Document:

f8k0411a1ex10xvi_wester.htm

Exhibit 10.16

No.: 14080272-2010 CHIDIAN No. 0060

 

 

 

 

Loan Agreement for Small-cap Enterprise

(2009 Version)

 

 

 

 

 

 

 

Special Notice: This Agreement is entered into based on mutual and volunteer consultation. All the provisions hereunder reflect true minds of the Parties. To protect the Borrower’s legal rights, the Lender particularly remind the Borrower to pay full attention to the terms concerning both parties’ rights and obligations, especially the part with boldface.

 

 

 

  

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 Lender: Industrial and Commercial Bank of China, Jinjiang Chidian Branch

Authorized Person: Wang Jianping                                                 Contact Person: Chen

Address:                                                                                               ZIP:

Tel:                                Fax:                                                                  Email:

Borrower: Fujiang Jinjiang Chengdai Ansheng Shoes and Clothing Co., Ltd.

Legal Representative: Ding Jianbiao                                                Contact Person:

Address:                                                                                               ZIP:

Tel:                                Fax:                                                                  Email:

Based on mutual and equal consultation, the Parties have agreed on the following regarding the loan from the Lender to the Borrower.

 

Part I Condition of the Loan

Section 1 Use of Proceeds

The loan hereunder shall be used as working capital. The Borrower shall not use it for any other purposes without prior written consent of the Lender. The Lender has right to supervise the use of the proceeds.

Section 2 Amount and Term

2.1 The currency hereunder is Renminbi (“RMB”), the amount of the loan is RMB3 million.

2.2 The term of the loan is 12 months from the date the Lender release the loan (if there are several trenches of the release, the term shall be started to calculate from the date of the first trench). The date of the release shall be according to the receipt.

Section 3 Interest Rate, Interest and Expenses

3.1 Method to decide the RMB interest rate

The RMB interest rate shall be decided according to the 2nd method:

	
(1)  

	
Fixed interest rate, yearly rate is -%, the interest rate shall be not change during the term hereunder.

	
(2)  

	
Float interest rate, the interest rate shall be decided according to benchmark interest rate and floating rate. The benchmark interest rate shall be according to the benchmark interest rate circulated by the Central Bank of China at the effective date of this Agreement with respect to the loan with the same term hereunder. The floating rate is 5% (floating upward). The floating rate hereunder shall not be changed during the term. After the loan is released, the RMB interest rate will be changed each 12 months (“Period”). The interest rate of the second Period shall be decided according the RMB interest rate at the date of the last day of the last Period, and so on. If the loan is released by multiple trenches, the RMB interest rate shall be adjusted according to the    of the following:

 

  

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A.  

	
Within one Period, each trench of loan shall use the same RMB interest rate for that Period, and the RMB interest rate shall be changed at the same time for all trenches of loan in the following Periods.

	
B.  

	
The RMB interest rate of each trench shall be decided and changed separately.

	
(3)  

	
Other provision

3.2 Method to decide foreign exchange interest rate (not applicable)

The foreign exchange interest rate shall be decided according to - method:

	
(1)  

	
Fixed interest rate, yearly rate is -%, the interest rate shall be not change during the term hereunder.

	
(2)  

	
Float interest rate.

3.3 The interest hereunder shall be calculated from the date when the loan is released, and be paid monthly. The loan and the interest shall be paid off at the maturity date of the term. The daily interest rate equals to yearly interest rate divided by 360.

 

3.4 The penalty interest rate for delay of payment of interest is the interest rate hereunder plus another 30% of the interest rate. The penalty interest rate for using the loan for any other purposes is the interest rate hereunder plus another 50% of the interest rate.

Section 4 Withdrawal of the Loan

The Borrower shall withdraw the loan according to the actual demand. The first trench of the loan shall be withdrew before August 9, 2010, and the last trench shall be withdrew before August 9, 2010, otherwise the Lender has right to cancel the part or the entire loan hereunder.

Section 5 Repayment

5.1 The Borrower shall make the repayment according to the 1st method:

(1) The loan shall be repaid at the maturity date of the term hereunder.

(2) Make the repayment according to the following schedule:

 

	
Time

	
Amount

	  	  
	  	  

5.2 If the loan hereunder belongs to any of the following circumstances, the Borrower shall repay the loan  (not applicable) .

5.3 Except for the case in Section 5.2, if the Borrower repays the loan before the maturity date of the term hereunder, the Borrower shall pay a penalty to the Lender equal to -% of the amount of loan repaid in before the maturity date of the term.

Section 6 Guarantee

6.1 The loan hereunder is with guarantee. The type of guarantee is warranty.

 

6.2 If the guarantee hereunder is maximum guarantee, the maximum guarantee agreement is:

Title of the maximum guarantee agreement: Warranty Agreement

(No.: 16080272-2010Chidianbao)

Warrantor: Jinjiang Qiuzhi Dongya Shoes and Clothing Co., Ltd.

 

  

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Section 7 Financial Provision (Optional, not applicable)

Section 8 Dispute Settlement

The method of dispute settlement shall be the 1st one as follows:

	
(1)  

	
Any dispute occurred hereunder shall be submitted to Xiaman Arbitration Committee and arbitrated with its valid arbitration rules. The arbitration award is final and shall bind the Parties.

	
(2)  

	
The dispute shall be filed to the Lender’s local People’s Court.

 

Section 9 Miscellaneous

9.1 There are two counterparts of this Agreement with the same validity, the Lender and Borrower each holds one.

9.2 The following attachments and other attachments mutually confirmed by the Parties shall constitute part of this Agreement with the same validity:

Exhibit 1: Notice of Withdrawal (format)

Exhibit 2: Consignment Agreement

Section 10 Other provision

The Borrower shall provide the Notice of Withdrawal before it withdraws any part or the entire loan. The Notice of Withdrawal shall not be cancelled upon submission without prior written consent by the Lender.

If the Lender agrees with Borrower to withdraw the loan after an approving process, the Lender will release the loan to the Borrower’s account designated by the Borrower, which will be deemed that the Lender has release the loan to the Borrower according to this Agreement.

As required by supervision rules and the Lender’s management rules, if the amount of loan to be withdrawn exceeds certain amount or the condition of the loan satisfies certain requirement, the loan shall be released to third parties directly from the Lender, according to the application of the Borrower. The money released to the third party shall be used according to the provision hereunder. The parties shall enter into a consignment agreement as an attachment of this Agreement, and the Borrower shall designate a bank account to be used for the consignment.

If any dispute hereunder is submitted to arbitration committee, the Parties agree to apply for summary procedure. Any related legal instruments shall be deemed as delivered if the legal instrument is presented to the courier with the receiver’s address is the same with the address hereunder. The Parties agree if any part of the credit or debt is clear, this part of credit or debt can be arbitrated in advance. If there only exists the Lender’s mortgage right, the Parties shall authorized the arbitration committee to auction the collateral, the income of the auction shall be used to settle the debt hereunder with the first priority.

  

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 Part II Terms and Conditions of Loan for Small-cap Enterprise

Section 1 Interest rate and interest

1.1 In foreign currency borrowings, LIBOR is the foreign currency interest rate that shows on “LIBO=” on Reuters terminal (London 11:00 am) two business days before the withdrawal date or the base rate adjustment date. HIBOR is the HKD rate that shows on “HIBO=” on Reuters terminal (HK time 11:15 am) two days before the withdrawal date or the base rate adjustment date.

1.2 If this agreement use floating rate, the interest will adjust according to original rule after overdue.

1.3 The payment date is 20th if the interest payment are due by month, the payment date is 20th of the last month of each quarter if the interest payment are due by quarter. The payment date is June 20th, and Dec. 20 if the payment are due semiannually.

1.4 The first interest period is the period from the withdrawal date to the first interest payment date. The last interest period is from the last interest payment date to the final loan maturity date.

1.5 If the People’s bank of China adjusts interest for loans, we change accordingly, and the Borrower might not be notified.

Section 2 Loan issuance

2.1 The Borrower needs to satisfy the following conditions, otherwise the Lender doesn’t have any obligations to issue any loans, except for the ones that the Lender agrees to issue first:

(1) Upon withdrawal, the Borrower confirms the statements and guarantees under this agreements are true, correct and complete, and the Borrower are not in breach of this and other agreements with the Lender.

(2) The Borrower has already provided collaterals and guarantees and the collaterals has not been compromised or changed towards against the Lender.

(3) If the Borrower claims the loans through ICBC online banking, the <ICBC online banking service agreement for enterprise clients> are also valid.

2.2 If the Borrower claims the loans through our branches, he/she should submit notification 5 working days before. The notification cannot be cancelled after submission without the consent of the Lender.

2.3 If the Borrower claims through ICBC online banking, the Borrower needs to sign the <ICBC online banking service agreement for enterprise clients> and promise to obey the rules. The claim notification submitted through online banking upon the Lender confirmation should be regarded as debt receipt.

2.4 When the Borrower satisfied above conditions, the Lender shall transfer the loan to Borrower, and this is regarded as loan issued.

  

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2.5 According to related rules and regulations, as well as Lender management requirement, if the Borrower requests the Lender to send the loan directly to the related party for specific purpose, the Lender should do according to the request. For this purpose, the Borrower should sign a authorization letter with the Lender as an attachment for this agreement.

Section 3 Payback

3.1 The Borrower should pay back all principal, interest and other payables. On the final principal payment date and the day before each interest settlement date, the Borrower should deposit enough current period interest and principal and other payables in the account appointed by the Lender. The Lender should have rights to take the payment on the payment date, or request the Borrower to cooperate with related procedures. If the balances in the accounts are not enough to pay all payments due, the Lender has the claim rights.

3.2 If the Borrower applies for all or part of the loans in advance, he/she should submit paper application, or submit payment in advance notice to online banking, and after the Lender’s approval, should make compensation payment to the Lender.

3.3 Upon the approval of Lender for payment in advance, the Borrower should make all payment on that date, including principal, interests and other payables.

3.4 The Lender has right to take back the loan according to the Borrower’s cash flow.

3.5 If the time period shorted because of the Borrower’s payment in advance or the Lender’s action according to this agreement, interest rate doesn’t change.

Section 4 Guarantees and collaterals

4.1 The Borrower should provide legitimate collaterals approved by the Lender. A collateral agreement should be signed additionally.

4.2 If the collaterals has been damaged, depreciated, and has property rights dispute or has been sealed up, or the person who hand in the collaterals does things that makes the Lender at disadvantage position, the Borrower should notify the Lender, and provide other collateral for approval.

4.3 Upon the approval of Lender, those loans guaranteed by accounts receivables, the Lender has the right to request the Borrower to repay part or all of the principal and interest if any of the following happens, or the Borrower add more legitimate, effective and sufficient collateral:

(1) Accounts receivable pledger has experienced two months increasing bad loan rate.

(2) The pledger has more than 5% of the total accounts receivable overdue not received.

(3) The pledger has trade conflicts with the pledgee or other third parties (including but not limited to quality, technology and service, etc) or debt dispute, all of which could lead to the delay receipt or write off of account receivable.

  

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Section 5 Account Management

5.1 If the loan hereunder is used as working capital, the Borrower shall use the bank account in the Lender to collect sales revenue and pay back the loan. When the sales revenue is not cash, the Borrower shall deposit the cash when it is collected.

5.2 The Lender shall have right to supervise the Borrower’s account for pay back the loan by ways of, including but not limited to, understanding and inspection of the cash flow of the account. The Borrower shall cooperate with the Lender. If required by the Lender, the Borrower shall sign a supervision agreement with the Lender.

Section 6 Representations and Warranties

The Borrower has the representations and warranties as follows, which will keep valid during the term of this Agreement:

6.1 Qualified to be a borrower, to sign and perform this Agreement.

6.2 Authorized to sign this Agreement. Signing of this Agreement will not conflict with its bylaws, investment contract, joint venture contract, partnership contract, relevant laws and regulations, and obligations under any other agreements.

6.3 Any of other outstandings due have been paid off on time. No record of delaying to pay back loan or interest.

6.4 No material non-compliance action regarding the business or operation was taken within one year. There is no material bad record of current management of the company.

6.5 All the documents and information provided to the Lender are true, accurate, complete and valid. There is no false record, material omission or misrepresentation.

6.6 Has not concealed any lawsuit, arbitration or claim event.

6.7 Has understood all the rules on internet banking system related to this Agreement.

Section 7 Borrower’s Commitment

7.1 The Borrower shall use the loan hereunder solely for the usage according to the schedule provided hereunder. The proceeds shall not be used in securities market, future market, real estate market or for any other usage restricted or prohibited by relevant laws and regulations.

7.2 The Borrower shall repay the loan, interest and other expenses according to the provisions hereunder.

7.3 The Borrower shall accept the Lender’s supervision on usage of the loan by account analysis, voucher inspection and site visit, and report the usage of the loan regularly to the Lender.

  

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7.4 The Borrower shall accept the Lender’s credit inspection, provide true, accurate and complete financial statement and other material that can prove the Borrower’s capability to repay the loan, including bank name where the Borrower has bank account(s), account number, balance of the deposit. The Borrower shall cooperate with the Lender to inspect, understand and supervise the Borrower’s operation and finance.

7.5 The Borrower shall obtain the Lender’s prior written consent before the Borrower’s merge and separation, decrease of registered capital, change of shareholder structure, joining in or exiting a partnership, transfer of material assets or creditor’s right, material external investment, substantial increase of debt financing, if any of the actions will impact the Lender’s interest.

7.6 In the event any of the following circumstances is occurred, the Borrower shall notify the Lender:

(1) change of company name, seal, bylaws, address, legal representative and mailing address.

(2) recession, dismissal, liquidation, suspension, license being cancelled, being canceled, or bankruptcy.

(3) has been(or will) involved in material economic dispute, lawsuit, arbitration or assets sealed, detained, enforced or punishment by judiciary, tax authority or AIC.

(4) Shareholder, director, management, partner or investor of the Borrower has involved in material lawsuit or economical dispute.

7.7 The Borrower shall disclose complete and accurate affiliates relationship and related party transaction on time to the Lender.

7.8 The Borrower shall accept the Lender’s notice sent by mail or other ways on time.

7.9 The Borrower shall not dispose its assets by way of worsening its capability to repay the loan, or provide guarantee to any third party to impact the Lender’s interest.

7.10 The Borrower shall bear all the expenses for signing and performance of this Agreement, and expenses for the Lender to collect the loan and interest hereunder, including but not limited to expenses of lawsuit, arbitration, property preservation, lawyer, enforcement, appraisal, auction, public notice.

7.11 The repayment of the loan is prior to the Borrower’s debt to its shareholder, legal representative, partner, main investor or key management, and at least at the same sequence with the Borrower’s other debt to other creditors.

7.12 The Borrower has fully understood the rules on the internet banking system relating to this Agreement, shall keep the client certificate and PIN well. Anyone usage of the client no, PIN or client certificate to access to the internet banking system shall be deemed as the Borrower’s action, the electronic record generated therefrom will the proof of performance of this Agreement.

  

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Section 8 Lender’s Commitment

8.1 The Lender shall release the loan to the Borrower according to this Agreement.

8.2 The Lender shall keep the Borrower’s information on financials, operation and any non-public materials confidential, unless as required by laws or regulations or otherwise provisions hereunder.

Section 9 Breach of Contact

9.1 In the event of any following circumstances occurs, the Borrower breaches this Agreement:

(1) the Borrower fails to repay the loan and interest or other outstandings hereunder, or perform the other obligations, or comply with the warrants and representations hereunder;

(2) in the event that the guarantee hereunder has change which is not in favor of the Lender, but the Borrower fails to provide supplementary guarantee as required by the Lender;

(3) the Borrower fails to repay any other debt (other than the loan hereunder) due, or perform other obligations under other agreements, which has impacted or will impact the Borrower’s performance hereunder;

(4) any of the Borrower’s profitability, ability to repay the debt, operation ability, cash flow is lower than the standard, or worsening, which has impacted or will impact the Borrower’s performance hereunder;

(5) any of the Borrower’s operation, external investment has changed, which has impacted or will impact the Borrower’s performance hereunder;

(6) the Borrower or any of the Borrower’s shareholder, legal representative, partner, main individual investor or key management has been involved or will involve in material economical dispute, litigation, arbitration, assets sealed-up, detained or enforced, investigation or punishment by judiciary or government, or disclosure of the Borrower’s breach of laws or regulations by media, which has impacted or will impact the Borrower’s performance hereunder;

(7) any change of the Borrower’s shareholder structure, partnership, joint venture, management, which has impacted or will impact the Borrower’s performance hereunder;

(8) the Borrower gets the loan by fake contract or transaction, or avoids to repay the loan through related transaction;

(9) the Borrower has (or will) terminated, dismissed, liquidated, business suspension, been cancelled the business license, bankrupted;

(10) the Borrower has breached any of the rules on food safety, production safety and environmental protection, which has impacted or will impact the Borrower’s performance hereunder;

(11) the Borrower or any of Borrower’s legal representative, partner, main individual investor or key management has involved in mafia-style organization activity, drug taking, gambling, smuggling, etc;

(12) the Borrower frequently delays to pay tax, expense, and employee’s salary;

(13) any other circumstances which has impacted or will impact the Borrower’s performance hereunder.

9.2 In the event the Borrower has breached the contract, the Lender has right to take one or more of the following actions:

(1) requiring the Borrower to correct its performance hereunder;

(2) stopping to release the loan under this Agreement or any other agreement;

(3) declaring that the undue outstanding loan is due;

(4) requiring the Borrower to compensate the Lender’s damages and losses;

(5) any other actions provided by this Agreement, laws or regulations or deemed as necessary by the Lender.

9.3 In the event that the Borrower has not fully repay the loan due, the Borrower shall pay a penalty according the provision hereunder to the Lender. In the event that the Borrower has not fully pay the interest due, the Borrower shall pay a penalty with compound interest rate.

  

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9.4 In the event that the Borrower has used the loan for purpose other than that provided hereunder, the Borrower shall pay a penalty interest with penalty interest rate from the date when the Borrower used the loan for purpose other that provided hereunder. If the Borrower has not fully pay the interest during the period when the Borrower used the loan for purpose other that provided hereunder, the Borrower shall pay a penalty with compound interest rate.

9.5 If the Borrower has breached the provisions in Section 8.3 and 8.4, the penalty interest rate shall be the higher one, but not the combined.

9.6 In the event that the Borrower has not fully repay the loan due, pay the interest due or any other outstandings, the Lender shall have right to disclose it to the media.

9.7 In the event that the Borrower and its affiliates have changed their controlling relationship, or the Borrower’s affiliates have involved in any circumstances provided in Section 8.1 (except for item 1 and 2), which has impacted or will impact the Borrower’s performance hereunder, the Lender shall have right to take any action provided hereunder.

Section 10 Deduct

10.1 In the event that the Borrower has not fully repaid the loan due, the Lender shall have right to deduct the same amount from the Borrower’s bank account in ICBC until the entire loan due has been paid off.

10.2 If the currency of the deducted money is different from the currency of the loan hereunder, the exchange rate shall be applied to the exchange rate circulated by the Lender. The Interest, other expenses and exchange rate difference incurred from the date of deduction to settlement date shall be borne by the Borrower.

10.3 If the money deducted by the Lender is not enough to pay off the loan due, the Lender shall have right to determine the settlement order.

Section 11 Transfer of Right and Obligation

11.1 The Lender shall have right to transfer all its rights and obligations to any third party without consent of the Borrower. The Borrower shall not transfer any of its rights or obligations to any third party without the Lender’s written consent.

11.2 The Borrower agrees that the Lender or ICBC may authorize other branch to perform the rights and obligations hereunder, or manage the loan hereunder. The authorized branch shall have rights to perform this Agreement and file law suit, arbitration or enforcement for any dispute hereunder.

Section 12 Validity, Modification and Termination

12.1 This Agreement shall take effect upon execution, and shall be terminated until the Borrower has completed all obligations hereunder.

12.2 Any change of this Agreement shall be made in written based on mutual consultation. Any change will be part of this Agreement with the same validity. The provisions other the change shall continue be effective, and the original provisions before the change takes effect shall be effective.

12.3 The change or termination of this Agreement shall not impact the Parties’ rights to claim for damages and losses hereunder. The termination of this Agreement shall not impact the validity of the provisions on dispute settlement.

  

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Section 13 Law Governance and Dispute Settlement

13.1 This Agreement shall be governed and construed by laws of PRC.

13.2 Any dispute hereunder shall be settled by consultation. If the consultation fails, the dispute shall be settled according to the provisions hereunder.

Section 14 Entire Agreement

The Part I and Party II of this Agreement shall constitute the entire agreement, and the terminology therein shall have the same meaning. The Borrower shall be bond by the entire agreement.

Section 15 Notice

15.1 Any notice hereunder shall be sent in written. The Parties’ address hereunder shall be the mail address for the notice, if there is no other provision. If any Party’s address has been changed, the Party shall notice the other Party in written.

15.2 In the event that any Party refuses to accept the mail of the notice or the notice can not be delivered for any other reason, the other Party shall have right to notice the Party through notarization or public announcement.

Section 16 Miscellaneous

16.1 The Lender’s non-performance of any rights hereunder shall not be deemed as waive or change of the rights, or impact its future performance of the said rights.

16.2 If any of provisions hereunder is deemed as invalid or unenforceable, validity of the other provisions or the entire agreement shall not be impacted.

16.3 The Lender shall have right to provide the Borrower’s information to credit information system of Central Bank of China as required by laws or rules of financial regulators, which will be inquired and used by qualified institutions and individuals. The Lender shall have right to inquire the Borrower’s information from the credit information system on purpose of this Agreement.

16.4 The definition of “affiliates”, “affiliates relationship”, “related transaction”, “main individual investor”, “key management” are the same with that in “Accounting Standards 36 – Related Party Disclosure” and amendments, circulated by the Ministry of Finance.

16.5 Any receipts and documents produced according to this Agreement and the Lender’s operation rules shall constitute the proof of the debtor-creditor relationship between the Lender and the Borrower, which bind the Borrower.

16.6 In this Agreement, (1) anywhere “this Agreement” is mentioned, any amendment shall be included; (2) the headlines hereunder are just for reference, not explanations of the provisions, which shall not restrict the content and scope of the provisions thereunder.

  

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The Parties hereby confirm: the Parties have full consultation for all provisions hereunder. The Lender has reminded the Borrower to pay full attention to and accurately understand all provisions regarding the Parties’ rights and obligations, and explained all relevant provision as required by the Borrower. The Borrower has fully read and understood all provisions (including the Part I “Condition of the Loan” and Party II “Terms and Conditions of the Circle Loan for Small-cap Enterprises”). The Parties have unanimous understandings to the content of this Agreement.

 

	
The Lender (Seal): Industrial and Commercial Bank of China, Jinjiang Chidian Branch

	 
	 	 	 
	
By: 

	/s/ Wang Jianping	 
	 	Wang Jianping	 
	 	Authorized Signatory 	 

	
The Borrower (Seal): Fujiang Jinjiang Chengdai Ansheng Shoes and Clothing Co., Ltd.

	 
	 	 	 
	
By: 

	/s/ Ding Jinbiao	 
	 	Ding Jinbiao	 
	 	Authorized Signatory	 
	 	 	 
	Signing Date: August 8, 2010	 

 

 

12f8k0411a1ex10xvii_wester.htm

Exhibit 10.17

 

No.: 14080272-2010(OPR) No.00041

 

 

 

 

 

Domestic Factoring Agreement

[with/without resource]

 

 

 

 

 

 

 

 

 

 

Special Notice: This Agreement is entered into based on mutual and volunteer consultation. All the provisions hereunder reflect true minds of the Parties. To protect the Borrower’s legal rights, the Lender particularly remind the Borrower to pay full attention to the terms concerning both parties’ rights and obligations, especially the part with boldface.

 

  

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Party A: Industrial and Commercial Bank of China, Jinjiang Chidian Branch

Adress: Chidian, Jinjiang, Quanzhou, Fujian

Authorized Representative: Wang Jianping

Party B: Fujian Jinjiang Chendai Ansheng Shoes and Clothing Co., Ltd.

Adrees: Chendai, Jinjiang

Legal Representative: Ding Jinbiao

Whereas Party B has applied to Party A for factoring (with resource) by using accounts receivable (from Party B’s clients) as guarantee. In order to clarify the liability and comply with credit, the Parties have agreed on this Agreement based on mutual and equal consultation, according to Contract Law of PRC and relevant laws and regulations.

 

Section 1 Definition

Unless otherwise provided hereunder, the terminology hereunder shall be defined as below:

	
1.1  

	
Factoring with Resource: Party B transfers its accounts receivable (generated from its clients for the Party B’s goods, service, etc) to Party A, based on which Party A provide Party B debt financing and relevant comprehensive financial services. If Party B’s clients fail to fully settle the accounts receivable within the provided term, Party A shall have right to require Party B to fully repay the debt according to this Agreement.

	
1.2  

	
Factoring without Resource: Party B transfers its accounts receivable (generated from its clients for the Party B’s goods, service, etc) to Party A, based on which Party A provide Party B debt financing and relevant comprehensive financial services. If Party B’s clients fail to fully settle the accounts receivable within the provided term because of the clients’ financial status or credit, Party A shall not have right to require Party B to fully repay the debt according to this Agreement.

	
1.3  

	
Sales or Service Agreement: refers to the contracts signed between Party B and its clients under which the accounts receivable hereunder are generated.

	
1.4  

	
Account Receivables: refers to the creditor’s right transferred from Party B to Party A, which shall be unique, concrete, special, exclusive, valid and without dispute, and generated based on true and valid transaction and creditor-debtor relationship between Party B and its clients.

	
1.5  

	
Actual Amount of the Invoice for Account Receivables: amount on the invoice, deducting the paid amount thereunder.

	
1.6  

	
Amount of Factoring Financing: refers to the proceeds of the financing hereunder provided by Party A to Party B.

	
1.7  

	
Interest Settlement Date: if the interest shall be settled one-time, the interest settlement date shall be the date when Party A release the financing; if the interest shall be settled monthly, the interest settlement date is the 20th date of each month; if the interest shall be settled seasonally, the interest settlement date is the 20th date of the last month of each season.

	
1.8  

	
Balance of Factoring: refers to the collected accounts receivable, deducting the total amount of factoring financing, interest, penalty interest, and relevant expenses.

	
1.9  

	
Factoring Account: refers to the account in Party A opened by Party B, used to collect the accounts receivable, pay interest, Balance of Factoring. It is the only valid account to collect the accounts receivable hereunder.

	
1.10  

	
Factoring Expenses: refer to the expenses that Party A shall have right to charge to Party B for the factoring financing and relevant services.

 

  

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Section 2 Party B’s Representations and Warranties

2.1 Party B shall be a legally existing incorporation with valid business license, have assets according to laws and legally operate its business.

2.2 Party B shall have the capability to perform the rights and obligations hereunder.

2.3 Signing of this Agreement shall not conflict with any laws or regulation binding Party B. Performance of this Agreement shall not conflict with Party B’s other contracts, its incorporation documents and bylaws.

2.4 All the material provided by Party B shall be true, accurate and complete. There are not any material debts or potential debt that is not disclosed to Party A.

2.5 The sales and service contracts, which generate the accounts receivable hereunder shall true, valid, effective and without dispute.

2.6 There are not any restriction provisions in the sales and service contracts between Party B and its clients.

2.7 The accounts receivable transferred from Party B to Party A shall be clear and without any defect. Party B shall not transfer it to any third party, or set up pledge or priority right for claim to any third party.

2.8 At the effective date hereof, there is no existing, suspended or potential lawsuit, arbitration or other material dispute with Party B.

2.9 The financial statements provided to Party A are complete, true and fair, reflecting Party B’s financial status for certain period. After the date of the financial statements, there is no material adverse change to Party B’s business and financial status.

2.10 The account Party B opened in Party A of   is the account for factoring, used to collect the accounts receivable and deduct the factoring financing and interest. Without Party A’s consent, Party B shall not withdraw any money or place any order to pay money out of this account. Party B shall not open internet banking for this account.

2.11 Party B authorizes Party A to supervise the factoring account on, including but not limited to, cash-in and cash-out, checking each collected amount.

2.12 In the event any of the following circumstances occurs, Party A shall have right to deduct the factoring financing, interest and expenses from the factoring account:

(1) At the interest settlement date provided hereunder, Party B fails to fully pay the interest due.

(2) At the expiration date hereof, Party B fails to fully repay the financing and interest.

(3) The accounts receivable is collected in advance.

2.13 At the expiration date hereof, if the cash in the factoring account is lower than the total financing and interest, Party A shall have right to deduct the balance from Party B’s accounts in other branches of ICBC. This provision is not applicable for factoring without resource.

2,14 the proceeds of the factoring financing hereunder shall be used as working capital. Party B shall not use it on any other purposes without Party A’s written consent.

  

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Section 3 Amount of Factoring Financing and Term

3.1 Party B transfers the creditor rights of accounts receivable to Party A. After inspection, Party A grants Party B a factoring financing of RMB3.2 million, based on the total amount of the invoices of the accounts receivable as attached “Accounts Receivable Transfer List”.

3.2 The term of each factoring financing based on each invoice as shown on the attached “Accounts Receivable Transfer List” shall be from the date when the financing is released to the date provided by the Parties.

3.3 The actual release and payback date of financing shall be subject to the note. The note is part of this Agreement with the same validity. If there is any conflict between the note and “Accounts Receivable Transfer List”, the note prevails.

Section 4 Interest Rate, Interest and Expenses of the Factoring Financing

4.1 The interest rate of the factoring financing hereunder shall be described on the “Accounts Receivable Transfer List”.

4.2 The interest rate shall be decided according to the following provision:

The interest rate shall be decided according to benchmark interest rate and floating rate. The benchmark interest rate shall be according to the benchmark interest rate circulated by the Central Bank of China at the release date of financing hereunder with respect to the loan with the same term hereunder. The floating rate is 5% (floating upward).

4.3 In the event the benchmark interest is adjusted, the interest rate hereunder shall not be changed.

4.4 In the event that Party B has not repay the financing on time, the delayed party of the financing shall apply for the interest rate decided according to the provision of Section 4.2.

4.5 In the event that the Central Bank of China changes the method to decide the interest rate, the method to decide the interest rate hereunder shall adjust accordingly.

4.6 The interest shall be settled according the following provision:

After the financing is released, the interest will be calculated by each day (daily rate equals to yearly rate/360), and shall be paid monthly. At the expiration date of the financing, Party B shall fully repay the financing and related interest. The interest settlement date is the 20th day of each month.

4.7 Before the interest settlement date, Party B shall deposit the interest into the factoring account, and Party A will deduct the interest directly from the account. At the expiration date of the financing hereunder, the unpaid interest shall be paid off with the financing.

Section 5 collection of Accounts Receivable

5.1 The accounts receivable shall be collected according the following provision:

Party B shall collect the accounts receivable, and have the clients pay the accounts receivable into the factoring account.

5.2 After Party A has collected all the payment from Party B’s clients, Party A shall check the accounts receivable with the factoring financing hereunder. If there is not any difference, Party A shall write off the accounts receivable from the “Accounts Receivable Transfer List”. If there is nay balance in the factoring account, Party A shall pay the balance to Party B.

  

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Section 6 Condition, Method and Procedure of Buying back the Accounts Receivable

6.1 In the event that the collection of the accounts receivable hereunder is impacted by Party B’s false representations and warranties, Party B shall buy back the accounts receivable as required by Party A.

6.2 Except the provisions in Section 6.1, any of the following condition for factoring with resource meets, Party B shall buy back the accounts receivable according to Party A’s order:

(1) the clients of Party B present objection to pay the accounts receivable because of the damage of the goods Party B delivered to its clients or any other issue, and refuse to fully pay the account receivable.

(2) at the expiration date of the factoring financing, Party A has not collected the payment from Party B’s clients, or the payment is less than the total amount of the financing, interest, penalty and expenses.

(3) Party B’s action constitutes breach of contract as provided in Section 9 hereof, Party A declares that the financing is matured.

6.3 Within 3 days after Party B receives the written notice to buy back the accounts receivable from Party A, Party B shall buy back the accounts receivable according to Party A’s notice. If Party B buys back all the accounts receivable, the Parties shall sign a written agreement regarding buying-back the accounts receivable, and upon full payment of the buy-back agreement, this Agreement shall be terminated.

Section 7 Rights and Obligations of Party B

7.1 Party B shall enjoy the rights and perform the obligations as follows:

(1) Party B shall have right to require Party A to provide the financing hereunder.

(2) Party B shall pay the factoring expenses, interest, penalty and relative expenses, and perform the buy-back obligations according to this Agreement.

(3) Party B shall have its clients wire the cash for the account receivable directly into the factoring account. If the clients use instruments, Party B shall pay the cash into the factoring account upon receipt of cash therefrom.

(4) Party B shall cooperate with Party A on Party A’s inspection and understanding of Party B’s operation and financial status, and provide accounting material and financial statements to Party A.

(5) Party B shall assist Party A in Party A’s litigation with Party B’s clients for colleting the accounts receivable.

(6) Party B shall provide related information to Party A within 5 days after any of the following event occurs:

* any of Party B’s actions constitutes breach of contract.

* any potential event that may impact Party A’s interest hereunder.

* change of company name, address, registered capital, business scope, nature of the company, articles of association, shareholder structure, contract relationship, lease, merger, separation, joint venture, financial status or any other material event.

(7) If any third party has provided guarantee on the accounts receivable and the guarantee can be transferred, Party B shall transfer the guarantee along with the account receivable. If the guarantee can not be transferred, Party B shall assist Party A in collecting the account receivable as required by Party A.

(8) Except the accounts receivable and related rights transferred to Party A, Party B shall perform other obligations under the sales and service agreement with its clients.

(9) After this Agreement takes effective, Party B shall not sign any agreement or documents, or take any action that may impact Party A’s interest hereunder.

7.2 Notwithstanding the provision in Section 7.1, Party B shall bear the final liability to fully pay back the financing hereunder. Any reason that the accounts receivable can not be fully collected, it shall not impact Party A’s right of resource on Party B.

  

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Section 8 Rights and Obligations of Party A

8.1 Party A shall enjoy rights and perform obligations as follows:

(1) from the date when this Agreement takes effective, the accounts receivable are transferred to Party A. Party A shall enjoy all rights related to the accounts receivable.

(2) in the event that the Party fails to buy back the accounts receivable according to this Agreement, Party A shall have rights of set-off and resource, i.e. Party A shall have rights to deduct the amount for buy-back directly from Party B’s account in Party A or other branch of ICBC, or require Party B to pay.

(3) Party A shall have right to keep the original invoices for the accounts receivable until Party B has paid back all the financing and interest. After all the financing and interest are collected, Party A shall return the original invoices to Party B.

(4) Party A shall release the financing provide other services to Party B according to this Agreement.

(5) Party A shall keep confidential of information and material relating to debt, financials, production and operation provided by Party B, unless otherwise provided by laws and regulations or this Agreement.

8.2 Notwithstanding the provision in Section 8.1, for the factoring with resource, Party A shall also have the following rights:

(1) Before the factoring financing and interest are fully collected, If Party B fails to repay the financing and related expenses, Party A shall have right to deduct the financing, factoring financing expenses, interest, penalty and related expenses.

(2) Party A shall have right to review, inspect and supervise Party B’s operation and financials status.

(3) at the expiration date of the financing, if the cash collected by Party A is not enough to pay the financing, interest, penalty and related expenses, Party A shall have right to decide to require Party B’s clients. If Party A requires Party B’s clients to pay, Party B’s obligation to buy back the accounts receivable shall not be impacted.

Section 9 Breach of Contract

9.1 General Principle: If any of the Parties breaches this Agreement, the Party shall bear liability according to this Agreement.

9.2 Any of the following actions will be deemed as Party B’s breach of contract:

(1) Party B fails to perform its obligations hereunder, or comply with its representations and warranties hereunder.

(2) event of cross-default, including the following circumstances:

* Party B fails to repay other debt due.

* Any of Party B’s creditor other than Party A obtains part or all of property of Party B’s business or assets, or enforce Party B to execute any arbitration award or judgment relating to Party B’s assets, which substantially impact Party B’s capability to perform this Agreement.

(3) event of anticipatory breach of contract, including any of the following circumstances:

* Party B stopped or may stop its business or material part thereof, or Party B disposed its business or assets or material part thereof, which impact Party B’s capability to perform the obligations hereunder.

* Party B’s production or financial status has material adverse change, or Party B’s capability to perform its obligations hereunder has material adverse change.

* Party B has accident because of its non-compliance with food safety, production safety, environmental protection laws and regulations, which impact Party B’s capability to perform the obligations hereunder.

* has been (or will) involved in material economic dispute or assets sealed, detained, enforced, which impact Party B’s capability to perform the obligations hereunder.

* the guarantee hereunder has material adverse change, and Party B fails to provide new guarantee according to Party A’s requirement.

* Party B has involved in any of the following circumstances, which impact Party B’s capability to perform the obligations hereunder or Party A’s interest: Party B or its affiliates has been inspected or punished by judiciary institute, SAIC, tax authority; the controlling relationship between Party B and its affiliates has been changed; Party B’s affiliates has been (or will) involved in material economic dispute, lawsuit or arbitration; main investor or key management of Party B has been involved in criminal actions and inspected and restricted by judiciary institute; Party B’s affiliates have other material adverse change.

* Party B uses accounts receivable based on fake contract or transaction between Party B and its affiliates to obtain the factoring financing, or Party B intentionally avoids the debt hereunder by related party transaction.

  

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(4) notwithstanding the provision in Section 9.2 (3), the event of anticipatory breach of contract for the factoring with resource shall also include the following circumstances:

* Party B or its clients have delay of paying back financing or interest, advance or other bad record on credit in Party A.

* bad debt ratio of the accounts receivable increases for two consecutive months.

* the unpaid accounts receivable due of Party B’s clients is higher than 5% of the total accounts receivable due.

* Party B fails to fully collect the accounts receivable twice.

* any other circumstances that may impact Party B’s performance of its obligations hereunder.

9.3 In the event any of the circumstances of breach of contract occurs, Party A shall have right to take one or mare of the following actions:

(1) request Party B to stop actions of breach of contract.

(2) stop factoring business with Party B.

(3) declare the existing factoring business with Party B matured immediately and require Party B to buy back the accounts receivable.

(4) deduct the financing, interest and related expenses directly from Party B’s bank account in Party A or other branches of ICBC.

(5) require Party B to provide more valid and adequate guarantee.

(6) when the accounts receivable is due, require Party B’s clients to pay to Party A.

(7) other necessary actions as provided by laws and regulations, this Agreement or required by Party A.

9.4 If Party B fails to repay the financing and interest hereunder, Party A shall have right to receive a penalty interest with interest rate of original interest rate plus 30%. The interest rate for the delayed interest shall be compound interest rate based on the penalty interest rate.

9.5 If Party B uses the financing hereunder for purpose other than that provided hereunder, Party A shall have right to receive a penalty interest with interest rate of original interest rate plus 50% from the day when the financing is incorrectly used. The interest rate for the delayed interest shall be compound interest rate based on the penalty interest rate.

9.6 To realize the creditor right, Party A shall have right to deduct cash directly from Party B’s bank account in Party A or any other branches of ICBC. If the currency of the deducted cash is different from that hereunder, the foreign exchange rate shall use the one circulated by Party A. The Interest, other expenses and exchange rate difference incurred from the date of deduction to settlement date shall be borne by Party B.

Section 10 Others

10.1 Party A should keep in its financial records the principal and interest payables, fees and any other expenses payables by party B and all record of the repayment. All the above records and other records between Party A and Party B during transaction can be regarded as the proofs for the execution of this agreement.

10.2 Unless approved by Party A in written notice, party B cannot transfer any of the rights and obligations under this agreement to others.

10.3 Party A can transfer part or all of the rights under this agreement to others.

10.4 If party A does not implement or delay its rights or decision under this agreement , it doesn’t mean that party A give up this right or decision. Any partial or independent rights implementation will not affect its ability to further implement its rights. All rights under this agreement are accumulative, and shall not exclude other rights by the law.

10.5 Party A has the rights to provide any information and other related information of party B to the People’s Bank of China credit enquiry system and other credit information database, required by the rules and regulations. Party A also has the rights to check party B’s credit record through the People’s Bank of China credit enquiry system and other legitimate credit information database.

10.6 Party A may directly notice the customer of Party B who owes accounts payable that the liabilities transferred without the consent from Party B.

  

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Section 11 Dispute resolution

11.1 The establishment, effectiveness, explanation, execution and the resolution of the dispute are all subject to the PRC law. All the dispute from this agreement should be negotiated between each party first. In case the negotiation failed, then it should be resolved by (1):

(1) The dispute should be submitted to Xiamen arbitration committee, and it will be arbitrated according to its rules, and it’s final, and both parties are bind.

(2) Sue through local court.

11.2 If arbitration were submitted, and both parties choose to use the easy procedure to do this, and the related legal documents delivery (including the arbitration letter) is the time that the express mail delivery time (Any change, please inform the other party and the arbitration committee. If the debt liabilities are confirmed, the arbitration committee can made decision. If only one lender rights exists, and no other existing rights and seizure, all parties can authorize the arbitration committee to auction the collateral, the proceeds of which will be used to first repay the liabilities.

Section 12 The effectiveness, modification, termination of the agreement

12.1 The agreement will be effective upon the signature of this agreement, until Party B completes all obligations under this agreement.

12.2 Each party cannot change or terminate this agreement unless both parties agree. Any change or modification needs to be agreed by all parties and make written documents.

12.3 If the law and regulation and policy changes, which make all or part of the conditions disobey the country’s law, both parties should negotiate in time and revise related conditions.

12.4 Any void and non-execution of any condition in this agreement will not affect other terms and conditions, and will not affect the whole agreement as well.

12.5 The modification and termination of this agreement will not affect the claims for loss. The termination of the agreement will not affect the dispute resolution conditions.

Section 13 Appendix

13.1 In this agreement, unless specified in the context of this agreement, (1) this agreement include the agreement itself and its appendix and attachment, and any other modification, and supplementary documents. (2) The terms and conditions are just the ones in this agreement. (3) The headings in this agreement are just for convenient reading purpose, and should not be regarded as explanations and shall not restrict or make definitions for the following paragraph.

13.2 All the attachment, supplementation, amendment or modification, are the essential parts of the agreement, and are regarded as important as the text of the agreement.

13.3 The related parties, the related relations, and related transactions, primary investor, key management and other words shall have the same meaning with the <enterprise accounting rule No. 36---related party disclosure>(financial accounting[2006] No. 3) and amendments made thereafter.

13.4 The attachment includes <accounts receivable transfer list>.

13.5 Other things not mentioned in this agreement should be resolved by both parties’ negotiation, or according to related law, rules and regulations.

13.6 This agreement has two original copies, one for party B, and one for party A, and are both effective and identical.

 

	Party A: Industrial and Commercial Bank of China, Jinjiang Chidian Branch	 
	 	 	 
	
By: 

	/s/Wang Jianping	 
	 	Wang Jianping	 
	 	Authorized Signatory	 

	
Party B: Fujiang Jinjiang Chengdai Ansheng Shoes and Clothing Co., Ltd.

	 
	 	 	 
	
By: 

	/s/ Ding Jinbiao	 
	 	Ding Jinbiao	 
	 	Authorized Signatory	 
	 	 	 
	Date: July 22, 2010	 

 

 

  

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Accounts Receivable Transfer List

Unit: RMB

	
No.

	
Purchaser’s Name

	
Invoice No.

	
Invoice Amount

	
Due Date

	
Factoring Amount

	
Release Date

	
Expiration Date

	
Interest Rate

	
Method to Pay Interest

	
Method to collect AR

	
Expense

	
1

	
Shenyang Yangyan Baijia Trading Co., Ltd.

	
00022542

	
4809492.00

	  	
3.2 million

	
7/23/2010

	
7/15/2011

	
none

	
One-time

	
Party B collects

	  
	
2

	  	  	  	  
	
3

	  	  	  	  
	
4

	  	  	  	  
	
Total amount of invoices

	
4809492.00

	
Tot. Factoring Amount

	
3.2 million

	  	
Total Expense Amount

	  

Note: 1. due date of accounts receivable is subject to the sales and service contract. Fill in the table with format of year/month/day.

2. format of release date and expiration date is year/month/day.

3. method to collect accounts receivable is “Party A collects” or “Party B collects”.

4. Method to pay interest is “one-time”, “daily” or “monthly”.

	
 

	
Party A (Seal): 

	
/s/ Industrial and Commercial Bank of China, Jinjiang Chidian Branch

	 
	 	 	Industrial and Commercial Bank of China, Jinjiang Chidian Branch	 

	
 

	
Party B (Seal): 

	
/s/ Fujian Jinjiang Chendai Ansheng Shoes and Clothing Co., Ltd.

	 
	 	 	Fujian Jinjiang Chendai Ansheng Shoes and Clothing Co., Ltd.	
 

  

 

 

9

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