplicate of the relevant registration certificate
to the Mortgagee within three days. In case the collaterals include any
machinery equipments which have not been installed, within ten days after
completion of installation of those equipments, the Mortgagor shall make the
necessary filing with the relevant government authority for registration of
those equipments.
Section
9
Execution of Mortgage Rights
Should
the Mortgagor default for performing its obligations due under the Credit
Facility Agreements, the Mortgagee shall have the right to convert or sell
the
collaterals at the agreed price. If the price is not agreed, the Mortgagee
may
apply with the court to auction or sell the collateral. The amount from disposal
of the collaterals shall set-off the debts under the Credit Facility Agreements
after paying the disposal fees and fees payable by the Mortgagor to the
Mortgagee under this Agreement. When the Mortgagee claims to execute the
mortgage rights, the Mortgagor shall not refuse by any excuses.
Section
10 Relationship between the Mortgagee Agreement and the Credit Facility
Agreement
The
Agreement is independent from the Credit Facility Agreement and this Agreement
shall not be voided or revoked because of the unenforceability of the Credit
Facility Agreement. The parties to the Credit Facility Agreement terminate
the
Credit Facility Agreement or make it expire in advance, this Agreement shall
still be valid and the Mortgagor shall be liable for the debts occurred and
losses caused by the Mortgagor to the Mortgagee.
Amendment
to the Credit Facility Agreement and to the letter of credit opened and
guarantee letter issued in accordance with the Credit Facility Agreement require
no written consent of the Mortgagor who shall be liable for the amended Credit
Facility Agreement and the obligations of the Mortgagor to the Mortgagee due
to
the amended letter of credit and guarantee letter.
The
adjustment to the credit line by the Mortgagee in accordance with the Credit
Facility Agreement and assignment of the rights and obligations under the Credit
Facility Agreement by the Mortgagee to other branches of Bank of China or
assignment of credit rights by the Mortgagee under the Credit Facility Agreement
require no written consent of the Mortgagor whose liabilities shall not
decreased or exempted thereof.
3
Section 11 Representation and Warranties
The
Mortgagor hereby represents and warrants that
1. |
Among
other things, that it is duly organized and in good standing under
Chinese
laws, and has legal ownership of or right to dispose the collateral.
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2. |
No
other co-owners exist on the collaterals, or though co-owners exist
on the
collaterals, the Mortgagor has obtained all written permit from all
other
co-owners. Such written permit has been delivered to the Mortgagee
before
conclusion of this Agreement.
|
3. |
It
has fully understood the Credit Facility Agreement. The execution
and
performance of this Agreement are voluntary and true expression of
intent
of the Mortgagor. The legal representative or authorized representative
who executes this Agreement on behalf of the Mortgagor has fully
obtained
the lawful and valid corporate authorization. Execution and performance
of
this Agreement will not violate any contracts, agreements or other
legal
documents having legal binding effect on the Mortgagor. The Mortgagor
has
obtained or will obtain all necessary permit, license, record or
registration for this mortgage.
|
4. |
All
documents and materials provided by the Mortgagor to the Mortgagee
are
true, complete, accurate and valid.
|
5. |
The
Mortgagor has not disguised, as of the date when this Agreement is
entered
into, any mortgage, pledge, lien or other securities existing on
the
collaterals.
|
6. |
It
shall immediately inform the Mortgagee of dissolution, bankruptcy
of the
Mortgagor and occurrence of other events which will have adverse
impact on
the financial status of the Mortgagor or creation of material new
obligations on the collaterals.
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7. |
In
case the collaterals are buildings under construction, no preemptive
rights of a third party for payment exist on such collaterals. In
case
such preemptive rights of a third party exist, such third party will
issue
a written statement to waive such preemptive
rights.
|
Section
12 Events of Default
After
conclusion of this Agreement, in case the mortgage rights can not be realized
because the Mortgagor refuses or delays to go through registration formalities
or due to other reasons, the Mortgagor, if he is the debtor, shall be liable
to
the Mortgagee for the Secured Obligations; if the Mortgagor is a third party,
the Mortgagor shall be severally and jointly liable for the Secured Obligations
under the Credit Facility Agreement.
Any
of
the following events shall constitute the breach of contract by the
Mortgagor:
1. |
transferring,
leasing, lending, reconstruction or disposing of all or some of the
collaterals by other means at will in violation of the stipulations
specified under Section 6;
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4
2. |
preventing
the Mortgagee from disposing of the collaterals in accordance with
this
Agreement by any means;
|
3. |
refusing
or delaying to coordinate the Mortgagee to renew the registration
of
mortgage so as to invalidate the mortgage before full repayment of
the
Secured Obligations;
|
4. |
the
insurer refuses to compensate the destroy or loss of the collaterals
occupied by the Mortgagor due to the Mortgagor has not purchased
insurance
for the collaterals; and
|
5. |
Any
representation furnished by the Mortgagor under this Agreement proves
to
be incorrect or the Mortgagor breaches any of its
representations/warranties under this
Agreement.
|
In
the
event of breach of contract by the Mortgagor, the Mortgagee is entitled to
take
one or all of following actions:
1. |
reducing
or canceling the line of credit;
|
2. |
declaring
early expiration of the Loan Agreement and the Credit Facility Agreement
entered into between the Mortgagor and the Mortgagee;
|
3. |
requiring
the Mortgagor to compensate the Mortgagee all and any direct or indirect
losses suffered therefrom;
|
4. |
offsetting
the money of the Mortgagor saved in the Mortgagee or other branches
of
Bank of China against the Secured Obligations.
|
Section
13 Fees
All
costs
incurred in connection with the Agreement or the collateral thereunder shall
be
borne by the Mortgagor.
Section
14 Offset and Reservation of Rights
Unless
the Mortgagee agrees otherwise, the Mortgagor has no rights to offset any
payment made to the Mortgagee.
Any
tolerance, extension and preference given by the Mortgagor to the Mortgagee
or
any delay to execute the rights under this Agreement by the Mortgagee shall
not
affect, impair or restrict any enjoyable rights of the Mortgagee according
to
this Agreement and other laws and regulations, nor be deemed a waiver of the
aforesaid rights of the Mortgagee under this Agreements, nor exempt any
obligations of the Mortgagor under this Agreement.
5
Section 15 Amendment, Termination and Interpretation of the Agreement
This
Agreement may be amended, supplemented or terminated based on mutual written
agreement between both Parties. Any amendments and supplements to this Agreement
shall constitute an integral part of this Agreement.
Any
matters that are not covered by this Agreement shall be interpreted or handled
according to the relevant provisions of the Credit Facility
Agreements.
Any
unenforceable provision of this Agreement will not affect the enforceability
of
all the remaining provisions of this Agreement.
Section
16 Application of Laws, Disputes Resolution and Jurisdiction
The
Agreement is governed by the laws of the People’s Republic of
China.
Disputes,
which cannot be settled through consultation, shall be adjudicated by the court
which has the jurisdiction pursuant to the Credit Facility Agreements.
Section
17 Attachments to the Agreement
Attached
to this Agreement are: (i) list of collaterals; (ii) ownership certificate
of
collaterals; (iii) original copies of insurance policies of collaterals; (iv)
mortgage registration certificate; and (v) assessment reports of collaterals.
These attachments shall be integral part of this Agreement.
Section
18 Effectiveness of the Agreement
The
Agreement shall take into effect after (i) signature by the legal
representatives or authorized representatives of both Parties, affixed with
corporate seals; and (ii) registration by the Mortgagor.
Section
19
Special
Note
The
Parties have conducted sufficient negotiations on all terms of this Agreement.
The Mortgagee has reminded the Mortgagor of paying special attentions to all
the
terms regarding the rights and obligations of both Parties and of understanding
these terms comprehensively and accurately. Upon the request of the Borrower,
the Mortgagee has respectively informed and explained the aforesaid terms to
the
Mortgagor.
/s/
Yuncong Ma
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Seal
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September
27, 2007
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Place:
Jinzhou Tiebei Branch
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Bank of China (Jinzhou Tiebei Branch)
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/s/
Xxx Xxxx
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Seal
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Place:
Jinzhou Tiebei Branch
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6