SENIOR LOAN AGREEMENT BETWEEN DEG - DEUTSCHE INVESTITIONS- UND ENTWICKLUNGSGESELLSCHAFT MBH (hereinafter "DEG") and SHANGHAI BLESSFORD ALLOY CO., LTD. (hereinafter the "BORROWER")
Exhibit
10.1
BETWEEN
DEG
- DEUTSCHE INVESTITIONS-
UND
ENTWICKLUNGSGESELLSCHAFT MBH
(hereinafter
"DEG")
and
SHANGHAI
BLESSFORD ALLOY CO., LTD.
(hereinafter
the "BORROWER")
TABLE
OF CONTENTS
Article
1 DEFINITIONS AND INTERPRETATION
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4
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Article
2 LOAN AMOUNT AND LOAN PURPOSE
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4
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Article
3 CALL NOTICE AND DISBURSEMENT PROCEDURE
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5
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Article
4 CONDITIONS PRECEDENT TO DISBURSEMENT
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5
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Article 5
INTEREST
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7
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Article 6 FEES
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8
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Article 7
REPAYMENT
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8
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Article
8 PREPAYMENT
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9
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Article 9
PAYMENTS
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9
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Article
10 DELAYED PAYMENTS
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10
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Article
11 NEGATIVE PLEDGE
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11
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Article 12
SECURITY
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11
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Article 13
INSURANCE
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11
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Article 14
REPORTING
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12
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Article
15 ENVIRONMENTAL SOCIAL & HEALTH
COMPLIANCE
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14
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Article
16 REPRESENTATIONS AND WARRANTIES
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15
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Article
17 GENERAL COVENANTS
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17
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Article
18 EVENTS OF DEFAULT
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19
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Article
19 COSTS AND EXPENSES
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21
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Article
20 GOVERNING LAW AND JURISDICTION
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21
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Article
21 MISCELLANEOUS
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22
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2
Schedules
1.
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Definitions
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2.
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Project
Description
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3.
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Call
Notice
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4.
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Form
of Letter to Auditors
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5.
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Form
of Certificate of Incumbency and Authority
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6.
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Form
of Letter to Process Agent
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7.
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Excluded
Activities
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8.
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List
of applicable IFC Performance Standards and World Bank Group EHS
Guidelines
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3
LOAN
AGREEMENT
The
BORROWER is a limited liability company incorporated and existing under the laws
of the People’s Republic of China (Reg. No. 0792698) having its registered
office at 000 Xxxxxxx Xx, 000000 Xxxxxxxx, People’s Republic of
China.
The
BORROWER intends to expand its business activities by installing and
commissioning of a cold rolling mill and annealing Furnaces which requires an
investment of approximately USD 29,200,000.
DEG is a
financial institution incorporated and existing as a limited liability company
under the laws of the Federal Republic of Germany (Reg.- Xx. XXX 0000, XX Xxxx)
having its registered office at Köln, Federal Republic of Germany.
At the
BORROWER´s request, DEG intends to participate in the financing of the Project
by means of a long-term loan. Therefore, the BORROWER and DEG enter into the
following Agreement:
Article
1
DEFINITIONS
AND INTERPRETATION
1.
|
In
the context of this Agreement all capitalised terms shall have the
meanings as set out in Schedule 1.
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2.
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Unless
otherwise set forth, any reference to an Article or a Schedule is a
reference to that Article or Schedule of this
Agreement.
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3.
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The
singular includes the plural and vice
versa.
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Article
2
LOAN
AMOUNT AND LOAN PURPOSE
1.
|
DEG
undertakes to lend the BORROWER an amount of up to USD 18,000,000 (in
words: eighteen million United States Dollars) and the BORROWER accepts
the Loan in accordance with the terms and conditions of this
Agreement.
|
2.
|
The
BORROWER shall apply the Loan exclusively to finance the Project in
accordance with the Project Description as set out in Schedule
2.
|
4
Article
3
CALL
NOTICE AND DISBURSEMENT PROCEDURE
1.
|
The
Loan will be disbursed in the maximum number of three instalments of at
least USD 5,000,000 (in words: five million Unites States Dollars)
each (other than the last disbursement) according to the Project's
requirements upon the receipt of a call notice by
DEG.
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2.
|
A
call notice shall only be valid if
|
|
a)
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all
conditions precedent pursuant to Article 4 have been
fulfilled,
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b)
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it
is in the form of Schedule 3,
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c)
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it
is received by DEG at least 10 Business Days prior to the requested date
of disbursement.
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3.
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Upon
each disbursement the BORROWER shall – if necessary - register the
transfer of funds promptly with the relevant authorities and shall send
DEG a confirmation of receipt together with copies of the registration and
the bank statement showing the date and amount of the Loan
received.
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4.
|
DEG
may suspend or terminate the right of the BORROWER to disbursements of the
Loan if the first disbursement has not been made by 01 February 2010. The
right of the BORROWER to disbursements of the Loan will terminate on 31
December 2010.
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Article
4
CONDITIONS
PRECEDENT TO DISBURSEMENT
DEG shall
be obliged to disburse the Loan in accordance with Article 3 (Call Notice and Disbursement
Procedure) only if
1.
|
the
total financing of the Project according to the Project Description
(Schedule 2) has been secured, in
particular
|
|
a)
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the
BORROWER's share capital has been paid in full;
and
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b)
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the
Co-Lenders’ Loan Agreements have been committed to the satisfaction of DEG
and DEG's Co-Lenders have confirmed their willingness to disburse pro rata
and pari passu with DEG;
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2.
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the
Finance Agreements and the Project Documents are in place, in form and
substance satisfactory to DEG and shall have become unconditional and
effective;
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5
3.
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all
Authorisations shall have been
obtained;
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4.
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the
Security has been perfected and DEG has been supplied with documentary
evidence thereof;
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5.
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a
lawyer in the People’s Republic of China appointed by DEG has rendered a
legal opinion to DEG's satisfaction on the following
points:
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|
a)
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the
legal validity of the BORROWER's establishment as a limited liability
company,
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b)
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the
legal validity of all provisions of this Agreement, its enforceability in
the People’s Republic of China, and its admissibility as evidence; in
particular the validity of Article 21
(10),
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c)
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the
legal validity and enforceability of the Finance Agreements and the
Project Documents,
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d)
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the
existence or procurement of all
Authorisations,
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e)
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the
perfection and enforceability of the
Security,
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f)
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unencumbered
title of the BORROWER to its fixed assets and the possibility to
create/register a charge in favour of DEG if and when
required,
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g)
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any
priority or privilege that any creditor may have by operation of
law,
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h)
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the
validity of the nomination of DEG as sole beneficiary/loss payee of the
insurance claims to DEG according to Article 13
(Insurance),
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i)
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any
other legal requirement for the implementation of the Project and any
other point which DEG may reasonably
request;
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6.
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evidence
has been submitted to DEG of the BORROWER's compliance with its
obligations under Article 13
(Insurance);
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7.
|
evidence
has been submitted to DEG of the BORROWER’s compliance with its
obligations under Article 15 (Environmental Social & Health
Compliance);
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8.
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the
BORROWER is in compliance with Article 14 (Reporting), those reports
specified in Article 14 (1), which are due at the time of disbursement, as
well as the Auditors acceptance of being appointed and authorised to
communicate directly with DEG (Schedule 4), have been received by
DEG;
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6
9.
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DEG
has received financial statements of the BORROWER for the quarter dated
31.December 2009;
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10.
|
DEG
has received satisfactory consolidated financial statements of the SPONSOR
for the second quarter of the Financial Year
2009/2010;
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11.
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evidence
in writing has been submitted to DEG of the consent of the person
authorised to receive service in accordance with Article 20 (3) and
Schedule 6 (Form of
Letter to the Process Agent) and DEG has received evidence of the
payment of the fees to be paid to such process
agent;
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12.
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DEG
has received the Certificate of Incumbency in the form of Schedule 5 as
well as (certified) copies of the identity cards of the persons authorized
thereunder;
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13.
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all
fees, costs and expenses due according to Article 6 (Fees) and Article 19
(Costs and Expenses) have been paid;
and
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14.
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no
Event of Default has occurred or is threatening to
occur.
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Article
5
INTEREST
1.
|
The
BORROWER shall pay interest on the disbursed amount of the Loan at the six
months USD LIBOR rate plus 4.5 % p.a. (in words: four point five per
cent per annum). In respect of the first Interest Period for the first
disbursement, such USD LIBOR rate shall apply, the period of which is
closest in length to the duration of such Interest Period; in case the two
periods differ equally from the Interest Period, the rate for the longer
period shall apply. The USD LIBOR rate so determined shall similarly apply
to any further disbursement until the end of the first Interest Period.
For all disbursements after the first Interest Period such USD LIBOR rate
shall apply which is determined at the beginning of the respective
Interest Period.
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2.
|
On
each Interest Determination Date, DEG shall fix the applicable interest
rate with reference to the respective interest rate applicable to the
respective Interest Period rounded to 5 (five) decimal places quoted on
Reuters' Screen LIBOR 01 Page at 11:00 a.m. London time. DEG shall
promptly inform the BORROWER of the applicable interest rate. The interest
rate thus established shall be binding on the BORROWER except in the event
of manifest calculation or communication
error.
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7
3.
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If
the respective LIBOR rates are not published on any Interest Determination
Date, DEG shall inform the BORROWER promptly thereof and shall fix the
interest rate with reference to interest rates quoted by three leading
commercial banks active in the interbank market for United States Dollars
in London selected by DEG after consultation with the
BORROWER.
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4.
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Interest
is calculated from the date disbursements are debited until the day
immediately before repayments are credited to DEG's
account.
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5.
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Interest
is payable semi-annually in arrears on each Payment Date. Interest payable
in respect of each calendar day shall be calculated by dividing annual
interest due by 360.
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Article
6
FEES
1.
|
The
BORROWER shall pay a commitment fee on undisbursed Loan amounts of
1 % p.a. (one per cent per annum), from the date of this
Agreement.
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The
provisions of Article 5 (4) and (5) shall apply accordingly.
2.
|
The
BORROWER shall pay a front-end-fee of USD 270,000 (in words: two hundred
seventy thousand United States Dollars). A non-refundable amount of USD
35,000 (in words: thirty five thousand United States Dollars) has already
been paid. The outstanding amount of USD 235,000 (in words: two hundred
thirty five thousand United States Dollars) is payable within 30 days of
the date of this Agreement but in any event prior to the first
disbursement of the Loan.
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3.
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In
the event that DEG should demand immediate repayment of the Loan pursuant
to Article 18, DEG may demand from the BORROWER 1 % (in words: one
per cent) of the amount to be repaid, as compensation for all costs and
expenses which DEG has incurred in connection with such repayment. The
BORROWER shall be free to prove that no damage has arisen, or that damage
has not arisen in the asserted amount. The right of DEG to claim further
damages shall remain unaffected.
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4.
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The
BORROWER shall pay a waiver-fee in the amount of USD 5,000 (in words: five
thousand United States Dollars) per each waiver request and per each
waiver granted by DEG.
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Article
7
REPAYMENT
1.
|
The
BORROWER shall repay the Loan as
follows:
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8
Payment
Dates
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Repayment Instalments in USD
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|||
15
December 2011
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1,800,000 | |||
15
June 2012
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1,800,000 | |||
15
December 2012
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1,800,000 | |||
15
June 2013
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1,800,000 | |||
15
December 2013
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1,800,000 | |||
15
June 2014
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1,800,000 | |||
15
December 2014
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1,800,000 | |||
15
June 2015
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1,800,000 | |||
15
December 2015
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1,800,000 | |||
15
June 2016
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1,800,000 |
2.
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Undisbursed
Loan amounts shall be set off against the Repayment Instalments in inverse
order of their maturity.
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Article
8
PREPAYMENT
1.
|
The
BORROWER may prepay the whole or any part of the Loan amount on any
Payment Date by giving not less than one month’s prior written notice to
DEG. The prepaid amount shall be an amount of not less than one Repayment
Instalment or a multiple thereof.
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2.
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Any
notice of prepayment shall be irrevocable and shall specify the Payment
Date upon which the prepayment is to be made and the amount of such
prepayment.
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3.
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The
BORROWER shall repay the indicated amount of the Loan and all accrued
interest and any other fees and/or payments outstanding on the principal
amount to be prepaid on the Payment Date following the notice under
Article 8 (1).
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4.
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Repaid
amounts under Article 8 (3) shall be set off against the Repayment
Instalments in inverse order of maturity. The BORROWER may not request
disbursements of any part of the amounts prepaid under this
Agreement.
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Article
9
PAYMENTS
1.
|
Payment
obligations of the BORROWER pursuant to this Agreement will be satisfied
only if and in so far as, after deduction of all costs and expenses, the
respective amount is credited in United States Dollars by no later than
11:00 a.m. EST on its due date to DEG's bank account (Citibank New York,
3849-2573, swift code: CITI US 33 / ABA 02 10000 89 [Chips
0008]), or such other account notified to the BORROWER not later than 7
days prior to the respective obligation falling
due.
|
9
2.
|
The
set off of counterclaims against DEG's claims arising under this Agreement
and the BORROWER's right to withhold payments is not permitted. This shall
not apply to the set off of the BORROWER's claims that are undisputed or
that have been adjudicated upon by way of a final and binding judgement
against DEG.
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3.
|
To
the extent that any payment by the BORROWER is not sufficient to meet all
due obligations, such payment shall be applied first against costs and
expenses, then against interest and finally against principal amounts of
the Loan outstanding.
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4.
|
Should
the BORROWER be compelled by legal regulation to make lesser payments than
are due or payments in a currency other than that contracted, it shall be
obliged to increase the payment to be made to DEG until the contracted sum
has been reached and, in the case of payment in a currency not specified
in this Agreement, shall be obliged to pay the difference between the
contracted amount and the equivalent in USD of the amount paid converted
at the same time.
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5.
|
All
payments to be made by the BORROWER to DEG pursuant to this Agreement
shall be made free and clear of and without deduction or retention of any
present or future tax liabilities, charges or official payments
whatsoever, except where such deduction or retention is prescribed by law,
in which case the sum payable by the BORROWER in respect of which such
deduction or withholding is required to be made shall be increased to the
extent necessary to ensure that, after the making of the required
deduction or withholding, DEG receives and retains a net sum equal to the
sum which it would have received and so retained had no such deduction or
withholding been made or required to be
made.
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Article
10
DELAYED
PAYMENTS
1.
|
If
payments (other than those referred to in Article 10 (2)) are not made on
their due date, additional interest of 2 % p.a. (in words: two per
cent per annum) to the applicable interest hereunder, calculated from the
due date to the actual date of payment, shall be payable. The additional
interest shall be paid on the next following Payment
Date.
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2.
|
In
the event that interest or fees due to DEG are not paid when due, the
BORROWER shall pay to DEG damages in respect of all overdue amounts for
the period from the due date thereof until the date on which the
respective overdue amount has been received by DEG, calculated at the same
rate as stipulated in Article 10 (1) above, provided that the BORROWER
shall be free to prove that no damage has arisen, or that damage has not
arisen in the asserted amount. The right of DEG to claim further damages
shall remain unaffected.
|
10
3.
|
The
provisions of Article 5 (4) and (5) shall be applied accordingly to the
calculation of interest and penalty payments in accordance with this
Article. Article 18 and any claims for damages remain unaffected by the
above.
|
Article
11
NEGATIVE
PLEDGE
1.
|
The
BORROWER confirms that its assets are not encumbered by any mortgage,
charge, pledge, right of retention or set off or any other priority or
security right or interest.
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2.
|
The
BORROWER shall not encumber its assets or any part thereof without DEG's
prior written consent.
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3.
|
At
DEG’s request, the BORROWER shall at any time during the term of this
Agreement create and register in favour of DEG security(ies) over each of
its assets as DEG may specify to cover upon enforcement the balance of the
Loan then outstanding plus interest and other payment obligations due
under this Agreement.
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Article
12
SECURITY
1.
|
In
order to secure the Loan, interest and other payment obligations arising
under this Agreement, thereby including existing and future claims of DEG,
the BORROWER shall:
|
|
a)
|
create
and register a first ranking mortgage in an amount of USD 28,800,000 (in
words: twenty eight million eight hundred thousand United States
Dollars);
|
|
b)
|
undertakes
to provide a First Demand Payment Guarantee from the
Sponsor;
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2.
|
If
DEG is of the opinion that at any time during the term of this Agreement,
the Security has become inadequate to cover the balance of the Loan then
outstanding, DEG will be entitled to request from the BORROWER such
additional security as may be acceptable to DEG to cover such
deficiency.
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Article
13
INSURANCE
1.
|
The
BORROWER undertakes
|
11
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a)
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to
insure and to keep insured adequately and in compliance with sound
business practice its present and future property, assets and business
with insurers acceptable to DEG;
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|
b)
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to
nominate DEG as beneficiary loss payee in the insurance policies, other
than policies for third party liability
insurance;
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c)
|
to
ensure that all premiums are paid on time and other obligations of the
BORROWER under the insurance policies are duly complied
with.
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2.
|
DEG
will not withhold its consent to the application of insurance proceeds up
to an aggregate of EUR 250.000 (or its equivalent) made in compensation of
loss or damage to the assets charged/encumbered in favour of DEG, to
repair or replace those assets, and DEG will release such payments
accordingly.
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3.
|
DEG
shall be entitled, at the BORROWER's expense, to take all measures
necessary to ensure the insurance cover set out in Article 13 (1) if the
BORROWER does not fulfil its obligations as set out
therein.
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4.
|
The
BORROWER shall provide DEG with copies of any new or renewed insurance
policy within two weeks of the effective date, and, within 60 days of the
end of each Financial Year, with confirmation of each insurer or an
independent insurance broker that the BORROWER is in compliance with its
obligations under this Article.
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Article
14
REPORTING
1.
|
The
BORROWER undertakes to maintain adequate financial and cost accounting and
control and reporting systems for the Project and the BORROWER’s
operations in the English language and to submit the following reports to
DEG in the English language:
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|
a)
|
as
soon as possible, but in any event not later than six months after the end
of each Financial Year, annual accounts (balance sheet, profit and loss
statement, statement of changes in the financial positions, notes to the
financial statements) which are prepared in accordance with IAS or
accounting principles generally accepted in the United States of America
applied on a consistent basis, and which have been examined and audited by
the Auditors in accordance with auditing standards generally accepted by
international accounting firms;
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|
b)
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promptly
after the end of project implementation, a completion report
including;
|
12
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c)
|
as
soon as possible, but in no event later than six months after the end of
each Financial Year, the annual Management Letter and a confirmation from
the Auditors that the BORROWER is in compliance with its obligations set
out in Article 17 (1)(e);
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|
d)
|
quarterly
unaudited interim results (balance sheet and profit and loss statement) as
well as additional data as requested by DEG within sixty days of the end
of the reporting period;
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e)
|
at
least 30 days before the start of each Financial Year, a running annual
business plan including a detailed investment budget and forecast accounts
for the following Financial Year;
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f)
|
as
soon as possible, but in any event not later than six months after the end
of each Financial Year, an annual monitoring report by the BORROWER on its
operations addressing the topics of sponsors and shareholding, country
conditions and government policy, management and technology, corporate
strategy, market, operating performance and financial
condition.
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|
g)
|
annually
and not later than six months after the end of each Financial Year with
the Annual Environmental and Social Monitoring Report on the BORROWER’s
compliance with Article [ 14].
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|
In
case the Annual Environmental and Social Monitoring Report is not
delivered to DEG when due or is not satisfactory to DEG, DEG may take
measures to ob-tain an Annual Environmental and Social Monitoring Report.
This report may, at the choice of DEG, be issued by an external social and
environmental advisor or DEG’s internal social and environmental
department. In any event the BORROWER shall reimburse DEG for all costs
incurred in connection with the exercise of such right under this
Article.
|
|
DEG
may request reasonable variations in the frequency and content of such
reports if the BORROWER's business performs
unsatisfactorily.
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2.
|
The
BORROWER shall authorise the Auditors, in the form of Schedule 4, to
provide DEG directly with information on the BORROWER’s commercial and
financial position.
|
13
3.
|
The
BORROWER shall notify DEG promptly of any legal action or any occurrence
which may substantially and adversely affect the commercial or financial
position of the BORROWER or the ability of the BORROWER to perform its
obligations pursuant to this Agreement and of the occurrence or potential
occurrence of any Event of Default.
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4.
|
The
BORROWER shall notify DEG promptly of any event having a direct or
potential material adverse effect on environmental, occupational health
& safety or labour issues, adjacent populations or that has attracted
the adverse attention of outside parties, created adverse press reports or
created potential liabilities, including any Environmental and Social
Claim as well as any measures taken to mitigate or remedy the effects or
cause of such event.
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5.
|
In
addition to DEG´s right according to Article 17 (1)(c) DEG shall have the
right to examine the BORROWER´s utilisation of the Loan and its
performance under this Agreement after having received the completion
report referred to in Article 14
(1)(c).
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6.
|
The
BORROWER undertakes to promptly inform DEG of all amendments to its
statutes, memorandum. articles which the law stipulates must be published,
as well as all transactions which would entail a change in ownership
relating to [10] % or more of its share capital or a change in its
control, either directly or
indirectly.
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Article
15
ENVIRONMENTAL
SOCIAL & HEALTH COMPLIANCE
1.
|
The
BORROWER undertakes to ensure that it diligently designs, constructs,
operates, maintains and monitors all of its plants, sites and equipment in
a safe, efficient and business-like manner and shall at all times comply
with
|
|
a)
|
all
environmental, labour and other social laws (including international
treaty obligations) applicable in any jurisdiction in which the BORROWER
or any member of the Group conducts
business,
|
|
b)
|
any
environmental and social permit, license, consent, approval and other
authorisation necessary for the BORROWER or any member of the Group to
conduct its business and to ensure that all such authorisations and
approvals are valid, and
|
|
c)
|
the
DEG Environmental and Social Standards, which materially encompass the IFC
Performance Standards and the relevant local guidelines, and the terms and
standards as set out in any ILO convention signed and ratified by the
Country, as well as ILO Core Labour Standards as set out in ILO
Declaration on Fundamental Principles and Rights at Work from 1998 and the
Basic Terms and Conditions of Employment,
and
|
14
|
d)
|
the
terms and standards as set out in any United Nations treaty, convention or
covenant on human rights signed and ratified by the Country(ies) the
BORROWER operates in.
|
2.
|
The
BORROWER shall not (and the BORROWER shall ensure that no other member of
the Group will) perform any of the excluded activities as listed in
Schedule X (Excluded Activities).
|
3.
|
The
BORROWER shall implement, maintain and continuously
improve:
|
|
a)
|
an
Environmental and Management System according to the principles of ISO
14001 or equivalent industry standard until 31st June
2012,
|
|
b)
|
an
Occupational Health and Safety Management System according to the
princi-ples of OHSAS 18001 or equivalent industry standard until 31st June
2012,
|
c)
|
a
Social Management System according to the principles of XX 0000 or
equiva-lent standard until 31st June
2012.
|
|
d)
|
Implementation
of corrective actions as recommended within the STR
reports.
|
4.
|
The
BORROWER shall
|
|
a)
|
appoint
a member of the senior management to be responsible for environmental and
social issues; and
|
|
b)
|
suitably
train an environmental and / or a social
manager.
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Article
16
REPRESENTATIONS
AND WARRANTIES
1.
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The
BORROWER hereby represents and warrants to DEG that at the time of
execution of this Agreement:
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a)
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the
Shareholder is the legal and beneficial owner of 100 % of the issued
share capital of the BORROWER and no other person has any actual or
contingent right or option to subscribe for, purchase, otherwise acquire
or require the transfer of any share (or any other interest in the share
capital of the BORROWER) or any other commitment or claim of any nature in
relation to any share (or any other interest in the share capital of the
BORROWER); to the best of its knowledge and belief, and after making due
enquiry, no material fund invested in the BORROWER’s issued share capital
or used for the financing of the Project is of illicit origin nor related
to drug trafficking, corruption, bribery, organised crime or terrorism and
the BORROWER furthermore warrants to promptly inform DEG, if the BORROWER
should at any time be informed of an illicit origin of any such
fund;
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b)
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it
is a company duly incorporated and validly existing under the laws of the
People’s Republic of China and has the corporate power to conduct its
business as presently conducted and as proposed to be conducted and to
enter into this Agreement;
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c)
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it
has the power to enter into, perform and deliver, and has taken all
necessary action to authorise its entry into, performance and delivery of
the Finance Agreements and the Project Documents to which it is a party
and the transactions contemplated by those
documents;
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d)
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the
BORROWER's audited financial statements (balance sheet, profit and loss
account, management report) as per 31st
December, 2008 and unaudited financial statements as per 31st
December 2009 are true and correct at the relevant dates and for the
respective period covered and have been prepared in conformity with
accounting principles generally accepted in United States of America;
since the date of the latest of its financial statements, the BORROWER has
not suffered any material adverse change in its business prospects nor,
since such date has the BORROWER incurred any substantial or unusual loss
or liability;
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e)
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all
tax returns and reports of the BORROWER have been filed as required by law
and all fees and other governmental charges payable by the BORROWER have
been duly paid;
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f)
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the
BORROWER is not engaged in or threatened by any litigation, the outcome of
which might adversely affect its financial position or the implementation
of the Project and the BORROWER is not in violation of any statute or
regulation of any governmental
authority;
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g)
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the
BORROWER has good title to all premises at which its business is carried
on and has the right to all concessions, trade names, trade marks, patents
and licence agreements necessary for the conduct of its business as now
conducted and as intended to be
conducted;
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h)
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the
BORROWER is not in breach of any
agreement;
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i)
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neither
the conclusion of this Agreement nor the compliance with its terms will
conflict with the terms of or require any consent under, any agreement or
arrangement to which the BORROWER is a party or violate any of the terms
of the BORROWER's constitutional documents
and
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j)
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neither
the BORROWER, nor the Shareholder, nor any affiliates, nor any
person acting on its or their behalf, has committed or engaged in, with
respect to the Project or any transaction contemplated by this Agreement,
any Sanctionable Practice.
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2.
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The
rights and remedies of DEG in relation to any misrepresentation or breach
of warranty on the part of the BORROWER shall not be prejudiced by any
investigation by or on behalf of DEG into the affairs of the
BORROWER.
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3.
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Each
of the representations set out in this Article 16 is made on the date of
this Agreement, shall survive the execution hereof and the making of each
disbursement hereunder and shall be deemed to be repeated, by reference to
the then existing circumstances, by the BORROWER on each day so long as
any amount is or may be outstanding
hereunder.
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Article
17
GENERAL
COVENANTS
1.
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Unless
DEG otherwise agrees the BORROWER
shall:
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a)
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implement
the Project and conduct its business activities in accordance with
generally accepted principles of care, prudence and commercial practice as
well as in conformity with sound engineering and technical practices and
standards;
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b)
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obtain
and maintain in full force and effect and comply with the terms of all
necessary Authorisations;
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c)
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permit
DEG's authorised representatives access to its business and works premises
at any time during normal working hours upon reasonable notice, as well as
to inspect and examine its financial records and all documents related to
the Project if the BORROWER does not comply with any obligation under this
Agreement or if DEG has reasonable grounds to believe that the performance
of the BORROWER`s obligations pursuant to this Agreement is endangered; in
such event the BORROWER shall reimburse DEG for all costs incurred in
connection with the exercise of such inspection right (business class air
fares and reasonable accommodation expenses for up to 5
days);
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d)
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ensure
that DEG’s claims under this Agreement are always serviced and secured at
least equally with those of other long-term lenders and not prepay other
loans;
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e)
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maintain
at all times the following financial
ratios:
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- Equity
Ratio: not less than 40 %
- Current
Ratio: not less than 1.2
- Debt
Service Coverage Ratio: not less than 1.2
- Interest
Bearing Debt / EBITDA not more than 3 times from 2012
- Equity
/ Fixed Assets minimum 130%
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f)
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notify
DEG promptly of any legal action or any occurrence which may substantially
and adversely affect the commercial or financial position of the BORROWER
or the ability of the BORROWER to perform its obligations pursuant to this
Agreement and of the occurrence or potential occurrence of any Event of
Default;
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2.
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Unless
DEG otherwise agrees the BORROWER shall
not
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a)
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change
its purpose or its constitutional documents in a way which is inconsistent
with this Agreement, nor merge or liquidate, nor acquire or dispose of
shares in other companies exceeding 15 % (in words: fifteen per
cent);
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b)
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sell,
transfer or otherwise dispose its fixed
assets;
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c)
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assume
liabilities, including contingent liabilities, other than as may be
provided for in the Project Description, exceeding the aggregate of more
than USD 20,000,000 (in words: twenty million United States Dollars) or
the equivalent in RMB thereof;
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d)
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violate,
amend or terminate the Finance Agreements and Project Documents nor
provide any grounds for the termination
thereof;
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e)
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enter
into or continue business relations with its shareholders, employees and
associated companies except on proper commercial terms negotiated at arms’
length;
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f)
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enter
into or continue business relationships with specially designated
nationals and blocked persons or entities maintained on the relevant lists
by the European Union or Germany in relation to embargoes or the fight
against terrorism;
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g)
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make
any dividend or other capital distribution or payment on or in respect of
any shareholder loan or advance as long as an Event of Default is
subsisting or is threatening to
occur;
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h)
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enter
into any partnership, profit-sharing or other similar arrangement whereby
the BORROWER´s income or profit can be shared with any other
person;
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i)
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engage
in (and shall not authorize or permit any affiliate or any other person
acting on its behalf to engage in) with respect to the Project or any
transaction contemplated by this Agreement, any Sanctionable
Practice. The BORROWER further covenants that should DEG notify
the BORROWER of its concerns that there has been a violation of the
provisions of this Article or of any Article of this Agreement, it shall
cooperate in good faith with DEG and its representatives in determining
whether such a violation has occurred, and shall respond promptly and in
reasonable detail to any notice from DEG, and shall furnish documentary
support for such response upon DEG's
request.
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Article
18
EVENTS
OF DEFAULT
1.
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Any
of the following shall constitute an Event of
Default:
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a)
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the
BORROWER fails to pay any amount due under this Agreement or under any
other agreement between the BORROWER and
DEG;
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b)
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the
BORROWER is in default in the due performance of any of its other
obligations under this Agreement and such default remains unremedied for
30 days after written notice thereof has been given to the BORROWER by
DEG;
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c)
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the
BORROWER is in payment default in respect of any amount, in any currency,
under any agreement with any party other than DEG or any of the BORROWER’s
lenders declares a loan to the BORROWER immediately due and
payable;
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d)
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the
loan agreement between Raiffeisen and Shanghai Tourong is declared to be
or otherwise becomes due and payable prior to its specified maturity as a
result of an event of default or the collateral on the land use rights on
the leased land of the BORROWER is threatened to be enforced or the lease
contract between Shanghai Tuorong and the BORROWER is threatened to be
changed or terminated;
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d)
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any
representation or statement made or confirmed by the BORROWER or any
Shareholder or Sponsor in or in connection with the Finance Agreements or
Project Documents or any other document delivered by or on behalf of the
BORROWER (including any call for disbursement) shall be found to have been
incorrect or misleading in any material
respect;
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e)
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any
insolvency, bankruptcy, liquidation, winding-up, receivership, execution,
sequestration or similar process is initiated or enforced against the
BORROWER or any Shareholder or Sponsor or a substantial part of its
assets;
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f)
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any
government or governmental authority shall have condemned, nationalised,
assumed custody or control or otherwise expropriated all or any
substantial part of the assets of the BORROWER or of its share capital or
shall have taken any similar action that would prevent the BORROWER from
carrying on its business;
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g)
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a
Change of Control in the Borrower;
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h)
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the
value or the enforceability of the Security is or is threatened to be
materially affected and this has not been remedied according to Article 12
(z) within a period of two months after written demand by
DEG;
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i)
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any
of the Finance Agreements, Project Documents and/or Authorizations have
been found to be invalid or unenforceable or have been amended, terminated
and/or violated without DEG’s prior written
consent;
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j)
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any
event occurs or circumstance arises or threatens to arise which, in the
reasonable opinion of DEG, is likely to have a material adverse effect on
the implementation of the Project, the conduct of the BORROWER’s business,
or the performance of the BORROWER’s obligations under this Agreement or
which restricts DEG’s rights under this
Agreement.
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2.
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On
and at any time after the occurrence of an Event of Default, DEG shall be
entitled to cancel the total outstanding commitment of the Loan and/or to
demand immediate repayment of the Loan or any part thereof together with
accrued interest and other sums due by the BORROWER under this Agreement
and/or to terminate this Agreement
promptly.
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Article
19
COSTS
AND EXPENSES
1.
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The
BORROWER shall bear all costs, taxes, fees and other charges and expenses
incurred in connection with the execution and implementation of this
Agreement, including (without limitation) those with respect
to
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a)
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all
payments to be made under this
Agreement;
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b)
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the
issuance of the legal opinion in accordance with Article 4
(6);
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c)
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the
creation, registration, enforcement and, if necessary, the cancellation of
the Security; and
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d)
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the
pursuance and enforcement of rights in connection with this
Agreement.
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2.
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DEG
shall have the right to pay any amount referred to in Article 19 (1) on
behalf of the BORROWER. The expenses so paid by DEG shall be immediately
reimbursed by the BORROWER upon demand by
DEG.
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Article
20
GOVERNING
LAW AND JURISDICTION
1.
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This
Agreement shall be governed by and construed in accordance with the laws
of the Federal Republic of Germany. If the English term and its legal
meaning differs from the German term and its legal meaning in this
Agreement, the German term and its legal meaning shall
prevail.
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2.
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All
legal disputes arising out of or in connection with this Agreement
(including all legal dispute concerning the existence, validity,
termination or consequence of invalidity of any Finance Agreements and
Project Documents) shall be heard and finally settled by an arbitration
panel established in accordance with the arbitration rules of the
International Chamber of Commerce, Paris; the arbitration award rendered
by such arbitration panel shall be final and binding upon the parties. The
seat of the arbitration shall be Cologne and the language of the
proceedings shall be English.
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3.
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The
BORROWER appoints FIDEUROP GmbH , Westhafen Tower, Xxxxxxxxxxxxxx 0, 00000
Xxxxxxxxx x.X., Xxxxxxx, Telefax: x00-00-000000-000 as its
authorised recipient, which in this capacity shall be the recipient of all
documents relating to any legal disputes or other legal proceedings
arising from or in connection with this Agreement or any amendment
thereof, in accordance with Schedule 6 (Form of Letter to the Process
Agent). As long as this Agreement remains in force and any
obligation pursuant hereto remains outstanding, the BORROWER shall
maintain a duly appointed recipient for the receipt of service within the
Federal Republic of Germany and shall notify DEG of the name and address
thereof.
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Article
21
MISCELLANEOUS
1.
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All
communications in connection with this Agreement shall be sent in writing
in the English language to the parties at the following address or telefax
number:
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For the
BORROWER:
Shanghai
Blessford Alloy Co., Ltd.
123
Laodong Lu
201809
Shanghai
People’s
Republic of China
Telefax:
x00-00-0000-0000
For DEG:
DEG –
Deutsche Investitions- und Entwicklungsgesellschaft mbH
Xxxxxxxxxxx
00
00000
Xxxx
Xxxxxxx
Xxxxxxxx of Germany
Telefax:
+ 49-221- 4986-1290
Each
party undertakes to notify the other party of any change of
address.
2.
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The
BORROWER will provide DEG with certified copies and, if requested by DEG,
certified translations into the English language of all Authorisations and
any other documents to be submitted according to this
Agreement.
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3.
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All
Schedules annexed hereto form an integral part of this
Agreement.
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4.
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Any
right or obligation under this Agreement may be transferred, provided,
however, that any transfer by the BORROWER is subject to the prior written
consent of DEG.
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5.
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a)
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The
BORROWER is aware that DEG is a wholly-owned subsidiary of Kreditanstalt
für Wiederaufbau (“KfW“) and a member of the KfW Bankengruppe. The members
of the KfW Bankengruppe are KfW, DEG, FuB - Finanzierungs- und
Beratungsgesellschaft mbH, Berlin and such further entities as listed on
the website of the KfW Bankengruppe (xxx.xxx.xx).
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b)
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DEG
shall be entitled to disclose confidential information (e.g. any data as
to legal status, business and financial condition, privacy data, etc.) it
receives in connection with this financing to any member of the KfW
Bankengruppe at any given date. Since within the KfW Bankengruppe a
central corporate risk management and a standardised controlling will be
performed, it may be necessary to forward special client data and/or
documents within KfW Bankengruppe. This client data and/or documents
include:
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·
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data
provided by the client;
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·
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documents
and data developed by DEG relating to the
client.
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The
client data and/or documents will be forwarded exclusively to members of
the KfW Bankengruppe and will not be made available to any person outside
the KfW Bankengruppe. All members of the KfW Bankengruppe will treat any
client data forwarded to them in compliance with the legal provisions as
prescribed by the Federal Data Protection Law (“Bundesdatenschutzgesetz”)
and the rules on banking secrecy.
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c)
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With
reference to the above information under a) and b) the BORROWER hereby
agrees to the transfer of client data within the KfW Bankengruppe for the
purposes of central corporate risk management and standardised controlling
and, to such extent, expressly release DEG from banking secrecy rules, the
provisions of the Federal Data Protection Law (“Bundesdatensschutzgesetz”)
and any separately concluded confidentiality
agreement.
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d)
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If
an entity ceases to be a member of the KfW Bankengruppe, DEG shall no
longer be entitled to disclose information to the relative entity. The
relative entity shall destroy or return the information disclosed to
it.
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e)
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The
disclosure by DEG may also be required or requested in order to fulfil
legal, judicial or regulatory requirements. The BORROWER consents to any
such disclosure.
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6.
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Any
modification or amendment to this Agreement, including this provision,
must be in writing.
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7.
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Should
any provision of this Agreement be or become invalid or unenforceable for
any reason, the validity of the remaining provisions shall not thereby be
affected.
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8.
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In
the event that any party does not exercise any right to which it is
entitled under this Agreement, such omission shall not be considered to
constitute a waiver of such right.
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9.
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This
Agreement shall be effective upon the date of the last signature and shall
remain effective as long as any amount is due to
DEG.
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10.
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The
limitation period for the BORROWER’s payment obligations under this
Agreement shall be five years.
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Köln,
this 17 December 2009
DEG –
DEUTSCHE INVESTITIONS- UND ENTWICKLUNGSGESELLSCHAFT MBH
/signature/
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/signature/
______________________
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[By
]
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[By
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Shanghai,
this 29 January 2010
SHANGHAI
BLESSFORD ALLOY Co., LTD.
/signature/
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[By
]
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[By
]
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