Credit Facilities Agreement, dated April 27, 2014, by and between Green Dragon Wood Products Co., Limited and ICICI Bank Limited

Green Dragon Wood Products Company Limited,

Hong Kong

April 29, 2014

 

45/IBGHKG/69189

 

Dear Sirs,

USD 4.0 MILLION CREDIT FACILITIES

ICICI Bank Limited, Hong Kong Branch (the "Bank") is pleased to make available to you the facilities set out in paragraph 3 below, on an uncommitted basis for a period of 12 months from April 27, 2014 (the "Availability Period") and subject to the terms and conditions set out in this Facility Letter. The facilities available to you under this Facility Letter (the "Facilities") are subject to non occurance of any Material Adverse Change, at the Bank's sole discretion.

Notwithstanding anything contained herein, the total amount of the Facilities in the aggregate shall not exceed USD 4.0 million (United States Dollars four million).

 

Green Dragon Wood Products Company Limited, a company incorporated under the laws of Hong Kong having its registered office at Unit 312, 3/F, New East Ocean Centre, 9 Science Museum Road, Kowloon, Hong Kong bearing company no.  709009 (the "Customer" or "you").

 

The provisions of the Bank's General Commercial Agreement (as amended, supplemented or restated from time to time, the "General Commercial Agreement") are incorporated into this Facility Letter to the extent that they are not inconsistent with the terms and conditions of this Facility Letter; in the event of  any inconsistency the provisions in this Facility Letter shall prevail.

Unless otherwise defined in this Facility Letter or where the context otherwise requires, terms defined and references construed in the General Commercial Agreement shall have the same meanings in this Facility Letter and references to this Facility Letter or its terms and conditions include any Appendices to this Facility Letter and the terms and conditions in those Appendices.

 

This Facility Letter, the Bank's General Commercial Agreement, the Security Documents and any other document which the Bank may from time to time require to be completed, executed and/or delivered in connection with the Facilities and which is designated a Facility Document by the Bank shall be the "Facility Documents".

 

 

 

 

(iii) Such other documents as may be required by the Bank.

 

 

5.3  Each LC under the LC Facility shall, at the sole and absolute discretion of the Bank, be available for issuance upon the full satisfaction of the following conditions precedent:

 

(i) the original Parent LC in the form and manner acceptable to the Bank;

 

(ii)  the proceeds of the Parent LC have been assigned in favour of the Bank; and

 

(iii)  any other document as may be required by the Bank, each in form and substance satisfactory to it and in compliance  with all  conditions  as  mentioned  in Annexure A.

 

5.4  The following documents  shall be furnished to the Bank as a condition  precedent to the Facilities being made available:

 

(A) CUSTOMER

 

(i) a certified copy of the constitutional documents of the Customer;

 

(ii)  The countersigned copies of this Facility Letter and the General Commercial Agreement.

 

(iii)  Resolutions of the board of directors of the Customer accepting the Facilities and this Facility Letter and authorising the execution of the Facility Documents to which you are a party, in a form acceptable to the Bank along with the signature specimen of the authorised signatories of the Customer.

 

(iii)  The  Security  Documents  listed  in paragraph  6 (Security  and  support)  below duly executed by the relevant parties thereto

 

(iv)  The Power of Attorney

 

(vi)  a legal opinion confirming the capacity of the Customer to enter into the Facility Documents and enforceability of the Security documents;

6.1 The following security shall be provided (created and perfected) in favour of the Bank, in a form and manner satisfactory to the Bank, to secure the Facilities:

 

 

(i) An exclusive floating charge over the Collection Account and the Cash Margin ("Charge Over Cash").

 

(ii) Assignment of receivables under the Parent LC opened in favour of the Customer from time to time upon receipt of the Parent LC and before the issuance of the LC corresponding to the Parent LC ("Assignment of Receivables").

 

6.2  The Customer shall procure the following contractual comfort in favour of the Bank, in a form and manner acceptable to the Bank:

 

(A) Irrevocable and unconditional  personal guarantee  (the "Guarantee")  from  Mr. Lee Kwok Leung ("Guarantor") residing at Hong Kong.

 

(Documents required to create the above mentioned security and contractual comfort shall collectively be referred to as the "Security Documents").

 

6.3  Where a guarantee or Security is to be provided by a third party, you hereby consent to the Bank releasing to such person a copy or summary of the Facilities or information on your outstanding liabilities, whether actual or contingent, to the Bank and supplying such person with copies of any reminder, demand, and latest statement of accounts showing your outstanding liabilities to the Bank from time to time, and you shall provide the Bank with information concerning your and/or such person's condition and operations, financial or otherwise, as the Bank may from time to time reasonably request.

 

7.  Covenants and Undertakings

 

7.1  The Customer undertakes that as long as any utilisation of the Facilities may be made or the Bank shall have any claim, actual or contingent, against you in respect of the Facilities:

 

(i)  In respect of the financial year most recently ended and each such year ending during the term of the Facilities, the Customer will provide to the Bank, as soon as available but in any event within 6 months after the end of such financial year, sufficient copies of its statutory audited accounts.

 

 

(iii)  The Bank shall have the right to call for the stock audit at its discretion during the Availability Period of the Facilities.

 

(iv)  The proceeds of the Parent LC shall be paid directly to an account (the "Collection Account") without counterclaim, withholding, set-off or condition. The Bank shall use the amounts lying in the Collection Account towards settlement of dues under the Facilities and any amount over and above will be released to the Customer for every transaction. In the event sufficient funds are not available in the Collection Account, then the Customer shall provide the shortfall amount immediately on demand to the Bank.

 

 

(v) The Customer shall  promptly pay  on demand by the  Bank, any demurrage I costs arising as a result of or in connection with any non­ acceptance, non-payment or non-delivery of any documents of title required in relation to any Parent LC or LC and shall indemnify and keep indemnified the Bank to the fullest extent permitted by applicable law, on demand by it, in respect of any claims/losses/liabilities suffered by the Bank in this regard.

 

(vi)  The Customer shall provide an irrevocable power of attorney (the "Power of Attorney") in favour of the Bank from the Customer, authorising the Bank to present documents under each Parent LC and to draw invoices, bills of exchange and any other required documents under each Parent LC.

 

(vii)  The Customer shall ensure that the Charge over Cash and the Assignment of Receivables is perfected, to the satisfaction of the Bank, within 45 days from the date of this Facility Letter. in the event, the Customer is not able to perfect the above mentioned security of Charge over Cash and the Assignment of Receivables, the Customer shall be liable to pay an additional interest at the rate of the US Prime Rate plus 4 percent per annum.

 

8.  OFAC

 

(A)  The Customer acknowledges that the Sanctions may become applicable with respect to the Facility and/or transactions hereunder, including to any documentary credits and/or guarantees issued and/or disbursements and/or payments made by the Bank pursuant to this Facility Letter. Sanctions may pertain inter alia to the purpose and end use of the Facility, goods manufactured in or  originated  from/through  certain countries, shipment from/to/using certain countries, ports, vessels, liners and/or due to involvement of certain  persons and entities (including correspondent banks and the facility office). Consequently, disbursement, issuance, payment and/or processing under the Facility by the Bank may become subjected to the Sanctions and the Bank shall have the unconditional right to refuse to process any  transactions  that violate/may violate any Sanctions.

 

(B)  The Customer agrees to ensure that the transactions entered into pursuant to this Facility Letter do not violate any Sanctions and that no persons, entities or otherwise, currently  subject  to  any Sanctions  are involved in any transactions  hereunder. The Customer agrees that it shall not avail of the Facility or use the proceeds of the Facility in any  transaction with, or for the purpose of financing the activities of, any person currently subject to any Sanctions as aforesaid.

 

(C) The Customer hereby agrees to indemnify and hold harmless the Bank, to the fullest extent permitted by applicable law, for all losses and liabilities (including due to claims by a third party), incurred by the Bank as a result of any breach by the Customer of the Customer representations and undertakings contained herein pertaining to the Sanctions and/or due to any action taken by the Bank pursuant to the Sanctions. No action taken by the Bank pursuant to this Facility Letter, including grant of the Facility, issuance of any financial instruments thereunder or processing of any payments or transactions, nor any action taken by the Customer in relation thereto, shall be deemed to be a waiver of any of the Bank's rights under any provisions of this Facility Letter related to the Sanctions nor shall they act to relieve the Customer of the Customer's obligations or liabilities in relation thereto.

9.  RBI Declaration

 

(A) No director, managing agent, manager, employee of the Customer or of a subsidiary or holding company of the Customer, or of a guarantor, if any, on behalf of the Customer is a director of the Bank and no director of the Bank holds substantial interest in the Customer or subsidiary or holding company of the Customer.

 

(B) Except to the extent disclosed none of the directors of the  Customer,  is a director of a banking company (as defined under the Banking Regulation Act, 1949 of India) or specified near relation (as specified by RBI) of a director of a  banking company or a near relative of any senior officer of the Bank.

 

(A)  The Bank reserves the unconditional right to  cancel  the  limits  advanced/  to  be advanced under the Facility Documents (either fully or partially) without giving any prior notice to the Customer, on the occurrence of any one or more of the following:

 

(i)  in case the limits/part of the limits are not utilised by the Customer; or

 

 

For the purpose of this clause, Deterioration in the Creditworthiness shall mean and include without  limitation, the following events:

 

(a)  downgrade of the rating of the Customer by a Credit Rating Agency;

 

 

 

 

 

(B)  The Customer unconditionally agrees, undertakes to get itself rated by Credit Rating Agency/ies within a period of six months and/or at such intervals as may be decided by the Bank, failing which the Bank shall have the right to review the applicable interest rate and/or costs, charges and expenses, which shall be payable by the Customer/Guarantor and on such date/s or within such period as may be specified by the Bank.

 

"Credit Rating Agency" shall mean and refer to the domestic credit rating agencies such as Credit Analysis and Research Limited, CRISIL Limited, FITCH India and ICRA Limited and international credit rating agencies such as Fitch, Moodys and Standard & Poor's and such other credit rating agencies identified and/or recognized by the Reserve Bank of India from time to time.

 

11.1 If it becomes unlawful in any jurisdiction for  the Bank to perform any of its obligations as contemplated by this Facility Letter and/or or to maintain its participation in any LC and/or to maintain the BP/BD Facility:

 

 

(B)  upon the Bank notifying the Customer, all commitments of the Bank under the Facilities will be immediately cancelled and the Bank shall not be obliged to continue to maintain the Facilities, to issue any further LCs and/or to disburse any funds under any bills; and

 

(C) the Customer shall on the date specified by the Bank in the notice delivered to the Bank (being no later than the last day of any applicable grace period permitted by law) repay all amounts outstanding under the Facilities to the Bank.

 

Where illegality has affected any LCs already issued, the aforesaid provisions shall apply mutatis mutandis, provided however that, the Customer shall take all action necessary to immediately discharge the respective LCs as directed by the Bank and/or shall promptly provide to the Bank security over cash collateral/term  deposits equivalent to the liability (actual or contingent, as the case may be) of the Bank under all outstanding LCs, in a form and manner satisfactory to the Bank, at the cost of the Customer.

 

12.  Material Adverse Change

 

12.1  "Material Adverse Change" shall mean and include:

 

 

 

 

Subject to Clause B below, if LIBOR is to be determined by reference to the Reference Banks but a Reference Bank does not supply a quotation by the 11.00 am (London time) on the Quotation Day, the applicable LIBOR shall be determined on the basis of the quotations of the remaining Reference Banks.

"Business Day" shall mean a day (other than Saturday or Sunday) on which banks are open for general business in Hong Kong (and additionally in respect of determination of LIBOR, in London)

 

"LIBOR" means, in relation to any period for which an interest rate is to be determined, ICE Benchmark Administration Limited (or any other person which takes over the administration of that rate) for the relevant currency for that period (or, if no rate is available for that period, an interpolated rate interpolating on a linear basis between the rate available for the longest period which is less than that period and the rate available for the shortest period which exceeds that period) as displayed on the applicable Reuters screen at or about 11.00 a.m. London time two Business Days before the start of that period provided that:

"Quotation Day" shall mean in relation to any period for which an interest rate is to be determined, two Business Days unless market  practice differs in the Relevant Interbank Market in which case the Quotation Day will be determined by the Bank in accordance with market practice in the Relevant Interbank Market (and if quotations would normally be given by leading banks in the Relevant Interbank Market on more than one day, the Quotation Day will be the last of those days).

 

"Reference Banks" shall mean any two or more correspondent banks of the Bank as determined by it from time to time.

Without prejudice to the generality of clause 1 (Repayment) of the General Commercial Agreement, the Facilities are repayable on demand and the Bank may (and you acknowledge and accept that the Bank may), at any time and without having to give any reason, terminate the Facilities and demand immediate repayment in full of all outstanding amounts under the Facilities and require you to pay to the Bank such sums as the Bank shall specify as being necessary to cover any future or contingent liabilities under the Facilities, and upon such demand being made by the Bank such amounts and sums shall be due and payable by you without further notice from the Bank. Such right may be exercised whether or not an Event of Default has occurred. All principal amounts shall be paid together with accrued interest, commission, discount and other bank charges (if any).

 

15.1 This Facility Letter may be executed in any number of counterparts and this has the same effect as if the signatures on the counterparts were on a single copy of this Facility Letter.

 

16.  Governing Law and submission to Jurisdiction

 

16.1  This Facility Letter shall be governed by and construed in all respects in accordance with the laws of Hong Kong.

 

16.2  Subject to paragraph 16.3, the parties irrevocably agree that the courts of Hong Kong shall have exclusive jurisdiction in relation to any legal action or proceedings arising out of or in connection with this Facility Letter ("Proceedings") and waive any objection to Proceedings in  such courts on the grounds of venue or on the grounds that Proceedings have been brought in an inappropriate forum.

 

16.3  The parties agree that paragraph 16.2 operates for the benefit of the Bank and accordingly the Bank shall be entitled to take Proceedings in any other court or courts having jurisdiction.

 

 

 

 

 

 

Please note that section 83 of the Banking Ordinance imposes on the Bank certain limitations on advances to persons (including firms, partnerships and companies) related to its directors, employees with lending authority or controllers (each person so related shall be referred to as a "Related Person"). When acknowledging and accepting this facility letter, you should advise us if you are, or any of your directors, shareholders, partners or managers is, a Related Person within the meaning of the Banking Ordinance. If subsequent to your acceptance of this facility letter, you become, or are aware that any of your directors, shareholders, partners or managers is or becomes, a Related Person, you should immediately advise us in writing.

 

 

Please sign (and, if applicable, arrange for each Security Party to sign) and return to the Bank the duplicate copy of this Facility Letter.

 

Unless the Bank receives duplicate copy of this Letter, duly signed in token of acceptance, within 30 days from the date of this Letter and unless agreements / documents are signed / executed in respect of the Facilities within 60 days from the date of this Letter, the Offer shall automatically lapse without any further communication from the Bank, unless the validity of the Offer is expressly extended I revived by the Bank in writing.

I (We) hereby agree to the terms of this Facility Letter and all other Facility Documents to which I am (we are) party and confirm that I (we) accept and are bound by all the terms hereof and thereof. I (We) further confirm that all documents including Security Documents (other than any previous facility letter) executed in favour of the Bank prior to this Facility Letter remain effective and apply to and shall secure and/or govern my (our) liabilities in relation to the Facilities.

The issuance of any LC under the LC Facility and any other disbursement under the Facilities is subject to all of the following additional terms and conditions being complied with by the Customer/being procured by the Customer, to the satisfaction of the Bank:

 

 

Shipment: Last date of shipment of the LC shall be prior to or same as that of the Parent LC;

Unit Price: Unit Price of the LC shall be equal to or lower than that of the Parent LC.

 

 

 

 

(f)   The Parent LC shall only be advised through the Bank and the Parent LC should also allow the Bank to confirm the Parent LC.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(bb)Any other additional terms and conditions as specified by the Bank from time to time or for issuance of any particular LC