Contract of Guarantee of Maximum Amount













China Construction Bank




Zhejiang Branch















Contract No.: 6472009992011036






Guarantor (Party A): Xu Kecheng




Type of the Identity Credential:ID card




Number of the Credential: 330522196208244514




Domicile: ZhichengTownship  Changxing County Zhejiang Province Zip Code: 313100




Facsimile:                                Tel.: 0572-6267326








Lender (Party B): China Construction Bank Corporation Changxing Sub-branch




Domicile: No. 18, West XianqianStreet,ZhichengTownship, Changxing CountyZip Code: 313100




Person in Charge: WANG Wei




Facsimile:                                Tel.: 0572-6030900










Whereas Party B, for consecutively handling the following A ,B and Ecredit business for Changxing Chisen Electric Co., Ltd. (hereinafter “Borrower”), during the period commencing from March 31, 2011 to March 30, 2014 (hereinafter “the Term of the Master Contract”), will (and/or has) entered into a Renminbi loan contract, Foreign Exchange Loan Contract, Bank Acceptance Agreement, the Contract of Issuing a Letter of Credit, the Agreement of Issuing a Letter of Guarantee and/or other documents of a legal nature (referred to as the “Master Contract” under the above contracts, agreements and/or other documents of a legal nature signed during the Term of the Master Contract) with Borrower.




A. granting Renminbi/foreign exchange loan;




B. acceptance of commercial bill of exchange;




C. issuing a letter of credit;




D. issuing a letter of guarantee;




E. other credit business: intentionally left blank herein.




Party A is willing to provide the maximum amount guarantee for the series of debts of Borrower under the Master Contract. In accordance with the related laws, regulations and rules, Party A and Party B hereby agree through consultation to enter into this contract for mutual compliance and implementation.




Article 1Scope of Guarantee and Maximum Amount under the Guarantee




1. The scope of guarantee hereof is all the liabilities under the Master Contract, including but not limited to the principal, interest (including the compound interest and penalty interest), liquidated damage, damages, other amount that Borrower shall pay to Party B (including but not limited to the related handling charge, communication fee, miscellaneous fees and the related bank fees that the beneficiary under the letter of credit refuses to undertake), any and all the fees incurred to Party B arising from the realization of Lender’s right and guarantee right (including but not limited to litigation fees, arbitration fees, fees for preservation of properties, travelling expenses, enforcement fees, appraisal fees, auction fees, public notarization fees, service fees, public announcement fees and attorney’s fees).




2 The balance of the principal under the Master Contract that is not more than (currency) Renminbi(in words) One hundred and seventy Million only; and provided that Party A fulfils its guarantee responsibilities pursuant to this Contract, the maximum of the principal that it guarantees shall be deducted according to the amount of the principal that Party A settles.




3. Even the loan, advances, interests and fees under the Master Contract or any other debts of Party B are actually formed is beyond the Term of the Master Agreement, they shall be within the scope of guarantee hereof. The expiration date for the performance of the obligation under the Master Contract will not be limited to the expiration date of the Term of the Master Contract.





Article 2Method of Guarantee




The guarantee provided by Party A hereunder shall be the guarantee with several and joint liability.




Article 3 Term of Guarantee




1. The Term of Guarantee hereunder shall be respectively calculated according to the single credit business that Party B handles for Borrower, namely, starting from the date on which the Master Contract for the single credit business is signed until the two years after the expiration date of the term for performing the obligations of Borrower under the said Master Contract.




2. Where Party B and Borrower reach an agreement regarding the extension of the term for Borrower’s performing the obligations under the Master Contract, the Term of Guarantee shall last for the two years as from the expiration date of the term for performing the obligations as stipulated in the extension agreement. The extension of the term has not to be subject to the consent of Guarantor, who shall still undertake a joint and several liability for the guarantee.




3. Provided that Party B announces to advance the maturity of the Debt in case of the occurrence of any event as stipulated in the laws and regulations or in the Master Contract, the Term of Guarantee shall last for the two years upon the earlier maturity of the Debt.










Article 4 Independence of the Guarantee Contract




The validity of this Contract is independent from the Master Contract. Failure to establish, ineffective, invalidity, partial invalidity, revocation or rescinded of the Master Contract shall not affect the effectiveness of this Contract. If the Master Contract is determined as not established, ineffective, invalid or partially invalid, or revoked or rescinded, Party A shall be jointly and severally liable for the debts arising from Borrower returning the property or compensating the losses.




Article 5 Amendment of the Master Contract




1. Party A agrees that Party B and the Borrower, while concluding master contract or amend it (including but not limited to renewal of the period of repaying debts, or increase of the principal of Lender’s rights), need not to notify Party A and that Party A shall still undertake guarantee liabilities within the maximum amount and guarantee scope as specified herein.




2. The guarantee liabilities of Party A shall not be mitigated due to any one of the following events:




(1)           Restructuring, consolidation, merger, division, increase or decrease of the registered capital, joint venture, joint operation, change of the name of Party B or Borrower;




(2)           Party B entrusts a third party to fulfill its obligations under the Master Contract.




3. Where the Lender’s rights under the Master Contract are transferred, the guarantee hereunder shall be transferred therewith.




4. Where the transfer of Lender’s rights or debts under the Master Contract is ineffective, invalid, revoked or rescinded, Party A shall still undertake a joint and several guarantee liability to Party B as specified herein.




Article 6 Responsibility of Guarantee




1. if the debts under the Master Contract matures or Party B announces the debts are matured in advance pursuant to the provisions of the Master Contract or the law, where Borrower fails to fully fulfill the debts on time or Borrower violates other provisions of the Master Contract, Party A shall undertake the guarantee liability within the Scope of Guarantee. If Party A fails to pay in time, it shall pay penalty to Party B according to0.5‰of the delayed amount as of date the debts is past due. In such case, Party A’s guarantee responsibility and the total penalty amount described above shall not be limited to the maximum amount stipulated in this contract.




2. No matter whether Party B has other guarantee for the debts under the Master Contract (including but not limited to such guarantee methods: guarantee, mortgage, pledge, letter of guarantee or standby letter of credit), no matter when it is established, whether it is valid, whether Party B files a claim against other guarantors, whether a third party agrees to undertake the whole or partial debts under the Master Contract, or whether other guarantee is provided by Borrower itself, the guarantee liability of Party A hereunder shall not be mitigated or exempted, Party B may directly require Party A to undertake the guarantee liability within its scope of guarantee as stipulated herein and Party A shall not raise any objection.




3. In the event that the Lender’s rights under the Master Contract fail to be fully settled after Party A undertakes the guarantee liability, Party A undertakes that, its claims to the right of subrogation or the right to seek compensation against other Borrower or guarantor shall not cause any harm to the interest of Party B and agrees that the settlement of the debts under the Master Contract is superior to the fulfillment of Party A’s right of subrogation or the right to seek compensation.




To be more specific, prior to the full settlement of Party B’s Lender’s rights:




(1) Party A agrees not to claim for the right of subrogation or the right to seek compensation against other Borrower or guarantor; if for any reason whatsoever, Party A fulfils the above rights, the amount it obtains shall be first used to settle the outstanding Lender’s right of Party B;









(2) Provided that the debts under the Master Contract has a security for things, Party A agrees not to file any claim for the security thing or the amount obtained from the disposal thereof, which shall be first used to settle the outstanding Lender’s right of Party B;




(3) Provided that Borrower or other guarantor provides counter-guarantee for Party A, the amount that Party A obtains based on the above counter-guarantee shall be first used to settle the outstanding Lender’s right of Party B.




4. Party A has been fully aware of the interest rate risks. Provided that Party B adjusts the interest rate level, the method of calculating or settling the interests pursuant to the provisions of the Master Contract or the change to the interest policy of the State, which results in the increase of the interest, penalty interest or compound interest that Borrower shall repay, Party A shall be jointly and severally liable for the increased part.




5. Provided that in addition to the debts under the Master Contract, Borrower has other due debts to Party B, Party B shall be entitled to first allocate and collect the amount in Renminbi or other currency from the account that Borrower opens in the China Construction Bank system to settle any due debt. The guarantee liability of Party A shall not be mitigated or exempted thereby.




Article 7 Other Obligations of Party A




1. Party A shall supervise the use of the loan by Borrower (including the purposes), and accept the supervision of Party B on the capital, property and operation status of Party A, provide such information, documents and materials as the financial statements according to the request of Party B and ensure its accuracy, authenticity, integrity and validity thereof. Without the written consent of Party B, Party A shall not provide guarantee for a third party that is beyond its capacity;




2. In case of any of the following: Party A  having nationality, domicile and marital status changes, suffering from heavy diseases, being involved in major legal dispute, administrative or criminal sanctions, severe difficulties or financial deterioration, or losing or probably losing the guarantee capacity for any reason, Party A shall immediately inform Party B in writing and carry out the undertaking, transfer or commitment of the guarantee liability hereunder or provide a new guarantee for the performance of the Master Contract to be acknowledged by Party B.




3. In the event that there is any change to such aspects as the name, legal representative (responsible person), domicile, scope of business, registered capital or the articles of association of the company (enterprise) of Party A, Party A shall inform Party B in writing within thirty (30) working days upon the change and attach the related materials changed.




Article 8 Miscellaneous




1. Allocation and Collection of Payables




With respect to all the payables of Party A hereunder, Party B shall be entitled to allocate and collect the corresponding amount in Renminbi or other currency from the bank account that Party A opens in the China Construction Bank system, without informing Party A in advance. Where the procedures regarding settlement and sale of foreign exchange or purchase/sale of foreign exchange is required, Party A shall be obliged to assist Party B in this regard and the foreign exchange rate risks shall be undertaken by Party A.




2. Use of Party A’s Information




Party A agrees Party B to inquire about the credit status of Party A in the credit database established under the approval of the People’s Bank of China or credit competent authority or inquire the related entity or department and agrees Party B to provide Party A’s information to the credit database established under the approval of the People’s Bank of China or credit authority.









3. Public Announcement and Collection




With respect to the defaults of Party A, Party B shall be entitled to notify the related department or entity and to make public announcements for collection through the news media.




4. Evidence of Party A’s Records




Unless there is reliable and definite evidence to the contrary, the internal accounting records of Party B regarding the principal, interest, fees and re-payment records, documents, voucher prepared or kept by Party B that are generated during such business procedures as withdrawal, re-payment, interest payment that Borrower goes through and the records and vouchers of the loan-collection by Party B shall all constitute the definite evidence to prove the Lender’s right relationship under the Master Agreement. Party A shall not raise any objection only on the ground that the aforesaid records, accounts, documents and vouchers are unilaterally prepared or kept by Party B.




5. Reservations of Rights




Party B’s rights hereunder shall not affect and exclude any other rights it shall be entitled to pursuant to the laws, regulations and other contracts. Any tolerance, grace for any default or delay, or preference or suspension in exercising any right hereunder shall not be deemed as a waiver of the rights and interests hereunder or permission or approval of any breaches, nor shall it affect, prevent or obstruct continuous exercise of such right or any other right or result in Party B’s assumption of obligations and responsibilities to Party A.




In the event that Party B fails to or delays in exercising any right under the Master Contract or fails to exhaust any remedy under the Master Contract, the guarantee responsibility of Party A hereunder shall not be mitigated or exempted. However, provided that Party B exempts the debts under the Master Contract, the guarantee responsibility of Party A hereunder shall be mitigated or exempted accordingly.




6. Dissolution or Bankruptcy of Borrower




Where Party A obtain the information that Borrower enters into dissolution or bankruptcy procedure, Party A shall inform Party B to file claims. In the meantime, it shall take part in the dissolution or bankruptcy procedure promptly and exercise the right to recourse first. Provided that Party A knows or should know Borrower enters into dissolution or bankruptcy procedures but fails to first exercise the right to recourse promptly, the losses thereof shall be solely undertaken by Party A.




Notwithstanding the provisions in the second sub-paragraph of the fifth paragraph of this clause, during the bankruptcy procedure of Borrower, in the event that Party B enters into a reconciliation agreement with Borrower or agrees to the re-construction plan, Party B’s rights hereunder shall not be damaged due to the reconciliation agreement or re-construction plan and the guarantee responsibility of Party A shall not be mitigated or exempted. Party A shall not use the conditions as stipulated in the reconciliation agreement or reconstruction plan to oppose the rights and claims of Party B. With respect to the part of the Lender’s rights that Party B makes compromises to Borrower in the reconciliation agreement or the re-construction plan and hence is not settled, Party B shall still be entitled to request Party A to continuously settle.




7. Dissolution or Bankruptcy of Party A




Where Party A becomes dissolved or bankrupt, even if the Lender’s rights of Party B under the Master Contract are not expired, Party B shall be entitled to take part in the liquidation or bankruptcy procedures of Party A and file claims.




8. Where there is a change to the correspondence address or contact of Party A, Party A shall immediately notify Party B. Any losses arising from failure to notify Party B promptly shall be solely undertaken by Party A.




9. Settlement of Disputes




Any dispute arising from the performance of this Contract may be settled through negotiations, failing which, it shall be settled in the 1st way as follows.




(1)           Bring a lawsuit before the people’s court at Party B’s location.










(2)           Submit to intentionally left blankArbitration Commission (the place of arbitration is intentionally left blank) for arbitration in accordance with rules in effect at the time of applying for arbitration. The arbitration award shall be final and binding upon both parties.




During the litigation or arbitration, the provisions of this Contract that are not in dispute shall continue to be implemented.




10. Conditions for the Effectiveness of this Contract




The Contract shall come into force as soon as being signed or sealed by Party A’s legal representative (principal) or authorized agent and Party B’s principal or authorized agent.




11. This Contract is intriplicate.




12. Other Provisions




Within the period of the Contract, if the contracts and agreement and other legal instruments concluded for the Lender’s rights and debts between Party B and the Borrower “Changxing Chisen Electric Co., Ltd. are not guaranteed by the Contract, they shall be explained in such contracts and agreement and other legal instruments.




Article 9 Representation and Warranty of Party A




1. Party A clearly knows the business scope and scope of authorization of Party B.




2. Party A has already read all the clauses of this contract and the Master Contract. Upon Party A’s request, Party B has already explained the clauses of this Contract and the Master Contract. Party A is completely aware of and fully understands the meaning and the corresponding legal consequences of the clauses of this Contract and the Master Contract.




3. Party A has the legal qualification to be Guarantor. The Guarantee provided by Party A hereunder complies with the provisions of the law, administrative regulations, rules and articles of association or internal constitutional documents of Party A, and has already obtained the approval of the company’s internal competent body and/or the State’s competent authority. Any liabilities arising from the lack of Party A in the right to sign this Contract shall be undertaken by Party A, including but not limited to full compensation for the losses that Party B suffered thereby.




4. Party A acknowledges that it fully understands the conditions of Borrower’s assets, debts, operation, credit and credibility, whether Borrower has the subject qualification and authority to sign the Master Contract and all the contents of the Master Contract.






Party A (Company’s seal):




Legal Representative (Person in Charge) or Authorized Agent (Signature): /s/ Authorized Person




March 31, 2011






Party B (Company’s seal):




Person in Charge or Authorized Agent (Signature):  /s/ Authorized Person




March 31, 2011