Capital Loan Agreement in Renminbi China Construction Bank Hunan Branch
Exhibit 10.4
Capital
Loan Agreement in Renminbi
China
Construction Bank
Hunan
Branch
1
Contract
Number: 4306886432006002
Loan
Category: Fixed asset loan
Borrower
(Party A): Hunan Sanjiang Electric Power Co., Ltd.
Address:
No. 000 Xxxxx Xxxxx Xxxxxxx
Xxxx
Xxx:
415300
Chujiang Township,
Shimen County
Legal
Representative ( Person in-Charge): Xxxx Xxx
Facsimile:
0736-7705511 Telephone:
0000-0000000
Lender
(Party B): China Construction Bank Co., Ltd. Changde Branch
Address:
000 Xxxxxxxx
Xxxxxx Zip:
415000
Person
in-Charge: Xxxxxxxx Xxxx
Facsimile:
Telephone: 0000000
2
Borrower
( hereinafter “Party A”): Hunan Sanjiang Electric Power Co.,
Ltd
Lender (
hereinafter “Party B”): China Construction Bank Co., Ltd.,
Changde Branch
Party A
applies to Party B for borrowing money and Party B agrees to grant the
loan. In accordance with the relevant laws, statutes and regulations,
the Parties enter into and abide by this contract upon
consultation.
Article 1. Amount
of the Loan
Party A
borrows from Party B Renminbi (in capital) 20
million.
Article
2. Purpose
of the Loan
Party A
borrows the Loan for the purpose of power station technology
transformation and expansion.
Article
3. Term
of the Loan
Term of
the loan stipulated herein is five years, commencing from
July 31,
2006 to July 30,
2011.
If the
starting date of the period of the loan hereunder is inconsistent with that
indicated in the indebtedness certificate, the date on the indebtedness
certificate for the first grant of the loan shall prevail. The
indebtedness certificate is an integral part of this contract and has equal
legal effect with this contract.
Article
4. Interest
Rate of the Loan, Penalty Rate, Calculation and Settlement of
Interest
|
1.
|
Interest
rate of the loan
|
Interest
rate of the loan hereunder is monthly
(annual/monthly) interest rate of the second category of
the following:
|
(1)
|
Fixed
interest rate, namely, BLANK_
the interest rate will remain unchanged during the period of the
loan;
|
|
(2)
|
Floating
interest rate, which is 0% upward
(upward/downward) the base interest rate, shall be adjusted every 12 (twelve)
months starting from the interest accrual date. Interest
adjustment day shall be the corresponding date to the interest accrual
date in that month and shall be the last day of that month if there is no
corresponding day.
|
|
2.
|
Penalty
rate
|
|
(1)
|
The
penalty rate is monthly
(annual/monthly) rate;
|
3
|
(2)
|
If
Party A fails to use the loan according to the stipulated purpose, penalty
rate shall be the second category
of the following:
|
|
(i)
|
Fixed
interest rate, which is BLANK;
|
|
(ii)
|
Floating
interest rate, which is 100% upward the
base interest rate, shall be adjusted every 12(twelve)
months starting from the interest accrual date. The penalty
rate adjustment date shall be the corresponding date to the interest
accrual date in that month and shall be the last day of that month if
there is no corresponding date.
|
|
(3)
|
Penalty
rate for the overdue repayment of the loan hereunder shall be the second category
of the following:
|
|
(i)
|
Fixed
interest rate, which is BLANK;
|
|
(ii)
|
Floating
interest rate, which is 50% upward the
base interest rate, shall be adjusted every 12(twelve)
months starting from the interest accrual date. The penalty
rate adjustment date shall be the corresponding date to the interest
accrual date in that month and shall be the last day of that month if
there is no corresponding date.
|
|
3.
|
The
accrual date under this agreement is the date the loan is first
transferred into the account of Party
A
|
The base
interest rate when the loan is first issued under this agreement is the loan
interest rate of the same grade promulgated by the People’s Bank of China on the
interest accrual day. Thereafter, while adjusting the interest rate
or the penalty rate under this agreement, the base interest rate is the loan
interest rate of the same grade promulgated by the People’s Bank of China on the
adjusting day. If the People’s Bank of China does not promulgate the
base interest rate of the same grade, the base interest rate shall be the
interest rate recognized by the banking industry or the common interest rate of
the same grade, subject to conditions otherwise agreed by the
parties.
|
4.
|
Interest
on the loan shall accrue from the date the loan is transferred into the
account of Party A. Interest accrues upon the loan hereunder on a daily
basis. Daily interest rate =monthly interest rate/30=annual interest
rate/360. If Party A fails to pay the interest on schedule, compound
interest shall accrue from the next
day.
|
|
5.
|
Settlement
of Interest
|
|
(1)
|
In
case of fixed interest rate applicable to this loan, the interest will be
settled at the stipulated interest rate. In case of a floating interest
rate, interest will be calculated at the interest rate applicable to each
floating period. If there are several times of interest floating in a
single interest settlement period, interest accrued in such interest
settlement period shall be a total of respective interests in each
floating period;
|
4
|
(2)
|
Interest
on the loan hereunder will be settled on a monthly basis
(monthly/quarterly). Interest settlement day is fixed at the twentieth day
of every month
(month/end of quarter).
|
Article 5. Grant
and Use of the Loan
|
1.
|
Precedent
Conditions of Grant of the Loan
|
|
(1)
|
Unless
wholly or partially waived by Party B, Party B shall be obliged to grant
the loan only after the following precedent conditions are
met:
|
|
(i)
|
Party
A has properly handled the approval, registration, delivery and other
legal formalities relating to the loan hereunder in accordance with the
relevant laws and regulations;
|
|
(ii)
|
If
there is security for this contract, the security contract or other
security method conforming to the requirements of Party B has taken into
effect;
|
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(iii)
|
Party
A does not incur any event of default as stipulated
herein;
|
|
(iv)
|
Other
precedent conditions as stipulated by the
Parties:
|
The
following space is intentionally left
blank
_____________________________________________________________________
|
(2)
|
Party
B will commence with granting the loan within 5 bank business
days after Party A has satisfied the above precedent
conditions.
|
|
2.
|
Use
Plan of the Loan
|
|
(1)
|
July 31, 2006,
amount: 20
million
|
(the
following space is intentionally left blank)
|
(2)
|
____Year____Month___Day Amount______
|
|
(3)
|
____Year____Month___Day Amount______
|
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(4)
|
____Year____Month___Day Amount______
|
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(5)
|
____Year____Month___Day Amount______
|
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(6)
|
____Year____Month___Day Amount______
|
5
Article 6. Repayment
|
1.
|
Principle
of repayment
|
Any
repayment by Party A hereunder shall be made based on the following
principles:
|
(1)
|
Repayment
of principal shall be prior to repayment of interest under the following
situations: the principal of the loan has been overdue beyond 90 days,
interest has been overdue beyond 90 days, Party A’s business operation or
projects related to the Loan have been terminated though the loan has not
become mature or the overdue has not been beyond 90 days, and other loans
stipulated by the laws and
regulations.
|
|
(2)
|
Except
as situations otherwise listed in the Article 6 1 (1) above, any repayment
shall be made based on the principle that repayment of interest shall be
prior to repayment of principal, and the interest shall be paid off
together with the principal upon the last installment of
repayment.
|
|
2.
|
Payment
of interest
|
Party A
shall pay Party B the interest due on interest settlement day. The first date
for paying interest is the first interest
settlement day after the loan is granted. Upon the last installment of
repayment, the interest shall be paid off together with the
principal.
|
3.
|
Plan
of Repayment of Principal
|
Party A
shall repay the principal of the Loan according to the following
plan:
|
(1)
|
2009 Year 7 Month 31
Day Amount:
5
million;
|
|
(2)
|
2010 Year 7 Month 31
Day Amount:
5
million;
|
|
(3)
|
2011 Year 7 Month 30
Day Amount:
10
million;
|
The
following space is intentionally left blank
|
(4)
|
____
Year __
Month __ Day Amount
________;
|
|
(5)
|
____
Year __
Month __ Day Amount
________;
|
|
(6)
|
____
Year __
Month __ Day Amount
________.
|
|
4.
|
Method
of repayment
|
Party A
shall deposit sufficient funds in the account it has maintained with Party B
before the repayment date, which will be automatically used for repayment, or
transfer funds from other accounts for such repayment on the prescribed
repayment date. If Party A fails to made repayment on schedule, Party B shall be
entitled to transfer the corresponding money out of Party A’s account opened at
China Construction Bank Company Limited.
6
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5.
|
Early
Repayment
|
|
(1)
|
Party
A only needs notifying Party B in advance for early repayment of
interest;
|
|
(2)
|
For
early repayment of principal, Party A shall apply to Party B 20 bank
business days in advance in writing and may early repay partial or all
principal with the consent of Party
B.
|
When
Party A early repays principal, interest will be calculated at the interest rate
of the loan as determined according to Article 4 hereof for the actual number of
days during which the loan is used.
If Party
A repays principal early, it agrees to pay Party B compensation. Amount of the
compensation = early repaid principle × number of months of early
repayment x ___ _
(ratio of compensation). In case the prepayment made within one month
before the maturity date, the number of months left before the maturity date of
the Loan shall be counted as one.
If Party
A makes repayment in installments, in the event of early repayment of partial
principal of the loan, the repayment shall be made in the reversed order of the
repayment plan. Upon early repayment, the loan interest rate stipulated herein
shall still be applicable to the outstanding loan.
Article 7. Security
for the Loan
If the
loan hereunder is a secured loan, the security method is the second of the
following:
|
1.
|
Guarantee;
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2.
|
Mortgage;
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3.
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Pledge;
|
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4.
|
Standby
letter of credit;
|
|
5.
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Credit
insurance.
|
|
6.
|
Others:
__BLANK__________________.
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Article 8. Rights
and Obligations of Party A
|
1.
|
Rights
of Party A
|
|
(1)
|
Requires
Party B to grant the loan as stipulated
herein;
|
|
(2)
|
Uses
the loan for the purpose as stipulated
herein;
|
|
(3)
|
Requests
Party B to extend the Loan in accordance with the provisions set forth in
this Agreement;
|
7
|
(4)
|
Requires
Party B to keep secret the relevant financial information and trade secret
relating to production and operation provided by Party A, unless otherwise
provided by laws, statutes and
regulations.
|
|
2.
|
Obligations
of Party A
|
|
(1)
|
Party
A shall provide the relevant financial accounting information and
information on a monthly basis regarding its production and operation
conditions, as required by Party B, including but not limited to providing
the balance sheet and income statement (income and expenditure statement
of public service unit) for the last quarter within the first 10 working days
of the first month of each quarter, and providing the cash flow statement
of each year by the end of such year, and shall be responsible for the
trueness, completeness and validity of the information provided by
it.
|
|
(2)
|
Party
A shall use the loan for the purpose set forth in this Agreement and do
not misuse or appropriate the loan;
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(3)
|
Party
A shall actively cooperate with Party B and voluntarily accept the
inspection and supervision by Party B of its production, operation and
financial activity and the use of the loan
hereunder;
|
|
(4)
|
Party
A shall repay the principal and interest of the loan on
schedule;
|
|
(5)
|
Party
A and its investors shall not withdraw capital or transfer assets to evade
their debts owing to Party B;
|
|
(6)
|
Before
repaying in full the principal and interest of the loan owing to Party B,
Party A shall not use the assets deriving from the loan hereunder to
provide security to any third party without the consent of Party
B;
|
|
(7)
|
During
the term of this agreement, if Party A provides security for the debts of
other person, which may affect Party A’s ability of repayment hereunder,
Party A shall notify and acquire the consent of Party B in
advance;
|
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(8)
|
In
the event the guarantor hereunder winds up, goes out of business, cancels
the registration or its business license is revoked, becomes bankrupt, is
dismissed or suffers operating loss or partially or completely loses the
ability of security corresponding to the loan hereunder, or the value of
the collateral hereunder is decreased or damaged or lost by accident,
Party A shall timely provide other security acceptable to Party
B;
|
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(9)
|
During
the term of this contract, in the event of any change in the name, legal
representative (responsible person), domicile, business scope, registered
capital of Party A, Party A shall notify Party B in
time;
|
|
(10)
|
During
the term of this contract, in the event of contracting, leasing,
shareholding system rebuilding, pooling, consolidation, merger, division,
establishing a joint venture, application for closing business for
reorganization, application for dissolution, application for bankruptcy on
the part of Party A, which is sufficient to affect the realization of
Party B’s rights with respect to the loan, Party A shall notify in writing
and acquire the written consent of Party B at least 30 (thirty)
days in advance, and ensure the repayment and security hereunder as
required by Party B;
|
8
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(11)
|
During
the term of this contract, in the event of such conditions as ceasing to
product, going out of business, canceling the registration or revocation
of business license, involvement in illegal activity or material
litigation of the legal representative or main responsible person, serious
difficulty in production and operation, deterioration of financial
condition on the part of Party A which may have material adverse influence
upon the performance by Party A of its obligation of repayment hereunder,
Party A shall immediately notify Party B in writing and ensure the
repayment and security hereunder as required by Party
B;
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|
(12)
|
Party
A shall assume the expenses of legal service, insurance, appraisal,
registration, custody, verification and notarization relating to this
contract and the security
hereunder.
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Article 9. Rights
and Obligations of Party B
|
1.
|
Party
B’s rights
|
|
(1)
|
Party
B has right to learn of the production, operation and financial activities
of Party A and request Party A to provide such documents and materials as
the relevant plans, statistics, financial statements and so
on;
|
|
(2)
|
Party
B has right to deduct and transfer any amount in any currency from Party
A’s account maintained with China Construction Bank Company Limited with
respect to any amount payable by Party A to Party B based on this
agreement;
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2.
|
Party
B’s obligations
|
|
(1)
|
Party
B shall grant in full the loan on schedule as stipulated herein except the
delay is caused by Party A;
|
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(2)
|
Party
B shall keep secret the relevant financial information and trade secret
relating to production and operation provided by Party A, unless otherwise
provided by laws, statutes and
regulations.
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Article 10. Liabilities
for Breach of Agreement
|
1.
|
Breach
of the agreement
|
|
(1)
|
Breach
by Party A
|
9
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(i)
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Fails
to provide true, complete and valid financial information, information of
production and operation condition and other relevant information as
required by Party B;
|
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(ii)
|
Fails
to use the loan for the purpose prescribed
hereunder;
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(iii)
|
Fails
to repay the principal and interest of the loan on
schedule;
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(iv)
|
Rejects
or prevents Party B from inspecting and supervising the use of the
loan;
|
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(v)
|
Transfers
assets and withdraws capital to evade the
debts;
|
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(vi)
|
Operation
and financial condition deteriorates, Party A fails to discharge the debts
due or Party A is or will be involved in material litigation or
arbitration proceedings and other legal disputes, where Party B considers
it may or has caused to an adverse effect or impair on the rights and
interests of Party B hereunder;
|
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(vii)
|
Any
other debt undertaken by Party A has affected or may affect the
performance of Party A of its obligations
hereunder;
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(viii)
|
Fails
to perform other due indebtedness owing to Party
B;
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(ix)
|
During
the term of this Contract, Party A incurs changes in operation method or
conversion of operational mechanism us as contracting, leasing,
consolidation, merger, establishing a joint venture, division, pooling,
shareholding system restructuring, where Party B considers it may or has
caused to an adverse effect or impair on the rights and interests of Party
B hereunder;
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(x)
|
Other
condition which Party B considers sufficient to affect the exercise of
Party B’s rights;
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(xi)
|
Breaches
other obligations as stipulated
herein.
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|
(2)
|
If
the guarantor is involved in the following circumstances and Party A fails
to provide new security as required by Party B, it shall be deemed that
Party A has breached this contract:
|
|
(i)
|
The
guarantor is involved in such circumstances as contracting, leasing,
consolidation, merger, establishing a joint venture, division, pooling,
shareholding system rebuilding, bankruptcy, cancellation which is
sufficient to affect the guarantor’s capacity of undertaking the joint and
several guarantee liability;
|
|
(ii)
|
The
guarantor provides any third party with security beyond its
capacity;
|
10
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(iii)
|
The
guarantor loses or may lose its ability of
security;
|
|
(iv)
|
Other
breaches by the guarantor as stipulated in the guarantee
contract.
|
|
(3)
|
If
the mortgagor is involved in the following circumstances and Party A fails
to provide new security as required by Party B, it shall be deemed that
Party A has breached this contract:
|
|
(i)
|
The
mortgagor fails to purchase insurance for the mortgaged property as
required by Party B, or fails to dispose of the insurance compensation as
stipulated in the mortgage contract after the occurrence of the insurance
accident;
|
|
(ii)
|
In
the event of damage, loss, devaluation of the collateral caused by the
behavior of any third party, the mortgagor fails to dispose of the damages
as stipulated in the mortgage
contract;
|
|
(iii)
|
The
mortgagor donates, transfers, leases, re-mortgages, moves or otherwise
disposes of the collateral without written consent of Party
B;
|
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(iv)
|
The
mortgagor disposes of the collateral with the consent of Party B but fails
to dispose of the proceeds therefrom as stipulated in the mortgage
contract;
|
|
(v)
|
In
the event of the damage, loss or devaluation of collateral which is
sufficient to affect discharging of the debts hereunder, the mortgagor
fails to reinstate the value of collateral or provide other security as
acceptable by Party B;
|
|
(vi)
|
Other
breaches by the mortgagor as stipulated in the mortgage
contract.
|
|
(4)
|
If
the pledgor is involved in the following circumstances and Party A fails
to provide new security as required by Party B, it shall be deemed that
Party A has breached this contract:
|
|
(i)
|
The
pledgor fails to purchase insurance for the pledged property as required
by Party B, or fails to dispose of the insurance compensation as
stipulated in the pledge contract after the occurrence of the insurance
accident;
|
|
(ii)
|
In
the event of damage, loss, devaluation of pledged property caused by the
behavior of any third party, the pledgor fails to dispose of the damages
as stipulated in the pledge
contract;
|
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(iii)
|
The
pledgor disposes of the pledged property with the consent of Party B but
fails to dispose of the proceeds therefrom as stipulated in the pledge
contract;
|
|
(iv)
|
In
the event of the damage, loss or devaluation of pledged property which is
sufficient to affect the repayment of the principal and interest, the
pledgor fails to reinstate the value of pledged property or provide other
security acceptable to Party B;
|
11
|
(v)
|
Other
breaches by the pledgor as stipulated in the pledge
contract.
|
|
(5)
|
In
the event the security contract or other security does not take effect, is
valid or rescinded, or the guarantor is involved in other circumstances of
partially or completely losing the ability of guarantee or rejects to
performance the obligations of security, and Party A fails to provide new
security as required by Party B, it shall be deemed that Party A has
breached this contract.
|
|
2.
|
Remedies
for Breaches of Agreement
|
In the
event of the breaches in above Article 10, 1 (1) to 1(5), Party B shall be
entitled to exercise one or more of the following rights:
|
(1)
|
Stop
granting the loan, accelerate the maturity immediately and require Party A
to promptly repay the principal, interest and expenses of all the mature
or immature debts hereunder;
|
|
(2)
|
Charge
liquidated damages against Party A at ‰
of the principal of the loan;
|
|
(3)
|
In
the event Party A fails to use the loan for the purpose as stipulated
herein, interest and compound interest shall accrue at penalty rate
according to the interest settlement method hereunder from the date of
violation to the date on which the principal and interest are repaid in
full;
|
|
(4)
|
Before
maturity date, compound interest will be calculated and payable upon the
interest not repaid by Party A on schedule according to the rate and
settlement method as stipulated in Article 4
hereof.
|
|
(5)
|
For
the overdue repayment, interest and compound interest shall accrue on the
repayment in arrears and any principal and interest wholly or partially
declared early maturity by Party B, pursuant to the penalty rate and
interest settlement method stipulated in this agreement, for a period
commencing from the overdue date to the date when the principal and
interest are repaid in full. Delay in the repayment of the loan means
Party A fails to satisfy the loan on schedule or repays the loan exceeding
the prescribed installments;
|
|
(6)
|
Transfer
any amount in any currency out of Party A's account opened in China
Construction Bank;
|
|
(7)
|
Request
Party A to provide new security at the requirements of Party B for all the
debts hereunder;
|
|
(8)
|
Exercise
security rights;
|
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(9)
|
Rescind
this agreement.
|
12
Article 11. Other
Matters agreed
|
1.
|
The
following space is intentionally left
blank_____________;
|
|
2.
|
__________________________________________________;
|
|
3.
|
__________________________________________________;
|
|
4.
|
__________________________________________________;
|
Article 12. Dispute
Settlement
Any
dispute arising during the performance of this agreement may be settled through
consultation. If the consultation fails, it shall be settled through the first of the
following methods:
|
1.
|
Bring
a suit before the court in the jurisdiction where Party B
domiciles;
|
|
2.
|
File
the dispute to blank_
arbitration commission for arbitration (Arbitration place is blank
) in accordance with the effective arbitration rules of the
arbitration commission at the time of applying for arbitration.
Arbitration award is will be final and bind the
Parties.
|
During
the suit or arbitration, the provisions in this agreement which are not in
dispute shall still be performed.
Article 13. Effectiveness
of the Agreement
This
agreement will take into effect upon execution of the legal representatives
(persons in-charge) or authorized representatives of the parties, affixed with
the official seals of both parties.
Article 14. There
are 4 (four)
duplicate copies of this agreement.
Article 15. Representations
|
1.
|
Party
A is clearly aware of the business scope and authority of Party
B;
|
|
2.
|
Party
A has read all the terms and conditions of this Agreement. Party B has
made the corresponding interpretation of the terms and conditions of this
Agreement as requested by Party A. Party A has fully learned and
understood the meaning and the corresponding legal consequence of the
terms and conditions of this
Agreement;
|
|
3.
|
Party
A has right to enter into this
Agreement.
|
13
Party
A (Seal): (Seal)
Legal
representative (person in-charge) or authorized representative
(Signature):
/s/
Xxxxxxx Xxxx
July
31, 2006
Party B
(Seal): (Seal)
Person
in-charge or authorized representative (Signature):
/s/ Baining Li
July 31, 2006
14
