LOAN AGREEMENT
LOAN AGREEMENT (this
“Agreement”) dated as of December 13, 2010 by and among CleanTech Innovations,
Inc., a Nevada corporation with its principal executive offices located at C
District, Maoshan Industry Park, Tieling Economic Development Zone, Tieling,
Liaoning Province, China 112616 (“CleanTech”), and its wholly owned
subsidiaries, Liaoning Creative Bellows Co., Ltd. (“Creative Bellows”) and
Liaoning Creative Wind Power Equipment Co., Ltd. (“Wind Power,” together with
Creative Bellows, the “Subsidiaries”), each such subsidiary organized under the
laws of the People’s Republic of China (CleanTech, Creative Bellows and Wind
Power are collectively referred to herein as the “Company”), and NYGG (Asia),
Ltd., a company organized under the laws of the British Virgin Islands with its
principal executive offices located at 00xx Xxxxx
Xxxxxxxxx Xxxxx, 00 Xxxxxxx Xxxxxx, Xxxxxxx, Xxxx Xxxx ("Lender").
WITNESSETH
WHEREAS, Lender has agreed,
subject to the terms and conditions hereof, to loan to the Company the sum of
U.S. $10,000,000 (Ten Million Dollars) (the "Loan").
NOW, THEREFORE, in
consideration of the foregoing premises and other good and valuable
consideration, the receipt of which is hereby acknowledged, the parties hereto
hereby agree as follows:
1. The Loan.
Simultaneously with the execution of this Agreement by the parties hereto, the
Lender will loan to the Company the sum of U.S. Dollars (“USD”) 10,000,000. The
Loan will be evidenced by a note (the "Note"), dated the date hereof, in the
principal amount of the Loan, and will bear simple interest at the rate of 10%
per annum, payable quarterly in advance commencing on the date hereof and
thereafter every three (3) months from the date hereof on the following dates:
March 13, 2011, June 13, 2011, September 13, 2011, and December 13, 2011, unless
such date is a banking holiday recognized by JPMorgan Chase & Co. in New
York City or a Saturday or Sunday (a “Business Day”), in which case such payment
will be due on the next succeeding Business Day. The principal, together with
any accrued and unpaid interest thereon, shall be due on the earlier of (i)
Xxxxx 0, 0000, (xx) on demand of the Lender of a full or partial payment at any
time after the closing of any financing of USD 10,000,000 or more, or the
equivalent in another currency, in one or a series of transactions or (iii) upon
acceleration due to a Change of Control or Event of Default (as defined in the
Note). The Note will be in the form attached hereto as Exhibit A. At the
Lender’s option, the principal amount of the note and all interest thereon shall
be paid in either USD or Renminbi (“RMB”) at an exchange rate of RMB 6.90 to USD
1.00 to the Lender or any designee of Lender as provided to the Company in
writing by Lender.
2. Representations and
Warranties of the Company. The Company represents and warrants
that:
(A) The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Nevada, and the Company and its Subsidiaries are
duly qualified to do business and in good standing in such jurisdictions where
the conduct of their business makes such qualification necessary. The Company
has full power and authority, corporate and otherwise, to enter into and perform
this Agreement and the Note.
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(B) The execution, delivery and
performance by the Company of this Agreement, and the making, execution and
delivery by the Company of the Note (collectively with the Agreement referred to
herein as the "Transaction Documents") have been duly authorized by all
necessary corporate action and will not violate any provision of law, court
order or decree to which the Company or its Subsidiaries are subject to, or the
Company's Articles of Incorporation or Bylaws, as amended, or result in the
breach of, or constitute a default under, or result in the creation of any lien,
charge or encumbrance upon any property or assets of the Company or its
Subsidiaries pursuant to any agreement or instrument to which they are a party.
The Transaction Documents are a valid and binding obligation of the Company,
enforceable in accordance with its terms subject to general principles of equity
and bankruptcy and other laws affecting creditors' rights
generally.
(C) No
governmental permit, consent, approval or authorization is required in
connection with (i) the execution, delivery and performance of the Transaction
Documents, or (ii) the offer, sale, issuance and delivery of the Note
contemplated hereby by the Company; provided, that, all
representations made to the Company by the Lender in this Agreement and in any
other document or instrument delivered in connection herewith are assumed for
purposes of this representation and warranty to be accurate and
complete.
(D) The
Company has made available to the Lender through the XXXXX system, true and
complete copies of the Company’s current report on Form 8-K filed July 2, 2010
(the “8-K”), and all other reports filed by the Company pursuant to the 1934 Act
since the filing of the 8-K and prior to the date hereof (collectively, the “SEC
Filings”). The SEC Filings are the only filings required of the Company pursuant
to the 1934 Act for such period. The Company and its Subsidiaries are engaged in
all material respects only in the business described in the SEC Filings and the
SEC Filings contain a complete and accurate description in all material respects
of the business of the Company and its Subsidiaries, taken as a
whole.
(E) The
SEC Filings complied as to form and content in all material respects with the
requirements of the 1934 Act and did not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading.
(F) The
net proceeds of the Note hereunder shall be used by the Company for working
capital.
(G) Since
December 31, 2009, except as identified and described in the SEC Filings, there
has not been:
(i) any
change in the financial condition of the Company that could reasonably be
expected to have a material adverse effect (“Material Adverse Effect”) on (x)
the assets, liabilities, results of operations, condition (financial or
otherwise), business, or prospects of the Company and its Subsidiaries taken as
a whole, or (y) the ability of the Company to perform its obligations under the
Transaction Documents, individually or in the aggregate; or
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(ii) any
other event or condition of any character that has had or could reasonably be
expected to have a Material Adverse Effect.
3. Representations and
Warranties by the Lender. As an inducement to the Company to enter into
this Agreement and issue the Note, Lender represents and warrants, as
follows:
(A)
Lender is a validly existing company, limited partnership or limited liability
company and has all requisite corporate, partnership or limited liability
company power and authority to enter into the Transaction
Documents.
(B) The
execution, delivery and performance by Lender of the Transaction Documents to
which Lender is a party have been duly authorized and will each constitute the
valid and legally binding obligation of Lender, enforceable against Lender in
accordance with their respective terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability, relating to or affecting creditors’ rights
generally.
(C)
Lender acknowledges that it has been advised that the Note has not been
registered under the provisions of the Act.
(D)
Lender acknowledges it has reviewed and received copies of all SEC Filings.
Lender specifically disclaims receipt of any other information and material,
whether oral or in writing, from the Company or anyone acting for or on behalf
of the Company, and reliance upon any such unauthorized oral or written
information and material is specifically disclaimed.
4. Covenants. Upon an
Event of Default or a Change of Control of the Company (as defined in the Note),
the entire outstanding principal amount of the Note, and interest due thereon,
shall become immediately due and payable in accordance with the terms of the
Note.
5. Negative Covenants.
Without the prior written consent of the Lender, from the date hereof until the
date the Note is repaid in full, the Company and its Subsidiaries shall be
prohibited from:
(A)
Selling, leasing, encumbering, pledging or otherwise disposing of their
respective assets, except in the ordinary course of business;
(B)
Dissolving, liquidating, or winding up their respective businesses;
(C)
Conducting their respective businesses other than in their ordinary and usual
course;
(D)
Paying any dividend or make any other distributions of cash or
property;
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(E)
Merging or consolidating with another entity;
(F)
Issuing any new stock or redeeming any existing stock;
(G)
Incurring indebtedness for borrowed money, including capitalized loan
obligations; or
(H)
Effecting any fundamental change to the Company's lines of
business.
6. Loan
Delivery. Lender shall deposit a total of USD 10,000,000, less any applicable
wire or transfer fees as follows:
Beneficiary:
The Xxxxxx Law Firm PLLC XXXX Trust Account
Bank
Name: TD Bank, NA
Bank
Address: 0 Xxxx Xxxxxx, Xxx Xxxx, XX 00000
ABA:
000000000
Account
Address: 00 Xxxx Xxxxxx, Xxx Xxxx, XX 00000
Account
Number:
Upon the
receipt by Lender and Company of the executed Loan Agreement and Note, The
Xxxxxx Law Firm is hereby authorized by the Lender and the Company to promptly
release all funds to the Company as directed by the Company in
writing.
7. Miscellaneous.
(A) (i)
The Company agrees to indemnify and hold harmless the Lender and its affiliates
and their respective directors, officers, employees and agents (each a “Lender
Indemnitee”) from and against any and all losses, claims, damages, liabilities
and expenses (including without limitation reasonable attorney fees and
disbursements and other expenses incurred in connection with investigating,
preparing or defending any action, claim or proceeding, pending or threatened
and the costs of enforcement thereof) (collectively, “Losses”) to which any such
Lender Indemnitee may become subject as a result of any breach of
representation, warranty, covenant or agreement made by or to be performed on
the part of the Company under the Transaction Documents, and will reimburse any
such Lender Indemnitee for all such amounts as they are incurred by such Lender
Indemnitee.
(ii) The
Lender agrees to indemnify and hold harmless the Company and its affiliates and
their respective directors, officers, employees and agents (each a “Company
Indemnitee”) from and against any and all Losses to which any such Company
Indemnitee may become subject as a result of any breach of representation,
warranty, covenant or agreement made by or to be performed on the part of the
Lender under the Transaction Documents, and will reimburse any such Company
Indemnitee for all such amounts as they are incurred by such Company
Indemnitee.
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(B) This
Agreement may not be assigned by a party hereto without the prior written
consent of the Company or the Lender, as applicable, provided, however, that Lender
may assign its rights and delegate its duties hereunder in whole or in part to
an affiliate and may assign in writing any right to the payment of interest and
principal to any designee. The provisions of this Agreement shall inure to the
benefit of and be binding upon the respective permitted successors and assigns
of the parties. Nothing in this Agreement, express or implied, is intended to
confer upon any party other than the parties hereto or their respective
successors and assigns any rights, remedies, obligations, or liabilities under
or by reason of this Agreement, except as expressly provided in this
Agreement.
(C) This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument. This Agreement may also be executed via facsimile, which shall be
deemed an original.
(D) The
titles and subtitles used in this Agreement are used for convenience only and
are not to be considered in construing or interpreting this
Agreement.
(E)
Unless otherwise provided, any notice required or permitted under this Agreement
shall be given in writing and shall be deemed effectively given as hereinafter
described (i) if given by personal delivery, then such notice shall be deemed
given upon such delivery, (ii) if given by mail, then such notice shall be
deemed given upon the receipt of such notice by the recipient and (iii) if given
by an internationally recognized overnight air courier, then such notice shall
be deemed given two Business Days after delivery to such carrier. All notices
shall be addressed to the party to be notified at the address as follows, or at
such other address as such party may designate by ten days advance written
notice to the other party:
If to the
Company:
C
District, Maoshan Industry Park,
Tieling
Economic Development Zone,
Tieling,
Liaoning Province, China 112616
Att: Bei
Lu
With a
copy to (which copy shall constitute notice):
The
Xxxxxx Law Firm, PLLC
00 Xxxx
Xxxxxx, 00xx
Xxxxx
Xxx Xxxx,
XX 00000
Attention:
Xxxxxx Xxxxxx
If to the
Lender:
NYGG
(Asia), Ltd.
00xx Xxxxx
Xxxxxxxxx Xxxxx,
00
Xxxxxxx Xxxxxx
Xxxxxxx,
Xxxx Xxxx
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With a
copy to (which copy shall constitute notice):
Xxxxxx,
Xxxxxxxxxx & Xxxxxxxxx, LLP
00 Xxxx
00xx
Xxxxxx
Xxx Xxxx,
XX 00000
Attn:
Xxxxxx X. Xxxx Esq.
(F) Amendments and
Waivers. Any term of this Agreement may be amended and the observance of
any term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written
consent of the Company and the Lender, and the Company will pay the reasonable
fees and expenses of the Lender incurred in connection with any such
amendment.
(G) Severability. Any
provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof but shall be interpreted as if it were written so as to be
enforceable to the maximum extent permitted by applicable law, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. To the extent
permitted by applicable law, the parties hereby waive any provision of law which
renders any provision hereof prohibited or unenforceable in any
respect.
(H) Entire Agreement.
This Agreement, including the Exhibits and the Disclosure Schedules, and the
other Transaction Documents constitute the entire agreement among the parties
hereof with respect to the subject matter hereof and thereof and supersede all
prior agreements and understandings, both oral and written, between the parties
with respect to the subject matter hereof and thereof.
(I) Further Assurances.
The parties shall execute and deliver all such further instruments and documents
and take all such other actions as may reasonably be required to carry out the
transactions contemplated hereby and to evidence the fulfillment of the
agreements herein contained.
(J) Governing Law; Consent to
Jurisdiction; Waiver of Jury Trial. This Agreement shall be governed by,
and construed in accordance with, the internal laws of the State of New York
without regard to the choice of law principles thereof. Each of the parties
hereto irrevocably submits to the exclusive jurisdiction of the courts of the
State of New York located in New York County and the United States District
Court for the Southern District of New York for the purpose of any suit, action,
proceeding or judgment relating to or arising out of this Agreement and the
transactions contemplated hereby. Service of process in connection with any such
suit, action or proceeding may be served on each party hereto anywhere in the
world by the same methods as are specified for the giving of notices under this
Agreement. Each of the parties hereto irrevocably consents to the jurisdiction
of any such court in any such suit, action or proceeding and to the laying of
venue in such court. Each party hereto irrevocably waives any objection to the
laying of venue of any such suit, action or proceeding brought in such courts
and irrevocably waives any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum. EACH OF THE PARTIES HERETO WAIVES
ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS
AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS
WAIVER.
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(K) The Company shall pay the
reasonable fees and expenses of counsel incurred in connection with the
negotiation and consummation of the transactions contemplated
hereby.
IN WITNESS WHEREOF, the
parties hereto have executed this agreement as of the date first above
written
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By:
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/s/ Bei Lu
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Name:
Bei Lu
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Title:
President and Chief Executive Officer
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LIAONING
CREATIVE BELLOWS CO., LTD.
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By:
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/s/ Bei Lu
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Name:
Bei Lu
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Title:
President and Chief Executive Officer
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LIAONING
CREATIVE WIND POWER
EQUIPMENT
CO., LTD.
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By:
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/s/ Bei Lu
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Name:
Bei Lu
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Title:
President and Chief Executive
Officer
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LENDER:
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NYGG
(Asia), Ltd.
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By:
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/s/ Xxxx Xx
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Name:
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Title:
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