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EXHIBIT 10.1

 

 

 

­­­­­­

Dated August17, 2009

between

Guangzhou Termbray Electronics Technology Co., Ltd

as Borrower

and

China Construction Bank Guangzhou Economic and Technological

Development District Branch

as Lender

CREDIT FACILITY CONTRACT

 
　　

 
 

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This Credit Facility Contract (the “Contract”) is entered into
 
BY AND BETWEEN
 
Guangzhou Termbray Electronics Technology Co., Ltd, located at 888 Jiu Fu West
Road, Jiu Long Town, Luo Gang District, Guangzhou P.R.C. 510555 with Mr. Daniel
J. Weber as its legal representative (or principal officer) and its fax number
020-8781-1571 and its telephone number 020-8749-0139 (“Party A”);

and

CHINA CONSTRUCTION BANK Guangzhou Economic and Technological Development
District BRANCH, located at 302 Zhi Cheng Ave. Guangzhou Economic and
Technological Development District, Guangzhou P.R.C. 510730 with Mr. Qili Li as
its principal officer and its fax number being 020-822-1427 and its telephone
number being 020-8222-427 (“Party B”).

WHEREAS
 
(1)  
Party A wishes to apply to Party B for credit facilities, and Party B agrees to
grant to Party A such credit facilities.

 
(2)  
NOW THEREFORE upon consultation in accordance with applicable laws and
regulations, both parties hereto agree as follows:

 
1.  
CREDIT FACILITY

 
1.1  
Party B shall provide to Party A a credit facility in an amount up to RMB
200,000,000 (the “Credit Facility”).

 
 
The Credit Facility referred hereto is the maximum available principal amount of
the RMB loans that may be granted by Party B to Party A at any specific time
within the Availability Period.  Party A may utilize the Credit Facility within
the Availability Period on a revolving basis.  Regardless of the number of
drawdowns and the amount of each loan, Party A may make consecutive applications
for loans as long as the total amount of the unpaid principal hereunder does not
exceed the Credit Facility; provided, however, that the aggregate of the loan
amount Party A is applying for and the loan amount that remains unpaid by Party
A hereunder may not exceed the Credit Facility.

 
 
The Credit Facility loan referred hereto means any loan drawn by Party A
utilizing the Credit Facility pursuant hereto.

 
2.  
AVAILABILITY PERIOD OF CREDIT FACILITY

 
2.1  
The availability period of the Credit Facility shall commence on date of signing
of this Contract and end on June 30, 2010 (the “Availability Period”). The
expiration date of each loan drawn during the Availability Period shall not be
subject to the expiration of the Availability Period.

 
 
When the Availability Period expires, any Credit Facility which has not been
utilized shall be cancelled automatically.

 
 
The term of each individual loan means the period commencing on the drawdown
date of such loan and ending on the agreed repayment date.

 
3.  
UTILIZATION OF CREDIT FACILITY

 
3.1  
During the Availability Period, Party A may make application for a loan as
needed within the limit of the Credit Facility. The parties shall undergo
relevant procedures.  The Drawdown Notification for each loan shall govern the
amount, interest rate, term and purpose of such loan.

 
3.2  
If a security provider has performed its security obligations in accordance with
a security contract, the Credit Facility shall be reduced by an amount equal to
the principal amount with respect to which the security provider has performed
such security obligations.

 
3.3  
The amount of loan that Party A applies for each time shall be not less than RMB
5000,000 and the tenor shall be not less than 10 days or more than 12 months.

 

                                                                 
 
 

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4.  
INTEREST RATE ON THE LOAN, DEFAULT INTEREST RATE, INTEREST CALCULATION AND
SETTLEMENT

 
4.1  
Interest Rate on the Loan ( the “Loan Rate”)

 
The interest rate on each loan hereunder shall be an annual rate and shall be 10
% below (the “Floating Percentage”) of the Base Rate. The Loan Rate shall,
during the period between the date when interest commences to accrue (the
“Interest Commencement Date”) and the date when all the principal amount and
interest accrued thereon have been fully repaid, be adjusted once every month in
accordance with the Base Rate on the interest rate adjustment date and the
Floating Percentage. The interest rate adjustment date shall be a date
corresponding to the Interest Commencement Date in the month when such interest
rate is adjusted. If there is no such a date corresponding to the Interest
Commencement Date in such month, interest rate adjustment date shall be the last
day of such month.
 
4.2  
Default Interest Rate

 
The default interest rate on each loan hereunder shall be calculated as follows:
 
(1)  
If Party A does not use the loan amount hereunder for purposes as agreed
(“Misappropriation”), the penalty interest rate on such loan amount shall be 50%
above the Loan Rate. If the Loan Rate is adjusted according to Article 4.1
hereof, the default interest rate shall be adjusted in accordance with the
adjusted Loan Rate and the upward floating  percentage set out in this Article
4.2(1).

 
(2)  
The default interest rate on overdue loan amount shall be 30% above the  Loan
Rate. If the Loan Rate is adjusted according to Article 4.1 hereof, such default
interest rate shall be adjusted in accordance with the adjusted Loan Rate and
the upward floating percentage set out in this Article 4.2(2).

 
(3)  
If Misappropriation and overdue payment occur concurrently, the default interest
shall be calculated and compounded in accordance with the higher of the two
default interest rates provided for in Articles 4.2(1) and 4.2(2) herein.

 
4.3  
At the time of drawdown of each individual loan, the parties may agree on the
Loan Rate and default interest rate in the Drawdown Notification, or may
otherwise opt to use the Loan Rate and the default interest rate provided
herein. If the parties fail to reach agreement regarding the interest rate,
Party B has the right to refrain from releasing such loan.

 
4.4  
In the event the Loan Rate or the default interest rate stipulated in the
drawdown notice is different from those provided herein, the rate stipulated in
the Drawdown Notification shall prevail.

 
4.5  
The Interest Commencement Date provided in Article 4 refers to the date on which
the principal of each individual loan have been deposited into the bank account
designated by Party A.

 
4.6  
The Base Rate provided in Article 4 means the lending interest rate quoted by
the People’s Bank of China (the “PBOC”) for loans with the same tenor and within
the same category. If the PBOC no longer publishes such lending interest rate,
the Base Rate shall mean, unless agreed otherwise between the parties, the
lending interest rate with the same tenor and within the same category generally
accepted by the banking industry or an interest rate commonly used for a loan
with the same tenor and within the same category.

 
4.7  
The loan interest shall commence to accrue as of the date when the proceeds of
such loan have been deposited into the bank account designated by Party A.
Interest on the loan shall be computed daily with the daily interest rate equal
to 1/360 of the annual interest rate. If Party A fails to pay interest on the
interest settlement date as provided herein, the interest shall be compounded as
of the date immediately following the applicable interest settlement date.

 
4.8  
Interest Settlement

 
4.8.1  
For a loan subject to a fixed interest rate, the interest accrued thereon shall
be calculated in accordance with the agreed fixed interest rate. For a loan
subject to a floating interest rate, the interest accrued thereon shall be
calculated in accordance with the interest rate determined for each interest
rate floating period. If the interest rate has been adjusted more than once
during a single interest settlement period, the interest during each interest
rate floating period shall be calculated first and the total interest accrued
during such interest settlement period shall be the aggregate amount of all the
interest accrued during each interest rate floating periods within such interest
settlement period.

 
4.8.2  
The interest accrued on the loans hereunder shall be settled in accordance
with  (2) of the following:

 
(1)  
on a monthly basis and the interest settlement date shall be the 20th day of
each month;

 
(2)  
on a quarterly basis and the interest settlement date shall be the 20th day of
the last month of the relevant quarter;

 
(3)  
other method: ___________________[Intentionally Left Blank]

 
5.  
FACILITY ADMINISTRATION FEE

 
 
5.1    Party A shall pay Party B a facility administration fee in an amount of
Zero within ______ [Intentionally Left Blank] working days after the execution
of the Contract.

 
6.  
ADVANCE AND DRAWDOWN

 
6.1  
Application for Drawdown

 
If Party A plans to draw any amount under the Contract, it shall submit a
application for drawdown to Party B in advance. In particular, the application
for drawdown of an individual loan in an amount exceeding RMB10,000,000 shall be
submitted five working days in advance.  Party B shall decide whether to advance
such loan to Party A within three working days after receiving Party A’s
application  for drawdown.
 
6.2  
Conditions Precedent to Advance

 
Unless Party B waives all or part of the following conditions, Party B shall not
be obligated to advance any loan unless the following conditions continuously
remain satisfied:
 
(1)  
Party A has completed all the approval, registration, delivery, insurance and
other statutory procedures in relation to the loans hereunder;

 
(2)  
the security has become and remains effective, if a security is established for
the Contract;

 
(3)  
Party A has opened the bank accounts for drawdown and debt service purposes as
Party B requests;

 
(4)  
Party B has received and approved Party A’s drawdown application after review
thereof;

 
(5)  
Party A has paid to Party B the facility administration fee  if required
hereunder;

 
(6)  
Party A has not triggered any event of default hereunder or any event that may
adversely impact Party B’s rights as a creditor;

 
(7)  
the advance to be made by Party B is not prohibited or restricted by any laws,
regulations, rules or competent authorities; and

 
(8)  
other conditions ___________________[Intentionally Left Blank].

 
7.  
REPAYMENT

 
7.1  
General Principles for Repayment

 
Party B has the right to apply Party A’s repayment first towards  payment of any
expenses which shall be borne by Party A as provided hereunder but has been
advanced by Party B and the expenses incurred by Party B for realizing its
creditor’s rights. Party B shall apply the balance of such repayment in the
order of interest first and then principal adhering to the principle that the
interest shall be fully repaid concurrently with the repayment in full of all
the principal amounts.
 
If for any loan the principal has become overdue for more than ninety days, or
the interest has become overdue for more than ninety days, or as otherwise
provided by the laws, regulations or rules, Party B may first apply Party A’s
repayment towards those expenses set out in the first paragraph of this article.
Then Party B may apply the balance of such repayment towards payment in the
order of principal first and then interest.
 
7.2  
Payment of Interest

 
Party A shall pay due interest to Party B on the interest settlement date. The
first interest payment date shall be the first interest settlement date after
the advance of a loan. All the interest and principal amounts outstanding shall
be paid in full on the last repayment date.
 
7.3  
Schedule for Repayment of the Principal

 
Party A shall repay the principal amounts in accordance with the repayment
schedule set forth in the relevant drawdown notice.
 
7.4  
Repayment Method

 
Party A shall deposit sufficient amount into its bank account at Party B before
the repayment date provided hereunder and transfer such amount to repay the loan
(Party B may also debit such amount from such account to repay the loan), or
transfer such amount from another bank account of Party A to repay the loan.
 
7.5  
Prepayment

 
Party A may prepay the principal in full or in part upon approval by Party B of
a written application submitted to Party B ___ [Intentionally Left Blank]
working days in advance.
 
The interest accrued on the principal to be prepaid shall be calculated on the
basis of the actual number of days lapsed and the Loan Rate provided in Article
4 hereof.
 
Where Party B approves the prepayment by Party A, Party B has the right to
charge Party A a compensation fee in an amount to be determined in accordance
with the (1) of the following methods:
 
(1)  
compensation fee=amount of the principal prepaid × number of  months remaining
until the scheduled repayment date(the “Remaining Period”)× 0%; provided,
however, that the part of the Remaining Period that falls short of a month shall
be calculated as a full month; or

 
(2)  
_____________________________[Intentionally Left Blank].

 
If Party A is obligated to repay the loan in installments and prepay part of the
principal, the prepaid amount shall be applied in the reverse order of the
repayment schedule. After partial prepayment, the outstanding loan shall still
be subject to the Loan Rate provided herein.
 
8.  
PARTY A’S RIGHTS AND OBLIGATIONS

 
8.1  
Party A’s Rights

 
Party A has the rights to:
 
(1)  
apply to Party B for drawing the loan in accordance with this Contract;

 
(2)  
utilize the loans for the purposes provided for hereunder;

 
(3)  
require Party B to keep confidential the relevant financial information and
manufacturing and operating trade secrets furnished by Party A except provided
otherwise by law, regulations and rules, or required otherwise by the competent
authorities, or agreed otherwise between the both parties;

 
(4)  
reject Party B or its employees asking for bribes; it has the right to lodge
complaint with the competent authority about such misconduct and any other act
of Party B that may violate the laws and regulations relating to the lending
interest rate and service charges.

 
8.2  
Party A’s Obligations

 
(1)  
Party A shall draw the loans and repay the principal and interest in full and
bear the expenses and fees in accordance with this Contract;

 
(2)  
Party A shall provide its financial, manufacturing and operating information as
the Party B requests.  Party A shall provide to Party B the quarterly balance
sheet and the profit and loss statement (or the income and expenditure
statement, if Party A is a public institution) on or before the 15th working day
of the first month of each subsequent quarter, and shall provide the annual cash
flow statement at the end of each year in a timely fashion. Party A shall be
responsible for the accuracy, completeness and validity of the information it
provides, and shall not provide false information or conceal material facts with
respect to its financial and operation status;

 
(3)  
In case of any change in Party A’s name, legal representative (or principal
officer), registered address, business scope, registered capital, articles of
association or any other registration with industrial and commercial authority,
Party A shall notify Party B in writing of the same and shall provide relevant
documents within ten (10) working days thereafter;

 
(4)  
Party A shall utilize the loans in accordance with the purposes as provided
herein, and shall not misappropriate the loans, or utilize the loans to carry
out any transactions in violation of the laws and regulations. Party A shall
cooperate with Party B in its inspection of Party A’s manufacturing, operating
and financial activities and utilization of the loans herein. Party A shall not
try to evade its repayment obligations owing to Party B by means of withdrawing
capital it has injected, transferring assets or entering into related-party
transactions. Further, Party A shall not attempt to obtain loans or credit
facilities from Party B by using dummy contracts with its related parties or by
pledging such rights as notes receivable or accounts receivable without actual
underlying transactions or by applying to Party B for discounting the same;

 
(5)  
Party A shall comply with the regulations relating to environmental protection,
if the loans hereunder shall be utilized for manufacturing or project
construction;

 
(6)  
Without Party B’s consent, Party A shall not mortgage or pledge any assets
acquired by utilizing the loans hereunder for the benefit of a third party
before full repayment of the principal and interest accrued thereon;

 
(7)  
If Party A qualifies as a group customer, it shall promptly report to Party B
any related-party transactions involving more than 10% of Party A’s net assets,
including (1) the relationship between parties to such transaction; (2) the
transaction and its nature ; (3) the transaction amount or the relevant ratio;
and (4) pricing policy (also applicable to the transactions with no price or
merely nominal price);

 
(8)  
If the loans available hereunder are for fixed assets or project financing,
Party A shall ensure that the proposed projects have been approved by the
competent governmental authorities, there be nothing in violation of laws or
regulations, the capital or other funds available be fully put in place in
accordance with the timetable and proportion as provided, and the project
milestones be achieved as scheduled.

 
9.  
PARTY B’S  RIGHTS AND OBLIGATIONS

 
9.1  
Party B is entitled to request Party A to repay the principal, interest accrued
thereon and expenses when due. Party B may exercise any other rights hereunder
and demand Party A to perform any other obligations hereunder.

 
9.2  
Party B shall advance the loans as provided herein unless the delay in advancing
the loan is caused by any reason attributable to Party A or any other reason
that can not be attributed to Party B.

 
9.3  
Party B shall keep confidential the relevant financial documents and
manufacturing and operating trade secrets furnished by Party A, except otherwise
provided by the laws, regulations and rules, or required by the competent
authorities, or agreed between the parties hereto.

 
9.4  
Party B shall not bribe Party A or its employees, nor request any bribe or
accept any bribe offered by Party A.

 
9.5  
Party B shall not engage in any activity which is dishonest or will be
detrimental to Party A’s lawful interest.

 

                                                                 
 
 

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10.  
DEFAULT AND REMEDY

 
10.1  
Event of Default by Party B and Liabilities

 
(1)  
If Party B does not advance any loan as provided herein without justifiable
reason, Party A may request Party B to advance such loan in accordance with the
Contract.

 
(2)  
If Party B charges any interest or fee which is prohibited by the laws or
regulations, Party A may request Party B to refund such interest or fee charged.

 
10.2  
Event of Default by Party A

 
The events of default by Party A shall include:
 
(1)  
Party A breaches any statutory obligation or any contractual obligation
hereunder; and

 
(2)  
Party A has repudiated its obligations hereunder expressly or by its conduct.

 
10.3  
Events that may Adversely Impact Creditor’s Rights

 
(1)  
the occurrence of any of the following events which Party B believes may
adversely impact its creditor’s rights:

 
contracting, trustee(receiver) appointed, lease, shareholding restructuring,
decrease of its registered capital, investment, joint operation, mergers and
acquisitions, acquisition and restructuring, division, joint venture, applying
for (or subject to an application for) temporary cessation of operation or
dissolution, revocation, applying for (or  subject to an application for)
bankruptcy, change of controlling shareholders/actual controllers, transfer of
material assets, suspension of production or operation, significant penalty
imposed by competent authorities, cancellation of registration, revocation of
business license, involvement in material legal proceedings, severe
deterioration in operation and financial condition, legal
representative/principal officer being unable to perform their duties;
 
(2)  
the occurrence of any of the following events which Party B believes may
adversely impact its creditor’s rights:

 
Party A fails to repay any other due debts, including such debts owed to any
other branch or organization of China Construction Bank or to any other third
party; Party A transfers assets at a low price or for free; Party A relieves or
waives any debt of a third party; Party A fails to exercise its creditor’s
rights or any other rights; or Party A provides security for a third party;
 
(3)  
Party A’s shareholder manipulates the independence status of Party A as a legal
person or the limited liability status of the shareholder in order to evade
debts, and Party B believes this manipulation may adversely impact its
creditor’s rights;

 
(4)  
any of the conditions precedent to advance loans has not been satisfied
continuously;

 
(5)  
the occurrence of any of the following events upon the guarantor which Party B
believes may adversely impact its creditor’s rights:

 
(i)  
the guarantor breaches any provision of  the guarantee contract, or any of the
representations and warranties it has made proves to be false, wrong or
incomplete;

 
(ii)  
contracting, trustee(receiver) appointed, lease, shareholding restructuring,
decrease of its registered capital, investment, joint operation, mergers and
acquisitions, acquisition and restructuring, division, joint venture, applying
for (or subject to an application for) temporary cessation of operation or
dissolution, revocation, applying for (or subject to an application for)
bankruptcy, change of controlling shareholders/actual controllers, transfer of
material assets, suspension of production or operation, significant penalty
imposed by competent authorities, cancellation of registration, revocation of
business license, involvement in material legal proceedings, severe
deterioration in operation and financial condition, legal
representative/principal officer’s inability to perform their duties, which may
adversely impact its capability as a guarantor;

 
(iii)  
other events in which the guarantor has lost or may lose its capability as a
guarantor;

 
(6)  
the occurrence of  any of the following events in relation to the mortgage or
pledge which Party B believes may adversely impact its creditor’s rights:

 
(i)  
the mortgaged or pledged property is damaged, destroyed or its value is reduced
as a result of a third-party’s action, or of requisition, confiscation, eminent
domain revocation or redevelopment and relocation by the government, or of
market change or any other reason;

 
(ii)  
the mortgaged or pledged property has been seized, impounded, frozen,
transferred, put on lien, sold by auction or subject to custody of authorities,
or a dispute has arisen over the ownership of the mortgaged or pledged property;

 
(iii)  
the mortgagor or pledgor breaches any provision of  the mortgage/pledge
contract, or any of the representations and warranties it has made proves to be
false, wrong or incomplete;

 
(iv)  
other events that may endanger Party B’s rights in relation to the mortgage or
pledge;

 
(7)  
the security is not effected, becomes ineffective, invalid, or is rescinded or
terminated, or the security provider defaults or repudiates its obligations
expressly or by conduct, or the security provider has lost its capability to
perform its obligations as a security provider in whole or in part, or the value
of the collateral decreases, which Party B believes may adversely impact its
creditor’s rights; or

 
(8)  
other events which Party B believes may adversely impact its creditor’s rights.

 
10.4  
Party B’s Remedies

 
Upon occurrence of any event under Article 10.2 or 10.3, Party B may exercise
one or more of the following rights:
 
(1)  
to stop advancing the loans;

 
(2)  
to declare all the loans immediately due and payable, and request Party A to
repay immediately all the due and undue principal, interest and fees;

 
(3)  
to adjust correspondingly, cancel or terminate Party A’s Credit Facility, or to
adjust the Availability Period;

 
(4)  
if Party A utilizes any part of the loans for any purpose other than as provided
herein, interest on the misappropriated  amount shall be calculated and
compounded for the period from the date of the misappropriation to the date when
all the principal and interest have been fully paid in accordance with the
relevant default interest rate and the interest settlement method as provided
herein;

 
(5)  
if any principal is overdue,  the interest on such principal and on any overdue
interest (including whole or part of the principal and interest which has been
accelerated), shall be calculated and compounded for the period from the date
such loan becomes overdue to the date when all the principal and interest have
been fully paid, in accordance with the relevant default interest rate and the
interest settlement method as provided herein;

 
“Overdue” herein means that Party A fails to repay the loans on the repayment
date or, in case of repayment in installments, fails to repay the relevant loans
in accordance with the repayment schedule as provided herein.
 
Before any principal is overdue, the overdue interest shall be compounded in
accordance with the interest rate and the interest settlement method as provided
herein;
 
(6)  
other remedies, including but not limited to:

 
(i)  
to debit Party A’s accounts at China Construction Bank in RMB or other
currencies with corresponding amount without prior notice to Party A;

 
(ii)  
to request Party A to provide new security satisfactory to Party B for the debts
of Party A hereunder;

 
(iii)  
to terminate the Contract.

 
11.  
MISCELLANEOUS

 
11.1  
Cost Allocation

 
Unless otherwise agreed by the parties, the expenses in association with the
legal service, insurance, valuation/appraisal, registration, custody,
authentication and notarization arising in connection with the Contract or the
security relating to the Contract shall be borne by Party A.
 
All the expenses incurred by Party B regarding realization of its creditor’s
rights, such as court fees, arbitration fees, property preservation fees, travel
expenses, enforcement expenses, valuation/appraisal fees, auction fees, notary
fees, service fees, public announcement costs, attorney’s fees, etc, shall be
borne by Party A.
 
11.2  
Use of Party A’s Information

 
Party A agrees that Party B is entitled to inquire about Party A’s
creditworthiness with the Credit Database or relevant authorities established or
approved by the People’s Bank of China and the Credit Reference Agency, and that
Party B is entitled to provide Party A’s information to such Credit
Database.  Party A further agrees that Party B may reasonably use and disclose
Party A’s information for business purpose.
 
11.3  
Collection by Public Announcement

 
In the event that Party A fails to repay on time any principal or interest or
breaches any other contractual obligations hereunder, Party B is entitled to
report to relevant authorities and demand repayments by means of public
announcement via press.
 
11.4  
Party B’s Record as Evidence

 
Unless there is reliable and definitive evidence to the contrary, Party B’s
internal records of principal, interest, expenses and repayment, the receipts,
vouchers made or retained by Party B during the course of drawdown, repayment
and interest payment, and records and vouchers relating to the collections by
Party B shall constitute valid evidence of the creditor-debtor relationship
between the two parties. Party A shall not raise any objection merely because
the above records, receipts, vouchers are made or retained by Party B.
 
11.5  
No Waiver

 
Party B’s rights hereunder shall not prejudice or exclude any other rights Party
B is entitled to under applicable laws, regulations and other contracts.  No
forbearance, extension of time limit, preferential treatment or delay in
exercising any right hereunder shall be deemed to constitute a waiver of rights
and interest hereunder or permit or recognition of any breach of the
Contract.  Nor shall it restrict, prevent or interfere with the continuous
exercise of such right at a later time or any other right, nor shall the
foregoing cause Party B to be liable in any way to the Borrower.
 
11.6  
If Party A owes Party B any other due and payable debts in addition to the debts
hereunder, Party B may debit any of Party A’s account at China Construction Bank
in RMB or other currencies and may choose to repay any of the due and payable
debts in the order it deems appropriate. Party A agrees not to raise any
objection with respect thereto.

 
11.7  
In the event of any change to its address or other contact information, Party A
shall promptly notify Party B of such change in writing.  Party A shall be
liable for any loss caused by its failure of giving prompt notice of such
change.

 
11.8  
The applications for drawdown, the drawdown notifications, other vouchers and
any other legal documents which underlie the creditor-debtor relationship
hereunder shall constitute integral parts of the Contract.

 
11.9  
Direct Debit Right

 
Party B is entitled to debit, without prior notice to Party A, any account of
Party A at China Construction Bank in RMB or other currencies to pay all amounts
payable under the Contract. Party A shall assist Party B to complete any
procedures for foreign exchange settlement or sale, and Party A shall bear the
risk of exchange rate fluctuation.
 
11.10  
Dispute Resolution

 
After signing of this Contract, the Parties will go to the Notary Public to
execute an enforceable letter of execution. If Party A fails to repay the
principal, interest and relevant expenses within the period agreed, Party A
agrees that Party B may apply for execution to the People’s Court with the
Notarized letter of execution. No matter whatever assets as the enforced subject
is involved, Party A agrees that Party B may enforce the execution and waive any
defense rights.
 
If the dispute arises from cause other than the foregoing execution letter, such
dispute shall be submitted to the People’s court within the jurisdiction where
Party B is located.
 
The provisions hereunder not subject to the dispute shall remain enforceable
during the process of litigation.
 
11.11  
Effectiveness of the Contract

 
 
         The Contract shall become effective upon:

 
(i)  
execution by the legal representative/(principal officer) or authorized
representative of Party A and the Contract being affixed with the company chop
of Party A; and

 
(ii)  
execution by the principal officer or authorized representative of Party B and
the Contract being affixed with the company chop of Party B.

 
11.12  
The Contract shall be executed in six (6) counterparts.

 
11.13  
Other Provisions agreed herein

 
Notwithstanding any deficiency from the terms elsewhere in this Contract, such
terms will be amended as and governed by the terms as follows:
 
(1)  
Article 1 shall be amended as follows:

 
a.  
add “and Foreign Currency loans” after “RMB loans” in the first sentence of the
second paragraph;

 
b.  
add “if Party A apply for RMB loans” at the end of the second sentence;

 
c.  
add as the last paragraph as follows:

 
“Upon Party A’s choice, Party A may utilize the Credit Facility for working
capital loans or import & export trade financing.”
 
(2)  
In Article 3.1 change “The parties shall undergo relevant procedures” to “the
parties shall undergo relevant procedures according to provisions of Article 6
herein;

 
(3)  
The first sentence of Article 4.1 is amended read to as follows:

 
The interest rate on each loan hereunder shall be an annual rate: (1) in terms
of individual RMB Loans the annual interest rate shall be 10 % below (the
“Floating Percentage”) of the Base Rate; (2) in terms of foreign currency loans,
the first drawdown before Sept. 30, 2009 in the principal of USD 10,000,000 will
apply the interest rate LIBOR plus 50 basis points; or (3) for the part of
foreign currency loan beyond USD 10,000,000 or drawdown after Sept. 30, 2009,
the interest rate will be the rate mutually agreed by the parties when Party A
applies for advance; (“Loan Interest Rate”)
 
(4)  
Amend Article 4.3 as follows:

 
Add “If Party A plans to draw RMB Loan,” in the beginning of the first sentence;
and add the following after the last sentence: “ If Party A draw USD Loans, the
first drawdown will apply Loan Interest Rate provided in the Article 4.1 herein
and the Default Interest Rate provided in Article 4.2 herein. Other drawdowns of
USD within the Credit Facility shall apply the Loan Interest Rate and Default
Interest Rate mutually agreed by the parties in the separate Loan Agreement when
Party A apply to draw the loan”.
 
(5)  
At the end of Article 6.2.(4) add the following words:

 
If the aforesaid at drawdown application conforms to the provisions of this
Contract and Party B’s loan policy, Party B is prohibited from refusing to
release such drawdown;
 
(6)  
 Replace the first sentence of Article 7.5 as follows:

 
Party A may prepay the principal in full or in part with written notice to Party
B five (5) working days in advance.
 
(7)  
Delete the content of Article 8.2.(7);

 
(8)  
Delete the wording “or any other reason that can not be attributed to Party B”
in Article 9.2.

 
(9)  
 Amend Article 10.3 as follows:

 
a. The content of (1) shall be replaced as follows:
 
“The occurrence of any of the following events which Party B believes may
adversely impact its creditor’s rights:
 
trustee(receiver) appointed, shareholding restructuring, decrease of its
registered capital, restructuring, division, applying for (or subject to an
application for) temporary cessation of operation or dissolution, revocation,
applying for (or  subject to an application for) bankruptcy, change of
controlling shareholders/actual controllers, transfer of material assets,
suspension of production or operation, cancellation of registration, revocation
of business license;
 
b.  
In (2) the wording “Party A transfers assets at a low price or for free” changes
to “ Party A transfers mortgaged assets at a low price or for free; and delete
the wording “Party A relieves or waives any debt of a third party;”

 
c.  
Delete the content of (5); and

 
d.  
Delete the wording “or of market change or any other reason” in (6)

 
(10)  
Delete the wording “the expenses in association with the legal service” in
Article 11.1.

 
12.  
REPRESENTATION

 
12.1  
Party A clearly understands the business scope and authorization limit of Party
B.

 
12.2  
Party A has read the Contract.  Party B, at Party A’s request, has explained the
terms of the Contract, and Party A fully understands their meanings and
corresponding legal consequences.

 
12.3  
The execution and performance of the Contract by Party A is in compliance with
laws, administrative regulations, rules and Party A’s articles of association
(or its other internal constitutional documents) and has been approved by its
internal competent organization and/or the competent governmental authorities.

 

 
IN WITNESS whereof the Contract has been executed on the date set out at the
beginning of the Contract by:
 

 
Party A
By the legal representative (principal officer) or authorized representative:
Signature: /s/ Daniel J. Weber
Date: August 17, 2009

Party B
By the principal officer or authorized representative:
Signature: /s/ Yinghong Yu
Date: August 17, 2009.

 

 

 
[No Body Text Below]
 

                                                                 
 
 

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