Document:

Exhibit 10.21

 

Ref: (2009) Xin Kai Yin Zui Di Zi No. 000013-1

 

Maximum Value Mortgage Contract

 

Prepared by: China CITIC Bank, Dalian Branch

  

  

  

 

Instruction

 

1.      The Contract herein shall be filled with dark blue or black-inked signature pen or pens.

 

2.      The Contract shall be completed in full with print letters.

 

3.      Currency type instead of its symbol shall be written in Chinese. When it relates to capital amount, currency type shall be added in front of capital letters, and currency symbol shall be added in front of small letters.

 

Columns and blank spaces under Withdrawal Plan or Repayment Schedule shall be filled with fold lines and handwritten/stamping words “The blank is left intentionally”. Other unnecessary blank spaces may be crossed with “/”.

  

  

  

 

The Maximum Value Pledge Contract (as the “Contract”) is made on April 15th 2009, at Rd. Renmin #29, Zhongshan District, Dalian, P.R.C., 116001.,

 

By and between

 

The Mortgagor, Lvshun Wanquan Garment Factory, of which the principal place of business is Baiyun Street, Lvshunkou District, Dalian (as “Mortgagor”)

 

And

 

the Mortgagee, China CITIC Bank Dalian Branch who assigns Mr. Yu Wenbo as its legal representative and its principal place of business is Rd. Renmin #29, Zhongshan District, Dalian, P.R.C., 116001, phone 86-411-82821868 (as the “Mortgagee”).

 

In order to facilitate execution of multiple obligatory rights (as “principal claim”) between the Mortgagee and Dalian TOFA New Materials Development Co., Ltd. (as “Debtor”), the Mortgagor is willing to provide maximum value mortgage to the Debtor. For the consideration of mutual premises, and in accordance with Contract Law of PRC and Guarantee Law of PRC and other laws and regulations, Mortgagor and Mortgagee hereto agree as follow:

 

Article 1 Definition

 

Maximum value mortgage means the highest guarantee line agreed between Mortgagor and Mortgagee against multiple debts incurred by Debtor. Mortgagor shall provide such guarantee no higher than such line. Such highest line equals to the total amount of unpaid liabilities (including contingent liabilities) Debtor shall pay to Mortgagee.

 

Article 2 Mortgaged Principal Claim

 

2.1 Mortgaged principal claim means a series of obligatory rights arising from Mortgagee extending a credit line to Debtor during the period as of April 15th 2009 till March 19th 2010. Those obligatory rights include but not limited to loans, notes, letter of guarantee, L/C and other banking services.

 

Mortgaged principal claim is up to RMB five million (5,000,000). If Mortgagor performs its obligations stated in the Contract, the highest guarantee line will be lowered subject to Mortgagor’s performance.

 

Within the abovementioned period and below highest guarantee line, any debt-related contracts, agreements and instruments made between Mortgagee and Debtor shall constitute the master contract over the Contract herein (as “Master Contract”).

 

It’s mutually agreed that the RMB Loan Contract referred as (2009) Xin Kai Yin Dai Zi made between Mortgagee and Debtor, under which the principal contemplated is RMB 5,000,000 (five million), is deemed as part of the Principal Claim defined herein.

 

2.2 Debtor shall perform its liabilities as required by the Master Contract. Where the Master Contract requires installment, then the matured day of any separate debt shall be deemed as the ending date of contractual execution to such debt. If the debt is terminated in advance as (1) required by laws and regulations, (2) agreed under the Master Contract, or (3) Debtor and Mortgagee agree to do so; or the debt payment is agreed to delay by Debtor, Mortgagee and Mortgagor, the date of such termination is the matured date of the debt. If the service contemplated under the Master Contract is in form of L/C, bank acceptance bills or letter of guarantee, each payment in advance is deemed as the ending date of contractual execution.

  

  

  

 

Article 3 Collateral

 

3.1 Collaterals furnished by Mortgagor are listed in Collateral List attached to the Contract. Total collateral are valued as Thirteen Million and Twenty Thousand (13,020,000) RMB Only, loan-to-value ratio 38.41%. The evaluated present value of collaterals herein shall neither constitute the basis for Mortgagee to dispose collaterals as allowed by the Contract, nor any limitations against Mortgagee to excises its mortgage right. Throughout the term of the Contract, Mortgagor shall have the duties to employ reasonable measures to bring the loan-to-value ratio back to the foresaid level, provided that the ratio becomes higher due to any reasons.

 

Article 4 Mortgage Scope

 

4.1 The Contract shall cover principal, interest, punitive and compound interest, imbursement for contract violation, damages, and expenses for excising debt rights (including but not limited to legal cost, arbitration, attorney fee no higher than 20% total principal claim, accommodation, assessment &evaluation, auction, disposal, transfer, property preservation, public disclosure and execution)

 

Article 5 Lien

 

5.1 Lien shall be excised within the limitations of Principal Claim.

 

Article 6 Mortgagor’s Representations and Warranties

 

6.1 Mortgagor is a legal person incorporated under laws of P.R.C., of civil rights and behavioral competence, and independently liable to any civil duties. Mortgagor has obtained necessary/lawful authorizations and approvals, from external or internal, to sign the Contract herein.

 

6.2 Mortgagor possesses complete, effective and lawful ownership or disposal right to the collaterals contemplated hereunder. The foresaid collaterals are free from any disputes, confiscation, impounding, pledge, supervision or any other mandatory measures. If such collaterals are co-possessed by Mortgagor and other owners, Mortgagor shall be believed to have obtained all the necessary consents and approvals from such person.

 

6.3 Mortgagor fully understands and agrees on all the terms and provisions set forth under the Master Contract. Mortgagor provides such guarantee to Debtor at its discretion and all the presentations and statements made under the Contract are true or factual.

 

6.4 The collaterals contemplated hereunder shall neither bear any limits nor cause any illicit circumstances.

 

6.5 All the collateral-related documentations and representations provided by the Mortgagor are of effect, truth, accurateness, completeness and law-binding. Other than conditions Mortgagor make written disclosure on to Mortgagee, Mortgagor has no other material liabilities (including contingent liabilities), behaviors of contract violations, prosecution, arbitration or other significant events influential to Mortgagor’s assets.

 

6.6 Mortgagor agrees that when Debtor of the Master Contract fails to perform the endue liabilities, or the collateralization right shall be excised, Mortgagee shall have the right to directly require Mortgagor executing its liabilities with priorities over other rights and interests (including but not limited to the case that the collateral of Debtor of Master Contract shall be disposed in the first place), regardless if Mortgagee has other guarantee against the debt under the Master Contract (including but not limited to the collaterals, pledges, mortgages, letter of guarantees, standing L/C and other forms of guarantees provided by the Debtor of Master Contract itself).

  

  

  

 

Article 7 Mortgagor’s Rights and Obligations

 

7.1 Mortgagor shall furnish Mortgagee with instruments testifying the ownership of collaterals and other necessary documents, including but not limited to verified business license, insurance policy for collaterals, and certificates for special imports issued by competent authorities. Those files and documents shall be kept by Mortgagee.

 

7.2 Mortgagor shall issue a written notice thirty (30) days in advance to the Mortgagee provided that Mortgagor know or should have known any adverse or possibly adverse impact to Mortgagor’s collaterals. The foresaid conditions includes but not limited to stock conversion, reorganization, M&A, spin-off, joint capital, alliance, leasing, any change to Debtor’s scope of operation and registered capitals, or material capital transaction.

 

7.3 If Mortgagor incurs events including but not limited to suspension, stoppage, bankruptcy, delinquency, revoke of business license, economic loss, lawsuits, arbitration, criminal affairs, and administrative punishment, thus hampering part or whole of capability of guaranteeing the loan, Mortgagor shall issue a written notice to Mortgagee within three days upon the occurrence or possible occurrence of such event.

 

7.4 Throughout the term, Mortgagor shall agree to properly assume all the liabilities under the Contract and thus provide an action plan, provided that Mortgagor incurs situations described in Article 7.2 and Article 7.3.

 

7.5 For the purpose of the Contract, Mortgagor shall, prior to obtaining Mortgagee’s written consent, not (1) transact, let, remortgage, (2) transfer as gift or trust, (3) materially change part or whole of collaterals. In case that Mortgagee agrees on Mortgagor’s disposal on collaterals, Mortgagor shall not only entitle Mortgagee to choose the following options for handling the capital earned from such disposal, but also provide support for possessing relevant procedures. Those options include – the capital shall

 

7.5.1 be paid to clear the principal and interest under the Mater Contract;

 

7.5.2 be deposited into saving account; and CD thereof shall be used as pledge.

 

7.5.3 be deposited to any third party designated by Mortgagee.

 

7.5.4 be entitled by Mortgagor if Mortgagor provides a new and satisfied mortgage.

 

7.6 If collaterals are (1) confiscated, detained, handled with other mandatory measures, (2) with conflict over ownership, (3) damaged by any third party, or (4) in other adverse situations, Mortgagor shall immediately inform Mortgagee in written form and cover Mortgagee’s damages up to its guarantee line.

 

7.7 Mortgagor shall have the right to terminate all the mortgage under the Contract provided that Debtor pays off all the debt liabilities under the Master Contract.

 

7.8 Under the circumstances that Mortgagor lets the collaterals prior to the establishment of the Contract, Mortgagor shall timely inform lessee regarding the mortgage in written form. Also, Mortgagor shall furnish Mortgagee with the written agreement signed by and between Mortgagor and Lessee, and/or a memo describing such lease.

  

  

  

 

7.9 If Mortgagor makes changes to legal person name, legal representative, project director, principal place of business, telephone, fax and among others, Mortgagor shall inform Mortgagee in written form seven (7) days after such change.

 

7.10 If it’s mutually agreed that Mortgagor takes its existing production lines, raw materials, product in process and finished products as mortgages, then Article 7.5 hereunder is not applicable. However, Mortgagor shall not maliciously dispose the collaterals through falsified sales. If mortgage right shall be excised subject to Article 12.4, Mortgagor shall not dispose the collaterals by any means, otherwise Mortgagor shall cover the damages arising thereof.

 

Article 8 Mortgagee’s Rights and Liabilities

 

8.1 If Debtor fails to execute its liabilities, in part or whole, at the matured date specified in Article 2.2, Mortgagee shall have the right to dispose the collaterals under the Contract.

 

8.2 If earning from disposing collaterals is inadequate to clear off all the debt liabilities, Mortgagee shall have the right to claim the residue to Debtor. However, Mortgagee shall return the remaining to Mortgagor if there is money left upon full settlement.

 

8.3 If Debtor pays off all the debt liabilities under the Master Contract, Mortgagee shall help Mortgagor to nullify the collateral registration in competent authority, and return ownership certificates and other documents to Mortgagor.

 

8.4 In exception to matters of extending credit line and increasing debt liabilities, Mortgagee and Debtor may not obtain Mortgagor’s consent prior to making any changes to the Master Contract. In such case, Mortgagor shall not waive its liabilities under the Contract.

 

Article 9 Custody and Use of Collaterals

 

9.1 Mortgagor shall be liable to secure collaterals under good conditions, pay various taxes and expenses, use/operate the collaterals properly and lawfully, and accept Mortgagee’s supervisions on collaterals from time to time.

 

9.2 In case that there is any possibility of value decrease on collaterals, Mortgagor shall (1) give notice to Mortgagee promptly and (2) recover collateral value as required, or provide a new satisfied collateral with equivalent value as decreased amount.

 

Article 10 Insurance

 

10.1 Mortgagor shall provide full insurance to collaterals, at Mortgagee’s request. And the primary beneficiary shall be Mortgagee. Throughout the existing period of mortgage rights, insurance term shall be longer than the term of Master Contract. However, if the debt under the Master Contract is extended; Mortgagor shall agree to extend insurance term accordingly. Mortgagor shall not withdraw the insurance. And Mortgagee shall keep insurance policies and policy of extended insurance term.

 

10.2 If Mortgagor fails to insure collaterals or pay premium as required in Article 10.1, Mortgagee shall have the right to insure collaterals and pay premiums on behalf of Mortgagor. All the fees and expenses arising shall be borne by Mortgagor.

 

10.3 If collaterals are damaged, lost or confiscated, Mortgagee shall be the primary beneficiary to the insurance coverage and indemnification of the collaterals.

  

  

  

 

If collaterals are damaged, lost or confiscated, but the debt liabilities under the Master Contract are not matured, Mortgagee shall have the right to deposit and withdraw the insurance coverage and indemnification of the collaterals.

 

10.4 Article 9.2 shall be applied if (1) Mortgagor fails to insure or extend the insurance to collaterals as required, so that damages of collaterals are not covered; (2) Mortgagor fails to insure or extend the insurance to collaterals as required, and collaterals are damaged by virtue of any third party’s behaviors, but Mortgagor receive none of indemnification from such third party; and (3) though Mortgagor buys insurance to the collaterals, yet the situation applies to the disclaimer under the insurance policy.

 

Article 11 Registration

 

11.1 Parties hereto shall process the registration of collaterals at competent authorities. And original copy of right certificate, registration statement and/or collateral ownership shall be kept in custody by Mortgagee upon three days after accomplishing such procedures.

 

11.2 If there is any transaction or change to the collateral ownership, which obtains Mortgagee’s written consent in advance, relevant parties shall process the Registration Change within required period.

 

Article 12 Violation

 

12.1 Parties hereto shall execute the Contract upon effect, or otherwise assume relevant liabilities for breaching the Contract.

 

12.2 If Mortgagor provides inaccurate, untruthful, incomplete or intentionally misleading representations and warranties, thus causing loss to Mortgagee, Mortgagor shall bear the damages arising thereof.

 

12.3 In case that the Contract becomes null and valid by virtue of Mortgagor’s fault, Mortgagor shall cover Mortgagee’s loss up to its guarantee line.

 

12.4 Throughout the term, Mortgagee shall have the right to excise the mortgage right promptly provided that:

 

12.4.1 Any debt under the Master Contract is matured without full imbursement.

 

12.4.2 Mortgagee is not paid at the date (1) required by laws and regulations, (2) agreed under the Master Contract, or (3) Debtor and Mortgagee agree to an early maturity of debt;

 

12.4.3 Mortgagor experiences shut-off, stoppage, delinquency, solvency, or delinquency of business license.

 

12.4.4 Mortgagor violates Article 7.4 under the Contract and fails to perform all the liabilities hereunder or to provide satisfied action plan.

 

12.4.5 Mortgagor is incapable to maintain collaterals as completed and in good conditions. Or if value of collaterals is decreased as described in Article 9.2 and Mortgagor refuses to provide a new collateral as required in Article 9.2.

 

12.4.6 Mortgagor incurs any events that may threaten/hamper or possibly threaten/hamper Mortgagee’s rights and interest.

 

12.4.7 Mortgagor violates Article 7.10 and maliciously disposes collaterals through fake sales or, against the requirements of restrictions on disposal, handles collaterals at its discretion.

  

  

  

 

Article 13 Realization of Mortgage Right

 

13.1 Mortgagor agrees that Mortgagee may choose any of the following means to excise its mortgage right. However if the currency under the Master Contract is different from the currency of excising mortgage right, earning from disposing collaterals shall be translated at the exchange rate announced by Mortgagee at the date of such disposal. Means to excise mortgage right include:

 

13.1.1 Collaterals may be discounted to realize mortgage right. Mortgagee may negotiate with Mortgagor regarding discount price, or accept the discount price evaluated by a qualified evaluation agent agreed by two parties herein.

 

13.1.2 Collaterals may be sold to realize mortgage right. Mortgagee may directly transfer collaterals, or indirectly through any agents or Mortgagor. The calculation of sales price is applicable to Article 13.1.1.

 

13.1.3 Auction. Mortgagee may entrust a China-registered qualified agent to auction the collaterals.

 

Article 14 Other Agreed Matters

 

None

 

Article 15 Governing Law

 

13.1 The Contract shall be governed by laws of Peoples’ Republic of China.

 

Article 16 Disputes

 

14.1 In case of any disputes arising from or related to the Contract, parties hereto shall settle the disputes on a friendly basis; otherwise either party may file a legal suit to the people’s court where Mortgagee is located.

 

Article 17 Accumulation of Rights

 

17.1 Mortgagee’s rights and interest under the Contract shall be accumulated, free from relevance of any rights required by laws or contracts. Unless specified in Mortgagee’s written statement, Mortgagee’s any delayed execution, partial execution and non-execution of any rights shall neither constitute any waiver of all/partial rights, nor impact Mortgagee’s continued execution of such rights or other rights.

 

Article 18 Continuity of Obligation

 

18.1 Any obligations and joint liabilities under the Contract shall bear continuity, which legally binds Debtor’s successors, receivers, transferee and entities after Debtor’s M&A, reorganization or name change, free from any disputes, claims, prosecutions, superior’s orders, or any contracts or files signed between Principal Claim Contract Debtor and any other persons. Such obligations shall not be altered due to Debtor’s solvency, delinquency, disqualification, amended Article of Associations or other changes of any nature or of any kind.

 

Article 19 Force of the Contract

 

19.1 The Contract is subordinated to the Master Contract. Any invalid part of Master Contract shall not affect the force of the Contract.

 

19.2 If a certain paragraph or content of a certain paragraph herein is deemed as ineffective by now or in the future, such paragraph or content shall not affect the legal power of Contract, other paragraphs or other content of such paragraph.

  

  

  

 

Article 20 Effect, Change and Termination

 

20.1 The Contract enters into full force upon signatures and seals attached by Mortgagor’s legal representatives or authorized agents, and Mortgagee’s legal representatives, incumbent or authorized agents.

 

20.2 Unless otherwise specified herein, parties hereto shall not alter or revoke the Contract at its discretion, upon the Contract entering into force. For any changes or terminations, parties hereto shall agree and form a written supplement.

 

Article 21 Miscellaneous

 

21.1 For any unsettled matters hereunder, parties hereto may make supplemental agreements as attachment of the Contract. Any attachment, amendment, supplements to the Contract shall constitute each and any inseparable part of the Contract, each with equivalent legal force.

 

21.2 Mortgagor shall bear all the expenses and fees arising from evaluation, notarization, insurance, registration, test, custody and deposit required under the Contract.

 

21.3 Any notices, requirements or other correspondences issued by Mortgagee to Debtor, including but not limited to telegraph, telex and facsimile, shall be deemed to be served to Debtor as soon as such notices, requirements or other correspondences are issued. The abovementioned correspondence in certified mail form shall be deemed to be served to Debtor at the third day upon such mailing day.

 

21.4 If Mortgagor makes changes to principal place of business, name, telephone, fax and among others, Mortgagor shall inform Mortgagee in written form fifteen (15) days after such change.

 

21.5 The Contract is made and executed in /, / for Mortgagor and / for Mortgagee.

 

21.6 Mortgagee has employed reasonable measures to (1) request Mortgagor to notice, and (2) make full explanation to any terms and provisions in connection with exemption or limited obligations. Both parties hold no dissent on understanding of all the terms and provisions hereunder.

 

	
Debtor: (Seal)

	
Mortgagee: (Seal)

	  	  
	
Legal Representative: /s/ Zheng Chuantao

	
Legal Representative: /s/ Yu Wenbo

 

  

  

  

 

Attachment 1

 

(Real Estate) Collateral List

 

Collateral Name: Land

 

Location: #4 Baiyun Street, Desheng Ave, Lvshunkou District, Dalian, PRC

 

Land Use Right Owner: Lvshun Wanquan Garment Factory

 

Floor Area: 10826 square meters

 

Term: Feb. 2004 to Feb. 2054

 

Ownshership Certificate: Lvshunkou Guo Yong (2004) Zi No. 0403005

 

Evaluation: 6,240,000  yuan

 

Evaluation Agent: Dalian Taihe Immovable Property Evaluation LLC

 

How to Get This Land: State Rent

 

Remark: Debt Amount 2,400,000 yuan.

 

Signed by Mortgagor: /s/ Zhou Pinren           Signed by Mortgagee: /s/ Yu Wenbo

  

  

  

 

Attachment 2

 

(Real Estate) Collateral List

 

Collateral Name: House Property

 

Location: #4-9 Baiyun Street, Desheng Ave, Lvshunkou District, Dalian, PRC

 

Floor Area: 432.1 square meters

 

Use: Warehouse

 

Ownshership Certificate: Dalian Quan Zheng Lv Dan Zi No. 1999358

 

Evaluation: 610,000 yuan

 

Evaluation Agent: Dalian Dafeng Real Estate and Land Property Evaluation LLC

 

Whether there is interest conflict: No.

 

Remark: Debt amount 230,000 yuan

 

Signed by Mortgagor: /s/ Zhou Pinren           Signed by Mortgagee: /s/ Yu Wenbo

 

  

  

  

 

Attachment 3

 

(Real Estate) Collateral List

 

Collateral Name: House Property

 

Location: #4-2 Baiyun Street, Desheng Ave, Lvshunkou District, Dalian, PRC

 

Property Owner: Dalian Lvshun Wanquan Garment Factory

 

Floor Area: 299.61square meters

 

Use: Office

 

Ownshership Certificate: Dalian Quan Zheng Lv Dan Zi No. 1999356

 

Evaluation: 460,000 yuan

 

Evaluation Agent: Dalian Dafeng Real Estate and Land Property Evaluation LLC

 

Whether there is interest conflict: No.

 

Remark: Debt amount 180,000 yuan

 

Signed by Mortgagor: /s/ Zhou Pinren           Signed by Mortgagee: /s/ Yu Wenbo

  

  

  

 

Attachment 4

 

(Real Estate) Collateral List

 

Collateral Name: House Property

 

Location: #4-10 Baiyun Street, Desheng Ave, Lvshunkou District, Dalian, PRC

 

Property Owner: Dalian Lvshun Wanquan Garment Factory

 

Floor Area:2264.74 square meters

 

Use: Manufactory

 

Ownshership Certificate: Dalian Quan Zheng Lv Dan Zi No. 2001427

 

Evaluation: 3,580,000 yuan

 

Evaluation Agent: Dalian Dafeng Real Estate and Land Property Evaluation LLC

 

Whether there is interest conflict: No.

 

Remark: Debt amount 137,000 yuan

 

Signed by Mortgagor: /s/ Zhou Pinren           Signed by Mortgagee: /s/ Yu Wenbo

  

  

  

 

Attachment 5

 

(Real Estate) Collateral List

 

Collateral Name: House Property

 

Location: #4-3 Baiyun Street, Desheng Ave, Lvshunkou District, Dalian, PRC

 

Property Owner: Dalian Lvshun Wanquan Garment Factory

 

Floor Area: 555,66 1square meters

 

Use: Warehouse

 

Ownshership Certificate: Dalian Quan Zheng Lv Dan Zi No. 1999355

 

Evaluation: 790,000 yuan

 

Evaluation Agent: Dalian Dafeng Real Estate and Land Property Evaluation LLC

 

Whether there is interest conflict: No.

 

Remark: Debt amount 300,000 yuan

 

Signed by Mortgagor: /s/ Zhou Pinren           Signed by Mortgagee: /s/ Yu Wenbo

  

  

  

 

Attachment 6

 

(Real Estate) Collateral List

 

Collateral Name: House Property

 

Location: #4 Baiyun Street, Desheng Ave, Lvshunkou District, Dalian, PRC

 

Property Owner: Dalian Lvshun Wanquan Garment Factory

 

Floor Area:19.97square meters

 

Use: Guardian Office

 

Ownshership Certificate: Dalian Quan Zheng Lv Dan Zi No. 1999364

 

Evaluation: 40,000 yuan

 

Evaluation Agent: Dalian Dafeng Real Estate and Land Property Evaluation LLC

 

Whether there is interest conflict: No.

 

Remark: Debt amount 20,000 yuan

 

Signed by Mortgagor: /s/ Zhou Pinren           Signed by Mortgagee: /s/ Yu Wenbo

  

  

  

 

Attachment 7

 

(Real Estate) Collateral List

 

Collateral Name: House Property

 

Location: #4-7 Baiyun Street, Desheng Ave, Lvshunkou District, Dalian, PRC

 

Property Owner: Dalian Lvshun Wanquan Garment Factory

 

Floor Area: 64.94 square meters

 

Use: Public Bathhouse

 

Ownshership Certificate: Dalian Quan Zheng Lv Dan Zi No. 1999363

 

Evaluation: 100,000 yuan

 

Evaluation Agent: Dalian Dafeng Real Estate and Land Property Evaluation LLC

 

Remark: Debt amount 40,000 yuan

 

Signed by Mortgagor: /s/ Zhou Pinren           Signed by Mortgagee: /s/ Yu Wenbo

  

  

  

 

Attachment 8

 

(Real Estate) Collateral List

 

Collateral Name: House Property

 

Location: #4-1 Baiyun Street, Desheng Ave, Lvshunkou District, Dalian, PRC

 

Property Owner: Dalian Lvshun Wanquan Garment Factory

 

Floor Area: 162.31square meters

 

Use: Office

 

Ownshership Certificate: Dalian Quan Zheng Lv Dan Zi No. 1999360

 

Evaluation: 250,000 yuan

 

Evaluation Agent: Dalian Dafeng Real Estate and Land Property Evaluation LLC

 

Whether there is interest conflict: No.

 

Remark: Debt amount 100,000 yuan

 

Signed by Mortgagor: /s/ Zhou Pinren           Signed by Mortgagee: /s/ Yu Wenbo

  

  

  

 

Attachment 9

 

(Real Estate) Collateral List

 

Collateral Name: House Property

 

Location: #4-6 Baiyun Street, Desheng Ave, Lvshunkou District, Dalian, PRC

 

Property Owner: Dalian Lvshun Wanquan Garment Factory

 

Floor Area:212.51square meters

 

Use: Boiler Room

 

Ownshership Certificate: Dalian Quan Zheng Lv Dan Zi No. 1999362

 

Evaluation: 310,000 yuan

 

Evaluation Agent: Dalian Dafeng Real Estate and Land Property Evaluation LLC

 

Whether there is interest conflict: No.

 

Remark: Debt amount 120,000 yuan

 

Signed by Mortgagor: /s/ Zhou Pinren           Signed by Mortgagee: /s/ Yu WenboExhibit 10.22

Contract Ref: 2010 Xin Kai Yin Dai Zi No. 000040

 

RMB Loan Contract

Prepared by: China CITIC Bank, Dalian Branch

  

  

  

 

Instruction

 

	
1.

	
The Contract herein shall be filled with dark blue or black-inked signature pen or pens.

 

	
2.

	
The Contract shall be completed in full with print letters.

 

	
3.

	
Currency type instead of its symbol shall be written in Chinese. When it relates to capital amount, currency type shall be added in front of capital letters, and currency symbol shall be added in front of small letters.

 

	
4.

	
Columns and blank spaces under Withdrawal Plan or Repayment Schedule shall be filled with fold lines and handwritten/stamping words “The blank is left intentionally”. Other unnecessary blank spaces may be crossed with “/”.

  

  

  

 

The RMB Loan Contract (as the “Contract”) is made on April 6th 2010 at Rd. Renmin #29, Zhongshan District, Dalian, P.R.C., 116001.,

 

By and between

 

Dalian TOFA New Materials Development Co., Ltd. who assigns Mr. Zheng Chuantao as it legal representative and its principal place of business is East Lingang Industrial Zone, Economic and Technology Development Zone, Dalian, P.R.C., 116600, phone 86-411-87517999, fax 86-411-87516698, and its CITIC bank account 7211210182100008057, (as the “Debtor”);

 

And

 

China CITIC Bank Dalian Branch who assigns Mr. Yu Wenbo as it legal representative and its principal place of business is Rd. Renmin #29, Zhongshan District, Dalian, P.R.C., 116001, phone 86-411-82821868 and fax 86-411-82821868 (as the “Creditor”).

 

For the consideration of mutual premises and in accordance with applicable laws and regulations, including Contract Law of P.R.C. and General Codes on Loans, parties hereto agree as follow:

 

Article 1 Loan Type

 

	
1.1 

	
The Creditor agrees to extend short-term loans to the Debtor.

 

Article 2 Loan Amount (as “Principal”) and Maturity

 

	
2.1

	
The principal contemplated under the Contract is Renminbi 10,000,000.000 (Say: Ten Million Only)

 

	
2.2

	
Maturity term is one (1) year as of April 6th 2010 till April 5th 2011.

 

	
2.3 

	
In respect with maturity, withdrawal date and amount of specific loan, the terms and provisions under Credit Certificate herein shall prevail. Credit Certificate shall be deemed as part of, and with equal binding force with the Contract.

 

Article 3 Use of Loan

 

	
3.1  

	
The loan shall be applied to working capitals. The Debtor shall not alter the use of loans without Creditor’s written consent, otherwise or shall the Debtor violate laws and regulations regarding loan use, it shall bear the liabilities arising thereof.

 

Article 4 Interest and Interest Rate

 

	
4.1

	
Principal interest rate shall be determined as benchmark interest rate on the exact withdrawal day announced by People’s Bank of China for the same loan category and same date, plus a premium up to 20%, which means the interest rate herein is 6.372%.

  

  

  

 

	
4.2

	
Principal interest rate shall be treated as floating rate and adjusted at the anniversary date every three (3) months (as “Adjustment Day”). If there is no such anniversary date at the month that adjustment shall be made, the last day of that month shall be deemed as the Adjustment Day. Adjusted interest rate is calculated on the basis of the benchmark interest rate on the exact Adjustment Day announced by People’s Bank of China for the same loan category and same date, plus a premium, as specified in Article 4.1.

 

	
4.3

	
Debtor shall bear the interest thereof as of the withdrawal date. Interest shall be calculated as outstanding principal×annualized interest rate×outstanding days /360 days

 

	
4.4

	
Interest rate for installment shall be settled initially on April 20th, and thereafter every 20th day of each month (as “Settlement Day”).

 

	
4.5

	
Debtor shall deposit adequate capitals to the account opened by the Creditor, from which Creditor will withdraw interest in due time. However, if Debtor chooses other means to execute due payment, Debtor shall ensure a timely transaction. In case that Settlement Day is non-business day, Debtor shall deposit the amount at least one business day earlier than the Settlement Day. Otherwise, the Debtor shall be deemed to have delayed the payment if the Creditor fails to deposit or transfer enough capitals to Creditor’s account.

 

	
4.6

	
When the loan reaches its maturity (as “Maturity Day”), both principal and interest shall be fully settled. If Maturity Day happens to be national holiday or weekend, interest shall be calculated on the basis of (1) the interest rate specified herein, subtracted by the interest calculated on days between Maturity and Repayment Day, provided that the Debtor executes repayment on the last business day prior to such national holiday or weekend; or (2) the interest specified herein, plus the interest calculated on days between Maturity and Repayment Day, provided that the Debtor executes repayment on the first business day upon such national holiday or weekend. However, if the Debtor fails to make repayment on the first business day after national holiday or weekend, the Debtor shall bear extra interest attributable to overdue loans as of such date.

 

Article 5 Withdrawal

 

5.1 Withdrawal Plan

 

The Debtor shall make withdrawals subject to the following plan. Withdrawal Date shall be business day.

 

	
SN

	 	
Withdrawal Date

	 	
Amount

	 
	 	 	 	 	 	 
	 	1	 	
April 6th 2010

	 	¥	5,000,000.00	 
	 	 	 	 	 	 	 	 
	 	2	 	
April 7th 2010

	 	¥	5,000,000.00	 

 

5.2 If the Debtor or its guarantor fails to fulfill all the statutory or contractual obligations and liabilities, including but not limited to circumstances that the Debtor fails to timely furnish the Creditor with a full set of loan-related documents, or guarantor delays to complete any guarantee-related procedures, Creditor shall reserve the right to change the abovementioned Withdrawal Plan. In case that the loan maturity is changed owing to a changed Withdrawal Plan, the Article 2.3 shall be favored.

  

  

  

 

5.3 Unless specified under the Contract. the Debtor shall withdraw loans subject to the foresaid Withdrawal Plan, or otherwise obtain Creditor’s written consent in advance so as to make any changes. If changes are necessary with regards to withdrawal date or amount, the Debtor shall issue written notice to the Creditor seven (7) business days prior to the agreed Withdrawal Day. And the Creditor may agree on offering a seven (7) business-day window period. If the Debtor doesn’t withdraw the loan after the window period which deems Debtor to have cancelled the loan contemplated herein, the Debtor mustn’t claim the loan any more and shall be liable to breaching the Contract as stipulated in Article 12.2.

 

5.4 If the Debtor’s willful cancellation of loan has caused changes in the actual principal amount extended by the Creditor, the principal is calculated subject to the effective Credit Certificate herein.

 

5.5 The Debtor shall, in accordance with the Withdrawal Plan defined in Article 5.1 or a different withdrawal plan agreed by the Creditor, give irrevocable Withdrawal Notice or Loan Certificate or notices of any other kinds (as “Withdrawal Notice”) to the Creditor three business days prior to the Withdrawal Day. The Creditor shall issue the loan upon approval and regard the Withdrawal Notice as the IOU. If the Debtor neither provides Withdrawal Notice nor request for a window period, the Article 5.3 herein shall prevail.

 

Article 6 Repayment

 

6.1 The Principal hereunder shall be paid by means of installment at the end of Maturity Day.

 

6.2 The Creditor shall repay the Principal in accordance to:

 

	
SN

	 	
Withdrawal Date

	 	
Amount

	 
	 	 	 	 	 	 	 	 
	 	1	 	
April 5th 2010

	 	¥	5,000,000.00	 
	 	 	 	 	 	 	 	 
	 	2	 	
April 7th 2010

	 	¥	5,000,000.00	 

 

6.2 The Debtor shall (1) deposit to Creditor’s account 7211210182100008057 the amount no less than principal plus interest prior to the Repayment Day; and (2) authorize the Creditor to automatically withdraw the principal and interest from such account.

 

6.3 If Debtor intends to repay in advance, he shall provide a written, irrevocable Prepayment Plan thirty (30) days prior to the Debtor’s intentional repayment day, in order to get the Creditor’s approval.

 

Article 7 Debt Extension

 

7.1 If Debtor is unable to pay the principal in due time and requests for extension, he shall file a written application with the Creditor thirty (30) days prior to its due date. However, Creditor shall have the right to treat the loan as overdue provided that Creditor disagrees on the extension and Debtor fails to make due payment.

 

Article 8 Guarantee

 

8.1 The loan contemplated hereunder shall be guaranteed by warranties. In respect of such warranties, the Creditor and guarantors have entered the following guarantee contracts referenced by

 

  

  

  

 

(1) 2010 Xin Kai Yin Zui Bao Zi No. 000040-1

 

(2) 2010 Xin Kai Yin Zui Bao Zi No. 000040-2

 

(3) 2010 Xin Kai Yin Zui Bao Zi No. 000040-3

 

Article 9 Debtor’s Representations and Warranties

 

9.1 The Debtor is a legal person incorporated under laws of P.R.C., of civil rights and behavioral competence, and independently liable to any duties. The Debtor has obtained necessary/lawful authorizations and approvals, from external or internal, to sign the Contract herein.

 

9.2 All the loan-related documentations, reports, representations and others, which are provided by the Debtor at Creditor’s request or subject to laws, are of effect, truth, accurateness, completeness and law-binding.

 

Article 10 Debtor’s Rights and Liabilities

 

10.1 The Debtor shall have the right to withdraw and use the loan as required in the Contract.

 

10.2 The Debtor shall pay principal and interest as required by the Contract.

 

10.3 The Debtor shall, on a regular basis or from time to time, furnish the Creditor with reports and documents that truly reflect Debtor’s economic and financial positions.

 

10.4 Debtor shall issue a written notice to the Creditor for approval and pin down any liabilities for settlement, in-advance settlement or provide guarantees acceptable to the Creditor, provided that throughout the term, there are any material change in Debtor’s operations and revolutions, including but not limited to stock conversion, reorganization, M&A, spin-off, joint capital, alliance, leasing, or any change to Debtor’s scope of operation and registered capitals.

 

10.5 Debtor shall provide positive support to Creditor who will oversee and inspect Debtor’s operations and use of loan from time to time. Debtor shall assume all the fees and expenses arising from interfering Creditor from such overseeing and inspection.

 

10.6 Unless obtaining Creditor’s written consent, Debtor shall not employ any ways to directly or indirectly transfer the payment liability specified herein.

 

10.7 Debtor, who handles any material assets or majority or whole of revenues by means of transferring, leasing or providing guarantees to debts other than what is contemplated hereunder, shall issue a written notice in advance of at least thirty (30) days for Creditor’s approval.

 

10.8 In case of any events unfavorable to fulfilling obligations herein, including but not limited to prosecution, arbitration, criminal suites, administrative penalties, suspension, stoppage, delinquency, bankruptcy, revoke of business license, or inferior financial positions, Debtor shall inform Creditor in written form within three days at the occurrence or possible occurrence of foresaid events.

  

  

  

 

10.9  If (1) any guarantor incurs events including but not limited to suspension, stoppage, bankruptcy, delinquency, revoke of business license, and operational loss, thus hampering part or whole of capability of guaranteeing the loan, or (2) values of collaterals, pawns, pledge rights are decreased, Debtor shall provide new guarantee acceptable to Creditor.

 

10.10 If Debtor makes changes to legal person name, legal representative, project director, principal place of business, telephone, fax and among others, Debtor shall inform Creditor in written form seven (7) days after such change.

 

10.11 Throughout the term, Debtor shall not unlawfully inject loans into stock or real estate market through Creditor’s or any third party’s third party’s bank account.

 

Article 11 Creditor’s Rights and Liabilities

 

11.1 Creditor shall have the right to inspect Debtor’s operations and use of loans.

 

11.2 Creditor shall be entitled for claiming outstanding residue provided that capitals generated from disposing collaterals/pawns are inadequate to fully pay off all the debts guaranteed hereby.

 

11.3 Creditor shall timely issue loans to Debtor at full amount provided that Debtor has fulfilled the obligations and prerequisites herein.

 

11.4 Creditor shall have the right to require loan-related documents from Debtor subject to loan reviewing rules. Creditor shall keep confidential for any documents, data and information furnished by the Debtor, unless required by laws and regulations.

 

Article 12 Violation

 

12.1 Parties hereto shall execute the Contract upon effect, or otherwise assume relevant liabilities for breaching the Contract.

 

12.2 If Debtor fails to obtain Creditor’s written consent and to withdraw the loan as required, Creditor shall be entitled to claiming any damages based on the outstanding days and interest rate defined in the Contract.

 

12.3 If Creditor fails to issue loan subject to the Contract, Debtor shall have the right to claiming any damages based on the outstanding days and interest rate defined in the Contract.

 

12.4 Debtor shall have the right to terminate or suspend any non-withdrawn loans under the Contract, require a prompt repayment to realized loans, accompanying interest and other expenses, and employ other measures as lawfully applicable, provided that

 

12.4.1 Debtor fails to pay principal and interest specified under the Contract in due time;

 

  

  

  

12.4.2 Debtor fails to perform any obligations set forth in the Contract; or

 

12.4.3 Debtor provides to Creditor the inaccurate, untruthful, incomplete or intentionally misleading documents, files, or representations and warranties under Article 9th.

 

12.4.4 Debtor ceases to, is unable to, or explicitly expresses its incapability to pay its due debts.

 

12.4.5 Debtor experiences shut-off, stoppage, delinquency, solvency, delinquency of business license, or any unfavorable events to Debtor’s operation or properties including actions, arbitrations, criminal affairs and administrative punishment.

 

12.4.6 Debtor incurs (1) any changes to principal place of business, scope of business, legal representation and other registered items, or (2) any significant investments, that may materially impact or threaten the fulfillment of debt liabilities hereunder.

 

12.4.7 Debtor incurs significant economic loss, asset damages or assets damages due to guarantees, or other financial crisis.

 

12.4.8 Debtor’s normal business course is distracted, due to (1) a significant operational or financial crisis incurring to Debtor’s holding shareholders or affiliated companies, or (2) a material related-party transaction executed among Debtor, Debtor’s holding shareholders and affiliated companies.

 

12.4.9 There is adverse trend in Debtor’s industry.

 

12.4.10 Debtor fails to seek settlement services or bank savings from Creditor.

 

12.4.11 Debtor alters the use of loan at its discretion.

 

12.4.12 Debtor’s senior managers are involved in corruptions, bribery, embezzlement or other illicit operational activities.

 

12.4.13 Debtor violates the debt agreements entered with other Creditors.

 

12.4.14 Debtor’s guarantor(s) violate(s) terms and provisions under guarantee contract.

 

12.4.15 Debtor incurs other events that may harm, damage or possibly threaten Creditor’s rights and interests.

 

12.5 If Debtor fails to reimburse the principal in due time, Creditor shall, without prejudice to rights specified in Article 12.4, have the right to add punitive 50% to the interest rate fixed herein.

 

12.6 If Debtor fails to pay interest in due time, Creditor shall reserve the right to collect interest at a punitive compound rate subject to Article 12.5, calculated on the actual days of delayed payment.

 

12.7 If Debtor applies the loan to other purposes unspecified under the Contract, Creditor shall be entitled to a payment calculated on basis of (1) the amount of misappropriated loans, (2) days of such misappropriation and (3) an applicable interest rate herein plus 100% punitive rate.

 

  

  

  

 

12.8 Creditor shall not collect any damages arising from Debtor’s prepayment.

12.9 Debtor in violence of Article 10.11 shall cover the damages incurred therefrom to Creditor.

 

12.10 Creditor’s any expenses, including but not limited to legal cost, accommodation, attorney fee (below 20% of total debts), property preservation, notarization, translation and auction, that arising from realizing the debt payment, shall be borne by the Debtor.

 

Article 13 Continuity of Obligation

 

13.1 Any obligations under the Contract shall bear continuity, which legally binds Debtor’s successors, receivers, transferee and entities after Debtor’s M&A, reorganization or name change, free from any disputes, claims, prosecutions, superior’s orders, or any contracts or files signed between Master Contract Debtor and any other persons. Such obligations shall not be altered due to Debtor’s solvency, delinquency, disqualification, amended Article of Associations or other changes of any nature or of any kind.

 

Article 14 Notarization

 

14.1 Any notarization expenses incurred at either of these two parties’ request shall be borne by the Debtor. Such notarization shall be performed by competent authorities.

 

14.2 If Creditor requires possessing a notarization with enforceable power, Debtor shall agree. Creditor may present such notarization to local court for mandatory execution provided that Debtor delays the payment of loan contemplated hereunder in due time. Debtor shall assume all the expenses incurred therefrom and agree on such mandatory execution and relinquishment of any defense right.

 

Article 15

 

Debtor undertakes to refrain from directly or indirectly injecting any of bank loans into stock or real estate market, otherwise shall assume all the losses incurred to Creditor. If there is any conflict between the Article 15 and other terms set fort under the Contract, the former shall prevail.

 

Article 16 Governing Laws

 

16.1 The Contract shall be governed by laws of Peoples’ Republic of China.

 

Article 17 Disputes

 

17.1 In case of any disputes arising from or related to the Contract, parties hereto shall settle the disputes on a friendly basis; otherwise either party may file a legal suit or forcible execution to the people’s court where Creditor is located.

 

  

  

  

 

Article 18 Accumulation of Creditor’s Rights

 

18.1 Creditor’s rights and interest under the Contract shall be accumulated, free from relevance of any rights required by laws or contracts. Unless specified in Creditor’s written statement, Creditor’s any delayed execution, partial execution and non-execution of any rights shall neither constitute any waiver of all/partial rights, nor impact Creditor’s continued execution of such rights or other rights.

 

Article 19 Effect, Change and Termination

 

19.1 The Contract enters into full force upon signatures and seals attached by Debtor’s legal representatives or authorized agents, and Creditor’s legal representatives, incumbent or authorized agents.

 

19.2 Unless otherwise specified herein, parties hereto shall not alter or revoke the Contract at its discretion, upon the Contract entering into force. For any changes or terminations, parties hereto shall agree and form a written supplement.

 

19.3 With the Contract entering into full force, Creditor shall issue a written notice to Debtor prior to transferring all or part of its debt rights hereunder to any third party. No approval from Debtor is necessary.

 

19.4 With the Contract entering into full force, Creditor shall obtain guarantors’ written consents and undertakings of continuing or renewing its guarantee-related obligations, provided that Debtor intends to transfer all or part of its debt obligations to any third party. Written consent from Creditor shall be obtained.

 

Article 20 Miscellaneous

 

20.1 For any unsettled matters hereunder, parties hereto may make supplemental agreements as attachment of the Contract. Any attachment, amendment, supplements to the Contract shall constitute each and any inseparable part of the Contract, each with equivalent legal force.

 

20.2 If a certain paragraph or content of a certain paragraph herein is deemed as ineffective, such paragraph or content shall not affect the Contract, other paragraphs and other content of such paragraph.

 

20.3 Any notices, requirements or other correspondences issued by Creditor to Debtor, including but not limited to telegraph, telex and facsimile, shall be deemed to be served to Debtor as soon as such notices, requirements or other correspondences are issued. The abovementioned correspondence in certified mail form shall be deemed to be served to Debtor at the third day upon such mailing day.

 

20.4 The Contract is made in quadruplets, one for Debtor and three for Creditor.

 

20.5 Creditor has employed reasonable measures to (1) request Debtor to notice, and (2) make full explanation to any terms and provisions in connection with exemption or limited obligations. Both parties hold no dissent on understanding of all the terms and provisions hereunder.

 

	
Debtor: (Seal)

	
Creditor: (Seal)

	  	  
	
Legal Representative: /s/ Zheng Chuantao

	
Legal Representative: /s/ Yu Wenbo

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