Exhibit 10.48

Line of Credit Agreement

Number: Wuzhongyinshouzi No. 0805039

Party A: Multi-Fineline Electronix (Suzhou) Co., Ltd.

Business License number: 320500400002758

Legal representative: Phil Harding

Principal office address: Building A and B, Suning Industry Zone, Dong South
Road, Suzhou

Postal code: 215128

Deposit bank and account number: Bank of China Wu Zhong Branch 10295808095014

Telephone: 65638146

Fax:                             

Party B: Bank of China Limited Wu Zhong Branch

Principal: Zhang Shu

Principal office address: No. 108 Dong Wu North Road, Wu Zhong District

Postal code: 215128

Telephone: 65272848

Fax: 65289459

In order to develop a friendly and reciprocal partnership, on the principle of
voluntary, equality, mutual benefit and good faith, through negotiation, Party A
and Party B enter into the following agreement.

Article 1 Scope of business

Party B shall grant a line of credit to Party A in accordance with this
Agreement. Party A may apply to Party B for revolving use, use at its discretion
or use in one lump sum of credit in accordance with this Agreement and
applicable individual agreements for the purpose of processing RMB short-term
loans, foreign exchange short term loans, trade financing, letter of guarantee
and undertaking capital business and other financing businesses (collectively
referred to as “Individual Financing Business”).

Trade financing business referred to under this Agreement shall include opening
international letter of credit, opening domestic letter of credit, import bill
advance, shipping guarantee, packing loan, export bill purchase, discount of
acceptance draft under Usance letter of credit, buyer’s negotiation of domestic
letter of credit, seller’s negotiation of domestic letter of credit, negotiation
of domestic letter of credit and other international and domestic trade
financing business.

The business of letter of guarantee referred to under this Agreement shall
include opening letter of guarantee, standby letter of credit and other
international and domestic business of letter of guarantee.

Article 2 Types and amount of line of credit

Party B agrees to grant Party A the following lines of credit:

Currency: Chinese Currency (RMB)

Amount:

   (in letters): One hundred million Yuan    (in figures): ¥100,000,000.00

The types and amount are as follows:

1. Credit line: Forty Million Yuan, among which:

Short term circulating funds: Forty Million Yuan

2. Trade financing limit: Thirty Million Yuan, among which:

 

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  1) Opening import letter of credit: Twenty Million Yuan

  2) Opening domestic letter of credit: Ten Million Yuan

3. Limit of letter of guarantee: Thirty Million Yuan, among which:

Guarantee for the customs duties: Thirty Million Yuan.

Article 3 Use of line of credit

 

1. Within the credit period as specified under this Agreement, Party B may use
the line of credit in the following first way within the scope for each
individual financing business as provided under this Agreement:

  1) Revolving use, the type of line of credit involved: all types of line of
credit.

  2) Use in one lump sum, the type of line of credit involved:
            /                        

In case Party A needs to use the line of credit as specified under Article 1, it
shall file an application with Party B in writing. Party B shall decide whether
and how to use the line of credit at its discretion and inform Party A in
writing.

2. The balance of existing credit that Party A grants to Party B in accordance
with effective Line of Credit Agreement or similar agreements and its individual
agreements as of the effective date of this Agreement shall be deemed as the
line of credit incurred under this Agreement.

Among which, the balance of credit using the line of credit shall be deemed as
the line of credit incurred under this Agreement.

3. Unless otherwise provided for, the following businesses shall not occupy the
line of credit:

  1) Export bill purchase where the letter of credit is consistent with the
documents;

  2) Negotiation or financing based on the draft or money under the export
letter of credit or domestic letter of credit accepted, honored, confirmed to
pay or guaranteed to pay by the issuing bank or confirming bank and acceptable
to Party B;

  3) In case Party A can provide guarantee money, government bonds, deposit
receipt issued by Party B or bank acceptance draft, letter of guarantee or
standby letter of credit acceptable to Party B, then the amount of credit
corresponding to the guarantee will not occupy the line of credit;

  4) …

(…) Other businesses that shall not occupy the line of credit separately agreed
by the parties hereto in writing

Businesses that don’t occupy the line of credit and whose business agreements
still belongs to the individual agreements under this Agreement shall be an
integral part of this Agreement and bound by this Agreement, unless such
business agreement provides otherwise.

Article 4 Agreement needs to be signed when undertaking individual credit
business

In case Party A applies to Party A for undertaking individual credit business
under this Agreement, it shall submit relevant application to Party B and/or
sign a corresponding contract/ agreement with Party B (collectively referred to
as “Individual agreements”).

Article 5 Term of the Credit

The credit term as specified under Article 2 shall run from the effective date
of this Agreement till January 24, 2010.

When the credit period as specified above expires, if Party B intends to grant a
further line of credit to Party A, both parties shall, through consultations,
sign a supplementary agreement in writing, specifying the new line of credit and
its credit period. Such supplementary agreement shall be an integral part of
this Agreement and have the same legal effect as this Agreement. Matters not
covered therein shall be governed by this agreement.

The expiration of the credit period shall not affect the legal effect of this
Agreement or cause the termination of this Agreement. Both parties shall
continue to undertake the individual credit businesses

 

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undertaken under this Agreement before the expiration of the credit period
subject to the provisions of this Agreement and applicable individual agreements
and perform their obligations incurred before the expiration of the credit
period.

Article 6 Preconditions for individual credit business

To undertake individual credit business, Party A shall meet the following
conditions upon Party B’s request:

1. Reserve and sign related documents, bills, seals, list of related personnel
and sample of signature of the company with Party A and complete related
documents;

2. Establish necessary account for undertaking individual credit business;

3. Have effectively furnished guarantee as provided by this Agreement and
individual agreements;

4. Other preconditions for undertaking this business as provided by individual
agreements;

5. Other conditions that Party B thinks Party A should meet.

Article 7 Representations and warranties

Party A hereby makes the following representations:

1. Party A is a company legally registered and validly existing and has the full
capacity for civil right and capacity to execute and perform this Agreement;

2. Party A executes and performs this Agreement and individual agreements out of
its own will. It has obtained legal and valid authorization in accordance with
the requirement of its Articles of Association or other internal management
documents and will not violate any other agreements, contracts or other legal
documents binding on Party B by doing so. Party A has obtained or accomplished
or will obtain or accomplish all related approval, permit, filing or
registration necessary for the execution and performance of this Agreement;

3. All documents, financial statements, vouchers and other data provided to
Party B by Party A under this Agreement and individual agreements are true,
complete, accurate and effective;

4. The transaction background of the business that Party A applies to Party B
for undertaking is true and legal and has not been used for money laundering and
other illegal purposes;

5. Party A has not concealed any matters that may affect the financial position
and capacity to perform this Agreement of Party A and the guarantor from Party
B.

Party A hereby warrants that:

1. It will submit its financial statements (including but not limited to annual
reports, quarter reports and monthly reports) and other related documents to
Party B regularly or in a timely manner according to the requirements of Party
B;

2. It will accept and coordinate with Party B’s examination and supervision on
its use of the line of credit and related production, operation and financial
activities;

3. If Party A signs a counter guarantee contract or similar contract with the
guarantor of this Agreement on its obligation of guarantee, such contract will
not impair any rights of Party B under this Agreement;

4. Party A will inform Party B in a timely manner in case of any circumstances
that may affect the financial position and capacity to perform this Agreement of
Party A and the guarantor, including but not limited to, any forms of division,
merger, joint operation, joint venture or cooperation with foreign businessman,
contracted management, restructuring, reform, IPO and any other changes in the
mode of operation, reduction of registered capital, transfer of significant
assets or shareholding, significant liabilities, any significant liabilities
newly created upon the collateral, sealing up of the collateral, dissolution,
cancellation, filing or being filed for bankruptcy or involving any significant
suit or arbitration;

5. Party A shall handle any matters not covered under this Agreement or
individual agreements in accordance with related provisions and business
practice of Party B;

 

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6. It will not mortgage its assets during the credit period;

7. The average days of turnover of receivables will not be more than 120 days
when it draws revolving funds;

8. Any drawing of circulating funds more than 20 million Yuan shall be subject
to Party B’s evaluation on its operating status and Party B’s approval.

Article 8 Related parties of Party A in its group and the disclosure of related
transactions

The parties hereto agree that the following Section 2 will be applied:

1. Party A is not a group client as specified by Party B subject to the
Guidelines on the Management of Risks of Credits Granted by Commercial Banks to
Group Clients (hereinafter referred to as “Guidelines”).

2. Party A is a group client as specified by Party B subject to the Guidelines.
Party A shall, subject to the provisions of Article 17 of the Guidelines, report
all related transactions accounting for more than 10% of its net assets to Party
B in a timely manner, including the relationship between the parties to the
transaction, item, nature, amount of the transaction or respective proportion
and pricing policy (including transactions without any amount or only with
negligible amount).

Article 9 Breach of agreement and remedies

Any one of the following circumstances shall constitute or be deemed as breach
of this Agreement and individual agreements by Party A:

1. Party A fails to pay any sum or repay debts to Party B according to the
provisions of this Agreement and individual agreements;

2. Party A fails to use the loans for the purpose as specified in this Agreement
and individual agreements;

3. The representations of Party A in this Agreement and individual agreements
are false or it breaches its warranties made in this Agreement and individual
agreements;

4. Any circumstances as specified under Article 2 Section 4 of this Agreement
that may affect Party A or the guarantor’s financial position or its capacity to
perform the Agreement in the view of Party B and that Party A fails to provide
new guarantee or change the guarantor according the provisions of this
Agreement;

5. Party A terminates its operation, dissolves, is cancelled or goes into
bankruptcy;

6. Party A breaches other provisions of this Agreement and individual agreements
regarding the rights and obligations of related parties;

7. Party A breaches other contracts between it and Party B or other agencies of
the Bank of China Limited;

8. The guarantor breaches the guarantee contract or other contracts with Party B
or other agencies of the Bank of China Limited.

Under any of the events of breach as mentioned above, Party B is entitled to
take the following measures respectively or at the same time according to actual
circumstances:

1. Request Party A and the guarantor to correct their breach within a fixed
period of time;

2. Reduce, suspend or terminate the line of credit granted to Party A in whole
or in part;

3. Suspend or terminate in whole or in part the acceptance of Party A’s business
application under this Agreement and individual agreements or other agreements
between Party A and Party B; to suspend or terminate in whole or in part the
granting and processing any outstanding loans, trade financing and letter of
guarantee;

4. Declare immediate expiration or maturity in whole or in part of this
Agreement and individual agreements, the principal and interests of any
outstanding loans, funds of trade financing and money advanced for the letter of
guarantee and other accounts payable;

5. Terminate or cancel this Agreement, or terminate or cancel individual
agreements or other agreements between Party A and Party B in whole or in part;

6. Claim compensation against Party A for the losses arising from Party A’s
breach of this Agreement;

7. Deduct the amount from Party A’s account established in Party B to offset
Party A’s debts to Party B in whole or in part by notice to Party B prior to or
after such deduction.

 

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Any immature sum in such account shall be deemed to mature ahead of schedule; in
case of difference between the currency of the account and Party B’s currency of
account, the amount deducted shall be converted according to the rate for
exchange settlement and sales then applicable to Party B;

8. Exert its right to collateral;

9. Request the guarantor to bear the responsibility of guarantee;

10. Take any other measures that Party B deems necessary.

Article 10 Reservation of rights

The failure of either party to exercise its right under this Agreement and
individual agreements in whole or in part, or require the performance by the
other party of its right and obligations in whole or in part, shall not
constitute a waiver of such right, obligations or responsibilities by such
party.

One party’s consent to any allowance, grace or delay to exercise the right under
this Agreement and individual agreements by the other party shall not affect any
right that should be entitled to under this Agreement and individual agreements
or any applicable laws and regulations and shall be deemed as its waiver of such
right.

Article 11 Alteration, modification, termination and partial invalidity

Through mutual agreement, the parties hereto may alter or modify this Agreement
in writing. Any alterations or modifications to this Agreement shall be an
integral part of this Agreement.

Unless otherwise provided by the laws and regulations or the parties hereto,
this Agreement shall not be terminated before all the rights and obligations
under this Agreement and individual agreements have been fulfilled.

Unless otherwise provided by the laws and regulations or the parties hereto, the
invalidity of any provisions of this Agreement shall not affect the legal effect
of other provisions.

Article 12 Governing law and settlement of disputes

Unless otherwise agreed by the parties hereto, this Agreement and individual
agreements shall be governed by the laws of the People’s Republic of China.

Unless otherwise agreed by the parties hereto, after this Agreement and
individual agreements go into effect, all disputes arising in connection with or
in the execution and performance of this Agreement and individual agreements
shall be settled by both parties through negotiation. In case no settlement can
be reached, either party may settle the disputes with the following second
method:

1. Submit the dispute to ______/_______ Arbitration Committee for arbitration;

2. Bring a lawsuit in the People’s Court where Party B or other agencies under
the Bank of China Limited exercising rights and obligations subject to this
Agreement and individual agreements is domiciled;

3. Bring a lawsuit in a competent People’s Court.

During the period of the settlement of dispute, if such dispute doesn’t affect
the fulfillment of other clauses of this Agreement and individual agreements,
such clauses shall continue to be fulfilled.

Article 13 Expenses

Unless otherwise provided by the laws or the parties hereto, Party A shall bear
all the expenses arising from the execution and performance of this Agreement
and individual agreements and the settlement of disputes (including legal
expenses).

Article 14 Annex

The following annexes, other annexes as commonly confirmed by the parties hereto
and the individual agreements shall be an integral part of this Agreement and
have the same legal effect as this Agreement.

 

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Annex 1: Matters regarding the Opening of International Letter of Credit

Annex 6: Matters regarding the Establishment of Letter of Guarantee/Standby
Letter of Credit

Annex 7: Matters regarding the Opening of Domestic Letter of Credit

Article 15 Miscellaneous

1. Without written consent of Party B, Party A shall not transfer any of its
rights and obligations under this Agreement and individual agreements to any
third party.

2. If, due to business needs, Party B needs to entrust other institutes under
the Bank of China Limited to perform its rights and obligations under this
Agreement and individual agreements, Party A will agree to it. The institutes
under the Bank of China Limited entrusted by Party B shall have right to exert
all rights under this Agreement and individual agreements and to bring lawsuits
in court or submit disputes to arbitration body for arbitration under this
Agreement and individual agreements.

3. Without prejudice to other provisions of this Agreement and individual
agreements, this Agreement shall be legally binding on the parties hereto and
their successors and assignees by law.

4. Unless otherwise agreed herein, the parties hereto specify the address
provided herein is their respective mailing and contact address and promise to
inform the other party in writing in a timely manner in case of any change in
their mailing and contact address.

5. The headings and description of business contained herein are for convenience
of reference only and are not to be used in the interpretation of the clauses of
this Agreement and the rights and obligations of the parties hereto.

Article 16 Effectiveness

This Agreement shall go into effect from the date of execution hereof by the
legal representatives, principals or authorized representatives of the parties
hereto.

This Agreement is made in two copies, one copy to be held by the parties hereto
and the guarantor respectively with equal legal effect.

 

Party A: Multi-Fineline Electronix (Suzhou) Co., Ltd.   Party B: Bank of China
Limited Wu Zhong Branch

Authorized Representative (signature):

 

/s/ Philip A. Harding

 

Authorized Representative (signature):

 

/s/ illegible signature

2009 Year_1____Month_25____Day   2009____Year__1___Month__25___Day

 

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Annex 1: Matters regarding the Opening of International Letter of Credit

 

1. In cases where the contents of the provisions of this annex conflict with
those under the Line of Credit Agreement (hereinafter referred to as the
“Agreement”), this annex shall prevail.

2. Party A shall meet the preconditions provided under the Agreement when it
files application with Party B for the opening of letter of credit.

3. Party A agrees that Party B shall follow the Uniform Customs and Practice of
Documentary Credits (¨UCP 500/¨UCP 600, same as below) of the International
Chamber of Commerce in handling all the matters regarding the letter of credit
and assume all the rights and obligations arising therefrom.

4. Opening and amendments of letter of credit:

  a) Party B shall, where it accepts the application by Party A for the opening
of letter of credit, open a letter of credit according to the Application for
the Opening of International Letter of Credit submitted by Party A, the final
terms and conditions of which shall be based upon the letter of credit
established by Party B.

  b) In cases where Party B requests Party A to submit instruments or documents
like trading contracts related to the opening of letter of credit, it shall not
be interpreted as Party B’s obligation to establish letter of credit according
to these instruments or documents.

  c) In the event of amendments of the letter of credit by Party A, it shall
submit an Application for the Amendment of International Letter of Credit to
Party B. Party A agrees that Party B will handle the amendment of the letter of
credit according to the above mentioned Uniform Customs and Practice of
Documentary Credit and assume all the duties and obligations arising therefrom.
The amendments of the letter of credit shall have binding forces on Party A once
they are issued.

  d) Party B shall have the sole discretion with regard to the amendments of
letter of credit and the right to reject application for amendments submitted by
Party A. It shall also have the right to make proposals for the contents of the
amendments. In terms of the amount, currencies, interest rate and terms of the
amendments as well as conditions that Party B believes will add to the
obligations of the guarantor, Party B shall have the right to request Party A to
increase the amount of guarantee, and/or request Party A to acquire the signed
approval of the guarantor on the Application for the Amendments of International
Letter of Credit; otherwise, Party B shall have the right to reject Party A’s
amendment application.

  e) The amendments of letter of credit do not change the other rights and
obligations assumed by Party A under the Agreement and its annexes.

  f) The information regarding the letter of credit under the Application for
the Opening of International Letter of Credit and the Application for the
Amendment of International Letter of Credit shall be filled out in English
language. Party A shall assume all the responsibilities for any misunderstanding
because of illegible texts of the applications or confusion of the terms.

  g) Party A shall promptly pay to Party B for all the costs for opening and
amending letter of credit (including related banking charges that foreign
beneficiaries refuse to pay) according to the fee schedules determined by Party
B.

5. Payment outside the country under the letter of credit

  a) During the term of the letter of credit, Party A shall, upon the receipt of
the notification of the arrival of documents from Party B, notify Party B within
the time limit provided under the notification of its instructions on how to
handle the documents; otherwise it should be deemed as Party A having no
objection to the documents and agreeing that Party B shall make the
payment/accept/guarantee the payment. If Party A instructs Party B to accept the
documents within the time limit under the notification of the arrival of
documents to which Party B agrees, Party B may make the payment/accept/guarantee
the payment outside of the country. Party A shall deposit the reserve fund for
payment under the terms and conditions of the Application for the Opening of
International Letter of Credit.

In the event of Party B’s disagreement to the instructions by Party A as to the
handling of the documents, i.e., to accept such documents, Party B shall have
the right to decide on its own whether to reject such payment to a party outside
the country according to the consistency of the documents. If Party A agrees to
provide Party B with enough amount of guarantee or other bond for payment, Party
B shall have the right to decide to give up the right to honour the payment to a
party outside the country according to the situations or retain the right to
refuse the payment on its own.

 

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  b) If Party A believes that there are inconsistencies in the documents and
requests Party B to refuse payment/accept/guarantee payment to a foreign party
within the time limit set by the notification of the arrival of documents, it
shall list all the inconsistencies in a single instruction with two copies of
pre-sealed reasoned notification of such rejection. Party B shall have the right
to regard the inconsistencies listed in the notification by Party A as the whole
of such inconsistencies. Party B may refuse payment to a foreign Party if it
agrees to the inconsistencies listed by Party A; if, however, Party B believes,
after international customary review, that the inconsistencies listed by Party A
do not stand or such inconsistencies are not substantial enough for the
rejection of payment, Party B shall have the right to decide to make the
payment/accept/guarantee payment to the foreign party and make such payment
using the reserve fund deposited by Party A. Party A shall assume all the
obligations and responsibilities arising therefrom.

  c) In the event that the reserve fund deposited by Party A falls short of the
advance payment by Party B to a foreign party, the fund payable, once paid,
shall become the liabilities that Party A assumes under the Agreement and its
annexes in relation to Party B, which it shall pay off promptly. The interest
rate and interest for the advance fund shall be handled according to the terms
and conditions under the related applications.

6. Additional guarantees

In addition to the contents provided under the Agreement, Party A hereby makes
the following guarantees to Party B as part of the business undertaken under
this annex:

  a) Once the letter of credit is issued, Party A shall notify Party B in
writing, without delay, of any modification of the export trade contract related
to the letter of credit.

  b) After Party B makes the advance, accepts or guarantees the payment, it
shall have the right to dispose of the entire documents/right to the goods under
the letter of credit or any other pledge right and interests or property rights
and interests under any applicable laws and regulations. If the right to dispose
of the entire documents/right to the goods under the letter of credit shall
belong to Party A according to the applicable laws and regulations or opinions
of competent courts or arbitration bodies, Party A hereby agrees to transfer
such right to Party B to the greatest extent possible under the law without
preconditions while at the same time acknowledges all the actions or non-actions
by Party B with regard to the disposal of such documents/goods. If the right to
dispose of the entire documents/right to the goods under the letter of credit
shall belong to Party B according to the applicable laws and regulations or
opinions of competent courts or arbitration bodies, Party B will reserve such
right until Party A retires the documents or pays off the advance payment by
Party B.

Party A shall not request Party B to stop payment for any reason with respect to
the time draft guaranteed by Party B or confirmed deferred payment. It shall
also give up the right to file application with the People’s Court for freezing
or any lawsuit to stop payment under the letter of credit for any reason to the
greatest extent possible under the law.

  c) Party A shall bear the risks associated with the missing, delay, mistakes
or omission, damage or loss of the correspondence, documents under the letter of
credit during their delivery, telegraph or any other method of delivery as well
as any risks related to any third party service that Party B uses.

7. Other specific matters related to the business under this annex shall be
handled according to the terms and conditions of the Application for the Opening
of International Letter of Credit and Application for the Amendment of
International Letter of Credit.

 

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Annex 6: Matters regarding the Establishment of Letter of Guarantee/Standby
Letter of Credit

 

1. In cases where the contents of the provisions of this annex conflict with
those under the Agreement, this annex shall prevail.

2. Party A shall meet the preconditions provided under the Agreement when it
files application with Party B for the opening of letter of guarantee/standby
letter of credit.

3. Opening and amendment of letter of guarantee/standby letter of credit:

  a) Party B shall, where it accepts the application by Party A for the opening
of letter of guarantee/standby letter of credit according to the mutually agreed
terms and conditions.

  b) The detailed contents of the letter of guarantee/standby letter of credit
opened by Party B at the request of Party A shall be referenced to the
Application for the Opening of Letter of Guarantee/Standby Letter of Credit
submitted by Party A to Party B and the final contents shall be based on the
terms and conditions of the letter of guarantee/standby letter of credit issued
by Party B.

  c) In the event of amendments of the letter of guarantee/standby letter of
credit by Party A, it shall submit an Application for the Amendment of Letter of
Guarantee/Standby Letter of Credit to Party B.

  d) In terms of the amount, currencies, interest rate and terms of the
amendments as well as conditions that Party B believes will add to the
obligations of the guarantor, Party B shall have the right to request Party A to
increase the amount of guarantee, and/or request Party A to acquire the signed
approval of the counter guarantor on the Application for the Amendments of
Letter of Guarantee/Standby Letter of Credit; otherwise, Party B shall have the
right to reject Party A’s amendment application.

  e) The amendments of letter of guarantee/standby letter of credit shall not
change the other rights and obligations assumed by Party A under the Agreement
and its annexes.

 

4. Party A hereby agrees that within the term of the letter of guarantee/standby
letter of credit, Party B shall have the right to use the reserve fund deposited
by Party A to pay the payment for any claims under the letter of
guarantee/standby letter of credit that Party B reviews to be consistent with
the terms and conditions of the letter of guarantee/standby letter of credit.

If the reserve fund deposited by Party A falls short of the advance payment of
the claims, the payment shall, once made, become Party A’s liabilities to Party
B under the Agreement and its annexes. Party A shall bear the interest from the
date of advance payment by Party B till the date of repayment and the interest
rate for the advance payment shall be determined according to the terms and
conditions of the Application for the Opening of Letter of Guarantee/Standby
Letter of Credit.

 

5. In addition to the contents provided under the Agreement, Party A hereby
makes the following guarantees to Party B as part of the business undertaken
under this annex.

  a) Where the letter of guarantee/standby letter of credit is presented or
transmitted by other banks, Party A hereby agrees to assume all the risks and
responsibilities assumed by Party B to the presenting/transmitting bank during
the presentation/transmission of the letter of guarantee/standby letter of
credit.

  b) Party A shall promptly notify Party B of anything that may impact the
guarantee obligations of Party B in terms of the underlying contract of the
letter of guarantee/standby letter of credit and the performance, amendment,
modification and termination of such underlying contract.

  c) Party A shall coordinate its efforts to assist Party B to fulfill the
related procedures in relation to the performance of contract under the
guarantee to a foreign party.

  d) Party A shall bear the risks associated with the missing, delay, mistakes
or omission, damage or loss of the correspondence, documents under the letter of
credit during their delivery, telegraph or any other method of delivery as well
as any risks related to any third party service that Party B uses.

  e) Party A hereby agrees to compensate all the risks, liabilities and damages
brought to Party B as a result of unspecific date of expiration of the letter of
guarantee/standby letter of credit, application of foreign laws or customs and
unspecific amount of guarantee.

6. Other specific matters related to the business under this annex shall be
handled according to the terms and conditions of the Application for the Opening
of Letter of Guarantee/Standby Letter of Credit and Application for the
Amendment of Letter of Guarantee/Standby Letter of Credit.

 

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Annex 7: Matters regarding the Opening of Domestic Letter of Credit

 

1. In cases where the contents of the provisions of this annex conflict with
those under the Agreement, this annex shall prevail.

2. Party A shall meet the preconditions provided under the Agreement when it
files application with Party B for the opening of domestic letter of credit.

3. Party A shall irrevocably shoulder the following responsibilities:

  a) Party A is willing to comply with the Regulation Regarding the Settlement
of Domestic Letter of Credit issued by the People’s Bank of China and other
national laws and regulation and agrees that Party B will handle all the matters
under the letter of credit according to the Regulation Regarding the Settlement
of Domestic Letter of Credit and other national laws and regulations and
shoulder all the responsibilities arising therefrom.

  b) Party A guarantees that all the information provided to Party B for the
purpose of the opening of letter of credit is true, whole and valid; and the
letter of credit so established shall have true trade backdrop, and will take
all the responsibilities if any false/incomplete and/or invalid information is
provided and/or there is no valid trade backdrop to the letter of credit so
established.

  c) If the goods under the letter of credit are under the effective control of
Party A before the payment under the letter of credit is made from Party A to
Party B, Party A guarantees that Party B shall have the title to the said goods.

  d) Party A shall assume all the responsibilities for any misunderstanding
because of illegible texts of the applications or confusion of the terms.

4. Opening and amendments of domestic letter of credit:

  a) Party B shall, where it accepts the application by Party A for the opening
of domestic letter of credit, open a letter of credit according to the
Application for the Opening of Domestic Letter of Credit submitted by Party A,
the final terms and conditions of which shall be based upon the domestic letter
of credit established by Party B.

  b) In cases where Party B requests Party A to submit instruments or documents
like trading contracts related to the opening of domestic letter of credit, it
shall not be construed as Party B’s obligation to establish domestic letter of
credit according to these instruments or documents.

  c) In the event of amendments of the letter of credit by Party A, it shall
submit an Application for the Amendment of Domestic Letter of Credit to Party B.
Party A agrees that Party B will handle the amendment of the domestic letter of
credit according to the Regulation Regarding the Settlement of Domestic Letter
of Credit issued by the People’s Bank of China and assume all the duties and
obligations arising therefrom. The Application for the Amendment of Domestic
Letter of Credit shall have binding forces on Party A once they are issued.

  d) Party B shall have the sole discretion with regard to the amendments of
domestic letter of credit and the right to reject application for amendments
submitted by Party A. It shall also have the right to make proposals for the
contents of the amendments. In terms of the amount, currencies, interest rate
and terms of the amendments as well as conditions that Party B believes will add
to the obligations of the guarantor, Party B shall have the right to request
Party A to increase the amount of guarantee, and/or request Party A to acquire
the signed approval of the guarantor on the Application for the Amendments of
Domestic Letter of Credit; otherwise, Party B shall have the right to reject
Party A’s amendment application.

  e) The amendments of domestic letter of credit do not change the other rights
and obligations assumed by Party A under the Agreement and its annexes.

  f) The information regarding the domestic letter of credit under the
Application for the Opening of Domestic Letter of Credit and the Application for
the Amendment of Domestic Letter of Credit shall be filled out in Chinese
language. Party A shall assume all the responsibilities for any misunderstanding
because of illegible texts of the applications or confusion of the terms.

  g) Party A shall promptly pay to Party B for all the costs for opening and
amending domestic letter of credit (including related banking charges that
foreign beneficiaries refuse to pay) according to the fee schedules determined
by Party B.

 

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5. Payment under the letter of credit

  a) During the term of the letter of credit, Party A shall, upon the receipt of
the notification of the arrival of documents from Party B, notify Party B within
the time limit provided under the notification of its instructions on how to
handle the documents; otherwise it should be deemed as Party A having no
objection to the documents and agreeing that Party B shall make the
payment/accept/guarantee the payment. If Party A instructs Party B to accept the
documents within the time limit under the notification of the arrival of
documents to which Party B agrees, Party B may make the payment/accept/guarantee
the payment outside of the country. Party A shall deposit the reserve fund for
payment under the terms and conditions of the Application for the Opening of
Domestic Letter of Credit.

In the event of Party B’s disagreement to the instructions by Party A as to the
handling of the documents, i.e., to accept such documents, Party B shall have
the right to decide on its own whether to reject such payment according to the
consistency of the documents. If Party A agrees to provide Party B with enough
amount of guarantee or other bond for payment, Party B shall have the right to
decide to give up the right to honour the payment according to the situations or
retain the right to refuse the payment on its own.

  b) If Party A believes that there are inconsistencies in the documents and
requests Party B to refuse payment/accept/guarantee payment to a foreign party
within the time limit set by the notification of the arrival of documents, it
shall list all the inconsistencies in a single instruction with two copies of
pre-sealed reasoned notification of such rejection. Party B shall have the right
to regard the inconsistencies listed in the notification by Party A as the whole
of such inconsistencies. Party B may refuse payment if it agrees to the
inconsistencies listed by Party A; if, however, Party B believes, after review,
that the inconsistencies listed by Party A do not stand or such inconsistencies
are not substantial enough for the rejection of payment, Party B shall have the
right to decide to make the payment/accept/guarantee payment and make such
payment using the reserve fund deposited by Party A. Party A shall assume all
the obligations and responsibilities arising therefrom.

  c) In the event that the reserve fund deposited by Party A falls short of the
advance payment by Party B to a foreign party, the fund paid shall become the
liabilities that Party A assumes under the Agreement and its annexes in relation
to Party B.

6. Additional guarantees

In addition to the contents provided under the Agreement, Party A hereby makes
the following guarantees to Party B as part of the business undertaken under
this annex:

  a) Once the domestic letter of credit is issued, Party A shall notify Party B
in writing, without delay, of any modification of the export trade contract
related to the domestic letter of credit.

  b) After Party B makes the advance, accepts or guarantees the payment, it
shall have the right to dispose of the entire documents/right to the goods under
the domestic letter of credit or any other pledge right and interests or
property rights and interests under any applicable laws and regulations to the
extent possible under the law.

  c) Party A shall bear the risks associated with the missing, delay, mistakes
or omission, damage or loss of the correspondence, documents under the domestic
letter of credit during their delivery, telegraph or any other method of
delivery as well as any risks related to any third party service that Party B
uses.

7. Other specific matters related to the business under this annex shall be
handled according to the terms and conditions of the Application for the Opening
of Domestic Letter of Credit and Application for the Amendment of Domestic
Letter of Credit.

 

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