Document:

smsapal8kex1024082310.htm

Exhibit 10.24

 

Domestic commercial invoice discounting agreement

No.: (2010)                      NanShangTieZi                                No. YD10-001 No.

Seller: Fujian Yada Group Co., Ltd.

Business license number: 350724100000961

Legal Representative / CEO: Zhan Youdai

Domicile: Shuinan Industrial Zone,Songxi County, Nanping City, Fujian Province.

Account and the account number of financial institutions: Bank of China Co., Ltd. Nanping Branch 880005556208093001

Tel : 0599-2325688 Fax : 0599-2332688

Factoring Business: Bank of China Co., Ltd. Nanping Branch

Legal Representative / CEO: Wang Heng   Authorized signatory:Zhu Mangui

Domicile: Bank of China Building, 459 Riverside Road, Nanping City, Fujian Province.

Tel : 0599-8856381 Fax : 0599-8822091

In view of the seller to be sold by way of credit to the Fujian Shengda Import & Export Trade Co., Ltd., Shanghai Meeting Sea Foods Limited ("Purchaser") to sell boiled bamboo shoots, boiled mountain dew, mountain boiled vegetables, boiled corn, ginger, iron system, empty cans, etc. (type of goods), and intended use of factor to provide domestic factoring business invoice discounting services, to clear rights and obligations of both parties, by consensus, especially the development execution of this Agreement.

This Agreement is a Single-Item Agreement under the Credit Line Agreement (2010 Nan Zhong Yin Shou Xie Zi YD10-001) between the parties.

 

 

  

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General Rules

	
Article 1

	
Since the effective date of this Agreement, the parties shall comply with the relevant laws, regulations and relevant rules and regulations apply for the Bank of China-related business.

	
Article 2

	
Definitions:

	
1.  

	
Commercial invoice discounting: the domestic commercial invoice discounting is a financing service where the seller sells its accounts receivable from a sales contract or a service contract with the buyer (i.e. the “debtor) to a third party (i.e. the “factor”) at a discount in exchange for immediate money. The factor deduct the interest and fee from the account receivable and pay cash to the seller. The factor will then collect the account receivables and manage the sales of the ledgers.

	
2.  

	
factorCommercial invoice: The commercial invoice referred to in this Agreement means trade invoices issued by the seller to the buyer as a bond documents, which specify the details of the shipment and the amount payable by the buyer.

	
3.  

	
Accounts receivable purchase notice: It is an item on the commercial invoice where the seller represents to the buyer that the receivables have been paid, and is a written notice to the factoring company.

	
4.  

	
Qualified accounts receivable: the debt arising from the sales of certain goods by credit and the nonpayment by the buyer. It cannot be offset by write-off, guarantees, compensation or pay for other deductions, and when the seller brought factoring company to discount:

	
(1)  

	
It does not expired:

	
(2)  

	
It is only calculated and paid in RMB;

	
(3)  

	
The maturity date of the invoice within 180 days from the invoice date (including 180 days);

	
(4)  

	
In the ordinary course of business arising from the seller, the real trade with legal background;

 

 

  

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(5)  

	
the seller is a illegitimate creditor;

	
(6)  

	
no restriction of transfer

	
5.  

	
The line of discount is the maximum amount of qualified accounts receivable approved by the factoring company according to the application of the Seller.

Effectiveness of Line of Discount

	
Article 3

	
The Line of Discount that the factor approves for the seller becomes effective when this Agreement enters into force. The amount of details as follows:

	
1.  

	
The approved line of discount: RMB TWENTY MILLION ONLY. (¥ 20,000,000,00).

	
2.  

	
The amount is valid: from __month ____ date of 2010 to June 18, 2011.

	
Article 4

	
In the term of the line of discount, the amount of qualified accounts receivables that the seller requests the factor to discount should not exceed the amount of the reserve of the approved line of discount. The factor agrees to provide discount to qualified accounts receivables within the amount of the reserve of the approved line of discount.

The Seller’s Representations and Warranties of the Accounts Receivables and the Transfer

The Seller makes the following representations and warranties to the factor:

	
Article 5

	
The Seller will transfer all the qualified accounts receivables to the factor after the execution of this Agreement.

	
Article 6

	
Each accounts receivable is from a true sales of goods under goodwill in the ordinary course of business. The sales of goods related to the accounts receivables to be transferred comply with the provisions of the corresponding sales contract, and the accounts receivables have not been used as guarantee.

	
Article 7

	
The Seller is the creditor of each account receivable its transfers to the factor, and the creditor of the interest and other fees related to such receivables. Unless otherwise approved by the factor in writing, such receivables can not be used to offset accounts receivable, write-off, guarantee, compensate, or to make other reductions

	
Article 8

	
The Seller cannot exercise any rights under accounts receivables that have been transferred to the factor. Without the written consent of the factor, the Seller may not transfer this Agreement.

 

 

  

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Article 9

	
The factor, as the assignee of the accounts receivables, obtains all the rights related to the account receivables.

Discount

	
Article 10

	
To apply to the factor for discount, the Seller shall submit two copies of the "the Application for Domestic Commercial Invoice Discounting", two copies of the commercial invoices with endorsement, the original and a copy of the shipping document, and other documents required by the factor.

	
Article 11

	
The Factor agrees to provide discount to the Seller within three days after it receives the Application for Domestic Commercial Invoice Discounting.

	
Article 12

	
The discount interest rate and the calculation of interest should following the following provisions:

	
1.  

	
The interest rate should be the factor’s discount interest rate on the date of discounting. .

    Interest accrues from the date of discounting, and should be

Interest = principal × number of interest days × daily rates

Daily rate = annual interest rate /360.

	
2.  

	
The way to collect interest

Payment in advance: According to the interest rate prescribed in the first paragraph, the interest should be collected on the date of discounting. The number of interest days should be the number of days from the discounting date to the due date + ___ days.

Payment at the end: According to the interest rate prescribed in the first paragraph, the interest should be paid on the date when the payments are fully made.

	
3.  

	
If the factor cannot collect the amount of discount of the invoice, the interest and the fee, the seller shall pay back to the factor the amount that equals to the face value of the invoice or the approved payment by the factor. The penalty interest for late payment accrues until the settlement date.

 

 

  

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Late penalty interest rate should be the interest rate in the first paragraph plus   50  %

If the Seller is unable to pay late penalty interest rate in a timely manner according to the second paragraph of this Article, compound interest shall accrue based on the interest rate in the first paragraph of this Article during the financing period, and on the late penalty interest rate in paragraph 2 after such period.

Late penalty interest rate= principal × number of interest days × daily rate. Principal refers to the overdue unpaid principal and interest payable.

Guarantee

	
Article 13

	
The guarantee in this Agreement should follow the following provisions:

	
1.  

	
The debt under this Agreement is secured by:

	
  

	
This Agreement is the Main Contract of the Maximum Guarantee Contract (2010 NanZuiGaoBaoZi No YD10-001) between Zhan Youdai and the factor, the Maximum Guarantee Contract (2010 NanZuiGaoBaoZi No YD10-002) between Fujian Fulaimen Wood Technology Co., Ltd.. and the facor, the Maximum Guarantee Contract (2010 NZGBZ YD10-003) between Songxi Ya Sheng Foods Co., Ltd. and the factor, and the Maximum Guarantee Contract (2010 NanZuiGaoBaoZi No YD10-004) between Fujian Yada Group Co., Ltd.  and the factor.   

	
2.  

	
If any events happened to the Seller or the Guarantor that the factors considers may affect their ability to perform this Agreement, or the guarantee contracts becomes null and void, revoked or discharged, or the Seller, the Guarantor and the deteriorating financial position or significant litigation or arbitration cases involved, or for other reasons can affect its performance capabilities, or guarantor in the guarantee and factoring contract or other business under a contract between the occurrence of default or devaluation of the collateral, damage, loss, was closed down, resulting in decrease or loss of security when the value of , factor the right to request, and the seller an obligation to provide a new guarantee, the guarantor so as to guarantee replacement under this Agreement debt.

 

 

  

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Setting up and checking accounts

	
Article 14

	
The factor has the right to choose any accounting mehods it deems appropriate to record each account receivables and check with the Seller periodically.

	
Article 15

	
The seller shall establish accounts for the factor to audit. The statements of accounts made by the factor shall be deemed accurate if the Seller does not raise any objection within seven days after it receives them,

Factoring fees

	
Article 16

	
The factor has the right to determine the factoring fee it charges the Seller according to its own standard. The standard, calculation and collection of the fee should made according the the facor’s rules.

	
Article 17

	
Unless otherwise provided, the factoring fee shall be deducted from the invoice on the discounting date,

	
Article 18

	
The factor should collect the due receivables transferred from the Seller from the debtor in an appropriate and timely manner.

	
Article 19

	
The debt is overdue if the debtor does pay off the debt on the due date on the commercial invoice. The late penalty interest rate accrues thirty days after such due date according to this Agreement.

The Seller’s Representation and Warranties

	
Article 20

	
The Seller makes the following Representation and Warranties:

	
1.  

	
The Seller is duly incorporated and lawfully existing, and has full legal capacity for civil rights and conducts to enter into and perform this Agreement.

	
2.  

	
This Agreement reflects the true intent of the Seller. It has obtained legal and effective authorization according to the requirements of its articles of association or other internal management documents. Performing this Agreement will not violate any contracts, agreements or other legal documents that are binding upon the Seller.

 

 

  

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3.  

	
All documents and materials provided by the Seller to the factor under this Agreement are accurate, true, complete and effective;

	
4.  

	
The background of the transactions related to the Seller’s application for factoring service is true and legal. The Seller providing documents to the factor per its request shall not constitute the factor’s obligation to check the accuracy and legality of the background.

	
5.  

	
The Seller does not conceal to the factor any facts that may affect its ability to perform this Agreement.

	
6.  

	
In case of the circumstances which may affect the financial position and performance ability of the Seller, including without limitation, changes of any form in the modes of business such as division, merger, joint management, joint venture with foreigners, cooperation, contracting, reorganization, reform, planned listing, reduction of registered capital, transfer of significant assets or stocks, material liabilities, dissolution, cancellation, applied for bankrupt, or involvement in material litigation or arbitration cases, the Seller shall notify the factor in a timely manner.

	
7.  

	
For the matters not covered by this Agreement, the Seller agrees that international practice and the factor’s relevant provisions apply.

	
8.  

	
The Seller shall notify the factor in advance of any material changes (including but not limited to financing, providing guarantee to any third party, transfer of shares, distributing dividends in cash, providing loans to related parties). The factor may change the factoring conditions according to such changes.

	
9.  

	
The proceeds from factoring shall not be used for investment in stock markets or other securities, or other purposes prohibited by the laws and regulations. The Seller shall use the proceeds from factoring for the purposes in the application. The factor reserves the right to withdraw its payment in the factoring if it finds that the Seller uses the proceeds for purposes not agreed.

 

 

  

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10.  

	
The deposit and settlement accounts of the Seller (including its affiliates in the Group) at the factor shall be no less than the line of discount. If not, the factor has the right to modify the factoring conditions accordingly.

Default

	
Article 21

	
One of the following circumstances, constitute breach of contract by the Seller:

	
1.  

	
False representations in this Agreement or breach of warranties in this Agreement;

	
2.  

	
winding up, dissolution, cancellation or bankrupt of the

	
3.  

	
Breach of other provisions of this Agreement

	
4.  

	
default by the Seller of other contracts with the factor or other branches of Bank of China Limited

In case of the default specified in the preceding paragraph, the factor shall have the right to separately or simultaneously take the following measures as the case may be:

	
1.  

	
Requires the seller to correct the violation within a time limit;

	
2.  

	
Wholly or partially suspend or terminate the acceptation of applications by the Seller to the factor under this Agreement or any other contracts between the Seller and the factor. Wholly or partially suspend or terminate providing financing under this Agreement and other contracts between the Seller and the factor.

	
3.  

	
Announce that the unpaid debts, principal and interest of other financings under this Agreement and other contracts between the Seller and the factor due.

	
4.  

	
Terminate or cancel this Agreement; wholly or partially terminate or cancel other contracts between the Seller and the factor

	
5.  

	
require the Seller to indemnify for the losses of the facor arising from its breach

	
6.  

	
deduct the amounts in the account opened by the Seller with the factor with a prior or post notice, to discharge all or partial debts owed by the Seller to the factor. Undue amounts in the account shall be deemed to be due in advance. If the account currency is different from the currency used by the facor for business pricing, conversion shall be made at the rate of exchange settlement and sales applied by the factor at the time of deduction

 

 

  

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7.  

	
other measures as the Creditor considers necessary.

Effectiveness and Termination

Article 22               This Contract shall become effective from the date when it is signed and sealed by the legal representatives, persons-in-charge or authorized signatories of the parties

This Agreement is executed in four copies, each party and the Registration department shall hold one copy respectively, each of which shall have equal effect in law.

	
Article 23

	
Unless otherwise provided by laws and regulations or agreed by the parties, legal validity of the remaining provisions will not be affected by the invalidity of any provision of this Contract.

	
Article 24

	
The date of termination of this Agreement shall be the due date of the line of discount approved by the factor.

	
Article 25

	
Unless otherwise provided by laws and regulations or agreed by the parties, this Contract may not be terminated prior to completion of performance of their rights and obligations hereunder

Amendment and Modification

	
Article 26

	
Amendment or modification may be made to this Agreement in writing by mutual agreement of the parties, which shall constitute an integral part of this Agreement.

Reservation of Right

	
Article 27

	
Failure by a party to exercise all or partial rights hereunder or to require the other party to perform and assume all or partial obligations and responsibilities will not constitute waiver by such party of such rights or exemption from such obligations and responsibilities.

 

 

 

  

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Any indulgence, extension or postponement in exercising the rights hereunder granted by a party to the other party will not affect any rights it shall have under this Contract and laws and regulations, nor be construed as waiver by it of such rights.

Application of law, dispute resolution

	
Article 28

	
This Agreement is governed by the laws of PRC.

	
Article 29

	
Except otherwise agreed upon by the parties, all disputes arising from the conclusion and performance of or relevant to this Agreement and Single-Item Agreement may be settled by both parties through consultation. If the consultation fails, either party may adopt the 2nd mode to make settlement:

	
a)  

	
Submit to   blank    Arbitration Committee for arbitration.

	
b)  

	
File lawsuit to the People’s Court of the place of Party B or other institutions of Bank of China Limited who perform rights and obligations in accordance with this Agreement and Single-Item Agreement in accordance with the laws.

	
c)  

	
File lawsuit to the competent People’s Court in accordance with the laws.

	
  

	
During the period of settling disputes, other articles shall continue to be performed, provided such disputes do not affect the performance of other articles of this Agreement and Single-Item Agreement.

 

 

	Article 30	The Seller shall not assign any rights and obligations hereunder to any third party without the written consent of the factor.  In the event that the factor needs to entrust other institutions of Bank of China Limited to perform the rights and obligations under this Agreement and Single-Item Agreement due to business needs, the Seller hereby expresses acknowledgement that other institutions of Bank of China Limited authorized by the factor shall be entitled to perform all rights under this Agreement, and to, upon any disputes under this Agreement, file lawsuits to the People’s Court or submit to the arbitral body for arbitration.

 

 

  

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This Agreement shall be legally binding upon both parties and their lawful successors and assignees, provided that other stipulations of this Agreement is not affected.

	
Article 31

	
In addition to be determine by law or the parties agree otherwise, the result of the contract legislation, implementation and dispute resolution costs incurred (including legal costs) borne by the Party. Unless otherwise provided by the laws or agreed by the parties, any fee resulted from execution and performance of this Agreement, and from solving disputes arising out of this Agreement (including attorney’s fee) should be born by the Seller.

	
Article 32

	
Unless otherwise specified, the parties specify the domicile recorded herein to be the contact address, and undertake to timely notify the other party in writing of any change in contact address.

Factoring Business: Bank of China Co., Ltd. Nanping Branch         (sealed)

The signers:Zhu Mangui     Special Seal for Company Contract 

July 21, 2010

Seller: Fujian Yada Group Co., Ltd.   (sealed)

The signers:  Zhan Youdai                  

July 21, 2010

 

 

  

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Exhibit 10.25

 

Maximum-amount Mortgage Contract

Code: 2010 Nan Zhong Yin Zui Di Zi No.YD10-004

Mortgager: Fujian Yada Group Co., Ltd.

Business License No.:350724100000961

Legal representative/accountable person: Zhan Youdai

Residential Address: Shuinan Industrial Park, Songxi, Nanping, Fujian  Post Code: 353500

Opening bank and Account No.  Bank of China, Nanping Branch 880005556208093001

Tel: 0599-2325688   Fax: 0599-2332688

Mortgagee: Bank of China Limited, Nanping Branch

Legal representative/accountable person: Wang Heng Authorized Signatory Zhu Mangui

Residential address: Bank of China Tower, 459,Binjiang Road, Nanping, Fujian Zip:353000

Tel: 0599-8856381 Fax: 0599-8822091

To secure the performance of the debts under the Master Contract mentioned in Article 1 herein, the Mortgager has its assets in “Collateral List” attached hereinto as mortgage for the Mortgagee’s credit rights, and both parties hereby enter into this Contract through equal consultations. Unless otherwise provided herein, interpretation of the words and expressions herein are defined according to the Master Contract.

	
Article 1

	
Master Contract

The Master Contract of this contract is:

Domestic Commercial Invoice Discounting Agreement between Mortgagee and debtor Fujian Yada Group Co., Ltd., with Code No. of (2010) Nan Shang Tie Zi YD10-001, single agreement signed or to be signed according to the Discounting Agreement, and the amendments and supplementary agreements, among which it is agreed as the Master Contract.

 

 

  

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Article 2

	
Principal Credit rights and the occurrence period

Unless otherwise legally determined or occurring beyond the agreed period, debts that actually happen under the Master Contract during the following period shall constitute the principal credit rights hereunder:

From the date when Domestic Commercial Invoice Discounting Agreement mentioned in Article 1 herein comes into force to the date when credit line stipulated in the agreement and its amendments or supplementary agreement expires.

	
Article 3

	
Maximum amount of secured credit rights

	
1.  

	
Maximum balance of the principal of the debt secured hereunder is:

Currency: RMB

Amount: (in words) FOUR MILLION NINE HUNDRED THIRTY-TWO THOUSAND FOUR HUNDRED AND EIGHTEEN YUAN;

(in figure) 4, 932,418.00 .

	
2.  

	
If a principal credit right is confirmed as secured hereunder on the date when the occurrence period of the principal debt expires, the interest of its principal (including legal interest, contractual interest, compound interest and penalty interest), default fines, damages, cost to realize credit rights (including but not limited to legal cost, attorney’s fee, notary fee, enforcement cost, etc.), and Mortgagee’s losses caused by default of the debtor and other expenses payable shall be deemed as secured credit, and the specific amount of which shall be determined when discharged.

The total amount of the credit confirmed in the above clauses shall be the maximum amount of credit.

	
Article 4

	
Collaterals

See “Collateral List”.

During mortgage period, the Mortgagee has the priority of compensation on the insurance benefits, compensations or indemnifications due to the damage, destroy or imposition of the collaterals. And such insurance benefits, compensations or indemnifications may be drawn within the mortgage period.

 

 

  

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Article 5

	
Mortgage Registration

The mortgagor and the Mortgagee shall transact mortgage registration in competent authorities within 15 days after the conclusion of this Contract.

The mortgagor and Mortgagee shall transact modification registration in competent authorities within 10 days, in case there is any change to the registration matters, if required by law.

	
Article 6

	
Possession and storage of collaterals

Collaterals under this contract will be possessed and stored by the mortgagor, but mortgage certificates of such collaterals shall be kept by the Mortgagee. The mortgagor agrees to accept inspection of the Mortgagee and the organizations or persons it designated at any time and provide full cooperation.

The mortgagor shall keep and maintain the collaterals properly, and take effective measures to ensure intact and completeness of the collaterals; maintenance and repairing shall be made in a timely manner to the collaterals by the mortgagor if required.

Without written content of the Mortgagee, the mortgagor shall not transfer, lease, lend, make financial contribution in form of material object, re-handle, reconstruct or dispose in any other manner all or part of the collaterals; money obtained from disposal of collaterals shall be used to pay off debts in advance or drew with a third party appointed by the mortgagee with its consent.

	
Article 7

	
Processing with value reduction of collaterals

Before the principal debts under the Contract are paid off completely, in case any act of the mortgagor will result in value reduction of the mortgaged properties, the Mortgagee is entitled to require the mortgagor to stop such act. And in case of value reduction of the mortgaged properties, the Mortgagee is entitled to require the mortgagor to recover the value of the collaterals or provide other guarantee with equal value of the reduced value accepted by the Mortgagee. In case mortgagor fails to do so, the Mortgagee is entitled to require the debtor to pay off debts in advance. And in case the debtor fails to pay off the debts, the Mortgagee is entitled to exercise mortgage rights。

If the value of the collaterals reduces or the collaterals are destroyed due to any natural disaster, accident, tort or other causes, the Mortgagor shall take immediate measures to avoid any further loss and inform the Mortgagee of the fact in writing.

 

 

  

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Article 8

	
Fruits

In case the debtor fails to pay off the debts due or other cases stipulated herein to actualize the mortgage rights occur, which causes the collaterals detained by the People's Court, the Mortgagee is entitled to collect natural or legal fruits of the mortgaged properties from the date of such detain, unless the Mortgagee fails to inform the obligor who shall pay off legal fruits.

Fruits stipulated above shall be used to pay the charges to collect such fruits first.

	
Article 9

	
Insurance of collaterals (item 1 below is selected: 1. applicable; 2. inapplicable)

The mortgagor shall purchase insurance from the insurance company agreed upon through negotiations with the Mortgagee according to the insurance sort and insurance period confirmed by both parties, and the insured amount shall be no less than the assessed value of the collaterals, and the contents of the insurance policy shall meet the requirements of the Mortgagee without any restrictive conditions which will prejudice the Mortgagee’s rights.

Before the principal debts hereunder are paid off, the Mortgagor shall not discontinue, terminate, revise or alter the insurance policy, and shall take all reasonable and necessary measures to ensure that the insurance maintains effective. If the Mortgagor fails to purchase insurance or breach the above terms, the Mortgagee is entitled to decide either purchase insurance or continue to purchase insurance for the collaterals, and the insurance expense shall be undertaken by the Mortgagor and might be reckoned in balance of the debts together with the losses thus incurred to the Mortgagee.

 

 

  

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The Mortgagor shall submit the original insurance policy for collaterals to the Mortgagee within 3 days after the conclusion of this Contract, and transfer the premium claim right to the Mortgagee. Before the principal debts hereunder are paid off, the original insurance policy shall be kept by the Mortgagee.

	
Article 10

	
Guarantee Liabilities

In case the Debtor fails to pay off the debts to the Mortgagee on any normal due date or advance payment date under this contract, the Mortgagee is entitled to exercise the mortgage right stipulated herein, and enjoy priority compensation for the collaterals within the maximum amount stipulated in Article 3 herein.

Normal payment due date mentioned above is the date to pay off the principal agreed upon in the Master Contract, interest payment date or the date for the debtor to pay any sum of money to the Mortgagee provided in such contract. The advance payment date mentioned above is the advance payment date suggested by the Debtor and agreed by the Mortgagee and the date on which the Mortgagee requires the Debtor to pay the principal and interest of the debts or any other sum of money.

 

 

	
Article 11

	
Mortgage Right Exercising Term and Period

After occurrence of guarantee liabilities, the Mortgagee is entitled to exercise mortgage rights to collaterals based on all or part, single or multiple sum of the principal debts due in accordance with laws and regulations on general mortgage right.

The Mortgagee shall exercise its mortgage rights for each sum of the principal debts within the time limit for action; if such debts are to be paid off in installments, the Mortgagee shall exercise its mortgage rights within the time limit for action of the last installment.

	
Article 12

	
Realization of Mortgage Rights

Upon the occurrence of guarantee liabilities, the Mortgagee is entitled to   enjoy priority compensation with the money obtained from discount or auction sale of the collaterals through negotiations with the Mortgagor. In case both parties fail to reach such agreement, the Mortgagee is entitled to request the People's Court to auction or sell the collaterals.

 

 

  

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Money obtained from disposal of collaterals shall be used to pay off principal debts after the cost of disposal and other expenses payable by the Mortgagor hereunder are paid off.

In case there exists any other guarantee or security on the principal debts besides this Contract, the Mortgagor’s rights hereunder and the exercising of such rights shall not be prejudiced. And the Mortgagor shall not plea with Mortgagee on this.

	
Article 13

	
Relationship between This Contract and the Master Contract

If the Master Contract contains the “Credit Line Agreement” /” General Agreement on Credit Business”, the extension of term of credit line/business cooperation shall be approved by the Mortgagor in writing. Without such approval from the Mortgagor or Mortgagee refuses to approve, the Mortgagor will only undertake its guarantee liabilities based on the collaterals for the principal debts occurred within the term of original credit line/business cooperation and the maximum amount of secured debts stipulated in Article 3 herein.

Any change to other contents or matters of the “Credit Line Agreement” /” General Agreement on Credit Business”, or to any individual agreement there-under, or to the any master contract on a single debt requires no consent of the Mortgagor. The Mortgagor shall still undertake its guarantee liabilities under the altered Master Contract based on the collaterals within the maximum amount of secured debts stipulated in Article 3 herein.

Upon the consent of the Mortgagee and the Mortgagor, the maximum amount of secured debts provided in Article 3 herein may be changed in written form.

If there exist other mortgagees on the collaterals under this Contract, , the above change shall not have adverse impact on the Mortgagee without its written consent.

The Mortgagee may entrust Bank of China Limited or other agency to perform part or all of its rights or obligations hereunder or assign the credit right under the Master Contract to a third party without consent of the mortgagor, and the mortgagor’s guarantee liabilities shall not be relieved or reduced accordingly. The mortgagor shall assist the Mortgagee and the third party to complete the mortgage modification or registration formalities required by law.

 

 

  

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Article 14

	
Statements and Commitments

Mortgagor’s statements and commitments are as follows:

	
1.  

	
Mortgagor was legally registered and is legally existing, with full capacity of civil right and act necessary for the signing and performance of this Contract, and enjoys legal ownership or disposal right to the Collaterals;

	
2.  

	
Mortgagor ensures that there is no other co-owner on the mortgaged property, or although there is any other co-owner, the mortgagor has obtained written permission of all the co-owners. The Mortgagor guarantees to submit such permission to the Mortgagee before the execution of this Contract;

	
3.  

	
Mortgagor fully understands the contents of the Master Contract, and the signing and performance of this Contract is based on the true intent of the Mortgagor, who has acquired legal and valid authorization in accordance with its Articles of Associations and internal management policy.

If the Mortgagor is a company third person, such mortgage has been approved by the company’s board of directors, board of shareholders and shareholder meeting in accordance with its Articles of Association; if the Articles of Association contains any limit for the total or single amount of the security, the security amount hereunder does not exceed such limit.

The execution and performance of this Contract will not breach any contract, agreement or other legal instruments binding upon the Mortgagor. Mortgagor has obtained or will obtain all the necessary approvals, licenses, records or registrations relating to the mortgage hereunder;

	
4.  

	
All the documents and information provided by the Mortgagor to the Mortgagee is accurate, true, complete and effective;

	
5.  

	
The Mortgagor has not concealed any other security interest existing on the Collateral to the Mortgagee by the execution date of this Contract;

 

 

  

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6.  

	
If the Collateral is set in the new security interest, sealed up by the People’s Court or involved in any material litigation or arbitration procedures, the Mortgagor shall promptly notify the Mortgagee;

	
7.  

	
As for the collateral is in construction, the Mortgagor commits that there exists no third-party priority for repayment on such collateral; otherwise, the mortgagor promises to have such third party waive the priority in written and submit the waiver to the Mortgagee.

	
Article 15

	
Contracting Negligence

The refusal or the delay of the Mortgagor to handle mortgage registration formalities, or other reasons caused by the Mortgagor resulting in the failure of the effectiveness of this Contract or the mortgage right after the execution of this Contract shall constitute a contracting negligence. And the Mortgagor shall indemnify Mortgagee against any loss thus incurred.

	
Article 16

	
Internal affiliated parties of Mortgagor and disclosure of affiliated transactions

Both parties agree that Item 1 listed below shall apply:

	
1.  

	
Mortgagor is not a group customer defined by Mortgagee in the Guideline of Management of Credit Business Risk Concerning Group Customers of Commercial Banks” (hereinafter referred to as “Guideline”).

	
2.  

	
Mortgagor is a group customer defined by Mortgagee in the Guideline. Mortgagor shall, in accordance with Article 17 of the Guideline, report to Mortgagee any related transaction with amount exceeding 10% of its net assets, including but not limited to the relationship of parties involved in the transaction, the subject and nature of the transaction, the amount of transaction and relevant proportion, pricing policy (including those transactions without actual amount or only in symbolic amount).

	
Article 17

	
Default and Resolution

Any of the following events will constitute or be deemed as a breach of Contract:

 

 

  

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1.  

	
Mortgagor breaches any covenant under this Contract and assign, let, lease, invest in kind, improve, re-construct or dispose by any other means of all or any part of the collateral without approval;

	
2.  

	
Mortgagor prevents Mortgagee from exercising any right to dispose of the collateral in accordance with the law or any covenant under this Contract;

	
3.  

	
Mortgagor fails to recover the value of the collateral nor provide any security as required by Mortgagee in the event of decrease of value of the collateral as set forth in Article 7 of this Contract;

	
4.  

	
Mortgagor makes any inaccurate statement in this Contract or violates any warranty made under this Contract;

	
5.  

	
Mortgagor violates any covenant on the rights and obligations to the parties to this Contract;

	
6.  

	
Mortgagor ceases to operate or is under such proceedings as dissolution, winding-up or bankruptcy;

	
7.  

	
Mortgagor breaches any contract entered into by itself with any affiliate to Mortgagee or Bank of China Limited.

In the event of occurrence of any breaching event mentioned above, Mortgagee shall have the right to take any one or all of the measures listed in the following as the case may be:

	
1.  

	
Request Mortgagor to remedy or correct any breach within the term designated;

	
2.  

	
Adjust, suspend or terminate all or part of the line of credit given to Mortgagor;

	
3.  

	
Suspend or terminate acceptance of all or part of business applications made by Mortgagor under any other contracts, or suspend or terminate granting and handling all or part of loans to be granted or trade financing businesses to be handled;

	
4.  

	
declare the immediate maturity of all or any part of principals and interests of any loans/trade financing and other amounts payable understanding by Mortgagor under any other contracts;

 

 

  

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5.  

	
Terminate or rescind this Contract, terminate or rescind all or any part of any other contracts entered into by Mortgagor and Mortgagee;

	
6.  

	
Claim for any loss caused to Mortgagor by any breach of Mortgagee;

	
7.  

	
Exercise the mortgage right;

	
8.  

	
Take any other measures deemed necessary by Mortgagee.

	
Article 18

	
Right Reservation

Failure by a party to exercise all or partial rights hereunder or to require the other party to perform and assume all or partial obligations and responsibilities shall not constitute waiver by such party of such rights or exemption from such obligations and responsibilities.

Any indulgence, extension or postponement in exercising the rights hereunder granted by a party to the other party will not affect any rights it shall have under this Contract and laws and regulations, nor be construed as waiver by it of such rights.

	
Article 19

	
Amendment, Modification and Termination

Amendment or modification may be made to this Contract in writing by mutual agreement of the parties, which shall constitute an integral part of this Contract.

Unless otherwise provided by laws and regulations or agreed by the parties, this Contract may not be terminated prior to completion of performance of their rights and obligations hereunder.

Unless otherwise provided by laws and regulations or agreed by the parties, legal validity of the remaining provisions will not be affected by the invalidity of any provision of this Contract.

	
Article 20

	
Applicable Law and Dispute Resolution

This Contract shall be governed by the laws of the People’s Republic of China.

Any and all disputes and controversies arising from performance of this Contract shall be settled by the parties through negotiation. In case no settlement can be reached through negotiation, the parties agree to apply the dispute resolution method as same as specified in the Master contract.

 

 

  

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During the period of settlement of disputes, if such disputes will not affect the performance of the remaining provisions of this Contract, such provisions shall continue to be performed.

	
Article 21

	
Expenses

Unless otherwise provided by laws or agreed by the parties, the expenses (including attorney fee) incurred for conclusion, performance of this Contract and dispute resolution shall be borne by the Mortgagor.

	
Article 22

	
Appendices

The appendices confirmed by the parties constitute an integral part of this Contract, with equal effect in law as this Contract.

	
1.  

	
Collateral List

	
2.  

	
         /

	
Article 23

	
Miscellaneous

	
  

	
1.

	
The Mortgager shall not assign any rights and obligations hereunder to the third party without the written consent of the Mortgagee.

	
  

	
2

	
If the Mortgagee must entrust other branches of Bank of China Limited to perform the rights and obligations hereunder due to the business need, the Mortgager hereby approves. Other branches of Bank of China Limited authorized by the Mortgagee shall have the right to exercise all rights hereunder, and to lodge a lawsuit or refer to the arbitration commission in respect of the disputes hereunder.

	
  

	
3

	
With prejudice to other provisions of this Contract, this Contract shall be binding upon the parties and the successors and assigns of the parties duly existing.

	
  

	
4

	
Unless otherwise specified, the parties specify the domicile recorded herein to be the contact address, and undertake to timely notify the other party in writing of any change in contact address.

	
  

	
5

	
The headings and business name in the Contract are for convenience only, and shall not be used to interpret the provisions of the Contract and rights and obligations of the parties.

 

 

  

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Article 23

	
Effectiveness and Establishment of Mortgage Right

This Contract shall become effective from the date when it is signed and sealed by the legal representatives, persons-in-charge or authorized signatories of the parties. However, in case need to handle mortgage registration, the contract shall come into effect after registration.

The mortgage right is established on the date of effectiveness of contract.

This Contract is executed in five copies; both parties, creditor and registration authority shall hold one copy respectively, each of which shall have equal effect in law.

Mortgager: Fujian Yada Group Co., Ltd (Sealed)

By: Zhan Youdai (Signature)

July 21, 2010

Mortgagee: Bank of China Limited, Nanping Branch (Sealed)

By: Zhu Mangui (Signature)

July 21, 2010

Appendix

List of Mortgage

Code: 2010 Nan Zhong Yin Qing Zi No.YD10-004

	
Name of Mortgage

	
QTY

	
Estimated value

	
Property/right to use (right voucher No.)

	
Location

	
Registry Unit

	
Assurance credit amount

	
Building

	
1

	
RMB

1.713181 million Yuan

	
Fujian Yada Group Co., Ltd./Tan Property right certificate Jianyang Zi No.20094794

	
Taxia Industry Park, Tancheng Street., Jianyang City

	  	
RMB 1.713181 million Yuan

	
Right of land use

	
1

	
RMB 3.219237 million Yuan

	
Fujian Yada Group Co., Ltd./Tan State use (2009)No.03971

	
Taxia Industry Park, Tancheng Street., Jianyang City

	  	
RMB 3.219237 million Yuan

	
sum

	  	
RMB 4.932418 million Yuan

	  	  	  	  
	
Note:

1. The loan amount of the master agreement of this mortgage agreement is RMB20million Yuan (letter: RMB twenty million Yuan);

2. The assurance credit amount of the mortgage is found in the table hereto.

 

Mortgager: Fujian Yada Group Co., Ltd. (signature &seal)

Mortgagee: Bank of China Limited, Nanping Branch (Signature &seal)

 

 

  

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