EX-10.36 4 v368767_ex10-36.htm EXHIBIT 10.36

Exhibit 10.36

 

China Development Bank

 

Domestic Factoring Financing Contract

 

(With Recourse)

 

(No. 1510201301400078488)

 

(This Is a Selective and Summary Translation for Reference Only)

 

Factoring Financing Applicant:

Inner Mongolia Yongye Nongfeng Biotech Co., Ltd.

Legal Representative:

SUN Xiaofeng

 

Factoring Financing Provider:

China Development Bank (Inner Mongolia Branch)

Responsible Person:

MA Jian

  

Whereas, the factoring financing applicant Inner Mongolia Yongye Nongfeng
Biotech Co., Ltd. (hereinafter, the “Seller”) proposes to adopt the
sell-on-credit method in selling goods and services to the Buyers (the Seller’s
trading partners) hereunder and agrees to transfer the corresponding accounts
receivable to China Development Bank (Inner Mongolia Branch) (hereinafter,
“CDB”) for recourse factoring financing from CDB.

 

Therefore, pursuant to the relevant state laws and regulations, the parties
hereto have entered into the agreement as follows.

 

 

Article 1Definitions

 

1.The following terms used herein shall have the following meaning, unless
otherwise specified.

 

[Translation of definitions omitted].

 

1

 

 

Article 2Factoring Amount and the Amount of Factoring Financing Credit Facility

 

2.             CDB, based on the Seller’s application and the CDB’s review of
the Seller’s and Buyers’ credit, has determined the Seller’s factoring amount
and the amount of factoring financing credit facility as follows:

 

(1)The Seller’s factoring amount is ¥111,069,500.00, and the amount of factoring
financing credit facility is ¥80,000,000.00; the effective term for both amounts
is 12 months.

(2)The Buyers and their respective portions of factoring financing credit
facility:

                                   Shenyang Tailai Trading Co.
Ltd.:                 ¥55,000,000.00;

                                   Anhui Danong Trading Co. Ltd.:
                  ¥25,000,000.00.

(3)The effective term for such factoring financing credit facility determined by
CDB starts on the effective date of this agreement.

(4)The dates of accounts receivable transferred by the Seller and the dates of
the Seller’s application must be within the effective term of the credit
facility. Any unused portion of the credit facility will be automatically
cancelled upon expiration of the effective term.

(5)The credit facility hereunder is non-revolving, and any amount of debt repaid
thereunder cannot be applied for again.

(6)If the Seller violates any provisions hereunder, or there is any policy
adjustment in the Seller/Buyers’ industry, or there is material deterioration of
Seller/Buyers’ operation or financial conditions or credit rating, CDB shall
have the right to make changes to the credit, including but not limited to
reduction of credit, shortening the term thereof and cancellation.

 

Article 3Factoring Financing Service Options and the Transfer of Accounts
Receivable

 

7. Based on Seller’s application, CDB provides the following service to the
Seller:

·Factoring financing

·Management of the sales sub-accounts

·Collection of accounts receivable

 

8.             During the effective term of the credit facility, the Seller must
transfer all the accounts receivable under the base trading contracts to CDB in
accordance with the provisions herein.

 

9.             The accounts receivable proposed to be transferred to CDB must
all be qualified and meet the following requirements:

 

2

 

 

(1)They are generated from authentic and valid base trading contracts normal
trading thereunder, which are encumbered by any restriction or limitations;

(2)They are expressed and to be pay in RMB;

(3)They are legally owned by the Seller and there are no defects on such
ownership and have not already been transferred to any third party;

(4)They are not involved in any lawsuits, arbitration, disputes or claims;

(5)They are not generated from trials, redistributions and consignments, or from
related party transactions;

(6)The Seller has performed, and will continue to perform, its obligations under
base trading contracts;

(7)There has been no breach on the part of the Buyers regarding their
obligations under the Base Trading Contracts before the Seller applies to
transfer such Base Trading Contracts ;

(8)There have been on cases of insolvency, bankruptcy, dissolution or
liquidation on the part of the Buyers before the Seller applies to transfer any
Base Trading Contracts ;

(9)The payment due dates for the accounts receivable transferred must not be
less than 10 days but must not more than 270 days and must not be past due;

(10)Other conditions set by CDB.

 

11.            At the time of transfer, the Seller must provide to CDB a “List
of Accounts Receivable to be Transferred” (as Appendix 1) and other relevant
documents and notes, including but not limited to:

 

(1)Original or copy of the Base Trading Contracts , or proof of sales/service
contracts;

(2)Original or copy of the terms and conditions of creditor’s right transfer;

(3)Proof of delivery of goods or other documents evidencing the performance of
the Base Trading Contracts ;

(4)Original copy of “Accounts Receivable Creditor’s Right Transfer Notice”
(Appendix 2) signed by the Seller;

(5)Other documents requested by CDB.

 

12.            After reviewing the documents mentioned above, if CDB agrees to
accept the accounts receivable to be transferred, CDB must send to the Seller an
“Accounts Receivable Transfer Confirmation” (Appendix 3), which specifies those
accounts receivable accepted and those accounts receivable not accepted, and the
transfer shall become effective on the dates specified in such confirmation.

 

13.            The Seller must assist CDB in the registration procedures with
People’s Bank of China Credit Information Center regarding the transfer.

 

14.            The amount of accounts receivable must be calculated after the
deduction from such amount any portion that must be deducted (such as
prepayment, deposit, rebate and discount as well as any withholding of taxes).

 

3

 

 

15.            After CDB has paid the factoring financing amount to the Buyers,
if the amount repaid by the Buyers is, for whatever reason, less than that
specified in the “Accounts Receivable Transfer Confirmation”, CDB shall have the
resource to pursue the Seller for any shortage and the associated interest and
fees.

 

16.            After the accounts receivable are transferred to CDB, CDB shall
have all the rights thereunder before they have been transferred, including but
not limited to all associated interest, penalty interest and compound interest,
as well as all other fees and expenses in connection with the collection of such
accounts receivable.

 

17.            Under no circumstance is it to be construed that CDB has assumed
all of the Seller’s obligations and responsibilities under the Base Trading
Contracts, and the Seller must continue to perform them.

 

18.            The Seller must perform the obligation of sending a “Accounts
Receivable Creditor’s Right Transfer Notice” with regard to each accounts
receivable at its own cost and must obtain the original receipt for the notice
signed by the Buyers.

 

19.            If the Seller fails to perform the obligation for sending notices
and provide receipt and other documents, or if for any reason on the Seller’s
part that CDB is unable to complete the registration procedures regarding the
transfer, CDB shall have no obligation to accept the transfer and provide
factoring financing.

  

Article 4Management of Accounts Receivable and Collection of Debts

 

20.            CDB will adopt appropriate method for recording each transaction
and provide periodic statement to the Seller or the Buyers.

 

21.            The Seller must establish corresponding record accounts to assist
CDB in account verification and raise any objection to the statement from CDB
within 5 days.

 

22.            CDB shall have the right to adopt appropriate method for the
collection of such accounts receivable already transferred by the Seller.

  

Article 5Factoring Financing

 

23.            The Seller will submit application for factoring financing based
on such amount calculated from verified accounts receivable transferred to CDB
within the limit of factoring financing credit facility.

 

24.            The ratio of each financing hereunder must not exceed 75%.

 

4

 

 

25.           The Seller promises that the proceeds from the financing will only
be used for such accounts receivable factoring financing under “Yongye Life
Series Products Exclusive Distribution Contract and Supplement” entered into
between Shenyang Tailai Trading Co. Ltd. and Anhui Danong Trading Co. Ltd. and
will not be used for investment in stocks and commodities and other area
prohibited by the State.

 

Violation of the above provision shall constitute a breach by the Seller and CDB
will charge a penalty interest for misuse of financing proceeds and exercise
other rights hereunder. The penalty interest is: financing interest X 200%.

 

26.           CDB will release the proceeds of factoring financing to the Seller
on the basis of the verified accounts receivable at the specified ratio and the
review of the Seller’s application.

 

27.           The Seller must provide the following documents along with each
application:

 

(1)“Application for Use of Factoring Financing Credit Facility” (Appendix 4)
signed by the Seller;

(2)Relevant Base Trading Contracts , copies of proof of goods delivery and a
written statement regarding performance of the relevant accounts receivable and
such Base Trading Contracts requested by CDB;

(3)The Seller’s most recent quarterly financial reports and monthly financial
reports;

(4)Rights certificates regarding the accounts receivable, invoices, notes and
other relevant documents as reasonably requested by CDB;

(5)If there are any material changes to or in the Seller’s business license,
articles of association or business/financial conditions, the Seller must
provide documents of proof regarding such changes.

 

28.           Upon approval of the application submitted by the Seller, CDB sign
promptly “Confirmation for Use of Factoring Financing Credit Facility” (Appendix
5) and factoring financing certificate, and deposit the proceeds of factoring
financing into the Seller’s the account set up with CDB (account no.:
15101560009399610000).

 

29.           The amount, term and interest of each factoring financing will be
based on the factoring financing certificate.

 

30.           The Seller must pay interest at the time of repaying the principal
of the amount of factoring financing. CDB will charge compound interest on any
past-due interest.

 

31. The Seller must repay the principal of the factoring financing and pay
interest thereof on time in accordance with the provisions herein.

 

When CDB receives any dispute notice, CDB shall have the right to deduct
directly any amount from the Seller’s account with CDB to repay the principal of
the factoring financing and pay interest thereof.

 

5

 

 

32.           If the Seller fails to repay the principal of the factoring
financing and pay interest thereof and other relevant fees, or if the Seller
fails to buy back the reverse-transfer made by CDB in accordance with the
provisions herein, the Seller must pay past-due interest to CDB starting from
such past-due date. The calculation method for past-due interest is: amount
past-due X past-due interest rate X actual number of past-due days; and the
past-due interest rate is financing interest rate X 150%.

 

33.           Upon the occurrence of any of the following, CDB shall have the
right to suspend the factoring financing service:

 

(1)Any occurrence of past-due repayment and payment of interest of the factoring
financing;

(2)Inability to collect accounts receivable on time;

(3)The ratio of accounts receivable due exceeds 10%;

(4)Two consecutive failures to buy back on time the reverse-transfer in full;

(5)Indirect payment by the Buyers to the Seller or any third party without CDB’s
prior written consent;

(6)Other situations that, in CDB’s determination, should lead to a suspension of
factoring financing.

 

 

Article 6Collection of Accounts Receivable and Payment by CDB

 

34.           The Seller must ask the Buyers in writing, in accordance with
provisions herein, to pay the full amount under the accounts receivable transfer
into the bank account designated by CDB. And the Seller shall not ask the Buyers
to pay such amount to the Seller or any third party without CDB’s written
consent.

 

If any payment of such amount is made to the Seller or any third party, the
Seller must immediately notify CDB and transfer such amount to the bank account
designated by CDB.

 

35.           The amount under the Base Trading Contracts paid by the Buyers to
CDB must all be applied to the accounts receivable transferred to CDB.

 

36.           Within 3 business days upon receiving the payment toward the
accounts receivable from the Buyers, CDB must:

 

(1)With regard to such accounts receivable based on which the factoring
financing has already been provided to the Seller, CDB must, after deducting any
repayment of factoring financing principal and interest and any associated fees,
transfer the remaining amount to the Seller’s account set up with CDB; or

(2)With regard to such accounts receivable based on which the factoring
financing has not yet been provided to the Seller, CDB must, after any factoring
financing fees, transfer the remaining amount to the Seller’s account set up
with CDB.

 

6

 

 

Article 7 Reverse-Transfer of Accounts Receivable

 

37.           Upon the occurrence of any of the following, CDB shall have the
right to transfer back to the Seller all accounts receivable involved and the
Seller much unconditionally buy back such accounts receivable at CDB’s request:

 

(1)The Buyers fails to pay, or pay in full, the accounts receivable when they
are due;

(2)The Buyers raises any dispute about the accounts receivable;

(3)The Buyers fails to provide, obtain or delivery any documents in accordance
with the provisions herein;

(4)The accounts receivable accepted by CDB are determined to be not qualified
accounts receivable;

(5)The Seller receives indirect payment from the Buyers but fails to notify CDB
and transfer such payment to the Seller;

(6)All or some of the accounts receivable are withheld, frozen or otherwise
enforced by any judicial or government organization;

(7)The Seller makes any offsets to its debts without CDB’s approval, provide
valid documents of confirmation or evidence or disagree with CDB’s collection
method or arrangement;

(8)The Seller or the Buyers represents that it will not perform any material
obligation under Base Trading Contracts ;

(9)Other situations set forth in Section 64 herein;

(10)The Seller’s financial situation deteriorates, or there is substantial
change in its major business or source of income, or it has potential
insolvency; or it engages in merger, spin-off, restructuring or reorganization,
or its assets are or will be frozen or seized;

(11)Any insurance company refuses to handle, or rejects, its claims under its
credit insurance;

(12)If there is any third party guarantee, such third party refuses to perform
its obligations;

(13)CDB believes that there is fraud;

(14)Other situations with regard to which CDB believes that reverse transfer is
warranted.

 

Under the aforementioned situations, CDB shall have the right to transfer all
accounts receivable back to the Seller.

 

38.           If CDB receives any dispute from a Buyer 3 times or more, CDB
shall have the right to transfer all accounts receivable from such Buyer back to
the Seller and terminates new factoring financing service with regard to such
Buyer.

 

7

 

 

39.           When CDB reverse transfers accounts receivable, the Seller has the
obligation to repay all principal and interest on any factoring financing
already provided and pay all the associated outstanding factoring financing
fees, default damages and other expenses and fees in connection with such
reverse transfer.

 

 

Article 8Factoring Financing Fees

 

40.           Based on the type of factoring financing service, CDB charges a
factoring financing management fee and processing fee at the following rate:

 

Management fee = book amount of factoring financing X management fee rate.

The management fee rate hereunder is 0.3%.

Processing fee = book amount of factoring financing X processing fee rate.

The processing fee rate hereunder is 0.3%.

 

41.           The above fees must be paid before any proceeds of factoring
financing is released.

 

 

Article 9Taxes and Tax Withholding and Payment

 

42.           Except the taxes that CDB must pay in connection with the
factoring financing service hereunder, the Seller must be responsible for all
relevant taxes, including those generated from producing, selling goods or
providing services.

 

43.           If, pursuant to the provisions of law and regulations, CDB has the
obligation to pay any taxes on behalf of the Seller in connection with any
relevant amount that is due to the Seller but received by CDB, CDB may deduct
any corresponding taxes from such amount but CDB must provide the relevant
documents of proof to the Seller.

 

 

Article 10The Seller’s Representations and Warranties

 

The Seller represents and warrants to CDB as follows:

 

44.           The Seller is an legal and existing entity duly incorporated with
the law of the People’s Republic of China and has all the rights, power and
authorization necessary for the execution and performance of the obligations
hereunder.

 

45.           The execution and performance of this agreement has not violated
any law, regulation or other applicable rules, the Seller’s organization
documents or other contracts to which the Seller is a party.

 

46.           All the documents and material provided to CDB by the Seller are
authentic, valid, complete and effective, and the Seller has disclosed all known
facts that may have an effect on the performance of this agreement; there are no
fraud, willful omission or material errors.

 

8

 

 

47.           All the accounts receivable transferred hereunder are qualified
accounts receivable that meet the requirements hereunder.

 

48.           The Seller will provide other invoices or notes involving such
accounts receivable at any time at CDB’s request.

 

49.           The Seller warrants that there is no affiliate relationship with
the Buyers.

 

The Seller warrants that the Buyers will make payment in connection with the
accounts receivable hereunder directly to CDB.

  

Article 11The Seller’s Covenants

 

50.           The Seller will not, before obtaining CDB’s written consent,
terminate, dissolve or modify Base Trading Contracts and transfer all the rights
hereunder. With regard to accounts receivable already transferred, the Seller
has not right do dispose of them by any method before obtaining CDB’s written
consent.

 

51.           If CDB is pursued by any third party as a result of accepting the
transfer of accounts receivable, the Seller agrees to bear all responsibility
and compensate CDB for all the consequent losses.

 

52.           The Seller promises to pay promptly the relevant factoring
financing fees with regard to the accounts receivable already transferred,
regardless of the circumstances.

 

53.           If the Seller receives any payment in connection to the accounts
receivable already transferred in whatever form at whatever time, the Seller
will guarantee that such payment will be the assets entrusted by CDB with CDB as
beneficial and will transfer such payment unconditionally to the bank account
designated by CDB.

 

54.           If CDB pursues the Buyers in whatever manner (including litigation
or arbitration), the Seller must provide all necessary assistance and bear the
fees and expenses incurred as a result of any fault on the Seller’s part.

 

55.           Starting from the date of any dispute from any Buyer, the Seller
will provide monthly written reports to CDB regarding the progress of any
negotiation, litigation or arbitration between the Buyers and the Seller.

 

56.           The Seller must immediately notify CDB if it becomes aware of any
(or likely) insolvency, dissolution, suspension of business, revocation of
business license or permit, M&A, going out of business on the part of the
Buyers.

 

9

 

 

57.           The Seller must actively cooperate with and accept CDB’s
supervision and examination of its production and operation and financial
conditions, and provide period financial reports at CDB’s request.

 

58.           The Seller must unconditionally cooperate with CDB in any reverse
transfer procedures, should such transfer occurs.

 

59.           The Seller must notify CDB in writing 20 business days prior to
any change of its name, legal representative, address, scope of operation and
contact person.

 

60.           If there is any occurrence of insolvency, dissolution, suspension
of business, revocation of business license or permit, M&A, going out of
business on the part of the Seller, the Seller must notify CDB in writing 20
business days prior to any such event.

 

 

Article 12Withholding and Offsetting

 

61.           With regard to any factoring financing principal and interest,
default damages, factoring financing fees and other fees arising from
realization of the creditor’s rights, CDB shall have the right to deduct the
corresponding amount directly from the Seller’s accounts set up with CDB until
all the debts hereunder have been repaid.

 

62.           The Seller agrees that CDB shall have the right use its creditor’s
right with regard to the Seller to offset any equal amount of debt toward the
Seller arising from accepting the transfer of accounts receivable from the
Seller.

 

63.           The Seller must repay the debt to CDB in the following order:

 

(1)Fees and expenses incurred by CDB for the purpose of realizing its creditor’s
rights;

(2)The factoring financing fees;

(3)Compensation for damages;

(4)Default damages;

(5)The factoring financing interest

(6)The factoring financing principal;

(7)Other amounts payable by the Seller.

 

And CDB shall have the right to change the above order of repayment.

 

Article 13 Breaches and the Handling Thereof

 

64. The occurrence of any of the following shall be considered an event of
breach by the Seller hereunder:

 

10

 

 

(1)The Seller violates the provisions of Article 3 herein regarding the transfer
of accounts receivable;

(2)The Seller refuses to perform its obligations regarding reverse transfer in
accordance with Article 7 herein;

(3)Any representation or warranty by the Seller in Article 10 herein is untrue
or violates its promises in Article 11 herein;

(4)The Seller violates the provisions herein regarding the collection of
accounts receivable;

(5)The Seller fails to pay, or pay in full, the factoring financing fees,
default damages, factoring financing interest and factoring financing principal
and other amounts payable;

(6)The Seller engages in the following events without CDB’s written consent and
such events cause material deterioration of the Seller’s credit: spin-off,
merger, contract operation and other corporate restructuring; disposition of its
assets through leasing, sale, transfer or pledge; reduction of its registered
capital or reorganization, change of shareholder or affiliate relationship;
providing pledge or guarantee on any third party’s debts;

(7)Any of the following on the part of the Seller: insolvency, dissolution,
external breaches, failure to repay other debts; complete or partial loss of its
assets, or freeze, seizure, confiscation, auction, appropriation of such assets;
being sued, pursued for any claims or sanctioned or having its debts declared
due in advance;

(8)Any of the following on the part of the Seller: material deterioration of its
operation; transfer or withdrawal of assets to avoid debts; loss of business
reputation; other events that may cause it to lose its ability to repay debts;

(9)Violation by the Seller of any other obligations hereunder.

 

65.           In the event of a breach by the Seller, CDB shall have the right
to take any one or several of the following remedial measures:

 

(1)Demand the Seller to rectify its breaches;

(2)Reduce or cancel the amount of the factoring financing credit facility;

(3)Transfer back (reverse transfer) to the Seller the accounts receivable with
regard to which the Buyers have not made payments;

(4)Suspend or terminate in advance this agreement, declare all the debts under
the factoring financing due;

(5)Exercise its deduction and offsetting rights in accordance with the
provisions herein;

(6)Realize the guarantee rights under the Base Trading Contracts ;

(7)Other measures available under the law or provided herein.

 

66.           Either party must be responsible for compensating the other party
for all actual losses resulting from such party’s violation of the provisions
herein.

  

Article 14Notices and Delivery

 

11

 

 

67.           All notices from one party to the other in connection with this
agreement must be in writing and be delivered to the receiving party’s contact
address. And either party must notify the other party immediately if there is
any changes in contact information.

  

Article 15Effectuation and Termination

 

68.           This agreement will become effective on the date when it is signed
by both parties.

 

69.           This agreement terminates when all the debts and interest and
other associated fees have been repaid and paid.

 

70.           CDB shall have the right to terminate this agreement in advance if
there is any event of breach set forth herein and to pursue the Seller for its
liabilities in accordance with the law.

 

71.           The termination of this agreement is not retroactive with regard
to the handling of the accounts receivable transferred before such termination,
except when there is occurrence of any event of breach set forth herein.

  

Article 16Dispute Resolution and the Applicable Law

 

72.           Any dispute arising from the performance of this agreement must be
resolved through consolation between the two parties; if such consultation
fails, such dispute must be submitted to the competent court at CDB’s location
for resolution.

 

73.           The applicable law is the law of the People’s Republic of China.

  

Article 17Others

 

74.           Without prior written consent from CDB, the Seller shall not
transfer any of its rights and obligations hereunder, but CDB may transfer its
rights and obligations hereunder without requiring the Seller’s prior written
consent.

 

75.           Unless otherwise specified, neither party shall have the right to
amend any provision herein with the other party’s consent.

 

76.           Without mutual consent, neither party may disclose the contents
herein to any third party.

 

77.           All lists, attachments, invoices and notices in connection with
this agreement are the inseparable parts hereof.

 

12

 

 

78.           Other matters not covered herein may be provided in a supplement
between the two parties and any such supplement signed by the two parties are
part of this agreement.

 

79.           This agreement is in six counterparts, with three each to the
Seller and CDB, and all have the same legal effect.

  

Factoring Financing Applicant:

/seal/ Inner Mongolia Yongye Nongfeng Biotech Co., Ltd.

Legal Representative:

/s/ [signature not legible]

  

Factoring Financing Provider:

/seal/ China Development Bank (Inner Mongolia Branch)

Responsible Person:

/s/ [signature not legible]

  

December 26, 2013

 

13