Document:

BorgWarner Exhibit 10.2 to Form 8-K - 06-30-11

EXHIBIT 10.2

GUARANTY

          THIS GUARANTY (as amended, restated supplemented or otherwise modified from time to time, this "Guaranty"), dated as of June 30, 2011, is made by EACH OF THE UNDERSIGNED AND EACH OTHER PERSON WHO SHALL BECOME A PARTY HERETO BY EXECUTION OF A GUARANTY JOINDER AGREEMENT (each a "Guarantor", and collectively, the "Guarantors") to BANK OF AMERICA, N.A., as administrative agent (in such capacity, the "Administrative Agent") for each of the lenders (the "Lenders") now or hereafter party to the Credit Agreement (as defined below). All capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Credit Agreement.

W I T N E S S E T H:

          WHEREAS, the Lenders have agreed to provide to BORGWARNER INC., a Delaware corporation (the "Borrower") certain credit facilities, including a revolving credit facility with letter of credit and swing line subfacilities pursuant to the terms of that certain Amended and Restated Credit Agreement dated as of even date herewith, among the Borrower, the Administrative Agent and the Lenders (as amended, modified, supplemented or restated from time to time, the "Credit Agreement");

          WHEREAS, each Guarantor is, directly or indirectly, a Material Domestic Subsidiary of the Borrower and will materially benefit from the Loans made and to be made, and the Letters of Credit issued and to be issued, under the Credit Agreement;

          WHEREAS, each Guarantor is required to enter into this Guaranty pursuant to the terms of the Credit Agreement; and

          WHEREAS, a material part of the consideration given in connection with and as an inducement to the execution and delivery of the Credit Agreement by the Lenders was the obligation of the Borrower to cause each Guarantor to enter into this Guaranty, and the Lenders are unwilling to extend and maintain the credit facilities provided under the Loan Documents unless the Guarantors enter into this Guaranty;

          NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein, the parties hereto agree as follows:

          1.          Guaranty. Each Guarantor hereby jointly and severally, unconditionally, absolutely, continually and irrevocably guarantees to the Administrative Agent for the benefit of the Secured Parties the payment and performance in full of the Borrower's Liabilities (as defined below). For all purposes of this Guaranty, "Borrower's Liabilities" means: (a) the Borrower's prompt payment in full, when due or declared due and at all such times, of all Obligations and all other amounts pursuant to the terms of the Credit Agreement and the other Loan Documents heretofore, now or at any time or times hereafter owing, arising, due or payable from the Borrower to any one or more of the Secured Parties, including without limitation, principal, interest, premiums and fees (including, but not limited to, loan fees and charges and disbursements of counsel); (b) the Borrower's prompt, full and faithful performance, observance

and discharge of each and every agreement, undertaking, covenant and provision to be performed, observed or discharged by the Borrower under the Credit Agreement and the other Loan Documents or any Secured Cash Management Agreement or Secured Hedge Agreement; and (c) the Borrower's prompt payment in full, when due or declared due and at all such times, of Obligations and all other amounts pursuant to the terms of any Secured Hedge Agreement or Secured Cash Management Agreement heretofore, now or at any time or times hereafter owing, arising, due or payable from any Loan Party to any one or more of the Secured Parties, including without limitation, principal, interest, premiums and fees (including, but not limited to, reasonable fees and charges and disbursements of counsel). The Guarantors' obligations to the Secured Parties under this Guaranty are hereinafter collectively referred to as the "Guarantors' Obligations" and, with respect to each Guarantor individually, the "Guarantor's Obligations". Notwithstanding the foregoing, the liability of each Guarantor individually with respect to its Guarantor's Obligations shall be limited to an aggregate amount equal to the largest amount that would not render its obligations hereunder subject to avoidance under Section 548 of the United States Bankruptcy Code or any comparable provisions of any applicable state law.

          Each Guarantor agrees that it is jointly and severally, directly and primarily, liable (subject to the limitation in the immediately preceding sentence) for the Borrower's Liabilities.

          2.          Payment. If the Borrower shall default in payment or performance of any of the Borrower's Liabilities, whether principal, interest, premium, fee (including, but not limited to, loan fees and reasonable charges and disbursements of counsel), or otherwise, when and as the same shall become due, and after expiration of any applicable grace period, whether according to the terms of the Credit Agreement, by acceleration, or otherwise, or upon the occurrence and during the continuance of any Event of Default under the Credit Agreement, then any or all of the Guarantors will, upon demand thereof by the Administrative Agent, fully pay to the Administrative Agent, for the benefit of the Secured Parties, subject to any restriction on each Guarantor's Obligations set forth in Section 1 hereof, an amount equal to all the Borrower's Liabilities then due and owing.

          3.          Absolute Rights and Obligations. This is a guaranty of payment and not of collection. The Guarantors' Obligations under this Guaranty shall be joint and several, absolute and unconditional irrespective of, and each Guarantor hereby expressly waives, to the extent permitted by law, any defense to its obligations under this Guaranty and the other Loan Documents which it is a party by reason of:

          (a)          any lack of legality, validity or enforceability of the Credit Agreement, of any other Loan Document, or of any other agreement or instrument creating, providing security for, or otherwise relating to any of the Guarantors' Obligations, any of the Borrower's Liabilities, or any other guaranty of any of the Borrower's Liabilities (the Loan Documents and all such other agreements and instruments being collectively referred to as the "Related Agreements");

          (b)          any action taken under any of the Related Agreements, any exercise of any right or power therein conferred, any failure or omission to enforce any right conferred thereby, or any waiver of any covenant or condition therein provided;

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          (c)          any acceleration of the maturity of any of the Borrower's Liabilities, of the Guarantor's Obligations of any other Guarantor, or of any other obligations or liabilities of any Person under any of the Related Agreements;

          (d)          any release, exchange, non-perfection, lapse in perfection, disposal, deterioration in value, or impairment of any security for any of the Borrower's Liabilities, for any of the Guarantor's Obligations of any Guarantor, or for any other obligations or liabilities of any Person under any of the Related Agreements;

          (e)          any dissolution of the Borrower or any Guarantor or any other party to a Related Agreement, or the combination or consolidation of the Borrower or any Guarantor or any other party to a Related Agreement into or with another entity or any transfer or disposition of any assets of the Borrower or any Guarantor or any other party to a Related Agreement;

          (f)          any extension (including without limitation extensions of time for payment), renewal, amendment, restructuring or restatement of, any acceptance of late or partial payments under, or any change in the amount of any borrowings or any credit facilities available under, the Credit Agreement or any other Loan Document or any other Related Agreement, in whole or in part;

          (g)          the existence, addition, modification, termination, reduction or impairment of value, or release of any other guaranty (or security therefor) of the Borrower's Liabilities (including without limitation the Guarantor's Obligations of any other Guarantor and obligations arising under any other Guaranty now or hereafter in effect);

          (h)          any waiver of, forbearance or indulgence under, or other consent to any change in or departure from any term or provision contained in the Credit Agreement, any other Loan Document or any other Related Agreement, including without limitation any term pertaining to the payment or performance of any of the Borrower's Liabilities, any of the Guarantor's Obligations of any other Guarantor, or any of the obligations or liabilities of any party to any other Related Agreement;

          (i)          any other circumstance whatsoever (with or without notice to or knowledge of any Guarantor) which may or might in any manner or to any extent vary the risks of such Guarantor, or might otherwise constitute a legal or equitable defense available to, or discharge of, a surety or a guarantor, including without limitation any right to require or claim that resort be had to the Borrower or any other Loan Party or to any collateral in respect of the Borrower's Liabilities or Guarantors' Obligations.

          It is the express purpose and intent of the parties hereto that this Guaranty and the Guarantors' Obligations hereunder and under each Guaranty Joinder Agreement (defined below) shall be absolute and unconditional under any and all circumstances and shall not be discharged except by payment as herein provided.

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          4.          Currency and Funds of Payment. All Guarantors' Obligations will be paid in Dollars and in immediately available funds, regardless of any law, regulation or decree now or hereafter in effect that might in any manner affect the Borrower's Liabilities, or the rights of any Secured Party with respect thereto as against the Borrower, or cause or permit to be invoked any alteration in the time, amount or manner of payment by the Borrower of any or all of the Borrower's Liabilities; provided that any Guarantors' Obligations with respect to principal and interest on Loans denominated in an Alternative Currency shall be made in such Alternative Currency unless, for any reason, a relevant Guarantor is prohibited by law from making any such payment hereunder in an Alternative Currency, in which case such Guarantor shall make such payment in Dollars in the Dollar Amount of the Alterative Currency payment amount as determined by the Administrative Agent as of the time of such payment (such that the Secured Parties shall not suffer any loss from the conversion of such Alternative Currency to Dollars).

          5.          Events of Default. Without limiting the provisions of Section 2 hereof, in the event that there shall occur and be continuing an Event of Default, then notwithstanding any collateral or other security or credit support for the Borrower's Liabilities, at the Administrative Agent's election and without notice thereof or demand therefor, the Guarantors' Obligations shall immediately be and become due and payable.

          6.          Subordination. Until this Guaranty is terminated in accordance with Section 22 hereof, each Guarantor hereby unconditionally subordinates all present and future debts, liabilities or obligations now or hereafter owing to such Guarantor (i) of the Borrower, to the payment in full of the Borrower's Liabilities, (ii) of every other Guarantor (an "obligated guarantor"), to the payment in full of the Guarantors' Obligations of such obligated guarantor, and (iii) of each other Person now or hereafter constituting a Loan Party, to the payment in full of the obligations of such Loan Party owing to any Secured Party and arising under the Loan Documents, the Secured Hedge Agreements or the Secured Cash Management Agreements; provided that the Borrower or any obligated guarantor may make ordinary course payments pursuant to such debts, liabilities or obligations unless an Event of Default has occurred and is continuing. All amounts due under such subordinated debts, liabilities, or obligations shall, upon the occurrence and during the continuance of an Event of Default, be collected and, upon request by the Administrative Agent, paid over forthwith to the Administrative Agent for the benefit of the Secured Parties on account of the Borrower's Liabilities, the Guarantors' Obligations, or such other obligations of the type described in clause (iii) above, as applicable, and, after such request and pending such payment, shall be held by such Guarantor as agent and bailee of the Secured Parties separate and apart from all other funds, property and accounts of such Guarantor.

          7.          Suits. Each Guarantor from time to time shall pay to the Administrative Agent for the benefit of the Secured Parties, on demand, at the Administrative Agent's place of business set forth in the Credit Agreement or such other address as the Administrative Agent shall give notice of to such Guarantor, the Guarantors' Obligations as they become or are declared due, and in the event such payment is not made forthwith, the Administrative Agent may proceed to suit against any one or more or all of the Guarantors. At the Administrative Agent's election, one or more and successive or concurrent suits may be brought hereon by the Administrative Agent against any one or more or all of the Guarantors, whether or not suit has been commenced against the Borrower, any other Guarantor, or any other Person and whether or

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not the Secured Parties have taken or failed to take any other action to collect all or any portion of the Borrower's Liabilities or have taken or failed to take any actions against any collateral securing payment or performance of all or any portion of the Borrower's Liabilities, and irrespective of any event, occurrence, or condition described in Section 3 hereof.

          8.          Set-Off and Waiver. Each Guarantor waives any right to assert against the Secured Parties or any of their respective Affiliates (the "Setoff Parties") as a defense, counterclaim, set-off, recoupment or cross claim in respect of its Guarantor's Obligations, any defense (legal or equitable) or other claim which such Guarantor may now or at any time hereafter have against the Borrower or any or all of the Setoff Parties without waiving any additional defenses, set-offs, counterclaims or other claims otherwise available to such Guarantor. If an Event of Default shall have occurred and be continuing, each Setoff Party is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by such Setoff Party to or for the credit or the account of any Guarantor against any of and all the obligations of such Guarantor now or hereafter existing under this Guaranty or any other Loan Document held by such Setoff Party, irrespective of whether or not such Setoff Party shall have made any demand under this Guaranty or any other Loan Document and although such obligations of such Guarantor may be contingent or unmatured or are owed to a branch or office of such Lender or the L/C Issuer different from the branch or office holding such deposit or obligated on such indebtedness; provided that in the event that any Defaulting Lender shall exercise any such right of setoff (x) all amounts so set off shall be paid over immediately to the Administrative Agent for further application in accordance with the provisions of Section 2.22 of the Credit Agreement and, pending such payment, shall be segregated by such Defaulting Lender from its other funds and deemed held in trust for the benefit of the Administrative Agent and the Lenders, and (y) the Defaulting Lender shall provide promptly to the Administrative Agent a statement describing in reasonable detail the Obligations owing to such Defaulting Lender as to which it exercised such right of setoff. In the event that amounts set off in one currency are applied to obligations in a different currency, the rate of exchange shall be determined by the Administrative Agent in accordance with Section 1.6 of the Credit Agreement. The rights of each Setoff Party under this Section are in addition to other rights and remedies (including other rights of setoff) which such Setoff Party may have. Each Setoff Party agrees to notify the Borrower and the Administrative Agent promptly after any such setoff and application, provided that the failure to give such notice shall not affect the validity of such setoff and application. For the purposes of this Section 8, all remittances and property shall be deemed to be in the possession of a Setoff Party as soon as the same may be put in transit to it by mail or carrier or by other bailee.

          9.          Waiver of Notice; Subrogation.

          (a)          Each Guarantor hereby waives to the extent permitted by law notice of the following events or occurrences: (i) acceptance of this Guaranty; (ii) the Secured Parties' heretofore, now or from time to time hereafter making Loans and issuing Letters of Credit and otherwise loaning monies or giving or extending credit to or for the benefit of the Borrower, whether pursuant to the Credit Agreement or any other Loan Document or

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Related Agreement or any amendments, modifications, or supplements thereto, or replacements or extensions thereof; (iii) presentment, demand, default, non-payment, partial payment and protest; and (iv) any other event, condition, or occurrence described in Section 3 hereof. Each Guarantor agrees that each Secured Party may heretofore, now or at any time hereafter do any or all of the foregoing in such manner, upon such terms and at such times as each Secured Party, in its sole and absolute discretion, deems advisable, without in any way or respect impairing, affecting, reducing or releasing such Guarantor from its Guarantor's Obligations, and each Guarantor hereby consents to each and all of the foregoing events or occurrences.

          (b)          Each Guarantor hereby agrees that payment or performance by such Guarantor of its Guarantor's Obligations under this Guaranty may be enforced by the Administrative Agent on behalf of the Secured Parties upon demand by the Administrative Agent to such Guarantor without the Administrative Agent being required, such Guarantor expressly waiving to the extent permitted by law any right it may have to require the Administrative Agent, to (i) prosecute collection or seek to enforce or resort to any remedies against the Borrower or any other Guarantor or any other guarantor of the Borrower's Liabilities, or (ii) seek to enforce or resort to any remedies with respect to any security interests, Liens or encumbrances granted to the Administrative Agent or any Lender or other party to a Related Agreement by the Borrower, any other Guarantor or any other Person on account of the Borrower's Liabilities or any guaranty thereof, IT BEING EXPRESSLY UNDERSTOOD, ACKNOWLEDGED AND AGREED TO BY SUCH GUARANTOR THAT DEMAND UNDER THIS GUARANTY MAY BE MADE BY THE ADMINISTRATIVE AGENT, AND THE PROVISIONS HEREOF ENFORCED BY THE ADMINISTRATIVE AGENT, EFFECTIVE AS OF THE FIRST DATE ANY EVENT OF DEFAULT OCCURS AND IS CONTINUING UNDER THE CREDIT AGREEMENT.

          (c)          Each Guarantor further agrees with respect to this Guaranty that it shall have no right of subrogation, reimbursement, contribution or indemnity, nor any right of recourse to security for the Borrower's Liabilities unless and until 93 days immediately following the Facility Termination Date (as defined below) shall have elapsed without the filing or commencement, by or against any Loan Party, of any state or federal action, suit, petition or proceeding seeking any reorganization, liquidation or other relief or arrangement in respect of creditors of, or the appointment of a receiver, liquidator, trustee or conservator in respect to, such Loan Party or its assets. This waiver is expressly intended to prevent the existence of any claim in respect to such subrogation, reimbursement, contribution or indemnity by any Guarantor against the estate of any other Loan Party within the meaning of Section 101 of the Bankruptcy Code, in the event of a subsequent case involving any other Loan Party. If an amount shall be paid to any Guarantor on account of such rights at any time prior to termination of this Guaranty in accordance with the provisions of Section 22 hereof, such amount shall be held in trust for the benefit of the Secured Parties and shall forthwith be paid to the Administrative Agent, for the benefit of the Secured Parties, to be credited and applied upon the Guarantors' Obligations, whether matured or unmatured, in accordance with the terms of

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the Credit Agreement or otherwise as the Secured Parties may elect. The agreements in this subsection shall survive repayment of all of the Guarantors' Obligations, the termination or expiration of this Guaranty in any manner, including but not limited to termination in accordance with Section 22 hereof, and occurrence of the Facility Termination Date. For purposes of this Guaranty, "Facility Termination Date" means the date as of which all of the following shall have occurred: (a) the Commitments have expired or been terminated and the principal of and interest on each Loan and all fees and other Obligations payable hereunder and under the other Loan Documents shall have been paid in full and all Letters of Credit shall have expired or terminated and all LC Disbursements shall have been reimbursed, (b) the obligations and liabilities of the Borrower and each other Loan Party under all Secured Cash Management Agreements and Secured Hedge Agreements shall have been fully, finally and irrevocably paid and satisfied in full and the Secured Cash Management Agreements and Secured Hedge Agreements shall have expired or been terminated, or other arrangements satisfactory to the counterparties shall have been made with respect thereto, and (c) the Borrower and each other Loan Party shall have fully, finally and irrevocably paid and satisfied in full all of their respective obligations and liabilities arising under the Loan Documents, including with respect to the Borrower and the Obligations (except for future obligations consisting of continuing indemnities and other contingent Obligations of the Borrower or any Loan Party that may be owing to any Secured Party or any Lender pursuant to the Loan Documents and expressly survive termination of the Credit Agreement).

          10.          Effectiveness; Enforceability. This Guaranty shall be effective as of the date first above written and shall continue in full force and effect until termination in accordance with Section 22 hereof. Any claim or claims that the Secured Parties may at any time hereafter have against a Guarantor under this Guaranty may be asserted by the Administrative Agent on behalf of the Secured Parties by written notice directed to such Guarantor in accordance with Section 24 hereof.

          11.          Representations and Warranties. Each Guarantor warrants and represents to the Administrative Agent, for the benefit of the Secured Parties, that it is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, duly authorized to execute and deliver this Guaranty (or the Guaranty Joinder Agreement to which it is a party, as applicable), and to perform its obligations under this Guaranty, that this Guaranty (or the Guaranty Joinder Agreement to which it is a party, as applicable) has been duly executed and delivered on behalf of such Guarantor by its duly authorized representatives; that this Guaranty (and any Guaranty Joinder Agreement to which such Guarantor is a party) is legal, valid, binding and enforceable against such Guarantor in accordance with its terms except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general equitable principles; and that such Guarantor's execution, delivery and performance of this Guaranty (and any Guaranty Joinder Agreement to which such Guarantor is a party) is within such Guarantor's corporate powers and do not violate or constitute a breach of any of its charter, by-laws or other organizational documents, any agreement or instrument to which such Guarantor is a party, or any law, order, regulation, decree or award of any governmental authority or arbitral body to which it or its properties or operations is subject or result in the creation or imposition of any Lien on any asset

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of such Guarantor.

          12.          Expenses. Each Guarantor agrees to be jointly and severally liable for the payment of all reasonable fees and expenses, including all reasonable charges and disbursements of counsel, incurred by any Secured Party in connection with the enforcement or protection of its rights in connection with this Guaranty.

          13.          Reinstatement. Each Guarantor agrees that this Guaranty shall continue to be effective or be reinstated, as the case may be, at any time payment received by any Secured Party in respect of any Borrower's Liabilities is rescinded or must be restored for any reason, or is repaid by any Secured Party in whole or in part in good faith settlement of any pending or threatened avoidance claim.

          14.          Attorney-in-Fact. To the extent permitted by law, each Guarantor hereby appoints the Administrative Agent, for the benefit of the Secured Parties, as such Guarantor's attorney-in-fact for the purposes of carrying out the provisions of this Guaranty and taking any action and executing any instrument which the Administrative Agent may deem necessary or advisable to accomplish the purposes hereof, which appointment is coupled with an interest and is irrevocable; provided that the Administrative Agent shall have and may exercise rights under this power of attorney only upon the occurrence and during the continuance of an Event of Default.

          15.          Reliance. Each Guarantor represents and warrants to the Administrative Agent, for the benefit of the Secured Parties, that: (a) such Guarantor has adequate means to obtain on a continuing basis (i) from the Borrower, information concerning the Borrower and the Borrower's financial condition and affairs and (ii) from other reliable sources, such other information as it deems material in deciding to provide this Guaranty and any Guaranty Joinder Agreement ("Other Information"), and has full and complete access to the Borrower's books and records and to such Other Information; (b) such Guarantor is not relying on any Secured Party or its or their employees, directors, agents or other representatives or Affiliates, to provide any such information, now or in the future; (c) such Guarantor has been furnished with and reviewed the terms of the Credit Agreement and such other Loan Documents as it has requested, is executing this Guaranty (or the Guaranty Joinder Agreement to which it is a party, as applicable) freely and deliberately, and understands the obligations and financial risk undertaken by providing this Guaranty (and any Guaranty Joinder Agreement); (d) such Guarantor has relied solely on the Guarantor's own independent investigation, appraisal and analysis of the Borrower, the Borrower's financial condition and affairs, the Other Information, and such other matters as it deems material in deciding to provide this Guaranty (and any Guaranty Joinder Agreement) and is fully aware of the same; and (e) such Guarantor has not depended or relied on any Secured Party or its or their employees, directors, agents or other representatives or Affiliates, for any information whatsoever concerning the Borrower or the Borrower's financial condition and affairs or any other matters material to such Guarantor's decision to provide this Guaranty (and any Guaranty Joinder Agreement), or for any counseling, guidance, or special consideration or any promise therefor with respect to such decision. Each Guarantor agrees that no Secured Party has any duty or responsibility whatsoever, now or in the future, to provide to such Guarantor any information concerning the Borrower or the Borrower's financial condition and affairs, or any

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Other Information, other than as expressly provided herein, and that, if such Guarantor receives any such information from any Secured Party or its or their employees, directors, agents or other representatives or Affiliates, such Guarantor will independently verify the information and will not rely on any Secured Party or its or their employees, directors, agents or other representatives or Affiliates, with respect to such information.

          16.          Rules of Interpretation. The rules of interpretation contained in Sections 1.2 through and including 1.7 of the Credit Agreement shall be applicable to this Guaranty and each Guaranty Joinder Agreement and are hereby incorporated by reference. All representations and warranties contained herein shall survive the delivery of documents and any extension of credit referred to herein or guaranteed hereby.

          17.          Entire Agreement. This Guaranty and each Guaranty Joinder Agreement, together with the Credit Agreement and any other Loan Document, constitutes and expresses the entire understanding between the parties hereto with respect to the subject matter hereof, and supersedes all prior negotiations, agreements, understandings, inducements, commitments or conditions, express or implied, oral or written, except as herein contained. The express terms hereof control and supersede any course of performance or usage of the trade inconsistent with any of the terms hereof. Except as provided in Section 22, neither this Guaranty nor any Guaranty Joinder Agreement nor any portion or provision hereof or thereof may be changed, altered, modified, supplemented, discharged, canceled, terminated, or amended orally or in any manner other than as provided in the Credit Agreement.

          18.          Binding Agreement; Assignment. This Guaranty, each Guaranty Joinder Agreement and the terms, covenants and conditions hereof and thereof, shall be binding upon and inure to the benefit of the parties hereto and thereto, and to their respective heirs, legal representatives, successors and assigns; provided that no Guarantor shall be permitted to assign any of its rights, powers, duties or obligations under this Guaranty, any Guaranty Joinder Agreement or any other interest herein or therein without the prior written consent of the Administrative Agent. Without limiting the generality of the foregoing sentence of this Section 18, any Lender may assign to one or more Persons, or grant to one or more Persons participations in or to, all or any part of its rights and obligations under the Credit Agreement (to the extent permitted by the Credit Agreement); and to the extent of any such assignment or participation such other Person shall, to the fullest extent permitted by law, thereupon become vested with all the benefits in respect thereof granted to such Lender herein or otherwise, subject however, to the provisions of the Credit Agreement, including Article VIII thereof (concerning the Administrative Agent) and Section 9.4 thereof concerning assignments and participations. All references herein to the Administrative Agent shall include any successor thereof.

          19.          Secured Cash Management Agreements; Secured Hedge Agreements. All obligations of the Borrower under (a) Secured Cash Management Agreements to which any Cash Management Bank is a party, or (b) Secured Hedge Agreements to which any Hedge Bank is a party, shall be deemed to be Borrower's Liabilities, and each Cash Management Bank and each Hedge Bank shall be deemed to be a Secured Party hereunder with respect to such Borrower's Liabilities.

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          No Person who obtains the benefit of this Guaranty by virtue of the provisions of this Section shall have, prior to the Facility Termination Date, any right to notice of any action or to consent to, direct or object to any action hereunder or under any other Loan Document or otherwise in respect of the Guarantors' Obligations (including the release or modification of any Guarantors' Obligations or security therefor) other than in its capacity as a Lender and only to the extent expressly provided in the Loan Documents. Each Secured Party not a party to the Credit Agreement who obtains the benefit of this Guaranty by virtue of the provisions of this Section shall be deemed to have acknowledged and accepted the appointment of the Administrative Agent pursuant to the terms of the Credit Agreement, and that with respect to the actions and omissions of the Administrative Agent hereunder or otherwise relating hereto that do or may affect such Secured Party, the Administrative Agent and its Affiliates shall be entitled to all the rights, benefits and immunities conferred under Article VIII of the Credit Agreement.

          20.          Severability. The provisions of this Guaranty are independent of and separable from each other. If any provision hereof shall for any reason be held invalid or unenforceable, such invalidity or unenforceability shall not affect the validity or enforceability of any other provision hereof, but this Guaranty shall be construed as if such invalid or unenforceable provision had never been contained herein.

          21.          Counterparts. This Guaranty may be executed in any number of counterparts each of which when so executed and delivered shall be deemed an original, and it shall not be necessary in making proof of this Guaranty to produce or account for more than one such counterpart executed by the Guarantor against whom enforcement is sought. Without limiting the foregoing provisions of this Section 21, the provisions of Section 9.1 of the Credit Agreement shall be applicable to this Guaranty.

          22.          Termination. Subject to reinstatement pursuant to Section 13 hereof, this Guaranty and each Guaranty Joinder Agreement, and all of the Guarantors' Obligations hereunder (excluding those Guarantors' Obligations relating to Borrower's Liabilities that expressly survive such termination) shall terminate on the Facility Termination Date.

          23.          Remedies Cumulative; Late Payments. All remedies hereunder are cumulative and are not exclusive of any other rights and remedies of the Administrative Agent or any other Secured Party provided by law or under the Credit Agreement, the other Loan Documents or other applicable agreements or instruments. The making of the Loans and other credit extensions pursuant to the Credit Agreement shall be conclusively presumed to have been made or extended, respectively, in reliance upon each Guarantor's guaranty of the Borrower's Liabilities pursuant to the terms hereof. Any amounts not paid when due under this Guaranty shall bear interest at the rate specified in Section 2.13(c) of the Credit Agreement.

          24.          Notices. All notices and communications hereunder or under any Guaranty Joinder Agreement shall be given to the addresses and otherwise made in accordance with Section 9.1 of the Credit Agreement; provided that notices and communications to the Guarantors shall be directed to the Guarantors, at the address of the Borrower set forth in Section 9.1 of the Credit Agreement.

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          25.          Joinder. Each Person who shall at any time execute and deliver to the Administrative Agent a Guaranty Joinder Agreement substantially in the form attached as Exhibit A (each, a "Guaranty Joinder Agreement") hereto shall thereupon irrevocably, absolutely and unconditionally become a party hereto and obligated hereunder as a Guarantor, and all references herein and in the other Loan Documents to the Guarantors or to the parties to this Guaranty shall be deemed to include such Person as a Guarantor hereunder.

          26.          Governing Law; Jurisdiction; Consent to Service of Process; WAIVER OF JURY TRIAL.

          (a)          This Guaranty shall be construed in accordance with and governed by the law of the State of New York.

          (b)          Each Guarantor hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the Supreme Court of the State of New York sitting in New York County and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Guaranty, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Guaranty shall affect any right that the Administrative Agent or any other Secured Party may otherwise have to bring any action or proceeding relating to this Guaranty against the any Guarantor or its properties in the courts of any jurisdiction.

          (c)          Each Guarantor hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Guaranty in any court referred to in paragraph (b) of this Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

          (d)          Each party to this Guaranty irrevocably consents to service of process in the manner provided for notices in Section 9.1 of the Credit Agreement. Nothing in this Guaranty will affect the right of any party to this Guaranty to serve process in any other manner permitted by law.

          (e)          EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON

11

CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (1) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (2) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS GUARANTY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

          27.          Termination & Release of Prior Guaranty. In connection with the Existing Credit Agreement, which such agreement is being amended and restated by the Credit Agreement, certain Subsidiaries of the Borrower entered into that certain Guaranty dated as of March 31, 2010 (the "Prior Guaranty"). This Guaranty is intended by the parties hereto to be a replacement of the Prior Guaranty, as of the effectiveness of this Guaranty the Prior Guaranty is terminated, and for the avoidance of doubt each Subsidiary of the Borrower is hereby released from its obligations under the Prior Guaranty and shall only be obligated under this Guaranty to the extent it is, or becomes, a party hereto.

[Signature pages follow]

12

          IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Guaranty as of the day and year first written above.

	
 
	
GUARANTORS:

	
 
	
 

	
 
	
 

	
 
	
BORGWARNER EMISSIONS SYSTEMS INC., as

Guarantor

	
 
	
 

	
 
	
By:
	
/s/ Fara S. Karam

	
 
	
Name:
	
Fara S. Karam

	
 
	
Title:
	
Authorized Signatory

	
 
	
BORGWARNER MORSE TEC INC., as Guarantor

	
 
	
 

	
 
	
By:
	
/s/ Fara S. Karam

	
 
	
Name:
	
Fara S. Karam

	
 
	
Title:
	
Authorized Signatory

	
 
	
BORGWARNER TORQTRANSFER SYSTEMS

INC., as Guarantor

	
 
	
 

	
 
	
By:
	
/s/ Fara S. Karam

	
 
	
Name:
	
Fara S. Karam

	
 
	
Title:
	
Authorized Signatory

	
 
	
BORGWARNER TRANSMISSION SYSTEMS

INC., as Guarantor

	
 
	
 

	
 
	
By:
	
/s/ Fara S. Karam

	
 
	
Name:
	
Fara S. Karam

	
 
	
Title:
	
Authorized Signatory

	
 
	
BORGWARNER TURBO SYSTEMS INC., as

Guarantor

	
 
	
 

	
 
	
By:
	
/s/ Fara S. Karam

	
 
	
Name:
	
Fara S. Karam

	
 
	
Title:
	
Authorized Signatory

BorgWarner Inc.

Guaranty (2011)

Signature Page

	
 
	
ADMINISTRATIVE AGENT:

	
 
	
 

	
 
	
 

	
 
	
BANK OF AMERICA, N.A., as Administrative

Agent

	
 
	
 

	
 
	
By:
	
/s/ Henry C. Pennell

	
 
	
Name:
	
Henry C. Pennell

	
 
	
Title:
	
Vice President

BorgWarner Inc.

Guaranty (2011)

Signature Page

EXHIBIT A

Form of Guaranty Joinder Agreement

GUARANTY JOINDER AGREEMENT

          THIS GUARANTY JOINDER AGREEMENT (as amended, restated, supplemented or otherwise modified, the "Guaranty Joinder Agreement"), dated as of __________, 20__ is made by and between __________, a __________ (the "Joining Guarantor"), and BANK OF AMERICA, N.A., in its capacity as Administrative Agent (the "Administrative Agent") under that certain Amended and Restated Credit Agreement (as amended, modified, supplemented or restated from time to time, the "Credit Agreement"), dated as of [________], 2011, by and among BORGWARNER INC., a Delaware corporation (the "Borrower"), the Lenders party thereto and the Administrative Agent. All capitalized terms not otherwise defined herein shall have the meanings given to such terms in the Credit Agreement.

          WHEREAS, the Joining Guarantor is a Material Domestic Subsidiary and required by the terms of the Credit Agreement to become a "Guarantor" under the Credit Agreement and be joined as a party to the Guaranty; and

          WHEREAS, the Joining Guarantor will materially benefit directly and indirectly from the credit facilities made available and to be made available to the Borrower by the Lenders under the Credit Agreement; and

          NOW, THEREFORE, the Joining Guarantor hereby agrees as follows with the Administrative Agent, for the benefit of the Secured Parties:

          1.          Joinder. The Joining Guarantor hereby irrevocably, absolutely and unconditionally becomes a party to the Guaranty as a Guarantor and bound by all the terms, conditions, obligations, liabilities and undertakings of each Guarantor or to which each Guarantor is subject thereunder, including without limitation the joint and several, unconditional, absolute, continuing and irrevocable guarantee to the Administrative Agent for the benefit of the Secured Parties of the payment and performance in full of the Borrower's Liabilities (as defined in the Guaranty) whether now existing or hereafter arising, all with the same force and effect as if the Joining Guarantor were a signatory to the Guaranty.

          2.          Affirmations. The Joining Guarantor hereby acknowledges and reaffirms as of the date hereof with respect to itself, its properties and its affairs each of the waivers, representations, warranties, acknowledgements and certifications applicable to any Guarantor contained in the Guaranty.

          3.          Severability. The provisions of this Guaranty Joinder Agreement are independent of and separable from each other. If any provision hereof shall for any reason be held invalid or unenforceable, such invalidity or unenforceability shall not affect the validity or enforceability of any other provision hereof, but this Guaranty Joinder Agreement shall be construed as if such invalid or unenforceable provision had never been contained herein.

          4.          Counterparts. This Guaranty Joinder Agreement may be executed in any number of counterparts each of which when so executed and delivered shall be deemed an original, and it shall not be necessary in making proof of this Guaranty Joinder Agreement to produce or account for more than one such counterpart executed by the Joining Guarantor. Without limiting the foregoing provisions of this Section 4, the provisions of Section 9.1 of the Credit Agreement shall be applicable to this Guaranty Joinder Agreement.

          5.          Delivery. Joining Guarantor hereby irrevocably waives notice of acceptance of this Guaranty Joinder Agreement and acknowledges that the Borrower's Liabilities are and shall be deemed to be incurred, and credit extensions under the Loan Documents made and maintained, in reliance on this Guaranty Joinder Agreement and the Guarantor's joinder as a party to the Guaranty as herein provided.

          6.          Governing Law; Venue; Waiver of Jury Trial. The provisions of Section 26, of the Guaranty are hereby incorporated by reference as if fully set forth herein.

[Signature page follows]

          IN WITNESS WHEREOF, the Joining Guarantor has duly executed and delivered this Guaranty Joinder Agreement as of the day and year first written above.

	
 
	
JOINING GUARANTOR:

	
 
	
 

	
 
	
 

	
 
	
 

	
 
	
By:
	
 

	
 
	
Name:
	
 

	
 
	
Title:
	
 

Acknowledged and accepted:

BANK OF AMERICA, N.A.,

as Administrative Agent

	
By:
	
 
	
 

	
Name:
	
 
	
 

	
Title:
	
 
	
 

BorgWarner Inc.

Guaranty Joinder Agreement

Signature PageLoan Agreement

EXHIBIT 4.21

CMBC-HT-313 (Gongsi 2010)-ZXSY-75166637 

Record Number:

CMBC-HT-313 (Gongsi 2010)

Mergers and Acquisitions

Loan Agreement

Gongjiedaizi Number: 99112010292815

China Minsheng Banking Corp., Ltd.

CMBC-HT-313 (Gongsi 2010)-ZXSY-75166637 

Mergers and Acquisitions Loan Agreement

Borrower:

Guizhou Puxin Energy Co., Ltd. (hereinafter referred to as “Party A”)

Address:

1 Yan’an Road Central, Yunyan District, Guiyang City

Postal code:

Legal representative/

Person-in-charge:

Ren Xiaogang

Telephone: 

0851-6885112

Fax:

0851-6885112

Bank:

Corporate Bank Division, Chongqing Branch, China Minsheng

Banking Corp., Ltd.

Account number: 

1xxxxxxxxxxxxxxx

Lender: 

Chongqing Branch of China Minsheng Banking Corp., Ltd.   (hereinafter referred to as “Party B”)

Address:

9 Jiansin Road North

Postal code:

400020

Legal representative/

Person-in-charge:

Liu Shuuun

Telephone:

023-67695759

Fax:

023-67695761

According to the applicable laws and regulations of the People’s Republic of China (the “PRC”), Party A and Party B, after reaching an agreement through negotiations, hereby enter into and execute this Agreement.

Article 1

Definition

Clause 1

In this Agreement, unless the context otherwise requires:

1.1

M&A or Mergers and Acquisitions Transactions refers to Party A achieving a merger/ acquisition or actually controlling the target enterprise that has been established and is still in operation through acquiring the vendor’s equity stake or subscribing for the new equity allotted, etc in the target enterprise, or Party A achieving effective control of the target asset through the transfer of asset title, etc. 

CMBC-HT-313 (Gongsi 2010)-ZXSY-75166637 

1.2

M&A Agreement means the _____________________________________

_____________________________________________________________agreement signed between Party A and the other party to the M&A transaction and its annex as well as any other related and effective amendments and supplements.

1.3

Target Enterprise means the enterprise, named _______________________________________________________, Party A intends to merge with and acquire through acquiring its vendor’s equity stake or subscribing for its new equity allotted in accordance with the M&A Agreement.

1.4

Target Asset means the asset Party A is to acquire in accordance with the M & A Agreement.

1.5

M&A Purchase Price means the amount Party A shall pay to the other party to the M&A transaction in accordance with the M&A Agreement.

1.6

M&A Loan means the loan Party B grants to Party A for paying part of the M&A Purchase Price under the M&A Agreement, or the loan Party B grants to Party A for the settlement of debt when Party A is undertaking the M&A through debt assignment.

1.7

The New Subsidiary means the subsidiary into which Party A, upon the acquisition of the Target Asset, shall conduct a capital injection using the Target Asset.

1.8

Designated Account means the account Party A opened at Party B as specified in Clause 10 of this Agreement.

Article 2

Purpose of the Loan

Clause 2

The Loan under this Agreement shall be used for Party A’s payment of the M&A Purchase Price.  Its specific use is _____________________________________.  Without the written approval of Party B, Party A shall not alter the purpose of the Loan.

Article 3

Amount, Period and Type of the Loan

Clause 3

The amount of the Loan under this Agreement shall be (in word) Renminbi One Hundred and Fifty Million Only.

CMBC-HT-313 (Gongsi 2010)-ZXSY-75166637 

Clause 4

The Loan under this Agreement shall have a tenure of three years.  The loan tenure shall start on August 11, 2010 (the contracted first drawdown date) and continue until August 11, 2013 (the contracted maturity date).

Clause 5

The Loan under this Agreement shall be a   £   short-term   ¢   medium-term   £  long-term loan.

Article 4

Calculation of Interest 

Clause 6

6.1

The interest rate on the loan under this Agreement (referred to as the Contracted Interest Rate) shall be 7.02% per annum (namely an annual rate equal to 30% above/ below the applicable 3-year official lending rate as stipulated by the People’s Bank of China on the day when this contract is signed, i.e. 5.4% per annum);

6.2

The interest on the loan under this Agreement shall be calculated from the drawdown date.  On each interest payment date, Party A shall pay Party B the interest accrued from the day after the preceding interest payment date or the drawdown date (including that day) until that interest payment date (including that day) and the principal due (if applicable) on that interest payment date;

6.3

The method of interest calculation on the loan under this Agreement adopted and the interest payment option taken shall be item 2 below:

(1)

The interest shall be calculated on a daily basis and payable on a monthly basis.  Interest payment date is the 20th day of each month.  The last interest payment date is the maturity date of the Loan;

(2)

The interest shall be calculated on a daily basis and payable on a quarterly basis.  Interest payment date is the 20th day of the last month of each quarter or the maturity date (in case of the last repayment date).  The last interest payment date is the maturity date of the Loan;

(3)

All principal and accrued interest shall be payable in a lump sum on the maturity date (applicable to loans with maturity within a year);

6.4

If Party A fails to repay the principal amount of the Loan on the due date, Party B shall charge Party A interest at a rate of 50% above the Contracted Interest Rate (referred to as the “Default Interest Rate”) on overdue sum from and including the due date to the actual payment date.  If Party A 

CMBC-HT-313 (Gongsi 2010)-ZXSY-75166637 

fails to repay the accrued interest and default interest on the due date, the Default Interest Rate shall be calculated monthly on the interest payment date, or in the case of last repayment, the last repayment date on a compound basis based on the actual number of days elapsed; (Note: the interest rate over the Contracted Interest Rate here should range from 30% to 50%)

6.5

If Party A fails to use the loan proceeds for the designated purpose, interest at a rate of 100% above the Contracted Interest Rate (referred to as the “Penalty Interest Rate”) shall be charged on the amount of proceeds used for purpose other than the designated one starting from the date when the loan proceeds are inappropriately used.  In the event of failure to pay the penalty interest on time, such penalty interest shall be calculated monthly on the interest payment date, or in the case of last repayment, the last repayment date on a compound basis based on the actual number of days that the loan proceeds are inappropriately used.  Party B may pursue action against Party A for other acts of default and shall at any time have the right to declare any part or the entire Loan under the Loan Agreement to be forthwith due and payable;  (Note: the interest rate over the Contracted Interest Rate here should range from 50% to 100%)

6.6

Should the People’s Bank of China adjust the above official lending rate after this contract is signed (the “Adjustment”), the Contracted Interest Rate:

£  will not be adjusted accordingly;

¢  will be adjusted accordingly using the method of interest calculation as stipulated under Clause 6.1;

The adjusted interest rate on the loan under this Agreement will be applied starting from the following day of the first interest payment date after the date of Adjustment.  Once the adjusted interest rate applies, the interest payment will be calculated based on the adjusted interest rate.

In the event of any change in the Contracted Interest Rate, all the Default Interest Rate and Penalty Interest Rate will be automatically adjusted, calculated accordingly and applied starting from the day when the adjusted Contracted Interest Rate applies.

Should the interest rate adjustment be made in accordance with Clause 6.6 under this Agreement, Party A and Party B are required to neither sign further agreement for the change of interest rate nor seek each other’s consent or inform the guarantors or obtain their consent.

CMBC-HT-313 (Gongsi 2010)-ZXSY-75166637 

Article 5

Self-financing

Clause 7

The self-financed funds Party A needs to consummate the M&A transactions shall be no less than             /            (in word:            /           ).

Article 6

Disbursement and Payment of Loan

Clause 8

Upon the effectiveness of this Agreement, Party A may withdraw the proceeds of the Loan:

¢

in a lump sum.

£

in installments in accordance with the drawdown schedule specified in Attachment 1.

£

other options: __________________________________________________.

Clause 9

Upon the effectiveness of this Agreement, if any part of the loan under this Agreement is to be disbursed, Party A must satisfy the following conditions precedent and submit a draw-down application as required by Party B at least three business days in advance, or Party B has the right to refuse Party A’s drawdown.  Should Party B, however, disburse the Loan even if not all the following conditions precedent have been satisfied, Party B’s act shall not constitute or be deemed to constitute its defective performance under this Agreement:

9.1

Party A has provided the documents as required by Party B, including but not limited to the following:

9.1.1

Party A’s business registration certificate (with the latest annual inspection passed), organization code permit and tax registration certificate, Party A’s articles of association as in force for the time being, proof of identity of Party A’s legal representative and his/ her copy of identity card;

9.1.2

A list of names and specimen signatures of Party A’s directors and relevant senior officers mentioned in this Loan Agreement;

9.1.3

Resolutions of the board of directors authorizing the borrowing of the Loan and the power of attorney to sign on its behalf this Loan Agreement;

9.1.4

Party A’s signed drawdown application;

9.1.5

A copy of the M&A Agreement and other documents showing the M&A Purchase Price that needs to be paid.

9.1.6

              /              .

CMBC-HT-313 (Gongsi 2010)-ZXSY-75166637 

9.2

All the relevant loan guarantee documents have been duly executed and in full force and effect.  Mortgage right/ pledge right has been established and such security has not had any adverse effects on Party B’s claims;

9.3

There is no occurrence or persistence in any event of default.  In case the event of default shall have occurred, either waiver has been obtained from Party B or rectification has been performed to the satisfaction of Party B.

9.4

All the representations and warranties contained in Clause 15 of this Agreement made by Party A shall be true, correct and valid with the same effect as though made on and as of the drawdown date with reference to the facts and circumstances then existing.

9.5

There has been no material advance change in the financial condition of Party A between the execution date of this Agreement and the drawdown date.

9.6

The M&A Agreement has come into effective and remains in full force and effect.  No event of default with respect to Party A as stipulated in the M&A Agreement has occurred and there has been no change in the M&A conditions;

9.7

Party A has provided a written explanation of the insurance on its Target Asset for Party B;

9.8

Party A’s self-financed funds have been sufficient;

9.9

              /              .

Party B shall, at its absolute discretion, release the Loan even if all the above conditions have not been satisfied.  Party B’s act shall not constitute or be deemed to constitute its defective performance under this Agreement.

Clause 10

Disbursement of loan

Upon approval of Party A’s drawdown request, Party B shall provide the approved amount of loan proceeds by bank transfer to Party A’s Designated Account and interest shall be calculated from the drawdown date.  The loan account under this Agreement shall be:

¢

the escrow account

Bank:

Corporate Bank Division, Chongqing Branch, China Minsheng Banking Corp., Ltd.

Account number:

1xxxxxxxxxxxxxxx                                 

£

the settlement account

Bank:

_________________________________________________________

Account number:

___________________________________________________

Others:

_________________________________________________________

CMBC-HT-313 (Gongsi 2010)-ZXSY-75166637 

Clause 11

Loan payment mode

11.1

All the loan proceeds Party B provides for Party A under this Agreement shall be disbursed by entrusted payment.

11.2

Under the entrusted payment method, upon approval of the drawdown application and such related documents as the M&A Agreement that Party A should submit pursuant to the requirements of Attachment 3 of this Agreement, Party B shall, in accordance with Party A’s drawdown application and payment entrustment, transfer the corresponding amount of proceeds to the account designated by the Party A’s transacting party under the M&A Agreement through Party A’s Designated Account for paying the M&A Purchase Price.

Without the consent of Party B, Party A shall neither make any withdrawals from the Designated Account nor issue any payment orders on the Designated Account.

11.3

Should there be a deterioration in Party A’s credit status, a decline in the profitability of Party A’s major businesses or an abnormality in the use of the loan proceeds in the process of loan disbursement, Party B shall have the right to reduce the amount of loan proceeds to be disbursed by entrusted payment; Party B shall also have the right to withhold disbursement and payment of the loan proceeds and, in this case, Party B shall timely inform Party A of the need to negotiate over additional loan disbursement and payment conditions.

Clause 12

Loan disbursement

The loan proceeds in the Designated Account shall, as stipulated in Clause 11 under this Agreement, be disbursed by entrusted payment.  Party A must submit a draw-down application and other related documents at least three business days in advance and Party B, upon approval of Party A’s application, shall disburse the requested amount of loan proceeds.  Should Party B consider Party A’s application unsuccessful, Party B shall have the right to require Party A to make adjustments or refuse Party A’s drawdown application and Party B, in this case, shall not be responsible for any liability and consequences arising from the loan disbursement delay.

Clause 13

Pursuant to this Agreement and the M&A Agreement, Party A shall authorize Party B to monitor the use and disbursement of the loan proceeds in the Designated Account.  Party B shall have the right to refuse the execution of Party A’s instructions in relation to the Designated Account that are in violation of the uses of that account as stipulated in this Agreement and the M&A Agreement.

CMBC-HT-313 (Gongsi 2010)-ZXSY-75166637 

Clause 14

Party A, Party A’s transacting party under the M&A Agreement and Party B can enter into an escrow account agreement stipulating that Party B’s monitoring of the account of Party A and its transacting party under the M&A Agreement shall be conducted in accordance with the provisions of the escrow account agreement.

Article 7

Repayment of Loan

Clause 15

15.1

Party A shall repay the principal:

£

in full, in a single payment on the due date stipulated in Clause 4 of this Agreement;

¢

in installments on the due dates in accordance with the repayment schedule specified in Attachment 2;

15.2

Should the actual first drawdown date be different from the contracted first drawdown date, the maturity date under this Agreement shall be adjusted as follows:

15.2.1

If Party A opts for full repayment of principal at the time of expiry, the maturity date will be automatically adjusted in accordance with the loan tenure set forth in Clause 4 and the actual first drawdown date

15.2.2

If Party A opts for repayment of principal in installments, the maturity date and other principal repayment dates will not alter in response to the change of the first drawdown date.  The loan should be repaid in accordance with the repayment schedule specified in Attachment 2.

15.3

If the repayment date or the interest payment date falls on a statutory holiday, payment shall be made on the first business day after that repayment date or interest payment date (and interest will be calculated up to the actual repayment date).  Party A shall make sure sufficient funds are available in the Designated Account on the repayment date or the interest payment date to be debited by Party B.  In the event of a delay in Party A’s repayment resulting from inadequate funds in its repayment account, Party A will be liable for default interest and compound interest at the Default Interest Rate;

15.4

Should there be insufficient funds to meet the principal and interest in Party A’s repayment account, Party B has the right to directly debit the principal, interest, default interest, compound interest, liquidated damages and other expenses Party A is liable for pursuant to the provisions of this Agreement from the accounts Party A opened in the business establishments owned by 

CMBC-HT-313 (Gongsi 2010)-ZXSY-75166637 

China Minsheng Banking Corp. Ltd and Party B is not responsible for any loss or interest incurred;

15.5

Except for the circumstances set out in Clause 15.6 below, any grant of early repayment of the Loan shall be conditional upon there being no default in payment of the Loan under this Agreement.  Party A should apply to Party B in writing for an early repayment and obtain Party B’s consent ten (10) bank business days in advance.  Should Party B approve Party A’s application for early repayment, in addition to the loan interest receivable, which is calculated based on the actual number of days the proceeds are used and the contracted interest rate, both parties agree            /            ; in the event of early repayment without Party B’s prior consent, in addition to the loan interest receivable calculated at the contracted interest rate for the actual number of days the proceeds are used, Party B shall have the right to charge Party A of default interest    /    in accordance with the following criteria;

15.6

Party A undertakes that it shall, upon receipt of the following proceeds, transfer them to the Designated Account and authorize Party B to directly debit the Designated Account for early repayment of the corresponding principal, interest and other expenses:

15.6.1

proceeds obtained by selling assets exceeding       /      ;

15.6.2

funds raised by issuing stocks (including public offer and non-public offer);

15.6.3

insurance claims or compensations for damage or loss of the Target Asset;

15.6.4

proceeds obtained from the transfer of the Target Enterprise’s shares held with the consent of Party B;

15.6.5

                /                 .

15.7

Should Party A consider a time extension for the repayment of the Loan necessary, it should submit a “Loan Extension Application” to Party B at least thirty (30) days prior to the maturity day.  If Party B decides to grant the time extension, both parties shall enter into a “Loan Extension Agreement”.  In the event that Party B decides not to grant the extension application, Party A should pay the full amount of the loan due as scheduled.

CMBC-HT-313 (Gongsi 2010)-ZXSY-75166637 

Article 8

Guarantee

Clause 16

To ensure the loan under this Agreement can be fully settled, both parties agree to execute one or more of the following guarantees:

¢

guarantee, see guarantee agreement number “Gong 99112010292155” [signed by Jinsha Baiping Mining Co. Ltd., for details]; 

¢

guarantee, see guarantee agreement number “Gong 99112010292156” [signed by Liuzhi Linjiaao Coal Mining Co. Ltd., for details];

¢

guarantee, see guarantee agreement number “Gong 99112010292157” [signed by Nayong Dayuan Coal Mining Co. Ltd., for details];

¢

guarantee, see guarantee agreement number “Gong 99112010292159” [signed by Liuzhi Xinsong Coal Mining Co. Ltd., for details];

¢

guarantee, see guarantee agreement number “Gong 99112010292160” [signed by Nayong Gouchang Coal Mining Co. Ltd., for details];

¢

guarantee, see guarantee agreement number “Gong 99112010292161” [signed by Guizhou Yongfu Mining Co. Ltd., for details];

¢

guarantee, see guarantee agreement number “Gong 99112010292210” [signed by Wuhu Port Co. Ltd., for details];

¢

guarantee, see guarantee agreement number “Ge 99112010292178” [signed by Li Feilie for details];

£

collateral, see collateral agreement number _______________________ for details;

¢

pledge, see pledge agreement number (Qian) Quzhidengjishezi [2010] 27, 28, 29, 30 and 31 for details [in respect of the equity shares in Liuzhi Linjiaao Coal Mining Co. Ltd., Nayong Dayuan Coal Mining Co. Ltd., Liuzhi Xinsong Coal Mining Co. Ltd., Nayong Gouchang Coal Mining Co. Ltd., and Guizhou Yongfu Mining Co. Ltd. held by Party A];

others:              /              .

Should Party A and Party B have entered into an integrated credit agreement, one or more of the following guarantees shall be executed:

£

guarantee, maximum guarantee agreement number _______________________;

£

collateral, maximum collateral agreement number ________________________;

£

pledge, maximum pledge agreement number ____________________________;

£

            /             .

CMBC-HT-313 (Gongsi 2010)-ZXSY-75166637 

Article 9

Party A’s Representations and Warranties

Clause 17

Party A represents and warrants as follows:

17.1

Party A is a duly incorporated, validly existing and duly organized legal entity with full capacity for civil rights and civil acts to enter into and execute this Agreement and has obtained all the permits, permission, registration and documents required to sign this Agreement; in accordance with the relevant laws and regulations of the People’s Republic of China, Party A is a qualified borrower of M&A loans; 

17.2

All the internal authorization procedures needed for signing this Agreement have been completed and are fully valid.  All the necessary actions and authorizations to enter into this Agreement and the obligations under this Agreement shall not contradict with the current articles of association, internal regulations, and any contracts, agreements or documents having a binding effect on Party A;

17.3

When this Agreement is signed, there has been and is no litigation, arbitration, administrative proceedings, actions taken by judicial or administrative agencies or potential material disputes against Party A and the Target Enterprise/ the New Subsidiary which could or might have a material adverse effect on Party A’s performance of this Agreement;

17.4

Party A and the Target Enterprise/ the New Subsidiary do not have any material debt or contingent liabilities not disclosed to Party B;

17.5

All the information provided for Party B by Party A is true, complete and valid and Party A has not omitted or concealed any significant facts;

17.6

Party A undertakes that the loan proceeds shall be used in accordance with this Agreement and the purpose prescribed by the laws of the PRC and no loan proceeds shall be used in areas officially prohibited by the nation like securities and futures trading, real estate, venture capital investment, etc.; 

17.7

Party A shall accept the investigation, enquiry and supervision of Party B in respect of the use of proceeds under this Agreement and ensure the progress of the M&A transaction is in proportion to the transaction payment.

17.8

Party A shall actively give assistance and cooperation to Party B in connection with its investigation, enquiry and supervision of production, operation and financial condition of Party A.  Party A has, as required by Party B, furnished to Party B a copy of financial reports such as balance sheet, income statement, statement of cash flow, etc. and shall continue furnishing to Party B copies of financial reports such as balance sheet, income statement, statement of cash flow, etc. as scheduled below:

CMBC-HT-313 (Gongsi 2010)-ZXSY-75166637 

17.8.1

submit a copy of Party A and the Target Enterprise/ New Subsidiary’s audited balance sheet, income statement, cash flow statement for the preceding fiscal year, etc. each year before March;

17.8.2

submit a copy of Party A and the Target Enterprise/ New Subsidiary’s financial statements for the previous quarter before the second month of each quarter;

17.8.3

submit a report of investment earnings on the M&A project before

       /       ;

Party A warrants that the abovementioned documents submitted to Party B are prepared in compliance with the existing laws, regulations and financial accounting standards and fairly reflect Party A’s financial conditions and business performance at the end of and during the accounting period concerned respectively, and that no material adverse change in Party A’s financial conditions has occurred since the cut-off date of the latest financial report;

17.9

Party A and the Target Enterprise/ New Subsidiary shall promptly inform Party B in writing of any occurrence of an event (including but not limited to those events stipulated in Clause 17.3) threatening their normal operation or inhibiting their performance of the repayment obligations under this Agreement;

17.10

Without the prior written consent of Party B, Party A and the Target Enterprise/ New Subsidiary shall not undertake amalgamation, spin-off, merger, stock company reorganization, project contracting, leasing, joint venture, investment, application for business suspension for rectification, application for dissolution, application for reconciliation/ reform/ bankruptcy, transfer/ disposal of any of its material assets by any means, or other acts which shall affect the interests of Party B by altering the debt/ liability relationship under this Loan Agreement;

17.11

Prior to the full repayment of the loan principal and interest, Party A and the Target Enterprise/ New Subsidiary shall not provide guarantee with the amount exceeding their net asset value for a third party;

17.12

Should there be any changes in the articles of association, business scope, registered capital, equity, registered address, company name or legal representative and senior officers of Party A and the Target Enterprise/ New Subsidiary during the life of this Agreement, a written notice should be given to Party B within seven (7) days after the change(s) is/ are made;

CMBC-HT-313 (Gongsi 2010)-ZXSY-75166637 

17.13

Party A undertakes to provide a new guarantee to the satisfaction of Party B or repay the loan under this Agreement before the maturity date in case the guarantor has violated any obligations and commitments under the guarantee agreement, the guarantor is incapable of providing guarantee, or the diminishment in the value or damage of the collateral.

17.14

The written consent of Party B is required if Party A shall transfer the liability under this Agreement to a third party.

17.15

Party A warrants that Party A and the Target Enterprise/ New Subsidiary operate in compliance with the laws, have good credit standing and do not have such bad records as credit default, evasion of bank debts, etc.

17.16

Party A warrants that the self-financed funds raised for the M&A transaction under this Agreement are derived from legitimate sources;

17.17

Should there be any relationship and transactions between Party A and its transacting party under the M&A Agreement, Party A shall truthfully report to Party B; the fact that Party A and its transacting party under the M&A Agreement are under the control of the same person has been fully disclosed to Party B and reasonable explanation for the M&A transaction purpose and purchase price has been provided; there has been no attempt to evade the aforementioned requirement by establishing a trust, warehousing of shares or other means;

17.18

Party A and the Target Enterprise/ New Subsidiary shall seek Party B’s prior written consent before the occurrence of the following events:

17.18.1

Party A’s newly-incurred debt reaching over     /      dollars, asset transfer involving over     /     dollars, one single external investment amounting to over     /     dollars or totaling over     / dollars during     /   ;

17.18.2

The Target Enterprise’s newly-incurred debt reaching over     / dollars, asset transfer involving over     /     dollars, one single external investment amounting to over     /     dollars or totaling over     / dollars during     /   ;

17.18.3

The New Subsidiary ‘s newly-incurred debt reaching over     / dollars, asset transfer involving over     /     dollars, one single external investment amounting to over     /     dollars or totaling over     / dollars during     /   ;

17.19

In the event of any changes in the M&A Agreement (including but not limited to the M&A Purchase Price, payment mode, approval of the relevant departments, performance of the M&A Agreement, etc.), Party A shall notify Party B ten (10) days in advance and obtain its written consent before 

CMBC-HT-313 (Gongsi 2010)-ZXSY-75166637 

making changes, adding supplements to or terminating the M&A Agreement;

17.20

Party A’s General Meeting (Annual) has passed a resolution guaranteeing that no dividends or bonus dividends shall be paid to shareholders without Party B’s prior written consent;

17.21

Party A warrants that there are no legal restrictions on the source of funding for the M&A transaction;

17.22

Party A warrants that Party A and the Target Enterprise/ New Subsidiary’s future cash flows shall be stable and Party A shall monitor the cash flow for the repayment in compliance with laws and regulations;

17.23

There exists a rather strong industrial and strategic connection between Party A and the Target Enterprise in that Party A can enhance its core competitiveness through acquiring the Target Enterprise’s such strategic resources as research and development capabilities, key technology and techniques, trademark, concessions, supply or distribution network, etc. by means of mergers and acquisitions.

17.24

Party A warrants that the disclosure of Target Enterprise/ New Subsidiary’s dividend policy, its fixed income instruments, etc. by its General Meeting (Annual) to Party B shall not have any adverse effect on the repayment of the loan under this Agreement;

17.25

Party A shall offer the Target Enterprise’s equity and Target Asset as the loan guarantee and undertakes to complete the procedures for transferring the Target Enterprise’s equity and Target Asset within twenty (20) days after this Agreement becomes effective and the guarantee registration procedures within twenty (20) days after the transfer of the Target Enterprise’s equity and Target Asset in accordance with the applicable laws and regulations and Party B’s requirements;

17.26

The M&A transaction has a real substance and background;

17.27

Party A, the Target Enterprise and the New Subsidiary have sound organizational and financial management systems; there have been no major violations of law in their production and operation within the past year; and there are no records of serious misconduct by the current senior management.

17.28

Party B shall be timely informed of the relevant policies and regulations newly implemented by the nation and local government and their effects on the production and operation of Party A, the Target Enterprise and the New Subsidiary

17.29

               /                .

CMBC-HT-313 (Gongsi 2010)-ZXSY-75166637 

Article 10

Party B’s Rights and Obligations

Clause 18

The rights and obligations of Party B

18.1

Party B undertakes to release the proceeds to Party A in accordance with this Agreement and the execution of this Loan Agreement has been properly authorized in full force and effect;

18.2

Upon full performance of the designated obligations by Party A and the satisfaction of the conditions precedent, Party B should remit the full amount it undertakes to Party B as scheduled;

18.3

Party B is obliged to keep the information obtained under or in connection with this Agreement concerning Party A’s liabilities, finance, production, operation, etc. secure and confidential and should not, without prior consent of Party A, divulge in any form any of the aforementioned information to any other parties, except under the following conditions:

18.3.1

Disclosure is required by applicable law or regulation, or by the relevant authority or the stock exchange in which Party B is listed;

18.3.2

Disclosure in accordance with applicable law, rule and regulation to relevant parties or third party is required if Party B (i) transfers or assigns the debt under this Agreement to a third party; (ii) engages a trust to manage the debt under this Agreement; and (iii) conducts asset securitization exercise of which the debt under this Agreement is a part;

18.4

Party B shall announce its change of registered address in time while this Agreement is in effect;

18.5

The written consent of Party A is not required if Party B transfers or assigns its debt under this Agreement to a third party but Party B should inform Party A after the execution of the debt assignment agreement;

18.6

All the repayment made by Party A (including the monies received by Party B according to this Agreement) shall be applied and settled of debt in the following order: (1) expenses in connection with the enforcement of the debt and guarantee; (2) damage compensation; (3) liquidated damages; (4) compound interest; (5) penalty interest; (6) interest; (7) principal.  Party B shall have the right to modify the above order; and

18.7

Party B is entitled to know the progress and completion of the M&A transaction, the transfer of the Target Enterprise’s equity and the Target Asset, and Party A’s major investment projects, and to examine the use of the loan proceeds by reviewing the operation information of Party A.

CMBC-HT-313 (Gongsi 2010)-ZXSY-75166637 

Article 11

Default Liability

Clause 19

Party A shall be deemed to be in default under this Loan Agreement upon the occurrence of any or more of the following events:

19.1

The Guarantor fails to complete the guarantee formalities (whether caused by Party A or the Guarantor), or Party A fails to complete the drawdown procedures at Party B’s business offices as scheduled and such failure is not remedied within 30 days (including statutory holidays, Saturday and Sunday).  Party B has the right to demand penalty based on the amount in default, the actual number of days elapsed and the Default Interest Rate.  In addition, Party B has the right to rescind this Agreement;

19.2

Party A fails to pay in accordance with the this Agreement any sums hereunder and thereunder when due;

19.3

The balance sheet and income statement furnished by Party A to Party B are falsified or have concealed material facts.  Party A refuses the investigation, enquiry and supervision of Party B in connection with its use of proceeds under this Agreement, production, operation and financial activities.  Any representation or warranty made or deemed to be made by Party A in Clause 17 is or proves to have been false, incorrect or misleading in any material respect when made or deemed to be made;

19.4

Party A explicitly states or expresses through its acts that it shall not perform this Agreement or any one of the obligations in other commitments, or the guarantor is in breach of any one of its obligation under the guarantee agreement;

19.5

Party A and the Target Enterprise/ New Subsidiary are in default of any contracts or agreements to which they are one of the parties, or any unilateral commitment or guarantee, thus constituting a default on other loan obligations or actually or probably accelerating the maturity of other loans;

19.6

Party A fails to use the proceeds for the designated purpose;

19.7

Party A fails to provide a new guarantee as demanded by Party B if there occurs a material adverse change in the condition of guarantee adversely affecting the debt of Party B, including without limitation the guarantee agreement or other forms of guarantee not being in full force and effect or being void or rescinded, the guarantor failing to possess part or all of its guarantee ability or explicitly expressing its intention not to perform or comply with its guarantee obligations, the guarantor failing to duly perform 

CMBC-HT-313 (Gongsi 2010)-ZXSY-75166637 

or observe any of its obligations or commitments under the guarantee agreement or other commitment to which it is a party, or the mortgaged or pledged property or assets being damaged, lost, impaired or diminishing in value;

19.8

There are material changes in financial condition of Party A or the Target Enterprise/ the New Subsidiary, or litigation, arbitration, administrative penalty and other judicial and administrative proceedings threatening against Party A, which could or might have a material adverse effect on Party A’s performance of this Agreement; and

19.9

Party A fails to rectify any other material unfavorable conditions within the prescribed time required by Party B.

19.10

Such indicators of the financial condition of Party A or the Target Enterprise/ the New Subsidiary as their profitability, solvency, operation, cash flow, etc. have deteriorated to such an extent that Party A’s performance of its obligations under this Agreement has been or may be adversely affected; and among the various financial indicators the following ones have fallen below the following requirements:          /         ;

19.11

There have been material adverse changes in Party A or the Target Enterprise/ the New Subsidiary’s brand, customers, marketing channels, ownership structure, production and management, foreign investment, etc., which have had or may have adverse effect on Party A’s performance of the obligations under this Agreement;

19.12

The M&A Agreement is rendered invalid or no longer capable of being fulfilled by law;

19.13

Accidents caused by Party A or the Target Enterprise/ the New Subsidiary’s breach of laws and regulations, regulatory requirements in relation to food safety, production safety, environmental protection, etc. or non-compliance with industrial standards have adversely affected or may adversely affect Party A’s performance of the its obligations under this Agreement;

19.14

Party A’s performance of its obligations under this Agreement has been or may be affected by abnormal changes in Party A or the Target Enterprise/ the New Subsidiary’s main investor(s) or management or their being suspected of criminal acts and thus being investigated or having their person freedom restricted by the judicial authority;

19.15

Party A’s performance of its obligations under this Agreement has been or may be affected by the change in the controller/ controlee relationship between Party A or the Target Enterprise/ the New Subsidiary and its related 

CMBC-HT-313 (Gongsi 2010)-ZXSY-75166637 

parties or the occurrence of the aforementioned events of default referred to in Clauses 19.5, 19.8, 19.10, 19.11, 19.13 and 19.14 by those related parties;

19.16

Other circumstances that may have adverse effects on Party A’s realization of its claims under this Agreement;

Clause 20

Upon the occurrence of any aforementioned event of default, Party B may exercise all of its rights under this Agreement, declare the entire loan under this Agreement to be due and payable at once, demand immediate repayment of the amounts already disbursed and cease extending the remaining tranche of the loan.

Clause 21

Upon the occurrence of an Event of Default by Party A, Party B may take legal proceeding against Party A.  Party A shall bear on a full indemnity basis all litigation, attorney, travelling and debt/ guarantee enforcement expenses in connection with the legal proceeding.

Clause 22

Provided that Party A has performed all its obligations under this Agreement, it shall have the right to demand liquidated damages from Party B if Party B fails to make the loan proceeds available on the prescribed date and in the prescribed amount.  The liquidated damages shall be calculated with reference to the default amount, the actual number of days elapsed and the Default Interest Rate.

Article 12

Effectiveness of the Agreement

Clause 23

This Agreement shall be effective after it is duly signed and sealed by the legal representatives/ the persons-in-charge or authorized agents of both parties, and both parties.

Article 13

Amendment and Termination of Agreement

Clause 24

Upon the effectiveness of this Agreement, neither Party A nor Party B can amend or rescind it early at their own discretion.  This Agreement can only be amended or rescinded upon the mutual written agreement of both parties.

CMBC-HT-313 (Gongsi 2010)-ZXSY-75166637 

Article 14

Dispute Resolution

Clause 25

Disputes arising out of or in connection with the Loan Agreement shall be settled through negotiation, or submitted to the People’s Court of the place where Party B is located, should the negotiation fail.

Article 15

Supplementary Provisions

Clause 26

This Agreement is a specific business agreement under the integrated credit agreement numbered         /         .

Clause 27

Notification and delivery

27.1

Any notice and written communication including with limitation any and all written documents and notices as stipulated by this Agreement to be made or delivered by one party to another shall be made by registered letter, facsimile, courier service, or other communication means to the designated address set out on page one of this Loan Agreement.

27.2

Any notices or written documents from one party to another shall be deemed to be sufficiently and duly served on the fourth day after having sent by registered mail.  Notices given by facsimile transmission shall be deemed effectively given on the date of successful transmission as evidenced by an automatically generated confirmation of transmission.  In case of courier delivery, any notices or written document shall be deemed to be sufficiently and duly served on the date when despatched to the recipient’s address.  Should there be any change in the contact details of either party, the party concerned shall inform the counter party in writing in seven (7) days in accordance with this clause.  All subsequent notices and documents shall then be served according to the new contact.

Clause 28

Other matters agreed by both parties

1.

Should Party A fail to consummate the M&A transaction in accordance with the formalities and procedures stipulated in the M&A Agreement concerned, Party B shall have the right to declare the loan to be forthwith due and payable and the borrower is obliged to repay the loan proceeds already disbursed immediately;

2.

80% of the revenue of Jinsha Baiping Mining Co. Ltd., Guizhou Nayong Dayuan Mining Co. Ltd., Liuzhi Xinsong Coal Mining Co. Ltd., Nayong Gouchang Coal Mining Co. Ltd., and Liuzhi Linjiaao Coal Mining Co. Ltd. obtain from the sale 

CMBC-HT-313 (Gongsi 2010)-ZXSY-75166637 

of coal should be settled through the settlement accounts they opened with our bank, otherwise our bank is entitled to recover in advance the entire principal amount of loan together with interest.

Clause 29

This Agreement is made in triplicate.  Party A, Party B and __________ each holds one original copy with the same legal effect.

Clause 30

Party B has explained all the clauses in the Agreement in details to Party A on signing the Agreement.  Both Party A and Party B have no further comment on all the clauses of the Agreement and fully and correctly understand the legal implications of their respective rights, obligations, restrictions and exclusion.

This Agreement is signed between Party A and Party B at Party B’s business office.

Party A (affixing the Official Seal)

/s/ Zhang Xiaoning

Legal Representative/ Person-in-charge (or Authorized Representative)

August 24, 2010

Party B (affixing the Official Seal)

/s/ Hu Yu

Legal Representative/ Person-in-charge (or Authorized Representative)

August 24, 2010

CMBC-HT-313 (Gongsi 2010)-ZXSY-75166637 

Attachment 1

Party A’s Drawdown Date and Amount

			
	Tranche

	Drawdown Date

	Amount (in word)

	1

	 
	 

	2

	 
	 

	3

	 
	 

	4

	 
	 

	5

	 
	 

	6

	 
	 

	7

	 
	 

	8

	 
	 

CMBC-HT-313 (Gongsi 2010)-ZXSY-75166637 

Attachment 2

Party A’s Repayment Date and Amount

			
	Tranche

	Repayment Date

	Amount (in word)

	1

	December 31, 2012

	Fifty Million

	2

	August 11, 2013

	One Hundred Million

	3

	 
	 

	4

	 
	 

	5

	 
	 

	6

	 
	 

	7

	 
	 

	8

	 
	 

	9

	 
	 

	10

	 
	 

CMBC-HT-313 (Gongsi 2010)-ZXSY-75166637 

Attachment 3

Drawdown Application Form

Number: _______________

Applicant (Trustor, Party A):

Guizhou Puxin Energy Co., Ltd.                

Lender (Trustee, Party B):

                   Branch, China Minsheng Banking Corp., Ltd.

In accordance with the M&A Loan Agreement signed between Party A and Party B, numbered ________________, (referred to as ‘Loan Agreement’ hereunder), the disbursement of the loan under the Loan Agreement shall be subject to the supervision and approval of Party B.  Pursuant to the provisions of Loan Agreement, Party A now makes the following loan disbursement application:

Currency:

________________________________________________________

Amount:

________________________________________________________

Purpose:

________________________________________________________

(Fill in the purpose that is consistent with the attached materials)

The loan proceeds requested by Party A in this application shall be disbursed by entrusted payment:

1.

Party A shall furnish Party B with the M&A Agreement and other documents required by Party B; Party A warrants that the M&A Agreement and documents furnished are true, correct and valid, and the amount of loan proceeds requested by Party A in this application and its authorization shall comply with the agreed terms of the M&A Agreement.

2.

Party A hereby unconditionally and irrevocably authorizes Party B to disburse the requested amount of loan proceeds in accordance with the following payment schedule:

CMBC-HT-313 (Gongsi 2010)-ZXSY-75166637 

							
	Serial number

	Account name (recipient’s full name)

	Bank

	Account number

	Amount (accurate to the nearest cent)

	Loan purpose

	Remarks

	 
	 
	 
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 
	 

Party A confirms that it has furnished Party B with all the documents related to this drawdown application as required by Party B and warrants that the aforementioned documents are true, correct and valid, or it shall be liable for default pursuant to the Loan Agreement.

				
	                              

	Applicant (Trustor) (Affixed Seal):

	  

	 

	 
	 
	 
	 

	 
	 
	 
	 

	 
	Application (Authorization) Date:

	 
	__________________

	 
	 
	 
	  D    M     Yr

Attached documents:

£

M&A Agreement: _____________________ (agreement name and number)

£

Other documents required by Party B: ______________________________

_____________________________________________________________

_____________________________________________________________

CMBC-HT-313 (Gongsi 2010)-ZXSY-75166637 

Attachment 4 Agreed Financial Performance Index

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