Document:

exh10-23.htm

 

Exhibit 10.23

ING

 

 

12 August 2010

PRIVATE & CONFIDENTIAL

Armco & Metawise (HK) Limited

Suite 1706A, Jincheng International Plaza

 No. 66 Jing San Road

Zhengzhou China 450008

Attn: Mr. Yao Kexuan

 Dear Sirs,

Re: Uncommitted Banking Facilities

We are pleased to advise that ING Bank N.V. (the ''Bank''), acting through its Hong Kong Branch, is prepared to make available to you the banking facilities granted as described below (the "Facilities”) subject to the terms and conditions set out in this letter (the "Facility Letter") and the Bank's standard terms and conditions.

	
  

	
1.

	
Borrower

Armco & Metawise (HK) Limited ("Armco")

	
  

	
2.

	
Uncommitted Facilities

Facility                      Limits (USD)                                           Description of Facilities

	  	
I

	
20,000,000.-

	
Opening of documentary credits (each a "DC") with full set of title documents on back-to-back basis, i.e. with terms in strict compliance with the relevant export DC acceptable to the Bank ("BBDC"); &/or

 

Negotiation of non-discrepant export bills with full set of title documents export DC acceptable to the Bank ("Clean Bills LC-LG”), up to a maximum tenor of one (1) month.

 

	  	
II

	
(3,000,000.-)

	
A sublimit of Facility I for:

 

- A sublimit of Facility I for freight advance("FA”) under BBDC transaction, up to amaximum tenor of one (1) month, against copies of relevant debit note from shippingcompany and bills of lading. The FA proceeds shall be paid directly to the bank account of relevant shipping company or shipping agent's account. Aggregate value of relevant import DC and FA shall not exceed 95% of the relevant export DC value.

The Facilities offered hereunder by the Bank are uncommitted. This Facility Letter does not oblige the Bank to provide the Facilities to the Borrower. However, the Bank may, in its absolute discretion, agree to provide the Facilities on a case-by-case basis on such terms and conditions as the Bank may think fit. Notwithstanding any other provision in this Facility Letter or any other documents issued pursuant hereto the Bank reserves the right at any time to terminate the Facilities at any time by notice to the Borrower in writing and after such termination the Facilities shall cease to be available for any further transactions hereunder and that an amounts then outstanding under the Facilities, together with accrued interest and any other sums for which the Borrower are actually or contingently liable under the Facilities shall be immediately due and payable without further notice from the Bank.

  

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3.

	
Repayment

The outstanding principal of each advance under Clean Bills LC-LG and FA shall be repaid in full by the borrower immediately upon maturity which shall be a Business Day.  If no such repayment is made on the relevant maturity date the Borrower shall then repay the Bank immediately such amount outstanding on first demand of the Bank.

	
4.

	
Security

All securities for the Facilities, the Bank shall require:

	
  

	
4.1

	
cash margin of 5% on outstanding of BBDC under Facility I;

	
  

	
4.2

	
the continuing guarantee dated 14 January 2010 from China Armco Metals Inc (the "Corporate Guarantor”) securing Armco & Metawise (HK) Ltd's total liabilities (actual or contingent) under the Facilities;

	
  

	
4.3

	
the continuing guarantee dated 8 December 2009 from Yao Kexuan (the ''Personal Guarantor" and together with the Corporate Guarantor, the "Guarantors") securing Armco & Metawise (HK) Ltd's total liabilities (actual or contingent) under the Facilities; and

	
  

	
4.4

	
assignment of relevant receivables by the Borrower in favour of the Bank (the "Assignment") in form and substance acceptable to the Bank for drawings under the Facilities,

 

 

(together, the "Security Documents" and each security provider, a "Security Provider”)

	
5.

	
Fees and Commissions:

The borrower shall pay to the Bank:

	
  

	
5.1

	
a facility set up fee of USD20,000 payable upon receipt of your duly signed acceptance of this facility letter;

 

 

	
  

	
5.2

	
BBDC for each validity period of six months or part thereof and commission in lieu of exchange at 1/4% on the first USD50,OOO or equivalent .in other currencies (subject to a minimum charge of USD125.00), and at 1/16% for remaining balances in excess of USD50,OOO;

	
  

	
5.3

	
commission on any other bills transactions at the Bank's standard rates

 

 

	
6.

	
Interest

The Barrower shall pay the Bank interest on any outstanding balance under Clean Bills LC-LG/FA at 2.5% per annum over the Bank's cost of funds (as conclusively determined by the Bank from time to time) or at such rate or rates as the Bank may from time to time charge at the Bank's sole discretion.

The Bank's determination of the rate of interest shall be conclusive for all purposes, Interest shall be payable on the last day of the relevant Interest Period (as defined below).

Interest will accrue from day to day and shall be calculated for the actual number of days elapsed on the basis of a 365 or 360 days year as the Bank shall determine in accordance with banking practice from time to time in the relevant market.

Default interest (both before and after judgment) on amounts due under the Facilities but unpaid will be charged at higher rates to be determined at the sole discretion of the Bank. The default interest shall be compounded (both before and after judgment) in accordance with the Bank's usual practice as the Bank may deem necessary.

The interest period in relation to any amount outstanding under Clean Bills LC-LG and FA shall be of a maximum of 1 month duration (the "Interest Period”) as, subject to the provisions of this paragraph, selected by the Borrower in writing to be received by the Bank at least one (1) Business Day (for HK$ loan)/ three (3) Business Days (for US$ loan) before the first day of an Interest Period. The first Interest Period in respect of a drawing shall commence on the date the drawing is made to the Borrower and shall end on the last day of the Interest Period selected pursuant to this paragraph and subsequent Interest Periods shall commence on the last day of the preceding Interest period.

  

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For the purpose of this Facility Letter, "Business Day" means a day (excluding Saturday, Sunday and all public holidays) on which banks generally are open for business in the Hong Kong Special Administrative region ("HKSAR"); London and New York.

	
7.

	
Conditions Precedent

The Facilities shall be made available to the Borrower after the following documents have been received by the Bank in form and substance satisfactory to the Bank:-

	
  

	
7.1  the attached copy of this Facility Letter duly signed by the authorized signatories of  the Borrower and the Guarantors signifying their acceptance of and agreement to the terms and conditions contained herein;

	
  

	
7.2 duly passed board resolution of the Borrower approving the Facilities and authorizing a person or persons to sign this Facility Letter and each of the documents required hereunder, and where necessary affixing its common seal onto any relevant document;

	
  

	
7.3 the Security Documents as referred to in Clause 4 herein, including all necessary corporate approvals (e.g. board resolution) for each of the Security Providers to issue the Security Documents and where necessary to affix their common seal onto the Security Documents and the evidence showing that the Security Documents have been duly registered (if applicable); and

	
  

	
7.4 such other documentation as may be required by the Bank's legal counsel and duly executed by the relevant parties thereto.

All documents, other than originals, are required to be certified as true, complete and up to date by a director or the company secretary of the Borrower or any other persons approved by the Bank.

	
8.

	
Covenants

In consideration of the Bank extending the Facilities to the borrower, the borrower undertakes with the Bank during the period while any sum is due or payable hereunder that it shall:-

	
  

	
8.1

	
Submit to the Bank its annual audited financial statements within 6 months from the end of each of its relevant fiscal year and its semi-annual financial statements within 4 months after the end of the respective financial period;

	
  

	
8.2

	
Notify the Bank in writing of any proposed material changes in its shareholding structure, management and business engagements;

	
  

	
8.3

	
procure that its payment obligations hereunder shall at all times be its direct, unconditional and unsecured obligations and will rank and will at all times rank pari passu, and at least equally and rateably in all respects with all its other present and future unsecured and unsubordinated obligations owed to other banks providing trade facilities to the Borrower;

	
  

	
8.4

	
comply with all applicable laws and maintain in full force and effect all such authorizations required from any governmental or other authority or any shareholders for or in collection with the execution, validity, performance and enforceability of the Facility Letter;

	
  

	
8.5

	
notify the Bank in writing and provide any other information pertaining to the financial, business and/or shareholding status including, inter alia, change in directors, share capital and/or shareholders and/or its subsidiaries, and/or affiliated companies to the Bank as the Bank may reasonably require from time to time; and

	
  

	
8.6 on demand from the Bank, provide the Bank with full cash cover satisfactory to the Bank in immediately available funds in respect of any actual or contingent liability owed by the Borrower to the Bank or incurred by the Bank under the Facilities.

  

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9.

	
Payments

All payments by each of the Borrower hereunder shall be made in immediately available funds free and clear of any withholdings or deductions for any present or future taxes duties or other charges. In case of such withholdings or deductions, the Borrower shall be obliged to gross up the payments such that the Bank win receive the same amount as if no such withholdings or deductions has been applied.

All payments shall be made to the account of the Bank as specified and in the currency or currencies in which the relevant amounts advanced to, or otherwise due and payable by, the borrower are denominated (the "Appropriate Currency"), unless otherwise previously agreed by the Bank in writing. If for any reason the Bank receives an amount in any currency other than the Appropriate Currency, such payment shall take effect as a payment to the Bank of the amount in the Appropriate Currency which the Bank is able to purchase (after deduction of any relevant costs) with the amount of the payment so received in accordance with the Bank's usual practice and the Borrower shall indemnify the Bank against any such shortfall on demand in writing.

 

 

If any payment becomes due on a day which is not a Business Day, the due date of such payment will be extended to the next Business Day unless such Business Day is in a new calendar month in which case such payment shall be made on the immediately preceding Business Day.

	
10.

	
Indemnity

The Borrower shall indemnify and hold the Bank harmless from and against any and all loss, costs, charges, claims and expenses which the Bank may incur as a result of a breach by the borrower of its obligations under the Facilities

.

	
11.

	
Increased Costs

 

 

If upon and after the date of acceptance of this Facility Letter, by reason of (i) the introduction of, or any change in the interpretation or administration of any law and/or (ii) compliance with any request from or requirement of any central bank or other fiscal, monetary or other authority (including without limitation a request or requirement which affects the manner in which the Bank is required to or does maintain capital resources having regard to the Bank's obligations hereunder), the Bank shall incur any increase in the cost to the Bank of funding or maintaining the Facilities or if the Bank is unable to obtain the rate of return on its overall capital which it would have been able to obtain but for the Bank having entered into' its obligations under this Facility Letter, then the Borrower shall from time to time on demand from the Bank, promptly pay to the Bank amounts sufficient to compensate the Bank for such increased cost or reduction in rate of return as the case may be.

	
12.

	
Assessment and Transfer

The Borrower may not assign or transfer any of their rights and/or obligations under this Facility Letter or any Security Documents without the Bank's prior written consent, The Bank may novate, assign and/or transfer in whole or in part its rights and/or obligations under this Facility Letter and any Security Documents to other lending institutions or persons or change its lending office without further consent of the Borrower or other parties. The Bank shall be entitled to pass the documentation of the Facilities to any prospective assignees and transferees and shall promptly notify the Borrower of the assignment or transfer or change of lending office.

	
13.

	
Expenses

Whether or not the legal documentation for the Facility is executed as contemplated, all out-of-pocket expenses (including legal fees) incurred by the Bank in connection with the Facility including, without limitation, the preparation, execution and/or enforcement of this Facility Letter and/or the Security Documents shall be for the account of and borne by the Borrower and shall be payable on demand.

  

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14.

	
Miscellaneous

	
  

	
14.1 In the event that any law or regulation renders our continuing the Facility illegal or a breach thereof, then it shall be cancelled forthwith and any amounts owing hereunder shall become immediately due and payable.

	
  

	
14.2 If at any time any provision contained in this Facility Letter is or becomes invalid, illegal or unenforceable in any respect under the law of any applicable jurisdiction, neither the validity, legality or enforceability of the remaining provisions hereof nor the validity, legality or enforceability of such provision under the law or any other jurisdiction shall in any way be affected or impaired thereby.

	
  

	
14.3 In the event of any conflict between the terms of this Facility Letter and the Bank's General Terms and Conditions or General Agreement by Customer(s) or General Agreement Relating to Commercial Credits, the terms of this Facility Letter will prevai1.

 

 

	
  

	
14.4  No waiver of any of the Bank's rights or powers or any consent by the Bank shall be valid unless made by the Bank in writing. No failure or delay by the Bank in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise preclude any other or further exercise thereof. The rights and remedies provided herein are cumulative and not exclusive of any rights or remedies provided by law and any other rights which the Bank may have.

	
  

	
14.5  The Borrower agrees that all documentary credits issued by the Bank pursuant to this Facility Letter shall be subject to the Uniform Customs and Practice for Documentary Credits in force at the time of issuing.

	
  

	
14.6  The Borrower authorizes the Bank to disclose the Facilities and all matters related to the Facilities to any competent authority under the relevant laws.

	
  

	 	
 
14.7  In this Facility Letter, where the context so permits, references to the Facility shall include any or more of them.

	
  

	
14.8  Any amendment or supplement to, or modification of this Facility Letter shall be made in writing by the borrower and the Bank.

	
15.

	
Law and Jurisdiction

 

 

This Facility Letter shall be governed by and construed in all respects in accordance with the laws of HKSAR. The Borrower hereby irrevocably submits to the non-exclusive jurisdiction of the HKSAR courts.

We trust that the above terms and conditions are acceptable to you and we look forward to developing a mutually rewarding relationship. Please signify your acceptance of the Facilities upon the terms and conditions of this Facility Letter by signing the form of acceptance on the enclosed copy of this Facility Letter and returning the same to us together with the documents as stipulated in Clause 7 (Conditions Precedent) within one month from the date hereof. In the absence of our written agreement to the contrary, if we do not receive the duly signed acceptance by such date, the Bank shall have the right to withdraw this Facility Letter without further notice.

Yours faithfully,

For and on behalf of

ING Bank N.V.

Hong Kong Branch

/s/Maarten Koning

Director, Head of

Commodities Group, North Asia

Structured Finance

  

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/s/Nicola Kan                                

Director,

Credit Risk Management Hong Kong

We hereby accept the Facility Letter dated 12 August 2010 issued by ING Bank N.V. Hong Kong Branch ("ING”) to us setting out the terms and conditions of the Facilities granted there under and of which this is a copy.

For and on behalf of

Armco & Metawise (HK) Limited

/s/ Kexuan Yao

Authorized Signatory(ies) (The Borrower)

Date:

We hereby accept the Facility Letter dated 12 August 2010 issued by ING Bank N.V., Hong Kong Branch (HING") to us setting out the terms and conditions of the Facilities granted thereunder and of which this is a copy. We further confirm that the Guarantee dated 14 January 2010 issued by us as Guarantor to secure Armco & Metawise (HK) Limited's total liabilities under the Facilities in favour of ING shall remain in full force and effect and continue to be binding on us.

 

 

For and on behalf of

China Armco Metals, Inc

/s/ Kexuan Yao

Authorized Signatory(ies) (Guarantor)

Date:

The terms and conditions of the Facility Letter dated 12 August 2010 issued by ING to the Borrower of which this is a copy are acknowledged and agreed to by the undersigned. I hereby confirm and agree that the Guarantee dated 8 December 2009 issued by me to secure total liabilities of Armco & Metawise (HK) Limited the Facilities in favour of ING shall remain in full force and effect and continue to be binding on me. I agree that the aforementioned Guarantee shall secure the obligations of the Borrower owed to ING from time to time up to _______ / on an unlimited basis*.

/s/Yao Kexuan

(Guarantor)

Date:

* delete as appropriate;exh10-24.htm

 

Exhibit 10.24

Armco & Metawise / No. 20090325080590001-1 

PRIVATE AND CONFIDENTIAL

Armco & Metawise (H.K) Limited

Room 1407, China Resources Building, 26 Harbour Road,

Wanchai, Hong Kong

Date: July 23rd, 2010

Amendment No. 1

Dear Sirs,

We refer to the Facility Letter No. 20090325080590001 dated March 25th, 2009 (the “Facility Letter”), WHEREBY RZB Austria Finance (Hong Kong) Limited (the “Lender”) and Armco & Metawise (H.K) Limited (the “Borrower”) agreed on uncommitted trade finance facilities (the “Facilities”) up to USD 10,000,000.00 (United States Dollar Ten Million Only).

Terms defined in the Facility Letter shall have the same meaning in this Amendment.

NOW it is agreed the Facility Letter shall be amended as follows:

1. Clause 2 (Type and Amount of the Facilities) shall be amended as follows:

	
  

	
(a)

	
Total Facilities Amount: USD 15,000,000.00 (United States Dollars Fifteen Million Only) maximum but in no circumstances shall the outstanding of any type of Facility exceed the respective facility sub-limits set out below.

	
  

	
(b)

	
Available for:

	
Sub- Limit

	
  

	
(i)

	
Back-to-Back L/Cs:  Issuance of commercial letters of

credit (the ''L/C'') against the lodging of master L/Cs

acceptable to the lender (the "Master L/C");                                                                                     USD 15, 000,000.00

  

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Armco & Metawise / No. 20090325080590001-1

(ii)           Master L/C Financing against

documents presented under Master

L/C by advancing funds to the Borrower;

                  USD 15,000,000.00

 

 

(iii)           Export L/C Financing against

documents presented under export

L/Cs acceptable to the lender (the

"Export L/C”) by advancing funds to

the Borrower.                                                                                        USD 15,000,000.00

(iv)           Front-to-Back L/Cs Issuance

 of front-to-back L/C subject to

subsequent lodging of the

Master L/C.                                                                                           USD 7,000,000.00

 

 

2. Clause 3 (Commission, Charges and Interest) shall be amended as follows:

L/C issuance commission:                                                                                     1/16% quarterly, min USD 500.00

L/C financing/Negotiation commission:                                                                                     1/16% flat, min USD 500.00

Commission-in-lieu:                                                                                     1/16% flat, min USD 500.00

Collection commission:                                                                                     1/16% flat, min USD 500.00

Interest Rate:

 

Master L/C/ Export L/C Financing before / after acceptance:

Cost of Funds + 200bp p.a. for the L/C issued by Agricultural Bank of China, Bank of China, Industrial & Commercial Bank of China, China Construction Bank and Bank of Communications; and case by case for the Master L/C / Export  L/C issued by other banks acceptable to the Lender.

Cost of funds shall be determined at the sole discretion by the lender by reference to its funding cost for the relevant interest period and relevant currency in respect of the Facilities under this letter.

Without prejudice to any clauses or any of the lender's rights contained in this letter, the lender may recall the Facilities at anytime at its sole discretion upon the

  

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Armco & Metawise / No. 20090325080590001-1

occurrence of any event which causes a material market disruption in respect of unusual movement in the level of funding costs to the lender or the unusual loss of liquidify in the funding market. For the avoidance of doubt, the lender has the sole discretion to decide whether or not such event has occurred. The lender will inform the Borrower upon occurrence of any market disruption.

All other charges of the lender are subject to the lender's Schedule of Charges.

The interest payable on Master L/C Export L/C Financing shall be calculated in US Dollars ("USD") on the basis of actual days elapsed and 360 days per year and shall be deducted up-front from the proceeds of Master L/C/ Export L/C Financing.

The Lender reserves the right at anytime to amend the commission and charges and to debit the Borrower's account with interest, charges, fees, insurance premiums, normal lender charges, expenses incurred on the Borrower’s behalf and all monies in connection with the Facilities.

3. Clause 4 (Purpose) shall be amended as follows:

To finance the Borrower’s trading of iron ore, chrome ore, manganese ore, nickel ore and any other products acceptable to the Lender from time to time (the “Goods”).

4. Clause 5 (Tenor) shall be amended as follows:

Final maturity of the Facilities is October 31st, 2010.

Notwithstanding the above, the Facilities are repayable on demand and the lender has the overriding right at any time to require immediate payment under the Facilities.

5. Clause 7 (Collateral/Security) shall be amended as follows:

(a)           Letter of Pledge;

(b)           Trade Finance Security Assignment;

(c)           Power of Attorney to act and sue on behalf of the Borrower;

        (d)   Opening by the Borrower of a collateral account (the “Collateral Account”) with the Lender and payment into the Collateral Account of:

(i)such amounts of money as the lender shall from time to time require by way of margin in respect of an utilization of the Facilities (“the Margin”), including (without limitation), a payment for each Front-to-Back L/C to be issued by the lender under the Facilities, of an amount in USD equal to 20% of such L/C amount;

(ii) the proceeds of all Master L/C and Export L/Cs; and

(iii) all amounts payable by the Borrower to the Lender in respect of the Facilities;

On the basis that all money in the Collateral Account shall secure the Borrowers obligations to the Lender in respect of the Facilities;

  

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Armco & Metawise / No. 20090325080590001-1

     (e)    Charge on Collateral Account, by which the Borrower shall charge all money in the Collateral Account as security for all the Borrowers obligations to the Lender in respect of the Facilities.

 

     (f)    Unconditional and irrevocable personal guarantee issued by Mr. Yao Kexuan (“the Guarantor”) in favor of the Lender with the Net Worth Statement duly signed by the Guarantor in form and substance acceptable to the lender;

     (g)    Unconditional and irrevocable corporate guarantee issued by China Armco Metals Inc. (the “Corporate Guarantor”) in favor of the lender in form and substance acceptable to the Lender.

6. Clause 9 (Conditions Precedent) shall be amended as follows:

Granting of the Facilities by the Lender is discretionary in nature. Each utilization request by the Borrower is further subiect to Clause 8 (Applications for the Facilities) and the fulfillment of the following conditions precedent:

(a) The Lender shall have received:

(i)           certified true copies of the Borrower's statutory/constitutional documents

(certificate of incorporation, memorandum and articles of association, excerpt from commercial register, etc.);

(ii)           this letter duly executed by the Borrower together with a certified copy of

the board resolution resolving or approving the acceptance of the Facilities and the provision of any collateral/security as required in Clause 7 (Collateral/Security), in form and substance acceptable to the lender;

(iii)           legal opinion from counsel(s) acceptable to the lender, if required;

(iv)           all necessary approvals and registrations, which may be required- in

connection with the Facilities to be granted thereunder, have been obtained from Hong Kong and PRC governmental authorities, including SAFE and any other governmental authorities, in form satisfactory to the Lender.

(b) All security / legal documentation mentioned in Clause 7 (Collateral/Security) duly executed and properly registered if required.

(c) A List from the Borrower confirming its most updated existing current account list, bank facilities and respective current outstanding and outstanding corporate guarantees issued for any third party.

  

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Armco & Metawise / No. 20090325080590001-1

(d) Not later than 3 business days prior to the issuance of any L/C, the lender shall have received;

(i)           a duly completed application to issue an L/C in form and substance

acceptable to the lender;

        (ii)    copy of purchase contract between the Borrower and the Supplier acceptable to the Lender(individually or collectively the “Supplier”) in form and substance acceptable to the Lender;

       (iii)    copy of sales contract between the Borrower and the Off-taker acceptable to the Lender (individually or collectively the “Off-taker”) in form and substance acceptable to the Lender;

       (iv)    In the event of issuing a Front-to-Back L/C, copy of sales contract must be signed with a third party off-taker;

(v)           marine insurance cover note or policy, in form and substance acceptable to

the Lender, to be endorsed to order of the Lender or to show the Lender as loss payee, and satisfactory evidence for payment of the premium, as and when required;

(vi)           pre-signed blank bills of exchange, invoices and pocking lists and any other

necessary documents the Lender may request from time to time;

(vii)            the event of issuing Front-to-Back L/C the Margin;

(viii)   in the event of issuing Back-to-Back L/C, the Master L/C, which is to be advised through and deposited with the Lender and, if required, confirmed by a bank specified by the Lender;

(ix)           any other documents required by the Lender

(e) For Export L/C Financing, the lender shall have received:

(i)           a written request from the Borrower for Export L/C Financing in form and substance acceptable to the Lender;

        (ii)    a duly completed application to effect payment to the supplier in form and substance acceptable to the Lender;

(iii)           copy of purchase contract between the Borrower and the Supplier in form and substance acceptable to the Lender;

(iv)           copy of sales contract between the Borrower and the Off-taker in form and substance acceptable to the lender;.

(v)           the Export L/C, which is to be advised through and deposited with the Lender and, if required, confirmed by a bank stipulated by the Lender.

(vi)           compliant documents presented under the Export L/C.

7. Clause 10 (Warranties and Undertakings) shall be amended as follows:

	
(a)

	
All payments due to be made by the Borrower under this Letter shall be made not later than 11:00 a.m. on the relevant day by effecting payments to the Collateral Account;

  

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Armco & Metawise / No. 20090325080590001-1

	
(b)

	
The Borrower shall deliver to the Lender such documents of title, which are being financed in connection with the relevant L/C and contain' such endorsement satisfactory to the Lender in all respects. Any bill of lading shall be in full set and made out to the order of the Lender or to order and blank endorsed;

	
(c)

	
The Lender shall have the sole discretion to accept or reject terms or conditions of any of the L/C  to be issued;

	
(d)

	
The terms of the Front-to-Back L/C & Back-to-Back L/C should be fully matched with that of the Master L/C;

	
(e)

	
In the event of issuing a Front-to-Back L/C, the Borrower shall lodge with the Lender the original Master L/C forthwith upon receipt of the same, latest by the shipment date. The Margin shall be released upon receipt of the Master L/C;

	
(f)

	
The beneficiary of the L/C shall inform the Lender of full shipping details as well as the Expected Time of Arrival ("ETA”) of the vessel no later than seven days before arrival of goods, as and when required;

	
(g)

	
The lender shall have the absolute discretion to apply any proceeds arising out of Master L/C, Export L/C and/or sale of the Goods to settle the corresponding import obligations and/or indebtedness owned by the Borrower to the lender when due;

	
(h)

	
All payments in connection with the Facilities shall be routed through the Collateral Account;

	
(i)

	
The Lender shall be allowed to offset any amount outstanding on any account of under the Facilities against the money in the Collateral Account;

	
(j)

	
There does not exist any encumbrances, mortgage, lien, pledge on any of the Borrower's assets, both present and future undisclosed and/ or unacceptable by the lender and the Borrower must not create or permit to exist any mortgage, pledge, lien, charge, assignment, or hypothecation or security interest or any other agreement or arrangement having the effect of conferring security over any of the Borrower's assets without the lender's prior written consent;

	
(k)

	
The Borrower must procure that all their obligations in relation to the Facilities will at all times rank pari passu in terms of security and support (including third party) with all their other present and future obligations, except for the obligations mandatorily preferred by law applying to companies generally;

  

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Armco & Metawise / No. 20090325080590001-1

	
(l)

	
The Borrower shall furnish to the lender within 60 days after the end of half year a copy of their interim financial statements and 120 days after the end of each financial year a copy of its annual audited financial statements;

	
(m)

	
The Borrower shall furnish to the lender such other information concerning the Borrower's business, properties, condition or operations, financial or otherwise, as the lender may from time to time reasonably request;

	
(n)

	
The Borrower shall promptly inform the lender if there is any material adverse change of its operations or financial position;

	
(o)

	
The Borrower shall promptly inform the lender if any termination event or event of default has occurred or is likely to occur under any agreement with the lender or other creditors;

	
(p)

	
Notwithstanding any provisions stated in this letter, the Facilities are repayable on demand by the lender. The lender may at any time by written notice to the Borrower immediately terminate, cancel or suspend the Facilities or otherwise modify the Facilities without the consent of any party. The Borrower shall upon notice pay to the lender immediately available funds with an amount equal to the aggregate of its liabilities (both actual and contingent and whether or not matured) which sum shall be credited forthwith to a collateral account with the Lender to be applied at the lender's sole absolute discretion towards the settlement and discharge of its liabilities and obligations on any account;

	
(q)

	
Notwithstanding any provision in the letter, the lender has absolute discretion to sell the Goods by auction or otherwise, at prevailing market price or invoice value to any buyer without having to seek prior consent or agreement from the Borrower. Any sum of money recovered from the sale of Goods shall be applied at the lender's discretion towards the settlement and discharge of liabilities or obligations of the Borrower on any account. All fees, charges, commissions, and/or expenses incurred in or in connection with the sale of the Goods shall be borne by the Borrower;

	
  

	
(r)

	
If this letter is addressed to more than one Borrower, each Borrower accepting the terms and conditions set out in this Letter is jointly and severally liable with the other Borrowers accepting the same. Each Borrower is liable for all obligations of any other Borrower outstanding under the Letter. The obligations and liabilities of each Borrower

  

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Armco & Metawise / No. 20090325080590001-1

	
  

	
shall take effect immediately upon its acceptance of the terms and conditions set out or referred to in this Letter. Each Borrower further agrees that the lender is not required to give any notice or make any reference to the other Borrower(s) in relation to the utilization of the Facilities by any Borrower(s);

	
(s)

	
If this letter is addressed to the Borrower and its subsidiaries, the Borrower, as a primary debtor, is liable to the Lender for all sums payable or owing under the Facilities (whether incurred by the Borrower or its subsidiaries).

8. Clause 17 (Assignment) shall be amended as follows:

The Borrower may not assign or transfer any of its rights under this Letter without the prior written consent of the Lender.

The Lender may assign and transfer its rights and obligations under the Facilities or any part thereof and for this purpose may disclose to a potential assignee or transferee such information about the Borrower, the Guarantor, the Corporate Guarantor, and the Facilities as the lender may absolutely think fit.

9. Clause 19 (Arbitration) shall be amended as follows:

19. Dispute:

In the event that the Lender chooses to settle any dispute amicably by negotiation, an agreement has to be reached within 30 days after a written notice on the existence of the dispute has been given.  Otherwise, both parties irrevocably submit to the non-exclusive jurisdiction of the Hong Kong courts for the purpose of hearing and determining any dispute arising out of or in connection with this Letter (including a dispute regarding the existence, validity or termination of this Letter) (“Dispute”) and for the purpose of enforcement of any judgment against its assets.

Notwithstanding above, both parties further agree that any dispute may at the option of the Lender be referred to and finally resolved by arbitration.  If the Lender does not elect to submit a Dispute to arbitration, the Borrower shall not be entitled to submit claims to arbitration unilaterally.  Disputes submitted to arbitration shall be resolved in accordance with the Rules of the Hong Kong International Arbitration Centre, which rules are deemed to be incorporated by reference into this clause.  The tribunal shall consist of one arbitrator who shall, in the absence of agreement of the parties, be appointed by the Hong Kong International Arbitration Centre.  The place of arbitration shall be Hong Kong.  The language of the arbitration shall be English.  The tribunal shall give a written record of the award and the reasons therefor.  The costs of arbitration, including reasonable attorneys’ fees shall be borne by the losing party.

  

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Armco & Metawise / No. 20090325080590001-1

10. Clause 20 (Notice) shall be amended as follows:

The Borrower hereby irrevocably agrees that all orders and notices the Borrower submits to the Lender shall be made in writing an signed by the authorized signatories of the Borrower

Except as otherwise provided in this Letter, all requests, notices or other communications between the parties, shall be in writing and either delivered personally or by registered post or facsimile, addressed to the other party at the following address or other address as notified by such other party:

The relevant address and fax numbers of the Borrower are:

Armco & Metawise (H.K) Limited

Room 1706, Building 1, No 66 Jingsan Road,

Jinshui District, Zhengzhou City, Henan Province,

P.R. China, 450008

Attention:                      Wang Chunxiang

Telephone:                      0371-65862751

Facsimile:                      0371-65861170

The relevant address and fax number of the Lender are:

RZB Austria Finance (Hong Kong) Limited

C/O: Raiffeisen Zentralbank Oesterreich AG, Beijing Branch

Room 200, Beijing International Club,

21 Jianguomenwai Dajie

Beijing 10020,

P.R. China

Attention: Ms. Reyza Rayembek / Ms. Vivienne Sun

Telephone: 0086-10-6532-3388 / Ext. 358 / Ext. 374

Facsimile: 0086-10-6532-5926

In the case of change of any contact details, one party shall notify to the other party in writing by not less than five(5) Business days prior notice. Notice is effective, if hand delivered, upon actual receipt, if by facsimile, when sent with confirmed facsimile report, if sent by mail, three(3) business days after posting. Any communication or notice to be made or delivered to the Lender will be effective only when actually received by the Lender.

All notices and instructions the Borrower submits to the Lender by fax shall be legally binding on the Borrower. The Borrower accepts full responsibility for any losses or damages arising in connection with such instructions submitted by fax, including those resulting from erroneous or multiple transmissions, and the Borrower undertakes to indemnify the Lender for all losses or damages arising in this connections.

All other terms and conditions remain unchanged. This amendment shall prevail in cases of discrepancy between this amendment and the Facility Letter. This Amendment is executed between the Borrower and the Lender as of the date thereon.

The authentic originals of this Amendment are made in duplicate; each has the same legal validity.

Yours faithfully,

RZB Austria Finance(Hong Kong) Limited

__________________________________

(Authorized Signatories and Company Stamp)

  

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Accepted and Agreed for a on behalf of

Armco Metawise (H.K) Limited

/s/ Kexuan Yao__________________________________

(Authorized Signatories and Company Stamp)

Date: 08/02/10

Acknowledged by the Guarantor:

China Armco Metals Inc.

/s/ Kexuan Yao

Yao Kexuan

Date: 08/02/10

Acknowledged by the Guarantor:

/s/ Kexuan Yao

Yao Kexuan

Date: 08/02/10

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