MORTGAGE CONTRACT OF MAXIMUM AMOUNT
EXHIBIT
10.26
MORTGAGE
CONTRACT OF MAXIMUM AMOUNT
Contract
No.: Year 2005 Shang Zi No. ▇▇▇▇▇▇▇▇▇▇
Mortgagee:
Shenzhen ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ of China Merchants Bank ("Party
A")
Address:
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇
Legal
Representative (Person-in-charge): ▇▇▇ ▇▇▇ Position:
President
Telephone
No.: ▇▇▇▇▇▇▇▇
Mortgagor:
Winner Industries (Shenzhen) Co., Ltd. ("Party
B")
Address:
Winner Industrial Park, Bulong Road Longhua Town, Shenzhen City
Legal
Representative: ▇▇▇▇▇▇▇▇ ▇▇ Position: Board
Chairman
Telephone
No.: ▇▇▇▇▇▇▇▇
Whereas:
Party
A
and Party B, being the Facility Applicant, have entered into a Credit Facility
Agreement (Contract No.: Year 2005 Shang Zi No. ▇▇▇▇▇▇▇▇▇▇) on June
27th
2005,
pursuant to which Party A agrees to grant to Party B a comprehensive facility
of
up to RMB 25,000,000 yuan (the “Facility”) during the term of the Facility
commencing from the July 12th
2005 to
July 12th
2006
(the “Availability Period”).
Party
B
is willing to place a mortgage on the property to which it has title or of
which
it is rightfully entitled to dispose for the purpose of securing the full
payment of all the debts owed to Party A by Party B under the Credit Facility
Agreement on time. Upon examinations, Party A agrees to accept such property
as
security. Parties A and B, after negotiations on the basis of equality, hereby
enter into this Contract subject to the following terms and in accordance with
the relevant laws and regulations:
| 1. |
SECURITY
OFFERED BY PARTY B
|
Details
in security list
| 2. |
MORTGAGE
FOR MAXIMUM AMOUNT OF THE
FACILITY
|
| 2.1 |
The
Facility referred to herein shall mean the maximum extent of facility
which Party A will grant to Party B during the Availability Period
in
respect of on-balance-sheet transactions such as continuing and revolving
loans, trade financing and discount of bills (collectively referred
to as
the “Loans”) and off-balance-sheet transactions such as acceptance of
commercial draft, opening of letters of credit and issue of confirmations
pursuant to the Credit Facility
Agreement.
|
| 2.2 |
During
the Availability Period, Party A may separately release the Loans
or
provide other facilities under the Facility to Party B. Party B may
utilize the Facility available in various forms in a revolving manner.
The
details of each provision of the Loans or other facilities such as
the
amounts, periods and specific purposes shall be prescribed in the
respective loan contracts, certificates of indebtedness or contracts
for
granting other facilities. Any of the above transactions may end
on a date
later than the expiry date of the Availability Period and both parties
shall not raise any objection
thereto.
|
| 2.3 |
If
any of the Loans or other facilities advanced to Party B by Party
A under
the Facility Agreement remains outstanding upon the expiry of the
Availability Period, Party B shall guarantee the repayment of the
same to
the extent of the Facility by way of the security it has offered.
|
| 2.4 |
Regarding
the Facility provided by Party A to Party B by ways of acceptance
of
commercial draft, opening of letters of credit, issue of confirmations
and
so forth during the Availability Period, Party B shall guarantee
the
repayment of all the debts incurred by Party B (including but not
limited
to the principal and interest of the advances made by Party A and
relevant
expenses) by way of the security it has offered notwithstanding that
Party
A has not made any advances upon the expiry of the Availability
Period.
|
| 2.5 |
The
guarantee given by Party B for the Facility by way of the security
it has
offered shall remain effective if Party A demands early payment from
Party
B in accordance with the Credit Facility Agreement and the respective
specific contracts before the expiry of the Availability
Period.
|
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| 3. |
COVERAGE
OF THE MORTGAGE
|
| 3.1 |
The
mortgage constituted hereunder shall cover the outstanding principal
of
the Loans or other facilities advanced to Party B by Party A in accordance
with the Credit Facility Agreement (up to the extent of the Facility
of
RMB 25,000,000) and interest thereon, default interest, default payments
and all other relevant expenses such as those arising from the enforcement
of the security, including but not limited to the
following:
|
| 3.1.1 |
the
outstanding principal of the Loans advanced by Party A pursuant to
the
respective loan contracts or certificates of indebtedness concluded
under
the Credit Facility Agreement and interest thereon, default interest,
default payments and relevant
expenses;
|
| 3.1.2 |
the
outstanding principal of the advances made to Party B by Party A
in
fulfilling its obligations of making payment in respect of the commercial
draft, letters of credit and confirmations under the Credit Facility
Agreement and interest thereon, default interest, default payments
and
relevant expenses;
|
| 3.1.3 |
all
expenses accrued to Party A as a result of recovering the debts from
and
enforcing the security against Party
B.
|
| 3.2 |
If
the outstanding principal of the Loans or other facilities advanced
to
Party B by Party A exceeds the extent of the Facility, the exceeding
amount shall not fall within the guarantee given by Party B. The
guarantee
given by Party B shall only cover the outstanding principal of the
Loans
or other facilities that is within the extent of the Facility, interest
thereon, default interest, default payments and other relevant
expenses.
|
| 4. |
INDEPENDENCE
OF THE CONTRACT
|
| 4.1 |
This
Contract is independent and unconditional. Subject only to the completion
of the formalities giving effect to this Contract as provided for
in
Clauses 6 and 19 hereof, this Contract shall be legally binding on
Parties
A and B. The validity of this Contract shall not be affected by the
validity of the Credit Facility Agreement and the respective specific
contracts and by any agreements or documents entered into between
Party B
and any entity. Nor shall it be altered as a result of fraud,
reorganization, winding up, dissolution, liquidation, bankruptcy
or
whatever on the part of Party B.
|
| 4.2 |
The
guarantee given by Party B hereunder shall not be affected if Party
A
stops releasing the unutilized portion of the Loans and/or other
facilities to Party B and declares that the loan advanced shall be
immediately due and payable or makes claims for the same pursuant
to the
Credit Facility Agreement.
|
| 5. |
CUSTODY
AND OBLIGATIONS IN RESPECT OF THE SECURITY AND DOCUMENTS OF TITLE
TO OR
RIGHTS OVER THE SECURITY
|
| 5.1 |
During
the term of the mortgage, the security shall be placed in custody
of Party
B or its attorney. Party B and its attorney shall keep the security
in
safe custody, be responsible for the maintenance and repair of the
security and keeping the security in good order and condition, and
at any
time allow Party A to examine the
security.
|
The
term
of the mortgage shall mean the period commencing from the effective date of
this
Contract and ending on the date on which the principal and interest of the
Facility and all other relevant expenses under the Credit Facility Agreement
are
paid off.
| 5.2 |
During
the term of the mortgage, Party B shall refrain from any acts that
are
likely to depreciate the value of the security. Should Party B commit
such
act, Party A shall be entitled to demand Party B to stop doing such
act
and restore the value of the security or provide additional security
approved by Party A. Expenses arising from restoration of the value
of the
security or creation of new security shall be borne by Party
B.
|
| 5.3 |
During
the term of the mortgage, Party B shall deliver to Party A the documents
of title to or rights over the security and other relevant certifying
documents. Party A shall keep such documents in safe custody or it
shall
bear the costs of replacement of the documents damaged or lost due
to
improper custody on the part of Party
A.
|
| 6. |
REGISTRATION
OF SECURITY
|
Parties
A
and B shall deliver this Contract and the relevant materials to the registration
authority for registration of the security within 15 days from the execution
date of this Contract.
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| 7. |
INSURANCE
|
| 7.1 |
Party
B shall keep the security insured against such risks as Party A may
require with Shenzhen Branch of China Pacific Property Insurance
Co.,
Ltd., the insurer designated by Party A, for an amount not less than
the
full replacement cost thereof. The insurance policy shall be placed
in the
custody of Party A who shall be named as the first beneficiary therein.
The insurance shall be maintained in full force and effect beyond
the
Availability Period agreed in the Credit Facility Agreement. Whenever
the
Availability Period is extended, Party B shall go through the formalities
to extend the term of the insurance. In case of any damages to the
security insured, Party A shall be given priority to recover the
principal
and interest of the Loans and the advances and all other relevant
expenses
under the Credit Facility Agreement out of the insurance
indemnity.
|
| 7.2 |
Party
B shall extend the term of the insurance on the security if it fails
to
pay off all its debts under the Credit Facility Agreement upon the
expiry
of the Availability Period notwithstanding that the Availability
Period
has not been extended. If Party B fails to extend the term of the
insurance on the security, Party A is entitled to do so on behalf
of Party
B and the expenses arising therefrom shall be borne by Party
B.
|
| 8. |
LIMITATIONS
ON DISPOSAL OF THE SECURITY DURING THE TERM OF THE
MORTGAGE
|
| 8.1 |
During
the term of the mortgage, Party B shall not transfer the security
hereunder by ways of sale, exchange, gift or whatever without
authorization. If Party B is required to transfer the security hereunder
for consideration, it shall be subject to the following
conditions:
|
| 8.1.1 |
Party
B shall obtain written consent from Party A and inform the transferee
of
the mortgage placed on the security to be transferred, otherwise
the
transfer shall be null and void;
|
| 8.1.2 |
Party
B shall, on demand of Party A, provide additional security if the
security
will be transferred at a price far less than its value and the proceeds
from such transfer are insufficient to cover the Facility and all
other
expenses in full; and no such transfer shall be effected if Party
B fails
to do so;
|
| 8.1.3 |
The
proceeds from the transfer of the security shall be deposited directly
in
the bank account designated by Party A for the purpose of payment
or early
payment of the principal and interest of all the Loans or advances
and all
other relevant expenses under the Credit Facility Agreement. After
Party B
has deposited the full amount of the proceeds from the transfer of
the
security in the bank account designated by Party A, Party A may assist
Party B to cancel the registration of the security and return to
Party B
the documents of title to or rights over the
security.
|
| 8.2 |
Without
prior written consent from Party A, Party B shall not transfer, lease
out,
place a second mortgage on the security hereunder or dispose of the
security hereunder in any other improper
manner.
|
| 9. |
All
expenses in connection with matters such as insurance, notarization
and
registration hereunder shall be borne by Party
B.
|
| 10. |
Once
this Contract has taken into effect, neither party shall modify or
terminate this Contract without prior consent of the other party.
This
Contract shall only be modified or terminated upon a written agreement
between the two parties through negotiations. All provisions hereof
shall
remain in force until the said written agreement has been
reached.
|
| 11. |
If
Party B undergoes division or amalgamation during the continuance
of this
Contract, the organization(s) so formed thereafter shall be jointly
or
severally liable for Party B’s obligations hereunder. In the event that
Party B is declared dissolved or bankrupt, Party A shall be entitled
to
dispose of the security prior to the expiry of this
Contract.
|
| 12. |
Party
A may dispose of the security in accordance with the law upon occurrence
of any of the following events:
|
| 12.1 |
any
of the events of default specified in Clause 10.1 of the Credit Facility
Agreement occurs on the part of Party B and Party A exercises the
right of
recourse pursuant to the Credit Facility Agreement and the respective
specific contracts;
|
| 12.2 |
any
of the events of default specified in Clause 10.3 of the Credit Facility
Agreement occurs on the part of Party B, or Party B fails to perform
its
obligations hereunder, constituting default under the provisions
hereof;
|
| 12.3 |
Party
B dies without appointing a successor or
beneficiary;
|
| 12.4 |
Party
B’s successor or beneficiary waives its right of succession or to gift,
and refuses to undertake the obligation to pay the principal and
interest
of loans;
|
| 12.5 |
Party
B winds up its business, has its business licence revoked or cancelled,
has filed or been presented the bankruptcy or dissolution petition
and so
forth;
|
| 12.6 |
the
occurrence of any other matters that would jeopardize the enforcement
of
claims under the Credit Facility
Agreement.
|
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| 13. |
LIABILITY
FOR DEFAULT
|
| 13.1 |
If
Party B violates Clause 5 hereof and fails to maintain and manage
the
security properly, resulting in depreciation of the value of the
security,
or Party B commits any acts that jeopardize the security directly,
resulting in depreciation of the value of the security, and refuses
to
restore the value of the security as required by Party A or provide
additional security acceptable to Party A, Party A shall be entitled
to
dispose of the security lawfully before the expiry of this
Contract.
|
| 13.2 |
If
Party B violates Clause 8 hereof and disposes of the security without
authorization, such disposal shall be null and void. Party A shall
be
entitled to require Party B to stop doing such tortious act immediately,
restore the original security and, where the actual circumstances
so
require, provide other security acceptable to Party A, or Party A
shall be
entitled to dispose of the security lawfully before the expiry of
this
Contract.
|
| 13.3 |
If
Party B conceals the fact that the security is jointly owned, in
dispute,
attached, distrained, leased out or in mortgage, or the fact that
Party B
has no title to and right of disposition over the security, Party
B shall
be liable for the economic losses so incurred to Party
A.
|
| 13.4 |
If
Party B fails to provide additional security on demand of Party A,
Party B
shall pay to Party A a default payment equivalent to 10 % of the
Facility
under the Credit Facility Agreement. Moreover, Party B shall indemnify
Party A against any economic loss arising
therefrom.
|
| 14. |
If
the security is attached or distrained by a People’s court as a result of
Party A's application for enforcement of its right to the security
hereunder due to the fact that the principal and interest of the
Loans and
advances and all other relevant expenses owed to Party A by Party
B have
not been paid on time upon expiry of the Availability Period, Party
A
shall be entitled to, from the date of such attachment or distraint,
receive the natural yields derived from the security and the legal
yields
payable to Party B in respect of the
security.
|
| 15. |
ENFORCEMENT
OF SECURITY
|
| 15.1 |
Upon
occurrence of any one or more of the events prescribed in Clauses
12
hereof, the right to the security may be enforced in the following
ways:
|
| 15.1.1 |
the
security may be converted into money directly or put up for auction
or
sale according to the agreement entered into between Parties A and
B;
|
| 15.1.2 |
the
security may be disposed of in such manner as stipulated in
law.
|
| 15.2 |
Party
A shall be given priority to have its claims satisfied with the proceeds
from the above-mentioned disposal of the security. Any excess of
the
proceeds over the total of the principal and interest of the Loans
and
advances and all other relevant expenses owed by Party B under the
Credit
Facility Agreement, shall be vested in Party B. In case of deficiency,
Party A shall exercise the right of recourse to recover the
deficit.
|
| 16. |
LAPSE
OF RIGHT TO THE SECURITY
|
If
the
principal and interest of the Loans and advances owed by Party B under the
Credit Facility Agreement have been paid off on time upon expiry of the
Availability Period, Party A’s right to the security shall lapse automatically.
Party A shall return to Party B the documents of title or rights or certifying
documents and the insurance policies of the security which are in its custody.
Party A may, at the request of Party B, assist Party B to cancel the
registration of the security.
| 17. |
During
the continuance of this Contract, no relaxation, forbearance or indulgence
by Party A in enforcing any of its interests or rights under the
Credit
Facility Agreement against any events of default or delay of Party
B shall
prejudice, affect or restrict Party A’s interests and rights as creditor
under the relevant laws and regulations and this Contract, nor shall
it
operate as a waiver of Party A’s rights to take actions against existing
or future defaults.
|
| 18. |
APPLICABLE
LAW AND SETTLEMENT OF
DISPUTES
|
| 18.1 |
The
execution, construction and settlement of disputes of this Contract
shall
be governed by the laws of the People’s Republic of
China.
|
| 18.2 |
Any
dispute between Parties A and B in connection with the performance
of this
Contract may be settled by the two parties through negotiations.
In case
no settlement can be reached through negotiations, any of the Parties
may
submit the dispute to the People’s court of the territory where Party A is
located.
|
| 19. |
EFFECTIVENESS
OF THE MORTGAGE CONTRACT
|
This
Contract shall take effect from the date on which the registration of the
security comes into force upon affixing the signatures and official seals by
the
authorized signatories of the two parties. This Contract shall remain effective
until the date on which the principal and interest of all the Loans and advances
and all other expenses owed to Party A by Party B under the Credit Facility
Agreement are settled in full.
| 20. |
This
Contract is executed in 7 counterparts. Party A, Party B, the guarantor
and the registration authority each holds one thereof.
|
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PARTY
A: (OFFICIAL
SEAL)
Shenzhen
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ of China Merchants Bank
AUTHORIZED
SIGNATORY: Lei Li
PARTY
B: (OFFICIAL
SEAL)
Winner
Industries (Shenzhen) Co., Ltd.
AUTHORIZED
SIGNATORY: ▇▇▇▇▇▇▇▇ ▇▇
DATE:
June 27th,
2005
Security
List
Real
properties under the Certificate numbered:
Shen
Fang
Di Zi No. 5000148445
Shen
Fang
Di Zi No. 5000148444
Shen
Fang
Di Zi No. 5000148443
Shen
Fang
Di Zi No. 5000148451
Shen
Fang
Di Zi No. 5000148450
Shen
Fang
Di Zi No. 5000148449
Shen
Fang
Di Zi No. 5000148448
Shen
Fang
Di Zi No. 5000148447
Shen
Fang
Di Zi No. 5000148446
Shen
Fang
Di Zi No. 5000148453
Shen
Fang
Di Zi No. 5000148454
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