Document:

f10k2013ex4viii_overnear.htm

Exhibit 4.8

 

 

 

  

  

  

 

CERTIFICATE OF DESIGNATION

OF

SERIES B CONVERTIBLE PREFERRED STOCK

OF

OVERNEAR, INC.

 

Pursuant to Section 78.1955 of the

Nevada Revised Statutes

 

OverNear, Inc., a Nevada corporation (the "Corporation"), certifies that pursuant to the authority conferred upon the Board of Directors of the Corporation (the "Board of Directors") by the Amended Articles of Incorporation of the Corporation (as further amended from time to time, the "Articles of Incorporation"), and in accordance with the provisions of Section 78.1955 of the Nevada Revised Statutes, as amended (the "NRS"), the Board of Directors, on March 26, 2014, adopted the following resolution creating a series of its preferred stock, par value $0.001 per share:

 

RESOLVED, that (1) pursuant to the authority conferred upon the Board of Directors by the Articles of Incorporation, the Board of Directors hereby designates 2,000,000 shares of the preferred stock, par value $0.001 per share, of the Corporation as "Series B Convertible Preferred Stock", and the powers, designations, preferences and relative, participating, optional and other rights of the Series B Convertible Preferred Stock and the qualifications, limitations and restrictions thereof, be, and they hereby are, as set forth in this certificate of designation (this "Certificate of Designation"), and (2) in connection therewith, the officers of the Corporation be, and each of them hereby is, authorized, empowered and directed on behalf of the Corporation and in its name to execute and to file this Certificate of Designation with the Nevada Secretary of State:

 

TERMS OF SERIES B CONVERTIBLE PREFERRED STOCK

 

Section 1.        Definitions. For the purposes hereof, the following terms shall have the following meanings:

 

"Affiliate" means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 405 of the Securities Act.

 

"Alternate Consideration" shall have the meaning set forth in Section 7(e).

 

"Board of Directors" means the board of directors of the Corporation.

 

"Business Day" means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.

 

  

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"Change of Control" means the occurrence after the date hereof of any of (a) an acquisition by an individual or legal entity or "group" (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether through legal or beneficial ownership of capital stock of the Corporation, by contract or otherwise) of in excess of 50% of the voting securities of the Corporation (other than by means of conversion of Series B Preferred Stock and any Parity Securities), (b) the Corporation merges into or consolidates with any other Person, or any Person merges into or consolidates with the Corporation and, after giving effect to such transaction, the stockholders of the Corporation immediately prior to such transaction own less than 50% of the aggregate voting power of the Corporation or the successor entity of such transaction, (c) the Corporation sells or transfers all or substantially all of its assets to another Person and the stockholders of the Corporation immediately prior to such transaction own less than 50% of the aggregate voting power of the acquiring entity immediately after the transaction, (d) other than as contemplated by the Transaction Documents, a replacement at one time or within a one year period of more than one-half of the members of the Board of Directors which is not approved by a majority of those individuals who are members of the Board of Directors on the Original Issue Date (or by those individuals who are serving as members of the Board of Directors on any date whose nomination to the Board of Directors was approved by a majority of the members of the Board of Directors who are members on the Original Issue Date), or (e) the execution by the Corporation of an agreement to which the Corporation is a party or by which it is bound, providing for any of the events set forth in clauses (a) through (d) above.

 

"Commission" means the United States Securities and Exchange Commission and its staff.

 

"Common Stock" means the Corporation's common stock, par value $0,001 per share, and stock of any other class of securities into which such securities may hereafter be reclassified or changed.

 

"Common Stock Equivalents" means any securities of the Corporation or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

 

"Conversion Date" shall have the meaning set forth in Section 6(a).

 

"Conversion Multiplier" shall have the meaning set forth in Section 6(b).

 

"Conversion Shares" means, collectively, the shares of Common Stock issuable upon conversion of the shares of Series B Preferred Stock in accordance with the terms hereof.

 

"Dividend Notice Period" shall have the meaning set forth in Section 3(a).

 

  

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"Dividend Payment Date" shall have the meaning set forth in Section 3(a).

 

"Dividend Share Amount" shall have the meaning set forth in Section 3(a).

 

"Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

"Fundamental Transaction" shall have the meaning set forth in Section 7(e).

 

"GAAP" means United States generally accepted accounting principles.

 

"Holder" shall have the meaning given such term in Section 2.

 

"Indebtedness" means (a) any liabilities for borrowed money or amounts owed in excess of $50,000 (other than trade accounts payable incurred in the ordinary course of business), (b) all guaranties, endorsements and other contingent obligations in respect of indebtedness of others, whether or not the same are or should be reflected in the Corporation's balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business, and (c) the present value of any lease payments in excess of $50,000 due under leases required to be capitalized in accordance with GAAP.

 

"Issuable Maximum" shall have the meaning set forth in Section 6(d).

 

"Liens" means a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.

 

"Liquidation" shall have the meaning set forth in Section 5.

 

"Bonita Courts" shall have the meaning set forth in Section 9(d).

 

"Notice of Conversion" shall have the meaning set forth in Section 6(a).

 

"Original Issue Date" means the date of the first issuance of any shares of the Series B Preferred Stock regardless of the number of transfers of any particular shares of Series B Preferred Stock and regardless of the number of certificates which may be issued to evidence such Series B Preferred Stock.

 

  

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"Person" means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

 

"Securities" means the Series B Preferred Stock.

 

"Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

"Series B Preferred Stock" shall have the meaning set forth in Section 2.

 

"Share Delivery Date" shall have the meaning set forth in Section 6(c)(i).

 

"Shareholder Approval" means such approval as may be required by the applicable rules and regulations of any national major exchange (or any successor entity) from the shareholders of the Corporation with respect to the transactions contemplated herein.

 

"Subsidiary" means any subsidiary of the Corporation and shall, where applicable, also include any direct or indirect subsidiary of the Corporation formed or acquired after the date of the Certificate of Designation.

 

"Successor Entity" shall have the meaning set forth in Section 7(e).

 

"Trading Day" means a day on which the principal Trading Market is open for business.

 

"Trading Market" means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange or the OTC Bulletin Board (or any successors to any of the foregoing).

 

Section 2.        Designation, Amount and Par Value. The series of preferred stock created hereunder shall be designated as its, Series B Convertible Preferred Stock (the "Series B Preferred Stock") and the number of shares so designated shall be 2,000,000 (which shall not be subject to increase without the written consent of the holders of a majority of the Series B Preferred Stock (each, a "Holder" and collectively, the "Holders"). Each share of Series B Preferred Stock shall have a par value of $0.001 per share.

 

Section 3.        Dividends. The Holders shall be entitled to receive, and the Corporation shall pay, dividends, if and when the Board of Directors so declares, at the rate per share and payable at the time and in the form payment as determined by the Board of Directors.

 

  

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Section 4.        Voting Rights. Except as otherwise required by law or expressly provided herein, each share of Series B Preferred Stock shall be entitled to vote on all matters (except election or removal of directors of the Corporation) submitted or required to be submitted to a vote of the stockholders of the Corporation and shall be entitled to One Hundred (100) votes of whole shares of Common Stock (subject to certain adjustments set forth in Section 6) (One Hundred (100) is referred as the "Vote Multiplier" hereunder), at the record date for the determination of stockholders entitled to vote on such matters or, if no such record date is established, at the date such vote is taken or any written consent of stockholders is solicited. In each such case, except as otherwise required by law or expressly provided herein, the holders of shares of Series B Preferred Stock and Common Stock shall vote together and not as separate classes.

 

Section 5.        Liquidation. Upon any liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary (a "Liquidation"), for each share of Series B Preferred Stock, the Holders shall be entitled to receive out of the assets, whether capital or surplus, of the Corporation an amount equal to such amount that the holders of Common Stock receives for the number of whole shares of Common Stock into which such share of Series B Preferred Stock are convertible pursuant to the provisions hereof, and at the time of distribution or payment shall be made to the holders of Common Stock. A Fundamental Transaction or Change of Control Transaction shall not be deemed a Liquidation. The Corporation shall mail written notice of any such Liquidation, not less than 45 days prior to the payment date stated therein, to each Holder.

 

Section 6.        Conversion.

 

 a)         Conversion Rights and Cashless Exercise. The Holder will have the right at its election at any time, to convert all or part of the Series B Preferred Shares into fully paid and non-assessable shares of common stock of OverNear, Inc. (as such stock exists on the date of designation of the Series B Preferred Shares, or any shares of capital stock of the Corporation into which such stock is hereafter changed or reclassified, the "Common Stock") as per the Conversion Formula set forth in Section 6(b). Any such conversion shall be cashless, and shall not require further payment from Holder.

 

 b)         Conversion Formula. Each share of Series B Preferred Stock shall be convertible, into five (5) shares of Common Stock (subject to the limitations set forth in Section 6(d)) (five (5) is referred as the "Conversion Multiplier" hereunder) at a conversion price of $0.25 per share ($0.25 is referred as the "Conversion Price").

 

  

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  c)        Cashless Exercise. The Series B Preferred Shares may be exercised, in whole or in part, by means of a "cashless exercise" in which the Holder shall be entitled to receive a certificate for the number of Series B Preferred Shares equal to the remainder obtained by subtracting X- ((A)*(X)), where:

 

 (A) = the Conversion Price of $0.25 per share; and

 

 (X) = the number of Series B Preferred Shares that would be issuable upon exercise of this Series B Preferred Share in accordance with the terms of this Certificate of Designation if such exercise were by means of a cash exercise rather than a cashless exercise.

 

 d)        Mechanics of Conversion

 

  i.        Delivery of Certificate Upon Conversion. Not later than three (3) Trading Days after each Conversion Date (the "Share Delivery Date"), the Corporation shall deliver, or cause to be delivered, to the converting Holder (A) a certificate or certificates bearing applicable restrictive legend, representing the Conversion Shares, and (B) a bank check in the amount of accrued and unpaid dividends (if the Corporation has elected to pay accrued dividends in cash).

 

 ii.         Obligation Absolute; Partial Liquidated Damages. Subject to Section 6(d), the Corporation's obligation to issue and deliver the Conversion Shares upon conversion of Series B Preferred Stock in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by a Holder to enforce the same, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, or any breach or alleged breach by such Holder or any other Person of any obligation to the Corporation or any violation or alleged violation of law by such Holder or any other person, and irrespective of any other circumstance which might otherwise limit such obligation of the Corporation to such Holder in connection with the issuance of such Conversion Shares; provided, however, that such delivery shall not operate as a waiver by the Corporation of any such action that the Corporation may have against such Holder. The Corporation shall issue Conversion Shares and, if applicable, cash, upon a properly noticed conversion. Nothing herein shall limit a Holder's right to pursue actual damages and all remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief. The exercise of any such rights shall not prohibit a Holder from seeking to obtain damages pursuant to any other Section hereof or under applicable law.

 

 v.         Reservation of Shares Issuable Upon Conversion. The Corporation covenants that it will at all times reserve and keep available out of its authorized and unissued shares of Common Stock for the sole purpose of issuance upon conversion of the Series B Preferred Stock and payment of dividends on the Series B Preferred Stock, each as herein provided, free from preemptive rights or any other actual contingent purchase rights of Persons other than the Holders of the Series B Preferred Stock, not less than such aggregate number of shares of the Common Stock as shall be issuable (taking into account the adjustments and restrictions of Section 7) upon the conversion of the then outstanding shares of Series B Preferred Stock and payment of dividends hereunder. The Corporation covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly authorized, validly issued, fully paid and nonassessable.

 

  

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vii.        Transfer Taxes. The issuance of certificates for shares of the Common Stock on conversion of the Series B Preferred Stock shall be made without charge to any Holder for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificates, provided that the Corporation shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such certificate upon conversion in a name other than that of the Holders of such shares of Series B Preferred Stock and the Corporation shall not be required to issue or deliver such certificates unless or until the Person or Persons requesting the issuance thereof shall have paid to the Corporation the amount of such tax or shall have established to the satisfaction of the Corporation that such tax has been paid.

 

 e)        Issuance Limitations. Notwithstanding anything to the contrary in this Certificate of Designation, if the Corporation has not obtained any required Shareholder Approval, then the Corporation shall not issue, upon conversion of the Series B Preferred Stock, a number of shares of Common Stock which, when aggregated with any shares of Common Stock issued on or after the Original Issue Date and prior to such Conversion Date, would exceed such percentage of the issued and outstanding shares of Common Stock on the day immediately prior to the Original Issue Date (subject to adjustment for forward and reverse stock splits, recapitalizations and the like) that would require Shareholder Approval (such number of shares, the "Issuable Maximum"). Each Holder shall be entitled to a portion of the Issuable Maximum equal to the quotient obtained by dividing (x) the number of shares of such Holder's Series B Preferred Stock by (y) the aggregate number of shares of all Series B Preferred Stock issued on the Issue Date to all Holders. This provision shall only have the effect of restricting the issuance of the Conversion Shares and shares of Common Stock issuable in lieu of dividends, not limiting any adjustments pursuant to Section 7. Any adjustments pursuant to Section 7 shall apply retroactively upon the Corporation obtaining Shareholder Approval as if this restriction did not exist.

 

Section 7.       Certain Adjustments.

 

 a)        Stock Dividends and Stock Splits. If the Corporation, at any time while the Series B Preferred Stock is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions payable in shares of Common Stock or any other Common Stock Equivalents on shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Corporation upon conversion of, or payment of a dividend on, the Series B Preferred Stock), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of a reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues, in the event of a reclassification of shares of the Common Stock, any shares of capital stock of the Corporation, then the Conversion Multiplier shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding any treasury shares of the Corporation) outstanding immediately after such event, and of which the denominator shall be the number of shares of Common Stock outstanding immediately before such event. Any adjustment made pursuant to this Section 7(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

 

  

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 b)        Fundamental  Transaction. If, at any time while the Series B Preferred Stock is outstanding, (i) the Corporation, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Corporation with or into another Person, (ii) the Corporation, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions (other than the grant of Permitted Liens), (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Corporation or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Corporation, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, (v) the Corporation, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a "Fundamental Transaction"), then, upon any subsequent conversion of the Series B Preferred Stock, the Holder shall have the right to receive, for each Conversion Share that would have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction (without regard to any limitation in Section 6(d) on the conversion of the Series B Preferred Stock, except where the Corporation is the surviving corporation), the number of shares of Common Stock of the successor or acquiring corporation or of the Corporation, if it is the surviving corporation, and any additional consideration (the "Alternate Consideration") receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which the Series B Preferred Stock had been convertible immediately prior to such Fundamental Transaction (without regard to any limitation in Section 6(d) on the conversion of the Series B Preferred Stock). The Corporation shall cause any successor entity in a Fundamental Transaction in which the Corporation is not the survivor (the "Successor Entity") to assume in writing all of the obligations of the Corporation under this Certificate of Designation in accordance with the provisions of this Section 7(b). Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Certificate of Designation and the other Transaction Documents referring to the "Corporation" shall refer instead to the Successor Entity), and may exercise every right and power of the Corporation and shall assume all of the obligations of the Corporation under this Certificate of Designation and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Corporation herein.

 

  

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 c)         Calculations. All calculations under this Section 7 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 7, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding any treasury shares of the Corporation) issued and outstanding.

 

 d)         Notice to the Holders.

 

  i.          Notice to Allow Conversion by Holder. If (A) the Corporation shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Corporation shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Corporation shall authorize the granting to all holders of the Common Stock of rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Corporation shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Corporation is a party, any sale or transfer of all or substantially all of the assets of the Corporation, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property or (E) the Corporation shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Corporation, then, in each case, the Corporation shall cause to be delivered to each Holder at its last address as it shall appear upon the stock books of the Corporation, at least twenty (20) calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange, provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. The Holder shall remain entitled to convert the desired number of shares of the Series B Preferred Stock (or any part hereof) during the 20-day period commencing on the date of such notice through the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.

 

Section 8.        Redemption. The Series B Preferred Stock may be redeemed upon written consents by between the Corporation and the holders of a majority of the Series B Preferred Stock in accordance with the terms and conditions as mutually agreed in writing by the Corporation and such consenting holders.

 

  

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Section 9.        Miscellaneous.

 a)         Notices. Any and all notices or other communications or deliveries to be provided by the Holders hereunder including, without limitation, any Notice of Conversion, shall be in writing and delivered personally, or sent by a nationally recognized overnight courier service, addressed to the Corporation, at the address set forth below:

 

Attention: Chief Executive Officer

 

1460 4th Street

Suite 304

Santa Monica, CA 90401

 

Any and all notices or other communications or deliveries to be provided by the Corporation hereunder shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized overnight courier service addressed to each Holder at the facsimile number or address of such Holder appearing on the books of the Corporation.

 

Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth in this Section prior to 5:30 p.m. (New York City time) on any date, (ii) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth in this Section on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (iii) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given.

 

 b)        Absolute Obligation. Except as expressly provided herein, no provision of this Certificate of Designation shall alter or impair the obligation of the Corporation, which is absolute and unconditional, to pay liquidated damages, accrued dividends and accrued interest, as applicable, on the shares of Series B Preferred Stock at the time, place, and rate, and in the coin or currency, herein prescribed.

 

 c)         Lost or Mutilated Series B Preferred Stock Certificate. If a Holder's Series B Preferred Stock certificate shall be mutilated, lost, stolen or destroyed, the Corporation shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated certificate, or in lieu of or in substitution for a lost, stolen or destroyed certificate, a new certificate for the shares of Series B Preferred Stock so mutilated, lost, stolen or destroyed, but only upon receipt of evidence of such loss, theft or destruction of such certificate, and of the ownership thereof reasonably satisfactory to the Corporation.

 

  

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 d)         Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Certificate of Designation shall be governed by and construed and enforced in accordance with the internal laws of the State of Nevada, without regard to the principles of conflict of laws thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense of the transactions contemplated by any of the Transaction Documents (whether brought against a party hereto or its respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state and federal courts sitting in the City of Bonita (the "Bonita Courts"). Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the Bonita Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such Bonita Courts, or such Bonita Courts are improper or inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Certificate of Designation and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by applicable law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Certificate of Designation or the transactions contemplated hereby. If any party shall commence an action or proceeding to enforce any provisions of this Certificate of Designation, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys' fees and other costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding.

 

 e)         Waiver. Any waiver by the Corporation or a Holder of a breach of any provision of this Certificate of Designation shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Certificate of Designation or a waiver by any other Holders. The failure of the Corporation or a Holder to insist upon strict adherence to any term of this Certificate of Designation on one or more occasions shall not be considered a waiver or deprive that party (or any other Holder) of the right thereafter to insist upon strict adherence to that term or any other term of this Certificate of Designation on any other occasion. Any waiver by the Corporation or a Holder must be in writing.

 

 f)          Severability. If any provision of this Certificate of Designation is invalid, illegal or unenforceable, the balance of this Certificate of Designation shall remain in effect, and if any provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable to all other Persons and circumstances. If it shall be found that any interest or other amount deemed interest due hereunder violates the applicable law governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum rate of interest permitted under applicable law.

 

  

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 g)         Next Business Day. Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.

 

 h)         Headings. The headings contained herein are for convenience only, do not constitute a part of this Certificate of Designation and shall not be deemed to limit or affect any of the provisions hereof.

 

  i)         Status of Converted Series B Preferred Stock. If any shares of Series B Preferred Stock shall be converted, or reacquired by the Corporation, such shares shall resume the status of authorized but unissued shares of preferred stock and shall no longer be designated as Series B Convertible Preferred Stock.

 

 RESOLVED, FURTHER, that the Chairman, the president or any vice-president, and the secretary or any assistant secretary, of the Corporation be and they hereby are authorized and directed to prepare and file this Certificate of Designation in accordance with the foregoing resolution and the provisions of Nevada law.

 

 IN WITNESS WHEREOF, the undersigned have executed this Certificate this 26th day of March, 2014.

 

	/s/ Fred E. Tannous	 
	
Name: Fred E. Tannous 

	 
	
Title: CEO

	 

                                            

  

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ANNEX A

 

NOTICE OF CONVERSION

 

(TO BE EXECUTED BY THE REGISTERED HOLDER IN ORDER TO CONVERT SHARES OF PREFERRED STOCK)

 

The undersigned hereby elects to convert the number of shares of Series B Convertible Preferred Stock indicated below into shares of common stock, par value $0.001 per share (the "Common  Stock"), of OverNear, Inc., a Nevada corporation (the "Corporation"), according to the conditions hereof, as of the date written below. If shares of Common Stock are to be issued in the name of a Person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates and opinions as may be required by the Corporation. No fee will be charged to the Holders for any conversion, except for any such transfer taxes.

 

Conversion calculations: 

 

Date to Effect Conversion:                                                                                                                                                             

 

Number of shares of Series B Preferred Stock owned prior to Conversion:

 

                                                                                                                   

 

Number of shares of Series B Preferred Stock to be Converted:

 

                                                                                                                   

 

Number of shares of Common Stock to be issued:                                                                                                                    

 

Applicable Conversion Price:                                                                                                                                                        

 

Number of shares of Series B Preferred Stock subsequent to Conversion:

 

                                                                                                                                                                                                            

 

Address for Delivery:                                                                                                                                                                      

 

	 	
By: 

	 	 
	 	 	Name:	 
	 	 	Title:	 

 

 

 

13f10k2013ex10xxxxvi_chinayida.htm

Exhibit 10.46

 

 

 

 

Fujian Haixia Bank

 

 

Current Capital Loan Agreement

 

 

 

October 17, 2013 – October 17, 2014

CNY Fifteen Million

  

  

  

 

Part I General Provisions

 

This Agreement is made by and between

 

The Borrower (hereinafter referred to as Party A): see Article 23 (I) hereof for details

 

And

 

The Lender (hereinafter referred to as Party B): see Article 23 (II) hereof for details

Whereas Party A makes a loan application to Party B, and Party B agrees to grant the loan after examination, after consultation between the parties according to relevant laws and regulations, the Agreement is formulated for common compliance.

 

Article 1 Loan type: see Article 24 hereof.

 

Article 2 Loan amount: See Article 25 hereof.

 

Article 3 Loan purpose: See Article 26 hereof.

 

Article 4 Loan term: See Article 27 hereof.

 

Article 5 Certificate of indebtedness

 

The certificate of indebtedness is an integral part hereof. In case the loan amount, loan interest rate or loan term is inconsistent with that recoded in the certificate of indebtedness, the loan amount, loan interest rate or loan term recorded in the certificate of indebtedness shall be observed.

 

Article 6 Loan interest loan

 

(I) The annual interest rate for the loan hereunder is provided in Article 28 (I).

 

(II) In case the base rate for loans is regulated by the People’s Bank of China after conclusion of this Agreement and before allocation of the loan, the following means shall be executed (for which means as follows to be executed, see Article 28 (II) hereof):

 

1. The interest rate for the loan hereunder will not be changed, but that determined in the first paragraph of this Article will continue to be executed.

 

2. The interest rate for the loan hereunder will be regulated based on the regulation extent of the base rate for loans of the same type, currency and term.

 

(3)  In case the base rate for loans is regulated by the People’s Bank of China after allocation of the loan, the following means shall be executed (for which means as follows to be executed, see Article 28 (III) hereof):

 

1. The interest rate for the loan hereunder will not be changed, but that determined in the first paragraph of this Article will continue to be executed.

 

2. The interest rate for the loan hereunder will be regulated based on the regulation extent of the base rate for loans of the same type, currency and term, as from the date when the base rate for loans is regulated.

 

3. The interest rate for the loan hereunder will be regulated based on the regulation extent of the base rate for loans of the same type, currency and term, as from the first day of the following month after the base rate for loans is regulated.

 

4. The interest rate for the loan hereunder will be regulated based on the regulation extent of the base rate for loans of the same type, currency and term, as from January 1 in the following year after the base rate for loans is regulated.

 

(IV) In case any change occurs to the interest rate for the loan hereunder, the default rate for breach of the loan purpose and for overdue repayment shall automatically change correspondingly.

 

(V) In case any change occurs to the interest rate policy of the People’s Bank of China, Party B may directly execute relevant regulations of the People’s Bank of China, without prior consent of Party A.

 

  

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Article 7 Allocation of the loan

 

(I) Premises for allocation of the loan:

 

1. In case a guarantee has been set against the loan hereunder, the guarantee formalities as required by Party B have been completed and remain valid.

 

2. Party A has completed and submitted the certificate of indebtedness as required by Party B.

 

3. Other premises for allocation of the loan: see Article 29 (I) hereof.

 

(II) In case Party A requires allocation of the loan fund by instalments, the following conditions shall be simultaneously satisfied in addition to those provided above in this Article:

 

1. Party A shall make an application for approval of Party B.

 

2. The total amount of the loan fund allocated by instalments shall not exceed the loan amount agreed in Article 2 hereof.

 

(III) Party A shall open a settlement account with Party B for allocation and payment of the loan fund: see Article 29(II) hereof for details.

 

Article 8 Fund payment

 

(I) Party A agrees to accept Party B’s management and control of the loan fund.

 

(II) The loan fund hereunder shall be subject to entrusted payment by Party B or independent payment by Party A.

 

1. Entrusted payment

 

(1) Entrusted payment means Party B pays the loan fund via Party A’s account based on the withdrawal application and payment entrustment from Party A to Party A’s transaction counterpart for the purpose agreed herein.

 

(2) The loan fund hereunder shall be subject to entrusted payment agreed in Article 30 hereof.

 

(3) In case of entrusted payment, Party A shall provide to Party B an application for entrusted payment, as well as the business contract established with its transaction counterpart and/or other transaction certificates. Party B may examine whether the relevant transaction materials provided by Party A satisfy the conditions before allocation of the loan fund; after examination and approval, Party B will pay the loan amount subject to entrusted payment via Party A’s account to Party A’s transaction counterpart.

 

2. Independent payment

 

(1) Independent payment means Party B allocates the loan fund to Party A’s account based on Party A’s withdrawal application, and then Party A makes independent payment to its transaction counterpart for the purpose agreed herein.

 

(2) Any loan amount can be subject to independent payment unless otherwise agreed herein.

 

(3) In case of independent payment, Party A shall report loan fund payment conditions to Party B on a monthly basis; Party B may check whether payment of such loan fund is made against the purpose agreed herein through account analysis, voucher inspection and field investigation.

 

(III) Change of the payment terms and change-triggering conditions

 

In case Party A is subject to decrease in its credit standing, low profitability of the major businesses, abnormal use of the loan fund or any other circumstances Party B thinks sufficient to trigger a change of the payment terms, Party B may change the payment terms or stop payment of the loan fund.

 

(IV) Restrictions and forbidden behaviors in payment of the loan fund

 

In case the loan fund hereunder is subject to entrusted payment, Party A may not change the payment terms arbitrarily, nor make independent payment of any loan amount subject to entrusted payment.

 

Article 9 Loan repayment

 

(I) Principles of repayment

 

1. In case of interest accrual on a daily basis, the daily interest rate = the annual interest rate/360, and the interest will accrue based on the actual days of fund occupancy as from the date when the loan fund is allocated.

 

2. In case of interest accrual on a monthly basis, the interest shall be accrued monthly to the 20th day in each month and settled on the following day. Party A shall pay the due interest to Party B on the interest settlement date. Upon the last repayment of the loan principal, Party A shall clear the corresponding interest on the loan principal.

 

3. Party A shall pay interest prior to principal of the loan hereunder. For repayments made by Party A, Party B may make recovery based on the sequence of “interest owed prior to the current period (including compound interest – principal owed prior to the current period – interest for the current period – principal for the current period”. Party B may change the foregoing repayment sequence without consent of Party A.

  

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4. Party A agrees that Party B may recover any mature loan principal plus interest from any of Party A’s account opened with Party B and other institutions of Fujian Haixia Bank. Party A shall deposit sufficient amount prior to 18:00 of the principal repayment date and interest repayment date for repayment of the principal plus interest; or otherwise Party A shall undertake corresponding default liability due to the overdue repayment. In case the principal repayment date and the interest repayment date coincide with any legal or public holiday and the account balance of Party A is insufficient for recovery of the principal plus interest, the insufficiency can be made up within a grace period to 18:00 on the first business day after the holiday; during the grace period, the principal shall accrue interest based on the normal loan interest rate. In case Party A fails to make repayment of the principal plus interest upon expiration of the grace period, interest and compound interest will accrue based on the default interest rate for overdue repayment as from the principal repayment date and interest repayment date prior to the grace period. Party A agrees that Party B may recover the due principal plus interest as from 18:00 on the day preceding the principal repayment date, and that Party B may recover the due interest as from 18:00 on the interest settlement date.

 

(II) Repayment terms: see Article 31 hereof.

 

(III) Advance repayment

 

1. In case Party A makes advance repayment of the loan principal, such advance repayment shall be subject to 15 days’ written application to Party B; partial or all the principal can be repaid ahead of time with Party B’s consent.

 

2. In case Party A makes advance repayment, interest that has accrued based on the interest rate agreed herein will not be regulated; for the part of loan principal repaid by Party A in advance, Party B will accrue the interest based on the interest rate herein and the actual number of days when such amount is occupied.

 

3. After advance repayment of partial loan principal, the outstanding loan amount shall still apply the loan interest rate agreed herein.

 

4. In case Party A makes advance repayment before 6 months after borrowing, Party B may charge a compensation for such advance repayment, which shall not exceed 1% of the loan principal repaid in advance.

 

(IV) Management of the capital return account

 

1. The capital return account specified by Party A: see Article 32 hereof.

 

2. Party A shall timely provide to Party B the capital inflows and outflows of the capital return account; Party B may supervise the foregoing capital return account of Party A. Whenever necessary as Party B thinks, Party A shall, as required by Party B, enter into a capital return account management contract, for inflow and outflow management of the returned capital.

 

(V) Party A and Party B agree that an unspecified third party may apply to Party B for perform the obligations hereunder on behalf of Party A, and Party B may decide whether to accept such application. In case Party B accepts such application, it may enter into relevant agreement with such third party (hereinafter referred to as the Relevant Agreement); where any provision of the Relevant Agreement on specific matter goes inconsistent with this Agreement, the former shall be observed. In case the third party fails to perform the obligation or to perform the obligation as agreed, Party A shall be held responsible to Party B for such failure.

 

Article 10 Guarantee

 

(I) To ensure proper performance of Party A’s obligations hereunder, Party B will additionally enter into a Guarantee Contract with Party A or the Guarantor provided by Party A, or the Guarantor shall issue an instrument with guaranteeing effect; the Guarantee Contract or the instrument shall be the accessory to this Agreement.

 

(II) In case the mortgage or pledge under the Guarantee Contract is subject to or will possibly be subject to resettlement, levy or requisition, Party A shall notify Party B within three days after it knows or should know such resettlement, levy or requisition; before the Mortgagor or the Pledgor sign relevant contract with the resettling, levying or requisitioning party, Party A shall make advance repayment of the indebtedness hereunder or provide another guarantee that satisfies the requirement of Party B; or otherwise Party B will be deemed as having violated the Agreement, and Party B may exercise its creditor’s right ahead of time.

 

Article 11 Party A’s rights and obligations

 

(I) Party A may require Party B to allocate the loan fund hereunder as agreed herein.

 

(II) Party B may apply to Party B for extension of the loan, provided such extension complies with Party B’s regulations.

 

(III) Party A shall make repayments of the loan principal plus interest as agreed herein.

 

(IV) Party A shall use the loan fund for the purpose agreed herein. Where Party A needs to use the loan fund for any other purpose, it shall obtain prior written permission of Party B.

 

  

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(V) Party A shall provide materials relating to operation, assets and finance as required by Party B, and ensure that all materials provided are true, legal, complete and valid.

 

(VI) Party A shall accept Party B’s inspection of and supervision over use of the loan fund, as well as Party A’s production, operation, financial activities and asset conditions, while giving sufficient assistance and coordination.

 

(VII) Prior to clearance of the loan principal plus interest to Party B, Party A may not use the assets formed by using the loan fund as a guarantee for any third party without written permission of Party B.

 

(VIII) In case Party A has any act that may cause a change in the debtor-creditor relationship hereunder or performance of the obligations hereunder (including but not limited to decrease in the registered capital, contracting, leasing, joint operation, trusteeship, merger, consolidation, separation, equity transfer, shareholding reconstruction, joint capital, cooperation, application for shutdown for rectification, application for dissolution, application for deregistration, application for bankruptcy, transfer of major assets, procurement of major assets, outward investment and large-amount financing etc.), it shall notify Party B in writing 15 days in advance, and conduct such act with written permission of Party B after performing the obligations and guarantee hereunder as required by Party B.

 

(IX) During performance of the Agreement, Party A shall not be subject to any event that may affect its performance of the obligations hereunder, including but not limited to suspension of production, suspension of business, shutdown for rectification, revocation of the business license, cancellation, forced application for bankruptcy, any of its management persons (including but not limited to the actual controller, holding shareholder, legal representative, senior management person and financial principal of Party A) subject to any judicial measure or pursued of any administrative or criminal liability, shareholder or shareholding change, involvement in any legal proceedings or arbitration, serious difficulty in production and operation, deterioration of the financial conditions and others. In case any of the foregoing events occurs, Party A shall immediately notify Party B in writing, and perform the obligations and guarantee hereunder as required by Party B.

 

(X) In case any change occurs to the name, domicile, Articles of Association, business scope, legal representative (or principal) or any other senior management persons of Party A, it shall notify Party B of such change in writing within 5 days after such change.

 

(XI) In case the Guarantor hereunder is subject to any event that may affect its performance of the guarantee obligation hereunder or the mortgage or pledge set as a guarantee for the loan hereunder is subject to market value reduction, incidental damage or loss, Party A shall timely notify Party B and provide another guarantee recognized by Party B.

 

(XII) Party A shall undertake to cover expenses relating to insurance, evaluation, registration and care of the Agreement or the guarantee hereunder, except for expenses specified by any normative legal document to be covered by Party B.

 

(XIII) Where Party A fails to perform the Agreement, it shall undertake to cover expenses incurred to Party B for realization of the creditor’s right (including but not limited to the legal cost, property preservation fee, lawyer’s fee, travelling expense, execution fee, evaluation cost, auction fee and others).

 

(XIV) Special provisions on granting credit to group clients

 

In case Party A is a group client (i.e. Group Client referred to in this Article, including the group clients recognized in the Guidelines for Commercial Banks on Risk Control in Credit Businesses with Group Clients and other relevant regulations), it shall observe the following special provisions:

 

1. Party A shall timely report to Party B any related transactions accounting for above 10% of its net assets, including

 

(1) The relationship between the transaction parties;

 

(2) The trading items and nature of the transactions;

 

(3) The transaction amounts or corresponding proportions;

 

(4) The pricing policy (including transactions without actual but nominal amount).

 

2. If Party A applies for loan credit in any of the following cases, Party B may laterally decide to stop payment of the unused loan amount to Party B, and make advance recovery of part or all the loan principal plus interest:

 

(1) Party A provides false material or conceals any major operation or financial fact;

 

(2) Party A changes the original purpose of the loan fund without permission of Party B, or embezzles the loan fund, or uses the bank loan for any illegal or improper transaction;

 

(3) Party A makes use of any false contract with any related party and uses notes receivable, accounts receivable or other creditor’s rights with no actual trading background to be discounted or pledged at the bank for capital or credit;

  

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(4) Party A refuses Party B’s supervision over and inspection of its loan capital use and relevant operation and financial activities;

 

(5) Party A is subject to substantial merger, acquisition or restructuring, which Party B thinks may affect the loan safety;

 

(6) Party A escapes the creditor’s right of the bank through related transactions.

 

(XV) In case the expiration date of the operation term or license period recorded on the operation licenses of Party A is earlier than the mature date of any debts of Party A hereunder, to ensure proper performance of Party A’s obligations hereunder, Party A commits to complete relevant extension or prolongation prior to the said expiration, and submit a copy of the operation licenses after extension or prolongation to Party B for retention. In case Party A fails to perform the foregoing obligation, which shall constitute as a breach of the Agreement, Party B may require Party A to make advance repayment of the indebtedness, and exercise other relevant rights.

 

The foregoing operation licenses shall include, without limitation, the Business License, the Approval Certificate (for foreign-capital enterprises), as well as other permits, certificates and authorizations that Party A is legally required to obtain for normal operation based on its institutional nature and business scope.

 

(XVI) Party A may apply to a national public notary office for notarization of the Agreement; in such case, Party B shall provide assistance.

 

(XVII) Any commitment made by Party A to Party B shall constitute obligations hereunder to be performed by Party A.

 

Article 12 Party B’s rights and obligations

 

(I) Party B may require Party A to provide materials relating to the loan.

 

(II) Party B may inspect and supervise Party A’s use of the loan fund, as well as its production, operation, financial activities and asset conditions.

 

(III) In case Party A delays realization of its due creditor’s right, having incurred damage to Party B, Party B may make request to the people’s court for subrogation to realize the creditor’s right of Party A in its own name, with the subrogation cost (including but not limited to the legal costs, property preservation fee, lawyer’s fee, travelling expense, execution fee, evaluation cost and auction fee etc.) to be covered by Party A.

 

(IV) In case Party A waives its due creditor’s right or voluntarily assigns its properties, having incurred damage to Party B, Party B may make request to the people’s court for cancellation of Party A’s act. In case Party A assigns its properties at an obviously low price, having incurred damage to Party B, while the assignee has knowledge of the same, Party B may make request to the people’s court for cancellation of Party A’s act, with the expenses incurred from exercising the right of claiming cancellation to be covered by Party A.

 

(V) Party A agrees that Party B may make inquiry to the credit database established with approval from the People’s Bank of China and competent credit investigation department for Party A’s credit standing, and that Party B may provide Party A’s information to the credit database established with approval from the People’s Bank of China and competent credit investigation department. Party A agrees that Party B may make reasonable use of and disclose Party A’s information for the purposes of business or recovering the creditor’s right.

 

(VI) Party B shall make timely and sufficient allocation of the loan fund as agreed, unless any delay is caused by Party A.

 

(VII) Party B may participate in Party A’s large-amount financing, property sales, as well as merger, separation, shareholding reconstruction, bankruptcy and liquidation etc., to defend the safety of its creditor’s right.

 

(VIII) Party B may decide whether to make advance recovery of the loan based on the capital returns of Party A.

 

(IX) Party B may apply to a national public notary office for notarization of the Agreement, and Party A shall provide assistance.

Once notarized, this Agreement shall have enforcement potency. Party A shall perform the repayment obligation as agreed herein; in case Party A fails to repay the debt or to properly repay the debt, Party B may apply to a competent people’s court for enforcement, and Party A will accept the enforcement by the judicial authority.

 

Article 13 Default liability

 

(I) Party A will be deemed as having violated the Agreement in any of the following cases:

 

1. Party A does not use the loan fund for the purpose agreed herein.

 

2. Party A fails to repay the loan principal or interest as agreed herein.

  

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3. Party A fails to make payments with the loan fund as agreed herein.

 

4. Party A has its financial indicators in any of the following cases: see Article 34 hereof.

 

5. Party A has cross default, i.e. Party A defaults in transaction or contract with any third party.

 

6. Party A fails to perform any of its commitments made to Party B.

 

7. Party A fails to perform any of its repayment obligations to Party B.

 

8. Party A fails to perform any other obligation hereunder.

 

9. The Guarantor fails to perform any obligation under the Guarantee Contract or any other legal document signed with Fujian Haixia Bank or subordinate institution of Fujian Haixia Bank, or any event occurring to the Guarantor (Guarantee) will possibly affect realization of the guarantee right by Party B.

 

10. The Guarantor fails to prolong or extend the valid period of the land use certificate on a timely and proper basis.

 

11. Other circumstances Party B thinks may be sufficient to affect realization of its creditor’s right.

 

(II) In any of the cases specified in Article 13 (I) above, Party B may exercise any or/and several of the following rights:

 

1. Party B may stop allocation of unpaid loan fund, bring all loan fund allocated mature in advance, and require Party A to make immediate repayment of all loan principal plus interest hereunder.

 

2. In case Party A fails to use the loan fund for the purpose agreed herein, Party B may accrue default interest on the loan amount used against this Agreement as from the defaulting date (included) based on the up-regulated loan interest rate (for the up-regulation, see Article 34 (I) hereof) and the interest settlement means agreed herein, and accrue compound interest on overdue interest based on the foregoing default rate and interest settlement means agreed herein.

 

3. In case Party A fails to repay the loan principal (including the loan principal subject to advance maturity) as agreed herein, Party B may accrue interest on the due but still outstanding loan principal as from the overdue date (included) based on the up-regulated loan interest rate (for the up-regulation, see Article 34 (II) hereof) (i.e. the default rate for overdue repayment) and the interest settlement means agreed herein.

 

4. In case Party A fails to clear the loan interest regardless of whether the loan principal is mature, Party B may accrue compound interest on the due but still outstanding interest as from the overdue date (included) based on the default rate for overdue repayment and the interest settlement means agreed herein.

 

5. Party B may make deduction directly from Party A’s account opened with Party B or other institutions of Fujian Haixia Bank for recovery of any due but outstanding loan principal, interest or any other amount from Party A.

 

6. Party B may require Party A to provide additional guarantee that satisfies Party B’s requirements for the indebtedness hereunder.

 

7. Party B may exercise the right of guarantee.

 

8. Party B may terminate this Agreement.

 

9. Party B may realize recovery by notification to a competent department or authority or announcement through news media.

 

(III) In case Party B fails to provide the loan fund as agreed, it shall undertake default liability, unless a delay in such provision is caused by Party A.

 

Article 14 Special provisions on energy saving and emission reduction

 

Party A commits to Party B as follows in aspects of energy-saving and emission reduction involved in the project using the credit loan fund:

 

(I) The construction project of Party A satisfies the “six conditions required” for commencing the construction (compliant with stipulations and requirements of the industrial policies and market access standard, the project approval or registration procedures, prequalification for land use, approval after evaluation of environment impact, review of energy-saving evaluation and credit loan, safety and urban planning); the project has been approved by competent authorities.

 

(II) Substantially, Party A’s construction project satisfies the following compliance requirements:

 

1. The new project is consistent with the national industrial policies and development trend;

 

2. The environmental evaluation of the project and its planning is compatible with the general requirements;

 

3. The technical and economic standards are aligned with the national advanced level and international level;

 

4. Other compliance requirements for construction projects.

  

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(III) In case Party A’s project is subject to any of the following circumstances, Party B may require Party A, or even the key third party of the project (such as the contractor, supplier and supervisor etc.), to establish and implement management system and action plan relating to environmental impact, system of communications with the local communities and social public, as well as monitoring, evaluation and reporting (announcing) systems; meanwhile, Party B may also supervise and evaluate, through an independent third party, the environmental risk control mechanism, competence and results of Party A and the first third party:

 

1. Project that substantially changes the original state of the environment, and may produce adverse environmental and social consequences which cannot be easily eliminated;

 

2. Projects that produces adverse environmental and social consequences which can be eliminated by using relief measures but still with great risks.

 

(IV) In case Party A is an enterprise featuring large energy consumption, serious pollution and poor rectification, as announced and recognized by any competent authority in charge of energy-saving and emission reduction, except for credit to improvement of energy-saving and emission reduction, Party B may refuse grant of additional credit, while gradually compressing and withdrawing the credit that has been granted to Party A.

 

(V) In case Party A or Party A’s construction project is listed among those with lagging-behind production capacity by the national or provincial development and reform commission or any other competent department, Party B may take reasonable and effective measures to timely adjust, compress and withdraw credit relating to the lagging-behind production capacity.

 

(VI) In case Party A’s construction project is required to obtain approval of environmental evaluation but has not obtained such approval, Party B may refuse advance allocation of fund for pre-construction preparation and construction; in case the design, construction and operation of the environmental facilities for the project are not simultaneous with the main works, Party B may suspend allocation of fund for constructing the main works, until the “three simultaneities” are realized; in case the project has not obtained approval of environment evaluation that shall be obtained upon completion, Party B may suspend allocation of fund for operation of the project; for any overseas project invested by domestic enterprises, Party A shall ensure compliance with the environment protection and other relevant laws of the country or region where the project is located.

 

(VII) In case Party A becomes subject to compliance and credit risks relating to energy consumption and pollution, Party B may select to require Party A to take any or several of the following measures:

 

1. To increase the proportion of the capital fund;

 

2. To issue middle- or long-term debentures (corporate bonds);

 

3. To add technological improvement project for energy saving and consumption reduction and technological improvement plan;

 

4. To take the operation right after the profitable project is completed, cash flow, accounts receivable and others as the pledge for credit;

 

5. To take out of construction period insurance for the project, as well as engineering liability insurance, environmental liability insurance, product liability insurance and others relating to energy consumption and pollution risks;

 

6. Other measures to help Party B relieve the compliance and credit risks relating to energy consumption and pollution.

 

(VIII) In case Party A fails to fulfill the foregoing commitments or any energy consumption or pollution risk takes on, Party B may:

 

1. Require Party A to make rectifications and improvements within a limited time period;

 

2. Suspend or compress the credit Party B has granted to Party A;

 

3. Declare advance maturity of the credit, and make advance recovery of the loan or stop allocation of the loan fund;

 

4. Exercise the right of mortgage or pledge in advance.

 

Article 15 Confidentiality

 

Neither Party A nor Party B shall tamper with or illegally use any business secret or other information obtained of the other party during performance of this Agreement or for purpose of performing this Agreement; without consent of the other party, neither party may disclose such information to any third party, unless provision of such information is required by the lawyer, accountant, auditor or evaluator engaged by the parties or by laws, regulations or rules, or by competent authorities.

Article 16 Change and termination of the Agreement and assignment of the creditor’s right and indebtedness

 

(I) Neither Party A nor Party B may change or terminate this Agreement after it becomes effective, unless otherwise agreed herein or between the parties. Any written modification or supplementary agreement reached between the parties shall constitute an integral part of this Agreement.

  

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(II) For extension of the loan term upon maturity, Party A shall make a written application to Party B 15 business days prior to the maturity of the loan and complete the guarantee matters. After inspection and approval by Party B, the loan term extension agreement will be signed and relevant formalities shall be attended to.

 

(III) Party B may assign all or partial of the creditor’s rights and obligations hereunder and corresponding right of guarantee to a third party. In case Party B assigns any creditor’s right and obligation hereunder and corresponding right of guarantee to a third party, such assignment shall be considered as having obtained the consent of Party A, provided that Party B notify Party A of such assignment. In case the assignment of any creditor’s right or obligation has not become effective, or has been invalid, cancelled or lifted, Party A shall still be responsible to Party B according to this Agreement.

 

Article 17 Right reservation

 

Any right of Party B hereunder will not affect or exclude any other right of Party B according to the laws, regulations and other contracts. Any tolerance to a default, grace to a delay, preference or delayed execution of any right hereunder shall not be deemed as Party B waives any right or interest hereunder, or permits or recognizes any default behavior, nor affect, hinder or prevent Party B continuing to exercise such right or any other right, nor cause Party B to assume any obligation or liability to Party A.

Article 18 Governing law and dispute dissolution

 

(I) This Agreement is governed by the laws of the People’s Republic of China.

 

(II) For ways to dissolve disputes, see Article 35 hereof.

 

(III) No dispute shall affect performance of any other provisions not involved.

 

Article 19 Notification

 

(I) Any notification from one party to the other party hereto can be served in writing (including but not limited to fax, mail and other written forms) to the address and responsible person of the other party as recorded herein. In case of fax, the notification shall be deemed as having been served when the fax reaches the other party; in case of mail, the notification shall be deemed as having been served on the third day after it is sent.

 

(II) Notification from Party B to Party A can be also served via one or more means as follows: newspapers or announcement on the website, bulletin at the operation outlets, telephone, short message and e-mail.

 

(III) In case the address and telephone number recorded herein changes during performance of the Agreement, the party subject to such change shall timely notify the other party.

 

Article 20 Declarations

 

Party A is a legally registered business entity in good standing; it may sign and perform this Agreement in its own name; signature of Agreement has been fully, legally and effectively authorized.

 

Article 21 Matters not covered

 

For any matter not covered, Party A and Party B shall settle the matter according to relevant laws, regulations and rules.

 

Article 22 Effectiveness of the Agreement

 

The Agreement will become effective upon satisfaction of the following conditions:

 

(I) Bearing the signatures of Party A’s legal representative (principal) or authorized agent, together with its official seal;

 

(II) Bearing the signatures of Party B’s principal or authorized agent, together with its official seal.

  

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Part II Special Provisions

 

Article 23 This Agreement is made by and between

 

(I) The Borrower: Yida (Fujian) Tourism Group Co., Ltd.

 

Address: No. 68, Xianfu Road, Zhangcheng Town, Yongtai County

Postal code: 350001

Tel.: 28308382

Fax: 15959106601

E-mail: None

Legal representative (or principal): Chen Minhua

Responsible person: Huang Aiping

 

(II) The Lender: Fujian Haixia Bank Co., Ltd., Yongtai Branch

 

Address: No. 34, Shangma Road, Zhangcheng Town, Yongtai County

Postal code: 350700

Tel.: 24819966

Fax: 24803888

E-mail: None

Principal: Lin Sheng

Responsible person: Wang Shuhua

 

Article 24 Loan type: short-term current capital loan.

 

Article 25 Loan amount: CNY Fifteen Million Only.

 

Article 26 Loan purpose: for payment of the advertising fee

 

Article 27 Loan term

 

The loan terms lasts for twelve months, as from October 17, 2013 to October 17, 2014. The loan fund hereunder shall be put into use within ninety days as of October 17, 2013.

 

Article 28 Loan interest rate

 

(I) The annual interest rate for the loan hereunder is 8.7%, 45% or Nothing here percent above the base rate released by the People’s Bank of China for loans based on the same terms.

 

(II) In case the base rate is subject to regulation by the People’s Bank of China after conclusion of this Agreement and before allocation of the loan fund, the 2nd item of Article 6 (II) shall be executed.

 

(III) In case the base rate is subject to regulation by the People’s Bank of China after allocation of the loan fund, the 1st item of Article 6 (III) shall be executed.

 

Article 29 Allocation of the loan fund

 

(I) The other premises for allocation of the loan fund referred to in the 3rd item of Article 7 (I) include: 1. Allocation of the loan fund shall comply with the loan scale management requirement of the national credit policy and financial regulatory departments, as well as Party B’s requirements for credit loans; 2. Nothing here.

 

(II) Party A shall open the following settlement account with Party B for allocation and payment of the fund:

 

Account name: Yida (Fujian) Tourism Group Co., Ltd.

Account No.: 100027460510010002

Opening bank: Fujian Haixia Bank, Yongtai Branch

 

Article 30 The loan fund hereunder shall be all subject to entrusted payment when the following conditions are satisfied:

 

1. Any single payment with any loan amount of no less than CNY nothing here (included);

 

2. Nothing here.

 

  

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Article 31 Terms of repayment

 

Party A and Party B agree to adopt the following 1st means for repayment of the loan principal:

 

(I) One-time repayment, i.e. Party A shall repay the loan principal once in full amount upon maturity of the loan.

 

(II) Repayment by instalments, i.e. Party A repays the loan principal based on the repayment schedule determined by the parties upon allocation of the loan fund.

 

(III) Other terms of repayment: Nothing here.

 

Article 32 Party A specifies the following account as a special account for returned capital:

 

Account name: Yida (Fujian) Tourism Group Co., Ltd.

Account No.: 100027460510010002

Opening bank: Fujian Haixia Bank, Yongtai Branch

 

Article 33 Party A will be deemed to have a breach in case any of its financial indicators is subject to the following conditions:

 

The asset-liability ratio is above 90%.

 

Article 34 Default rate

 

(I) Where Party A fails to use the loan fund for the purpose agreed herein, the loan amount used against the purpose will accrue default interest based on the default rate of 60% above the contractual loan interest rate.

 

(II) Where Party A fails to repay the loan principal as agreed herein, the due but outstanding loan amount will accrue default interest for overdue repayment based on the default rate of 50% above the contractual loan interest rate.

 

Article 35 Dispute dissolution

 

Any dispute arising from or relating to establishment or performance of this Agreement shall be settled by using the following 1st means:

 

(I) Referred to the local competent people’s court at the place where Party B is located.

 

(II) Referred to Nothing here for arbitration.

 

Article 36 Contractual text

 

This Agreement is made in triplicate, each for Party A and Party B; both copies shall have the same legal effect.

 

Article 37 Other provisions agreed

 

Nothing here.

(No text below)

 

  

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(This page is for signature but no text)

 

Party A and Party B confirm upon establishment of this Agreement that both parties have carefully read and fully agree with all provisions hereof. Party B has drawn Party A’s full attention to all provisions, particularly to the provisions releasing or exempting Party B’s liability, and given detailed explanations as requested by Party A. Both parties have fully known and understood the meanings and the legal consequences of the provisions of this Agreement.

  

	
Party A (Official Seal): Yida (Fujian) Tourism Group Co., Ltd.

	
Party B (Seal): Fujian Haixia Bank Co., Ltd., Yongtai Branch

	
Legal Representative (Principal) (Signature): /s/ Chen Minghua

	Principal (Signature): /s/ Lin Sheng
	
Or Authorized Agent (Signature):

	
Or Authorized Agent (Signature):

	
Responsible person (Signature):

	
Responsible person (Signature): /s/ Wang Shuhua, /s/ Yao Yu

 

Date of conclusion: October 17, 2013

Place of conclusion: No. 34, Shangma Road, Zhangcheng Town, Yongtai County

Contract No.: 056019000020130008

 

11

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