Document:

SETTLEMENT AND RELEASE
AGREEMENT

     

    This
SETTLEMENT AND RELEASE AGREEMENT (the “Agreement”) dated as
of this 4th day of
January, 2011, between and among MANHATTAN PHARMACEUTICALS, INC. (“Manhattan”), NORDIC
BIOTECH VENTURE FUND II K/S (“Nordic”), and H
PHARMACEUTICALS K/S (F/K/A HEDRIN PHARMACEUTICALS K/S) (the “Joint Venture”)
(Manhattan, Nordic and the Joint Venture are each individually, a “Party” and
collectively, the “Parties”).

     

    BACKGROUND

     

    WHEREAS, Manhattan and Nordic
are parties to that certain Joint Venture Agreement dated January 31, 2008, as
amended on February 18, 2008, and as further amended by an Omnibus Amendment on
June 9, 2008 (the “JV
Agreement”); and

     

    WHEREAS, pursuant to the JV
Agreement, Manhattan issued to Nordic a “Warrant for the Purchase of Shares of
Common Stock” No. 2008-1, dated April 15, 2008 (the “Warrant”), originally
covering 7,142,857 shares of Manhattan common stock (“Common Stock”);
and

     

    WHEREAS, the JV Agreement
contains certain provisions permitting Nordic to purchase shares of Common Stock
under specified circumstances, and requiring Nordic to purchase shares of Common
Stock under other specified circumstances (the “Put/Call”);
and

     

    WHEREAS, pursuant to the JV
Agreement, Manhattan and Nordic entered into a Registration Rights Agreement
dated February 25, 2009 (the “Registration Rights
Agreement”); and

     

    WHEREAS, pursuant to the JV
Agreement, Manhattan and the Joint Venture entered into a Services Agreement
dated February 25, 2009 (the “Services Agreement”);
and

     

    WHEREAS, pursuant to the JV
Agreement, (i) Nordic, Manhattan and H. Pharmaceuticals Partner ApS (the “General Partner”)
entered into a Limited Partnership Agreement dated February 21, 2008, as amended
by an Ominibus Amendment on June 9, 2008 (the “Limited Partnership
Agreement”), (ii) Nordic and Manhattan entered into a Shareholders’
Agreement dated February 21, 2008, as amended by an Omnibus Amendment on June 9,
2008 (the “Shareholders’
Agreement”), (iii) Articles of Association of the Joint Venture dated
February 21, 2008 were filed (the “JV
Articles”),  and (iv) a Memorandum of Association aand Articles
of Association of the General Partner dated February 21, 2008 were prepared and
filed (the “GP
Memorandum”) (collectively, the “Danish Agreements”);
and

     

    WHEREAS, the Parties have had
various disagreements and disputes with respect to the operation, ownership,
financing of, and other matters relating to, the Joint Venture (including,
without limitation, the Put/Call), as well as with respect to the Warrant, the
Registration Rights Agreement, the Services Agreement, and the Danish Agreements
(the “Disputes”);
and

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    WHEREAS, the Parties hereto
have mutually agreed to resolve any and all Disputes pursuant to the terms and
subject to the conditions hereinafter set forth.

     

    NOW, THEREFORE, for good and
valuable consideration, the receipt and legal sufficiency of which are hereby
acknowledged, the Parties, intending to be legally bound hereby, agree as
follows:

     

    A.           Terms of
Settlement.  The Parties act and agree as follows upon the
effectiveness of this Section A pursuant to Section C of this
Agreement:

     

    1.      Payment.  The
Partnership shall promptly, but in any event within five (5) Business Days (as
defined in the Partnership Agreement) after receipt of the Amendments duly
executed by Manhattan and the Resignations (as defined below) duly executed by
the parties thereto, make a payment of US$100,000.00 to Manhattan in connection
with this Agreement (the “Initial Payment”)
less the Excess Fees (as defined below), if any.

     

    2.      Amendment to Certain Danish
Agreements.  Contemporaneously herewith, Nordic, Manhattan and
the General Partner shall take all necessary action to (i) amend and restate the
Limited Partnership Agreement in its entirety in the form of the Consolidated
and Revised Limited Partnership Agreement attached hereto as Exhibit A together
with Appendices 2.5 and 7.7 thereto; and (ii) amend and restate the JV Articles
in their entirety in the form of Articles of Association attached as Appendix
2.5 of Exhibit
A (the “Amendments”).

     

    3.      Termination of
Warrant.  The Warrant is hereby terminated in all
respects.

     

    4.      Termination of JV Agreement
(including Put/Call).  The JV Agreement (which contains the
Put/Call) is hereby terminated in all respects.

     

    5.      Termination of Registration
Rights Agreement.  The Registration Rights Agreement is hereby
terminated in all respects.

     

    6.      Termination of Services
Agreement.  The Services Agreement is hereby terminated in all
respects.

     

    7.      Termination of the
Stockholders’ Agreement.  The Stockholders’ Agreement is hereby
terminated in all respects.

     

    
      
         

      

      
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    8.      Release by
Nordic.  In consideration of and subject to the release being
provided by Manhattan under Section 9 herein, the terms of this Agreement, and
other good and valuable consideration, Nordic, on behalf of itself and any other
person or entity claiming by, through or under it, including its subsidiaries,
affiliates, present and former officers, directors, employees, beneficiaries,
assignees, agents, shareholders, members, partners and owners (collectively, the
“Nordic
Releasors”), hereby unconditionally forever releases, waives, discharges
and gives up any and all Nordic Claims (as defined below), as the case may be,
which Nordic has or may have, directly or indirectly, against Manhattan and
Manhattan’s subsidiaries, affiliates, present and former officers, directors,
employees, beneficiaries, assignees, agents, shareholders, members, partners,
owners, successors and assigns (collectively, “Released Manhattan
Parties”), arising on or prior to the date hereof or relating to acts or
omissions occurring prior to the date hereof.  “Nordic Claims” means
any and all actions, charges, controversies, demands, causes of action, suits,
rights, and/or claims whatsoever and whether known or unknown, arising directly
or indirectly from any act or omission, whether intentional or unintentional,
asserted or unasserted, contingent or liquidated, which the Nordic Releasors may
have or had against any of the Released Manhattan Parties, including, without
limitation, (i) those arising under, related to or in connection with the
Disputes, the Joint Venture, the JV Agreement, the Put/Call, the Registration
Rights Agreement, the Services Agreement, the Warrant or any of the Danish
Agreements; and/or (ii) for debts, accounts, sums of money, losses, penalties,
license fees, claims for ownership of intellectual property and costs, attorney
fees, covenants, warranties, guaranties, representations, liens, judgments,
claims, counterclaims, cross claims, defenses, demands and damages, arising,
directly or indirectly, out of any promise, agreement, letter, contract (express
or implied), understanding, common law or tort, or the laws, statutes, and/or
regulations of the State of New York, the State of Delaware or any other state,
or any local ordinance, or the United States of America, or
Denmark.  This release covers all Nordic Claims including those of
which Nordic is not aware and those not mentioned in this
Agreement.

     

    9.      Release by
Manhattan.  In consideration of and subject to the release
being provided by Nordic under Section 8 herein, the terms of this Agreement,
and other good and valuable consideration, Manhattan, on behalf of itself and
any other person or entity claiming by, through or under it, including its
subsidiaries, affiliates, present and former officers, directors, employees,
beneficiaries, assignees, agents, shareholders, members, partners and owners
(collectively, the “Manhattan
Releasors”), hereby unconditionally forever releases, waives, discharges
and gives up any and all Manhattan Claims (as defined below), as the case may
be, which Manhattan has or may have, directly or indirectly, against Nordic, the
Joint Venture and the General Partner, and Nordic’s, the Joint Venture’s and the
General Partner’s respective subsidiaries, affiliates, present and former
officers, directors, employees, beneficiaries, assignees, agents, shareholders,
members, partners, owners, successors and assigns (collectively, “Released Nordic
Parties”), arising on or prior to the date hereof or relating to acts or
omissions occurring prior to the date hereof.  “Manhattan Claims”
means any and all actions, charges, controversies, demands, causes of action,
suits, rights, and/or claims whatsoever and whether known or unknown, arising
directly or indirectly from any act or omission, whether intentional or
unintentional, asserted or unasserted, contingent or liquidated, which any of
the Manhattan Releasors may have or had against any of the Released Nordic
Parties, including, without limitation, (i) those arising under, related to or
in connection with the Disputes, the Joint Venture, the JV Agreement, the
Put/Call, the Registration Rights Agreement, the Services Agreement, the Warrant
or any of the Danish Agreements; and/or (ii) for debts, accounts, sums of money,
losses, penalties, license fees, claims for ownership of intellectual property
and costs, attorney fees, covenants, warranties, guaranties, representations,
liens, judgments, claims, counterclaims, cross claims, defenses, demands and
damages, arising, directly or indirectly, out of any promise, agreement, letter,
contract (express or implied), understanding, common law or tort, or the laws,
statutes, and/or regulations of the State of New York, the State of Delaware or
any other state, or any local ordinance, or the United States of America, or
Denmark.  This release covers all Manhattan Claims including those of
which Manhattan is not aware and those not mentioned in this
Agreement.

     

    
      
         

      

      
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    10.     Resignations.  The
Resignations (as defined below) of Michael G. McGuinness and Douglas Abel as
members of the Board of Directors of the General Partner shall become
effective.

     

    B.           Representations, Warranties
and Covenants of all Parties.  Each Party hereby represents,
warrants and covenants to the other Parties to this Agreement as of the date
hereof as follows:

     

    1.      Such
Party has taken all such action necessary to, and has the power and authority
to, enter into, deliver and perform all of its obligations under this Agreement
and to consummate the transactions contemplated hereby so far as they relate to
such Party.

     

    2.      This
Agreement is a legal, valid, and binding obligation of such Party enforceable in
accordance with its terms, except as limited by laws of general applicability
limiting the enforcement of creditors’ rights or by the exercise of judicial
discretion in accordance with general principles of equity.

     

    3.      Such
Party warrants and represents to each other Party hereto that it has not
assigned, pledged, hypothecated and/or otherwise divested itself, and/or
encumbered all or any part, of the claims being released hereby and that such
Party hereby agrees to indemnify and hold harmless any and all of the Parties to
which a release is being granted hereby against whom any claim based on such an
asserted assignment, pledge, hypothecation, divestiture and/or
encumbrance.

     

    4.      Such
Party has not filed any complaint, charge, or lawsuit against the other Party
concerning any claims released under this Agreement with any local, state,
federal or national agency or court, that each will not do so at any time
hereafter, and that if such agency or court assumes jurisdiction of any
complaint, charge or lawsuit against the other Party, the Party initiating same
will request such agency or court to withdraw from the matter, or withdraw the
other Party’s name or names from the matter.

     

    5.      Such
Party represents and warrants that it: (i) has had sufficient opportunity to
review this Agreement with counsel or has chosen voluntarily not to do so, (ii)
has read this Agreement, (iii) understands all the terms and conditions hereof,
(iv) has entered into this Agreement of its own free will and volition, (v) has
duly executed and delivered this Agreement, and (vi) understands that,
except as otherwise agreed, it is responsible for his or its own attorney’s fees
and costs.

     

    
      
         

      

      
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    6.      Manhattan
represents and warrants to the other Parties that (i) the Waiver and Forbearance
Agreement (substantially in the form annexed hereto as Exhibit C) shall
become effective and binding on the holders of all of Manhattan’s 12% Senior
Secured Promissory Notes which were issued pursuant to that certain Securities
Purchase Agreement dated as of November 19, 2008 by and among Manhattan and the
lenders party thereto (the “Notes”) upon the
approval of Waiver and Forbearance Agreement by the holders of at least a
majority of the aggregate principal amount of the Notes (the “Requisite Holders”)
and (ii) the execution and delivery by Manhattan of this Agreement and the
Amendments, the consummation of the transactions contemplated hereby and the
compliance with any of the provisions hereof will not result in the violation of
any law, statute, rule, regulation, order, writ, injunction, judgment or decree
of any court or governmental authority to or by which Manhattan is bound, or of
any provision of the Certificate of Incorporation or By-Laws of Mantattan, and
will not conflict with, or result in a breach or violation of, any of the terms
or provisions of, or constitute (with due notice or lapse of time or both) a
default under (or give rise to any right of termination, cancellation or
acceleration under), any lease, loan agreement, mortgage, security agreement,
trust indenture or other agreement or instrument to which Manhattan is a party
or by which it is bound or to which any of its properties or assets is subject,
nor result in the creation or imposition of any lien upon any of the properties
or assets of Manhattan

     

    7.      Manhattan
represents and warrants to the other Parties that (i) Manhattan’s fair saleable
value of its assets exceeds the amount that will be required to be paid on or in
respect of Manhattan’s existing debts and other liabilities (including known
contingent liabilities) as they mature, (ii) Manhattan’s assets do not
constitute unreasonably small capital to carry on its business for the current
fiscal year as now conducted and as proposed to be conducted including its
capital needs taking into account the particular capital requirements of the
business conducted by Manhattan, and projected capital requirements and capital
availability thereof, and (iii) the current cash flow of Manhattan, together
with the proceeds Manhattan would receive, were it to liquidate all of its
assets, after taking into account all anticipated uses of the cash, would be
sufficient to pay all amounts on or in respect of its debt when such amounts are
required to be paid.  Manhattan does not intend to incur debts beyond
its ability to pay such debts as they mature (taking into account the timing and
amounts of cash to be payable on or in respect of its
debt).  Manhattan has no knowledge of any facts or circumstances which
lead it to believe that it will file for reorganization or liquidation under the
bankruptcy or reorganization laws of any jurisdiction within one year from the
date of this Agreement.  Manhattan is not in default with respect to
any debts and other liabilities.

     

    C.           Conditions
Precedent.  The rights, releases, obligations and agreements
set forth in Section A of
this Agreement shall be effective upon the date on which all of the following
shall have been satisfied (the “Effective
Date”):

     

    1.      Each
of the Parties shall have delivered executed Amendments, and this Agreement, to
the other.

     

    2.      Nordic
shall have made the Initial Payment (less the Excess Fees, if any) to
Manhattan.

     

    3.      Nordic
shall have made an additional, non-dilutive capital contribution of
US$1,200,000.00 to the Joint Venture.  (For avoidance of doubt, this
sum is in addition to the US$300,000.00 contributed by Nordic to the Joint
Venture on December 15, 2010.)

     

    
      
         

      

      
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    4.      The
Joint Venture shall have paid $75,000 to Manhattan representing the entire
outstanding amount due to Manhattan under the Services Agreement for services
rendered through the Effective Date.

     

    5.      Manhattan
shall have delivered to the Joint Venture the resignations of Michael G.
McGuinness and Douglas Abel as members of the Board of Directors of the General
Partner (the “Resignations”).

     

    D.           Second
Payment.

     

    1.      The
Partnership shall, within five (5) business days after conditions set forth in
Section D.2. below are satisfied, pay US$400,000.00 to Manhattan less any Excess
Fees that have not previously been paid or credited to the Joint Venture (the
“Second
Payment”).

     

    2.      Payment
of the Second Payment shall be conditioned upon the delivery to Nordic on or
before December 31, 2011 of (i) written evidence reasonably satisfactory to
Nordic that the Requisite Holders have extended the Maturity Date (as defined in
the Notes) of the Notes to at least December 31, 2011 and confirmed that no
Event of Default (as defined in the Notes) exists as of the date of such
extension or (ii) written evidence reasonably satisfactory to Nordic that all of
the outstanding Notes have converted to solely into shares of common stock or
other equity securities of Manhattan.

     

    E.           Miscellaneous.

     

    1.      Enforcement; Court
Costs.  Subject to Section 10 below, in any action to enforce
the terms of this Agreement, the prevailing party shall be entitled to recover
its attorneys’ fees and court costs and other non-reimbursable litigation
expenses.  Otherwise, each Party shall bear its own attorneys’ fees
and expenses.

     

    2.      No
Admission.  Nothing in this Agreement shall be construed as an
admission or concession of liability or wrongdoing by any Party hereto and or
that any Party fails to satisfy the standard under applicable law for
advancement and indemnification.

     

    3.      Governing
Law.  Each Party agrees that the formation, interpretation and
performance of this Agreement shall be governed by the laws of the State of New
York without giving effect to the principles of conflicts of law of such
state.  The language of all parts of this Agreement shall in all cases
be construed as a whole, according to its fair meaning, and not strictly for or
against any Party.  The Parties hereto agree that any suit or
proceeding arising out of this Agreement or the consummation of the transactions
contemplated hereby shall be brought by a Party only in the Court of Chancery or
such other Delaware courts as may have jurisdiction, in the event that the Court
of Chancery does not have subject matter jurisdiction and each of the Parties
hereby submits to in
personam jurisdiction in Delaware with respect to any claims arising out
of this Agreement or the consummation of the transactions contemplated
hereby.  The Parties hereto each waive any claim that such
jurisdiction is not a convenient jurisdiction or forum for any such suit or
proceeding and the defense of personal jurisdiction.

     

    
      
         

      

      
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    4.      Entire Agreement;
Amendment.  Each Party agrees that this Agreement and, together
with the Amendments, as and when read together set forth the entire agreement
among them on this subject and taken together as a whole supersede all other
oral and written understandings or agreements among the Parties regarding the
subject matter of this Agreement.  The terms of this Agreement are
contractual and not mere recitals.  This Agreement may be modified or
terminated only in writing signed by all Parties.

     

    5.      Counterparts.  This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original and all of which shall be deemed to constitute one and the
same instrument.

     

    6.      Successors and
Assigns.  This Agreement shall be binding upon and inure to the
benefit of the Parties hereto and their respective successors and permitted
assigns.

     

    7.      Headings,
Captions.  All indexes, titles, subject headings, section
titles and similar items are provided for the purpose of reference and
convenience and are not intended to affect the meaning, content or scope of this
Agreement.

     

    8.      Severability.  If
any term of this Agreement shall be held to be invalid or unenforceable for any
reason, it will not invalidate the remaining terms, and such term shall be
deemed modified to the extent necessary to make it enforceable.

     

    9.      Construction.  Unless
the context of this Agreement otherwise clearly requires, (i) references to
the plural include the singular, and references to the singular include the
plural, (ii) references to any gender include the other genders,
(iii) the words “include,” “includes” and “including” do not limit the
preceding terms or words and shall be deemed to be followed by the words
“without limitation”, (iv) the terms “hereof”, “herein”, “hereunder”,
“hereto” and similar terms in this Agreement refer to this Agreement as a whole
and not to any particular provision of this Agreement.

     

    10.     Expenses.  Manhattan
shall bear its own legal and other costs and expenses with respect to the
negotiation and preparation of this Agreement and the Amendments and the
completion of the transactions contemplated by this Agreement, and the Joint
Venture shall bear its and Nordic’s legal and other costs and expenses with
respect to the negotiation and preparation of this Agreement and the Amendments,
the completion of the transactions contemplated by this Agreement, and any
challenge to the enforceability of this Agreement, the Amendments or any other
documents delivered in connection herewith brought by or behalf of Manhattan or
any of its stockholders or creditor, whether in a bankruptcy proceeding or
otherwise.  If Nordic’s and the Joint Venture’s reasonable, actual
out-of-pocket legal and other costs and expenses incurred in good faith with
respect to the negotiation and preparation of this Agreement and the Amendments,
the completion of the transactions contemplated by this Agreement, and any
challenge to the enforceability of this Agreement, the Amendments or any other
documents delivered in connection herewith brought by or behalf of Manhattan or
any of its stockholders or creditor, whether in a bankruptcy proceeding or
otherwise exceed US$70,000.00, then the amount of such excess shall be referred
to herein as the “Excess
Fees.”

     

    
      
         

      

      
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    IN WITNESS WHEREOF, the parties have
caused this Agreement to be executed and delivered in their name and on their
behalf as of the date first above written.

    

    

    MANHATTAN
PHARMACEUTICALS, INC.

    

    

    By:
S/Michael McGuinness

    Print
Name: Michael McGuinness

    Title:
Chief Operating and Financial Officer

    

    

    

    NORDIC
BIOTECH VENTURE FUND II K/S

    

    By:
S/Florian Schonharting

    Print
Name: Florian Schonharting

    Title:
Principal

    

    

    H
PHARMACEUTICALS K/S

    (F/K/A
HEDRIN PHARMACEUTICALS K/S)

    

    

    By:  H. PHARMACEUTICALS PARTNER
APS

    

    By:  S/John
Barberich

    Print
Name: John Barberich

    Title:
Director

    

    By:  S/Enda
Kenny

    Print
Name: Enda Kenny

    Title:
DirectorExhibit
10.1

    

    No.
93062010280056

     

    SPD BANK
(Shanghai Pudong Development Bank)

     

    Working
Capital Loan Agreement

     

    
      
         

      

      
         

        
          

        

      

      
         

      

       

      Exhibit 10.1

    

     

    Working
Capital Loan Agreement

     

    
      	
              Borrower:

            	
              Goldenway
      Nanjing Garment Co., Ltd.

            
	
              Lender:

            	
              Shanghia
      Pudong Development Bank Co., Ltd., Nanjing
  Branch

            

    

    

    Whereas:

    The Borrower for financing applies with
the Lender for a loan of Working Capital; upon examination the Lender agrees to
grant a loan in the light of the terms and conditions of the Agreement. To
specify the rights and obligations of both Parties, now according to the
relating laws, regulations and rules of the People’s Republic of China, throught
the consultation and agreement of the Parties, the Agreement is signed for the
Parties to abide by.

    At the same time, the Borrower and
Lender confirm the following Primary Condition:

    The Agreement is a independent credit
document signed between the Borrower and the Lender (In case Borrower and the
Lender have not reached a financing quota agreement)

     

    Part
One        Business Terms

    

    
      	
              1.

            	
              Loan
      Category: Short-term cerculation fund
loan

            

    

    
      	
              2.

            	
              The
      loan amount under the Agreement is
  RMB10,000,000.00

            

    

    
      	
              3.

            	
              The
      specific usage of the loan under the Agreement is cerculation and
      financing

            

    

    
      	
              4.

            	
              The
      life of loan under the Agreement is from Dec 10, 2010 to Dec 10,
      2011.

            

    

    The
actual drawing date and repaying date are the dates recorded in the receipt made
by the Lender and the Borrower. The last time repayment shall not pass the life
of loan stipulated in the Agreement. The receipt is a inseparable part of the
Agreement.

    
      	
              5.

            	
              The
      interest rate of the loan under the Agreement
  is:

            

    

    
      	
            	
              (1)

            	
              For
      RMB: Decided upon the signing of the Agreement as
  5.56%.

            

    

    
      	
            	
              (2)

            	
              For
      Foreign Currencies: Void

            

    

    
      	
            	
              (3)

            	
              Interest
      Settlement

            

    

    By
seasons i.e. on every 20th of the
last month of a season.

    For
repayment or interests paying in installments, the last paying shall clear both
the capital and the interest.

    
      	
            	
              (4)

            	
              The
      adjustment of the interest rate of the RMB loan under the
      Agreement:

            

    

    Before
the grant of the RMB loan under the Agreement, if Bank of China adjusts the
basic interest rate of loans, the basic interest rate for the granting is
subject to the basic interest rate of People’s Bank of China of the same class
in the same term in which the date of granting falls in; after the loan under
the Agreement is granted, if Bank of China adjusts the basic interest rate of
loans, the basic interest rate for the granting is not to be
adjusted.

    
      	
            	
              (5)

            	
              Void

            

    

    
      	
              6.

            	
              The
      default interest rates under the Agreement
are:

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Exhibit 10.1

     

    
      	
            	
              (1)

            	
              The
      overdue default interest rate is the loan interest rate on the date of the
      overdue added by 30%.

            

    

    
      	
            	
              (2)

            	
              The
      appropriation default interest rate for usages of the loan not stipulated
      in the Agreement is the loan interest rate on the date of the
      appropriation added by 50%.

            

    

    
      	
              7.

            	
              The
      drawing date of the loan under the Agreement is December 10,
      2010.

            

    

    
      	
              8.

            	
              The
      drawing plan of the loan under the Agreement is as the
      following:

            

    

    Drawing
RMB40,000,000.00

    
      	
              9.

            	
              The
      repaying plan of the loan under the Agreement
  is:

            

    

    December
10, 2011 repaying RMB40,000,000.00

    
      	
              10.

            	
              Void

            

    

    
      	
              11.

            	
              Void

            

    

    
      	
              12.

            	
              Account
      opening

            

    

    Non-professional
mode:

    (1) The
common settlement account opened by the Borrower at the Lender:

    Opening
Bank: SPD BANK North-West Branch

    Account
Name: Goldenway Nanjing Garment Co., Ltd.

    Account
Number: 93060155300000366

    (2) The
capital withdrawal account opened by the Borrower at the Lender:

    Opening
Bank: SPD BANK North-West Branch

    Account
Name: Goldenway Nanjing Garment Co., Ltd.

    Account
Number: 93060155300000366

    
      	
              13.

            	
              The
      Lender is entrusted to pay: If the payee is definite and a single payment
      amounts over RMB30,000,000.00 a loaner-entrusted-payment mode shall be
      adopted.

            

    

    
      	
              14.

            	
              Void

            

    

    
      	
              15.

            	
              The
      guarantor confirmed by the Lender to guarant the debt under the Agreement
      and the Guarany Agreement include:

            

    

    Mortgagor:
Goldenway Nanjing Garment Co., Ltd. Mortgage Agreement Number
YD9306201028005601

    
      	
              16.

            	
              Void

            

    

    
      	
              17.

            	
              Void

            

    

    
      	
              18.

            	
              Void

            

    

    
      	
              19.

            	
              The
      Agreement is made in Four Copies, of which one is held by the Lender, two
      are held by the Borrower, one is held by the Real Estate Managing Bureau,
      each has the same legal force.

            

    

    

    Part
Two        General Terms

     

    Term
One  Loan

    

    
      	
              1.

            	
              The
      borrower irrevocably agrees and confirms that: At any time the drawing of
      the loan under the Agreement is subject to the full jurisdiction of the
      Lender; the loan is subject to periodic or aperiodic checkings on dates
      decided by the Lender’s full jurisdiction, whence to decide whether to
      continue to lend to the Borrower any fund in any form; despite other
      existing stipulations in the Agreement or any other ducuments, the Lender
      has the right at any time to demand the Borrower to settle all the loans
      immediately. The Lender also has the right to teminate immediately or
      suspend all or a part of the loan, to undo any further usage of the loan
      borrowed, not needing to notify the borrower in
  advance.

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

      

    Exhibit 10.1

     

    
      	
              2.

            	
              The
      loan under the Agreement shall be used for the purpose stipulated in the
      Agreement, the Lender shall not approriate, crowd out the loan to invest
      in real estate, shareholding, etc., shall not use the loan in field or for
      the purpose prohibited by the state, or in activities not in conformity
      with the usage of loan for circulating
fund.

            

    

    

    Term
Two     Loan Interest Rate and Its
Calculation

    

    
      	
              1.

            	
              Except
      for other stipulations in the Agreement, the loan interest is collected
      from the date when the Lender grants the loan according to the actual
      amount drawn and the number of days it is used. The number of days include
      the first day and do not include the last day. Daily interest rate =
      monthly interest rate / 30, and monthly interest rate = yearly interest
      rate / 12.

            

    

    
      	
              2.

            	
              The
      Lender has the right to collect interests for due (“due” in the Agreement
      also means the situation where the Lender announces a loan is due ahead of
      schedule) loan capital, from the date it was due, according to the
      interest rate for due loan stipulated in the Agreement by the number of
      days it had been due, until when the Borrower had paid off both the
      capital and the interest.

            

    

    
      	
              3.

            	
              If
      the Borrower had used the loan capital for purposes other than what is
      stipulated in the Agreement, the Lender has the right to collect interests
      for the amount used in violation, from the date of the violation,
      according to the penalty interest rate for appropriation stipulated in the
      Agreement by the number of days of the violation, until when the Borrower
      had paid off both the capital and the
interest.

            

    

    
      	
              4.

            	
              The
      Lender has the right to collect a compound interest on the interest paying
      date stipulated in the Agreement for interest not paid by the Borrower
      timely (including normal interest, overdue penalty interest, appropriation
      penalty interest), from the date of it was overdue, according to the
      penalty interest rate for overdue payment on the interest paying date (the
      next day of the expiry date for interest) stipulated in the Agreement, and
      it is calculated by the number of overdue
days.

            

    

    
      	
              5.

            	
              Interest
      Rate Marketization and Market
Paralysis

            

    

    
      	
            	
              (1)

            	
              After
      the loan under the Agreement is granted, if Bank of China carries out a
      marketization policy for loans of RMB, the Lender and the Borrower shall
      negotiate to decide a interest level. If no agreement is reached within 5
      bank working days after starting the negotiation, the Lender shall pay off
      all the capital and interest within 30 days after the failure to reach an
      agreement. (this is applicable to
RMB)

            

    

    
      	
            	
              (2)

            	
              After
      the loan under the Agreement is granted, if at 11 o’clock (London Time)
      a.m. on the quoting day of the related interest no related bank quotes
      intrest rates on the US Dollar deposit to the major banks on the call
      market of inner London banks, the Lender shall negotiate with the Borrower
      to determine a substitute interest rate. If no agreement is reached within
      5 bank working days after starting the negotiation, the Lender shall pay
      off all the capital and interest within 30 days after the failure to reach
      an agreement. (this is applicable to foreign
  currencies)

            

    

      

    
      
         

      

      
         

        
          

        

      

      
         

      

       

      Exhibit 10.1 

       

    

    Term
Three      Drawing the Loan

      

    
      	
              1.

            	
              Before
      the first-time drawing, the Borrower shall meet the following conditions,
      but the Lender has no obligation to check the authenticity of the
      following ducuments or conditions:

            

    

    
      	
            	
              (1)

            	
              To
      produce a Drawing Application Form (as attached to the Agreement) by the
      time and manner stipulated in the Agreement, a fill-out Borrowing (Loan)
      Certificate and other documents
needed;

            

    

    
      	
            	
              (2)

            	
              The
      Agreement and the corresponding Guaranty Agreement (if any) have been
      signed and keeps to be effective, and the guaranty right has been
      effectively set up;

            

    

    
      	
            	
              (3)

            	
              To
      present the currently effective and Business Certificate, Company Rules,
      Financial Statements immediately before the drawing date (including but
      not limited to the annual financial report of last year and the statement
      of current term which have been audited by a registered
      accountant);

            

    

    
      	
            	
              (4)

            	
              To
      produce the Borrowing Resolution made by Board of Directors / Shareholders
      or other organizations with equal effectiveness, an Authorization by the
      Legal Representative to his authorized representative and the original
      samples of the signatures of the Legal Representative and the authorized
      representative;

            

    

    
      	
            	
              (5)

            	
              The
      Borrower has opened a related account at the Lender’s according the
      request of the Lender;

            

    

    
      	
            	
              (6)

            	
              The
      Borrower has fulfilled the obligations under the Agreement, no violation
      is made on any terms in the
Agreement;

            

    

    
      	
            	
              (7)

            	
              Documents
      and conditions required by the Lender from time to
  time.

            

    

    

    
      	
              2.

            	
              Other
      than the first-time drawing, before every time of the drawings, the Lender
      shall meet the following conditions, but the Lender has no obligation to
      check the authenticity of the following ducuments or
      conditions:

            

    

    
      	
            	
              (1)

            	
              To
      produce a Drawing Application Form (as attached to the Agreement) by the
      time and manner stipulated in the Agreement, a fill-out Borrowing (Loan)
      Certificate and other documents
needed;

            

    

    
      	
            	
              (2)

            	
              The
      Borrower has fulfilled the obligations under the Agreement, no violation
      is made on any terms in the
Agreement;

            

    

    
      	
            	
              (3)

            	
              Documents
      and conditions requried by the Lender from time to
  time.

            

    

    

    
      	
              3.

            	
              Drawings

            

    

    
      	
            	
              (1)

            	
              The
      Lender shall draw one-off or in stallments according to the drawing plan
      under the Agreement, and produce a Drawing Application (see attachment 1
      or 2) 3 bank working days before every drawing date to complete the
      drawing procedure.

            

    

    
      	
            	
              (2)

            	
              In
      cases the Borrower needs to delay or change the drawing date, he shall get
      the consent of the Lender 3 bank business days before the drawing date
      expires, and pay the interest loss suppered by the Lender therefrom (the
      interest loss = the interest accrued during the delayed period – interest
      on current account in the same
term.

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

      

    Exhibit 10.1

     

    
      	
            	
              (3)

            	
              In
      cases the Borrower demands to cancel all or a part of the undrawn loans,
      he shall apply with the Lender 3 bank business days before the fixed
      drawing date or the expiring date of drawing, and the cancellation is only
      possible with the consent of the
Lender.

            

    

    
      	
            	
              (4)

            	
              At
      the fixed drawing date or within the drawing period, if no drawing
      procedure is completed or no application is made for delayed drawings, the
      Lender may notify the Borrower to finish the related procedures within 3
      bank business days; if not finished within the time limit, the Lender has
      the right to cancel the undrawn
loan.

            

    

    
      	
            	
              (5)

            	
              Depite
      the aforementioned stipulations in this term, only if the loan is not
      granted yet, the Lender has the right to refuse the drawing application by
      the Lender and cancel all or a part of the loan under the
      Agreement.

            

    

       
  

    Term
Four       Account Opening and Its
Management

     

    
      	
              1.

            	
              When
      the Lender signs the Agreement, he shall have opened a common settlement
      account and a capital withdrawal account (see the Part One of the
      Agreement), and a specific Working Capital loan account (if any) as
      stipulated by the two Parties. The Lender agrees that the Lender monitors
      the aforementioned accounts.

            

    

    
      	
              2.

            	
              If
      a specific Working Capital loan account is not opened, the common
      settlement account is used to check the granting of the loans applied by
      the Borrower with the Lender and the payment of the loaned
      fund.

            

    

    In the
case a specific Working Capital loan account is opened, the account is used to
check the granting of the loans applied by the Borrower with the Lender and the
payment of the loaned fund, the interest on the fund in the account is
calculated as current deposit. The Borrower agrees that besides the seal
reserved by the Borrower for the specific Working Capital loan account, a
Lender’s supervision seal for Working Capital and loan fund also needs to be
reserved. Without a written consent of the Borrower, the Lender shall not freely
alter the the reserved seals for the specific Working Capital loan
account

    
      	
              3.

            	
              The
      Borrower confirms that the capital withdrawal account constitutes a income
      account and a repayment reserve account under the Agreement. The cash flow
      of the Borrower’s income or his integral cash flow shall be deposited in
      the capital withdrawal account.

            

    

    The
Borrower assures that on every captial and interest repaying date and within the
3 days before it, the balance fund in the Borrower’s capital withdrawal account
is not less than the amount the Borrowers shall repay of the capital and the
interest in the same term. The Borrower also agrees that on every captial and
interest repaying date and within the 3 days before it, the Lender has the right
to astrict or refuse Borrower’s paying actions which may make the balance fund
in the capital withdrawal account to be less than the amount the Borrowers shall
repay of the capital and the interest in the same term, such to ensure the
balance fund in the capital withdrawal account is sufficient to pay the amount
the Borrowers shall repay of the capital and the interest in the same
term.

    The
Lender has the right to monitor the capital withdrawal account, and when any
abnormality occurs in the capital flow of the account, the Lender has the right
to have the Borrower to find out the cause and adopt matching
measures.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

       

      Exhibit 10.1 

       

    

    Term
Five       Payment Supervision

     

    
      
        
          	
                	
                  1.

                	
                  The
      Borrower agrees that, the Lender has the right to manage and control the
      payment of the loaned fund through the manners of Lender-entrusted payment
      or/and Lender-determined payment, in order to supervise that the loaned
      capital is used for the purposes stipulated in the
    Agreement.

                

        

      

    

     

    Lender-entrusted
payment, means that the Lender, upon the Borrower’s drawing applications or
paying entrustment, pays the loaned fund to the business counterpart of the
Lender for the usage stipulated in the Agreement through the Borrower’s
account.

    

    Lender-determined
payment, means that after the Lender, upon a Borrower’s drawing application,
grants the loaned fund into the Borrower’s account, the Lender pays the loaned
fund himself to his business counterpart for the usage stipulated in the
Agreement.

    

    
      
        	
              	
                2.

              	
                The
      Lender agrees that, if the Lender and the Borrower have newly established
      a credit business relation and the Lender has a common credit status, or
      the payee is specific and a single payment amounts over the stipulated
      amount (see Part One of the Agreement), or other situations confirmed by
      the Lender, a Lender-entrusted paying mode shall be
    adopted.

              

      

    

    

    When a
Lender-entrusted paying mode is adopted, the Lender has the right to check
whether the payee, paying amount etc. stated by the Lender are in conformity
with the cirtifying documents such as the business contract, in the light of the
loan usage stipulated in the loan contract. If it is agreed after the checking,
the Lender pays the loaned fund to the business partner of the Lender through
the account of the Borrower.

    

    
      
        	
              	
                3.

              	
                When
      the Borrower applies with the Lender for a outgoing payment, he shall
      produce the cirtifying documents that meet the requirement of the Lender,
      including but not limited to:

              

      

    

    
      
        	
              	
                (1)

              	
                What
      cirtifies the usage of the payment is in conformity with the usage
      stipulated in the Agreement;

              

      

    

    
      
        	
              	
                (2)

              	
                Business
      contract and written documents that truly reflects the paying obligations
      of the Lender;

              

      

    

    
      
        	
              	
                (3)

              	
                If
      a receipt is not obtained at the time of payment, the Borrower shall make
      the and provide it after the payment is
done.

              

      

    

    
      
        	
              	
                (4)

              	
                Legal
      and effective paying
certificate.

              

      

    

    
      
        	
              	
                (5)

              	
                Other
      documents to be provided as required by the
  Lender.

              

      

       

    

    
      
        	
              	
                4.

              	
                If
      a specific circulating fund account is not opened, the Lender shall
      produce a drawing application to the Lender 3 bank business days before
      the planned drawing, and comment on whether to adopt a Lender-entrusted
      payment or a Lender-determined payment. The Lender confirms that, the
      borrower has the right to check whether the related documents provided by
      the Borrower are in conformity with the paying conditions stipulated in
      the Agreement, and has the power to decide a paying mode of the
      loan.

              

      

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Exhibit
10.1

      

    To open a
specific circulating fund loan account, and to adopt a Lender-entrusted paying
mode, the Lender shall provide to the Lender a paying application (see
attachment 3 of the Agreement) stamped with the reserved seal of the Lender 3
days of the bank business day before the paying date, and the Lender has the
right to check whether the related documents of the Borrower are in conformity
with the paying conditions of the Agreement. If it is agreed through the check
by the Lender, the payment shall be made with a circulating fund loan capital
supervision seal stamped on the paying instrument. If a Borrower-determined
paying mode is adopted, the Borrower shall provide to the Lender a paying
application (see attachment 3) and other documents 3 bank business days in
advance, and the Lender has the right to check whether the related documents
provided the Lender are in conformity with the conditions stipulated in the
Agreement. If it is agreed through the check of the Lender, the Borrower shall
fill in the paying instrument (each amount of the accumulated paying instrument
shall not be more than the Lender-enstructed amount stipulated in the
Agreement). After checking, the Lender stamps a circulating fund loan capital
supervision seal on the accumulated paying instrument, and transfers the
corresponding capital to the common settlement account of the
Borrower.

    
      	
               
      

            	
              5.

            	
              If
      a Borrower-determined paying mode is adopted, the Lender shall produce a
      accumulated report on the self-determined paying situation to the Lender
      monthly. The Lender has the right to check whether the loan payment of the
      Borrower is in conformity with the arranged usage and the stipulated
      paying mode through account analysis, instrument examination, on-the-spot
      inspection, etc.

            

    

    
      	
               
      

            	
              6.

            	
              The
      Borrower confirms that, he shall pay the Lender a transferring fee
      accurred from paying the loan capital, which can be deducted from the
      related account directly.

            

    

    
      	
               
      

            	
              7.

            	
              During
      the granting and paying procedures, in each of the following cases, the
      Lender has the right to require the Lender to renew the drawing and paying
      conditions, or to alter the loan-paying mode, to stop the granting of
      paying of the loan fund:

            

    

    
      
        	
              	
                (1)

              	
                The
      credit status declines;

              

      

    

    
      
        	
              	
                (2)

              	
                The
      profit-making force of the main business is not
  strong;

              

      

    

    
      
        	
              	
                (3)

              	
                The
      loan capital usage shows
abnormity.

              

      

    

    

    Term
Six      Repayment

     

    
      	
              1.

            	
              The
      Borrower shall repay the capital and the interest of the loan and the
      related expenses timely and fully in the light of the repaying plan
      stipulated in the Agreement, and the Borrower hereby irrevocably accredits
      the Lender to have the right to automaticly transfer the aforementioned
      claimed amount from the account he had opened at the Lender’s when the
      loan reaches the expiring date or the conditions are met under the
      Agreement.

            

    

    
      	
              2.

            	
              When
      the Borrower repays the loan in advance, he shall notify the Lender and
      get the Lender’s consent 10 bank business days before the anticipated
      repaying date. Without a written consent beforehand, the Borrower shall
      repay the capital and pay the interest in the term stipulated in the
      Agreement. For the part of loan repaid in advance without a written
      consent of the Lender, the Lender shall collect a certain sum of penalty
      from the Borrower at a time (see Part One of the
    Agreement).

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Exhibit 10.1 

     

    The
repayment in advance with the consent of the Lender, is deemed to be a loan
expiring in advance. Under such the Lender also has the right to demand the
Lender to pay a certain sum of penalty in the light of the stipulations of the
Agreement (see Part One of the Agreement)

    For a
loan repaid in advance, the interest shall be calculated according to the actual
number of days within which the loan is used and the interest shall be repaid
together with the capital. The capital amount repaid in advance shall not be
less than the limited stipulated in Part One of the Agreement; the capital
repaid shall offset the loan capital in a reversed order to the repaying order
of the repaying plan.

    
      	
              3.

            	
              When
      the Borrower fails to repay the loan timely due to justifiable cause, he
      shall apply with the Lender for a extension ot the loan 30 bank business
      days before the repaying date stipulated in the Agreement, and prepare the
      necessary documents to the extension procedure. If the loan under the
      Agreement has guaranty, mortgage or pledge, he shall provide a written
      agreement to the guarantor, mortgager or pledger. It is decided by the
      Lender whether to extend the loan term, if the Lender fails to apply for
      an extension or the applicatin gets no approval by the Lender, the loan is
      transferred into the overdue loan from the next day of the expiring date
      of the loan.

            

    

     

    Term
Seven       Statement and
Assurance

     

    The
Borrower makes the following statements and assurance to the Lender, and the
statements and assurance are made at the same time when the Agreement is signed,
and is effective throughout the term of the Agreement.

    

    
      	
              1.

            	
              The
      Borrower is an independent legal entity, and has the necessary rights and
      capabilities, and is able to perform the obligations of the Agreement in
      the name of himself and assume the civil responsibilities
      independently.

            

    

    
      	
              2.

            	
              The
      Borrower has the right to sign the Agreement, and has completed all the
      authorization and approval by the board of shareholders, board of
      directors and other appreciate authorized organizations, which are needed
      to sign the Agreement and perform the obligations under the Agreement. All
      the terms and conditions are the intension expressed in genuine of the
      Borrower, and has the legal binding on the
  Borrower.

            

    

    
      	
              3.

            	
              The
      signing and perfoming of the Agreement violate no laws the Lender abides
      by (the laws under the Agreement include the laws, regulations, rules,
      local rules, and legal expressions, and the same is for the following),
      the related documents, verdicts, arbitraments do not contradict with the
      business rules of the Borrower or any contract, agreement ever signed by
      the Borrower, or any other obligations assumed by
  him.

            

    

    
      	
              4.

            	
              The
      Borrower guarantees that all the financial statements (if any) made by him
      are in conformity with the law of the People’s Republic of China (for the
      purpose of the Agreement they do not include the laws of Hong Kong, Macao
      special administration regions and Taiwan region), the statements are
      true, complete, and fair in reflecting the financial status of the
      Borrower; and all the information the Borrower provided to the Lender,
      including all the information, documents, data of himself and the
      guarantor during the performance of the Agreement are true, effective,
      accurate, complete without any concealment or
  omit.

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

      

    Exhibit 10.1

     

    
      	
              5.

            	
              The
      Borrower abide by the honest and credit principles when signing and
      performing the Agreement, and all the information the Borrower provided to
      the Lender, including all the information, documents, data of himself and
      the guarantor during the performance of the Agreement are true, effective,
      accurate, complete without any concealment or
  omit.

            

    

    
      	
              6.

            	
              The
      Borrower guarantees that he completes all the filing and registrating
      procedures in order to keep the Agreement effective and able to be
      performed by law and pays all the taxies and expenses
      therefore.

            

    

    
      	
              7.

            	
              The
      business stauts and the financial status of the Borrower have not changed
      gravely since the last audited financial statement was
      released.

            

    

    
      	
              8.

            	
              All
      the business activities strictly abide by the law and the regulations, and
      are conducted strictly according to the Borrower’s business license and
      the laws, and registration and annual inspection procedures are completed
      in time, the production or business is legal and complies with the
      regulations, and has the ability of continuous operation, and has legal
      resources to repay.

            

    

    
      	
              9.

            	
              Do
      not abandon any due claims, and do not dispose of the current property in
      a voluntary or other improper ways.

            

    

    
      	
              10.

            	
              The
      Borrower has revealed to the Lender what he knows or what he should know,
      and important facts and status for the Lender to decide whether to grant
      the loan.

            

    

    
      	
              11.

            	
              The
      Borrower confirms that, no overdue payment occurred or should occur on the
      signing date of the Agreement or during the performance of the Agreement,
      including but not limited to the salary of employees and medical and
      disability subsidies, comfort and compensation,
  etc.

            

    

    
      	
              12.

            	
              The
      Borrower assures that he has a good credit status and has no bad
      record.

            

    

    
      	
              13.

            	
              The
      Borrower assures that no situation or evernt will cause or may cause major
      negative effect to the Borrower’s performing ability of the
      Agreement.

            

    

     

    Term
Eight         Stipulations

     

    It is
stipulated by the Borrower and the Lender as follows:

    

    
      	
              1.

            	
              The
      Borrower assures to operate by the law, and use the loan as stipulated in
      the Agreement, and not to appropriate it. The Borrower shall provide all
      kinds of financial statements including monthly, annual statement as
      required by the Lender, and actively cooperate with the Lender to
      supervise the usage of the loan and the Borrower’s business status. The
      Lender may inspect and supervise the loan usage at any
    time.

            

    

    
      	
              2.

            	
              The
      Borrower shall repay the capital and interest under the Agreement
      according to the time, amount, currency and interest rate stipulated in
      the Agreement, application, Borrowing (Lending) Instrument, all of which
      are actually recorded in the Borrowing (Lending)
    Instruments.

            

    

    
      	
              3.

            	
              The
      Borrower assures that, once major and unfavoring events occurred which
      might be enough to impair the Guarantor’s financial status or his ability
      to perform the guaranty obligations, the Borrower shall provide a new
      guarantor confirmed by the Lender
timely.

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

      

    Exhibit 10.1

     

    
      	
              4.

            	
              The
      Borrower promises that, before obtaining a written agreement for the
      Lender, no following action shall be
adopted:

            

    

    
      	
            	
              (1)

            	
              Selling,
      giving, leasing, lending, transferring, pledging, mortgaging all or a part
      of his major property or in whatever other
way.

            

    

    
      	
            	
              (2)

            	
              Agreementing,
      leasing, co-operating, investing outward, shareholding-changing,
      amalgamating (merging), joint-venturing (cooperating), division,
      share-transferring, substantial increasing of claimed financing, setting
      up susidiaries, transferring proper right, reducting capital,
      business-terminating, disolving, bankruptcy applicating, re-structuring
      and other conducts which may affect the repaying ability of the
      Borrower.

            

    

    
      	
            	
              (3)

            	
              Modifying
      company charter or other document of the company set-up, changing the
      business scope or the main business of the
  company.

            

    

    
      	
            	
              (4)

            	
              A
      guaranty provided by a third party which render major and unfavoring
      effects on his financial status or his ability to perform the obligations
      under the Agreement.

            

    

    
      	
            	
              (5)

            	
              Clearing
      off other long-term claims.

            

    

    
      	
            	
              (6)

            	
              Signing
      the contracts/agreements which have major and unfavoring effects on the
      ability of the Borrower in performing the obligations under the Agreement,
      or assuming other obligations with the same
  effects.

            

    

    
      	
              5.

            	
              The
      Borrower promises that, whenever the following evernts occur, he shall
      notify the Lender on the days of the occurrence, and delivers the written
      notice 5 bank business days after the evernt to the Lender (with official
      seal stamped):

            

    

    
      	
            	
              (1)

            	
              Occurrence
      making the statements made by the Borrower under the Agreement untrue,
      inexact or ineffective.

            

    

    
      	
            	
              (2)

            	
              The
      Borrower or his holding shareholder, actual controller or correlating
      person involve in a lawsuit, arbitration or detention, cealing-up,
      freezing, or enforcement of his property, or are enforced other measurs
      with same effects, or his legal person/person in charge, director, monitor
      or senior manager involves in a lawsuit, arbitration or other
      enforcement.

            

    

    
      	
            	
              (3)

            	
              The
      legal representative of the Borrower or his authorized agency, person in
      charge, major financial chief, address, company name, office location has
      changed.

            

    

    
      	
            	
              (4)

            	
              To
      be re-structured through the application of other creditors, bankrupt or
      be canceled by a superior
organization.

            

    

    
      	
            	
              (5)

            	
              Occurrence
      of other major and unfavoring events enough to affect the repaying ability
      of the Borrower.

            

    

    
      	
              6.

            	
              The
      Borrower promises not to violate the normal repaying order and repay other
      loans with priority, and nor now neither in the future would sign any
      contract or agreement which shall render the loan under the Agreement to
      be in a subordinate status.

            

    

    
      	
              7.

            	
              The
      Borrower to the best of his ability repays the capital and interest under
      the Agreement in the same currency. If in a different currency, he shall
      by himself, or authorizes an agency to exchange the one into the currency
      of the loan to repay the capital and the interest in the light of the
      Deducting and Transferring Stipulation under the Agreement. The expences
      of which are to be born by the Borrower. When the Guarantor repays for the
      Borrower in a different currency, it is subject to the Deducting and
      Transferring Stipuation, all expenses occurred are born by the
      Borrower.

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

      

    Exhibit 10.1

     

    
      	
              8.

            	
              When
      the guaranty under the Agreement meets with specific situation or has
      specific changes, the Borrower shall provide the Lender other guarantee
      according to the requirement of the Lender. The specific situation or
      specific change includes by are not limited to the stopage, suspension,
      disolvement, stopage for retification, revocation of the business license
      or to be canceled, to be canceled or re-structured through application,
      bankruptcy, major changes in business or financial situations, involvement
      in major lawsuit or arbitration, legal representative, director, monitor
      or senior manager invlove in lawsuit, the devaluation or the pledge, or a
      possiblity or revaluation or to be concealed or to be preserved, there is
      violation under the guaranty contract and a demand to disolve the guaranty
      contract, etc.

            

    

    
      	
              9.

            	
              The
      Lender has the right to have a on-the-spot or non-on-the-spot due
      diligence investigation on the Borrower, to have a after-loan
      investigation on the Borrower about his business situation, financial
      situation, loan usage, repaying situation, etc. The Borrower has the
      obligation to cooperate with the Lender in the loan-paying management,
      after-loan management and the related
  inspections.

            

    

    
      	
              10.

            	
              The
      Lender has the right to withdraw the capital under the Agreement in
      advance judging from the captital withdrawal on the part of the
      Borrower.

            

    

    
      	
              11.

            	
              Special
      Stipulations about the Group Customer (applying to group
      customers)

            

    

    If the
Borrower of the Agreement is one of the Group Customers, the Borrower promises
hereunder:

    
      	
            	
              (1)

            	
              The
      Borrower shall report the situation of a related-party transaction
      involving more than 10% of th net property of the credit beneficiary,
      including: 1The relation
      between the related parties; 2The
      transaction item and quality; 3The amount
      of transactin the ratio;4The pricing
      policy (including the transactions without amount or with a symbolic
      amount)

            

    

    
      	
            	
              (2)

            	
              When
      the credit beneficiary has one of the following, it is deemed the
      Borrower’s violation of the Agreement, and the Lender has the right to
      decide unilaterally whether to cancel the unused credit, and take back a
      part of all the used credit, or demand the customer to add up to 100%
      security cash.: 1Providing
      false information or concealing important financial facts; 2Arbitrarily
      alter the usage of the credit without the Lender agreed; 3Make use of
      the false contract between the related parties, with the receivable
      instrument, receivable account without an actual background, to discount
      for cash or pledge, to extract funds or credits from the banks; 4Refuse to
      accept the monitoring or  inspection on the usate of the loaned
      fund or the related operating and financial situation by the Lender; 5Major
      amalgamation, purchase which seen by the Lender may affect the safety of
      the credit-giving; 6Willingly
      evade the bank claims through related-party
  transactions.

            

    

      

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Exhibit
10.1

     

    Term
Nine    Deducting and Transferring Stipulations

      

    
      	
              1.

            	
              The
      Borrower agrees that, when the first debt is due which is related to the
      loan of the Agreement, the Lender has the right to directly deduct and
      transfer the Borrower’s fund in his premium account and/or capital
      withdrawal account opened at SPD Bank to pay for the debt. When the fund
      in the premium account and/or capital withdrawal account is not sufficient
      to pay for the debt, the Lender has the right to deduct and transfer the
      Borrower’s fund at any branches of SPD
Bank.

            

    

    
      	
              2.

            	
              Except
      for other stipulations by the organizations of the state, the order of the
      clearing off with the deducted fund shall be firstly repaying the unpaid
      due expenses, then the unpaid due interest, finally the unpaid due
      capital.

            

    

    
      	
              3.

            	
              If
      the deducted fund is in a different currency than the fund cleared off,
      then the following measures are
taken:

            

    

    
      	
            	
              (1)

            	
              If
      the loan is RMB, then the currency is exchanged into RMB to clear off the
      capital and the interest at the RMB buying exchange rate publicized at the
      time when the fund is deducted.

            

    

    
      	
            	
              (2)

            	
              If
      the loan is not in RMB, and the deducted currency is in RMB, then the RMB
      is exchanged into the deducted currency clear off the capital and the
      interest at the RMB selling exchange rate publicized at the time when the
      fund is deducted.

            

    

    
      	
            	
              (3)

            	
              If
      the loan is not in RMB, and the deducted currency is not in RMB either,
      then the deducted currency is firstly exchanged into RMB at RMB buying
      rate at the deducting time, and then the RMB is exchanged into the loan
      currency at the RMB selling exchange rate publicized at the time when the
      fund is deducted, to clear off the capital and
  interest.

            

    

    

    Term
Ten      Financial Claim Certificate

    

    The
Lender, according to his consistent business convention, keeps the related
accounts related to the business activities involving the Agreement on his
accounting books, to certify the loan amount of the Lender. The Borrower admits
that the effective instrument of the loan in the Agreement is subject to the
record and instrument issued according to the Lender’s business
regulations.

    

    Term
Eleven        Notification and Its
Delivery

    

    
      	
              1.

            	
              The
      notification from a Party of the Agreement to another Party, shall be
      delivered to the address listed on the page bearing the signatures, until
      a written notice of the address alteraton is made by the other Party. Only
      if the notification is delivered to the above-mentioned addresses, then it
      is deemed to be arriving on the following dates: If it is a letter, then
      it is deemed to be arrving on the 7th
      bank business day after it was delivered to the main business address with
      registered mail; if it is delivered by a special trip, then it is deemed
      to be the date when the receiver signed the receipt; if it is a fax or
      e-mail, then it is the sending date of the fax or the e-mail. But all the
      notifications, requests, or other communications shall be deemed to have
      arrived when the Lender actually got them. And when all the notifications,
      requirements are sent by a fax or an e-mail, the original (stamped with a
      seal) shall be sent to the eye of the Lender or mailed to him to have be
      confirmed.

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

       

    Exhibit 10.1

     

    
      	
              2.

            	
              The
      Borrower agrees that, any subpena or notification delivered to him for a
      lawsuit, only if it is delivered to the main business address listed on
      the signature page of the Agreement, are deemed to be delivered already.
      Any change in the address of the aforementioned is not effective to the
      Lender except it was notified to the Lender in
  advance.

            

    

    

    Term
Twelve        Effectiveness, Alteration
and Release

    

    
      	
              1.

            	
              The
      Agreement is effective when the Borrower and the Lender put their official
      seals on it and have their legal representatives (perosn in charge) or his
      authorized agency sign and stamp the seal on it, until all the claims are
      cleared off under the Agreement.

            

    

    
      	
              2.

            	
              As
      soon as the Agreement is effective either Party of the Agreement shall not
      artitrarily alter or relieve it in advance. If a alteration or relief is
      needed, then an agreement shall be reached through the two Parties and it
      shall be in writte.

            

    

    

    Term
Thirteen          Default and
Treatments

     

    
      	
              1.

            	
              Default

            

    

    Any of
the following events constitutes a default by the Borrower to the
Lender:

    
      	
            	
              (1)

            	
              Any
      statement or promise made by the Borrower in the Agreement any
      notification, authorization, ratification, consent, certification or other
      documents made according to the stipulations under the Agreement are not
      true or are misleading, or are proved to be such, or are confirmed to be
      ineffective or cancelled or without legal
force.

            

    

    
      	
            	
              (2)

            	
              The
      Borrower has breached the “other events stipulated by the Parties” (if
      any) or any stipulation in Term Eight of Part
  Two.

            

    

    
      	
            	
              (3)

            	
              The
      Borrower caused major cross default, including but not limited to the fact
      that the Borrower violates any agreement of any loan contract, agreement
      he signed; or the Borrower fails to pay the due debts under other loan
      contract, agreement.

            

    

    
      	
            	
              (4)

            	
              The
      investor of the Borrower flights the capital, remove the property or
      arbitrarily transfers is stock
right.

            

    

    
      	
            	
              (5)

            	
              The
      guarantor is or will not be capable to provide a guaranty for the loan, or
      violates the guaranty ducument signe by
himself.

            

    

    
      	
            	
              (6)

            	
              The
      Borrower shuts up the business, stops the business, closes, recalls,
      liquidates, is taken over or taken into custody, or is dissolved, has
      business license revoked or canceled or goes into
    bankruptcy.

            

    

    
      	
            	
              (7)

            	
              Deterioration
      of the financial status of the Borrower of the Guarantor, grave
      difficulties occurrs in the operation, other events of situations which
      have adverse effects on his normal business, financial situation or
      repaying abilities.

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

      

    Exhibit 10.1

     

    
      	
            	
              (8)

            	
              The
      Borrower or his holding shareholder, actual controler or his related party
      involves in major legal cases, arbitrations, or their major properties are
      destained, sealed, frozen, enforced or are subject to other measures which
      are equally effective legally, causing adverse effects on the repaying
      ability of the Borrower.

            

    

    
      	
            	
              (9)

            	
              Failure
      in use the loan as stipulated or grant the loan in a stipulated
      way.

            

    

    
      	
            	
              (10)

            	
              The
      documents provided to apply for the loan are fauls and
      misleading.

            

    

    
      	
            	
              (11)

            	
              To
      be in disconformity with or surpassing the limitation of the related
      financial targets stipulated in the
Agreement.

            

    

    
      	
            	
              (12)

            	
              Abnormity
      occurrs in the caplital flows in the normal settlement account / capital
      withdrawal account.

            

    

    
      	
            	
              (13)

            	
              The
      borrower has acted to violate the Agreement or sufficiently to hamper the
      normal performance of the Agreement, or damage other proper interest of
      the Lender.

            

    

    
      	
              2.

            	
              The
      Treatment

            

    

    (1) When
one or a number of the situations listed in the foregoing term occur, the Lender
may take one or a number of the measures listed below:

    1To demand the
Borrower to rectify in a limited time;

    
      2To cancel the
unused loan quota of the Borrower, to stop to grant and pay the unused loan of
the Borrower;

    

    
      3To announce all or
a part of the capital immediately expire in advance under the Contrat, and
demand the the whole or a part of the loan to be repaid, and the interest owned
cleard, and pursue the Guarantor or the Borrower immediately though varies
forms.

    

    
      4To collect panalty
over the overdue loan and the crowded-out loan, and collect compound
interest;

    

    
      5To deduct from any
account in SPD Bank opened by the Borrower.

    

    
      6To demand the
Borrower to supplement conditions for granting and paying the loans, or to alter
the loan paying mode.

    

    
      7To demand the
Borrower to provide other guaranty reaffirmed by the Lender;

    

    
      8Other neccessory
measures according to the law;

    

    (2)
Besides the aforementioned measures, the Lender also may demand the Borrower to
assuem a defaul responsibility, and demand the Borrow to pay a penalty (the
calcualation of which could be seen in Part One of the Agreement). If the
penalty is not enough to compensate the loss sustained by the Lender, the
Borrower should compensate the Lender all the loss sustaine
therefrom.

    (3) If
the Borrower fails to repay the capital and the interest in full timely, he
shall also assume all the expenses to be born by the Lender in order to realize
the claim and guaranty right, including but not limited the collection cost,
legal cost, notarization fee, announcement fee, legal cost, travel expenses,
translation fee and various other payable fees.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

        

      Exhibit 10.1

    

      

    Term
Fourteen         Others

      

    
      
        
          	
                	
                  1.

                	
                  Definitions

                

        

      

    

    
      
        	
              	
                (1)

              	
                The
      “Whole Claim” under the Agreement referres to the loan capital, interest,
      penalty and all the costs for the realization of the
    claims.

              

      

    

    
      
        	
              	
                (2)

              	
                The
      “Interest” under the Agreement include interest, penalty and compound
      interest.

              

      

    

    
      
        	
              	
                (3)

              	
                The
      “Bank Buisness Day” under the Agreement, referres to the normal opening
      days for company business of the Lender at the location of the Lender,
      excluding Saturday, Sunday (except the days opened for a holiday
      adjustment) or other legal vocation
days.

              

      

    

    
      
        	
                
                

              	
                2.

              	
                Applicabel
      Law

              

      

    

    The law
of the People’s Republic of China applies (for the purpose of the Agreement not
including Hong Kong, Macao special administrations and Taiwan area), and by
which the Agreement is construed.

    
      
        	
                
                

              	
                3.

              	
                Dispute

              

      

    

    All
disputes occurred from the performance of the Agreement are to be resolved
through friendly negotiations; if negotiation fails a lawsuit shall be filed
with local People’s Court. During the period of the dispute, each Party shall
continue to performe all the terms and conditions not involving in the disputed
ones.

    
      
        	
              	
                4.

              	
                Miscellaneous

              

      

    

    
      
        	
              	
                (1)

              	
                All
      matters not referred to and needing supplement, shall be stipulated and
      recorded in Part One of the Agreement, or be agreed upon in writings,
      which are a part of the Agreement. The attachment of the Agreement (see
      Part One of the Agreement) is an indivisible part of the Agreement, and
      has an equal legal effect of the Agreement
  proper.

              

      

    

    
      
        	
              	
                (2)

              	
                In
      the effective term of the Agreement, any grace or delay of any actions by
      the Lender against the Lender for any breach of the Agreement or any other
      behaviors, shall not damage, affect, or limit all the rights and interests
      enjoyed by the the loaner according to the law or the Agreement as a
      creditor; and not to be a confirmation of the behaviors by the Borrower,
      and furtherly not to be seen as abandoning the right to take actions
      against the Borrower for his breaches in the current of future
      days.

              

      

    

    
      
        	
              	
                (3)

              	
                The
      ineffectiveness of any of the terms in the Agreement does not affect the
      effect of other terms. When the Agreement is ineffective for any cause,
      the Borrower shal assume the responsibility to repay all the debt owed to
      the Lender. If the above-mentioned occurres, the Lender has the right to
      terminate the execution of the Agreement immediately, and pursue the
      Borrower for all the debts owed by the Borrower under the
      Agreement.

              

    

    
      
        
          	
                	
                  (4)

                	
                  The
      Lender has the right to transfer all or a part of the responsibilty /
      obligation under the Agreement, and under the situations, the transferree
      enjoys and / or assumes the same rights and obligations as a Party of the
      Agreement against the Borrower. When the Borrower received the
      notification about the claim transfer from the Lender, shall assume the
      responsibilities against the transferree in the light of the stipulations
      of the Agreement.

                

        

      

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      Exhibit 10.1

       

    

    
      
        	
              	
                (5)

              	
                Except
      specially stipulated in the Agreement, the attachment of the Agreement has
      the terms and expressions with the same meanings of those in the
      Agreement.

              

      

    

    
      
        	
              	
                (6)

              	
                The
      titles under the Agreement is for the purpose of referrence only and are
      not the basis to construe the contents under
  which.

              

      

    

    

    (Void
hereunder on the page)

    

    The
Agreement is signed by and between the below Borrower and Lender on _____. The
Lender confirms that, when the Agreement was signed, the tow Parties had already
made expressions and discussions on all the terms and conditions of the
Agreement, and there was not doubt about them, and had the correct and exact
understandings about the related rights and obligations and duty limitations and
exemption terms of the Parties.

     

    
      
        	
                The
      Borrower (Official Seal)

              	 
      	
                The
      Lender (Official Seal)

              
	 
      	 
      	 
      
	
                Legal
      Representative or Authorized Agency

              	 
      	
                Person
      in Charge of Authorized Agency

              
	
                (signature
      or seal)

              	 
      	
                (signature
      or seal)

              
	 
      	 
      	 
      
	
                Major
      Business Address:

              	 
      	
                Major
      Business Address

              
	
                Post
      Code:

              	 
      	
                Post
      Code:

              
	
                Tel.:

              	 
      	
                Tel.:

              
	
                Fax:

              	 
      	
                Fax:

              
	
                e-mail:

              	 
      	
                e-mail:

              
	
                contact
      person:

              	 
      	
                contact
      person:

              
	
                Date:
      January 4, 2011

              	 
      	
                Date:
      December 3, 2010

              

      

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

        

      Exhibit 10.1

       

    

    Attachement
1

    Drawing
Application under the

    Circulating
Fund Loan Agreement

    (for the
case when no special circulating fund loan account is opened)

    

    SPD
Nanjing Branch:

    

    As we had
signed with your bank a Circulating Fund Loan Agreement (herein after referred
to as the Loan Agreement) numbered 93062010280056 on December 03, 2010,
according to the drawing plan stipulated in the Agreement, we are going to draw
the first amount of the loan, i.e. RMB 40,000,000.00.

    As
regulated in the Loan Agreement, the fund shall be paid to the common settlement
account of the Borrower opened at SPD named Goldenway Nanjing Garment Co., Ltd.
numbered 93060155300000366.

    We
confirms hereby that, no event or situation occurred untill the issurance date
of this Application that constitute a violation under the Agreement. We further
confirms that all the statements and promises made in the Loan Agreement and the
event promised thereby have been performed in the light of the Loan Agreement
and all the pre-conditions stipulated in the Loan Agreement have already been
met.

    

    The first
drawing will be paid outward as following item 1:

    
      	
            	
              (1)

            	
              We
      have provided the following documents in conformity with the Loan
      Agreement:

            

    

    Business
Agreement and written documents truly reflecting the paying obligations of the
Borrower

    Legal and
effective paying instrument.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

        

      Exhibit 10.1

       

    

    Your bank inspected the above-mentioned
and agreed to transfer the loan capital into the following account of the
business partner and in the light of the following requirements:

     

    
      
        	
                Numver

              	 
      	
                Amount

              	 
      	
                Account Name

              	 
      	
                Opening Bank

              	 
      	
                Account

              
	
                1

              	 
      	
                7,000,000.00

              	 
      	
                Chuzhou
      EG

              	 
      	
                C.B.
      Chuzhou

              	 
      	
                -6883

              
	
                2

              	 
      	
                11,200,000.00

              	 
      	
                Catchluck

              	 
      	
                C.B.

              	 
      	
                -4749

              
	
                3

              	 
      	
                18,800,000.00

              	 
      	
                New
      Talent

              	 
      	
                C.B.

              	 
      	
                -7429

              
	
                4

              	
                  

              	
                3,000,000.00

              	
                  

              	
                High-Tech

              	
                  

              	
                C.B

              	
                  

              	
                -8207

              

      

    

     

    We
confirms that the paying mode of the above loans shall be subject to what was
inspected and confirmed by your bank, and you have the right to inspect and
adjust the paying mode according to the stipulations in the Loan
Agreement.

        

    Please
ratify.

    

    
      
        
          	
                  The
      Applicant (Official Seal)

                
	
                  Signature
      or seal of the legal representative or his proxy

                
	
                  Year,
      Month and Date

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