Document:

f8kex10i_intercloud.htm

Exhibit 10.1

 

AGREEMENT

 

THIS EXCHANGE AGREEMENT (the “Agreement”) is dated this 12th day of March, 2014, by and among INTERCLOUD SYSTEMS, INC. f/k/a GENESIS GROUP HOLDINGS, INC., a Delaware corporation (the “Company”), RIVES-MONTEIRO LEASING, LLC, an Alabama limited liability company (“Rives”), TROPICAL COMMUNICATIONS, INC., a Florida corporation (“TCI”), ADEX CORPORATION, a New York corporation (“ADEX”), T N S, INC., an Illinois corporation (“TNS”), ADEXCOMM CORPORATION, a Florida corporation (“ADEXCOMM”), AW SOLUTIONS, INC., a Florida corporation (“AWS”), and INTEGRATION PARTNERS-NY CORPORATION, a New Jersey corporation (“IPC”), and DOMINION CAPITAL LLC and 31 GROUP LLC (collectively, the “Holders”).

 

WHEREAS, the Holders beneficially own and hold certain Term Notes issued by the Company as set forth on Exhibit A hereto (the “Term Notes”); and

 

WHEREAS, the Holders desire to exchange the Term Notes for the number of shares of common stock of the Company as set forth and memorialized on Exhibit A hereto and Schedule A-1 to Exhibit A (the “Exchange Shares”), and the Company desires to issue the Exchange Shares in exchange for the Term Notes, all on the terms and conditions set forth in this Agreement; and

 

WHEREAS, the reliance upon the representations made by each of the Holders and the Company in this Agreement, the transactions contemplated by this Agreement are such that the offer and exchange of securities by the Company under this Agreement will be exempt from registration under applicable United States securities laws as a result of this exchange offer being undertaken pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”).

 

NOW, THEREFORE, in consideration of the terms and conditions contained herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and the Holders hereby agree as follows:

 

Section 1. Exchange.  Subject to and upon the terms and conditions set forth in this Agreement, the Holders agree to surrender to the Company the Term Notes and, in exchange therefore, the Company shall issue to the Holders the Exchange Shares (the “Exchange”).

 

1.1 Closing.  On the Closing Date (as defined below), the Company will issue and deliver (or cause to be issued and delivered) the Exchange Shares to the Holders, or in the name of a custodian or nominee of the Holders, or as otherwise requested by the Holders in writing, and the Holders will surrender to the Company the Term Notes.  The closing of the Exchange shall occur on March 12, 2014, or as soon thereafter as the parties may mutually agree in writing (the “Closing Date”), subject to the provisions of Section 4 and Section 5 herein.  The shares of common stock of the Company (the “Exchange Shares”) issuable upon closing shall not bear any restrictive legend or be subject to any stop-transfer instructions.

 

1.2 Section 4(a)(2).  Assuming the accuracy of the representations and warranties of each of the Company and the Holders set forth in Sections 2 and 3 of this Agreement, the parties acknowledge and agree that the purpose of such representations and warranties is, among other things, to ensure that the Exchange qualifies as an exchange of securities under Section 4(a)(2) of the Securities Act.

 

  

 

  

 

Section 2. Representations and Warranties of the Company.  The Company represents and warrants to the Holders that:

 

2.1 Organization and Qualification.  The Company and each of the subsidiaries of the Company (the “Subsidiaries”) is an entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted.  Neither the Company, nor any Subsidiary is in violation or default of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents.  Each of the Company and the Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity or enforceability of this Agreement or any documents executed in connection herewith (the “Transaction Documents”), (ii) a material adverse effect on the results of operations, assets, business, prospects or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse Effect”) and no proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.

 

2.2 Authorization; Enforcement.  The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Agreement and each of the other Transaction Documents and otherwise to carry out its obligations hereunder and thereunder.  The execution and delivery of this Agreement and each of the other Transaction Documents by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company, the Board of Directors or the Company’s stockholders in connection herewith or therewith other than in connection with the Required Approvals.  This Agreement and each other Transaction Document to which it is a party has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

 

  

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2.3 Issuance of Exchange Shares.  The issuance of the Exchange Shares is duly authorized and, upon issuance in accordance with the terms hereof, the Exchange Shares shall be validly issued, fully paid and non-assessable shares of the common stock of the Company.  Assuming the truth and accuracy of each of the representations and warranties of the Holders contained in Section 3 of this Agreement, the issuance by the Company of the Exchange Shares is exempt from registration under the Securities Act.

 

2.4 No Conflicts.  The execution, delivery and performance by the Company of this Agreement and the other Transaction Documents to which it is a party, the issuance of the Exchange Shares and the consummation by it of the transactions contemplated hereby and thereby do not and will not: (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws or other organizational or charter documents, (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any options, contracts, agreements, liens, security interests, or other encumbrances (“Liens”) upon any of the properties or assets of the Company or any Subsidiary, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) subject to the Required Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not have or reasonably be expected to result in a Material Adverse Effect.

 

2.5 Acknowledgment Regarding the Exchange.  The Company acknowledges and agrees that the Holders are acting solely in the capacity of an arm’s length third party with respect to this Agreement and the transactions contemplated hereby.  The Company further acknowledges the Holders are not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to this Agreement and the transactions contemplated hereby, and any advice given by the Holders or any of their representatives or agents in connection with this Agreement is merely incidental to the Exchange.

 

  

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2.6 SEC Reports; Financial Statements.  The Company has filed all reports, schedules, forms, statements and other documents required to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) of the Exchange Act, for the two years preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the “SEC Reports”) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension.  As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.  The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing.  Such financial statements have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”), except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company and its consolidated Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.

 

2.7 Subsidiaries.  All of the direct and indirect subsidiaries of the Company are set forth in the SEC Reports.  The Company owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary free and clear of any Liens, and all of the issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase securities.  If the Company has no subsidiaries, all other references to the Subsidiaries or any of them in the Transaction Documents shall be disregarded.

 

2.8 Filings, Consents and Approvals.  Other than as set forth on Schedule 3.1(e), the Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than: (i) the notice and/or application(s) to each applicable Trading Market for the issuance and the listing of the Exchange Shares for trading thereon in the time and manner required thereby, and (ii) the filing of Form D with the Commission and such filings as are required to be made under applicable state securities laws (collectively, the “Required Approvals”).

 

  

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2.9 Capitalization.  The capitalization of the Company is as set forth in the SEC Reports.  No Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents.  There are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of Common Stock or Common Stock Equivalents. The issuance of the Exchange Shares will not obligate the Company to issue shares of Common Stock or other securities to any Person (other than the Purchasers) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under any of such securities. All of the outstanding shares of capital stock of the Company are duly authorized, validly issued, fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities.  No further approval or authorization of any stockholder, the Board of Directors or others is required for the issuance of the Exchange Shares.  There are no stockholders agreements or other similar agreements with respect to the Company’s capital stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s stockholders.

 

2.10 Shell Company Status. The Company is not currently, and within the past three years has not been, an issuer identified in Rule 144(i)(1) under the Securities Act.

 

2.11 DTC Eligibility.  The Company, through the Transfer Agent, currently participates in the DTC Fast Automated Securities Transfer (FAST) Program and the Common Stock can be transferred electronically to third parties via the DTC Fast Automated Securities Transfer (FAST) Program.

 

2.12 Material Changes; Undisclosed Events, Liabilities or Developments.  Since the date of the latest audited financial statements included within the SEC Reports, except as specifically disclosed in a subsequent SEC Report filed prior to the date hereof: (i) there has been no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP or disclosed in filings made with the Commission, (iii) the Company has not altered its method of accounting, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock and (v) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company stock option plans. The Company does not have pending before the Commission any request for confidential treatment of information.  Except for the issuance of the Exchange Shares contemplated by this Agreement, no event, liability, fact, circumstance, occurrence or development has occurred or exists or is reasonably expected to occur or exist with respect to the Company or its Subsidiaries or their respective businesses, properties, operations, assets or financial condition, that would be required to be disclosed by the Company under applicable securities laws at the time this representation is made or deemed made that has not been publicly disclosed at least 1 Trading Day prior to the date that this representation is made.

 

  

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2.13 Litigation.  There is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”) which (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the Exchange Shares or (ii) could, if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect.  Neither the Company nor any Subsidiary, nor any director or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty.  There has not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation by the Commission involving the Company or any current or former director or officer of the Company.  The Commission has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act.

 

2.14 Labor Relations.  No labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees of the Company, which could reasonably be expected to result in a Material Adverse Effect.  None of the Company’s or its Subsidiaries’ employees is a member of a union that relates to such employee’s relationship with the Company or such Subsidiary, and neither the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the Company and its Subsidiaries believe that their relationships with their employees are good.  To the knowledge of the Company, no executive officer of the Company or any Subsidiary, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant in favor of any third party, and the continued employment of each such executive officer does not subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing matters.  The Company and its Subsidiaries are in compliance with all U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours, except where the failure to be in compliance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

  

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2.15 Compliance. Neither the Company nor any Subsidiary: (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any judgment, decree or order of any court, arbitrator or other governmental authority or (iii) is or has been in violation of any statute, rule, ordinance or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws relating to taxes, environmental protection, occupational health and safety, product quality and safety and employment and labor matters, except in each case as could not have or reasonably be expected to result in a Material Adverse Effect.

 

2.16 Regulatory Permits.  The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as described in the SEC Reports, except where the failure to possess such permits could not reasonably be expected to result in a Material Adverse Effect (“Material Permits”), and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation or modification of any Material Permit.

 

2.17 Title to Assets.  The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by them and good and marketable title in all personal property owned by them that is material to the business of the Company and the Subsidiaries, in each case free and clear of all Liens, except for (i) Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries and (ii) Liens for the payment of federal, state or other taxes, for which appropriate reserves have been made therefor in accordance with GAAP and, the payment of which is neither delinquent nor subject to penalties.  Any real property and facilities held under lease by the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases with which the Company and the Subsidiaries are in compliance.

 

  

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2.18 Intellectual Property.  The Company and the Subsidiaries have, or have rights to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual property rights and similar rights as described in the SEC Reports as necessary or required for use in connection with their respective businesses and which the failure to so have could have a Material Adverse Effect (collectively, the “Intellectual Property Rights”).  None of, and neither the Company nor any Subsidiary has received a notice (written or otherwise) that any of, the Intellectual Property Rights has expired, terminated or been abandoned, or is expected to expire or terminate or be abandoned, within two (2) years from the date of this Agreement.  Neither the Company nor any Subsidiary has received, since the date of the latest audited financial statements included within the SEC Reports, a written notice of a claim or otherwise has any knowledge that the Intellectual Property Rights violate or infringe upon the rights of any Person, except as could not have or reasonably be expected to not have a Material Adverse Effect.  To the knowledge of the Company, all such Intellectual Property Rights are enforceable and there is no existing infringement by another Person of any of the Intellectual Property Rights.  The Company and its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of all of their intellectual properties, except where failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

2.19 Insurance. The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged, including, but not limited to, directors and officers insurance coverage at least equal to the aggregate Subscription Amount.  Neither the Company nor any Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business without a significant increase in cost.

 

2.20 Transactions With Affiliates and Employees.  Except as set forth in the SEC Reports, none of the officers or directors of the Company or any Subsidiary and, to the knowledge of the Company, none of the employees of the Company or any Subsidiary is presently a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from providing for the borrowing of money from or lending of money to, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee, stockholder, member or partner, in each case in excess of $120,000 other than for: (i) payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses incurred on behalf of the Company and (iii) other employee benefits, including stock option agreements under any stock option plan of the Company.

 

  

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2.21 Sarbanes-Oxley; Internal Accounting Controls.  The Company and the Subsidiaries are in compliance with any and all applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any and all applicable rules and regulations promulgated by the Commission thereunder that are effective as of the date hereof and as of the Closing Date.  The Company and the Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that: (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The Company and the Subsidiaries have established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and the Subsidiaries and designed such disclosure controls and procedures to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms.  The Company’s certifying officers have evaluated the effectiveness of the disclosure controls and procedures of the Company and the Subsidiaries as of the end of the period covered by the most recently filed periodic report under the Exchange Act (such date, the “ Evaluation Date ”).  The Company presented in its most recently filed periodic report under the Exchange Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date.  Since the Evaluation Date, there have been no changes in the internal control over financial reporting (as such term is defined in the Exchange Act) that have materially affected, or is reasonably likely to materially affect, the internal control over financial reporting of the Company and its Subsidiaries.

 

2.22 Certain Fees.  No brokerage or finder’s fees or commissions are or will be payable by the Company or any Subsidiaries to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by the Transaction Documents.

 

2.23 Investment Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Exchange Shares, will not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.  The Company shall conduct its business in a manner so that it will not become an “investment company” subject to registration under the Investment Company Act of 1940, as amended.

 

2.24 Registration Rights.  Other than as disclosed in the SEC Reports, no Person has any right to cause the Company to effect the registration under the Securities Act of any securities of the Company or any Subsidiaries.

 

  

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2.25 Listing and Maintenance Requirements.  The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act nor has the Company received any notification that the Commission is contemplating terminating such registration.  Except as set forth in the SEC Reports, the Company has not, in the 12 months preceding the date hereof, received notice from The Nasdaq Market LLC any other exchange or quotation service on which the Company’s securities are traded (the “Trading Market”) on which the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with the listing or maintenance requirements of such Trading Market. Except as set forth in the SEC Reports, the Company is, and has no reason to believe that it will not in the foreseeable future continue to be, in compliance with all such listing and maintenance requirements.

 

2.26 Application of Takeover Protections.  The Company and the Board of Directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Company’s certificate of incorporation (or similar charter documents) or the laws of its state of incorporation that is or could become applicable to the Purchaser as a result of the Purchaser and the Company fulfilling their obligations or exercising their rights under the Transaction Documents, including without limitation as a result of the Company’s issuance of the Exchange Shares pursuant to the Exchange.

 

2.27 Disclosure.  Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the Company confirms that neither it nor any other Person acting on its behalf has provided the Holder or its agents or counsel with any information that it believes constitutes or might constitute material, non-public information.  The Company understands and confirms that the Holder will rely on the foregoing representation in effecting transactions in securities of the Company.  All of the disclosure furnished by or on behalf of the Company to the Holder regarding the Company and its Subsidiaries, their respective businesses and the transactions contemplated hereby, including the Disclosure Schedules to this Agreement, is true and correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.  The press releases disseminated by the Company during the twelve months preceding the date of this Agreement taken as a whole do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made and when made, not misleading.  The Company acknowledges and agrees that the Holder makes no nor has made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 3 hereof.

 

  

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2.28 No Integrated Offering. Assuming the accuracy of the Holder’s representations and warranties set forth in Section 3, neither the Company, nor any of its Affiliates, nor any Person acting on their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause the Exchange to be integrated with prior offerings by the Company for purposes of (i) the Securities Act which would require the registration of any such securities under the Securities Act, or (ii) any applicable shareholder approval provisions of any Trading Market on which any of the securities of the Company are listed or designated.

 

2.29 Solvency.  The Company does not intend to incur debts beyond its ability to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt).  Except as set forth in the SEC Reports, the Company has no knowledge of any facts or circumstances which lead it to believe that it will file for reorganization or liquidation under the bankruptcy or reorganization laws of any jurisdiction within one year from the Closing Date.  The SEC Reports set forth as of the date hereof all outstanding secured and unsecured Indebtedness of the Company or any Subsidiary, or for which the Company or any Subsidiary has commitments.  For the purposes of this Agreement, “Indebtedness” means (x) 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), (y) 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 Company’s consolidated 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 (z) the present value of any lease payments in excess of $50,000 due under leases required to be capitalized in accordance with GAAP.  Except as set forth in the SEC Reports, neither the Company nor any Subsidiary is in default with respect to any Indebtedness.

 

2.30 Tax Status. Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect, the Company and its Subsidiaries each (i) has made or filed all United States federal, state and local income and all foreign income and franchise tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations and (iii) has set aside on its books provision reasonably adequate for the payment of all material taxes for periods subsequent to the periods to which such returns, reports or declarations apply.  There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company or of any Subsidiary know of no basis for any such claim.

 

  

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2.31 Foreign Corrupt Practices.  Neither the Company nor any Subsidiary, nor to the knowledge of the Company or any Subsidiary, any agent or other person acting on behalf of the Company or any Subsidiary, has: (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company or any Subsidiary (or made by any person acting on its behalf of which the Company is aware) which is  in violation of law or (iv) violated in any material respect any provision of FCPA.

 

2.32 Accountants.  The Company’s accounting firm is BDO USA, LLP.  To the knowledge and belief of the Company, such accounting firm: (i) is a registered public accounting firm as required by the Exchange Act and (ii) shall express its opinion with respect to the financial statements to be included in the Company’s Annual Report for the fiscal year ending December 31, 2013.

 

2.33 No Disagreements with Accountants and Lawyers.  There are no disagreements of any kind presently existing, or reasonably anticipated by the Company to arise, between the Company and the accountants and lawyers formerly or presently employed by the Company and the Company is current with respect to any fees owed to its accountants and lawyers which could affect the Company’s ability to perform any of its obligations under any of the Transaction Documents.

 

2.34 Acknowledgment Regarding Holder’s Exchange of Term Notes.  The Company acknowledges and agrees that the Holders are acting solely in the capacity of an arm’s length party with respect to the Transaction Documents and the transactions contemplated thereby.

 

2.35  Regulation M Compliance.  The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate the issuance or resale of any of the Exchange Shares, (ii) sold, bid for, purchased, or paid any compensation for soliciting purchases of, any of the Exchange Shares, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities of the Company.

 

2.36 Office of Foreign Assets Control.  Neither the Company nor any Subsidiary nor, to the Company's knowledge, any director, officer, agent, employee or affiliate of the Company or any Subsidiary is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”).

 

  

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2.37 Bank Holding Company Act.  Neither the Company nor any of its Subsidiaries or Affiliates is subject to the Bank Holding Company Act of 1956, as amended (the “BHCA”) and to regulation by the Board of Governors of the Federal Reserve System (the “Federal Reserve”).  Neither the Company nor any of its Subsidiaries or Affiliates owns or controls, directly or indirectly, five percent (5%) or more of the outstanding shares of any class of voting securities or twenty-five percent or more of the total equity of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve.  Neither the Company nor any of its Subsidiaries or Affiliates exercises a controlling influence over the management or policies of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve.

 

2.38 Money Laundering.  The operations of the Company and its Subsidiaries are and have been conducted at all times in compliance with applicable financial record-keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, applicable money laundering statutes and applicable rules and regulations thereunder (collectively, the “Money Laundering Laws”), and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any Subsidiary with respect to the Money Laundering Laws is pending or, to the knowledge of the Company or any Subsidiary, threatened.

 

Section 3. Representations and Warranties of the Holders.  Each Holder represents and warrants, severally and not jointly, to the Company that:

 

3.1 Ownership of the Term Notes.  The Holder is the legal and beneficial owner of the Term Notes.  The Holder paid for the Term Notes, and has continuously held the Term Notes since its issuance or purchase.  The Holder, individually or through an affiliate, owns the Term Notes outright and free and clear of any options, contracts, agreements, liens, security interests, or other encumbrances.

 

3.2 No Public Sale or Distribution.  The Holder is acquiring the Exchange Shares in the ordinary course of business for its own account and not with a view toward, or for resale in connection with, the public sale or distribution thereof; provided, however, that by making the representations herein, the Holder does not agree to hold any of the Exchange Shares for any minimum or other specific term and reserves the right to dispose of the Exchange Shares at any time in accordance with an exemption from the registration requirements of the Securities Act and applicable state securities laws.  The Holder does not presently have any agreement or understanding, directly or indirectly, with any person to distribute, or transfer any interest or grant participation rights in, the Term Notes or the Exchange Shares.

 

  

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3.3 Accredited Investor and Affiliate Status.  The Holder is an “accredited investor” as that term is defined in Rule 501 of Regulation D under the Securities Act.  The Holder is not, and has not been, for a period of at least three months prior to the date of this Agreement (a) an officer or director of the Company, (b) an “affiliate” of the Company (as defined in Rule 144) (an “Affiliate”) or (c) a “beneficial owner” of more than 10% of the common stock (as defined for purposes of Rule 13d-3 of the Exchange Act).

 

3.4 Reliance on Exemptions.  The Holder understands that the Exchange is being made in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying in part upon the truth and accuracy of, and each Holder’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Holder set forth herein in order to determine the availability of such exemptions and the eligibility of each Holder to complete the Exchange and to acquire the Exchange Shares.

 

3.5 Information.  The Holder has been furnished with all materials relating to the business, finances and operations of the Company and materials relating to the Exchange which have been requested by the Holder.  The Holder has been afforded the opportunity to ask questions of the Company. Neither such inquiries nor any other due diligence investigations conducted by the Holder or its representatives shall modify, amend or affect the Holder’s right to rely on the Company’s representations and warranties contained herein.  The Holder acknowledges that all of the documents filed by the Company with the SEC under Sections 13(a), 14(a) or 15(d) of the Exchange Act that have been posted on the SEC’s EDGAR site are available to the Holder, and the Holder has not relied on any statement of the Company not contained in such documents in connection with the Holder’s decision to enter into this Agreement and the Exchange.

 

3.6 Risk.  The Holder understands that its investment in the Exchange Shares involves a high degree of risk.  The Holder is able to bear the risk of an investment in the Exchange Shares including, without limitation, the risk of total loss of its investment.  The Holder has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with respect to the Exchange.  There is no assurance that the Exchange Shares will continue to be quoted, traded or listed for trading or quotation on the Nasdaq Capital Market or on any other organized market or quotation system.

 

3.7 No Governmental Review.  The Holder understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement in connection with the Exchange or the fairness or suitability of the investment in the Exchange Shares nor have such authorities passed upon or endorsed the merits of the Exchange Notes.

 

  

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3.8 Organization; Authorization.  The Holder is duly organized, validly existing and in good standing under the laws of its state of formation and has the requisite organizational power and authority to enter into and perform its obligations under this Agreement.

 

3.9 Validity; Enforcement.  This Agreement has been duly and validly authorized, executed and delivered on behalf of the Holder and shall constitute the legal, valid and binding obligations of the Holder enforceable against the Holder in accordance with its terms.  The execution, delivery and performance of this Agreement by the Holder and the consummation by the Holder of the transactions contemplated hereby (including, without limitation, the irrevocable surrender of the Term Notes) will not result in a violation of the organizational documents of the Holder.

 

3.10 Prior Investment Experience.  The Holder acknowledges that it has prior investment experience, including investment in securities of the type being exchange, including the Term Notes or the Exchange Shares, and has read all of the documents furnished or made available by the Company to it and is able to evaluate the merits and risks of such an investment on its behalf, and that it recognizes the highly speculative nature of this investment.

 

3.11 Tax Consequences.  The Holder acknowledges that the Company has made no representation regarding the potential or actual tax consequences for the Holder which will result from entering into the Agreement and from consummation of the Exchange.  The Holder acknowledges that it bears complete responsibility for obtaining adequate tax advice regarding the Agreement and the Exchange.

 

3.12 No Registration, Review or Approval.  The Holder acknowledges, understands and agrees that the Exchange Shares are being exchanged hereunder pursuant to an exchange offer exemption under Section 4(a)(2) of the Securities Act.

 

Section 4. Conditions Precedent to Obligations of the Company.  The obligation of the Company to consummate the transactions contemplated by this Agreement is subject to the satisfaction of each of the following conditions, provided that these conditions are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion by providing the Holders with prior written notice thereof:

 

4.1 Delivery.  The Holders shall have delivered to the Company the Notes.

 

4.2 No Prohibition.  No order of any court, arbitrator, or governmental or regulatory authority shall be in effect which purports to enjoin or restrain any of the transactions contemplated by this Agreement; and

 

  

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4.3 Representations.  The accuracy in all material respects when made and on the applicable Closing Date of the representations and warranties of the Holders contained herein (unless as of a specific date therein);

 

Section 5. Conditions Precedent to Obligations of the Holders.  The obligation of each Holder to consummate the transactions contemplated by this Agreement is subject to the satisfaction of each of the following conditions, provided that these conditions are for each Holder’s sole benefit and may be waived by the applicable Holder at any time in its sole discretion by providing the Company with prior written notice thereof:

 

5.1 No order of any court, arbitrator, or governmental or regulatory authority shall be in effect which purports to enjoin or restrain any of the transactions contemplated by this Agreement;

 

5.2 each Holder shall have received an opinion of counsel to the Company to the Company’s transfer agent satisfactory to such Holder in its sole discretion.  Such opinion of counsel shall provide that the Exchange Shares may be issued free of restrictive legend in accordance with applicable rules and regulations under the Securities Act, as amended, including, in particular, Rule 144 as in effect and promulgated thereunder;

 

5.3 the accuracy in all material respects when made and on the applicable Closing Date of the representations and warranties of the Company contained herein (unless as of a specific date therein);

 

5.4 all obligations, covenants and agreements of the Company required to be performed at or prior to the applicable Closing Date shall have been performed; and

 

5.5 from the date hereof to the relevant Closing Date, trading in the Company’s common stock shall not have been suspended by the SEC or any trading market and, at any time prior to the Closing Date, trading in securities generally as reported by Bloomberg L.P. shall not have been suspended or limited, or minimum prices shall not have been established on securities whose trades are reported by such service, or on any trading market, nor shall a banking moratorium have been declared either by the United States or New York State authorities nor shall there have occurred any material outbreak or escalation of hostilities or other national or international calamity of such magnitude in its effect on, or any material adverse change in, any financial market which, in each case, in the reasonable judgment of the Holder makes it impracticable or inadvisable to purchase the Exchange Shares at the closing.

 

  

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Section 6. Governing Law; Jurisdiction; Waiver of Jury Trial.  This Agreement shall be construed under the laws of the state of New York, without regard to principles of conflicts of law or choice of law that would permit or require the application of the laws of another jurisdiction.  The Company and the Holders each hereby agrees that all actions or proceedings arising directly or indirectly from or in connection with this Agreement shall be litigated only in the Supreme Court of the State of New York or the United States District Court for the Southern District of New York located in New York County, New York.  The Company and the Holders each consents to the exclusive jurisdiction and venue of the foregoing courts and consents that any process or notice of motion or other application to either of said courts or a judge thereof may be served inside or outside the State of New York or the Southern District of New York by generally recognized overnight courier or certified or registered mail, return receipt requested, directed to such party at its or his address set forth below (and service so made shall be deemed “personal service”) or by personal service or in such other manner as may be permissible under the rules of said courts.  THE COMPANY AND THE HOLDER EACH HEREBY WAIVES ANY RIGHT TO A JURY TRIAL IN CONNECTION WITH ANY LITIGATION PURSUANT TO THIS AGREEMENT.

 

Section 7. Indemnification of Holders.   Subject to the provisions of this Section 7, the Company will indemnify and hold each Purchaser and its directors, officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls such Holder (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders, agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title) of such controlling persons (each, a “Holder Party”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Holder Party may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants or agreements made by the Company in this Agreement or in the other document related to this exchange or (b) any action instituted against Purchaser Parties in any capacity, or any of them or their respective Affiliates, by any stockholder of the Company who is not an Affiliate of such Holder Party, with respect to any of the transactions contemplated by this exchange (unless such action is based upon a breach of such Purchaser’s Party’s representations, warranties or covenants under the exchange or any agreements or understandings such Holder Party may have with any such stockholder or any violations by such  Holder Party of state or federal securities laws or any conduct by such Holder Party which constitutes fraud, gross negligence, willful misconduct or malfeasance). If any action shall be brought against any Holder Party in respect of which indemnity may be sought pursuant to this Agreement, such Holder Party shall promptly notify the Company in writing, and the Company shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Holder Party. Any Holder Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Holder Party except to the extent that (i) the employment thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume such defense and to employ counsel or (iii) in such action there is, in the reasonable opinion of counsel, a material conflict on any material issue between the position of the Company and the position of such Holder Party, in which case the Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel.  The Company will not be liable to any Holder Party under this Agreement (y) for any settlement by a Holder Party effected without the Company’s prior written consent, which shall not be unreasonably withheld or delayed; or (z) to the extent, but only to the extent that a loss, claim, damage or liability is attributable to any Holder Party’s breach of its representations, warranties or covenants under the Transaction Documents or any agreements or understandings such Holder Party may have with any such stockholder or any violations by such  Holder Party of state or federal securities laws or any conduct by such Holder Party which constitutes fraud, gross negligence, willful misconduct or malfeasance.  The indemnification required by this Section 7 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or are incurred however, each Holder Party who receives such interim payment agrees to reimburse the Company for any such payment made by the Company to such Holder Party if it is finally determined in such action or proceeding that such Holder Party is not entitled to indemnification pursuant to this Section 7.  The indemnity agreements contained herein shall be in addition to any cause of action or similar right of any Holder Party against the Company or others and any liabilities the Company may be subject to pursuant to law.

 

  

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Section 8. Counterparts.  This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party; provided that a facsimile signature shall be considered due execution and shall be binding upon the signatory thereto with the same force and effect as if the signature were an original, not a facsimile signature.

 

Section 9. Headings.  The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement.

 

Section 10. Severability.  If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction.

 

Section 11. Entire Agreement; Amendments.  This Agreement supersedes all other prior oral or written agreements between the Holders, the Company, their affiliates and persons acting on their behalf with respect to the matters discussed herein, and this Agreement and the instruments referenced herein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor the Holders makes any representation, warranty, covenant or undertaking with respect to such matters.  No provision of this Agreement may be amended other than by an instrument in writing signed by the Company and the Holders.  No provision hereof may be waived other than by an instrument in writing signed by the party against whom enforcement is sought.

 

Section 12. Notices.  Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (a) upon receipt, when delivered personally; (b) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (c) one calendar day (excluding Saturdays, Sundays, and national banking holidays) after deposit with an overnight courier service, in each case properly addressed to the party to receive the same.

 

  

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The addresses and facsimile numbers for such communications shall be:

 

If to the Company:

 

InterCloud Systems, Inc.

331 Newman Springs Road, Building 1, Suite 104

Red Bank, NJ, 07701

Attn: Lawrence Sands

With a copy (which shall not constitute notice) to:

Pryor Cashman LLP

7 Times Square,

New York, NY 10036-6569

Attn: M. Ali Panjwani

If to the Holders:

Dominion Capital LLC

341 West 38th Street • Suite 800

New York NY 10018

Attn: Daniel Kordash

Head of Structured Products

Managing Partner

31 Group LLC

c/o Magna Group LLC

5 Hanover Square – 16th Floor

New York, New York 10003

Attn: Joshua Sason

Managing Member

With a copy (which shall not constitute notice) to:

 

Robinson Brog Leinwand Greene Genovese & Gluck P.C.

875 Third Avenue, 9th Floor

New York, NY 10022

Attn: David E. Danovitch, Esq.

or to such other address and/or facsimile number and/or to the attention of such other person as the recipient party has specified by written notice given to each other party five (5) days prior to the effectiveness of such change.

 

  

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Section 13. Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns, including any purchasers of the Exchange Shares.  The Holders may assign some or all of their rights hereunder without the consent of the Company, in which event such assignee shall be deemed to be the Holders hereunder with respect to such assigned rights.

 

Section 14. No Third Party Beneficiaries.  This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other person.

 

Section 15. Survival of Representations.  The representations and warranties of the Company and the Holders contained in Sections 2 and 3, respectively, will survive the closing of the transactions contemplated by this Agreement.

 

Section 16. Further Assurances.  Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

 

[Signature Page Follows]

 

  

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IN WITNESS WHEREOF, the parties have executed this Exchange Agreement as of the date first written above.

 

INTERCLOUD SYSTEMS, INC.

By:       /s/ Lawrence Sands                                                   

Name:  Lawrence Sands

Title:    Senior Vice President

	
RIVES-MONTEIRO LEASING, LLC

	  
	
By:       /s/ Lawrence Sands                                                     

Name:  Lawrence Sands

Title:    Vice President

	  
	
TROPICAL COMMUNICATIONS, INC.

	  
	
By:       /s/ Lawrence Sands                                                    

Name:  Lawrence Sands

Title:    Vice President

	  
	
ADEX CORPORATION

	  
	
By:       /s/ Lawrence Sands                                                       

Name:  Lawrence Sands

Title:    Vice President

	  
	
T N S, INC.

 

By:       /s/ Lawrence Sands                                                     

Name:  Lawrence Sands

Title:    Vice President

	  
	
ADEXCOMM CORPORATION

	  
	
By:       /s/ Lawrence Sands                                                  

Name:  Lawrence Sands

Title:    Vice President

 

	
AW SOLUTIONS, INC.

	  
	
By:       /s/ Lawrence Sands                                                   

Name:  Lawrence Sands

Title:    Vice President

 

  

21

  

INTEGRATION PARTNERS-NY CORPORATION

By:       /s/ Lawrence Sands                                                                                                                             

Name:  Lawrence Sands

Title:    Vice President

DOMINION CAPITAL LLC

 

By:      /s/ Mikhail Guervich                                                   

Name: Mikhail Guervich

Title:   Managing Member

31 GROUP, LLC

By:      /s/ Joshua Sason                                                         

Name: Joshua Sason

Title:   Managing Member

  

22

  

EXHIBIT A

	
Holders

	 	
Principal Amount of Notes

	 	
Accrued Interest

	 	
Shares of Common Stock

	
Dominion Capital LLC

	 	
$ 6,024,059.69

	 	
Included in Principal Amount

	 	
573,720

	 	 	 	 	 	 	 
	
31 Group, LLC

	 	
$6,646,291.98

	 	
Included in Principal Amount

	 	
632,981

 

The Company agrees to pay to the Holders in cash the amounts in respect of interest due effective March 12, 2014, of $276,574.99. Upon receipt of such payment to the Holders, the Holders agree to reduce the number of shares issued to Dominion Capital LLC and 31 Group, LLC by 12,523 shares and 13,817 shares respectively.

Schedule A-1

If on the third trading day following the Closing Date, 85% of the volume weighted average price of the Common Stock for such date is less than $10.50, then an additional number of shares of Common Stock shall be issued so as to make the per share value at which the MM Debt Amount is exchanged such lower price.Unassociated Document

Exhibit 10.8

 

Working Capital Loan Contract

 

Contract NO. 2012EZYloan10801

 

THIS CONTRACT (“Contract”) is made by the Parties listed hereunder:

 

Borrower: Laifeng Anpulo (Group) Food Development Co., Ltd.,

Business Licence No: 422827000001641

Legal Representative: Wenping Luo

Address: Hangkong Road, Xiangfeng Town, Laifeng County

Post code: 445700

Banking accounts: Laifeng Branch of Bank of China Limited

Tel: 0718-6285928

Fax: 0718-6285928

 

Lender: Enshi Branch of Bank of China Limited

Person in Charge: Xiaonong Ma

Address: No. 35, Hangkong Road, Enshi City, Hubei Province

Post code: 445000

Tel: 0718-8248218

Fax: 0718-8248218

 

Upon equal negotiations and mutual agreement, the Lender and the Borrower enter into this Contract in relation to the provision of relevant loan by the Lender to the Borrower.

 

Article 1 Amount of Loan

 

1.1 Currency of loan: RMB

 

1.2 Amount of loan: RMB 28,000,000.00 (RMB TWENTY-EIGHT MILLION Yuan ONLY)

 

Article 2 Term of the Loan

 

The term of the loan hereunder shall be 24 months commence from the actual drawdown date, or if there are withdrawn by installments, the term commence from the first drawdown installment date.

 

The Borrower shall make drawdown strictly comply with the agreed drawdown date hereunder, and shall make repayment in accordance with the amount and schedule as required under this Contract even if the actual drawdown date is latter than the agreed drawdown date.

 

Article 3 Purpose of Loan

 

Purpose: For working capital used for purchasing hogs, hogs slaughtering and selling.

 

Without written consent of the Lender, the Borrower may not use the loan for any purpose other than those abovementioned. The loan cannot used for including but not limited to: invest in fixed assets or equity investments, or any other purpose prohibited or restricted by applicable laws and regulations.

 

Article 4 Interest Rate and Interest Calculation

 

4.1 Interest Rate

 

Interest rate for the loan shall be determined in accordance with Item (2)below:

 

(1) Fixed interest rate at N/A % per annum, which shall remain unchanged within the term of this Contract.

 

  

  

  

 

(2) Floating interest rate. The interest determination date shall be the actual drawdown date (or if there are withdrawn by installments, the drawdown date) of the loan. The rate shall be adjusted every 12 months, and the first day of each subsequent float period shall be the interest determination date of that float period. Viz. the benchmark interest rate applicable to each interest period subsequent to the initial period shall be determined on the same numerical date in the month of such adjustment as the drawdown date. If there is no same numerical date in the month of adjustment as the drawdown date, the benchmark interest rate for such period shall be determined on the last day of such month of adjustment

 

For each drawdown

 

Floating interest rate for a RMB loan

 

A. the interest for the first-term(from the actual drawdown date to expiration date of that float period) loan shall be the benchmark lending rate for loans with a term of two (2) years as stipulated by the People’s Bank of China on the actual drawdown date;

 

B. the applicable interest for each float period shall be calculated according to the loan interest rate as adjusted and applicable to such float period stipulated by the People’s Bank of China on the adjustment date.

 

4.2 Interest Calculation

 

Loan interest shall be calculated from the actual drawdown date on the basis of the actual drawdown amount and the actual day number that the borrowed amount outstanding.

 

Interest calculation formula: interest= principal amount * actual number of days * daily interest rate

 

The basis for calculating the daily interest rate shall be 360 days per annum, and the conversion formula shall be: daily interest rate= annual interest rate/360.

 

4.3 Interest Settlement

 

Interest for the loan shall be settled in accordance with Item (2) below:

 

(1) If interest is settled on a quarterly basis, the settlement date shall be 20th day of the last month of each quarter, and the 21st day shall be the interest paying date.

 

(2) If interest is settled on a monthly basis, the settlement date shall be 20th day of each month, and the 21st day shall be the interest paying date.

 

If the repayment date for the last installment of the principal is not the interest paying date, the interest paying date shall be the repayment date for the last installment of the principal. The Borrower shall repay all the interest hereof to the Lender.

 

4.4 Penalty Interest

 

(1) Penalty interest will be imposed on any overdue amount (overdue penalty interest rate), or on any amount that is used for any purpose other than those set out hereunder (misappropriation penalty interest rate).

 

If overdue and misappropriation exists simultaneously, the applied penalty interest rate shall be the higher of the two rates mentioned above.

 

(2) Compound interest will accrue at the overdue penalty interest rate under Article 4.3 on any interest that the Borrower fails to pay when it becomes due.

 

  

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(3) Penalty interest rate

 

Penalty interest rate for loan of floating interest rate

 

Penalty interest rate shall be adjusted in accordance with the floating interest rate under Article 4.1. The overdue penalty interest rate shall be 30% above the original interest rate and the misappropriation penalty interest rate shall be 50 % above the original interest rate.

 

Article 5 Preconditions to withdraw the Loan

 

The following conditions shall be satisfied by the Borrower before the loan drawdown:

 

5.1 This Contract and the appendices hereof have become effective;

 

5.2 The Borrower has provided guarantor as required by the Lender. All guarantor documents have been duly obtained relevant approvals, fillings and registrations formalities in accordance with the applicable legal requirement;

 

5.3 The Borrower has furnished the Lender with all the relevant copies of documents, receipts, seals, personnel roll, signature, and the documents concerned have been dully filled;

 

5.4 The Borrower has opened an applicable bank account in accordance with the Lender’s requirement;

 

5.5 The Borrower has submitted a drawdown application and the supporting documents concerning the purpose of the loan to the Lender at least 10 bank business days prior to the proposed drawdown date, and the formality of drawdown has been completed;

 

5.6 The Borrower has furnished the Lender with the valid, genuine a resolutions and authorizations of the board of directors or other authorities that approve the application, signing and performance of this Contract;

 

5.7 Other materials required by law or both parties: N/A

 

The Lender has no obligation to advance any loan to the Borrower until all abovementioned conditions have been satisfied by the Borrower or waived by the Lender

 

Article 6 Drawdown

 

6.1 The Borrower shall make drawdown according to the schedule and method in accordance with Item (1)below:

 

(1) The drawdown shall be made in one lump sum on October 31, 2012. (The actual drawdown date is subject to relevant receipt of loan.)

 

(2) The final drawdown shall be made before N/A.

 

(3) The drawdown shall be made in accordance with the schedule below:

 

	
Date

	
Amount

	
N/A

	
N/A

	
N/A

	
N/A

	
N/A

	
N/A

 

6.2 If the Borrower fails to make drawdown as required above, the Lender may cancel all or part of the loan.

 

  

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6.3 Commitment Fee

 

In the event that the Borrower fails to make drawdown in full before the drawdown date as agreed, the commitment fee as prescribed below shall be imposed on the “undrawn loan”, which shall be the difference between the amount of the loan during the period and the amount for which the Borrower has made drawdown.

 

Amount of the commitment fee shall be calculated in accordance with the undrawn loan, the number of the overdue days and a rate of 1% per annum.

 

The date of collecting the commitment fee shall be October 31, 2012. (The actual collecting date is subject to relevant receipt of loan.)

 

7. Delivery of the Loan

 

7.1 Loan Delivery Account

 

The Borrower shall open an account in the Lender and which shall be used for receiving the loan in accordance with this Contract:

 

The account information:

 

Name: Laifeng Anpulo (Group) Food Development Co., Ltd.,

 

Account Number:【572957549394】

 

7.2 Method of Loan Delivery

 

(1) The method of the loan delivery shall comply with relevant regulatory requirements, management requirement and articles hereunder. The method of a single loan drawdown shall be confirmed in the drawdown application, in the event that the loan delivery method chosen by the Borrower in the drawdown application is deemed not satisfied with the Lender’s requirement, the Lender may alter the method of delivery or cancel the delivery.

 

(2) Entrusted delivery refers to the delivery of the proceeds of the loan to relevant payees for the purpose as agreed under this Contract upon and in accordance with drawdown request and delivery entrustment issued by the Borrower. In accordance with relevant regulatory requirement and management requirement of the China Banking Regulatory Commission (“CBRC”) and the Lender, a loan meeting any of conditions as below shall be subject to the entrusted delivery arrangement:

 

A. The Borrower obtains the loan from the Lender for the first time and whose credit rating is not meeting the requirement of the Lender;

 

B. The payees is explicit (including the account name and number) in the drawdown request and a single drawdown is over 5 millionRMB (excluding the foreign currency shall be converted at the exchange rate of N/A on the actual drawdown date)

 

C. Other condition agreed by both parties: N/A

 

(3) Delivery of the Borrower at its own discretion refers to the delivery of the proceeds of the loan to relevant payees by the Borrower for the purpose as agreed under this Contract after the relevant proceeds of the loan has been paid to the Borrower’s account upon the drawdown request. Except for the conditions stipulated in the abovementioned term of Entrusted delivery, all the method of delivery of the loan shall be the delivery of the Borrower at its own discretion.

 

(4) Change the method of delivery. In the event of any change to the delivery to others by the Borrower and the credit rating of the Borrower after the drawdown request has been submitted, the delivery method shall be changed if the delivery of the Borrower at its own discretion meeting the requirements of the Item (2) of Article 7.2 hereunder.

 

  

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7.3 Requirements for Entrusted Delivery

 

(1) Entrusted Delivery. In the event that the loan delivery is applicable to the entrusted delivery, the Borrower shall submit a drawdown request with an entrusted delivery agreement to the Lender. After the relevant proceeds of the loan has been paid to the Borrower’s account, the Lender will pay the proceeds of the loan to such payees for the purpose as agreed under this Contract basing on the entrusted delivery agreement and the specific names and account information of the relevant payees thereof.

 

(2) Provision of the transaction documents. In the event that the loan delivery is applicable to the entrusted delivery, the Borrower shall provide the information of specific names and account information of the relevant payees and the supporting documents concerning the purpose of loan which is consistent with the purpose as agreed hereunder. All documents and information provided by the Borrower to the Lender are true, complete and effective. The Lender shall not be liable for any nonperformance of delivery arising from any untrue, inaccurate or incomplete transaction documents provided by the Borrower, and the repayment obligations of the Borrower thereof shall not be affected thereby.

 

(3) Performance of Entrusted Delivery

 

A. In the event of entrusted delivery, the Lender shall pay the loan to the payees via the account of the Borrower upon reviewing the entrusted delivery agreement and the transaction documents provided by the Borrower.

 

B. In the event that the supporting documents concerning the purpose of loan is inconsistent with the purpose as agreed hereunder or has any other defects, the Lender may request the Borrower to make supplement, replacement, explanation or resubmission to the relevant documents and is of the right to refuse the delivery of loan until the eligible documents are provided by the Borrower.

 

C. The Lender shall not be liable for any nonperformance of delivery due to the fact that the remittances is returned by the bank of the payees, and the repayment obligations of the Borrower thereof shall not be affected thereby. In such event, the Lender may freeze up the retuned remittances and the Borrower shall resubmit the entrusted delivery agreement and the transaction documents to the Lender.

 

(4) The Borrower shall not break the loan which is subject to entrusted delivery into parts to dodge entrusted delivery.

 

7.4 The Borrower shall timely provide utilization record and relevant documents concerning the loan to the Lender in accordance with the Lender’s requirement, such documents shall including but not limited to: N/A.

 

7.5 In the event of the following conditions, the Lender may cease to pay the loans to the Borrower under this Contract or reconfirm the amount and delivery terms of the loan:

 

(1) The Borrower violates this Contract and breaks the loan which is subject to entrusted delivery into parts to dodge entrusted delivery.

 

(2) The credit rating and profit ability of main business of the Borrower suffer deterioration.

 

(3) There is abnormal change to the fund utilization.

 

(4) The Borrower fails to provide timely utilization record and relevant documents concerning the loan to the Lender in accordance with the Lender’s requirement.

 

(5) The utilization of the loan by the Borrower is inconsistent with the terms under this Contract.

 

  

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Article 8 Repayment

 

8.1 The Borrower shall designate the following special collection account, which will be used to collect relevant fund to be used to repay the loan. The Borrower shall submit the cash flow related to such account. The Lender may supervise on the special collection account and require the Borrower to give explanation on abnormal change to the cash flow concerning to such account.

 

Name: Laifeng Anpulo (Group) Food Development Co., Ltd.,

 

Account Number:【572957549394】

 

8.2 Unless otherwise agreed, the Borrower shall repay the loans hereunder in accordance with Item (1) below:

 

(1) The Borrower shall fully repay the loan in one lump sum on the maturity date according to the Contract.

 

(2) The Borrower shall repay the loan in installments according to the following schedule

 

	
Date

	
Amount

	
N/A

	
N/A

	
N/A

	
N/A

 

(3) Other repayment plan: N/A

 

In the event that the Borrower requires altering the abovementioned repayment schedule, a written request shall be submitted to the Lender at least 30 bank business days prior to the proposed repayment date and the new repayment schedule shall be confirmed in writing by both parties.

 

8.3 Unless otherwise agreed, if the Borrower fails to repay both the principal and interest on the due date, the Lender may decide the priority sequence of each item to be settled; in the event that the repayment are made in installments and there are more than one due or overdue loans, the Lender may decide the priority sequence of each loan to be settled; in the event that there are more than one due or overdue loans contracts, the Lender may decide the priority sequence of each contract to be performed.

 

8.4 Unless otherwise agreed, the Borrower may prepay the loan upon a prepayment notice not less than 15 bank business days to the Lender. The amount prepaid shall be used to repay the last maturing loan first, i.e., repay in a reverse chronological order.

 

The Borrower shall pay a prepayment fee of 1%of the amount to be prepaid in the event of any prepayment of the loan or any part thereof.

 

8.5 The Borrower shall repay the loans hereunder in accordance with Item (1) below:

(1) The Borrower shall, on the day that is 10 bank business day prior to the repayment date and each interest settlement date, deposit into the following repayment account opened by the Borrower sufficient fund to repay the principal and interest to be paid on such repayment date or interest settlement date. The Lender may transfer an amount equal to such principal and interest out of such account on such repayment date or interest settlement date without further instruction from the Borrower.

 

Repayment Account Name: Laifeng Anpulo (Group) Food Development Co., Ltd.,

 

Account Number: 【572957549394】

 

(2) Other repayment method: N/A

  

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Article 9 Security

 

9.1 The Borrower shall provide the following security for the loan hereunder:

 

This Contract shall be the master contract of the Pledge Contracts (Contact No:2012EZYDZ101801, 2012EZYDZ101802 and 2012EZYDZ101803) made between the Borrower and the guarantors of Laifeng City Construction Investment Co., Ltd., Wenping Luo and Junyi Luo.

 

Laifeng Anpulo Yunxing Transportation Co., Ltd., Wenping Luo and Jinfeng Hu shall undertake joint liability for the security and shall enter into Guarantor Contracts, the contract numbers of which are 2012EZYBZ101801 and 2012EZYBZ101802.

 

9.2 The Borrower shall provide other security that is acceptable to the Lender in the event of any damage, depreciation, title dispute, seizure or attachment of the collateral hereunder, or unauthorized disposal of the collateral by the mortgagor, or any adverse change to the guarantor's financial condition, or any other adverse change to the claims of the Lender.

 

Article 10Representations and Warranties

 

10.1 The Borrower makes the following representations to the Lender:

 

(1) The Borrower is legally and effective registered, and has all qualifications and capacity to enter into and perform this Contract.

 

(2) The Borrower has obtained all necessary authorizations or approvals to enter into this Contract. Its execution and performance of this Contract does not violate its articles of association or any applicable laws or regulations, or conflict with any of its obligations under other contracts. All essential approval, permission and registration have obtained or will be obtained by the Borrower.

 

(3) All documents, financial statements, vouchers and information provided by the Borrower to the Lender are true, accurate, complete and effective and do not contain any false record, gross omission or misleading statement.

 

(4) The transaction background hereunder shall be real, legal and do not use for money laundering and other illegal purpose.

 

(5) The Borrower has not concealed any past or on-going situation which may affect the Lender’s judgment on the Borrower’s financial status and ability to repay the Facility.

 

(6) The project related to the loan is meeting the national environmental protection standard and is not the prohibitive project of consuming energy and polluting environment identified by the authorities.

 

(7) Others: N/A

 

10.2 The Borrower makes the following warranties to the Lender:

 

(1) The Borrower shall regularly provide the financial and accounting reports (including but not limited to annual reports, quarterly reports and monthly reports) to the Lender;

 

(2) If the Borrower has entered into or will enter into any counter guarantor contracts with the guarantors hereunder, such counter guarantor contracts shall not cause any adverse impact on the Lender's rights and interests hereof.

 

(3) The Borrower shall accept and actively cooperate with the Lender's credit check and supervision. In the event of the delivery of the Borrower at its own discretion, the Borrower shall regularly summarize and report information on the use of the loan as requested by the Lender, the date of such report shall be: before 10th of the following month.

  

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(4) The Borrower undertakes to obtain prior written consent of the Lender, before it carries out any merger, division, decrease of capital, equity change, transfer of material assets and creditor's rights, material external investment, material increase of debt financing and other action that may cause an adverse impact on the Lender's rights and interests.

 

The Borrower undertakes to promptly notify the Lender upon occurrence of any of the following events:

 

A. any change to its articles of association, business scope, registered capital or legal representative;

 

B. any change to its business pattern, such as any association, joint venture or cooperation with foreign entity, contract management, reorganization, restructuring or listing;

 

C. it is or may be involved in any material economic dispute, litigation or arbitration, or its property is subject to seizure, attachment or supervision in accordance with applicable laws;

 

D. its winding-up, dissolution, liquidation, suspension of business, revocation or cancellation of its business licence, or application (or be applied for) for bankruptcy;

 

E. any of its shareholders, directors or current senior management personnel is suspected of major crime or involved in any material economic dispute;

 

F. any violation to other contracts of the Borrower; or

 

G. the business or finance of the Borrower suffers difficult or deterioration.

 

(5) The debt hereunder is senior to the debts owed by the Borrower to its shareholders, and is not subordinated to similar debts owed by the Borrower to other creditors.

 

(6) The Borrower undertakes not to distribute any dividend or profit in any form before full settlement of principal, interest and other amount payable in relation to the loan hereunder.

 

(7) The Borrower undertakes not to dispose of its own assets in a way that will reduce its ability to repay its debts. The Borrower undertakes not to provide security higher than 0.5 times of its own assets or exceeds the limited stipulated in its articles of association to any third party.

 

(8) Unless stipulated in this Contract or otherwise agreed by the Lender, the Borrower shall not remit the loan hereunder to any associated account or account of the same name.

 

If the loan hereunder is required to remit to any associated account or account of the same name, the Borrower shall provide relevant documents to the Lender.

 

(9) The Borrower undertakes the security, loan interest rate and priority sequence of settlement for the loan hereunder shall not less favorable than any other financial institutions it provide to at present or in the future.

 

(10) The Lender may require the Borrower to early repay any loan based on the Borrower's collection of receivables.

 

(11) Others: N/A

 

Article 11 Disclose of Related Transaction

 

Item 11.1 below shall be applicable to both parties:

 

11.1 The Borrower does not belong to the Customer Groups as stipulated in the Guidelines for the Risk Management by Commercial Banks for Granting Credit to Customer Groups (“Guidelines”)

 

  

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Article 12 Default

 

The Borrower will be in default upon occurrence of any of the following events:

 

1. Borrower fails to make repayment and settlement to lender according to the provisions of this Contract;

 

2. Borrower fails to withdraw the loan through the agreed methods in this Contract or to utilize the loan on the agreed ways in this Contract;

 

3. The declaration that borrower made in this contract is not true or the borrower in violation of his commitment in this contract;

 

4. Under the conditions regulated under the Article 10.2 (4), when lender believes which may affect the borrower’s or guarantor’s financial condition or performing capabilities, and borrower fails to provide a new replacement of security or guarantor;

 

5.The Borrower's credit status decrease, whose ability to make profit, repay debts or operate its business, or its financial indicators such as cash flow do not comply with agreed standard in this contract or other financial agreement;

 

6. The Borrower is in default under the contract with the Lender or other institutions of Bank of China;

 

7. The Guarantor breach the security contract or the Guarantor is in default under the contract with the Lender or other institutions of Bank of China;

 

8. The Borrower is under termination of business, dissolution, cancellation of business license or bankruptcy;

 

9. The Borrower is or may be involved in any material economic dispute, litigation or arbitration, or its property is subject to attachment, seizure or enforcement, or the Borrower is investigated or punished by any competent judicial or administrative authority in accordance with laws, which has affected or may affect performance of its obligations hereunder;

 

10. There is any abnormal change or missing of major individual investor or key management personnel of the Borrower, or any competent judicial authority has launched investigation on or restricted right of freedom of such investor or personnel in accordance with laws, which has affected or may affect performance of the Borrower's obligations hereunder;

 

11. At the annual reviewing on the Borrower’s financial condition and performance capability, the Lender find some situation that may affect the Borrower or Guarantor’s financial condition and performance capability;

 

12. There is any abnormal or large amount of cash flow in or out of the designated repayment account, besides the Borrower fail to provide the Lender any acceptable document to explain;

 

13. The Borrower in violate with any other provisions of this contract concerning to Parties’ rights and liabilities.

 

If the Borrower is in default, the Lender may take any one or more of the following steps:

 

1. The Lender may require the Borrower to remedy its default within a designated period;

 

2. The Lender can make full or partial reduction, suspension or cancellation, termination of the Borrower’s credit limit;

 

  

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3. The Lender may cease to advance the loans and other amounts to the Borrower under this Contract or any other contract between the Lender and the Borrower, and cancel portion or the entirety of the loan or other amount for which the Borrower has not made drawdown;

 

4. The Lender may declare immediate maturity of all outstanding loans and other amounts under this Contract or any other contract between the Lender and the Borrower, and require immediate repayment, in full or partial, of such loans and amounts;

 

5. The Lender may terminate or cancel this contract, and terminate or cancel the portion or the entirety of the other contracts between the Borrower and the Lender;

 

6. The Lender may require the Borrower to compensate the Lender against all losses caused by such default of the Borrower;

 

7. The Lender may deduct relevant amount from all RMB and foreign exchange accounts opened by the Borrower with the Lender or any other institutions of Bank of China to set off such debt in full or in part. The undue account is considered early maturity. If the currency of deducted amount is different from that of the loan hereunder, the amount will be converted in accordance with applicable exchange rate published by the Lender on the date of such deduction.

 

8. The Lender shall be entitled to excise a security right;

 

9. The Lender shall be entitled to claim for the security amount against the Guarantor;

 

10. Other steps that are deemed necessary by the Lender.

 

Article 13 Persistence of Rights

 

If either Party does not exercise his part or all rights under this contract, or does not require the other Party to perform or to bear part or all of the obligations, which does not constitute a waiver of his rights or obligations.

 

If one Party has tolerance, extension or delay to excise his rights to the other Party, shall not affect any of his rights in accordance with this contract or the laws, nor deemed to be a waiver of that right.

 

Article 14 Alteration, Amendment and Termination

 

Any amendment to this Contract shall be agreed by the Parties and made in writing. Amended clauses or amendment agreement shall constitute an integral part of this Contract and have equal legal effect as this Contract.

 

Unless otherwise stipulated in laws and regulations or the parties agree otherwise, this Contract shall not end until all of the Borrower's obligations hereunder are fully performed.

 

Article 15 Governing Law and Dispute Resolution

 

This Contract shall be governed by the PRC law.

 

All disputes and controversies arising from or in connection with this Contract shall be solved by the Parties through consultations, failing which, be solved by the means agreed hereunder.

 

Bring suit to the court situated in the Lender’s domicile location or Bank of China’s other institutions’ domicile location.

 

Before the dispute resolved, if the dispute does not affect the performance of the other provisions of this contract, the other terms should continue to be performed by both Parties.

 

  

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Article 16 Appendices

 

The following appendices and other appendices as confirmed by both parties shall constitute integral part of this Contract and have equal legal effect as this Contract:

 

Appendix 1: Form of Drawdown Request

 

Article 17 Miscellaneous

 

17.1 The Borrower may not transfer any of its rights or obligations hereunder without written consent of the Lender.

 

17.2 The Borrower acknowledges that the Lender or Bank of China may, based on operation and management requirements, authorize or appoint any other institutions of Bank of China to perform the rights and obligations hereunder, or transfer the loan hereunder to any other institutions of Bank of China. Such transfer by the Lender does not require further consent of the Borrower. The institutions of Bank of China that is the transferee of the rights and obligations of the Lender hereunder may exercise all rights hereunder, and may in its own name initiate litigation or arbitration or apply for enforcement in relation to the dispute hereunder.

 

17.3 Without affection of any provisions of this contract, this contract is legally binding to the both parties and their respective successors or statutory assigns.

 

17.4 Unless otherwise agreed, the address of each Party as stated in this Contract will be its address for communication and contact. If the contact address or other contact information of a Party changes, such Party shall promptly notify the other Party of such change in writing.

 

17.5 The transaction under this contract is basing on each Party's solo and independent interests. If according to the relevant laws, regulations and regulatory requirements, any other parties of the transaction constitute the affiliates or related parties to the lender, the other parties of the transaction shall not seek to take advantage of this relationship affect the fairness of the transaction.

 

17.6 The titles and the business name within this Contract only for the convenience to the use of referring, and shall not for the interpretation of the provisions or the content of rights and obligations.

 

17.7 If so required by applicable laws, regulations, or other financial regulators, the Lender may provide the information related to this Contract and other information related to the Borrower to the credit information database of the People's Bank of China and other countries or other credit database created in accordance with laws for duly qualified institutions or individuals to check or use. The Lender may also enquire information related to the Borrower by using the credit information basic database of the People's Bank of China or other credit database created in accordance with laws for purpose of execution and performance of this Contract.

 

17.8 If a drawdown date or repayment date is not a bank business day, it shall be postponed to the immediate following bank business day.

 

17.9 Due to laws and regulations, changes in regulatory requirements or regulatory requirements, the Lender cannot fulfill this Contract or cannot perform in accordance with this Contract, the lender has the right to terminate or according to laws and regulations or the relevant changes to perform this Contract or any individual agreement within the Contract. The lender has liability exemption on the termination or amendment of the Contract due to the reasons aforementioned.

 

Article 18

 

This Agreement is made in quadruplicate and each party holds two copies. This Agreement will come into force upon signature and seal by legal representatives (or personnel in charge) from both Parties.

 

  

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Borrower (seal): Laifeng Anpulo (Group) Food Development Co., Ltd.

 

Legal representative/authorized representative: /s/ Wenping Luo

 

Date: 2012-11-06

 

Lender (seal): Enshi Branch of Bank of China Limited

 

Person-in-charge/authorized representative: /s/ Xiaonong Ma

 

Date: 2012-11-06

 

 

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