Document:

cbmg_ex41.htm

Exhibit 4.1

 

  PRIVATE AND CONFIDENTIAL EXECUTION VERSION

 

2 July 2014

 

CELLULAR BIOMEDICINE GROUP, INC.

 

AND

 

VENTURE GARDEN LIMITED

OPTION DEED

  

1

  

 

THIS DEED is entered on the 2 day of July 2014

 

BETWEEN:

 

	
  (1)

	
CELLULAR  BIOMEDICINE  GROUP,  INC.,  a  Delaware  corporation  whose principal office is situated at 530 University Avenue, #17, Palo Alto, CA 94301, the United States of America (Company); and

 

	
  (2)

	
VENTURE GARDEN LIMITED, a company incorporated under the laws of the British Virgin Islands whose registered address is situated at P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, the British Virgin Islands (Optionholder).

 

WHEREAS:

 

(A)           The Company is a company whose shares of common stock are listed on the Nasdaq Capital Market in the United States.

 

(B)           The Optionholder is a company wholly-owned by the same sole shareholder (Parent) of Full Moon Resources Limited (Existing Shareholder). As of 15 June 2014, Existing Shareholder was the beneficial owner of 107,015 Shares (as defined below).

 

(C)    On 15 June 2014, the Company entered into a subscription agreement (Subscription Agreement) with the Existing Shareholder pursuant to which the Company agreed to issue, and the Existing Shareholder agreed to subscribe for, an additional 447,762 Shares (as defined below) at US$6.70 per Share on the terms and conditions set out in the Subscription Agreement, which resulted in the Existing Shareholder becoming the beneficial owner of 554,777 Shares in the aggregate.

 

(D)    In connection with the transactions contemplated by the Subscription Agreement, the Company has agreed to grant to the Optionholder the Option (as defined below).

 

NOW IT IS HEREBY AGREED as follows:

 

1.    DEFINITIONS

 

1.1    In this Deed and the recitals hereto, unless the context otherwise requires, the following expressions have the following meanings :

 

	 	 Business Day 	means a day other than a Saturday or Sunday or a public holiday in Hong Kong or the PRC on which banks are open in Hong Kong and the PRC for general commercial business and on which the Principal Market is open for business in dealing in securities;
	 	 	 
	 	
Deed

	
means this deed;

	 	 	 
	 	
Exercise Date

	
means any Business Day falling during the Exercise Period on which all or part of the Option are duly exercised before the close of business on such day by delivery of an Exercise Notice to the Company;

	 	 	 
	 	
Exercise Monies

	
means, in respect of each election to exercise the Option, an amount that is equal to the relevant Option Price multiplied by the number of Option Shares subject to the exercise of Option by the Optionholder in such election;

	 	 	 
	 	
Exercise Notice

	
means  a  notice  substantially  in  the  form  set  out  in  the Schedule;

	 	 	 
	 	Exercise Period	means the period from the date of this Deed to the Expiry Date during which the Option shall remain exercisable;
	 	 	 
	 	
Expiry Date

	
means the earlier of (i) the date falling on three years from the date of this Deed; and (ii) the date on which the Option lapse pursuant to Clause 3.2;

 

  

2

  

 

	 	 	 
	 	
Hong Kong

	
means the Hong Kong Special Administrative Region of the People's Republic of China;

	 	 	 
	 	
Option

	
means the rights to subscribe for the Option Shares at a price per Share equal to the Option Price in force on the Exercise Date;

	 	 	 
	 	
Option Price

	
means US$8.00, being the price payable in respect of each Share on exercise of the Option, subject to adjustments pursuant to Clause 6;

	 	 	 
	 	
Option Shares

	
means  those  Shares  to  be  issued  upon  exercise  of  the Option in such number, up to a total of 1,000,000 Shares subject to adjustments pursuant to Clause 6;

	 	 	 
	 	
PRC

	
means the People’s Republic of China (excluding, for the purpose of this Deed, Hong Kong, Taiwan and Macau);

	 	 	 
	 	
record date

	
means the date fixed by the bylaws of the Company or otherwise specified by the Company or otherwise for the purpose  of  determining  entitlement  to  dividends  or  other distributions to, or rights of, holders of Shares;

	 	 	 
	 	Reorganisation	means any reorganisation of the capital shares of the Company (other than a Dissolution provided in Clause 5), or any merger or consolidation of the Company with or into another corporation (other than a merger or consolidation of the Company in which the Company is the surviving entity), or any transfer of all or substantially all the assets of the Company;
	 	 	 
	 	Shares	means  the  common  stock  of  the  Company  of  par  value US$0.001 per share;
	 	 	 
	 	Principal Market	means the market on which the shares of the Company are primarily listed on or quoted for trading;
	 	 	 
	 	Trading Day	means a day on which there is trading on the Securities Exchange or such other market or exchange on which the Common Stock is then principally traded;
	 	 	 
	 	Triggering Condition	means the condition provided in Clause 3.2;
	 	 	 
	 	USA	means the United States of America;
	 	 	 
	 	US$	means  United  States  dollars,  the  lawful  currency  of  the United States of America; and
	 	 	 
	 	VWAP	means the volume-weighted average price as provided for in Clause 3.2.

 

1.2       Unless the context otherwise requires terms importing the singular number only shall include the plural and vice versa and terms importing persons shall include bodies corporate and unincorporated and terms importing one gender only shall include the other genders.

 

1.3      References in this Deed to Clauses and the Schedule shall be construed as references to the Clauses of and the Schedule to this Deed.

 

1.4       The headings to Clauses and the Schedule are inserted for convenience only and shall be ignored in construing this Deed.

 

2.         THE OPTION

 

The Company hereby irrevocably and unconditionally grants to the Optionholder the Option to subscribe for the Option Shares, in whole or in part, exercisable at the Option Price during the Exercise Period on terms and conditions as set out in this Deed.

 

  

3

  

3.         EXERCISE OF THE OPTION

 

3.1       Subject to Clause 3.2 of this Deed, the Optionholder shall have the right to exercise its Option from time to time, in whole or in part, at the Option Price, at any time during the Exercise Period.

 

3.2       At any time after eighteen (18) months from the date of this Deed, if the VWAP of the Shares for each Trading Day is greater than US$12.00, representing 150% of the Option Price, subject to adjustments pursuant to Clause 6 of this Deed, for a consecutive period of twenty (20) Trading Days (Triggering Condition), the Company shall have the right to require the Optionholderto exercise the unexercised portion of the Option in full within 14 days of satisfaction of the Triggering Condition, otherwise the Option shall lapse. To exercise this right, the Company shall deliver a written notice to the Optionholder within 7 days of the satisfaction of the Triggering Condition.

 

For purposes of this Clause 3.2:

 

VWAP means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on an established stock exchange (Securities Exchange), including without limitation the NasdaqCapital Market, thevolume weighted average price of the Common Stock for such date (or the nearest preceding date) on the primary Securities Exchange on which the Common Stock is then listed or quoted as reported by Bloomberg Financial L.P.; (b) if the Common Stock is not then listed or quoted on a Securities Exchange and if prices for the Common Stock are then quoted on the OTC Bulletin Board, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin Board; (c) if the Common Stock is not then listed or quoted on a Securities Exchange or the OTC Bulletin Board and if prices for the Common Stock are then reported in the "Pink Sheets" published by the National Quotation Bureau Incorporated (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported; or (d) in all other cases, the fair market value of a share of Common Stock as determined by the Company, unless the Optionholder requests that the Company obtain an opinion of a nationally recognized investment banking firm chosen by the Company (who shall bear the expense) and reasonably acceptable to Optionholder, in which event the VWAP shall be as determined by such investment banking firm thereof.

 

3.3       In order to exercise the Option, the Optionholder shall complete and sign an Exercise Notice (which will be irrevocable) at each election and deliver the Exercise Notice to the Company. The Exercise Notice shall specify the number of Option Shares (in accordance with Clause 3.1 of this Deed) the Optionholder wishes to subscribe, the amount of the Exercise Monies payable and a date for completion of the exercise of the Option, which shall not be less than five (5) Business Days of the date of the Exercise Notice. For the avoidance of doubt, the Optionholder shall have the right to subscribe for less than the number of Option Shares covered hereby, provided that no partial exercise of this option may be for any fractional Share or for fewer than 100 whole Shares.

 

3.4       On the exercise of Option, the amount of the Exercise Monies payable shall be calculated  by  multiplying  the  Option  Price  by  the  number  of  the  Option  Shares subscribed.  The aggregate maximum amount of Exercise Monies payable upon the exercise of the Option in full shall be US$8,000,000, subject to adjustment pursuant to Clause 6.

 

3.5       Completion of the exercise of the Option shall take place at the principal office of the Company in the USA (or such other place as agreed between the Company and the Optionholder).

 

3.6       On the date specified for completion in the Exercise Notice the Company shall:

 

	
  

	
(a)    duly and validly authorize and issue the number of Option Shares as stated in the Exercise Notice to the Optionholder; and

 

	
  

	
(b)  procure the registration of the Optionholder, or its nominee, as a shareholder of the Company in respect of the Option Shares referred to in sub-paragraph (a) above.

 

3.7       On the date specified for completion in the Exercise Notice the Optionholder shall pay or procure the payment of the Exercise Monies payable by electronic funds transfer in the amount thereof to such account(s) as the Company shall notify the Optionholder in writing at least three (3) Business Days prior to the date of completion specified in the Exercise Notice, or by other means as agreed between the Company and the Optionholder. The Exercise Monies shall be paid in cash by the Optionholder at the time of exercise.

 

3.8       The  Company  agrees  that  Exercise  Monies  remitted  by  the  Optionholder pursuant to Clause 3.7 of this Deed shall be deemed to be the amount received by the Company, without deduction therefrom of any expenses incurred or any commissions or concessions  or  discounts  paid  or  allowed  by  the  Company  in  connection  with  the exercise of the Option.

 

3.9       The Option shall, to the extent not exercised, lapse automatically on the Expiry Date.

 

  

4

  

4.         UNDERTAKINGS BY THE COMPANY

 

4.1       The Company hereby undertakes with the Optionholder that pending the Option being exercised in full or lapsing:

 

	
  (a) 

	
the Company shall keep available for issue, free from pre-emptive rights, out of its authorised and unissued share capital sufficient Shares to satisfy in full the Option Shares (to the extent of the outstanding Option) and all other rights for the time being outstanding of subscription for and conversion into Shares;

 

	
  (b)  

	
all Option Shares issued, sold and delivered on an exercise of the Option shall rank paripassu in all respects with the fully paid Shares in issue on the relevant Exercise Date and shall accordingly entitle the holders to participate in full in all dividends or other distributions paid or made on the Shares on or after the relevant Exercise Date other than any dividend or other distribution previously declared, or recommended or resolved to be paid or made if the record date therefor shall be before the relevant Exercise Date and notice of the amount and record date for which shall have been given to the Principal Market prior to the relevant Exercise Date;

 

	
  (c)   

	
it will use its reasonable endeavours to ensure that the holder of all Option Shares   issued, sold and delivered on each exercise of the Option shall be entitled to the same registration rights as if they were Shares subscribed by the Existing Shareholder under the Subscription Agreement; and

 

	
  (d)   

	
the Company will ensure that all Shares, when issued upon the exercise of the Option, are in compliance with the provisions of the Bylaws of the Company from time to time in force, will be duly and validly issued and fully paid and non- assessable, free and clear of all encumbrances.

 

5.         WINDING UP OF THE COMPANY

 

If an effective resolution is passed during the Exercise Period for the Dissolution of the Company, then the Company shall cause to be mailed to the Holder at its last address as it shall appear upon the Warrant Register of the Company, at least twenty (20) calendar days prior to (if applicable) the record date for determining rights to vote with respect to such Dissolution or the  effective date of such Dissolution, a notice stating the date on which such Dissolution is expected to become effective or close, and the date as of which it is expected that holders of Shares of record shall be entitled to exchange their Shares for securities, cash or other property deliverable upon suchDissolution; provided that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice.   The Optionholder shall remain entitled to exercise this Option during the period commencing on the date of such notice to the effective date of the event triggering such notice, except as may otherwise be expressly set forth herein.

 

For purposes of this Clause 5, Dissolution shall mean any voluntary or involuntary dissolution, liquidation or winding-up of the Company, merger, reorganization, consolidation, share exchange, transfer of assets or other transaction having similar effect involving the Company.

 

Subject to the foregoing, the Option in so far as not exercised shall lapse on the effective date of the Dissolution.

 

6.         REORGANISATION OF CAPITAL STRUCTURE

 

6.1       If and whenever the Shares by reason of any consolidation, sub-division, Share dividend or like events become of a different nominal amount whilst any Option remains exercisable, (i) the Option Price in force immediately prior thereto shall be adjusted by multiplying it by the revised nominal amount and dividing the result by the former nominal amount  and  (ii)  the  number  of  Option  Shares  (subject  to  the  Option  so  far  as unexercised) in force immediately prior thereto shall be adjusted by multiplying it by the former nominal amount and dividing the result by the revised nominal amount.   Each such adjustment shall be effective from the close of business in the USA on the day immediately preceding the date on which the consolidation or sub-division becomes effective.

 

6.2       In case of any Reorganisation of the Company, lawful provision shall be made so that the Optionholder shall thereafter be entitled to receive, upon exercise of the Option, during the period specified herein and upon payment of the Option Price then in effect, the  number  of  shares  or  other  securities  or  property  of  the  successor  corporation resulting from such Reorganisation that a holder of the shares deliverable upon exercise of the Option would have been entitled to receive in such Reorganisation if the Option had been exercised immediately before such Reorganisation, all subject to further adjustment as provided in this Clause 6. The foregoing provisions of this Clause 6.2 shall similarly apply to successive Reorganisations and to the shares or securities of any other corporation that are at the time receivable upon the exercise of the Option.  In all events, appropriate adjustment (as determined in good faith by the Company’s board of directors) shall be made in the application of the provisions of this Deed with respect to the rights and interests of the Optionholder after the transaction, to the extent that the provisions of this Deed shall be applicable after that event, as near as reasonably may be, in relation to any Shares or other property deliverable after that event upon exercise of the Option.

 

  

5

  

6.3       If there is any event that gives rise to an adjustment of the Option Price and/or the number of Option Shares issuable upon exercise of the Option as set forth in Clause 6.1 or 6.2, the Company shall give the Optionholder a written notice pursuant to Clause 10 below within five Business Days of the date of the event giving rise to the adjustment. The notice shall describe the adjustment or readjustment and show in reasonable detail the facts on which the adjustment is based.

 

6.4       If any adjustment as set forth in Clause 6.1 or 6.2 results in any fractional shares or script representing fractional Shares to be issued as Option Shares, the number of Option Shares the Optionholder is entitled to subscribe for shall be rounded up to the next whole Share.

 

6.5       Save as provided herein, no adjustments shall be made to the Option Price or the number  of  Option  Shares  in  the  event  of  alteration  in  the  capital  structure  of  the Company, provided that such alteration does not result in a change in the number of issued Shares.

 

7.         COSTS AND EXPENSES

 

7.1       Each party shall be responsible for its own costs and expenses (including legal fees and transaction costs) in connection with the preparation, negotiation and settlement of this Deed as well as the exercise of the Option and the issue of any Option Shares and any registration fees or other charges payable to relevant authorities in respect of the execution of this Deed, the exercise of the Option and the issue of Shares upon exercise of the Option.

 

8.         TRANSFERABILITY

 

The Option may not be transferred, directly or indirectly, without the Company’s consent unless the transfer is made to a wholly-owned subsidiary of the Optionholder, one or more corporate entities wholly owned by the Parent, or trust or family member of the Parent for the benefit of the Parent. Subject to the foregoing, the Option and/or the Option Shares (upon exercise of the Option) shall be freely transferrable in whole or in part by the Optionholder subject to any laws, rules, regulations or guidelines of any governmental or regulatory authority or Principal Market applicable to the Optionholder or any transferee of the Option or Option Shares, except that the Option may not be transferred by the Optionholder without the written consent of the Company.

 

9.         CONFIDENTIALITY

 

Each of the parties shall maintain the terms of this Deed including the existence of which in strict confidence and no disclosure or public announcement or communication concerning this Deed including its existence shall be made or despatched without the prior written consent of the other party except under the following circumstances:

 

9.1       disclosure is required by law or by any regulatory, governmental or antitrust body (including any tax authority) having applicable jurisdiction (provided that the disclosing party shall first inform the other party of its intention to disclose such information and take into account the reasonable comments of the other party); or

 

9.2       disclosure is  required for  the  purpose of  any arbitral  or judicial  proceedings arising out of this Deed; or

 

9.3       the information in respect of which a party seeks to disclose is already in the public domain otherwise than as a result of a breach of this Clause by such party.

 

10.       NOTICES

 

10.1     Except as otherwise provided in this Deed, every notice under this Deed shall be in writing marked for the attention of the persons respectively shown below and shall be deemed to be duly given if it (or the envelope containing it) identifies the party to whom it is intended to be given as the addressee and:

 

(a)   it is delivered by being handed personally to any one of the directors or the secretary of the addressee; or

 

(b)   it is delivered by being left in a letter box or other appropriate place for the receipt of letters at the addressee’s authorised address; or

 

(c)   notice is duly transmitted by email, followed by subsequent written notice sent to the addressee at its authorised address and duly posted, and, in proving the giving or service of such notice, it shall be sufficient to prove that the notice was duly given within the meaning of this Clause 10.1.

 

  

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10.2     A notice sent by post (or the envelope containing it) shall not be deemed to be duly posted for the purposes of Clause 10.1(c) unless it is put into the post properly stamped or with all postal or other charges in respect of it otherwise prepaid.

 

10.3     For the purposes of this Clause 10 the authorised address of each of the parties hereto shall be the address shown in this Deed (or such other address as the relevant party shall by notice substitute therefor).

 

10.4     The persons for whose attention notices shall be marked referred to above are:

 

(a)         in the case of the Company :

 

530 University Avenue, #17

Palo Alto, CA 94301

United States of America

Attn: Tony Liu, Chief Financial Officer tony.liu@cellbiomedgroup.com

Tel: +1 (650) 566 5064

 

(b)         in the case of the Optionholder :

 

1902-03 Bank of America Tower

12 Harcourt Road Central, Hong Kong Attn: Francis Leung

francis.p.leung@gmail.com

Tel: +852 3900 8282

 

10.5     Any notice duly given within the meaning of Clause 10.1 shall be deemed to have been both given and received

 

(a)   if it is delivered in accordance with Clause 10.1(a) or 10.1(b) on such delivery;

 

(b)   if it is duly posted or transmitted in accordance with Clause 10.1(c) by any of the methods there specified, on the second Business Day after the day of the posting or, in the case of a notice transmitted by email, upon dispatch and the receipt of such email.

 

10.6     For the purposes of this Clause 10 “notice” shall include any request, demand, instructions or other document.

 

11.       TIME OF THE ESSENCE

 

In this Deed, time shall be of the essence.

 

12.      CHOICE OF LAW, SUBMISSION TO JURISDICTION AND ADDRESS FOR SERVICE

 

12.1     This Deed shall be governed by and interpreted in accordance with the laws of Hong Kong.

 

12.2     The  Company  and  the  Optionholder  hereby  submit  to  the  non-exclusive jurisdiction of the Hong Kong Courts but this Deed may be enforced in any court of competent jurisdiction.

 

13.       FURTHER ASSURANCES

 

Each party agrees to do all things and execute all deed, instruments, transfer or other documents as may be necessary or desirable to give full effect to the provisions of this Deed.

 

  

7

  

14.       NO WAIVER

 

No waiver of any provision of this Deed shall be effective unless set forth in a written instrument signed by the party waiving such provision.  No failure or delay by a party in exercising any right, power or remedy under this Deed shall operate as a waiver thereof, nor shall any single or partial exercise of the same preclude any further exercise thereof or the exercise of any other right, power or remedy.  Without limiting the foregoing, no waiver by a party of any breach by the other party of any provision hereof shall be deemed to be a waiver of any subsequent breach of that or any other provision hereof.

 

15.       SEVERABILITY

 

Each and every obligation under this Deed shall be treated as a separate obligation and shall be severally enforceable as such and in the event of any obligation or obligations being or becoming unenforceable in whole or in part.  To the extent that any provision or provisions of this Deed are unenforceable they shall be deemed to be deleted from this Deed, and any such deletion shall not affect the enforceability of this Deed as remain not so deleted.

 

16.       ENTIRE AGREEMENT AND VARIATION

 

16.1     This Deed together with any documents referred to in it or incorporated into it by reference constitute the entire agreement between the parties with respect to its subject matter and supersedes and extinguishes any undertakings, representations, warranties, prior drafts, previous negotiations, proposals, commitments, writings, advertisements, publications oral or written, understanding and arrangements of any nature whatsoever.

 

16.2     No variations or alternations to this Deed shall be effective unless such changes are set out in writing and signed by the Company and the Optionholder.

 

17.       COUNTERPARTS

 

17.1     This Deed may be executed in one or more counterparts including counterparts transmitted by telecopier or facsimile, each of which shall be deemed an original, but all of which signed and taken together, shall constitute one document.

 

***The remainder of this page is left blank intentionally****

  

8

  

 

Executed as a deed by affixing the common seal of CELLULAR BIOMEDICINE GROUP, INC. in the presence of:

 

	/s/ Wei Cao	 	COMMON SEAL 
	 
Wei CAO

	 	 
	 
Chief Executive Officer

	 	 

 

	/s/ Bizuo Liu	 	 
	 
 
Bizuo LIU

	 	 
	 
 
Chief Financial Officer

	 	 

 

  

9

  

 

Executed as a deed by affixing the common seal of VENTURE GARDEN LIMITED in the presence of:

 

	/s/ Leung Pak To	 	[SEAL]
	 
 
 
Leung Pak To

	 	 
	 
 
Sole Director

  

10

  

 

SCHEDULE EXERCISE NOTICE

 

To: Cellular Biomedicine Group, Inc.(the Company)

 

We refer to the option deed entered into by and between the Company and us dated [●] July 2014 (the Option Deed).  Unless otherwise specified or the context requires otherwise, definitions used in the Option Deed apply in this Notice.

 

In accordance with Clause 3 of the Option Deed, we

 

(A)         hereby irrevocably elect to exercise the Option to subscribe for [●] Option Shares in the capital of the Company at the Option Price of US$[●], the Exercise Monies being US$[●], and agree to accept such Option Shares in the form of the relevant share certificates and on the terms of the Bylaws of the Company from time to time in force; and

 

(B)         make payment in full for such Option Shares by electronic funds transfer, or by other means as agreed between the Company and us, in favour of the Company for the full amount of the Exercise Monies mentioned in paragraph (A) of this Notice, and the Exercise Monies shall be paid (a) in cash; (b) through the withholding of Shares; or (c) US$  in cash and the remaining through the withholding of Shares.

 

(C)         request that a certificate for such Option Shares be issued in the name of the Optionholder and delivered to the following: 

 

Name:[●]

 

Address: [●]

 

(D)         in accordance with Clause 3.3 of the Option Deed, notify the Company that completion of exercise of the Option shall take place on [date] [month] 201[●]*.

 

Dated: [date] [month] 201[●]

 

For and on behalf of

 

VENTURE GARDEN LIMITED

 

                                                      

Name: 

Title:

 

  *Note:  The date specified should not be less than five (5) Business Days from the date of this Notice.

 

11f10q0314ex10i_keyuanpetro.htm

Exhibit 10.1

C1-02: Inward Bills Contract (applicable for single business)

 

Inward Bills Contract

No.: 2014beilun C1-02 No 004

 

Party A (Applicant): Ningbo Keyuan Plastic Co., Ltd

Business license No.:330200400023187

Legal representative/Principal: Chunfeng Tao

Address: Qingshi Industrial Park, Ningbo                    Postcode: 315803

Financial institution account and account No.: Bank of China Inc, Beilun Branch 361058330713

Tel: 0574-86232932 Fax: 0574-86232618

Party B: Bank of China Inc, Beilun Branch

Legal representative/ Principal: Shuguang Sun

Address: No.588, Huashan Road, Beilun Zone            Postcode: 315800

Tel: 0574-86869916 Fax: 0574-86895311

WHEREBY, the undersigned parties agreed to sign this contract in comply with applicable laws.

Article 1. Preconditions

 

Inward Bills under this contract shall meet the following requirements:

 

	
1.

	
This contract has already been effective;

	
2.

	
Party A obligates and signs the related documents, receipts, seal, related person’s name lists and samples of signatures for party B, and also fills in relevant certificates;

	
3.

	
Party A opens the required account to fulfill this contract;

 

	
4.

	
Party A arranges the required legal and administrative approval process to facilitate the business properly, and submits the duplicate copy of the approval documents and the copies of the original documents as requested by Party B;

 

	
5.

	
The guarantee on the provision of this contract has been effectively established;

	
6.

	
Other conditions requested by Party B.

Article 2. Related to Import Trade (Notes: complete with factual information.)

√Letter of Credit

Letter of Credit No.:LC1901313000703

Name of Bank Issuing Documents: Royal Bank of Scotland,SINGAPORE

No. of Issued Document: AB1901313000685

Receipt amount: USD  11,725,356.96

Collection

Invoice No.: / Entrusted bank’s name: /

Issuing documents No.: / Receipt amount: /

 

  

 

  

Article 3. Currency of Inward Bills and amount

 

Currency of Inward Bills: USD

Amount: (Spell-Out)  Eleven million USD

(Numeric)USD  11,000,000

Article 4. The Term of Inward Bills

 

The term of Inward Bills is / 12 months/ 365 days, beginning to calculate since the date of Party B made foreign payment.

 

If sale price of the imported products has been collected before the closing of the financing, Party B has the right to consider the final collection date as the closing date of the financing. Party A agrees to use the payment for sale of imported products it receives to repay Party A of the financing amount.

Article 5. Interest Rate and Interest Settlement (Notes: complete with factual information.)

 

	
1.

	
Interest rate (annual interest rate)

	 	
(1)

	
Inward Bills in RMB: fixed interest rate, and annual interest rate is /%;

	 	
(2)

	
Inward Bills in foreign currency:

 

	 	
A.

	
Fixed interest rate, and annual interest rate is /%;

 

	 	
B.

	
Loan interest rate in the floating period within / months / years since the Inward Bills date published by the Bank of China, Inc.

 

	 	
C.

	
Benchmark of LIBOR/HIBOR + 190 points for the latest 12 months published by Reuters till the 9:00- of the prior working day of the Inward Bills date.

 

	
2.

	
Calculation of interest

 

Interest is calculated according to the actual payment amount and days since the date of Party B made payment.

 

Calculation formula: Interest=Principal*Days*Daily interest rate.

 

Base for calculating daily interest rate is of 360 days, the reduction formula is: daily interest rate=annual interest rate/360.

 

  

2

  

 

	
3.

	
Method of interest settlement

 

Interest settlement is according to the following _third_ way:

	 	
(1)

	
Settlement with quarter, 20th of each last month per quarter as the interest settlement day, and the 21st as the payment day.

	 	
(2)

	
Settlement with month, 20th of each month as the interest settlement day, and the 21st as the interest payment day.

	 	
(3)

	
Same as expiration date of principal.

	 	
(4)

	
Receive the interest in advance and settle when expiration date.

On the condition that the final payment day of the financing principal is not the same date of interest payment day, then the final payment day is considered as interest payment day and Party A shall pay off the entire interest.

 

	
4.

	
Default interest

	 	
(1)

	
If Party A fails to return the payment of Inward Bills within the agreed time, as for the overdue payment, the default interest shall begin accruing according to the default interest rate starting from the date of late payment until both the principal and interest are paid off.

	 	
(2)

	
If Party A fails to pay the interest and default interest in time, it can be penalized with compound interest per month/per quarter according to agreed default interest in this contract.

	 	
(3)

	
Default interest rate

	 	
A.

	
Default interest rate is a floating rate, the floating period is four month/ /year. In every floating period, the default interest shall be re-priced on the default date. The re-pricing date is the corresponding date in the month of the default date. If there is no corresponding date in the same month, then the last date of the month is the re-pricing date.

 

	 	
B.

	
Default interest rate equals to the benchmark interest rate in the item C below plus 20%.

 

	 	
C.

	
In the first floating period, the benchmark interest rate is the financing interest rate item 1 of this Article. After each full floating period, the benchmark interest rate shall be calculated as below:

 

Financing in RMB, it floats upward/ floats downward according to the same level loan benchmark interest rate issued by the People’s Bank of China in the re-pricing day.

 

Financing with foreign currency,

 

It is the loan interest rate within the same floating period of / years of the re-pricing day implemented by Bank of China, Inc.

 

√ It equals to the latest floating period obtained from Reuters of the prior day of re-pricing day before 9:00 (Beijing time) 12 M LIBOR pluses 190 points.

 

  

3

  

Article 6. Fees

 

Party A shall pay the related fees related to the business under this contract in time and the Party B decides the calculation basis, standard and method, etc.

 

Party A pays the above fees through the __second__ method:

 

	
1.

	
In __/__ banking day since this contract became effective, pay with __/___.

	
2.

	
Party B is authorized to deduct from the Party A’s account (Account No.:361058330713)

	
3.

	
Other methods:____________________/_______________.

Article 7. Other Rights and Obligations of the Parties

Party B has the right to handle the full set of documents/goods under the inward bills business or other guarantee right/ property right pursuant to applicable laws and regulations. According to applicable laws and regulations or the verdict of the courts and arbitral authorities, the right to handle the full set of documents/goods under the Inward Bills business belongs to Party A, then Party A agrees to transfer this right to party B unconditionally to the maximum extent allowed by applicable law and regulations and accept performance and non- performance of Party B to handle the documents/goods. If according to applicable laws and regulations or the verdict of the courts and arbitral authorities, the right to handle the full set of documents/goods under the Inward Bills business belongs to Party B, then Party B retains this right till Party A completely pays off the financing.

When Party A requests to hold receipts/goods, and repays the financing with sales income, Party A is only acting as Party B’s consignee, including but not limited to safekeeping relevant receipts, handling storage, transportation and other related matters under those receipts, and maintain sales fund or deposit it to specific account of Party B. Party A shall disclose this role when selling the goods to a third party.

Party A shall be responsible for all the fees (including but not limited to insurance, storage, transport and wharf) during period when Party A retains the goods. Party A promises to insure the goods according to the market price of the goods, indicate Party B as the insured and provide the insurance documents to Party B. Party B has the right to claim directly when insured cargo endures loss.

Without the permission of Party B, party A is not allowed to delay payment or handle the goods through any non-currency method or at the price lower than the market price. Party A is not

allowed to mortgage or pledge, or make the goods to be bound by any other liens. Once requested by Party B, Party A shall submit the details of the goods’ accounts, any sales revenue or relevant sales contracts to party B; Party B has the right to enter into the warehouse to review the actual situations of the goods, or repossess these goods.

 

  

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Article 8. Guarantee (Notes: complete with factual information.)

 

The guarantee methods of liability under this contract:

 

√ Ningbo Keyuan plastic Co.ltd , to provide the guarantee by the following method,

 

In case the pledgor is a third party, Party B and the pledgor shall enter into additional margin pledge contract.

 

√ This contract is the Beilun 2010 Beilun 102-05-01-014 guarantee under the main contract of < General Agreement of Pledge>, and the agreement provides margin pledge and submit corresponding <Certification of Pledge> or handle directly as following ways rather submit <Certification of Pledge>:

 

	
1)

	
Margin Amount: (Currency) RMB ; (Spell-Out) 68,000,000 RMB

	
2)

	
Party A pay for above margin with following method:

 

Within / 1 banking days since the effective date of this contract, Party A will deposit or load margin to the margin account opened in Party B with(396162796142) .

 

Entrusted Party B to load the margin from Party A’s account () to the margin account of Party B ()

Party A ‘s guarantee liability of margin under business has been removed, and Party A authorized Party B to load the margin to margin account opened in Party B directly from account.

Others:

	
3)

	
In case above guarantee liability of margin has been removed by Party B, Party B shall return according to following methods:

Return to the Party A’s account.

 

Return according to the deposit route.

 

Return according to the written instruction of Party A.

 

Others: .

If Party B believes that Party A or guarantee occurred matters potentially affect the contractual capacity, or guarantee contract becomes invalid, terminated or cancelled, or financial conditions of Party A or guarantor gets worse or they enter into major litigation or arbitration, or any other factors that may affect their ability to perform their contractual obligations, or the value of guaranty gets worse or lost due to devaluation, destruction, losses, or being closed down, Party B has the right to demand and Party A has the obligation to provide new guarantee, replace the guarantor to bear the liability under this contract.

Article 9. Party A’s Statements and Commitment

 

Statements as follows:

 

	
1.

	
Party A registers and survives by law, and possess the complete capacity of civil rights needed to fulfill this contract;

	
2.

	
Party A signs and fulfills this contract based on true intention, has obtained the legal and effective authority according to the requirements of the Articles of Incorporation or other internal management documents, and is not allowed to violate any binding agreement, contract and other legal documents; Party A has gained or will gain all the relevant approvals, permits, files or registers.

 

  

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3.

	
All the documents and certificates provided by party A to Party B is authentic, complete, accurate and effective under this contract;

	
4.

	
The trading background described by party A to party B is authentic and legal, and does not have the illegal purpose such as money laundering. Party A providing any documents according to party B’s requirements does not mean that party B has the obligations and responsibilities of inspection towards the authenticity and legality of party A’s trade;

	
5.

	
Party A will not hide any truths that may influence both parties’ financial situation and contractual capacity.

 

Commitments as follows:

 

	
1.

	
Provide the statement of products sales regarding the import items in timely manner according to Party B’s requirement.

	
2.

	
If Party A has already signed or will sign counter-guarantee agreement or other similar agreements about the guaranteed obligations with the guarantor of this contract, then the agreement will not damage any rights owned by party B under this contract;

	
3.

	
If the products sales of the import items have serious difficulties, or situations that may influence both parties’ financial conditions and capacity to fulfill this contract, including but not limited to the change of any business pattern of dismantlement, merger, affiliation, joint venture with foreign merchants, cooperation, contractual operation, reorganization, reformation and listing program, reduction of registered capital, assignment of significant property or stock right, commitment of significant liabilities, or installation of new significant liabilities on the pledge, or involvement to grave litigation or arbitration cases, party A shall inform party B in time;

 

	
4.

	
As for pending matters, Party A agrees to handle according to the international conventions and agreement with Party B.

Article10. Disclosure of Related Parties of Party A and Related Transactions

 

The _first  item below is applicable to both parties:

 

	
1.

	
Party A does not belong to the group client of party B according to the Management Guidance of Credit Extension Business Risk of Commercial Bank Group (short for Guidance).

	
2.

	
Party A belongs to the group client of party B according to Guidance. Party A shall report the situation of related transactions over 10% net assets in time, including the related relationship, trading projects, trading properties, trading amount, corresponding proportion and pricing policy and so on (including the trade with no capital but only proportion capital).

 

  

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Article 11. Default Events

 

Party A will be considered in violation of this contract if one of the following events happens:

 

	
1.

	
Party A fails to fulfill its obligations to pay and repay to the party B according to this contract;

	
2.

	
The statements made by party A is untrue or default the commitments under this contract;

	
3.

	
The matters mentioned in No.3 of Item 2 in Article 9 happen; Party B considered those may affect the financial conditions and contractual capability of Party A or guarantor, and Party A has not provided new guarantee, replaced guarantor in accordance with the provisions of this contract.

	
4.

	
Party A closes down or is subject to disincorporation, revocation or bankrupt.

	
5.

	
Party A defaults other covenants in this contract;

	
6.

	
Party A default the other contracts signed with Party B or other institutions of Bank of China, Inc.

	
7.

	
Guarantor defaults the covenants of guarantee contract, or other contracts signed with Party B or other institutions of Bank of China, Inc.

 

When any of the above mentioned events occur, Party B has the right to take one or some following actions:

 

	
1.

	
Request Party A and/or guarantor to amend the default behaviors within limited time;

 

	
2.

	
Entirely or partly suspend or terminate Party A’s business applications under this contract or the other contracts, entirely or partly suspend or terminated to grant and handle the un-granted loans, holding trading financing;

	
3.

	
Announce the unpaid loans/financing principals and interests and the other account payables to entirely or partly expire.

	
4.

	
Terminate or revoke this contract, entirely or partly terminate or revoke the other contracts between Party A and Party B;

	
5.

	
Request Party B to compensate the liquidated damages;

	
6.

	
Deduct funds from Party A’s account to repay entirely or partly liability under this contract.

 

The undue funds in this account will be considered due in advance. If the account currency is different from the business currency of Party B, convert according to the applicable rate of Party B.

 

	
7.

	
Execute real guarantee;

	
8.

	
Request guarantor to bear guarantee liability;

	
9.

	
Other measures considered necessary by Party B.

 

  

7

  

 

Article 12. Reservation of the Rights

 

If one party fails to fulfill entire or part rights under this contract or request the other party to fulfill, undertake entire or part obligations, responsibilities, it shall not be considered to waive the obligations or responsibilities.

 

Any party’s tolerance or extension or delay execution of the rights under this contract towards another party shall not affect the rights under this contact and laws and regulations, also not considered to waive the rights.

Article 13. Amendment, Modification and Termination

 

This contract can be amended or modified in writing mutual agreement. Any amendments or modifications are inseparable parts of this contract.

 

Unless otherwise specified by laws or regulations or covenants, this contract is not allowed to terminate till the rights and obligations are completely executed.

Unless otherwise specified by laws or regulations or covenants, invalidation of any items under this contract will never affect the other items’ legal effectiveness.

Article 14. Applicable Laws and Settlement

 

This contract shall be governed by the laws of PRC.

 

After this contract becomes effective, all disputes concerning this contract should be settled through friendly negotiation. When negotiation fails, any party can settle with following second method;

 

	
1.

	
Submit to ___________________Arbitration Committee to arbitrate.

 

	
2.

	
Submit to the People’s court located in the domicile of Party B or other corresponding institutions of Bank of China, Inc.

 

	
3.

	
Prosecute the People's Courts with jurisdiction.

During the settlement period, if this dispute does not affect the performance of this other items, the other items shall continue to performance,

Article 15. Attachment

 

The following attachments and other attachments ensured by both parties makes up the inseparable parts of this contract, and possess the equal legal validity.

 

1,__________/_______;

 

2,__________/_______;

Article 16. Other Covenants

 

	
1.

	
Without Party B’s written consent, Party A is not allowed to transfer rights or obligations to the third parties.

	
2.

	
If Party B entrusts any other institutes of Bank of China to execute the rights and obligations under this contract, Party A shall agree. Party B or its designees are entitled to exercise all the rights under this agreement and to file a lawsuit in the People's Courts or submit to the Arbitration Committee to arbitrate.

 

  

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3.

	
In case of not affecting the other covenants of this contract, this contract has the legal binding to the heirs and transferees.

	
4.

	
Apart from the other covenants, the address specified in this contract by both parties is regarded as the contract address, and also promise that when the contract address changes, then information will sent to the party in written form in time.

	
5.

	
The titles and business names in this contract are just used for the purpose of convenience, and can’t be used for the purpose to explain the clause content, and obligations and rights of the party.

	
6.

	
Per the changes of laws and regulations or regulatory process or the requirements of regulatory authority, Party B is unable to execute this agreement or execute according to covenants, Party B has the right to terminate or amend this agreement or single agreement according to the changes of laws and regulations or regulatory process or the requirements of regulatory authority and exemption from liability.

Article 18. Conditions for effectiveness

 

This contract becomes effective upon the signature and seal of the legal representatives of both parties, principals or the authorized persons.

 

This contract made in duplicate, each party has one copy, both having the same legal effects.

Party A: Ningbo Keyuan Plastic Co., Ltd Party   B: Bank of China, Inc Beilun Branch

 

The authorized person:                      The authorized person:

 

JANUARY,20, 2014    JANUARY,20, 2014

 

 

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