Document:

kl07044_exhibit10-9.htm

    
      

    

     

    Exhibit 10.9

    

    

    

    

    

    

    

    Mortgage
Contract

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    China
Construction Bank, Hunan Branch

    

    

    

    

    

    

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    
 

    
      Contract
Number: 436688643200700011

       

      

       

      Mortgagor
(Party A):  Hunan Sanjiang Electric Power Co., Ltd.

       

      Domicile:
No. 001 South Power Station Road                    Zip:
415300

       

           Chujiang
Township, Shimen County

       

      Legal
Representative ( Person in-Charge):   Hong Zhu

       

      Facsimile:                                        Telephone:
7703900

       

      

       

      

       

      Mortgagee
(Party B): China Construction Bank Co., Ltd. Changde Branch

       

      Address:
130 Dongting Avenue                            Zip: 415000

       

      Person
in-Charge: Xiaoping Meng

       

      Facsimile:                                       Telephone:
7709217

       

      

       

      

      

      2

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      Mortgagor
(hereinafter “Party A”):  Hunan Sanjiang Electric
Power Co., Ltd.

       

      Mortgagee
(hereinafter “Party B”): China Construction Bank Co.,
Ltd. Changde Branch

       

      In order
to ensure the execution of the "Renminbi Capital Loan
Agreement" (hereinafter referred to as the “Underlying Contract”) between
Hunan Sanjiang
Electric Power Co., Ltd(hereinafter referred to as the "Debtor") and
Party B (contract no.:436688643200700011) and the realization of creditor's
right of Party B, Party A desires to provide mortgage to secure the creditor's
right formed under the Underlying Contract between Party B and the Debtor.
According to relevant laws, regulations and rules, Party A and Party B, upon
consultation, enter into this Contract for their mutual compliance and
performance.

       

      Article
1.           Collateral

       

      Party A
creates a mortgage on the property described in the “List of Collateral”
provided in Article 16 of this Contract;

       

      Party A
undertakes that it has the ownership of or the right to dispose of the
collateral according to the laws;

       

      Party A
undertakes that the collateral is not subject to any ownership dispute,
attachment or seizure.

       

      Article
2.           Scope of
Security

       

      Loan
principal in the amount of Renminbi (currency
type) 43
million (capital), together with interest (including compound interest
and penalty interest), damages for breach of contract, compensation and expenses
incurred by Party B in realizing its rights as a creditor and mortgagee
(including, without limitation, expenses in connection with litigation,
arbitration, property preservation, travel, enforcement, and appraisal as well
as auction expenses);

       

      If
the Debtor fails to fulfill its obligations under the Underlying Contract, Party
B shall have the right to require Party A directly to undertake its liability
within the scope of security, regardless of any other security (including, but
not limited to, guarantee, mortgage, pledge, letter of guarantee or standby
letter of credit) Party B may have with respect to the creditor's right under
the Underlying Contract.

       

      Article
3            Term of
Mortgage

       

      The
mortgage shall continue for two years after the date the limitation of actions
with respect to the secured creditor's right expires.

       

      Article
4            Variations
to the Underlying Contract

       

      Party
A confirms, that except for the following cases, prior consent of Party A shall
be deemed as have been obtained in case of any variation to the Underlying
Contract mutually agreed between Party B and the Debtor, and Party A’s
obligation hereunder shall not be reduced or discharged thereby:

       

       

       

      3

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

      
        	
                (1)  

              	
                The
      term of the Loan is extended;

              

      

       

      (Page
3 of the original contract is missing)

       

      Article
8:           Third
Party’s Damages

       

      As long
as the mortgage continues to exist, the damages shall be deposited into an
account designated by Party B if the collateral is decreased in value as a
result of a third party's acts. Party A agrees that Party B may select any of
the following methods to handle the damages and will assist Party B in
completing relevant procedures:

       

      (1) to
pay off or pay off in advance the principal and interest and relevant expenses
under the Underlying Contract;

       

      (2) to
convert it into a fixed-term deposit and pledge the certificate of
deposit;

       

      (3) to
use it to repair the collateral and restore its value upon Party B's
consent;

       

      (4) to
submit it to a third party designated by Party B;

       

      (5) to
dispose of the damages at Party A's own discretion after Party A provides new
security as required by Party B;

       

      As long
as the mortgage continues to exist, Party A shall provide new security
acceptable to Party B if the collateral is not enough in value to pay off the
principal and interest and relevant expenses under the Underlying Contract as a
result of a third party's acts. Any portion of the collateral that is not
decreased in value shall still be used to secure the creditor's
right;

       

      Article
9.           Disposal of
the Collateral

       

      1. As
long as the mortgage continues to exist, Party A shall not donate, transfer,
lease, mortgage repeatedly, remove or otherwise dispose of the collateral under
this Contract without Party B's written consent;

       

      2. As
long as the mortgage continues to exist, Party A shall obtain Party B's written
consent in advance of its disposal of the collateral. Party A agrees that Party
B shall have the right to select any of the following methods to handle the
proceeds from the disposal of the collateral:

       

      (1) to
pay off or pay off in advance the principal and interest and relevant expenses
under the Underlying Contract;

       

      (2) to
convert them into fixed-term deposit and pledge the certificate of
deposit;

       

      (3) to
submit them to a third party designated by Party B;

       

       

      4

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

      (4) to
dispose of the proceeds at Party A's own discretion after Party A provides new
security as required by Party B.

       

      Article
10.          Realization of
the Mortgage

       

      Party A
agrees that Party B shall have the right to duly sell the collateral by action,
convert the collateral into money upon agreement, or sell off the collateral,
if:

       

      (1) Party
B has not been paid off when the term for discharging all or part of the
principal or interest under the Underlying Contract expires;

       

      (2) other
circumstances under which Party B may realize its creditor's right in advance
under the Underlying Contract.

       

      Article
11.          Breach of
Contract and Remedies

       

      As long
as the mortgage continues to exist, Party B shall have the right to require
Party A to rectify its breach, provide corresponding security and indemnify
Party B against losses within a limited period and to dispose of the collateral
in advance if Party A is in breach of Article 1, Article 6, Article 7, Article 8
or Article 9 hereunder;

       

      Party A
agrees that Party B shall have the right to select any of the following methods
to handle the proceeds from the disposal of the collateral:

       

      (1) to
pay off or pay off in advance the principal and interest and relevant expenses
under the Underlying Contract;

       

      (2) to
convert them into fixed-term deposit and pledge the certificate of
deposit;

       

      (3) to
submit them to a third party designated by Party B;

       

      (4) to
dispose of the proceeds at Party A's own discretion after Party A provides new
security as required by Party B.

       

      Article
12.          Registration and
Revocation of the Collateral

       

      If the
collateral shall be registered according to the laws, the two Parties shall
complete the registration of the collateral with appropriate registration
department upon the execution of this Contract.  Party A shall, as of
the effectiveness date of this Contract, submit to Party B the certificate of
encumbrance, original mortgage registration document and other right
certificates with respect to the collateral;

       

      When all
debts under the Underlying Contract and this Contract are paid off, Party B
shall promptly complete the registration of the mortgage revocation together
with Party A.

       

      Article
13.          Expenses

       

      Expenses
with respect to assessment, notarization, insurance, registration, appraisal,
custody and submission hereunder shall be borne by Party A.

       

       

      5

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

      Article
14.          Other Terms
Agreed

       

      (1) The
Mortgagor is fully aware of the risks associated with the interest rate. If the
floating interest rate is applied to the Underlying Contract, the Mortgagor is
willing to assume such additional liability as may be increased due to the
floating interest rate;

       

      (2) The following space is
intentionally left blank;

       

      (3)
_____________________________________.

       

      Article
15.          Dispute
Resolution

       

      Any
dispute arising during the performance of this Contract may be settled through
consultation. If the consultation fails, it shall be settled through the first of the
following methods:

       

      (1) Bring
a suit before the court in the jurisdiction where Party B
domiciles;

       

      (2) File
the dispute to   BLANK  
arbitration commission for arbitration (Arbitration place is   BLANK 
) in accordance with the effective arbitration rules of the arbitration
commission at the time of applying for arbitration. Arbitration
award  shall be final and conclusive and be binding on both
Parties.

       

      During
the suit or arbitration, the provisions in this Contract which are not in
dispute shall still be performed.

       

      Article
16.          List of
Collateral

       

      The List
of Collateral is as follows:

    

    List
of Collateral

     

    
      	
              Name
      of the

              Collateral

            	
              Title
      

              Certificate
      

              and
      No.

            	
              Domicile

            	
              Value
      

              Indicated
      in

              the
      Invoice of 

              the
      Collateral

              (Renminbi)

            	
              Assessed
      

              Value
      of the

              Collateral
      

              (Renminbi)

            	
              Amount
      of 

              Mortgage

              Created
      for

              other
      

              Creditor’s
      Right

            	
              Note

            
	 	 	 	 	 	 	 
	
              The
      dam

            	 
      	 
      	 
      	
              30,000,000

            	
              0

            	 
      
	
              No.1,
      No.2, and

              No.3
      power 

              generator

            	 
      	 
      	 
      	
              18,900,000

            	
              0

            	 
      
	
              Power
      plant

              project
      and the

               main
      building of

              the
      power plant

            	
              Shi
      Real 

              Property
      

              Certificate
      

              Chujiang
      Zi 

              No.017748

            	 
      	 
      	
              25,860,000

            	
              0

            	 
      
	
               The
      land use 

              right

            	
              Shi
      State Use

              (2004)
      No. 

              999

            	 
      	 
      	
              20,720,000

            	
              0

            	 
      

    

     

     

     

     

    
      
        
        

      

      
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           Article
17.          This Contract
shall become effective upon the satisfaction of the following
conditions:

     

    (1) The
Contract is executed by the legal representative (person in-charge) or
authorized representative of Party A and affixed with the official seal of Party
A (executed by Party A is enough, if Party A is a natural person) and executed
by the person in-charge or authorized representative of Party B and affixed with
the official seal of Party B;

     

             (2) The collateral
described in the “List of Collateral” hereunder is duly registered according to
the laws if so required.

     

           Article
18.          Representations

     

             (1) Party A is
clearly aware of Party B's scope of business and limit of
authorization;

     

             (2) Party A has read
all provisions herein and is particularly aware of the provisions highlighted in
bold. At the request of Party A, Party B has explained relevant provisions
hereunder. Party A is fully aware of and completely understands the meaning of
each provision as well as its related legal consequences;

     

             (3) Party A is
authorized to enter into and execute the Contract herein.

     

    
 

     

    Party A
(Seal): (Seal)

     

    Legal
representative (person in-charge) or authorized representative
(Signature):

     

                                    /s/
Zhengxi Wang

     

                                                       July 10, 2007

     

    

     

    Party B
(Seal): (Seal)

     

    Person
in-charge or authorized representative (Signature):

     

                                    /s/
Bing Zhao

     

                                    July
10, 2007

     

    

     

     

    

    7kl07044_exhibit10-10.htm

    
      

    

     

    Exhibit 10.10

    

    

    

    

    

    

    

    

    

    Loan
Agreement

    

    

    

    

    

    

    

    Contract
Number: (2004)
Bank of China, Shenzhen Corporate Loan No.
42001

    

    

    

    

    

    Borrower
(hereinafter “Party A”):  Hunan Zhaoheng Hydropower
Co., Ltd.

     

    Business
License Number of Enterprise Legal Person: Joint Venture, Changde,
Hunan, No. 000427

     

    Legal
Representative: Hong
Zhu

     

    Domicile:
Power Station Road,
Shimen County, Changde City

     

    Telephone:  0736-7703900

     

    

     

    Lender
(hereinafter “Party B”): Bank of China, Shenzhen
Branch

     

    Person
in-charge: Jianyou,
Zhang

     

    Domicile:
No. 2022 Jianshe Road,
Shenzhen City

     

    Telephone:
82288288

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    

     

    Party A
applies to Party B for borrowing money because of the business operation needs,
and the Parties, through consultation, have agreed to execute the Agreement as
follows:

     

    Article
1.           Currency and
Amount of the Loan

     

    The
currency under this Loan is Renminbi, the amount
of the Loan under this Agreement is (word) RMB a hundred and eighty
million, and (Arabic numerals) RMB 180,000,000.

     

    Article
2.           Purpose of
the Loan

     

    The Loan
hereunder shall be used for the expansion of Sanjiangkou
Hydropower Station, and, Party A shall not change the purpose of the Loan
hereunder without the written consent of Party B.

     

    Article
3.           Term of the
Loan

     

    The term
of this loan is 96 months from the
date of effectiveness of this Agreement.

     

    Article
4.           Interest
Rate and Interest Calculation

     

    1.
Interest Rate: The interest rate shall be 5.76%
.  During the Loan term, if the country's related authority or
Party B adjusted the interest rate or the manner of calculation of interest in
accordance with the related regulations, the interest of this contract shall be
adjusted accordingly without the obligation to notify Party B and the
Guarantor;

     

    2. The
interest shall be calculated from the date of first drawdown and the actual days
the borrower uses. One year shall be calculated as 360 days.  Interest
on the loan hereunder will be settled on a quarterly basis
(monthly/quarterly). Interest settlement day is fixed at the twentieth day of
the last month of a
quarter (month/end of quarter).  If the maturity date of
the Loan is not the same as the interest settlement day, the maturity date of
the Loan shall be the interest settlement date for the last
installment.  For the interests Party A fails to pay on time during
the term of loan, Party B is entitled to collect interest in accordance with the
interest rate stipulated in the Agreement starting from the interest settlement
day.  After the loan is overdue, Party B is entitled to collect
interest at the rate of 2.4‰ per day on the
unpaid interest if the currency of the loan is Renminbi or claim penalty
interest at a rate of BLANK upward the
original interest rate if the currency of the loan is foreign currency until all
the interest has been paid off;

     

    3.
Overdue interests and misusing interest: Repayment overdue means Party A fails
to repay the Loan on time as stipulated in the Agreement and fails to reach an
agreement with Party B regarding the extension.  Should Party A fail
to repay the Loan under the Agreement on time, Party B has the right to collect
the overdue interest at the rate of 2.4‰ per day to the
overdue amount if the currency of the loan is Renminbi, or claim penalty
interest at a rate of BLANK upward the
original interest rate if the currency of the loan is foreign
currency. Should Party A fail to use the Loan for the purpose as stipulated
in the Agreement, Party B has the right to collect interest at the rate of 2.4‰ per day on any
balance of the Loan used by Party A in breach of this Agreement for the days of
breach if the currency of the loan is Renminbi, or claim penalty

     

     

    
      
        
        

      

      
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    interest
at a rate of BLANK
upward the original interest rate on any balance of the Loan used by
Party A in breach of this Agreement for the days of breach if the currency
of the loan is foreign currency;

     

    4.
Repayment of interest: Party A shall repay the interest on every interest
settlement day, or Party B may deduct the amount payable directly from the
savings account of Party A.

     

    Article
5.           Grant of the
Loan

     

    Party A
shall start collecting the Loan under this Agreement within _BLANK_ month
after the effective date of the Agreement, or collect the Loan in accordance
with the grant plan stipulated in this Agreement.  The grant plan is
confirmed by the Parties through consultation.  Party A may collect
the Loan in one time or by installment for the purpose stipulated in this
Agreement.   Should Party A fail to collect the Loan in
accordance with the grant plan, Party A will not have the right to collect the
amount that has not been collected without the consent of Party B, and Party B
shall be entitled to collect the commitment fee of _____ in one time from Party
A at the rate of _____.  For every withdrawal, Party A has to fulfill
the collecting procedures as required by Party B.

     

    Article
6.           Repayment of
the Loan

     

    Party A
shall repay all the principal and interest before the maturity date of the Loan
as stipulated in the Agreement.  If a repayment plan is included,
Party A shall make the repayment in accordance with the plan.

     

    For early
repayment, Party A shall obtain the written consent of Party B.  Party
B is entitled to collect the compensation of ______in one time from Party A for
the early repayment, and Party A shall not collect the part of the Loan that has
been repaid early.  If there is a repayment plan in the Agreement, the
early repayment shall be made in the reversed order of the repayment
plan.

     

    In the
event Party A may fail to repay the Loan on time and need an extension, Party A
shall apply to Party B for the extension in writing one month in advance, and
Party B has the right to decide whether to grant the extension.

     

    Article
7.           Security of
the Loan

     

    All debts
under the Agreement is guaranteed by Shenzhen Zhaoheng Industrial
Co., Ltd in accordance with the Guarantee Contract, (2004) Bank
of China, Shenzhen, Guarantee No. 0011, and the Pledge Contract, (2004) Bank of
China, Shenzhen, Pledge No. 0005. The guarantor
shall bear the guarantee obligations as stipulated.

     

    Article
8.           Rights and
Obligations of Both Parties

     

    1. Rights
and Obligations of Party A

     

    (1) Party
A has right to collect and use the Loan as stipulated herein;

     

     

    
      
        
        

      

      
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    (2)  Party A
shall repay the principal and interest of the loan on schedule and assume the
related expenses as stipulated herein;

     

    (3) Party
A shall provide the relevant materials as required by Party B, including but not
limited to providing the reports regarding its operation and financial
conditions, sheets, certificates, and documents, and shall be responsible for
the accuracy, trueness, completeness and validity of the information
provided by it;

     

    (4) Party
A shall notify Party B in writing the following issues:

     

    (i) The
event of breach of contract under any loan contracts or credit line agreements
and the sub-credit contracts or guaranty contracts between the Party A and any
branches of Bank of China or other banks, non-bank financial organizations and
creditors;

     

    (ii) Any
change in the corporate structure, business scope, shareholder and senior
management personnel, agreement of joint venture operation and articles of
association, and the internal organizational structure;

     

    (iii)
Involvement in illegal activity or material litigation or debt claiming of the
legal representative or main responsible person;

     

    (iv) Serious
difficulty in operation, deterioration of financial condition on the part of
Party A;

     

    (v)
Before repaying in full the principal and interest of the Loan under this
Agreement, any debt that has been or will be owned by Party A, or any mortgate
or pledge guarantee that has been or will be provided by Party to any third
parties;

     

    (vi)
Party A’s involvement of any litigation or arbitration that have been brought
because of the creditor-debtor disputes;

     

    (vii)
Other events that might affect Party A’s financial conditions and ability of
paying debts.

     

    (5) Party
A’s debts shall not exceed its net assets, and Party A shall not dispose the
assets which will make adverse impact on its ability of paying
debts;

     

    (6) Party
A shall accept the credit investigation and supervision by Party B and provide
enough assistance and cooperation;

     

    (7)
Whether or not Party A and the guarantor under this Agreement have reached or
may reach a counter-guarantee contract, such contract shall not legally or
factually damage Party B’s rights under this Agreement;

     

    (8) Party
A shall obtain the written consent from Party B in advance of any of the
following events:

     

     

    
      
        
        

      

      
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    (i)
Reducing the registered capital, division, merger, consolidation, joint stock
restructuring or other major structure changes, revocation, dissolution, and
going out of business;

     

    (ii)
Major issues regarding investment and assets transfer;

     

    (iii)
Trading of property right or operation right by leasing, contracting, joint
operation, or trusteeship;

     

    (iv)
Adjustment or assignment of equity interest or other major issues regarding the
change of equity interest structure;

     

    (9) In
the event that Party A’s income in a fiscal year is not enough to repay the due
principal, interest, and other expenses under this Agreement, Party A shall not
issue dividend or bonus in any form to shareholders;

     

    (10) The
proportion of Party A’s deposit and settlement business with Party B of the
total deposit and settlement business Party A shall not be lower than the
proportion of Party A’s credit granted by Party B of Party A’s total credit
granted by financial institutions.

     

    2. Rights
and Obligations of Party B

     

    (1)  Extends
the Loan in accordance with the provisions stipulated herein;

     

    (2) Party
B has right to supervise and investigate using conditions of the Loan and
collect the principal and interest of the Loan on time;

     

    Article
9.           Breach of
Contract

     

    1. The
occurrence of any of the following events constitutes the breach of contract by
Party A under this Agreement:

     

    (1) Fails
to use the Loan in accordance with the purpose stipulated
hereunder;

     

    (2) Fails
to pay the due principal, interest, expenses or other payable in accordance with
the Agreement;

     

    (3) Party
A breaches the obligations set forth in Article 8 hereunder;

     

    (4) Party
A breaches other loan agreements or guaranty agreements or the Guarantor breach
the guaranty agreement which may affect Party A to perform the obligations under
this Agreement;

     

    (5) The
value of the mortgaged property or pledged property that provides guarantee for
this Agreement decreases so clearly that affect Party B’s rights and benefits,
and the mortgagor or the pledgor fails to provide additional
security;

     

    (6)
Serious deterioration of operation conditions on the part of Party
A;

     

    (7) Party
A transfers assets or withdraws capital or conducts other acts to evade the
debts;

     

     

    
      
        
        

      

      
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    (8) Party
loses the business credit;

     

    (9) Party
A involves in litigation or arbitration proceedings and other legal disputes
with third parties, where Party B considers it may cause adverse effect or
impair on the rights and interests of Party B hereunder;

     

    (10) Any
events that has caused or may cause Party A lose the ability of repaying
debts;

     

    (11)
Intentionally conceals important issues relevant to the execution of the
Agreement or provides false information;

     

    (12)
Before the maturity date of the Loan under this Agreement, Party A expresses
specifically or the conducts of Party A show clearly that Party A refuses to
undertaken the major debts under this Agreement;

     

    (13)
Party A fails to inform Party B serious issues that affect the security of the
Loan;

     

    (14)
Party A breaches obligations under the Account Supervision Agreement executed by
both Parties and Bank of China, Changde Branch on March 03,
2004;

     

    2. The
occurrence of any of the following events constitutes the breach of contract by
Party B under this Agreement:

     

    (1) Party
B fails to grant the Loan as stipulated herein;

     

    (2) Party
B breaches the interest rate stipulated in this Agreement and demands additional
interest and other expenses;

     

    Article
10.          Liabilities for
Breach of Contract

     

    1. In the
event of the breaches in the Section 1 of Article 9 herein, Party B shall be
entitled to exercise one or more of the following rights:

     

    (1)
Requests Party A to rectify within the period designed by Party B;

     

    (2) In
the event of misusing the Loan, calculates and collects interest in accordance
with the Section 3 of Article 4 under the Agreement;

     

    (3) For
the overdue repayment, calculates and collects interest in accordance with the
Section 3 of Article 4 under the Agreement;

     

    (4)
Deduct and transfer the overdue principal, interest, expenses and damages
directly from the Party A’s account;

     

    (5)
Suspense the Agreement by notifying Party A in writing and requests Party A to
regain the ability of execution within a month or provides new security
acceptable to Party B;

     

    (6)
Rescind this Agreement;

     

     

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

     

    (7)
Cancel the credit or stops granting the Loan;

     

    (8)
Accelerate the maturity immediately and requires Party A to promptly repay the
principal, interest and expenses of all the mature or immature debts
hereunder.

     

    2. In the
event of the breaches in the Section 2 of Article 9 herein, Party A shall be
entitled to exercise one or more of the following rights:

     

    (1)
Request Party B to rectify within the period designed by Party A;

     

    (2) Repay
the Loan in advance;

     

    (3)
Rescind this Agreement.

     

    Article
11.          Supplement and
Amendment of the Agreement

     

    1. This
Agreement may be supplemented and amended in writing. Any amendment and
supplement shall be an integral part of this Agreement;

     

    2.  In
the event of change of laws or regulations which will cause any terms contained
in this Agreement become illegal or loss of the power of compulsory enforcement,
the legality, validity, and the power of compulsory enforcement of other parts
of this Agreement shall not be impaired by it. Both Parties shall make efforts
to promptly amend the terms that become illegal, invalid or loss of compulsory
enforcement power.

     

    Article
12.          Notarization of
the Agreement

     

    Should
the Agreement need to be notarized, Party A shall assume the expense of
notarization.  Once the Agreement is notarized, Party B has the right
to apply for compulsory enforcement directly if Party A fails to fulfill the
obligations.

     

    Article
13.           Appendices
of the Agreement

     

    The
appendices hereto are an integral part of the Agreement. The Agreement and the
appendices hereto have the equal legal force:

     

    
      	
              1.  

            	
              Certificate
      of Indebtedness;

            

    

     

    
      	
              2.  

            	
              Security
      Documents;

            

    

     

    
      	
              3.  

            	
              Repayment
      Plan;

            

    

     

    
      	
              4.  

            	
              Other
      necessary materials agreed by both
Parties.

            

    

     

    Article
14.          Other Matters
Agreed

     

    1. Party A
shall assume all expenses related to this Agreement;

     

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

     

    2.Party A
shall not assign any right and obligation under this Agreement to third parties
without the written consent of Party B;

     

    3.
Commitment fees and compensation fees under this Agreement are within the
category of damages agreed by both Parties;

     

    Article
15.          Applicable Laws
and Dispute Settlement

     

    The
applicable laws of the Agreement are the laws of the People’s Republic of
China.

     

    Any
dispute arising during the performance of this Agreement may be settled through
consultation. If the consultation fails, it shall be settled through the first of the
following methods:

     

    1. Bring
a suit before the court in the jurisdiction where Party B
domiciles;

     

    2. File
the dispute to   BLANK  
arbitration commission for arbitration in accordance with the effective
arbitration rules of the arbitration commission.

     

    Article
16.          Effectiveness of
the Agreement

     

    1. This
Agreement is executed by the authorized representatives of the Parties and
affixed with the official seals of both Parties;

     

    2. The
guarantee contract under this Agreement becomes effective;

     

    3. The
above mentioned Account Supervision Agreement executed by both Parties and Bank
of China, Changde Branch becomes effective;

     

    4. Should
the notarization needed, the Agreement becomes effective only after the
notarization.

     

    Article
17.          Form of the
Agreement

     

    The
Agreement is executed in quintuplicate with
the equal legal effect.  Each of Party A and Party B shall
hold two,
and the Guarantor shall hold one.

     

    Party A
(Seal): (Seal)

     

     Authorized
representative (Signature): 

     

                        /s/
Zhengxi Wang

     

    Party B
(Seal): (Seal)

     

    Authorized
representative (Signature):        /s/
Jianyou Zhang

     

    March 03,
2004 in Shenzhen

     

     

     

    8

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