Document:

Unassociated Document

 

	 	 	 	

Exhibit 10.1

 

Execution Version

 

AMENDMENT NO. 1 TO

SECURITIES PURCHASE AND SALE AGREEMENT

 

THIS AMENDMENT NO. 1 TO SECURITIES PURCHASE AND SALE AGREEMENT (this “Amendment”), dated as of September 8, 2010, is made by and among CAPRIUS, INC., a Delaware corporation (“Caprius”), M.C.M. ENVIRONMENTAL TECHNOLOGIES, INC., a Delaware corporation (“M.C.M.”), M.C.M. ENVIRONMENTAL TECHNOLOGIES LTD., an Israeli corporation (“M.C.M. Israel”) (Caprius, M.C.M. and M.C.M. Israel may be individually referred to as a “Borrower” and collectively referred to as the “Borrowers”), and VINTAGE CAPITAL GROUP, LLC, a Delaware limited liability company (together with its successors and assigns, the “Purchaser”).

 

R E C I T A L S

 

WHEREAS, the Borrowers and the Purchaser are parties to that certain Securities Purchase and Sale Agreement, dated as of September 16, 2009 (as amended, restated, supplemented or otherwise modified from time to time, the “Purchase Agreement”);

 

WHEREAS, the Events of Default set forth on Schedule A hereto have occurred and are continuing under the Purchase Agreement (collectively, the “Specified Events of Default”);

 

WHEREAS, the Borrowers and the Purchaser have agreed to amend the Purchase Agreement as set forth herein; and

 

WHEREAS, capitalized terms not otherwise defined herein shall have the meanings ascribed to such terms in the Purchase Agreement;

 

A G R E E M E N T

 

NOW THEREFORE, in consideration of the foregoing premises and other good and valuable consideration paid by each party to the other, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

 

1.           Background.

 

(a)           The Borrowers acknowledge and agree that as of August 31, 2010, the outstanding principal amount of the Obligations (exclusive of the Capitalized Obligations (as defined below)) to the Purchaser under the Purchase Agreement was $3,091,037.01.  The foregoing amount does not include all of the interest, fees, costs and expenses to which the Purchaser is entitled under the terms and provisions of the Investment Documents.  The Borrowers acknowledge and agree that such Obligations are outstanding, and they have no right to offset, defense or counterclaim with respect to such Obligations.

 

  

 

  

 

(b)           The Borrowers acknowledge and agree that as of August 31, 2010, the outstanding principal amount of all PIK Notes (including PIK Notes accruing at the Default Rate) and all fees, costs and expenses for which the Purchaser is entitled to payment or reimbursement under the Purchase Agreement (including, without limitation, the Closing Fee, the Facility Fee, forbearance fees, the Amendment Fee and the fees, costs and expenses of the Purchaser’s professionals and advisors) (the “Capitalized Obligations”) was $1,270,707.98.  The foregoing amount does not include all of the interest, fees, costs and expenses to which the Purchaser is entitled under the terms and provisions of the Investment Documents.  The Borrowers acknowledge and agree that the Capitalized Obligations are outstanding, and they have no right to offset, defense or counterclaim with respect to such Capitalized Obligations.

 

(c)           The Borrowers acknowledge and agree that as of August 31, 2010, the outstanding Capitalized Obligations exclusive of the principal amount of all PIK Notes (including PIK Notes accruing at the Default Rate) was $808,143.44 (the “Amendment No. 1 Capitalized Obligations”).

 

(d)           The Borrowers acknowledge and agree that the Specified Events of Default have occurred and certain of such Specified Events of Default are continuing as of the date hereof.

 

(e)           The Borrowers acknowledge and agree that, as a result of the existence of the Specified Events of Default, the Purchaser has no obligation to make additional loans or otherwise extend credit to the Borrowers under the Investment Documents or otherwise and the Purchaser has the right to exercise its rights and remedies under the Investment Documents.

 

2.           Amendments to Purchase Agreement.  Effective upon the Amendment No. 1 Effective Date, the Purchase Agreement is hereby amended as follows.

 

(a)           Section 1.1 of the Purchase Agreement is hereby amended by deleting the definition of “Subsequent Term Maximum Availability” in its entirety and replacing it with the following:

 

““Subsequent Term Maximum Availability” shall mean Four Million Dollars ($4,000,000) (exclusive of Capitalized Obligations incurred by the Borrowers prior to, on or following the Amendment No. 1 Effective Date).”

 

(b)           Section 1.1 of the Purchase Agreement is hereby amended by inserting the following new definitions in their proper alphabetical order:

 

““Amendment No. 1” means that certain Amendment No. 1 to Securities Purchase and Sale Agreement, dated as of September 8, 2010, by and among the Borrowers and the Purchaser.”

 

““Amendment No. 1 Capitalized Obligations” has the meaning ascribed thereto in Amendment No. 1.”

 

““Amendment No. 1 Effective Date” has the meaning ascribed thereto in Amendment No. 1.”

 

““Amendment No. 1 Waiver/Amendment Effective Date” has the meaning ascribed thereto in Amendment No. 1.”

 

  

2

  

 

““Capitalized Obligations” has the meaning ascribed thereto in Amendment No. 1.”

 

““Subsequent Term” shall mean the period from the Amendment No. 1 Effective Date through the earlier of (a) the Maturity Date (as such term is defined in the Note) and (b) the occurrence of an Event of Default that has not been waived by the Purchaser in its sole and absolute discretion.”

 

(c)           Section 2.5.2 of the Purchase Agreement is hereby amended and restated in its entirety as follows:

 

“2.5.2           Attached hereto as Schedule 2.5(b) is a budget and a statement of forecasted cash receipts for the Borrowers prepared by the Borrowers for the Subsequent Term which has been approved by the Purchaser (the “Subsequent Approved Budget”).  From time to time during the Subsequent Term, if any, the Administrative Borrower may request that the Purchaser fund Advances under the Note to or on behalf of the Borrowers, which request shall be in the form of a Disbursement Request and specify the principal amount of the proposed Advance and the item(s) in the Subsequent Approved Budget to which the request relates.  The Purchaser shall fund Disbursement Requests not later than three (3) Business Days following receipt thereof; provided, that any Disbursement Request received by the Purchaser after 11:00 a.m. (Los Angeles time) on any Business Day (or received at any time on a day that is not a Business Day) shall be deemed to have been received on the next succeeding Business Day.  The Purchaser shall not be obligated to fund any Advance unless it elects to do so in its sole and absolute discretion.  In no event during the Subsequent Term shall (a) the Administrative Borrower request an Advance for any item(s) other than in accordance with the Subsequent Approved Budget, (b) the Administrative Borrower request any Advances more frequently than on the first day of the Subsequent Term and each two week anniversary thereof and (c) the aggregate amount of Advances under the Note (exclusive of Capitalized Obligations incurred by the Borrowers prior to, on or following the Amendment No. 1 Effective Date) made during the Subsequent Term exceed the Subsequent Term Maximum Availability.”

 

3.           Amendment Fee.  On the Amendment No. 1 Effective Date, the Purchaser shall be deemed to have earned, and the Borrowers hereby jointly and severally agree to pay the Purchaser, an amendment fee (the “Amendment Fee”) of Fifty Thousand Dollars ($50,000).  Such fee is nonrefundable and is fully earned and payable upon the effectiveness of this Amendment and the Borrowers acknowledge and agree that they shall be deemed to have requested an Advance on the Amendment No. 1 Effective Date in an amount equal to the Amendment Fee.

 

4.           Conditions Precedent to Effectiveness.  This Amendment shall be effective upon the first day that all of the following are satisfied (the “Amendment No. 1 Effective Date”):

 

(a)           The Purchaser’s receipt of a counterpart hereof duly executed by the Borrowers;

 

  

3

  

 

(b)           The Purchaser’s receipt of the Amendment Fee; and

 

(c)           The representations and warranties of the Borrowers contained in this Amendment and the Purchase Agreement shall be true and correct.

 

5.           Covenants, Waivers and Further Amendments to Purchase Agreement.

 

(a)           The Borrowers covenant and agree that the Borrowers shall, within one (1) Business Day after receipt thereof, pay to the Purchaser all collections, payments and proceeds of the Borrowers’ Accounts and all deposits, pre-payments and cash-on-delivery payments received by the Borrowers on account of any orders for products or sales of Inventory (excluding amounts received by the Borrowers representing shipping costs, taxes and reimbursed out-of-pocket expenses) exclusive of up to One Hundred and Fifty Thousand Dollars ($150,000) of collections, payments and proceeds of the Borrowers' Accounts relating to invoices dated prior to the Amendment No. 1 Effective Date.  In the event that the Borrowers are obligated to return any deposits or pre-payments to a customer for which the Purchaser previously received any payment pursuant to this Section 5(a), upon demand of the Borrowers, the Purchaser shall return to the Borrowers an amount equal to the payment so received.  All such payments (unless returned to the Borrowers in accordance with the preceding sentence) shall be applied to the Amendment No. 1 Capitalized Obligations (including all such Amendment No. 1 Capitalized Obligations accruing or incurred on and after the Amendment No. 1 Effective Date).  The Borrowers shall, prior to payment to the Purchaser pursuant to this Section 5(a), cause all collections, payments and proceeds subject to this Section 5(a) to be deposited in a bank account set forth on Schedule 3.29 to the Purchase Agreement with respect to which a Borrower has entered into a deposit account control agreement reasonably acceptable to the Purchaser.

 

(b)           Effective upon the receipt by the Purchaser of payment in full of cash of all then-outstanding Amendment No. 1 Capitalized Obligations (the “Amendment No. 1 Waiver/Amendment Effective Date”), and provided that no Default or Event of Default other than the Specified Events of Default has occurred and is continuing, the Purchaser shall be deemed to have waived the Specified Events of Default and the covenant set forth in Section 5(a) hereof shall terminate and no longer be in force and effect.

 

(c)           Effective upon the Amendment No. 1 Waiver/Amendment Effective Date, the Purchase Agreement is hereby amended as follows:

 

(i)           Section 9.20 of the Purchase Agreement is hereby amended and restated in its entirety as follows:

 

“9.20           Manufacturing Source.  The Borrowers shall establish a manufacturing source based in the United States (or such other location as is mutually agreed to by the Purchaser and the Borrowers), which source shall, within one hundred and fifty (150) days following the Amendment No. 1 Waiver/Amendment Effective Date, deliver both a working senior unit and a working junior unit (in each instance, a prototype or a first article unit) to the Borrowers.”

 

  

4

  

 

(ii)           Section 9.21 of the Purchase Agreement is hereby amended and restated in its entirety as follows:

 

“9.21           Unit Sales.  The Borrowers shall, (a) within thirty (30) days following the Amendment No. 1 Waiver/Amendment Effective Date, recognize revenue with respect to the sale of two (2) units to independent third party customers on market terms pursuant to arms’ length transactions, (b) within ninety (90) days following the Amendment No. 1 Waiver/Amendment Effective Date, recognize revenue with respect to the sale of fifteen (15) units (including units counted for purposes of clause (a) above) to independent third party customers on market terms pursuant to arms’ length transactions, and (c) within one hundred and fifty (150) days following the Amendment No. 1 Waiver/Amendment Effective Date, recognize revenue with respect to the sale of twenty five (25) units (including units counted for purposes of clause (b) above) to independent third party customers on market terms pursuant to arms’ length transactions.  For the purposes hereof, the Borrowers shall be deemed to have “recognized revenue,” (x) with respect to sales to customers inside the United States, when a unit is accepted by the customer in writing, and (y) with respect to sales to customers located outside of the United States, when either (i) a unit departs the factory and said departure is verified by an export manifest or (ii) the customer executes a bill and hold letter agreement.”

 

6.           Representations and Warranties of the Borrowers.  Each Borrower makes the following representations and warranties to the Purchaser, each and all of which shall survive the execution and delivery of this Amendment:

 

(a)           This Amendment has been executed and delivered by duly authorized representatives of each Borrower, and the Purchase Agreement, as modified and amended by this Amendment, constitutes a legal, valid and binding obligation of such Borrower, and is enforceable against such Borrower in accordance with its terms, except as enforcement may be limited by equitable principles or by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditors’ rights generally;

 

(b)           After giving effect to this Amendment, no Default or Event of Default has occurred or is continuing other than the Specified Events of Default; and

 

(c)           After giving effect to this Amendment, all of the representations and warranties of the Borrowers contained in the Purchase Agreement continue to be true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations or warranties that already are qualified or modified as to “materiality” or “Material Adverse Effect” or “Material Adverse Change” in the text thereof, which representations and warranties shall be true and correct in all respects subject to such qualification) on and as of the date hereof as though made on and as of such date, except to the extent that any such representation or warranty expressly relates solely to an earlier date (in which case such representation or warranty shall be true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations or warranties that already are qualified or modified as to “materiality” or “Material Adverse Effect” or “Material Adverse Change” in the text thereof, which representations and warranties shall be true and correct in all respects subject to such qualification) on and as of such earlier date.

 

  

5

  

 

7.           No Waivers.  The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of the Specified Events of Default or any other Default or Event of Default or any right, power or remedy of the Purchaser under the Purchase Agreement or any of the other Investment Documents, nor constitute a waiver of any provision of the Purchase Agreement or any of the other Investment Documents, whether arising as a result of the Specified Events of Default or any other Default or Event of Default or otherwise.  This Amendment shall not constitute a modification of the Purchase Agreement or a course of dealing between the Borrowers, on the one hand, and the Purchaser, on the other hand, at variance with the Purchase Agreement such as to require further notice by the Purchaser to the Borrowers to require strict compliance with the terms of the Purchase Agreement and the other Investment Documents in the future, except as expressly set forth herein. Each Borrower acknowledges and expressly agrees that the Purchaser reserves the right to, and does in fact, require strict compliance with all terms and provisions of the Purchase Agreement and the other Investment Documents and reserves and preserves its rights, remedies and powers with respect to the Specified Events of Default and any other Default or Event of Default which may now exist or hereafter arise under the Investment Documents.  No Borrower has knowledge of any challenge to the Purchaser’s rights arising under the Investment Documents or the effectiveness of the Investment Documents.

 

8.           Effect on Investment Documents.

 

(a)           The Purchase Agreement, as amended hereby, and each of the other Investment Documents shall be and remain in full force and effect in accordance with their respective terms and hereby are ratified and confirmed in all respects.

 

(b)           Upon and after the effectiveness of this Amendment, each reference in the Purchase Agreement to “this Agreement,” “hereunder,” “herein,” “hereof” or words of like import referring to the Purchase Agreement, and each reference in the other Investment Documents to “the Purchase Agreement,” “thereunder,” “therein,” “thereof” or words of like import referring to the Purchase Agreement, shall mean and be a reference to the Purchase Agreement as modified and amended hereby.

 

(c)           To the extent that any terms and conditions in any of the Investment Documents shall contradict or be in conflict with any terms or conditions of the Purchase Agreement, after giving effect to this Amendment, such terms and conditions are hereby deemed modified or amended accordingly to reflect the terms and conditions of the Purchase Agreement as modified or amended hereby.

 

(d)           This Amendment is an Investment Document.

 

  

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9.           Fees, Costs and Expenses.  The Borrowers jointly and severally agree to pay on demand all fees, costs and expenses in connection with the preparation, execution, delivery, administration, modification and amendment of this Amendment and the other instruments and documents to be delivered hereunder, including, without limitation, the reasonable fees, cost and expenses of counsel for the Purchaser with respect thereto and with respect to advising the Purchaser as to its rights and responsibilities hereunder and thereunder.  The Borrowers acknowledge and agree that they shall be deemed to have requested an Advance on the Amendment No. 1 Effective Date in an amount equal to all such fees, costs and expenses for which the Purchaser has received an invoice on or before such date.

 

10.           Counterparts.  This Amendment may be executed in any number of separate counterparts and by the different parties hereto on separate counterparts, each of which shall be deemed an original and all of which, taken together, shall be deemed to constitute one and the same instrument. In proving this Amendment in any judicial proceedings, it shall not be necessary to produce or account for more than one such counterpart signed by the party against whom such enforcement is sought. Any signatures delivered by a party by facsimile transmission or electronic mail shall be deemed an original signature hereto.

 

11.           GOVERNING LAW.  EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AMENDMENT, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AMENDMENT AND THE OBLIGATIONS SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.

 

[The remainder of the page is intentionally blank.]

 

  

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IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year first written above.

 

 

	 	
BORROWERS:

 

CAPRIUS, INC.

	 
	 	 	 	 
	 	
By: 

	/s/Dwight Morgan 	 
	 	 	
Name: Dwight Morgan

Title: Chief Executive Officer

	 
	 	 	 	 
	 	 	 	 
	 	
M.C.M. ENVIRONMENTAL TECHNOLOGIES, INC.

	 
	 	 	 	 
	 	
By: 

	/s/Dwight Morgan	 
	 	 	
Name: Dwight Morgan

Title: Chief Executive Officer

	 
	 	 	 	 
	 	 	 	 
	 	
M.C.M. ENVIRONMENTAL TECHNOLOGIES LTD.

	 
	 	 	 	 
	
 

	
By: 

	/s/George Aaron 	 
	 	 	
Name: George Aaron

Title: Chairman

	 
	 	 	 	 

 

 [SIGNATURE PAGE TO AMENDMENT NO. 1 TO

SECURITIES PURCHASE AND SALE AGREEMENT]

  

  

  

 

	 	 	 	 
	 	
PURCHASER:

  

VINTAGE CAPITAL GROUP, LLC

	 
	 	 	 	 
	 	
By: 

	/s/Fred Sands 	 
	 	 	
Name: Fred Sands 

Title: Chairman 

	 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 [SIGNATURE PAGE TO AMENDMENT NO. 1 TO

SECURITIES PURCHASE AND SALE AGREEMENT]Jinhao Motor Company. Exhibit 10.14 - Filed by newsfilecorp.com

Exhibit 10.14

Loan Contract of Chinese Mercantile Bank 

Loan Contract

Cosigned 

By and among 

Chinese Mercantile Bank

As the Lender 

AND

Guangdong Jinhao Motorcycle Co., Ltd.

As the Borrower 

Zhaoqing Haoyan Industries Co., Ltd. 

Shenzhen Jinhao Dawang Import and Export Co., Ltd.

Mr. Tsoi Man Hoo 

As the Guarantors 

Guangdong Jinhao Motorcycle Co., Ltd.

As the
Mortgagor/Pledgor

Signed on: March 24,
2008

No.: LT200803MGR18 

 

1

Loan Contract of Chinese Mercantile Bank 

This Loan Contract
(hereinafter referred to as the “Contract”) is cosigned on March 24, 2008
by the parties below in Futian District, Shenzhen,
Guangdong Province, P.R.C. 

Lender: Chinese Mercantile Bank
(hereinafter referred to as the “Lender”) 

Legal representative/responsible
person: Zhu Qi 

Address: 1-23F, Dongfeng Building, Yannan Road,
Futian District, Shenzhen 

Postal Code: 518031 

Telephone:
0755-83788168 Fax: 0755-83257955 

Borrower: Guangdong Jinhao
Motorcycle Co., Ltd. (hereinafter referred to as the “Borrower”)

Legal
representative: Tsoi Man Hoo 

Address: Dawang Industrial Park,
Zhaoqing New & High Technology Industrial Development Zone 

Postal
Code: 526238 

Telephone: (0758)3625488 Fax: (0758)3130380 

Basic deposit account opening bank: Dawang Rural Credit Cooperative,
Sihui City 

Basic deposit account number: 5988021401301000008957 

Guarantor: Zhaoqing Haoyan Industries Co., Ltd. (hereinafter
referred to as the “Guarantor A”) 

Legal representative: Liu Huilin 

Address: Dawang Industrial Park, Zhaoqing New & High Technology
Industrial Development Zone 

Postal Code: 526238 

Telephone:
___________________________Fax: _________________________

Basic deposit account opening bank: ____________________________________

Basic deposit account number: ________________________________________

Guarantor: Shenzhen Jinhao Dawang Import and Export Co., Ltd.
(hereinafter referred to as the “Guarantor B”) 

Legal Representative: 

Address: Room 2112, 2113, 2115 and 2116, South International
Plaza,futian district, Shenzhen Postal Code: 

Telephone:
___________________________Fax: _________________________

Basic deposit account opening bank: ____________________________________

Basic deposit account number: ________________________________________

Guarantor: Tsoi Man Hoo (hereinafter referred to as the
“Guarantor C”) 

2 

Loan Contract of Chinese Mercantile Bank 

ID No./Hongkong ID No.: C369685(3)

Address:17F, Building 13, Yuet Wu Villa, Tuen Mun, New Territories, Hongkong

Postal Code: _________________________

Telephone: 13580619868   

Mortgagor/Pledgor: Guangdong Jinhao Motorcycle Co., Ltd. (hereinafter referred to as the “Mortgagor/Pledgor”)   

Legal representative: Tsoi Man Hoo

Address: Dawang Industrial Park, Zhaoqing New & High Technology Industrial Development Zone  Postal Code: 526238  

Telephone: (0758) 3625488                   
Fax: (0758)3130380

Basic deposit account opening bank: Dawang Rural Credit Cooperative, Sihui City

Basic deposit account number: 5988021401301000008957   

The aforementioned Guarantor A, Guarantor B and Guarantor C shall be collectively called the “Guarantor”, who shall bear joint and several liabilities for the loans granted hereunder.   

The Parties are willing to enter into this Contract by consensus to set forth their respective rights and obligations hereunder in accordance with relevant provisions of the law of the People’s Republic of China.    

Article 1 Category and Amount of Loan

The categories of loan hereunder shall be categories B, C:

	
A.	
Single normal credit loan, the line of credit is
___/___ (currency)  ___/___ yuan (in words).
	
 	
 
	
B. 		
Working capital loan, the line of credit is RMB (currency) thirteen million yuan (in words).

	
	 	 
	
C. 		
Invoice financing loan, the line of credit is RMB (currency) twenty million yuan (in words).

	

All the lines aforesaid shall be collectively called the “total line”.

Article 2 Purpose of Loan

The loan granted hereunder shall be used as follows: line B set forth in Article 1 hereof shall be used as general operating funds, and line C shall be used by the Lender to purchase raw materials from domestic suppliers. The Borrower shall
not use the loan for purpose other than that stipulated in the Contract, unless otherwise agreed by the Lender in writing.  

Article 3 Loan Period/Validity of Credit Line

The loan hereunder shall be implemented by way of B, C:

	
A. 		
Single normal credit loan, the loan period is / , commencing from / to / . The
actual beginning-end date of a loan shall be subject to the certificate of
indebtedness.
	
	
 	
 

 

3

Loan Contract of Chinese Mercantile Bank 

 

	
B. 		
The line of working capital loan, whose valid period hereunder is three years, commencing from the first drawing day upon execution of this Contract, and the Lender shall examine loan granted annually from the said drawing
day. In case of failed examination, the Lender shall have right to withdraw all loan drawn and cancel all undrawn line of loan. The longest period for each loan shall not exceed six months and the actual beginning-end date shall be subject to
the certificate of indebtedness.

	
	 	 
	
C. 		
The line of invoice financing loan, whose valid period hereunder is three years, commencing from the first drawing day upon execution of this Contract, and the Lender shall examine loan granted annually from the said
drawing day. In case of failed examination, the Lender shall have right to withdraw all loan drawn and cancel all undrawn line of loan. The longest period for each loan shall not exceed three months and the actual beginning-end date shall be
subject to the certificate of indebtedness.

	

If the first drawing days of loans falling into categories B and C are different, the initial day for such lines shall be counted from the earlier first drawing day. 

Article 4 Loan Rate and Calculation Method, Commission Charge

1. Renminbi Loan

The rate of Renminbi loan shall be 10% higher than the base rate announced by the People’s Bank of China for the first to third years (including the third year). Where the People’s Bank of China adjusts the base loan rate or calculation
method during the term of this Contract, the said rate or method hereunder shall be adjusted accordingly, and the Lender may make no further notice.   

2. Foreign Exchange Loan  

The rate for foreign exchange loan shall be subject to the Table on Foreign Currency Deposit and Loan Rate announced by China Mercantile Bank for the current period. The loan rate hereunder shall be
implemented by means of _________/_______:

	
          A.
		
Fixed rate: annual rate 
	
	
		
	
	
          B.
		
Floating rate: in currency, increase/decrease by
(annual rate). The preferential rate shall
be adjusted with the adjustment of rate for each period and the interest of loan shall be subject
to calculation on multi-stage basis. 
	

	
3. 		
The Lender shall calculate interests on a monthly manner against the Borrower. The interest settlement date shall be the 20th day of each month and the payment date shall be the 21st day. The Borrower
shall, prior to the interest settlement date, deposit the loan interest payable to the account opened by the Lender, who shall be entitled to collect interest from the account of the Borrower directly.

	
	 	 
	
4. 		
The loan interest hereunder shall be based on 360 days, and subject to the actual loan amount collected from the Borrower’s account and the number of days from the day when such loan is collected from the account of
the Borrower.

	
	 	 
	
5. 		
The interest rate hereunder shall be a preliminary agreed value. If the certificate of indebtedness subject to circular usage is inconsistent with the agreed rate, the rate set forth in the said certificate shall prevail.

	

4

Loan Contract of Chinese Mercantile Bank 

Article 5 Drawing of Loan   

	
1. . 		
Precondition for the First Drawing

	

The Borrower shall satisfy the following preconditions or such preconditions have been exempted by the Lender, otherwise, it is not allowed to apply to the Lender for any drawing in light of this Contract:  

	
A. 		
This Contract has been already executed and issued by the Lender;

	
	 	 	 
	
B. 		
The certificates and the originals of property ownership certificates for mortgage registration procedures hereunder have already been delivered to the Lender;

	
	 	 	 
	
C. 		
The following true copies examined and verified by the Borrower, Guarantors (including Guarantor A and Guarantor B) and the Mortgagor have been delivered to the Lender:

	
	 	 	 
		
1. 		
Articles of Association and any modifications to the Articles prior to the execution date of this Contract;

	
	 	 	 
		
2. 		
The latest business license issued by the Administrative Bureau for Industry and Commerce concerned;

	
	 	 	 
		
3. 		
Financial statements audited in the recent one year;

	
	 	 	 
		
4. 		
Identity certificate of the legal representative;

	
	 	 	 
		
5. 		
Identity card of the legal representative;

	
	 	 	 
		
6. 		
Organization code certificate, tax registration certificate (state taxes and local taxes)

	
	 	 	 
		
7. 		
Copy of loan card, whose status is in normal effect;

	
	 	 	 
		
8. 		
Approval document for establishment and approval certificate (if any);

	
	 	 	 
		
9. 		
Resolution passed in the shareholders’ meeting and/or board of directors of the Borrower, which authorizes the Borrower right to borrow in accordance with this Contract and relevant contractual clauses, and authorize one or
more persons to sign this Contract, relevant security agreement, all advices of drawing and other required documents pertaining to these contracts to which the Borrower is a party. Moreover, it is also required to list specimen signatures of the
authorized persons and provide their identity certifications.

	
	 	 	 
		
10. 		
Shareholders’ resolution of Guarantor A and Guarantor B, by which the Guarantor shall have right to provide guarantee for the Borrower with regard to the liabilities hereunder, and shall authorize one or more persons to sign
this Contract, relevant security agreement, all advices of drawing and other required documents pertaining to these contracts to which the Borrower is a party. Moreover, it is also required to list specimen signatures of the authorized persons and
provide their identity certifications.

	
	 	 	 
	
D. 		
The true copies of ID card of Guarantor C examined have already been delivered to the Lender;

	
	 	 	 
	
E. 		
The written appraisal report given by an authority with Grade I evaluation qualification rated by the Ministry of Construction and acceptable by the Lender has been delivered to the Lender, and the evaluated value of such
mortgaged property shall not be less than RMB 80 million yuan. Such expenses shall be held liable by the Borrower;

	

5

Loan Contract of Chinese Mercantile Bank 

	
 	
 
	
 	
 
	
F. 		
Legal opinion issued by the legal counsel to the satisfaction of the Lender has already been delivered to the Lender;

	

(This page is for signature only, and the remainder is intentionally left blank)

Lender: China Mercantile Bank 

Signature: (company seal of China Mercantile Bank) 

Borrower: Guangdong Jinhao Motorcycle Co., Ltd. 

Signature: /s/ Tsoi Man Hoo (company seal of Guangdong Jinhao Motorcycle Co., Ltd.)

Guarantor: Zhaoqing Haoyan Industries Co., Ltd. 

Signature: /s/ Tsoi Man Hoo (company seal of Zhaoqing Haoyan Industries Co., Ltd.)

Guarantor: Shenzhen Jinhao Dawang Import and Export Co., Ltd. 

Signature: /s/ Tsoi Man Hoo (company seal of Shenzhen Jinhao Dawang Import and Export Co., Ltd. )

Guarantor: Tsoi Man Hoo 

Signature: /s/ Tsoi Man Hoo 

ID No./Hongkong ID No.: C369685 (3)

Mortgagor/Pledgor: Guangdong Jinhao Motorcycle Co., Ltd. 

Signature: /s/ Tsoi Man Hoo (company seal of Guangdong Jinhao Motorcycle Co., Ltd.)

Witness: Zhao Lin 

Signature: /s/ Zhao Lin 

ID No.: 210105197307261415 

6

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