Exhibit 10.1


 


Cooperation
Agreement on Overseas Refinancing of


China Construction
Bank


 


Agreement No.:
2010 - 004


 


	
  Party A (Full name):

  	
   

  	
  Source Photonics
  (Chengdu) Company Limited

  
	
  Address:

  	
   

  	
  No. 2 and No. 5
  Standard Workshops of Western Part of Chengdu Export Processing Zone,
  No. 8 Kexin Road, Chengdu Hi-Tech Industrial Zone

  
	
  Postal Code:

  	
   

  	
  611731

  
	
  Legal Representative/
  Principal:

  	
   

  	
  Brett John Chloupek

  
	
  Fax: 87958788

  	
   

  	
  Telephone: 87958788

  
	
  Principle Bank of
  Deposit:

  	
   

  	
  China Industrial &
  Commercial Bank, Chengdu Exports Processing Disctrict Branch

  
	
  Bank Account Number:

  	
   

  	
  [Redacted.]

  
	
   

  	
   

  	
   

  
	
  Account set up in Party
  B:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Party B (Full name):

  	
   

  	
  China Construction
  Bank, Chengdu Hi-Tech. and New Tech. Sub-branch

  
	
  Address:

  	
   

  	
  No. 8-2, 4th Section of 1st Loop Road of Chengdu City

  
	
  Postal Code:

  	
   

  	
  610041

  
	
  Principal:

  	
   

  	
  Tan Shuo

  
	
  Fax: 028-85574286

  	
   

  	
  Telephone: 028-85512255

  



 

















 


For the purpose of
establishing the rights and obligations of both parties in oversea refinancing,
Party A and Party B hereby conclude this agreement according to applicable
laws, rules and regulations upon consensus for mutual compliance.


 


Article 1                 Overseas Refinancing


 


1.               Overseas refinancing under this agreement
shall mean financing services provided by the overseas branches of China
Construction Bank and other banks to Party A, whereby Party B files an
application on behalf of Party A to the overseas branches of China Construction
Bank and other banks approved by China Construction Bank (hereinafter referred
to as “overseas branches/other banks”), and the overseas branches and other
banks, upon Party A’s commitment to the payment and Party B’s guarantee of
payment, pay for imported goods (including pre-payment) and non-trade
businesses through letter of credit, inward collect, and T/T settlement.


 


2.               Overseas refinancing under this agreement
shall be limited to overseas payments under import trade contracts or non-trade
business contracts. International settlements covered by overseas refinancing
shall include sight letter of credit, usance letter of credit and usance letter
of credit payable at sight under settlement by letter of credit; D/P (document
against payment) and D/A (document against acceptance) under inward collection
as well as payment under T/T.


 


3.               Upon Party A’s request, Party B agrees to
provide a limit for trust receipt up to (currency and amount in words) RMB
One Hundred and Twenty Million for the purpose of overseas refinancing. This
limit shall remain valid for a period from September 21, 2010 till September 20,
2011. During the term of the said limit, Party A may file unlimited
applications to Party B for overseas refinancing as per provisions of this
agreement, provided that the balance of principle for overseas refinancing
stays within the above mentioned limit; however, the sum of the amount of
proposed overseas refinancing requested by Party A with Party B and used and
yet-to-be-paid balance of principle of overseas refinancing by Party A shall
not exceed the limit prescribed under the preceding paragraph.


 


The trust receipt limit
under this agreement shall fall into the category of limit for trade financing,
which shall mean the import financing limit provided by Party B to Party A upon
Party A’s issuance of trust receipt. Party A may apply to Party B for the use of
this limit for overseas refinancing.


 


4.               Unless otherwise agreed upon by the parties
hereto, the specific amount of each overseas refinancing shall be determined by
Party B according to the amount payable under import account, provided that the
maximum amount is less than the draft amount; in the absence of drafts, the
maximum amount shall not exceed the invoice amount.


 


5.               The term for each overseas refinancing shall
start from the date of the actual refinancing till the date of expiry
established by the paying bank.


 


Article 2                 Procedures for Overseas Refinancing under this
Agreement


 


1.               Where Party A intends to use the trust receipt
limit under this agreement for overseas refinancing, it shall submit to Party B
an Application for Overseas Refinancing
within the term of the limit. Party A shall guarantee that the amount of its
requested overseas financing will not exceed the limit provided under this
agreement.


 


2.               Where Party B, upon review, agrees to Party A’s
entrustment for application to overseas branches and other banks for overseas
refinancing, it shall, in its capacity as the agent, file an application for
financing to the overseas branches and other banks according to the
entrustment, bear the responsibility of payment guarantee and at the same time,  issue an Advice of Use of Trade
Financing Limit to Party A.


 


3.               Before the expiration of an overseas
refinancing, Party B shall issue an Advice of Expiration of
Overseas Refinancing to Party A. The parties agree that the specific
amount, interest, charges and term of an overseas refinancing shall be subject
to the information specified in the applicable Advice of
Expiration of Overseas Refinancing.


 


Article 3                 Interest Rate and Charges on Overseas
Refinancing


 


Party A hereby agrees to
bear applicable interest charges under overseas refinancing (including the
interest on financing charged by overseas branches/other banks, transaction
costs for Party B’s overseas refinancing and other applicable expenses).
Furthermore, payments for all the interest and charges should be made through
Party B .


 

















 


1.               Interest rate and charges


 


Party A elects to decide
the interest rate on overseas refinancing according to the first method
set forth below:


 


1)                  Where Party A applies to Party B for providing
an overseas refinancing, Party A shall determine the interest rate on the
overseas refinancing through Party B’s inquiry with overseas branches/other
banks and pay for the interest of overseas branches/other banks as well as
transaction costs of Party B for overseas refinancing. Specific interest rate
of financing and charges shall be subject to the interest rate, charge rate
specified in the Advice of Use of Trade Financing Limit
issued by Party B to Party A.


 


2)                  Party A and Party B hereby agree that overall
charges of overseas refinancing of LIBOR plus spread (including financing
interest of overseas branches/other banks and transaction costs of Party B’s
overseas refinancing) shall apply to each overseas refinancing transaction. At
the same time, Party A agrees that Party B shall have the right to deduct the
transaction costs for overseas refinancing that should be paid to Party B from
total interest and charges payable. Specific overall charges of overseas
refinancing shall be based upon the terms under Advice of
Use of Trade Financing Limit.


 


The interest rate on refinancing shall be a fixed annual interest rate
and the interest shall be calculated on a daily basis (where the currency of
refinancing is Hong Kong dollar or pound sterling, one year shall be calculated
as 365 days; where the currency of refinancing is a currency other than Hong
Kong dollar and pound sterling, one year shall be calculated as 360 days).


 


The LIBOR referred to in this paragraph shall mean the interbank offered
rate for the same period and currency published by the British Bankers’
Association (BBA) as provided by TELERATE or other financial telecommunication
terminal on the date of a refinancing or 1 or 2 banking days prior to the date
of a refinancing, or the date of any adjustment of interest rate or 1 or 2
banking days prior to the date of any adjustment of interest rate. The specific
LIBOR applicable to each overseas refinancing shall be subject to the LIBOR
determined by applicable overseas paying bank.


 


The LIBOR for the same period shall mean the LIBOR on a monthly basis
corresponding to the term and currency of an overseas refinancing. There are
LIBOR rates for 1 to 12 months every day. If the term of an overseas
refinancing is less than one month, the 1-month LIBOR shall apply. If the term
of an overseas refinancing is more than one month but less than two months, the
2-month LIBOR shall apply. The rest can be done in the same manner. Up to
12-month LIBOR shall apply to an overseas refinancing.


 


2.               Other expenses


 


Unless otherwise
provided, Party A agrees to bear other expenses arising from the process of
overseas refinancing, including but not limited to postage and expenses charged
by the overseas bank.  Party A agrees to
pay the expenses in applicable Advice of Expiration of
Overseas Refinancing issued by Party B in one lump sum prior to the
expiry date of applicable overseas refinancing.


 


3. Payment of Interest
and Charges


 


Party A agrees to pay the
principal, interest and charges specified in applicable Advice of
Expiration of Overseas Refinancing issued by Party B for the
interest and charges under overseas refinancing in one lump sum prior to the
expiry date of applicable overseas refinancing to the overseas branches/other
banks through Party B.


 


4. In the event of
extension of the term of any overseas refinancing, Party A shall also pay the
interest for such extended term and various expenses incurred in such extended
term.


 


Article 4                 Preconditions for Party B to Accept Party A’s
Entrustment, Apply for Overseas Refinancing with Overseas Branches/Other Banks
and Provide Repayment Guarantee for Party A


 


Party B shall not have
the obligation to apply for overseas refinancing with overseas branches/other
banks and provide repayment guarantee for Party A until the following
preconditions are met, unless Party B waives such preconditions in whole or in
part:


 

















 


1.               Party A has gone through approval,
registration, delivery and other statutory procedures applicable to refinancing
under this agreement in accordance with applicable laws, regulations and rules;


 


2.               Party A has fulfilled procedures for overseas
payment in foreign exchanges as per requirements of the State Administration of
Foreign Exchange, which has been confirmed by the Administration.


 


3.               Party A has submitted applicable documents meeting
Party B’s requirements;


 


4.               A guarantee contract or other guarantee
meeting Party B’s requirements has gone into force and remains valid


 


5.               There is no incident of breach of contract
specified under this agreement on the part of Party A; and


 


6.               Party A has submitted applicable Trust Receipt
to Party B unless Party B agrees to any exemption of such receipt.


 


7.               Party B has approved Party A’s application.


 


Article 5                 Repayment


 


1.               Method of repayment


 


1)                  The funds obtained by Party A from the
disposal of goods represented by applicable Trust Receipt shall be used for
repayment of overseas refinancing provided by Party B. In the event of any
deficiency, Party A shall use other funds to pay back overseas refinancing
provided by Party B.


 


2)      The principal, interest and other expenses payable
specified in applicable Advice of Expiration of
Overseas Refinancing issued by Party B to Party A shall be payables
under applicable overseas refinancing. 


 

















 


Unless otherwise agreed
upon by the parties hereto, Party A shall pay such payables in one lump sum to
Party B prior to the expiry date of applicable overseas refinancing.


 


3)                  Party A shall deposit sufficient funds in an
account opened with Party B and transfer the sum due under applicable overseas
refinancing prior to the date of repayment specified in applicable Advice of Expiration of Overseas Refinancing or pay the sum
due prior to such date of repayment through transfer of funds from other
account. In the event that Party A becomes delinquent in the payment of any sum
due hereunder, Party B shall have the right to transfer such sum from the
account opened by Party A with the system of the Construction Bank of China.


 


2.               Pre-payment. Unless otherwise agreed upon by
overseas branch/other banks and Party B, Party A shall not pay back the
principal of overseas refinancing and interest and other expenses thereon ahead
of schedule. However, if Party B holds that any business crisis or any other
factor of Party A that has already taken place or may take place may affect or
has already affected the capacity of Party A to pay back any overseas
refinancing upon the expiration thereof, or Party B needs Party A to pay back
all the sum payable ahead of schedule due to change of applicable national
policies or the needs of Party B’s internal management, Party A shall have the
obligation to pay back overseas refinancing hereunder and other expenses
thereon ahead of schedule.


 


In case Party A needs to
repay the whole or part of the overseas refinancing ahead of schedule, it shall
file such application with overseas branches/other banks through Party B by
means of authorized messages at least 15 days in advance. If the overseas
branch/other banks agree with Party A’s prepayment, Party A shall pay
liquidated damages to the overseas branch/other banks through Party B. The
liquidated damages shall be based on the amount specified under the authorized
messages from the overseas branch/other banks approving such prepayment. At the
same time, Party B shall have the right to charge Party A for any damages
resulting from such prepayment.


 


3.               In the event that Party A intends to extend
the term of overseas refinancing, Party A shall file such application with
overseas branches/other banks through Party B by means of authorized messages
at least 15 days in advance.


 


Article 6                 Rights and Obligations of the Parties


 


1.               Party A shall have the right to request Party
B to apply for overseas refinancing with overseas branches/other banks for
Party A, and provide repayment guarantee for Party A in accordance with the
provisions of this agreement, provided that conditions under this agreement are
met.


 


2.               Party B shall keep confidential Party A’s
trade secrets according to law.


 


3.               Any settlement of Renminbi and foreign
currencies by Party A within this agreement shall be made in an account opened
by Party A with Party B.


 


4.               Once any of the overseas branches/other banks
make any overseas payment and holds applicable title certificates and other
documents representing title to applicable goods, Party B shall acquire the
title to such documents and the goods represented by such documents.


 


5.               Party B shall hand over the documents to Party
A after Party A issues relevant Trust Receipt to Party B.


 


6.               Party B, as the principal of trust receipt,
shall have the right to benefit from disposal of trust property by Party A.


 


7.               Party A, as the agent of trust receipt, shall
hold the documents and the goods represented by such documents under the letter
of credit/ inward collection, T/T payment and other methods of settlement
involved in overseas refinancing hereunder and have the right to unload, store,
manufacture, process and sell such goods on its own.


 


The funds obtained by Party A from the sale of such goods shall be used
for the repayment of overseas refinancing applied for from overseas
branches/other banks through Party B. In the event of any deficiency, Party A
shall use other funds to pay back overseas refinancing provided by Party B.


 


8.               Party A shall bear all expenses arising from
the disposal of such goods or otherwise in connection with such goods.


 


9.               After the goods represented by the documents
under the letter of credit/ inward collection, T/T payment and other methods of
settlement involved in each overseas refinancing hereunder are sold, 


 

















 


Party B shall have
the right to collect payment for such goods from buyers thereof and issue valid
receipts to such buyers,  without prior
notice to Party A.


 


10.         Where Party B puts forward any special
requirement, Party A shall dispose of the goods according to such requirement.


 


11.         The documents and the goods represented by
such documents involved in each overseas refinancing hereunder are Party B’s
trust properties and independent from Party A. In the event of dissolution,
dismantlement or bankruptcy of Party A, such trust properties shall not belong
to the properties to be liquidated. The creditor’s right acquired by Party B
from administration and disposal of the documents and the goods represented by
such documents shall not be offset against the debts arising from its own
properties.


 


12.         Party A shall not mortgage or pledge the
documents and the goods represented by such documents before full repayment of
the principal of overseas refinancing and the interest and other expenses
thereon to Party B.


 


13.         Upon Party B’s request, Party A shall, prior
to sale of the goods involved in any overseas refinancing hereunder, submit
documents relating to such goods or have such goods warehoused as per Party B’s
instructions and prepare warehouse receipts to the order of Party B.


 


14.         Upon Party B’s request, Party A shall purchase
insurance according to the full value of the goods involved in any overseas
refinancing hereunder against fire risks and other commonly insured risks from
insurers with good standing and reputation. Party A shall, in the capacity of
agent, hold such insurance policies or insurance contracts with Party B as the
beneficiary or endorsement of benefits to Party B, and submit such insurance
policies or insurance contracts to Party B at any time upon Party B’s request.
In the event of any claim under such insurance policies, Party A shall notify
Party B immediately and hand over the full amount of the insurance compensation
to Party B upon receipt of the same without delay.


 


15.         Party B shall have the right to decide and
inspect the mode of transportation, storage place, method of storage and
insurance to be purchased. Party A shall provide facility to Party B, including
allowing personnel of Party B access to the warehouses and premises that Party
A owns, holds or manages. Upon Party B’s request, Party A shall sign all the
documents necessary for facilitating pick-up of the goods or claims by Party B.


 


16.         Party B should have the right to monitor the
operating of Party A, and Party A should provide the helps. Party B shall have
the right to inspect and supervise the collection of payment for the goods
involved in any overseas refinancing hereunder and Party A shall report
applicable information to Party B in writing at any time upon Party B’s
request.


 


17.         In the event of change of legal representative
(principal), address or place of business or reduction of registered capital of
Party A during the term of this agreement, Party A shall notify Party B in
writing in advance.


 


18.         In the event of change of mode of business
operation or management or form of ownership or organization of Party A caused
by contract, lease, joint venture, shareholding reform, split, merger,
acquisition or other reason, Party A shall notify Party B in writing in advance
and carry out measures for repayment of debts hereunder.


 


19.         In the event of the occurrence of any
circumstance that poses a threat to Party A’s normal operation or has
significantly adverse impact on Party A’s performance of repayment obligation
hereunder, including but not limited to stop of production, going out of
business, nullification of registration, revocation of business license, the
legal representative or main principal engaging in any illegal activity or
involved in any major lawsuit,  serious
difficulties in production and operation, worsening of financial situation, or
flight of capital contribution, transfer of assets or unauthorized assignment
of shares by Party A or its investors, Party B shall have the right to ask
Party A to deposit the principle and applicable interest charges related to
overseas refinancing into the bank account designated by Party A as pledge
guarantee, or take other measures approved by Party B.


 


20.         Party A warrants that it will not enter into
any agreement with any third party that will impair Party B’s rights and
interests hereunder.


 


21.         Party B may cancel the trust at any time. Upon
Party B’s request, Party A shall return whole set of documents of title,
documents or the goods under such documents to Party B.


 

















 


22.         In the event of failure of Party A to disposal
of trust properties subject to Party B’s requirement, Party B shall have the
right to cancel the trust relationship, recover the trust properties and
dispose of the trust properties on its own.


 


23.         Where a guarantee is provided and the
guarantor breaches the guarantee agreement or loses the capacity of guarantee,
Party A shall provide new guarantee acceptable to Party B promptly. In the
event that Party A fails to do so, Party B shall have the right to recover the principal
of overseas refinancing and the interest and other expenses thereon ahead of
schedule, transfer such principal, interest and expenses from the account
opened by Party A with the system of the Construction Bank of China and
exercise the security right.


 


24.         Party A hereby agrees that Party B shall have
the right to exercise the rights that overseas branches/other branches enjoy
over Party A.


 


25.         The parties agree that UCP600 and other
applicable international practices shall apply to the matters not provided or
indefinitely provided in this agreement.


 


Article 7                 Guarantee


 


The seventh method
set forth below shall be the method of guarantee under this agreement:


 


1)                  Warranty.


2)                  Mortgage.


3)                  Pledge.


4)                  Security deposit.


5)                  Standby letter of credit.


6)                  Credit insurance.


7)                  Other: Credit.


 


Article 8                 Breach of Agreement


 


1.               Where Party A fails in its overseas payment in
full through Party B upon the expiration of any overseas refinancing, or there
is any shortfall in the balance of funds in the account opened by Party A with
Party B, Party B shall have the right to issue a Payment Request to Party A. Party A shall raise funs
promptly as per Party B and make such overseas payment in full amount. Under
any circumstances, if Party B has performed its obligation of overseas payment,
Party A shall pay the following amount to Party B within 3 working days after
Party B has made the overseas payment:


 


1)                  The full amount that Party B pays to overseas
branches/other banks or its designated third parties;


 


2)                  The interest charge on the overdue sum of
Party A (including the principal of refinancing and interest, commission and
postage thereon) at the rate of 0.05% every day from the date such sum
is due till Party B receives the payable from Party A in full.


 


3)                  Costs for sending such Request and related
costs.


 


2.               In the event of failure of Party A to pay back
the principal of any overseas refinancing and the interest and applicable
expenses thereon in full amount, Party B shall have the right to take one or
several measures below:


 


1)                  To transfer the sum due from the account
opened by Party A with the system of the Construction Bank of China or any
other receivable of Party A;


 


2)                  To dispose of the documents and the goods
represented by such documents under the letter of credit/ inward collection,
T/T payment and other method of settlement involved in any overseas refinancing
hereunder; or


 


3)                  To dispose of collateral or pledged properties
or claim compensation against the guarantor.


 


3.               In the event of breach of any provision of
this agreement by Party A, Party B shall have the right to ask Party A to
rectify its misbehaviors within a prescribed time limit, provide guarantee
consistent with the requirements of Party B, transfer any amount payable by
Party A from the account opened by Party A with the Construction Bank of China
and seek any other remedies permitted by law.


 


Article 9                 Modification, Supplement and Interpretation


 


1.               Any modification or supplement to this
agreement shall be agreed upon by the parties hereto and made in writing and
constitute an effective part of this agreement.


 

















 


2.               In the event of any dispute over the
understanding of any provision of this agreement, the true meaning of such
provision shall be determined in accordance with the purpose of this agreement,
words and phrases used in this agreement, applicable provisions, trade
practices and the principle of good faith.


 


Article 10               Attachment


 


Any Application for Overseas Refinancing
submitted by Party A, Advice of Use of Trade
Financing Limit and Advice of Expiration of
Overseas Refinancing issued by Party B to Party A, list of imported
goods and other certificates and documents under the letter of credit/ inward
collection, T/T payment and other method of settlement involved in any overseas
refinancing hereunder shall be attachments to this agreement and constitute an
effective part of this agreement.


 


Article 11               Settlement of Disputes


 


All disputes arising in
the execution of this agreement shall be settled amicably through negotiations.
In case no settlement can be reached, the case in dispute shall be settled
according to the first method set forth below:


 


1)                  To be submitted to the people’s court where
Party B resides for litigation; or


 


2)                  To be submitted to resolution by arbitration
administered by this space intentionally left blank Arbitration
Commission (in (place of arbitration) this space intentionally left blank),
in accordance with the procedure rules of such Arbitration Commission
which are in effect at the time that the application for arbitration is made.
The arbitral award shall be final and binding upon both parties hereto.


 


During the period of
lawsuit or arbitration, the provisions of this agreement not involved in
dispute shall continue to be performed.


 


Article 12               Entry into Force of this Agreement


 


This agreement shall go
into effect after Party A’s legal representative (principal) or authorized
representative signs and affixes the official seal to this agreement and Party
B’s principal or authorized representative signs and affixes the official seal
to this agreement.


 


Article 13               Miscellaneous


 


1.               Party A undertakes to reach the following
indexes during the term of this agreement:


 


1)                  Party A’s credit rating by Party B shall be
equal to or above grade AA.


 


2)                  Party A’s financial situation shall be
maintained at the following level: asset-liability ratio not exceeding 85%,
liquidity ratio not less than 1, contingent liability to net asset ratio not
exceeding 50%.


 


3)                  During the term of credit line, without this
bank’s consent, Party A shall not have any long-term investment at the amount
of more than 10 million Yuan, or issue or have any debt having priority over
the credit provided by Party B. In the event of any changes in the equity
structure during the validity of the credit line, this bank must be notified of
such changes 10 working days in advance.


 


In the event of breach of
any of the above undertakings by Party A, Party B shall have the right to seek
remedies specified in Article 8 hereof.


 


2.               Upon the date of full pay-off by Party A of
all the principle, interest and other expenses payable etc. for the overseas
refinancing provided under the Note Notice of Overseas Refinancing (expiry date
of the trust receipt), Party A shall obtain and enjoy the ownership of the
instruments involved in the transaction as well as the goods that the
instruments represent.


 


Article 14               This agreement is made in three copies.


 


Article 15               Representations


 


1.               Party A clearly understands Party B’s scope of
business and limit of authorization.


 


2.               Party A has reviewed all provisions of this
agreement. Upon Party A’s request, Party B has explained applicable provisions
of this agreement. Party A fully acknowledges and understands the meaning of
the provisions of this agreement and corresponding legal consequences thereof.


 


3.               Party A has the power to execute this
agreement.


 


Party A (official seal):
Source Photonics (Chengdu) Company Limited


Legal Representative
(Principal) or Authorized Representative (signature) Brett John Chloupek


Date:


 


Party B (official seal):
Chengdu Hi-Tech Branch of China Construction Bank


Principal or Authorized
Representative (signature) Signed


Date: