Pledge Contract


 


S/N: 37100420120003495


 


(This is a summary translation to be
used for reference only)


 


		Pledgee:	Agricultural Bank of China, Jinan Hi-Tech Development Zone Branch



 


		Pledgor:	Trunkbow Asia Pacific (Shandong) Co. Limited



 


To ensure the performance of Domestic Factoring
Contract (with Recourse) between the Pledgee and the Pledgor (“Master Contract”), the Pledgee and the Pledgor have
entered into the following pledge contract as guarantee.


 


Article 1              Master
Debt under the Guarantee and Amount of the Principal


 


The type of master debt under the guarantee
is factoring financing with recourse, the principal amount of which is RMB 18,000,000.


 


Article 2              Scope
of the Pledge Guarantee


 


The scope of this pledge guarantee includes
the loan principal hereunder and interest, penalty interest, compound interest, default damages and other fees incurred by the
creditor to realize the creditor claims.


 


Article 3              Right
Pledged


 


The Pledgor agrees to pledge its creditor
right to its accounts receivable (see details in the attached “List of Accounts Receivable Transferred”).


 


Article 4              The
Pledgor’s Warranties


 


1.          The
Pledgor has obtained all authorization necessary for the pledge.


 


2.          The
Pledgor has full, uncontestable right to the item pledged.


 



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3.          The
creditor right pledged may be transferred in accordance with the law.


 


4.          There
is no application for cancellation of and annulling the creditor right, nor is there any dispute, seizure, freeze, litigation,
arbitration on such right.


 


5.          The
Pledgor has obtained consent from the joint owner regarding the pledge.


 


6.          The
Pledgor will continue to make payments for all the fees associated with the pledged right and perform other legal obligations to
ensure the effectiveness of such right during the period of the pledge.


 


7.          During
the period of the pledge, the Pledgor will notify the Pledgee in writing upon the occurrence of any of the following:


 


(1)         Application
for cancellation of and annulling the creditor right; any dispute, seizure, freeze, litigation, arbitration on such right;


 


(2)         The
Pledgor is dissolved, having its license cancelled or is ordered to shut down;


 


(3)         The
Pledgor files, or is forced to file, for bankruptcy, restructuring;


 


8.           There
exists no situation that will affect the realization of the creditor’s right.


 


Article 5              Effectiveness
of the Pledged Right


 


The effectiveness of the pledged right extends
to subordination, yield and other asset and rights provided by law.


 


Article 6              Delivery
and Safekeeping of the Certificates of the Pledged Right


 


1.          If
necessary, the Pledgor must deliver the certificates of the pledged right to the Pledgee for safekeeping.


 


2.          If
such certificates are in the form of bank draft, promissory note, check, warehouse receipts, bill of lading or loan certificates,
they should be marked “pledged” on the back.


 


3.          If
registration is required, the pledge must be registered.


 


4.          During
the effective period of the pledge, the Pledgor shall not gift, transfer or dispose of the pledged right in any other form without
the authorization of the Pledgee.


 


5.          During
the effective period of the pledge, if the value of the pledged right decreases, the Pledgor has the right to ask the Pledgor to
provide additional guarantee.


 



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Article 7              Transfer
of the Pledged Right


 


If the Pledgee transfers some of the claims
under the pledged right, the Pledgee has the right not to transfer the corresponding pledgee’s right.


 


Article 8              Realization
of the Pledgee’s Right


 


1.            Upon
the occurrence of any of the following, the Pledgee has the right to exercise its pledgee’s right, and has the right to decide
how to apply the proceeds from the disposition of the pledged item:


 


(1)         The
debt under the Master Contract is due and the Pledgee has not been fully repaid;


 


(2)         The
debtor’s, or the Pledgor’s, license is revoked, or the debtor or the Pledgor is ordered to shut down or dissolved;


 


(3)         The
debtor or the Pledgor is involved in a bankruptcy or settlement proceeding ordered by a court;


 


(4)         The
debtor or the Pledgor is dead or declared missing or dead;


 


(5)         The
pledged right is being cancelled or declared invalid, or is involved in any seizure, freeze, litigation, arbitration or other enforcement
action;


 


(6)         The
Pledgor fails to provide additional guarantee at the Pledgee’s request;


 


(7)         The
Pledgor violates its obligations hereunder;


 


(8)         Other
situations that will affect the realization of the creditor right.


 


2.            If
the pledged bank draft, promissory note, check, warehouse receipts or bill of lading become due prior to the due date of the debt
under the Master Contract, the Pledgee has the right to cash them out or take the delivery and use the proceeds to repay the debt
in advance (or deposit them in escrow).


 


3.            If
the claims under the guarantee are also guaranteed by using property as security, the Pledgee may use such property to realize
its claim and may also ask such guarantor to assume responsibility.


 


4.            If
the Pledgor is a party other than the debtor, the Pledgor agrees to continue to provide such guarantee as necessary.


 



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5.            If
the proceeds from disposition of the pledged right and property is insufficient to repay all the debt due, the Pledgee has the
right to decide the order of applying such proceeds with regard to the debt.


 


Article 9              Return
of the Certificates of the Pledged Right


 


1.            Upon
the full repayment of the debt under the Master Contract, the Pledgee must promptly return to the Pledgor all the certificates
of the pledged right.


 


2.            If
the Pledgor refuses to accept the return of such certificates, the Pledgor has the right to deposit them in escrow at the Pledgor’s
cost.


 


Article 10             Liability
for Breach


 


1.            Upon
the occurrence of any of the following on the part of the Pledgor, the Pledgor must pay default damages and compensate the Pledgee
for any resulting loss:


 


(1)         Failure
to obtain valid authorization necessary for the pledge guarantee;


 


(2)         Withholding
of information regarding dispute, bankruptcy proceeding, seizure, freeze, litigation or arbitration involving the pledge right;


 


(3)         Failure
to provide certificates of the pledge right required;


 


(4)         Disposition
of the pledge right without the Pledgee’s authorization;


 


(5)         Failure
to provide additional guarantee at the Pledgee’s request;


 


(6)         Other
acts in violation of the provisions herein.


 


2.            Upon
the occurrence of any of the following on the part of the Pledgee, the Pledgee must compensate the Pledgor for any resulting loss:


 


(1)         Damage
to or disappearance of certificates of the pledge right due to the Pledgee’s negligence;


 


(2)         Upon
the expiration of the debt performance period, the Pledgor requests the Pledgee to exercise its pledgee right promptly but the
Pledgee delays such exercise.


 






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Article 11          Sharing
of fees


 


All fees paid to a third party in the performance
of this contract will be assumed based on the agreement between the parties hereto. If no such agreement, such fees will be assumed
according to the law or the equitable principle.


 


The laws and regulations referenced herein
are those of the People’s Republic of China, including local statutes and regulations.


 


Article 12          Dispute
Resolution


 


Any dispute arising from this contract must
be resolved through consultation; if such consultation fails, the dispute may be submitted to the local people’s court.


 


During the period of the legal proceedings,
the obligations hereunder not in dispute must continue to be carried out.


 


Article 14          Other
Matters


 


The Pledgor has already received and read
the Master Contract under the guarantee.


 


Article 15          Contract
Effectiveness


 


This contract becomes effective upon execution.


 


Article 16          This
contract is in duplicates, with one to each party.


 


		Pledgee:	Agricultural Bank of China, Jinan Hi-Tech Development Zone Branch



Legal Representative:ZHANF Guiying


 


		Pledgor:	/seal/ Trunkbow Asia Pacific (Shandong) Co. Limited



Legal Representative:/s/ HOU Wanchun


 


April 26, 2012


 



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