Document:

Unassociated Document

    
      Exhibit
10.1

 

    AMENDED
AND RESTATED

    

    ZANETT
STOCK PLAN

    

    ZANETT,
INC. AND SUBSIDIARIES

    

    

    135 E.
57th Street

    15th
Floor

    New York,
NY 10022

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ZANETT
INCENTIVE STOCK OPTION PLAN

     

    Purpose

    

    The
purpose of the Zanett, Inc. Amended and Restated Incentive Stock Plan (the
“Amended Plan”) is to encourage employees and directors of, and consultants to,
Zanett, Inc. (the “Company”) and of any eligible present or future subsidiaries
of Zanett (each, a “related sub” and together with the Company, the “Zanett
Group”) and other individuals who render services to the Zanett Group, by
providing opportunities to participate in the ownership of the Company and its
future growth through the grant of options which may qualify as “incentive stock
options” under Section 422 of the Internal Revenue Code of 1986, as amended (the
“Code”) (each such option, an “ISO”); the grant of options which do not qualify
as “incentive stock options” under Section 422 of the Code, (each such
non-qualified option, a “NQO”); awards of stock in the Company (each, an
“Award”); stock appreciation rights (“SARs”), and opportunities to make direct
purchases of stock in the Company (each, a “Purchase”).

    

    ISOs,
NQOs, Awards, SARs and authorizations to make Purchases are collectively
referred to as “Stock Rights”.  ISOs and NQOs are collectively
referred to as “Options”.  Recipients of Stock Rights are referred to
as “Grantees”.

    

    The Board
of Directors of the Company believes that the grant of Stock Rights will be a
significant factor in the growth and success of the Company and will help it
attract, retain and motivate qualified employees, directors, consultants and
advisers.  The Board of Directors further believes that Stock Rights
provide a strong incentive to employees and directors of the Company to put
forth their best efforts to ensure the Company’s success and, additionally, that
Stock Rights are a means of rewarding individuals without depleting the cash
resources of the Company.

    

    Summary
Description

    

    All
employees (including officers and directors) of the Company (and any related
sub) and non-employee directors, consultants and independent contractors
providing services to the Company (or any subsidiaries) are eligible to receive
Stock Rights under the Amended Plan. The Amended Plan is not subject to the
Employee Retirement Income Security Act of 1974. The Amended Plan permits the
granting of Stock Rights to employees and non-employee officers, directors and
agents of the Company in the form of ISOs, NQOs, Awards, SARs and
Purchases.  It is administered by the Board of Directors or by a
committee appointed by the Board of Directors.

    

    The
Amended Plan gives broad powers to the Board or Committee to administer and
interpret the Amended Plan, including the authority to select the individuals to
be granted Stock Rights, and to prescribe the particular form and conditions of
each Stock Right granted.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    Certain
Tax Matters

    

    Currently,
the Board of Directors does not contemplate that Stock Rights granted under the
Amended Plan shall be in the form of ISOs - incentive stock options - meeting
the requirements of Section 422 of the Code, but rather it contemplates that
Options granted hereunder will consist of non-qualified options that do not meet
the requirements of Section 422.  Upon exercising a non-qualified
stock option, the Grantee must recognize ordinary income equal to the excess of
the fair market value of the shares of Common Stock of the Company acquired on
the date of exercise over the exercise price, and the Company will be entitled
at that time to a tax deduction for the same amount.  The tax
consequence to a Grantee upon a disposition of shares acquired through the
exercise of an Option will depend upon how long the shares have been
held. Generally, there will be no tax consequence to the Company in connection
with disposition of shares acquired under a NQO, except that the Company may be
entitled to a tax deduction in the case of a disposition of shares acquired
under an incentive stock option before the applicable incentive stock option
holding periods set forth in the Code have been satisfied. In general, the tax
consequences to the Company and to recipients of Stock Rights other than ISOs or
NQOs (such as an Award of restricted stock) will be governed by principles
relating to transfer of property in consideration of services, including Section
83 of the Code.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    TABLE OF
CONTENTS

    

    
      	 
      	 
      	 	
              Page

            
	
              1.

            	
              Purpose
      of Amended Plan

            	 	
              2

            
	
              2.

            	
              Stock
      Subject to Amended Plan

            	 	
              2

            
	
              3.

            	
              Administration
      of the Amended Plan

            	 	
              2

            
	
              4.

            	
              Eligibility

            	 	
              3

            
	
              5.

            	
              Price

            	 	
              3

            
	
              6.

            	
              Term

            	 	
              4

            
	
              7.

            	
              Exercise
      of Stock Right

            	 	
              4

            
	
              8.

            	
              Additional
      Restrictions

            	 	
              4

            
	
              9.

            	
              Alternative
      Stock Appreciation Rights

            	 	
              4

            
	
              10.

            	
              Ten
      Percent Shareholder Rule

            	 	
              5

            
	
              11.

            	
              Non-Transferability

            	 	
              5

            
	
              12.

            	
              Restricted
      Stock Awards

            	 	
              5

            
	
              13.

            	
              Performance
      Awards

            	 	
              6

            
	
              14.

            	
              Dilution
      or Other Adjustments

            	 	
              6

            
	
              15.

            	
              Amendment
      or Discontinuance of Plan

            	 	
              6

            
	
              16.

            	
              Time
      of Granting

            	 	
              6

            
	
              17.

            	
              Income
      Tax Withholding and Tax Bonuses

            	 	
              6

            
	
              18.

            	
              Effective
      Date and Termination of Amended Plan

            	 	
              7

            
	
              19.

            	
              Governing
      Law

            	 	
              7

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ZANETT
STOCK PLAN

    

    1.           Purpose
of Amended Plan

     

    This
Amended and Restated Plan shall be known as the “ZANETT STOCK PLAN” and is
hereinafter referred to as the “Amended Plan”.

    

    The
purpose of the Zanett, Inc. Amended and Restated Incentive Stock Plan (the
“Amended Plan”) is to encourage employees and directors of, and consultants to,
Zanett, Inc. (the “Company”) and of any eligible present or future subsidiaries
of Zanett (each, a “related sub” and together with the Company, the “Zanett
Group”) and other individuals who render services to the Zanett Group to put
forth their best efforts to help the Company succeed, by providing opportunities
to participate in its ownership and future growth through:  the grant
of options which may qualify as “incentive stock options” under Section 422 of
the Internal Revenue Code of 1986, as amended (the “Code”) (each such option, an
“ISO”); the grant of options which do not qualify as “incentive stock options”
under Section 422 of the Code, (each such non-qualified option, a “NQO”); awards
of stocks in the Company (each, an “Award”); stock appreciation rights (“SARs”),
and opportunities to make direct purchases of stock in the Company (each, a
“Purchase”).

    

    ISOs,
NQOs, Awards, SARs and authorization to make Purchases are collectively referred
to as “Stock Rights”.  ISOs and NQOs are collectively referred to as
“Options”.  Recipients of Stock Rights are referred to as
“Grantees”.

    

    Grantee

    

    Currently,
the Board of Directors does not contemplate that Stock Rights granted hereunder
shall be in the form of ISOs - incentive stock options -meeting the requirements
of Section 422 of the Code, but rather it contemplates that Options will be
non-qualified options that do not meet the requirements of Section
422.

    

    2.           Stock
Subject to Amended Plan

     

    Subject
to the provisions of Section 14 hereof, the stock to be subject to Stock Rights
under the Amended Plan shall be the authorized shares of Common Stock of the
Company, $.001 par value (the “Common Shares”). Such shares may be either
authorized but un-issued shares, or issued shares, which have been reacquired by
the Company.  The maximum number of Common Shares on which Stock
Rights may be granted under this Amended Plan shall be seven million
(7,000,000), subject to adjustment as provided in Section 14
hereof.

    

    If a
Stock Right under the Amended Plan expires, terminates or is unexercised for any
reason with respect to any Common Shares, such shares shall again be available
for Stock Rights thereafter granted during the term of the Amended
Plan.

    

    3.           Administration
of the Amended Plan

     

    (a)           The
Amended Plan shall be administered by the Board of Directors of the Company or a
committee thereof (the “Committee”), subject to the provisions of Section 3(b)
hereof. The members of any such committee shall be appointed by and serve at the
pleasure of the Board of Directors. If no committee is appointed by the Board,
the Committee shall be comprised of all of the members of the Board of
Directors.

     

    (b)           Notwithstanding,
Section 3(a) hereof, all Stock Rights granted under this Amended Plan to
officers, directors and others who are subject to Section 16 under the
Securities Exchange Act of 1934, as amended (the “1934 Act”), and the rules and
regulations of the Securities and Exchange Commission promulgated thereunder
(“Section 16 Regulations”), shall be made exclusively by a committee (the
“Disinterested Committee”) comprised of at least two members of the Board of
Directors who qualify as “disinterested” plan administrators under Section 16
Regulations, or whose administration otherwise qualifies transactions under the
Amended Plan as exempt from Section 16(b) of the 1934 Act. All references
hereinafter to the “Committee” shall mean the “Disinterested Committee” if the
action to be taken in administration of the Amended Plan must be taken by the
Disinterested Committee.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    

    (c)           The
Committee shall have plenary authority in its discretion, but subject to the
express provisions of the Amended Plan: (i) to determine the purchase price of
the Common Stock covered by each Stock Right, (ii) to determine the persons to
whom and the time or times at which such Stock Right shall be granted and the
number of shares to be subject to each, (iii) to determine the form of payment
to be made upon the exercise of a Stock Right, either cash, Common Shares of the
Company or a combination thereof, (iv) to determine the terms of exercise of
each Stock Right, (v) to accelerate the time at which all or any part of a Stock
Right may be exercised, (vi) to amend or modify the terms of any Stock Right
with the consent of the Grantee, (vii) to interpret the Amended Plan, (viii) to
prescribe, amend and rescind rules and regulations relating to the Amended Plan,
(ix) to determine the terms and provisions of each Stock Right agreement under
the Amended Plan (which agreements need not be identical), including the
designation of any options intended to be ISOs, and (x) to make all other
determinations necessary or advisable for the administration of the Plan,
subject to the exclusive authority of the Board of Directors under Section 15
herein to amend or terminate the Amended Plan. The Committee’s determinations on
the foregoing matters, unless otherwise disapproved by the Board of Directors of
the Company, shall be final and conclusive.

     

    (d)           The
Committee may select one of its members as its Chairman and shall hold its
meetings at such times and places as it may determine. A majority of its members
shall constitute a quorum. All determinations of the Committee shall be made by
not less than a majority of its members. Any decision or determination reduced
to writing and signed by all of the members of the Committee shall be fully
effective as if it had been made by a majority vote at a meeting duly called and
held. The grant of a Stock Right shall be effective only if a written agreement
shall have been duly executed and delivered by and on behalf of the Company
following such grant. The Committee may appoint a Secretary and may make such
rules and regulations for the conduct of its business, as it shall deem
advisable.

     

    4.           Eligibility

     

    ISOs may
only be granted under this Amended Plan to any employee (which term as used
herein includes, but is not limited to, officers and directors who are also
employees) of the Company and of its related subs. Full or part-time employees,
non-employee members of the Board of Directors, and non-employee consultants,
agents or independent contractors to the Company or one of its related subs
shall be eligible to receive NQOs, SARs, Awards and authorizations to make
Purchases; provided, however, that no member of the Disinterested Committee
shall act upon the granting to him/herself of Stock Rights, but any such member
may be counted in determining the existence of a quorum at any meeting of the
Board or Committee during which action is taken with respect to the granting of
Stock Rights to such member.   In determining the persons to whom
Stock Rights shall be granted and the number of Common Shares subject to each,
the Committee may take into account the nature of services rendered by the
respective employees or consultants, their present and potential contributions
to the success of the Company and such other factors as the Committee in its
discretion shall deem relevant. A person who has been granted a Stock Right
under this Amended Plan may be granted additional Stock Rights under the Amended
Plan if the Committee shall so determine; provided, however, that for ISOs, to
the extent the aggregate fair market value (determined at the time the ISO is
granted) of the Common Shares with respect to which all ISOs are exercisable for
the first time by an employee during any calendar year (under all plans
described in subsection (d) of Section 422 of the Code of his employer
corporation and its parent and subsidiary corporations) exceeds $100,000, such
options shall be treated as options which do not qualify as incentive stock
options. Nothing in the Amended Plan or in any agreement thereunder shall confer
on any employee any right to continue in the employ of the Company or any of its
related subs or affect, in any way, the right of the Company or any of its
related subs to terminate his or her employment at the time.

    

    5.           Price

     

    The
option price for all ISOs granted under the Amended Plan shall be determined by
the Committee but shall not be less than 100% of the fair market value of the
Common Shares at the date of grant of such option.  The option price
for options granted under the Amended Plan that do not qualify as ISOs, and, if
applicable, the purchase price for all Awards or other Stock Rights shall also
be determined by the Committee and may be other than 100% of the fair market
value of the Common Shares.  For purposes of the preceding sentence
and for all other valuation purposes under the Amended Plan, the fair market
value of the Common Shares shall be as reasonably determined by the
Committee.  If on the date of grant of any Stock Right hereunder the
Common Shares are not traded on an established securities market, the Committee
shall make a good faith attempt to satisfy the requirements of this Section 5
and in connection therewith shall take such action as it deems necessary or
advisable.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    

    6.           Term

     

    Each
Stock Right and all rights and obligations thereunder shall expire on the date
determined by the Committee and specified in the Stock Right agreement. The
Committee shall be under no duty to provide terms of like duration for Stock
Rights granted under the Amended Plan, but the term of an Option may not extend
more than ten (10) years from the date of grant of such option.

    

    7.           Exercise
of Stock Right

     

    (a)           The
Committee shall have full and complete authority to determine whether a Stock
Right will be exercisable in full at any time or from time to time during the
term thereof, or to provide for the exercise thereof in such installments, upon
the occurrence of such events (such as termination of employment for any reason)
and at such times during the term of the Stock Right as the Committee may
determine and specify in the Stock Right agreement.

     

    (b)           The
exercise of any Stock Right granted hereunder shall only be effective at such
time that the sale of Common Shares pursuant to such exercise will not violate
any state or federal securities or other laws.

     

    (c)           A
Stock Right holder electing to exercise his/her Stock Rights shall give written
notice to the Company at its principal office address, or to such transfer agent
as the Company shall designate from time to time.  Such notice shall
identify the Stock Right being exercised and specify the number of Common Shares
subject to such exercise. The full purchase price of such shares shall be
tendered with such notice of exercise.  Payment for such shares shall
be made to the Company either (a) in United States dollars in cash or check, or,
(b) at the discretion of the Committee and as specified by the Committee, (i) by
delivering certificates for the Company’s Common Shares already owned by the
holder having a fair market value as of the date of grant equal to the cash
exercise price of the Stock Rights or (ii) a combination of cash and such
shares, or (c) at the discretion of the Company and consistent with applicable
law, through the delivery of an assignment to the Company of a sufficient amount
of the proceeds from the sale of the Common Shares acquired upon exercise of the
Stock Rights and an authorization to the broker or selling agent to pay that
amount to the Company, or (d) at the discretion of the Company, by any
combination of (a), (b) and (c) above.  Until such person has been
issued the Common Shares subject to such exercise, he or she shall possess no
rights as a shareholder with respect to such shares.

     

    8.           Additional
Restrictions

     

    The
Committee shall have full and complete authority to determine whether all or any
part of the Common Shares of the Company acquired upon exercise of any of the
Stock Rights granted under the Amended Plan shall be subject to restrictions on
the transferability thereof or any other restrictions affecting in any manner
the holder’s rights with respect thereto, but any such restriction shall be
contained in the agreement relating to such Stock Rights.

    

    9.           Alternative
Stock Appreciation Rights

     

    (a)           Grant.
At the time of grant of a Stock Right under the Amended Plan (or at any other
time), the Committee, in its discretion, may grant a “Stock Appreciation Right”
evidenced by an agreement in such form as the Committee shall from time to time
approve. Any such SAR may be subject to restrictions on the exercise thereof as
may be set forth in the agreement representing such SAR which agreement shall
comply with and be subject to the following terms and conditions and any
additional terms and conditions established by the Committee that are consistent
with the terms of the Amended Plan.

     

    (b)           Exercise.
A SAR shall be exercised by the delivery to the Company of a written notice
which shall state that the holder thereof elects to exercise his/her SAR as to
the number of Common Shares specified in the notice and which shall further
state what portion, if any, of the SAR exercise amount (hereinafter defined) the
holder thereof requests be paid to in cash and what portion, if any, is to be
paid in Common Shares of the Company. The Committee promptly shall cause to be
paid to such holder the SAR exercise amount either in cash, in Common Shares of
the Company, or any combination of cash and shares as the Committee may
determine. Such determination may be either in accordance with the request made
by the holder of the SAR or in the sole and absolute discretion of the
Committee. The SAR exercise amount is the excess of the fair market value of one
Common Share on the date of exercise over the per share exercise price at the
time of the grant of such SAR, multiplied by the number of shares as to which
the SAR is exercised. For the purposes hereof, the fair market value of the
Common Shares shall be determined as provided in Section 5 herein.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    10.           Ten
Percent Shareholder Rule

     

    Notwithstanding
any other provision in the Amended Plan, if at the time an Option is granted
pursuant to the Amended Plan the Grantee owns directly or indirectly (within the
meaning of Section 425(d) of the Code) Common Shares possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or its parent or subsidiary corporations, if any (within the meaning of
Section 422(b)(6) of the Code), then any ISO to be granted to such Grantee
pursuant to the Amended Plan shall satisfy the requirements of Section 422(c)(6)
of the Code, and the option price shall be not less than 110% of the fair market
value of the Common Shares determined as described herein, and such Option by
its terms shall not be exercisable after the expiration of five (5) years from
the date such option is granted.

    

    11.           Non-Transferability

     

    Except as
otherwise provided in a Stock Right agreement, no Stock Right granted under the
Amended Plan shall be transferable by a Grantee, otherwise than by will or the
laws of descent or distribution, and during the lifetime of a Grantee, the Stock
Right shall be exercisable only by such Grantee.

    

    12.           Restricted
Stock Awards

     

    The
Committee may grant Awards of Common Shares subject to forfeiture and transfer
restrictions. Any restricted stock Award shall be evidenced by an agreement in
such form as the Committee shall from time to time approve, which agreement
shall comply with and be subject to the following terms and conditions and any
additional terms and conditions established by the Committee that are consistent
with the terms of the Amended Plan:

    

    (a)           Grant
of Restricted Stock Awards. Each restricted stock Award made under he Amended
Plan shall be for such number of Common Shares as shall be determined by the
Committee and set forth in the agreement containing the terms of such Award,
such as a period of time during which the Grantee must remain in the continuous
employment of the Company in order for the forfeiture and transfer restrictions
to lapse. If the Committee so determines, the restrictions may lapse during such
restricted period in installments with respect to specified portions of the
Common Shares covered by the Award. The agreement may also, in the discretion of
the Committee, set forth performance or other conditions that will subject the
Common Shares to forfeiture and transfer restrictions. The Committee may, at its
discretion, waive all or any part of the restrictions applicable to any or all
outstanding restricted stock Awards.

     

    (b)           Delivery
of Common Shares and Restrictions. At the time of a restricted stock Award, a
certificate representing the number of Common Shares awarded thereunder shall be
registered in the name of the Grantee. Such certificate shall be held by the
Company or any custodian appointed by the Company for the account of the Grantee
subject to the terms and conditions of the Amended Plan, and shall bear such a
legend setting forth the restrictions imposed thereon as the Committee, in its
discretion, may determine. The Grantee shall have all rights of a shareholder
with respect to the Common Shares, including the right to receive dividends and
the right to vote such shares, and the Committee shall generally impose certain
restrictions including the following: (i) the Grantee shall not be entitled to
delivery of the stock certificate until the expiration of the restricted period
and the fulfillment of any other restrictive conditions set forth in the
restricted stock agreement with respect to such Common Shares; (ii) none of the
Common Shares may be sold, assigned, transferred, pledged, hypothecated or
otherwise encumbered or disposed of during such restricted period or until after
the fulfillment of any such other restrictive conditions; and (iii) except as
otherwise determined by the Committee, all of the Common Shares shall be
forfeited and all rights of the Grantee to such Common Shares shall terminate,
without further obligation on the part of the Company, unless the Grantee
remains in the continuous employment of the Company for the entire restricted
period in relation to which such Common Shares were granted and unless any other
restrictive conditions relating to the restricted stock award are met. Any
Common Shares, any other securities of the Company and any other property
(except for cash dividends) distributed with respect to the Common Shares
subject to restricted stock awards shall be subject to the same restrictions,
terms and conditions as such restricted Common Shares.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (c)           Termination
of Restrictions. At the end of the restricted period and provided that any other
restrictive conditions of the restricted stock Award are met, or at such earlier
time as otherwise determined by the Committee, all restrictions set forth in the
agreement relating to the restricted stock Award or in the Plan shall lapse as
to the restricted Common Shares subject thereto, and a stock certificate for the
appropriate number of Common Shares, free of the restrictions and the restricted
stock legend, shall be delivered to the Grantee or his/her beneficiary or
estate, as the case may be.

     

    13.           Performance
Awards

     

    The
Committee is further authorized to grant Performance Awards. Subject to the
terms of this Amended Plan and any applicable Award agreement, a Performance
Award granted under the Amended Plan (i) may be denominated or payable in cash,
Common Shares of the Company (including, without limitation, restricted stock),
other securities, other awards, or other property and (ii) shall confer on the
holder thereof rights valued as determined by the Committee, in its discretion,
and payable to, or exercisable by, the holder of the Performance Awards, in
whole or in part, upon the achievement of such performance goals during such
performance periods as the Committee, in its discretion, shall establish.
Subject to the terms of this Amended Plan and any applicable Award agreement,
the performance goals to be achieved during any performance period, the length
of any performance period, the amount of any Performance Award granted, and the
amount of any payment or transfer to be made by the Company under any
Performance Award shall be determined by the Committee.

    

    14.           Dilution
or Other Adjustments

     

    If there
shall be any change in the Common Shares through merger, consolidation,
reorganization, recapitalization, dividend in the form of stock (of whatever
amount), stock split or other change in the corporate structure, appropriate
adjustments in the Amended Plan and outstanding Stock Rights shall be made by
the Committee. In the event of any such changes, adjustments shall include,
where appropriate, changes in the aggregate number of shares subject to the
Amended Plan, the number of shares and the price per share subject to
outstanding Stock Rights and the amount payable upon exercise of outstanding
Awards, in order to prevent dilution or enlargement of Stock
Rights.

    

    15.           Amendment
or Discontinuance of Plan

     

    The Board
of Directors may amend or discontinue the Amended Plan at any time. Subject to
the provisions of Section 14 no amendment of the Amended Plan, however, shall
without shareholder approval: (i) increase the maximum number of shares under
the Amended Plan as provided in Section 2 herein, (ii) decrease the minimum
price provided in Section 5 herein, (iii) extend the maximum term under Section
5, or (iv) modify the eligibility requirements for participation in the Amended
Plan. The Board of Directors shall not alter or impair any Stock Right
theretofore granted under the Amended Plan without the consent of the holder of
such Stock Right.

    

    16.           Time
of Granting

     

    Stock Rights may be granted under the
Amended Plan at any time on or after September 1, 2001 and prior to January 1,
2011.  The  date of a grant of a Stock Right under the
Amended Plan will be the date specified by the Committee at the time it grants
the Stock Rights.

    

    17.           Income
Tax Withholding and Tax Bonuses

     

    (a)           In
order to comply with all applicable federal or state income tax laws or
regulations, the Company may take such action as it deems appropriate to ensure
that all applicable federal or state payroll, withholding, income or other
taxes, which are the sole and absolute responsibility of a Grantee under the
Amended Plan, are withheld or collected from such Grantee. In order to assist a
Grantee in paying all federal and state taxes to be withheld or collected upon
exercise of a Stock Right which does not qualify as an ISO hereunder, the
Committee, in its absolute discretion and subject to such additional terms and
conditions as it may adopt, shall permit the Grantee to satisfy such tax
obligation by (i) electing to have the Company withhold a portion of the shares
otherwise to be delivered upon exercise of such Stock Right with a fair market
value, determined in accordance with Section 5 herein, equal to such taxes or
(ii) delivering to the Company Common Shares other than the shares issuable upon
exercise of such Stock Right with a fair market value, determined in accordance
with Section 5, equal to such taxes.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    (b)           The
Committee shall have the authority, at the time of grant of a Stock Right under
the Amended Plan or at any time thereafter, to approve tax bonuses (gross-up) to
senior employees of the Company who are Grantees, to be paid upon their exercise
of Stock Rights granted hereunder. The Committee shall determine the amount of
any such payment. The Committee shall have full authority in its absolute
discretion to determine the amount of any such tax bonus and the terms and
conditions affecting the vesting and payment thereafter.

     

    18.           Effective
Date and Termination of Amended Plan

     

    (a)           This
Amended Plan was adopted by the Board of Directors by unanimous action in
writing, effective as of April 22, 2003, amending and restating the Incentive
Stock Plan effective September 1, 2001 and approved by the shareholders at the
Annual Meeting of Shareholders which took place on June 13, 2002, subject, with
respect to the validation of ISOs granted under the Amended Plan, to approval of
the Amended Plan by the shareholders of the Company at the Next Meeting of
Shareholders or, in lieu thereof, by written consent.  If the approval
of shareholders is not obtained prior to October 30, 2003, any grants
of  ISOs under the Amended Plan made prior to that date shall be
rescinded.

     

    (b)           Unless
the Amended Plan shall have been discontinued as provided in Section 14 hereof,
the Amended Plan shall terminate at 5:00 PM (New York Time) on January 1, 2011.
No Stock Right may be granted after such termination, but termination of the
Amended Plan shall not, without the consent of Grantee, alter or impair any
rights or obligations under any Stock Right theretofore granted.

     

    19.           Governing
Law

     

    The
validity and construction of the Amended Plan and the instruments evidencing
Stock Rights shall be governed by the laws of the State of
Delaware.

     

    
      
        
        

      

      
        7Unassociated Document

    Agreement
on Line of Credit

     

    No. 2009
Zhen Zhong Yin Bu E Xie Zi No. 000455

     

    Party A:
Shenzhen Highpower Technology Co., Ltd.

    Business
License No.: 440307503274740

    Legal
representative/principal: Pan Dangyu

    Domicile:
A2 Block, Luoshan Industrial Park, Pinghu Town, Luogang District,
Shenzhen

    Postal
Code: 518111

    Opening
financial institution & account: Bank of China, Pinghu Subbranch,
814809259208091001

    Tel.:
89686236                                        Fax:
89686298

    

    Party B:
Bank of China Limited, Shenzhen Buji Subbranch

    Legal
representative/Principal: Jiang Guoliang

    Domicile:
No. 108, Buji Road, Buji Town, Longgang District, Shenzhen

    Postal
Code: 518112

    Tel.:
28274825                                        Fax:
28270847

    

    Party A
and Party B, in light of developing friendly and mutual benefit cooperation
relationship, reached the following agreement through negotiation pursuant to
principles of voluntariness, equality, mutual benefit and good
faith.

    

    Article
1: Scope of business

     

    Party B
will provide Party A the line of credit as agreed in the Agreement. Party A may,
subject to the preconditions as agreed herein and in relevant single agreement,
apply to Party B for revolving use, adjustment or one-time use of the line of
credit for the purpose of RMB short-term loan, foreign currency short-term loan,
trade financing, Letter of Guarantee, funding business and other credit business
(collectively referred to as “single loan business”).

     

    Trade
financing, as mentioned herein, includes opening international L/C, opening
domestic L/C, import bill advance, lading guarantee, packing credit, export bill
advance, discounting acceptance draft under time L/C, buyer bill advance for
domestic L/C, seller bill advance for domestic L/C, negotiation of domestic L/C
and other international and domestic trade financing businesses.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Article
2: Types and Sum of Line of Credit

     

    Party B
agrees to provide the following line of credit to Party A:

     

    Currency:
RMB

     

    Sum: (in
words) one hundred million Yuan

     

      (in
figures) RMB100, 000,000.00

     

    The
detailed types and sum are as follows:

     

    1. Line
of credit for loan RMB 20,000,000.00 (in words: twenty million Yuan), which
includes:

     

    (1) Line
of credit for Short-term loan RMB 20,000,000.00(in words: twenty million
Yuan)

     

    2. Line
of trade financing: RMB75,000,000.00 (in words: seventy-five million Yuan),
which includes:

     

    (1)
Factoring line of credit: RMB35,000,000.00 (in words: thirty-five million
Yuan)

     

    (2) Line
of credit for opening domestic L/C (incl. buyer bill advance): RMB40,000,000.00
(in words: forty million Yuan)

     

    3. Line
of fund:RMB 5,000,000.00(in words: five million Yuan) , which
includes:

       
Line of foreign currency trading earnest money RMB 5,000,000.00(in words: five
million Yuan)

    

    Article
3: Use of the line of credit

     

    1. Within
the use period of the line of credit as agreed in the agreement, Party A may,
without exceeding the scope of line regarding respective single loan business as
agreed herein, use the respective line of credit by the
following  (1)
manner:

     

    (1)
Revolving use: the detailed types of line of credit are factoring line of credit and
line of credit for opening domestic L/C (incl. buyer bill advance),line of credit for
Short-term loan, line of
fund.

     

    (2)
One-time use: the detailed types of line of credit are:        /                     .

    

    In case
Party A intends to adjust the use of line of loan of credit as agreed in Article
1, it shall apply to Party B in written form, subsequent to which Party B shall
determine whether or not grant and the details of the adjustment and inform
Party A in written form accordingly.

    

    2. As of
the effective date of the Agreement, the balance of credit based on Agreement on
Line of Credit or similar agreement and single agreement thereof previously
effective shall be deemed the credit generated hereunder.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    In which,
the balance of credit in the line of credit shall be deemed the line of credit
hereunder.

    

    3. Unless
otherwise agreed, the following businesses shall not be incorporated into the
line of credit:

     

    (1)
Export bill advance where the L/C is consistent with documents;

     

    (2) Bill
advance or financing based on the export L/C acceptable by Party B and accepted/
honored/ confirmed for payment/ confirmed by the opening bank or confirming
house, or based on the bill of exchange or sum under domestic L/C;

     

    (3) Where
Party A would provide deposit, national debt, or deposit receipt issued by Party
B, or the acceptance bill, letter of guarantee and standing L/C acceptable to
Party B, the sum of credit corresponding to the said guarantee will not be
incorporated into the line of credit;

     

    (4)

     

    (...) Other
businesses not incorporated into the line of credit otherwise confirmed by both
parties in written form.

    Though
the said items will not be incorporated into the line of credit, the business
agreements thereof shall still constitute the single agreement hereunder and the
integral part hereof and shall be bound by the Agreement hereof, unless
otherwise agreed in the said business agreements.

    

    Article
4: Agreements Executed in Single Loan Business

     

    Party A
shall, in case of applying to Party B for the single loan business hereunder,
submit respective application and/or execute respective contract/agreement
(collectively referred to as “single agreement”) with Party B.

    

    Article
5: Use period of the line of credit

     

    The use
period of the line of credit as stated in Article 2 hereof shall be from the
effective date of the Agreement to 23 November 2010.

     

    At the
expiration of the aforesaid use period, where Party B provides the line of
credit to Party A through negotiation, both parties may execute supplemental
agreement in written form, define clearly the new line of credit and use period
etc. The said supplemental agreement shall constitute integral part of the
Agreement hereof, and any items uncovered in supplemental agreement shall be
subject to provisions herein. The supplemental agreement shall be of the equal
force adeffect as of the Agreement hereof.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Expiration
of the use period as aforementioned shall not influence the force adeffect of
the Agreement and shall not constitute the cause of terminating the Agreement.
Single loan business executed between Party A and Party B in light of the
Agreement will be performed as per the agreements in the Agreement and in
relevant single agreement. Any rights and obligations already generated shall be
performed completely.

    

    Article
6: Preconditions for single loan business

     

    Party A
shall comply with the following conditions regarding single loan business as
required by Party B:

     

    1.
Reserve for Party B relevant Company file, document, seal, namelist of relevant
staff, specimen signature relevant to the Agreement and single agreement, and
fill in relevant certificates;

     

    2. Open
the account required by single loan business;

     

    3. The
guarantee agreed in the Agreement and single agreement has been effectively
established;

     

    4. Other
preconditions required of the single business agreed in single business
agreement;

     

    5. Other
conditions to be met by Party A deemed necessary by Party B.

    

    Article
7: Guarantee

     

    With
respect to the liabilities of Party A to Party B arising from the Agreement and
any single agreements, both parties agree to guarantee the liabilities by the
following methods:

     

    (1) Surepower Technology
(Shenzhen) Co., Ltd will, subject to 2009 Zhen Zhong Yin Bu Bao Xie Zi No.
000455A Contract on Maximum Guarantee, provide the maximum guarantee and
sign corresponding Contract on Maximum Guarantee;

     

    (2) Pan Dangyu will, subject to
2009 Zhen Zhong Yin Bu Bao Xie Zi No. 000455B Contract on Maximum
Guarantee, provide the maximum guarantee and sign corresponding Contract
on Maximum Guarantee;

     

    (3) Li Wenliang will, subject to
2009 Zhen Zhong Yin Bu Bao Xie Zi No. 000455C Contract on Maximum
Guarantee, provide the maximum guarantee and sign corresponding Contract
on Maximum Guarantee;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (4) Ma Wenwei will, subject to
2009 Zhen Zhong Yin Bu Bao Xie Zi No. 000455D Contract on Maximum
Guarantee, provide the maximum guarantee and sign corresponding Contract
on Maximum Guarantee;

     

    Maximum
pledge:

     

    (1)Shenzhen Highpower tech.
CO., Ltd. subject to 2009 Zhen Zhong Yin Bu Di Xie Zi No.000455 Contract on
Maximum pledge  will provide the maximum pledge and sign
corresponding Contract on Maximum Pledge.

     

    (2)
/   will provide the maximum pledge and sign corresponding
Contract on Maximum Pledge.

     

    The
guarantee contract shall be singed corresponding to the detailed loan business
agreement in case single loan business is to be provided.

    

    In case
of any events occurred to Party A or the guarantor which is deemed to be
influencing the performance capacity of Party A or the guarantor, or in case the
guarantee contract turns to invalid, is cancelled or rescinded, or in case Party
A or the guarantor seriously deteriorates in the financial position or is
involved in significant litigation or arbitration cases or any other conditions
which may influence its performance capacity hereunder, or in case the guarantor
breaches the guarantee contract or any other contract executed between Party B,
or in case the collateral is depreciated, damaged, lost or sealed which weakens
or eliminates the guarantee value, Party B shall have the right to require Party
A and Party A shall be obligated to provide new guarantee, to change guarantor
etc to guarantee the liabilities hereunder.

    

    Article
8: Representations and commitments

     

    Party A
represents as follows:

     

    1. Party
A is lawfully registered and existed and of the full capacity for private rights
and the full capacity for civil acts as needed for the execution and performance
of the Agreement;

     

    2.
Executing and performing the Agreement and single agreements shall be the
declaration of Party A's true intention with legal and valid authorization in
accordance with the articles of association or other internal management
document. Execution and performance of the Agreement and single agreements will
not breach any agreement, contract or other legal documents binding Party A.
Party A has acquired or will acquired all relevant approvals, permissions,
filings or registrations needed by the execution and performance of the
Agreement;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    3. All
documents, financial statements, certificates and other materials provided by
Party A hereunder and under any single agreement shall be true, complete,
accurate and valid;

     

    4. The
background of the transaction hereunder shall be true and legal, which will not
be used for illegal purposes like money laundering etc;

     

    5. Party
A did not conceal from Party B any event which may influence the financial
position and performance capacity of itself and the guarantor.

    

    Party A
makes the commitment as follows:

     

    1. Party
A will submit the financial statements (including but not limited to annual
statements, quarterly statements and monthly statements) on a regular basis or
in a timely manner as required;

     

    2. Party
A will accept and cooperate with Party A’s inspection and monitor over the use
condition of the line of credit and relevant production and operation, financial
activities;

     

    3. In
case Party A executes with the guarantor hereunder any counter-guarantee
contract or similar contract, it shall not impair any rights of Party B
hereunder;

     

    4. In
case of any conditions which may influence the financial position and
performance capacity of Party A or the guarantor hereunder, including but not
limited to the split-up, merging, pooling, joint venture with foreign investors,
cooperation, contract operation, reconstruction, transformation, planning for
listing etc of its business manner in any form, reduction of registered capital,
significant asset or equity transfer, bearing of significant indebtedness, setup
of new significant liability on the collateral, seal-up of the collateral,
wind-up, revocation or (being applied) application for bankruptcy etc, or
engaging in any significant litigation or arbitration cases, Party A shall
timely inform Party B;

     

    5. Party
A agrees to follow Party B’s relevant regulations and business practices
regarding any items not covered in the Agreement and in any single
agreement.

    

    Article
9: Internal related transaction and disclosure thereof in Party A’s
Group

     

    Both
parties agreed to follow the item 1 as mentioned
hereunder:

     

    1. Party
A did not fall into the customer group as determined in Guidelines for the Risk
Management by Commercial Banks for Granting Credit to Customer Groups
(“Guidelines”);

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    2. Party
A falls into the category of customer group as defined by Party B in compliance
with Guidelines. Party A shall, subject to provisions of Article 17 of
Guidelines, timely report to Party B the conditions of any related transaction
over 10% of Party A’s net assets, including the related relation of parties
concerned, transaction items, transaction nature, sum or respective ratio,
pricing policies (incl. transaction without any sum or with only symbolic
sum).

    

    Article
10: Defaults and treatment

     

    Any of
the following conditions shall constitute or be deemed as the default of Party A
hereunder or under any single agreement:

     

    1. Party
A fails to perform the payment and settlement obligations to Party B as agreed
in the Agreement and single agreement;

     

    2. Party
A fails to use the funds acquired for agreed purposes as stated in the Agreement
and single agreement;

     

    3. The
representations made by Party A in the Agreement and single agreement were
untrue or breached the commitment of Party B in the Agreement and single
agreement.

     

    4. In
case of the condition provided in Article 8, item 2 (4) which is deemed by Party
B as influencing Party A’s financial position and performance capacity, or
influencing the guarantor’s financial position and performance capacity, while
Party A fails to provide new guarantee and replace guarantor as agreed in the
Agreement.

     

    5. Party
A terminates the business or is engaged in any wind-up, cancellation or
bankruptcy issues.

     

    6. Party
A breaches any other agreements regarding involving party's obligations in the
Contract or in single agreement.

     

    7. Party
A was engaged in any default issues under any other contract with Party B or
other organizations under Bank of China Limited;

     

    8. The
guarantor breaches the agreement in guarantee contract, or is engaged in any
default issues under any other contract with Party B or other organizations
under Bank of China Limited.

    

    Party B
shall, according to the actual situation, have the right to take the following
measures jointly or respectively regarding the aforesaid default
issues:

     

    1.
Require Party A and the guarantor to correct the default action within required
duration;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    2.
Reduce, suspend or terminate in whole or in part the line of credit to Party
B;

     

    3.
Suspend or terminate in whole or in part any business application of Party A
under the Agreement, single agreement or any other agreement between Party A and
Party B; suspend or terminate in whole or in part the issuance and handling of
any loan not issued, any trading financing business and letter of guarantee
business not handled;

     

    4.
Declare that the loan, trade financing sum, principal and interest of advanced
sum for letter of guarantee not repaid and other payables under the Agreement,
single agreement or any other agreement between Party A and Party B shall be in
whole or in part be mature immediately;

     

    5.
Terminate or cancel the Agreement, terminate or cancel single agreements and
other agreements between Party A and Party B in whole or in part;

     

    6.
Require Party A to indemnify the losses caused to Party B thereby;

     

    7. With
prior or after notice, deduct the sum in the account opened in Party B to
discharge all or part liabilities of Party B attributable to Party A. Any
premature sum in the account shall be deemed mature in advance. Where the
currency of the account is different from the pricing currency of Party B’s
business, the settlement exchange rate applicable to Party B at the time of
deduction shall be followed for the translation;

     

    8.
Exercise the security interest;

     

    9.
Require the guarantor to undertake the guarantee responsibility;

     

    10. Party
A promises that, within the effective period of the Agreement, the total line of
credit (which may be extended to total amount of exposed credit) in all banks
shall not exceed RMB140 million, or else Party B shall have the right to suspend
the credit;

     

    11. Any
other measures deemed necessary by Party B.

    

    Article
11: Rights reservation

     

    Any
party’s failure in performing the rights under the Agreement, single agreement
in whole or in part or in requiring the other party to perform and undertake
partial or whole liabilities and obligations shall not constitute the waiver of
the rights or release of the liabilities or obligations.

     

    Any
party’s allowance or extension to the other party or delay in performing the
rights under the Agreement or single agreement shall not affect any of its
rights under the Agreement, single agreement, laws or regulations and shall not
be deemed as the waiver of the rights.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Article
12: Modification, alteration, termination and partial invalidity

     

    The
Agreement may be subject to modification or alteration with both parties’
negotiation and consensus, and any modification or alteration made thereby shall
constitute integral part of the Agreement.

     

    Unless
otherwise provided by laws or regulations or otherwise agreed by both parties
concerned, the Agreement shall not be terminated prior to the complete
performance of the rights and obligations hereunder and under single
agreement.

     

    Unless
otherwise provided by laws or regulations or otherwise agreed by both parties
concerned, the invalidity of any provisions herein shall not influence the
validity of any other provisions herein.

    

    Article
13: Applicable laws and dispute settlement

     

    Unless
otherwise agreed by parties concerned, the Agreement and single agreement shall
be governed by laws of the People’s Republic of China.

     

    Unless
otherwise agreed by parties concerned, upon the coming into force of the
Agreement and single agreement, any and all disputes arising from or in
connection with the execution and performance of the Agreement and single
agreement shall be subject to negotiation between both parties, failing which
any party hereto may solve the dispute under question by the 2 manner mentioned
below:

     

    1. Submit
to     /       
arbitration committee for arbitration.

     

    2. Appeal
to the people's court in the place where Party B resides or where any other
organizations under Bank of China Limited performing rights and undertaking
obligations under the Agreement or single agreement reside.

     

    3. Appeal
to the people’s court with jurisdiction.

     

    During
the dispute settlement period, any other articles not affected by the dispute
shall be performed as well.

    

    Article
14: Expense

     

    Unless
otherwise provided for by law or otherwise agreed by both parties, the expenses
(incl. attorney fee) for concluding, performing and dispute settling of the
Agreement and single agreement shall be borne by Party A.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Article
15: Attachments

     

    The
following attachments and any other attachments and single agreements jointly
confirmed by both parties shall constitute integral part of the Agreement and be
of the same force adeffect with the Agreement.

     

    Attachment
7: Opening of Domestic L/C.

     

    Attachment
9: Buyer Bill Advance of Domestic L/C.

     

    Attachment
12:       /           
..

    

    Article
16: Other provisions

     

    1. Party
A, without the consent of Party B in written, shall not assign any rights and
obligations hereunder or under any single agreement to any third
party.

     

    2. In
case Party B shall, as required by business, entrust other organizations under
Bank of China Limited to exercise the rights and undertake obligations under the
Agreement and single agreement, Party A shall agree with the arrangement. Other
organizations under Bank of China Limited as authorized by Party B shall have
the right to exercise all rights under the Agreement and single agreement and
shall have the right to appeal to the people’s court or to arbitration
institution for any dispute under the Agreement or single
agreement.

     

    3. The
Agreement shall be binding upon both parties and successors and assignees
legally generated of both parties without affecting any other provisions herein
and in single agreement.

     

    4. Unless
otherwise agreed, domicile designated by both parties herein shall be the
address of both parties for communication. Both parties commit to inform the
other party in written form in case of changing the said domicile.

     

    5.
Headings and business names as mentioned herein shall be used only for the
convenience of reference, which shall not be regarded as the interpretation of
provisions contained herein or rights and obligations of parties
hereto.

     

    6. Party
A commits to take Party B as the secondary mortgagee upon acquiring the property
right certificate of Lilang Production Base.

     

    7. Party
A commits that it will take the settlement account opened in Party B as the main
account of recovering sales proceeds, and the relevant deposit and settlement
sum therein shall not be less than the credit tranche granted to Party A by
Party B.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    8. Party
A commits that it shall inform Party B in written form and shall obtain the
consent of Party B prior to applying for any credit from other commercial banks,
otherwise Party B shall have the right to terminate the credit.

    

    Article
17: Effectiveness

     

    The
Agreement shall come into force with the signature of both parties’ legal
representatives, principals or authorized signatories and with both parties’
official seals.

    The
Agreement shall be made in sextuplicate, out of which Party A shall hold one,
Party B shall hold two , the Guarantor shall hold two and the pledge
registration authority shall hold one. The six originals shall be of the same
force.

     

    
      
        	      
                Party
      A: Shenzhen Highpower Technology Co., Ltd.

              	 	 	 	 
	 	 	 	 	 
	
                /s/
      Pan Dang Yu

              	 	 	(Official Seal)	 
	
                Pan
      Dang Yu

              	 	 	
                 

              	 
	
                24
      November 2009

              	 	 	
                 

              	 

      

    

     

    
      	Party
      B:  Bank of China Limited, Shenzhen Buji Subbranch	 	 	 	 
	 	 	 	 	 
	
              /s/
      Jiang Guo Liang

            	 	 	(Official Seal)	 
	
              Jiang
      Guo Liang

            	 	 	
               

            	 
	
              24
      November 2009

            	 	 	
               

            	 

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Attachment
7: For Opening of Domestic L/C

     

    1. Where
there is any difference between the Attachment and the Agreement, the Attachment
shall be applied.

     

    2.
Preconditions agreed in the Agreement shall be met in case Party A applies to
Party B for opening domestic L/C.

     

    3. Party
A undertakes the following responsibilities irrevocably:

     

    (1) Party
A is willing to comply with Rules for the Settlement of Domestic Letter of
Credit and relevant national regulations, agrees that Party B will go through
all issues under the L/C based on the Rules for the Settlement of Domestic
Letter of Credit and relevant national regulations and agrees to bear all
responsibilities thus generated.

     

    (2) Party
A guarantees that all materials provided to Party B for opening the L/C shall be
true, complete and valid, and that the L/C to be opened shall be based upon
actual transaction. Party A agrees to bear all responsibilities for the
provision of any false and/or incomplete and/or invalid materials to Party B
and/or for the lack of actual transaction background for the L/C to be
opened.

     

    (3) Prior
to paying the sum of L/C to Party B by Party A, Party A commits that the title
to the goods shall be attributable to Party B in case the goods under L/C is
subject to actual control of Party A.

     

    (4) Party
A shall bear all effects arising from the unclear or ambiguous application
letter.

    

    4.
Opening and Modification of domestic L/C

     

    (1) In
case Party B accepts Party A’s application for opening domestic L/C, it shall
issue domestic L/C according to Application Letter for Opening Domestic L/C
submitted by Party A, while the detailed content shall be subject to the
domestic L/C issued by Party B.

     

    (2)
Party’s requirement of submitting documents or files such as trade contracts etc
relating to the opening of domestic L/C shall not be interpreted as Party’s
obligation to issue the domestic L/C subject to the said documents or
files.

     

    (3) In
case Party A intends to modify domestic L/C, it shall submit Application Letter
for the Modification of Domestic L/C to Party B. Party A agrees that Party B
will go through the modification issues of domestic L/C in compliance with Rules
for the Settlement of Domestic Letter of Credit and agrees to undertake the
liabilities and responsibilities thus generated. The Application Letter for the
Modification of Domestic L/C shall, upon issuance, be binding upon Party
A.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (4) Party
B shall have the independent discretion regarding the modification of domestic
L/C, it shall have the right to reject the modification application letter of
Party A and the right to propose the modification content. In case the
modification of domestic L/C involves sum and period etc which is deemed by
Party B to increase the obligation of the guarantor, Party B shall be entitled
to require Party A to increase deposit, and/or require Party A to obtain the
signature and agreement of the guarantee in the Application Letter for the
Modification of Domestic L/C, or else Party B shall have the right to reject the
modification application of Party A.

     

    (5)
Modification of domestic L/C shall not modify other rights and obligations of
Party A in the Agreement and the Attachment.

     

    (6)
Content relating to domestic L/C in the Application Letter for the Opening of
Domestic Letter of Credit and the Application Letter for the Modification of
Domestic L/C shall be filled in Chinese, and all responsibilities generated due
to the ambiguity caused by the unclear writing or ambiguous wording in
application letter shall be borne by Party A.

     

    (7) Party
A shall pay all expenses (incl. relevant banking fees refused by the beneficiary
of the L/C) arising from the opening and modification of domestic L/C in a
timely manner, the charging method shall be subject to Party B’
rules.

     

    5.
Payment under domestic L/C

     

    (1)
Within the valid period of domestic L/C, Party A shall, upon receiving Party A’
notice about documents received, inform Party B within agreed period in the
notice the method of processing documents; or else it shall deemed that Party A
holds no rejection opinions about the documents and agrees Party B to pay/commit
for payment; in case Party A inform Party B within agreed period in the notice
to receive documents, and Party B agrees with Party A’s document handling
opinions, Party B may pay the sum/commit to pay the sum concerned. Party A shall
deposit payable sum as agreed in Application Letter for Opening Domestic Letter
of Credit.

    In case
Party A informs Party B to receive documents yet Party B disagrees with Party
A’s document handling opinions, Party B shall have the right to determine at its
own discretion whether or not reject the payment solely in light of documents;
where Party A agrees to provide sufficient deposit or other payment guarantee to
Party B, Party B shall have the right to determine whether to release the right
of reject or not according to actual situations or whether to reserve the right
of rejection at its own discretion.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (2) In
case Party A deems any discrepancy existed in documents and request to reject
the payment/ commitment of payment within agreed period in notice, it shall list
discrepancies all at once and shall submit the Cause for Rejection of Demand in
duplicate stamped with Party A’s reserved seal. Party B shall have the right to
deem discrepancies listed in the Cause for Rejection of Demand as all
discrepancies proposed by Party A regarding documents. Party B may reject the
payment in case it agrees with Party A for discrepancies proposed, while Party B
shall have the right to determine the payment/commitment of payment in case it
deems, according to review subject to practices, the discrepancies listed by
Party A can not hold water, or the discrepancies listed are immaterial
discrepancies which can not lead to reject of payment, subsequent to which Party
B may pay the sum by the payable sum deposited by Party A, all obligations and
responsibilities arisen thereby shall be undertaken by Party A.

     

    (3) In
case the payable sum deposited by Party A hereunder is sufficient and thereby
Party B advances for Party A the sum payable, it shall constitute, upon the
payment of the sum, Party A’s liability to Party B under the Agreement and the
Attachment.

    

    6.
Supplemental agreement

    In
addition to the content agreed in the Agreement, Party A hereby makes the
following supplemental commitment to Party B regarding the business under the
Attachment:

     

    (1) Upon
the issuance of domestic letter of credit, Party A shall immediately inform
Party B in written form in case of any modification made to trade contracts
which relates to the domestic letter of credit;

     

    (2) With
respect to delayed payment confirmed by Party B, Party A shall not request Party
B to suspend the payment for any cause and shall waive the right, as required by
laws, regulations and rules, to apply to the people’s court for freezing the sum
under domestic letter of credit or the right to appeal to the people’s court for
suspending the sum under domestic letter of credit;

     

    (3) The
risk of missing, delaying, omitting or damaging correspondence or documents
under domestic letter of credit in mail delivery, telecommunication delivery or
other delivery and the risk of using third party service by Party B shall be
borne by Party A.

     

    7. Any
other issues under the Attachment shall be subject to the agreement in the
Application Letter for Opening Domestic Letter of Credit and Application Letter
for Modification of Domestic Letter of Credit.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Attachment
9: Buyer Bill Advance of Domestic L/C

     

    1. Where
there is any difference between the Attachment and the Agreement, the Attachment
shall be applied.

     

    2. Buyer
bill advance refers to that Party B will, upon receiving documents from
negotiation bank or remitting bank, will grant Party A short-term finance with
Party A’s requirement to pay the sum subject to the documents.

     

    3.
Preconditions of bill advance:

     

    (1) The
preconditions agreed in the Agreement shall be met for Party A’s application of
buyer bill advance with Party B.

     

    (2) The
letter of credit shall indicate the Rules for Settlement of Domestic Letter of
Credit issued by the People’s Republic of China or the updated version thereof
with the form and content reviewed and approved by Party B.

     

    4. Party
B’s application for bill advance

     

    Party A
shall submit the Application for Bill Advance under Domestic Letter of Credit
for each application of bill advance business (“transaction”).

    Every
transaction hereunder shall be interdependent, which shall be in compliance with
the Attachment, relevant Letter of Credit and Party A’s
application.

     

    5.
Payment

     

    Upon
meeting preconditions for bill advance, Party B will accept Party A’s
application for buyer bill advance, while Party B shall, subject to the sum
agreed in Application for Bill Advance under Domestic Letter of Credit
acceptable by it, pay the sum under L/C on behalf of Party A.

    Relevant
issues including period of bill advance etc shall be subject to the Application
for Bill Advance under Domestic Letter of Credit aforementioned.

     

    6. Party
A acknowledges hereby that:

     

    (1) Party
B shall be entitled to dispose of the complete set of documents/goods under
buyer bill advance or any other security interest or interest in property
attributable to it by any applicable laws and regulations. In case the right of
disposing of the complete set of documents/goods under buyer bill advance shall
be attributing to Party A in accordance with applicable laws and regulations or
the judgment of any people's court or arbitration institution with jurisdiction,
Party A agrees that within the largest extent as permitted by applicable laws
and regulations it will transfer the right to Party B and acknowledge any
actions and omission of Party A in disposing of the documents/goods. In case the
right of disposing of the complete set of documents/goods under buyer bill
advance shall be attributing to Party B in accordance with applicable laws and
regulations or the judgment of any people's court or arbitration institution
with jurisdiction, Party B will reserve the right until the complete discharge
by Party A of the bill advance financing surrendered by Party B.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (2) Party
A, as Party B’s assignee, applies to Party B for holding documents/goods and
repay the bill advance financing by Party B through sales proceeds, which
include but not limited to, on behalf of Party B, keeping relevant documents,
going through the warehousing, storage, transport, processing, sales and
insurance etc of the goods under the documents, keep the sales proceeds or
deposit the sales proceeds in the account designated by Party B. Party A shall
indicate the status hereunder when selling goods to third party.

     

    (3) All
expenses (including but not limited to insurance, warehousing, storage, port fee
etc) arising from goods under Party A’s custody shall be borne by Party A; Party
A commits to insure the goods against all possible risks a the market value of
the goods, list Party B as the insured in the original insurance certificate and
present original insurance certificate to Party B for safekeeping. Party B shall
have the right to claim against insurance company in case of losses to insured
goods.

     

    (4)
Without Party B’s permission, Party A shall not dispose of the goods through
delayed payment, payment in non-monetary manner or at the price lower than
market price. Party A shall not pledge or mortgage the goods to any party or set
the goods bound by any lien. Upon Party B’s demand, Party A shall submit to
Party B the details of the account of the goods, any sales revenue or any sales
contract relating to the goods; Party B shall be entitled to inspect the actual
condition of the goods in warehouse or occupy the goods again.

     

    7.
Supplemental commitment

     

    In
addition to the content agreed in the Agreement, Party A shall make the
following supplemental commitment to Party B regarding the business under the
Attachment:

    Party A
commits that the sales proceeds under the domestic letter of credit shall be
used for the repayment of the financing for Party A surrendered by Party
A.

    8. Any
other detailed issues relating to the business under the Attachment shall be
subject to the agreement contained in the Application for the Buyer Bill Advance
under Domestic L/C.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00171-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00171-of-00352.parquet"}]]