ex10_12.htm


     EXHIBIT 10.12 

    
       Credit
Line Contract 

      


       Contract
No:(2008)0004 

       Party
A:Nanxin
Branch, CIB Shenzhen 

       Address:
1st Floor, Nan Hai Tai
Building, Nanxin Road, Nanshan District, Shenzhen,
China    

       Postcode:518052 

       Phone
# 0755-26077176, Fax
#
0755-26077085 

      


      


       Party
B: SinoHub
SCM Shenzhen, Ltd.  

       Address:6/F, No. 5 Qiongyu Road,
Central Area, Technology Park, Nanshan District, Shenzhen,
China 

       Postcode:518057 

       Phone
# 86-755-26612106, Fax
# 86-755-26612060 

      


       This
contract was signed at CIB Shenzhen Branch, CIB Building, Futian District,
Shenzhen. 

      


       Party
A agreed to provide a credit line to Party B. In order to specify
responsibilities and obligations, Party A and Party B agreed on the following
terms and conditions in accordance with relevant laws and
regulations. 

      


      
        	
                 1   

              	
                 Definition
      and Interpretation 

              


      

      
        	
                 1.1   

              	
                 “Credit
      Granting” means Party A shall comprehensively evaluate the management
      situations and risk factors of Party B, and define the credit line of
      Party B, which includes foreign currency loans, trade financing,
      acceptance of bills, discount on bills, the opening of L/Cs, guarantees or
      the like. 

              


      

      
        	
                 1.2   

              	
                 “Basic
      credit granting” refers to a credit line granted to Party B for funds flow
      based on the basic conditions of Party B. Party B may use the credit line
      gradually and circularly within the
term. 

              


      

      
        	
                 1.3   

              	
                 “Credit
      line term” refers to an uninterrupted period, in which Party B may apply
      for financing under the agreement of Party A. However, the time for Party
      B to fulfill obligations (including but not limited to the performance of
      payment of the main debt and responsibility for the guarantee) shall not
      be limited to the term. 

              


      

      
        	
                 1.4   

              	
                 Party
      A shall take a control of the credit line balance. The balance refers to
      the sum of outstanding credit line and the credit line at
      maturity: 

              


      

      
        	
                 1.4.1   

              	
                 Outstanding
      credit line refers to the sum of loans that are not
    due. 

              


      

      
        	
                 1.4.2   

              	
                 Credit
      line at maturity refers to sum of the loans that are
      overdue. 

              


      

      
        	
                 1.5   

              	
                 “Sub-contract”
      refers to contracts that regulate the amount, the performance terms of the
      debt instrument, rights and obligations for each financing under the
      credit line. This contract is the general contract, all sub-contracts have
      the same legal effect, and they are integral parts of the general
      contract. 

              


      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

         

      

      
        	
                 1.6   

              	
                 “The
      main debt” refers to the principle, which includes but is not limited to
      loan principle for all currencies, trade financing principle, the
      principle of bill acceptance, the bill discount amount, L/C advances, debt
      principle of the guarantee provided by Party A to Party
    B. 

              


      

      


      
        	
                 2   

              	
                 Credit
      Line 

              


      

       Credit
line under this contract is RMB 30
million. If there is a foreign currency financing under the credit line,
that currency shall be exchanged to RMB according to the exchange rate published
by Party A. This credit line can be used for the following
items: 

      


      
        	
                 Business
      name 

              	
                 Amount(
      RMB) 

              	
                 Remark 

              
	
                 1. Import
      L/C Opening 

              	
                 30,000,000.00 

              	
                 15%
      for deposit 

              
	
                 2. Import
      Bill Advance 

              	
                 25,500,000.00 

              	  
      
	
                 3. Import
      services 

              	
                 25,500,000.00 

              	  
      
	
                 4. Short-term
      loan 

              	
                 5,000,000.00 

              	  
      
	
                     The
      credit line can be used among above
items. 

              


      

      


      
        	
                 3   

              	
                 Credit
      Line Term 

              


      

       Term
of the credit line starts on September
25, 2008, and ends on September
25, 2009. 

      


      
        	
                 4   

              	
                 Guarantee 

              


      

      
        	
                 4.1   

              	
                 The
      following are the guarantee contracts for this general
      contract: 

              


      

      
        	
                 4.1.1   

              	
                 The
      first guarantee for Contract
      NO. 2008-0004A Nanxin Branch, CIB Shenzhen, The
      Highest Credit Line Guarantee Contract is the guarantee of the
      guarantor SinoHub
      Electronics Shenzhen
Ltd. 

              


      

      
        	
                 4.1.2   

              	
                 The
      second guarantee for Contract
      NO. 2008-0004B Nanxin Branch, CIB Shenzhen, The
      Highest Credit Line Guarantee Contract is the guarantee of the
      guarantor Shenzhen
      Yin Zhao Co., Ltd. 

              


      

      
        	
                 4.1.3   

              	
                 The
      third guarantee for Contract
      NO. 2008-0004A Nanxin Branch, CIB Shenzhen, The
      Highest Credit Line Guarantee Contract is the personal guarantee of
      Lei
      Xia as a pledgor. 

              


      

      
        	
                 4.1.4   

              	
                 The
      fourth guarantee for Contract
      NO. 2008-0004B Nanxin Branch, CIB Shenzhen, The
      Highest Credit Line Guarantee Contract is the personal guarantee of
      Christina
      Cui as a pledgor. 

              


      

      
        	
                 4.1.5  

              	
                 The
      fifth guarantee (mortgage) for Contract
      NO. 2008-0004 Nanxin Branch, CIB Shenzhen, The
      Highest Mortgage Contract is a Mortgage on a property owned
      jointly (50/50) by HENRY
      THOMAS COCHRAN and LINDA MARIE HETUE (together the
      Mortgagor). 

              


      

      


      
        	
                 4.2   

              	
                 Unless
      otherwise agreed, all debts under the credit line shall be provided with
      maximum guarantee by the guarantor, the mortgagor, or the
      pledgor. 

              


      

      


      
        
          
          

        

        
           2 

          
            

          

        

        
          
          

        

         

      

      
        	
                 4.3   

              	
                 Party
      A has the right to take the measures according to Chapter 6.2 for the
      following situations: 

              


      

      
        	
                 4.3.1   

              	
                 The
      guarantor violates the The
      Highest Credit Line Guarantee Contract, or the guarantor’s credit
      has deteriorated, or the guarantor is not competent to support the
      guarantee. 

              


      

      
        	
                 4.3.2   

              	
                 The
      Mortgagor violates The
      Highest Mortgage Contract, intentionally damages collateral, or the
      collateral value has been or may be significantly reduced, or other
      incidents happen which damage the lien of Party A on the
      mortgage. 

              


      

      
        	
                 4.3.3   

              	
                 The
      pledgor violates The
      Highest Credit Line Guarantee Contract, or the pledged property
      value has been or may significantly reduced, or the right to pledge must
      be fulfilled before the settlement of the loan, or other incidents happen
      which damage the pledge right of Party
A. 

              


      

      


      


      


      
        	
                 5   

              	
                 Rights
      and Obligations 

              


      

      
        	
                 5.1   

              	
                 Within
      the term and the amount limit, Party A shall grant credit to Party B after
      reviewing all the conditions. 

              


      

      
        	
                 5.2   

              	
                 Party
      B shall open a bank account at CIB, and have all the transactions go
      through that bank account. 

              


      

      
        	
                 5.3   

              	
                 Party
      A has the right to access to the financial report and other business
      information of Party B, Party B shall provide timely information to Party
      A of the marketing plans, investment and development plans, and funds
      demand. Party A shall not disclose any trade secrets of Party
      B. 

              


      

      
        	
                 5.4   

              	
                 Party
      B shall provide a full and valid guarantee recognized by Party
      A. 

              


      

      
        	
                 5.5   

              	
                 Party
      A shall provide guidance to Party B on economic policy, business
      management, and credit policy. 

              


      

      
        	
                 5.6   

              	
                 Party
      A has the right to charge fees relating to the credit line. Unless
      otherwise agreed, all necessary costs based on the credit line shall be
      paid by Party B. 

              


      

      
        	
                 5.7   

              	
                 Party
      A has the right to adjust or terminate the credit line for the following
      situations: 

              


      

      
        	
                 5.7.1   

              	
                 Party
      B is having serious operational difficulties and
  risks. 

              


      

      
        	
                 5.7.2   

              	
                 Party
      B is making significant changes in organization (including split-off,
      merging, revocation of license or the
like) 

              


      

      
        	
                 5.7.3   

              	
                 The
      credit of Party B decreases, or Party B does not pay off debt on
      time. 

              


      

      
        	
                 5.7.4   

              	
                 Significant
      changes take place in the
market. 

              


      

      
        	
                 5.7.5   

              	
                 Other
      situations under which Party A shall change the credit
      line. 

              


      

      
        	
                 5.8   

              	
                 Party
      B may apply for an increase on the credit line for a special occasion or a
      particular project. 

              


      

      


      
        	
                 6   

              	
                 Liabilities 

              


      

      
        	
                 6.1   

              	
                 Breach
      of Contract by Party B shall
mean 

              


      

      
        	
                 6.1.1   

              	
                 Party
      B provides untrue information or covers up the truth of corporate
      matters. 

              


      

       

      
        
          
          

        

        
           3 

          
            

          

        

        
          
          

        

         

      

      
        	
                 6.1.2   

              	
                 Party
      B’s credit has deteriorated, or Party B is not competent to support the
      guarantee. 

              


      

      
        	
                 6.1.3   

              	
                 Party
      B violates the sub-contracts. 

              


      

      
        	
                 6.1.4   

              	
                 Party
      B violates the general
contract. 

              


      

      


      
        	
                 6.2   

              	
                 If
      Party B violates the contract, Party A has the right to exercise one or
      more of the following measures: 

              


      

      
        	
                 6.2.1   

              	
                 Suspend,
      reduce, or terminate the credit
line. 

              


      

      
        	
                 6.2.2   

              	
                 Declare
      the expiry of some or all of the credit
  line. 

              


      

      
        	
                 6.2.3   

              	
                 Request
      for full compensation for loss from Party
B. 

              


      

      


      
        	
                 7   

              	
                 Fees 

              


      

       If
either Party breaches the contract, the defaulting party shall pay for all fees,
including but not limited to legal costs, lawyers fees, property preservation
fees, implementation fees, handling fees or the like. 

      


      
        	
                 8   

              	
                 Jurisdiction 

              


      

       The
signing, legal validity, interpretation, performance or disputes of this
contract shall apply to the law of the People's Republic of China. During the
term of the contract, all controversy and dispute shall be dealt through
negotiation. If the two parties are unable to reach an agreement, either party
may demand for arbitration by the Shenzhen Arbitration
Committee. 

      


      
        	
                 9   

              	
                 Notification 

              


      

      
        	
                 9.1   

              	
                 Any
      notice under this contract shall be in writing and delivered to the other
      party as per the address or fax number on the front
    cover. 

              


      

      
        	
                 9.2   

              	
                 Either
      party shall promptly inform the other party of changes in their contact
      information. 

              


      

      
        	
                 9.3   

              	
                 All
      notices that are delivered as per the specified address shall be deemed as
      well received after: 

              


      

      
        	
                 9.3.1   

              	
                 5
      days if the notice is delivered by a registered
  mail. 

              


      

      
        	
                 9.3.2   

              	
                 Receiving
      a confirmation after sending a
fax. 

              


      

      
        	
                 9.3.3   

              	
                 Receiving
      a receipt with the receiver’s
signature. 

              


      

      


      
        	
                 10   

              	
                  Effective
      Conditions of The Contract 

              


      

      
        	
                 10.1   

              	
                  This
      contract shall enter into full force after the following
      conditions: 

              


      

      
        	
                 10.1.1   

              	
                 Both
      parties sign and chop on the
contract 

              


      

      
        	
                 10.1.2   

              	
                 The
      Guarantee (Mortgage, Pledge) contracts under this contract have come into
      effect. 

              


      

      
        	
                 10.1.3   

              	
                 Party
      A requests that this contract be notarized and notarization procedures are
      fulfilled legally. 

              


      

      
        	
                 10.2   

              	
                 This
      contract shall cease to be in effect once all the debts are
      paid. 

              


      

      


      
        	
                 11   

              	
                 Contract
      Documents 

              


      

       This
contract will be executed in quadruplicate, each of the parties, the notary
agency, and the guarantor will have one copy. 

       

      
        
          
          

        

        
           4 

          
            

          

        

        
          
          

        

      

      


      
        	
                 12   

              	
                 Supplementary
      Provision 

              


      

       The
sum of the balances of Contract
No.(2007)0004 and Contract No.(2008)0004 shall not be greater than
RMB30million. 

       

      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              	   	
                                                       Signature Page Follows 

                                                    	   	   
	   	
                                                       

                                                    	
                                                       

                                                    	   	   
	   	 Party A (Corporate Chop)  	
                                                       Legal representative or authorized agent
      

                                                       (signature) 

                                                    	   
	   	   	   	   	   
	   	 Nanxin Branch, CIB
      Shenzhen 	   	 /s/Zhang
      Lesheng 	   
	   	   	   	   	   
	   	   	   	   	   
	   	   	   	   	   
	   	   	   	 August 21,
      2008 	   
	   	   	   	   	   
	   	   	   	   	   
	   	 Party B (Corporate
      Chop)   	
                                                       Legal
      representative or authorized agent 

                                                       (signature) 

                                                    	   
	   	   	   	   	   
	   	 SinoHub SCM Shenzhen,
      Ltd.  	   	 /s/Cui
      Hantao 	   
	   	   	   	   	   
	   	   	   	   	   
	   	   	   	   	   
	   	   	   	 August 21,
      2008 	   


                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

       

       

       

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