Document:

Exhibit
10.41

 

	
  

  	
   

  	
  CLIFFORD CHANCE

  

 

EXECUTION COPY

 

DATED OCTOBER 11, 2010

 

 

PREMIUM SINO FINANCE LIMITED

as Chargor

 

 

IN FAVOUR OF

 

 

DB TRUSTEES (HONG KONG) LIMITED

 

as Security Agent

 

 

SHARE CHARGE

 

 

 

CONTENTS

 

	
  Clause

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
  Definitions
  and Interpretation

  	
   

  	
  1

  
	
  2.

  	
  Payment
  of Secured Obligations

  	
   

  	
  3

  
	
  3.

  	
  Fixed
  Charge

  	
   

  	
  4

  
	
  4.

  	
  Perfection
  of Security

  	
   

  	
  4

  
	
  5.

  	
  Further
  Assurance

  	
   

  	
  6

  
	
  6.

  	
  Undertakings

  	
   

  	
  7

  
	
  7.

  	
  Shares

  	
   

  	
  8

  
	
  8.

  	
  Enforcement
  of Security

  	
   

  	
  10

  
	
  9.

  	
  Powers
  of Sale

  	
   

  	
  10

  
	
  10.

  	
  Appointment
  of Receiver or Administrator

  	
   

  	
  11

  
	
  11.

  	
  Powers
  of Receiver

  	
   

  	
  12

  
	
  12.

  	
  Application
  of Monies

  	
   

  	
  14

  
	
  13.

  	
  Receipt
  and Protection of Purchasers

  	
   

  	
  14

  
	
  14.

  	
  Power
  of Attorney

  	
   

  	
  15

  
	
  15.

  	
  Representations

  	
   

  	
  15

  
	
  16.

  	
  Effectiveness
  of Security

  	
   

  	
  18

  
	
  17.

  	
  Release

  	
   

  	
  20

  
	
  18.

  	
  Subsequent
  Security Interests

  	
   

  	
  21

  
	
  19.

  	
  Currency
  Conversion and Indemnity

  	
   

  	
  21

  
	
  20.

  	
  Costs,
  Expenses and Indemnity

  	
   

  	
  22

  
	
  21.

  	
  Payments
  free of Deduction

  	
   

  	
  23

  
	
  22.

  	
  Discretion
  and Delegation

  	
   

  	
  23

  
	
  23.

  	
  Set-off

  	
   

  	
  23

  
	
  24.

  	
  Changes
  to Parties

  	
   

  	
  24

  
	
  25.

  	
  Amendments
  and waivers

  	
   

  	
  25

  
	
  26.

  	
  Perpetuity
  Period

  	
   

  	
  25

  
	
  27.

  	
  Notices

  	
   

  	
  25

  
	
  28.

  	
  Counterparts

  	
   

  	
  25

  
	
  29.

  	
  Governing
  Law

  	
   

  	
  25

  
	
  30.

  	
  Jurisdiction

  	
   

  	
  25

  
	
  Schedule 1 Particulars of the Shares

  	
   

  	
  27

  
	
  Schedule 2 FORM OF SUPPLEMENT

  	
   

  	
  28

  
	
  Schedule 3

  	
   

  	
  30

  
	
  Schedule 4

  	
   

  	
  31

  

 

i

 

	
  Schedule 5

  	
   

  	
  33

  
	
  Schedule 6

  	
   

  	
  34

  
	
  Schedule 7

  	
   

  	
  35

  

 

ii

 

THIS
DEED is made on

 

BY

 

(1)         PREMIUM
SINO FINANCE LIMITED, a BVI Business Company
incorporated under the laws of the British Virgin Islands with company number
607520 and having its registered office at P.O. Box 957, Offshore Incorporations
Centre, Road Town, Tortola, British Virgin Islands (the “Chargor”)

 

in
favour of

 

(2)         DB
TRUSTEES (HONG KONG) LIMITED,  as security trustee for the Secured Parties on the terms
and conditions set out in the Security Trust Deed (the “Security
Agent”, which expression shall include its successors, assigns and
transferees).

 

NOW THIS DEED WITNESSES as follows:

 

1.             DEFINITIONS
AND INTERPRETATION

 

1.1           Definitions

 

Unless
otherwise defined in this Deed or unless the context otherwise requires, terms
and expressions defined in or construed for the purposes of the Security Trust
Deed shall bear the same meanings when used herein.  In addition:

 

“Amendment to Security
Trust Deed” has the meaning given to it in the definition of “Security
Trust Deed”.

 

“Additional Charged Shares” means any and all of the shares
of and/or interests in the Company specified in any or all of the Supplements
delivered to the Security Agent after the date of this Deed.

 

“Charged Portfolio” means the Shares and the Related Assets.

 

“Collateral Rights” means all rights, powers and remedies of
the Security Agent provided by or pursuant to this Deed or by law.

 

“Company” means SinoTech Energy Limited, an exempted company incorporated with limited liability in the
Cayman Islands with registration
number 241866.

 

“Facility Agreement” means the facility agreement dated 8 January 2010
made between, among others, Tianjin New Highland Science and Technology
Development Co., Ltd. as borrower, Deutsche Bank AG, Hong Kong Branch as
arranger, calculation agent and facility agent and DB Trustees (Hong Kong)
Limited as security agent, as amended and restated by an amendment agreement
dated 11 January 2010 and a second amendment agreement dated                                       
made between, among others, Tianjin New Highland Science and Technology
Development Co., Ltd. as borrower and Deutsche Bank AG, Hong Kong Branch
as facility agent.

 

1

 

“Initial
Additional Charged Shares” means all those shares in the Company
(other than the Initial Charged Shares) registered in the name of and
beneficially owned by the Chargor immediately after the completion of the
Relevant Permitted Reorganisation.

 

“Initial Charged Shares”
means those shares in the Company which are represented by share certificate
number               
(or any replacement thereof), registered in the name of and are beneficially
owned (as at the date of this Deed) by the Chargor.

 

“Receiver” means a receiver or receiver and manager or an
administrative receiver of the whole or any part of the Charged Portfolio and
that term will include any appointee made under a joint and/or several
appointment.

 

“Related Assets” means, in relation to any
Share, all present and future:

 

(a)           dividends
and distributions of any kind and any other sum received or receivable in
respect of that Share;

 

(b)           rights,
shares, money or other assets accruing or offered by way of redemption, bonus,
option or otherwise in respect of that Share;

 

(c)           allotments,
offers and rights accruing or offered in respect of that Share; and

 

(d)           other
rights and assets attaching to, deriving from or exercisable by virtue of the
ownership of, that Share.

 

“Release Date”
has the meaning ascribed to such term in the Security Trust Deed.

 

“Relevant Permitted Reorganisation” has the meaning ascribed
to such term in Schedule 2 to the Second Amendment Agreement.

 

“Second Amendment Agreement”
means the second amendment agreement dated
                             
2010 and made between, amongst others, the Borrower, Deutsche Bank AG, Hong
Kong Branch as facility agent and DB Trustees (Hong Kong) Limited as security
agent in relation to the Facility Agreement

 

“Security Trust
Deed” means the security trust deed
dated 11 January 2010 between, among others, Tianjin New Highland Science
and Technology Development Co., Ltd., Deutsche Bank AG, Hong Kong Branch
as Facility Agent and DB Trustees (Hong Kong) Limited as Security Agent, as
amended by a deed of amendment (the “Amendment to Security
Trust Deed”) dated                                                   .

 

“Shares” means together:

 

(a)           the Initial Charged Shares;

 

(b)           the Initial Additional Charged Shares; and

 

(b)           any Additional Charged
Shares.

 

2

 

“Supplement” means any supplement to this Deed substantially
in the form of Schedule 2 (Form of Supplement).

 

“Transaction Warrant
Instruments” means the transaction warrant instruments dated 8 January 2010
and entered into by Premium Sino as issuer, Holdco, Parentco and the Founder,
as amended by the First Supplemental Instruments and Second Supplemental
Instruments (in each case) as defined in the Second Amendment Agreement.

 

1.2           Construction

 

In
this Deed:

 

1.2.1        the rules of
construction set out in clause 1.3 (Construction)
of the Security Trust Deed shall apply to this Deed  mutatis mutandis;

 

1.2.2        any reference to the
Chargor, the Security Agent or any or all of the Secured Parties shall be
construed so as to include its or their (and any subsequent) successors and any
permitted assigns and transferees in accordance with their respective
interests;

 

1.2.3        any reference to the
Security Trust Deed or any other agreement or instrument shall be a reference
to the Security Trust Deed or that other agreement or instrument as amended or
novated from time to time; and

 

1.2.4        save where the
context otherwise requires, references in this Deed to any Clause or Schedule shall be to a clause or schedule contained in
this Deed.

 

2.             PAYMENT
OF SECURED OBLIGATIONS

 

2.1           Covenant
to Pay

 

The Chargor covenants with the Security Agent that it shall pay,
discharge and satisfy each of the Secured Obligations on their due date in
accordance with their respective terms provided that neither such covenant nor
the Security constituted by this Deed shall extend to or include any liability
or sum which would, but for this proviso, cause such covenant or Security to be
unlawful or prohibited by any applicable law.

 

2.2           Interest
on Demands

 

If the Chargor fails to pay any sum on the due date for payment of that
sum the Chargor shall pay interest on such sum (before and after any judgment
and to the extent interest at a default rate is not otherwise being paid on
such sum) from the date of demand until the date of payment of such sum in full
by the Chargor, calculated on a daily basis at the rate determined in
accordance with the provisions of clause 9.3 (Default
Interest) of the Facility Agreement (for such purpose only, in the
form subsisting as at the date of this Deed).

 

3

 

3.             FIXED
CHARGE

 

The Chargor hereby charges as beneficial owner in favour of the Security
Agent as trustee for the Secured Parties, as Security
for the payment and discharge of the Secured Obligations, by way of first fixed
charge all the Chargor’s right, title and interest from time to time in and to the
Charged Portfolio.

 

4.             PERFECTION
OF SECURITY

 

4.1           Perfection

 

4.1.1        The Chargor shall deliver
to the Security Agent the following (in respect of (A) the Initial Charged
Shares, within 10 Business Days from
the date hereof or, if earlier, the Effective Date as defined in the Amendment to
Security Trust Deed; or (B) any Initial Additional Charged Shares or Additional
Charged Shares, promptly but in any event within 10 Business Days from the date
of completion of the Relevant Permitted Reorganisation or (as the case may be) the
date of the Supplement to which such Additional Charged Shares relate):

 

(a)           a
certified true copy of the Company’s register
of members, annotated to include details of this Deed and the charge of such
Shares; and

 

(b)           a
certified true copy of the Chargor’s register of charges, duly stamped and
filed at the Registry of Corporate Affairs in the British Virgin Islands,
showing details of this Deed.

 

4.1.2        If at any time after
the date of this Deed, the Chargor applies to have itself registered as a
non-Hong Kong company under Part XI of
the Companies Ordinance (Cap. 32), it shall forthwith notify the Security
Agent.  Without prejudice to the
foregoing, upon its being registered as a non-Hong Kong company under Part XI of the Companies Ordinance
(Cap. 32), it shall (a) forthwith notify the Security Agent and provide
the Security Agent with the details of such registration and (b) promptly
(and in any case within five weeks after the date of such registration) take
all steps to comply with the requirements under section 91(5) of the
Companies Ordinance (Cap. 32) in respect of this Deed and the Security created hereby.

 

4.2           Delivery
of Documents of Title

 

The Chargor shall:

 

4.2.1        on the date of this Deed (in respect of the Initial Charged Shares) and
promptly but in any event by no later than the date of completion of the
Relevant Permitted Reorganisation (in respect of the Initial Additional Charged
Shares), deposit with or deliver to the Security Agent (or procure the deposit with or delivery to the Security Agent of) the following in respect of such Shares:

 

(a)           all original certificates or other documents evidencing ownership of
such Shares by the Chargor;

 

4

 

(b)           undated
share transfer forms or, as the case may be, other appropriate instruments of
transfer in respect of such Shares executed in blank by or on behalf of the
Chargor
in the form as set out in Schedule 3 (Share Transfer);

 

(c)           executed and undated
letters of resignation together with letters of authority to date the same from
each of the directors and alternate directors (if any) of the Company, in the
form as set out in Schedule 4 (Letter of Resignation),
unless such letters have already been delivered to the Security Agent;

 

(d)           an executed shareholder
proxy in respect of such Shares in favour of the Security Agent in the form as
set out in Schedule 5 (Irrevocable Proxy);

 

(e)           an executed notice of
charge from the Chargor to the Company in the form as set out in Schedule 6 (Notice of Charge); and

 

(f)            a certified copy of a
memorandum signed by the directors of the Company with respect to the
endorsement of a note of charge in respect of this Deed to the register of
members of the Company in the form as set out in Schedule 7 (Director’s Memorandum);

 

4.2.2        promptly upon (1) the delivery of
any Supplement to the Security Agent, or (2) the accrual, offer or issue of any stocks, shares, warrants or other
securities in respect of or derived from any Shares, notify the Security Agent
of that occurrence (in the case of (2)) and procure the delivery to the Security Agent of:

 

(a)           all original certificates or other documents evidencing ownership of
such Shares by the Chargor;

 

(b)           undated
share transfer forms or, as the case may be, other appropriate instruments of
transfer in respect of such Shares or other items executed in blank by or on behalf of the Chargor  in the form as set out in Schedule 3 (Share Transfer) or such other form as the Security Agent may
request;

 

(c)           if applicable, an executed
shareholder proxy in respect of such Shares or other items in favour of the
Security Agent in the form as set out in Schedule 5 (Irrevocable
Proxy) or such other form as the Security Agent may request;

 

(d)           in the case of Shares:

 

(i)            an
executed notice of charge from the Chargor to the Company in the form as set
out in Schedule 6 (Notice of Charge); and

 

(ii)           a
certified copy of a memorandum signed by the directors of the Company with
respect to the endorsement of a note of charge in respect of this Deed and such Shares to the register of members of the Company;

 

5

 

4.2.3        procure that, immediately upon the appointment of any replacement or
additional director or alternate director of the Company, an executed and
undated letter of resignation together with a letter of authority to date the
same from such director, in the form as set out in Schedule 4 (Letter of Resignation).

 

4.3           Delivery
of Supplements

 

The Chargor may from time to time deliver
any duly executed Supplement to the Security Agent. Upon such delivery, any and
all shares and/or interests in the Company specified in such Supplement shall
immediately become subject to the security constituted by this Deed.

 

5.             FURTHER
ASSURANCE

 

5.1           Further
Assurance: General

 

5.1.1        The Chargor shall
promptly at its own cost do all such acts and/or execute all such documents
(including without limitation assignments, transfers, mortgages, charges,
notices and instructions) as the Security Agent may specify (and in such form
as the Security Agent may require in favour of the Security Agent or its nominee(s)):

 

(a)           to
perfect the Security created or intended to be created in respect of the
Charged Portfolio (which may include, without limitation, the execution by the
Chargor of a mortgage, charge or assignment over all or any of the assets
constituting, or intended to constitute, any part of Charged Portfolio) or for
the exercise of the Collateral Rights;  and/or

 

(b)           to facilitate the realisation of the Charged
Portfolio.

 

5.2           Necessary
Action

 

The Chargor shall from time to time take all such action (whether or not
requested to do so by the Security Agent) as is or shall be available to it
(including without limitation obtaining and/or effecting all Authorisations) as
may be necessary for the purpose of the creation, perfection, protection or
maintenance of any Security conferred or intended to be conferred on the
Security Agent by or pursuant to this Deed.

 

5.3           Implied
Covenants for Title

 

The obligations of the Chargor under this Deed shall be in addition to
any covenants for title deemed to be included in this Deed under the
Conveyancing and Property Ordinance (Cap. 219) and/or general law.

 

6

 

6.             UNDERTAKINGS

 

6.1           Negative
Pledge

 

The Chargor undertakes that it shall not, at any time during the
subsistence of this Deed, create or permit to subsist any Security or
Quasi-Security over all or any part of the Charged Portfolio
other than Security constituted by this Deed.

 

6.2           No
Disposal of Interests

 

The Chargor undertakes that it shall not and shall not agree to at any
time during the subsistence of this Deed, sell, assign,
transfer or otherwise dispose of any of its interest in the Charged Portfolio
except (i) with the prior consent in writing of the Security Agent or (ii) for
any transfers of any Charged Portfolio pursuant to the exercise of Transaction
Warrants in accordance with the terms of the Transactions Warrant Instruments
(provided that the provisions of Clause 6.5 (Maintenance of minimum Charged Portfolio) are
satisfied before and after such transfer).

 

6.3           Ownership

 

At any time and
except as a result of any Permitted Reorganisation, on or after the date of
this Deed but prior to the occurrence of a Qualifying IPO (as defined in the
Facility Agreement), the Chargor shall legally and beneficially own directly at
least 90% of the shares in the Company (of each class) of and equity interests
in the Company, free from Security (other than Transaction Security (if any))
and shall not cease to have management control over the Company.

 

6.4           Other
adverse actions

 

The Chargor undertakes that it shall not, at any time during the
subsistence of this Deed:

 

6.4.1        create, grant or
permit to subsist any restriction on the ability of the Security Agent to
transfer or realise, all or any of its
right, title and interest in the Charged Portfolio or any part thereof; or

 

6.4.2        do or permit to be done any act or thing which could
reasonably be expected to jeopardise the rights of the Security Agent in the
Charged Portfolio or any part thereof or which could reasonably be expected to
adversely affect or diminish the value of the Charged Portfolio or any part
thereof.

 

6.5           Maintenance of Minimum Charged Portfolio

 

The Chargor undertakes that until the
Release Date (except with the prior (i) sanction of a Transaction Written
Consent, as defined in the Transaction Warrant Instruments and (ii) consent
of the Security Agent (acting in accordance with the Security Trust Deed)), it
shall ensure that at all times, and notwithstanding any transfers pursuant to
the exercise of the Transaction Warrants in accordance with the terms of the
Transaction Warrant Instruments, the Charged Portfolio
subject to security constituted by this Deed are
not less than the higher of (a) the aggregate maximum number of shares in
the Company

 

7

 

 

that may be required to satisfy the exercise of all outstanding
Transaction Warrants in full and to satisfy any obligations that it may have
under the Transaction Warrant Instruments in full and (b) such number of
shares in the Company comprised in the  Charged
Portfolio as shall be equal to 30% of the Fully Diluted Share
Capital (as defined in the Transaction Warrant Instruments) from time to time.

 

6.6           Changes
to share capital etc

 

Except as otherwise
permitted under the Facility Agreement (in the form subsisting on the date of
this Deed), the Chargor shall
procure that there shall be no increase or reduction in the number of
authorised or issued shares of the Company, no change in the registered
office, no change to the register of members, no appointment of any
further director or officers of the Company and no change to the register of
directors, in each case, without the prior consent in writing of the Security
Agent.

 

6.7           Initial
Additional Charged Shares

 

6.7.1        The Chargor shall ensure
that, immediately after the completion of the Relevant Permitted
Reorganisation, 90% of the entire issued share capital of the Company will be
registered in the name of and beneficially owned by the Chargor.

 

6.7.2        The Chargor shall promptly
notify the Security Agent of the particulars of the Initial Additional Charged
Shares (including without limitation the number and par value of such Shares,
and the number of the share certificate(s) representing such Shares) in
writing.

 

7.             SHARES

 

7.1           Dividends

 

7.1.1        Any and all dividends
and/or distributions received, recovered, paid or delivered to the order of the
Chargor in respect of the Charged Portfolio at any time on or after the occurrence of an Event of Default (as long
as any Event of Default is continuing) shall be promptly paid and delivered to
(and the Chargor shall promptly deliver such dividends and/or distributions to)
the Security Agent for application in accordance with this Deed.

 

7.1.2        Without prejudice to
the foregoing, the Chargor shall promptly inform the Security Agent of the
receipt of any dividend or distribution (whether or not in cash) in respect of
the
Charged Portfolio.

 

7.2           Before
Event of Default

 

7.2.1        Prior to the
occurrence of an Event of Default which is continuing the Chargor shall be
entitled to exercise all voting rights in relation to the Charged Portfolio  provided that
the Chargor shall not exercise such voting rights in any manner, or otherwise
permit or agree to any (a) variation of the rights attaching to or
conferred by any of the Charged Portfolio or (b) increase in the issued share capital, registered capital or

 

8

 

equity
interest of any company, corporation or entity whose shares/securities/equity
interests are charged or subject to Security
under this Deed, except (in the case of such increase) where such increase is
permitted under the Facility Agreement and any and all such additional shares,
registered capital or equity interests are paid for in full and immediately
made subject to the Security
constituted under this Deed upon their issuance.

 

7.3           After
Event of Default

 

The Security Agent
may, upon and/or after the occurrence of an Event of Default (as long as any
Event of Default is continuing), at its discretion (in the name of the Chargor
or otherwise and without any further consent or authority from the Chargor):

 

7.3.1        exercise (or refrain
from exercising) any voting rights in respect of the Charged Portfolio;

 

7.3.2        apply all dividends,
distributions, interest and other monies arising from the Charged Portfolio as
though they were proceeds of sale under this Deed;

 

7.3.3        transfer all or any
of the
Charged Portfolio into the name of such
nominee(s) of the Security Agent as it shall think fit; and

 

7.3.4        exercise (or refrain
from exercising) the powers and rights conferred on or exercisable by the legal
or beneficial owner of the Charged Portfolio, including without limitation the right, in relation to any company,
corporation or entity whose shares, equity interests or other securities are
included in the Charged Portfolio or any part thereof, to concur or participate
in:

 

(a)           the
reconstruction, amalgamation, sale or other disposal of such company,
corporation or entity or any of its assets or undertaking (including without
limitation the exchange, conversion or reissue of any shares, equity interests
or securities as a consequence thereof);

 

(b)           the
release, modification or variation of any rights or liabilities attaching to
such shares, equity interests or securities; and

 

(c)           the
exercise, renunciation or assignment of any right to subscribe for any shares,
equity interests or securities,

 

in each case in such manner and on such terms as
the Security Agent may think fit, and the proceeds of any such action shall
form part of the Charged Portfolio and may be applied by the Security Agent in
accordance with Clause 12 (Application of
Monies).

 

7.4           Payment
of Calls

 

The Chargor shall pay when due all calls or other payments which may be
or become due in respect of any of the Charged Portfolio,
and in any case of default 

 

9

 

by the Chargor in such payment, the Security Agent may, if it thinks
fit, make such payment on behalf of the Chargor in which case any sums paid by
the Security Agent shall be reimbursed by the Chargor to the Security Agent on
demand and shall carry interest from the date of payment by the Security Agent
until reimbursed in full at the rate and in accordance with Clause 2.2 (Interest on Demands).

 

7.5           Exercise
of Rights

 

The Chargor shall not exercise any of its rights and powers in relation
to any of the Charged Portfolio in any manner which,
in the opinion of the Security Agent, would prejudice the value of, or the
ability of the Security Agent to realise, the Security created by this Deed.

 

8.             ENFORCEMENT
OF SECURITY

 

8.1           Enforcement

 

Upon and after the occurrence of an Event of Default (as long as any
Event of Default is continuing) or if the Chargor requests the Security Agent
to exercise any of its powers under this Deed, the Security created by or
pursuant to this Deed is immediately enforceable and the Security Agent may,
without notice to the Chargor or prior authorisation from any court, in its
absolute discretion:

 

8.1.1        enforce all or any
part of such Security (at the times, in the manner and on the terms it thinks
fit) and take possession of and hold or dispose of all or any part of the
Charged Portfolio; and

 

8.1.2        whether or not it has
appointed a Receiver, exercise all or any of the powers, authorities and discretions
conferred by the Conveyancing and Property Ordinance (Cap. 219) (as varied or
extended by this Deed) on mortgagees and by this Deed on any Receiver or
otherwise conferred by law on mortgagees and/or Receivers.

 

8.2           No
Liability as Mortgagee in Possession

 

Neither the Security Agent nor any Receiver shall be liable to account
as a mortgagee in possession in respect of all or any part of the Charged
Portfolio or be liable for any loss upon realisation or for any neglect,
default or omission in connection with the Charged Portfolio to which a
mortgagee or a mortgagee in possession might otherwise be liable.

 

9.             POWERS OF
SALE

 

9.1           Extension
of Powers

 

The power of sale or other disposal conferred on the Security Agent and
on any Receiver by this Deed shall operate as a variation and extension of the
statutory power of sale under Sections 51 and 53 of the Conveyancing and
Property Ordinance (Cap. 219) and such power shall arise (and the Secured
Obligations shall be deemed due and payable for that purpose) on execution of
this Deed.

 

10

 

9.2           Restrictions

 

The restrictions contained in paragraph 11 of the Fourth Schedule to the
Conveyancing and Property Ordinance (Cap. 219) shall not apply to this Deed or
to the exercise by the Security Agent of its right to consolidate all or any of
the Security created by or pursuant to this Deed with any other Security in
existence at any time or to its power of sale, which powers may be exercised by
the Security Agent without notice to the Chargor on or at any time after the
occurrence of an Event of Default (as long as any Event of Default is
continuing). Any restrictions on the consolidation of Security shall be
excluded to the fullest extent permitted by law.

 

10.           APPOINTMENT
OF RECEIVER OR ADMINISTRATOR

 

10.1         Appointment
and Removal

 

Upon and after the occurrence of an Event of Default (as long as any
Event of Default is continuing) or if requested to do so by the Chargor, the
Security Agent may by deed or otherwise (acting through an authorised officer
of the Security Agent), without prior notice to the Chargor:

 

10.1.1      appoint one or more
persons to be a Receiver of the whole or any part of the Charged Portfolio;

 

10.1.2      appoint two or more
Receivers of separate parts of the Charged Portfolio;

 

10.1.3      remove (so far as it
is lawfully able) any Receiver so appointed; and/or

 

10.1.4      appoint another
person(s) as an additional or replacement Receiver(s).

 

10.2         Capacity
of Receivers

 

Each person appointed to be a Receiver pursuant to Clause 10.1 (Appointment and Removal) shall be:

 

10.2.1      entitled to act
individually or together with any other person appointed or substituted as
Receiver;

 

10.2.2      for all purposes
deemed to be the agent of the Chargor which shall be solely responsible for his
acts, defaults and liabilities and for the payment of his remuneration and no
Receiver shall at any time act as agent for the Security Agent; and

 

10.2.3      entitled to
remuneration for his services at a rate to be fixed by the Security Agent from
time to time.

 

10.3         Statutory
Powers of Appointment

 

The powers of appointment of a Receiver herein contained shall be in
addition to all statutory and other powers of appointment of the Security Agent
under the Conveyancing and Property Ordinance (Cap. 219) (as varied and
extended by this Deed) or otherwise and such powers shall remain exercisable
from time to time by the Security Agent in respect of all or any part of the
Charged Portfolio.

 

11

 

11.           POWERS OF
RECEIVER

 

11.1         Powers of
Receiver

 

Every Receiver shall (subject to any restrictions in the instrument
appointing him but notwithstanding any winding-up or dissolution of the
Chargor) have and be entitled to exercise, in relation to the Charged Portfolio
(and any assets of the Company which, when got in, would be Charged Portfolio)
or that thereof in respect of which he was appointed, and as varied and
extended by the provisions of this Deed (in the name of or on behalf of the
Chargor or in his own name and, in each case, at the cost of the Chargor):

 

11.1.1      all the powers
conferred by the Conveyancing and Property Ordinance (Cap. 219) on mortgagors
and on mortgagees in possession and on receivers appointed under that
Ordinance;

 

11.1.2      all the powers and
rights of an absolute owner and power to do or omit to do anything which the
Chargor itself could do or omit to do; and

 

11.1.3      the power to do all
things (including without limitation
bringing or defending proceedings in the name or on behalf of the Chargor)
which seem to the Receiver to be incidental or conducive to (a) any of the
functions, powers, authorities or discretions conferred on or vested in him or (b) the
exercise of any Collateral Rights (including without limitation realisation of all or any part of the Charged
Portfolio) or (c) bringing to his hands any assets of the Chargor forming,
or which when got in would be, part of the Charged Portfolio.

 

11.2         Additional
Powers of Receiver

 

In addition to and without prejudice to the generality of the foregoing,
every Receiver shall (subject to any limitations or restrictions expressed in
the instrument appointing him but notwithstanding any winding-up or dissolution
of the Chargor) have the following powers in relation to the Charged Portfolio
(and any assets of the Chargor which, when got in, would be part of the Charged
Portfolio), in respect of which he was appointed (and every reference in this
Clause 11.2 to the “Charged Portfolio”
shall be read as a reference to that part of the Charged Portfolio in respect
of which such Receiver was appointed):

 

11.2.1      Take Possession

 

power to enter upon, take immediate possession
of, collect and get in the Charged Portfolio including without limitation
dividends, distributions and other income whether accrued before or after the
date of his appointment  and
for that purpose to make, or to require the directors of the Company to
make, calls conditionally or unconditionally upon the holders of the Company’s
share capital in respect of any such capital of the Company
which remains uncalled and to enforce payment of calls so made and any previous
unpaid calls by taking proceedings in the name of the Chargor or in his own
name;

 

12

 

11.2.2     Proceedings and
Claims

 

power to bring, prosecute, enforce, defend and
abandon applications, claims, disputes, actions, suits and proceedings in
connection with all or any part of the Charged Portfolio or the Deed in the
name of the Chargor or in his own name and to submit to arbitration, negotiate,
compromise and settle any such applications, claims, disputes, actions, suits
or proceedings  and
in addition to take or defend proceedings for the compulsory winding-up of the
Chargor and proceedings for directions under Section 255 of the Companies
Ordinance (Cap. 32);

 

11.2.3     Deal with Charged
Portfolio

 

without the need to observe the restrictions imposed by paragraph 11 of
the Fourth Schedule to the Conveyancing and Property Ordinance (Cap. 219),
power, in relation to the Charged Portfolio and each and every part thereof, to
sell, transfer or convey the same (in each case with or without consideration)
or concur in any of the foregoing by the Chargor or any other receiver or
manager of the Chargor (including without limitation to or in relation to the Security
Agent or any of the other Secured Parties) in such manner and
generally on such terms as he thinks fit;

 

11.2.4     Insurance

 

power to effect, maintain or renew indemnity and
other insurances and to obtain bonds and performance guarantees;

 

11.2.5     Borrowing

 

power to raise or borrow money from the Security
Agent or any of the other Secured Parties or any other person to rank either in
priority to the Security constituted by this
Deed or any part of it or otherwise and with or without a mortgage or charge on
the Charged Portfolio or any part of it on such terms as he shall in his
absolute discretion think fit (and no person lending such money shall be
concerned to see or enquire as to the propriety or purpose of the exercise of
such power or the application of money so raised or borrowed);

 

11.2.6     Redemption of
Security

 

power to redeem, discharge or compromise any Security
whether or not having priority to the Security
constituted by this Deed or any part of it;

 

11.2.7     Covenants, Guarantees
and Indemnities

 

power to enter into bonds, covenants,
guarantees, commitments, indemnities and other obligations or liabilities as he
shall think fit, to make all payments needed to effect, maintain or satisfy
such obligations or liabilities and to use the company seal of the Chargor; and

 

13

 

11.2.8     Exercise of Powers in
Chargor’s Name

 

power to exercise any or all of the above powers
on behalf of and in the name of the Chargor (notwithstanding any winding-up or
dissolution of the Chargor) or on his own behalf.

 

11.3         Terms of
Disposition

 

In making any sale or other disposal of all or any part of the Charged
Portfolio or any acquisition in the exercise of their respective powers a
Receiver or the Security Agent may accept or dispose of as, and by way of
consideration for, such sale or other disposal or acquisition, cash, shares,
loan capital or other obligations, including without limitation consideration
fluctuating according to or dependent upon profit or turnover and consideration
the amount whereof is to be determined by a third party.  Any such consideration may, if thought
expedient by the Receiver or the Security Agent, be nil or may be payable or
receivable in a lump sum or by instalments. 
Any contract for any such sale, disposal or acquisition by the Receiver
or the Security Agent may contain conditions excluding or restricting the
personal liability of the Receiver or the Security Agent.

 

12.           APPLICATION
OF MONIES

 

12.1         Order of
Application

 

Save as otherwise expressly provided in this Deed, all moneys received
or recovered by the Security Agent or any Receiver pursuant to this Deed or the
powers conferred by it shall (subject to the claims of any person having prior
rights thereto and subject to Clause 12.2 (Suspense Account),
and by way of variation of the Conveyance and Property Ordinance (Cap. 219)) be
applied in accordance with Clause 7 (Application of Proceeds) of the Security
Trust Deed.

 

12.2         Suspense
Account

 

All monies received, recovered or realised under this Deed by the
Security Agent or any Receiver or the powers conferred by it (including the
proceeds of any conversion of currency) may in its discretion be credited to
and held in any suspense or impersonal account pending their application from
time to time in or towards the discharge of any of the Secured Obligations in
accordance with Clause 12.1 (Order of Application).

 

12.3         Application
by Chargor

 

Any application under this Clause 12 shall override any application by
the Chargor.

 

13.           RECEIPT
AND PROTECTION OF PURCHASERS

 

13.1         Receipt
and Consideration

 

The receipt of the Security Agent or any Receiver shall be conclusive
discharge to a purchaser of any part of the Charged Portfolio from the Security
Agent or such Receiver and in making any sale or disposal of any part of the
Charged 

 

14

 

Portfolio or making any acquisition, the Security Agent or any Receiver
may do so for such consideration, in such manner and on such terms as it thinks
fit.

 

13.2         Protection
of Purchasers

 

No purchaser or other person dealing with the Security Agent or any
Receiver shall be bound to inquire whether the right of the Security Agent or
such Receiver to exercise any of its powers has arisen or become exercisable or
be concerned with any propriety or regularity on the part of the Security Agent
or such Receiver in such dealings.  The
protection given to purchasers from a mortgagee in Sections 52 and 55 of the
Conveyancing and Property Ordinance (Cap. 219) shall apply equally to purchaser(s) and
other person(s) dealing with the Security Agent or any Receiver.

 

14.           POWER OF
ATTORNEY

 

14.1         Appointment
and Powers

 

The Chargor by way of Security
irrevocably (within the meaning of Section 4 of the Powers of Attorney
Ordinance (Cap. 31)) appoints the Security Agent and any Receiver severally,
upon or after the occurrence of an Event of Default (as long as any Event of
Default is continuing), to be its attorney and in
its name, on its behalf and as its act and deed to execute, deliver and perfect
all documents and do all things which the Security Agent or
such Receiver may consider to be necessary for:

 

14.1.1      carrying out any
obligation imposed on the Chargor by this Deed or any other agreement binding
on the
Chargor to which the Security Agent
is party (including without limitation the execution and delivery of any deeds, charges, assignments or other Security and any transfers of the Charged Portfolio or
any part thereof); and

 

14.1.2      enabling the Security
Agent and any Receiver to exercise, or delegate the exercise of, any of the
rights, powers and authorities conferred on them by or pursuant to this Deed or
by law (including, without limitation, upon or after the occurrence of an Event of
Default (as long as any Event of Default is continuing) the exercise of any right of a legal or beneficial
owner of the Charged Portfolio or any part thereof).

 

14.2         Ratification

 

The Chargor shall ratify and confirm all things done and all documents
executed by any attorney in the exercise or purported exercise of all or any of
his powers.

 

15.           REPRESENTATIONS

 

15.1         Representations

 

The Chargor represents and warrants to the Security Agent that as at the
date of this Deed:

 

15.1.1      it is a  company incorporated with limited liability and validly existing under the laws of the British
Virgin Islands; and

 

15

 

15.1.2      subject to any
general principles of law as at the date of this Deed limiting its obligations
which are specifically referred to in any legal opinion delivered pursuant to the terms of the Second
Amendment Agreement:

 

(a)           each
of the obligations expressed to be assumed by it in this Deed  are legal, valid, binding and enforceable
obligations; and

 

(b)           (without
limiting the generality of Clause 15.1.2(a) above), this Deed creates the
security interests which it purports to create and such security interests are
valid and effective;

 

15.1.3      the entry into and
performance by it of, and the transactions contemplated by, this Deed do not
and will not:

 

(a)           conflict
with any law or regulation applicable to it;

 

(b)           conflict
with its constitutional documents;

 

(c)           conflict
with any agreement or instrument binding upon it or any of its assets; or

 

(d)           result
in the existence of or oblige it to create any Security over all or any of its
assets (other than the Security constituted pursuant to this Deed);

 

15.1.4      it has the power to
enter into, perform and deliver, and has taken all necessary action to
authorise its entry into, performance and delivery of, this Deed;

 

15.1.5      no limit on its
powers will be exceeded as a result of the grant of Security contemplated by
this Deed;

 

15.1.6      all Authorisations
required or desirable:

 

(a)           to
enable it lawfully to enter into, exercise its rights and comply with its
obligations in this Deed;

 

(b)           to
make this Deed admissible in evidence in its jurisdiction of incorporation, the Cayman Islands and/or Hong Kong; and/or

 

(c)           to
enable it to create the Security expressed to be created by it pursuant to this
Deed and to ensure that such Security has the priority and ranking it is
expressed to have,

 

have been obtained or effected and are in full force and effect;

 

15.1.7      the choice of the
laws of Hong Kong as the governing law of this Deed will be recognised and
enforced in its jurisdiction of incorporation and in the Hong Kong courts;

 

15.1.8      any judgment obtained
in the Hong Kong courts in relation to this Deed will, subject to the legal
qualifications specifically referred to in any 

 

16

 

legal
opinion delivered pursuant to the terms of the Second Amendment Agreement, be recognised and enforced in its jurisdiction of
incorporation and/or Hong Kong;

 

15.1.9      under the law of its
jurisdiction of incorporation and the Cayman Islands, it is not necessary that this Deed be filed, recorded or enrolled with
any court or other authority in that jurisdiction or that any stamp,
registration or similar tax be paid on or in relation to this Deed;

 

15.1.10    it
has not sold or otherwise disposed of, or created, granted or permitted to
subsist any Security over, all or any of its right, title and interest in the
Charged Portfolio (other than the Security
constituted pursuant to this Deed);

 

15.1.11    the
particulars of the Initial Charged Shares as at the date of this Deed as set out in Schedule 1 (Particulars of the Shares), the particulars of the Initial Additional
Charged Shares as notified by the Chargor to the Security Agent, and (in respect of any and all Additional Charged Shares)
the particulars of such Additional Charged Shares as at the date of the
Supplement relating thereto as set out in such Supplement, are accurate in all
respects;

 

15.1.12    the
Shares have been validly issued by the Company and are fully paid up and there
are no monies or liabilities payable or outstanding in relation to any of the
Shares;

 

15.1.13    the
Chargor legally and beneficially owns all of the Shares, free and clear of all
Security, except for any Security constituted hereby, and exercises management control over the
Company; and

 

15.1.14    as at the date of this Deed, the Chargor is not
registered as a non-Hong Kong company under Part XI of the Companies
Ordinance (Cap. 32) nor has it made any application to be so registered.

 

17

 

 

 

15.2         All
of the representations and warranties in Clause 15.1 (Representations) are made by the Chargor
to the Security Agent on the date of this Deed and each of such  representations and warranties (except
sub-Clauses 15.1.11 and  15.1.14)
shall be deemed to be repeated by the Chargor on the date of each Utilisation
Request, on each Utilisation Date and on the first day of each Interest Period
relating to each Loan, the date of the Second Amendment Agreement, the
Effective Date (as defined in the Second Amendment Agreement) and (for so long as the Release Date has not
occurred) on each date falling on the last day of each successive period of
three Months from and including the Facility Release Date, in each case by
reference to the facts and circumstances existing at the date on which such
representation or warranty is deemed to be made or repeated.

 

16.           EFFECTIVENESS
OF SECURITY

 

16.1         Continuing
Security

 

16.1.1      The Security created
by or pursuant to this Deed shall remain in full force and effect as a continuing
Security for the Secured Obligations unless and until
discharged by the Security Agent.

 

16.1.2      No part of the Security from time to time intended to be constituted
by this Deed will be considered satisfied or discharged by any intermediate
payment, discharge or satisfaction of the whole or any part of the Secured
Obligations.

 

16.2         Cumulative
Rights

 

The Security created by this Deed and the Collateral Rights shall be
cumulative, in addition to and independent of every other Security
which any or all of the Secured Parties may at any time hold for any or all of
the Secured Obligations or any rights, powers and remedies provided by
law.  No prior Security
held by any Secured Party over the whole or any part of the Charged Portfolio
shall merge into the Security
constituted by this Deed.

 

16.3         Chargor’s
Obligations

 

None of the obligations of the Chargor under this Deed or the Collateral
Rights shall be affected by an act, omission, matter, thing or event which, but
for this Clause 16.3, would reduce, release or prejudice any of its obligations
under this Deed (without limitation and whether or not known to it or any
Secured Party) including:

 

16.3.1      any time, waiver or
consent granted to, or composition with, any Obligor or other person;

 

16.3.2      the release of any
Obligor or any other person under the terms of any composition or arrangement
with any creditor of any member of the Group;

 

16.3.3      the taking,
variation, compromise, exchange, renewal or release of, or refusal or neglect
to perfect, take up or enforce, any rights against, or Security over assets of, any Obligor or other person or
any non-presentation or non-observance of any formality or other requirement in

 

18

 

respect
of any instrument or any failure to realise the full value of any Security;

 

16.3.4      any incapacity or
lack of power, authority or legal personality of or dissolution or change in
the members or status of any Obligor or any other person;

 

16.3.5      any amendment, novation, supplement,
extension (whether of maturity or otherwise) or restatement (in each case
however fundamental and of whatsoever nature and whether or not more onerous)
or replacement of a Transaction Document or any other documents or Security or
of the Secured Obligations;

 

16.3.6      any variation of the
terms of the trust upon which the Security Agent holds any Transaction
Security;

 

16.3.7      any unenforceability,
illegality or invalidity of any obligation of any person under any Transaction Document or any other document or Security; or

 

16.3.8      any insolvency or
similar proceedings;

 

16.3.9      any claims or set-off
right that the Chargor may have; or

 

16.3.10    any
law, regulation or decree or order of any jurisdiction affecting any Obligor.

 

16.4         Remedies
and Waivers

 

No failure on the part of the Security Agent to exercise, or any delay
on its part in exercising, any Collateral Right shall operate as a waiver
thereof or constitute an election to affirm this Deed.  No election to affirm this Deed shall be
effective unless it is in writing.  No
single or partial exercise of any Collateral Right preclude any further or
other exercise of that or any other Collateral Right.

 

16.5         No
Liability

 

None of the Security Agent, its nominee(s) or any Receiver shall be
liable by reason of (a) taking any action permitted by this Deed or (b) any
neglect or default in connection with all or any part of the Charged Portfolio
or (c) taking possession of or realising all or any part of the Charged
Portfolio, except in the case of gross negligence or wilful default upon its
part (as finally judicially determined).

 

16.6         Partial
Invalidity

 

If, at any time, any provision of this Deed is or becomes illegal,
invalid or unenforceable in any respect under the law of any jurisdiction,
neither the legality, validity or enforceability of the remaining provisions of
this Deed under such laws nor of such provision under the laws of any other
jurisdiction shall in any way be affected or impaired thereby and, if any part
of the Security intended to be
created by or pursuant to this Deed is invalid, unenforceable or ineffective
for any reason, that shall not affect or impair any other part of that Security.

 

19

 

16.7         No Prior
Demand

 

The Security Agent shall not be obliged to make any demand of or enforce
any rights or claim against any Obligor or any other person, to take any action
or obtain judgment in any court against any Obligor or any other person or to
make or file any proof or claim in a liquidation, bankruptcy or insolvency of
any Obligor or any other person or to enforce or seek to enforce any other
Security in respect of any or all of the Secured Obligations before exercising
any Collateral Right.

 

16.8         Deferral
of rights

 

Until the occurrence of the Release Date, the Chargor will not (unless
the Security Agent otherwise directs) exercise any rights which it may have by
reason of performance by it of its obligations under this Deed:

 

16.8.1      to be indemnified by
any Obligor;

 

16.8.2      to claim any
contribution from any guarantor of any Obligor’s obligations under any or all of the
Transaction Documents;
and/or

 

16.8.3      to take the benefit (in whole or in part and whether
by way of subrogation or otherwise) of any rights of the Secured Parties under
the Transaction Documents or of any other guarantee or Security taken pursuant to, or in connection with, the Transaction Documents by any Secured Party.

 

16.9         Settlement
conditional

 

Any settlement, discharge or release hereunder in relation to the
Chargor or all or any part of the Charged Portfolio shall be conditional upon
no Security or payment by any or all of the Obligors to, or recovery from any
or all of the Obligors by, any or all of the Secured Parties being avoided or
reduced by virtue of any bankruptcy, insolvency, liquidation or similar laws of
general application or any similar event or for any other reason and shall in
those circumstances be void.

 

17.           RELEASE

 

17.1         Release of Security

 

17.1.1      After the occurrence
of the Release Date and subject to Clauses 16.9 (Settlement conditional)
and 17.2 (Avoidance of payments), the Security Agent shall (at the request and cost of
the Chargor) execute such documents and do all such reasonable acts as may be
necessary to release the Charged Portfolio from the security constituted by
this Deed
without recourse to, or any representation or warranty by, the Security Agent
or any of its nominees.

 

17.1.2      Upon any transfer of
any Charged
Portfolio pursuant to the exercise of
any Transaction Warrants in accordance with the terms of the Transaction
Warrant Instruments, provided that the provisions of Clause 6.5 (Maintenance
of minimum Charged Portfolio) are satisfied before 

 

20

 

and
after such transfer, the Security Agent shall (at the request and cost of the Chargor) execute such documents and do all such reasonable
acts as may be necessary to release such Charged Portfolio so transferred from the security constituted by this Deed without recourse to,
or any representation or warranty by, the Security Agent or any of its nominees, such release shall not prejudice the security
hereunder over the other Charged Portfolio.

 

17.2         Avoidance
of Payments

 

If the Security Agent considers that any amount paid or credited to any Security Party
by or from any Obligor is capable of being avoided or reduced
by virtue of any bankruptcy, insolvency, liquidation or similar laws, the
liability of the Chargor under this Deed and the Security
constituted by this Deed shall continue and such amount shall not be considered
to have been irrevocably paid.

 

18.           SUBSEQUENT
SECURITY INTERESTS

 

18.1         Subsequent
Security Interests

 

If the Security Agent (acting in its capacity as security
agent or trustee or otherwise) or any of the other Secured Parties at any time
receives or is deemed to have received notice of any subsequent Security or
other interest affecting all or any part of the Charged Portfolio or any
assignment or transfer of the Charged Portfolio which is prohibited by the
terms of this Deed or any Transaction Document,
all payments thereafter by or on behalf of any or all of the Obligors to the
Security Agent (whether in its capacity as security agent or trustee or
otherwise) or any of the other Secured Parties shall be treated as having been
credited to a new account of the Security Agent or, as the case may be, that
other Secured Party and not as having been applied in reduction of the Secured
Obligations as at the time when (or at any time after) the Security Agent or
any other Secured Party received such notice of such subsequent Security or
other interest or such assignment or transfer.

 

18.2         Prior
Security Interests

 

In the event of any
action, proceeding or step being taken to exercise any powers or remedies
conferred by any prior ranking Security or upon the exercise by the Security
Agent or any Receiver of any power of sale under this Deed, the Security Agent
may redeem that prior Security or procure the transfer of it to itself.  The Security Agent may settle and agree the
accounts of the prior Security and any accounts so settled and agreed will be
conclusive and binding on the Chargor. 
All principal monies, interest, costs, charges and expenses of and
incidental to any redemption or transfer will be paid by the Chargor to the Security
Agent on demand.

 

19.           CURRENCY CONVERSION AND INDEMNITY

 

19.1         Currency
Conversion

 

For the purpose of or pending the discharge of any of the Secured
Obligations the Security Agent may convert any money received, recovered or
realised or 

 

21

 

subject to application by it under this Deed from one currency to
another, as the Security Agent may think fit, and any such conversion shall be
effected at the Security Agent’s spot rate of exchange (or, if so such spot of exchange
is quoted by the Security Agent, such other rate of exchange as may be
available to the Security Agent) for the time being for obtaining such other
currency with such first-mentioned currency.

 

19.2         Currency
Indemnity

 

If any sum (a “Sum”) owing by
the Chargor under this Deed or any order or judgment given or made in relation
to this Deed has to be converted from the currency (the “First
Currency”) in which such Sum is payable into another currency (the “Second Currency”) for the purpose of:

 

19.2.1      making or filing a
claim or proof against the Chargor;

 

19.2.2      obtaining an order or
judgment in any court or other tribunal;

 

19.2.3      enforcing any order
or judgment given or made in relation to this Deed; or

 

19.2.4      applying the Sum in
satisfaction of any of the Secured Obligations,

 

the Chargor shall indemnify the Security Agent from and against any loss
suffered or incurred as a result of any discrepancy between (a) the rate
of exchange used for such purpose to convert such Sum from the First Currency into
the Second Currency and (b) the rate or rates of exchange available to the
Security Agent at the time of such receipt or recovery of such Sum.

 

20.           COSTS,
EXPENSES AND INDEMNITY

 

20.1         Costs and
expenses

 

The Chargor shall, on demand of the Security Agent, reimburse the
Security Agent on a full indemnity basis for all costs and expenses (including
legal fees and any value added tax) incurred by the Security Agent in
connection with (a) the execution of this Deed or otherwise in relation to
this Deed, (b) the perfection or enforcement of the Security constituted
by this Deed and/or (c) the exercise of any Collateral Right, together
with interest from the date such costs and expenses were incurred to the date
of reimbursement of the same by the Chargor, calculated in accordance with the
provisions of the Facility Agreement (applying mutatis
mutandis as if the same were an Unpaid Sum thereunder).

 

20.2         Stamp
taxes

 

The Chargor shall pay all stamp, registration and other Taxes to which
this Deed, the Security contemplated in this Deed and/or any judgment given in
connection with this Deed is, or at any time may be, subject and shall, from
time to time, indemnify the Security Agent on demand against any liabilities,
costs, claims and/or expenses resulting from any failure to pay or delay in
paying any such Tax.

 

22

 

20.3         Indemnity

 

The Chargor shall, notwithstanding any release or discharge of all or
any part of the Security constituted by this Deed, indemnify the Security Agent
and each other Secured Party (through the Security Agent), their respective
agents, attorneys and any Receiver against any action, proceeding, claims,
losses, liabilities and costs which it may sustain as a consequence of any
breach by the Chargor of the provisions of this Deed, the exercise or purported
exercise of any of the rights and powers conferred on any of them by this Deed
or otherwise relating to the Charged Portfolio or any part thereof.

 

21.           PAYMENTS
FREE OF DEDUCTION

 

All payments to be made to the Security Agent under this Deed shall be
made free and clear of and without deduction for or on account of Tax unless
the Chargor is required to make such payment subject to the deduction or
withholding of Tax, in which case the sum payable by the Chargor in respect of
which such deduction or withholding is required to be made shall be increased
to the extent necessary to ensure that, after the making of such deduction or
withholding, the person on account of whose liability to Tax such deduction or
withholding has been made receives and retains (free from any liability in
respect of any such deduction or withholding) a net sum equal to the sum which
it would have received and so retained had no such deduction or withholding
been made or required to be made.

 

22.           DISCRETION
AND DELEGATION

 

22.1         Discretion

 

Any liberty or power which may be exercised or any determination which
may be made under this Deed by the Security Agent or any Receiver may, subject
to the terms and conditions of the Security Trust Deed,
be exercised or made in its absolute and unfettered discretion without any
obligation to give reasons.

 

22.2         Delegation

 

Each of the Security Agent and any Receiver shall have full power to
delegate (either generally or specifically) the powers, authorities and
discretions conferred on it by this Deed (including without limitation the
power of attorney under Clause 14 (Power of Attorney))
on such terms and conditions as it shall see fit which delegation shall not
preclude any subsequent exercise, any subsequent delegation or any revocation
of such power, authority or discretion by the Security Agent or any Receiver.

 

23.           SET-OFF

 

The Security Agent may set off any matured obligation due from the
Chargor under any or all of the Transaction Documents (to the extent
beneficially owned by the Security Agent) against any matured obligation owed
by the Security Agent to the Chargor, regardless of the place of payment,
booking branch or currency of either obligation.  If such obligations are in different
currencies, the 

 

23

 

Security Agent may convert either obligation at a market rate of
exchange in its usual course of business for the purpose of such set-off.

 

24.           CHANGES
TO PARTIES

 

24.1         Successors

 

This Deed shall be binding upon and enure to the benefit of each party
hereto and its and/or any subsequent successors and permitted assigns and
transferees.  Without prejudice to the
foregoing, this Deed shall remain in effect despite any amalgamation or merger
(however effected) relating to the Security Agent; and references to the
Security Agent herein shall be deemed to include any person who, under the laws
of its jurisdiction of incorporation or domicile, has assumed the rights and
obligations of the Security Agent under this Deed or to which, under such laws,
those rights and obligations have been transferred.

 

24.2         No
Assignment or Transfer by the Chargor

 

The Chargor may not assign or transfer any or all of its rights (if any)
and/or obligations under this Deed.

 

24.3         Assignment
and Transfer by Security Agent to Successor

 

The Security Agent may:

 

24.3.1      assign all or any of
its rights under this Deed; and

 

24.3.2      transfer all or any
of its obligations (if any) under this Deed,

 

to any successor Security Agent in accordance with the provisions of the
Security Trust Deed provided that it is acknowledged that such transfer shall
not in any way prejudice the priority of the Security constituted by this Deed
(which shall be assigned to such successor Security Agent pursuant to the terms
of the Security Trust Deed).  Upon such
assignment and transfer taking effect, the successor Security Agent shall be
and be deemed to be acting as security agent and trustee for the Secured
Parties for the purposes of this Deed and in place of the former Security
Agent.

 

24.4         Assignment
by other Secured Parties

 

Each Secured Party (other than the Security Agent) may assign all or any
of its rights under this Deed (whether direct or indirect).  The Chargor irrevocably and unconditionally
confirms that:

 

24.4.1      it consents to any
assignment or transfer by any Secured Party of its rights and/or obligations
made in accordance with the provisions of the applicable Transaction Documents;

 

24.4.2      it shall continue to
be bound by the terms of this Deed, notwithstanding any such assignment or
transfer; and

 

24.4.3      the assignee or
transferee of such Secured Party shall acquire an interest in this Deed upon
such assignment or transfer taking effect.

 

24

 

24.5         Disclosure

 

The Chargor agrees to any disclosure of any information made in
accordance with Clause 23.9 (Disclosure of information) of the Facility
Agreement.

 

25.           AMENDMENTS
AND WAIVERS

 

Any provision of this Deed
may be amended or waived only by agreement in writing between the Chargor and
the Security Agent.

 

26.           PERPETUITY
PERIOD

 

The perpetuity period under the rule against perpetuities, if
applicable to this Deed, shall be the period of eighty years from the date of
the Facility Agreement.

 

27.           NOTICES

 

The provisions of Clause 30 (Notices)
of the Facility Agreement (in the form subsisting as at the date of this Deed)
shall apply to this Deed mutatis mutandis.

 

28.           COUNTERPARTS

 

This Deed may be executed in any number of counterparts, all of which
taken together shall constitute one and the same instrument.

 

29.           GOVERNING
LAW

 

This Deed is governed by the laws of Hong Kong.

 

30.           JURISDICTION

 

30.1         Hong Kong
Courts

 

The courts of Hong Kong have exclusive jurisdiction to settle any dispute
(a “Dispute”) arising out of, or connected
with this Deed (including a dispute regarding the existence, validity or
termination of this Deed or the consequences of its nullity).

 

30.2         Convenient
Forum

 

The parties hereto agree that the courts of Hong Kong are the most
appropriate and convenient courts to settle Disputes between them and,
accordingly, that they will not argue to the contrary.

 

30.3         Exclusive
Jurisdiction

 

This Clause 30 (Jurisdiction)
is for the benefit of the Security Agent only. 
As a result and notwithstanding Clause 30.1 (Hong Kong
Courts), nothing herein shall prevent the Security Agent from taking
proceedings relating to a Dispute in any other courts with jurisdiction.  To the extent allowed by law the Security
Agent may take concurrent proceedings in any number of jurisdictions.

 

25

 

30.4         Service
of process

 

Without prejudice to any other mode of service allowed under any
relevant law, the Chargor:

 

30.4.1      irrevocably appoints
International Petroleum Services Corporation Limited of 1/F., Sunning Plaza, 10
Hysan Avenue, Causeway Bay, Hong Kong as its agent for service of process in
relation to any proceedings before the Hong Kong courts in connection with this
Deed; and

 

30.4.2      agrees that failure by a process agent to notify the
Chargor of any process will not invalidate the proceedings concerned.

 

30.5         Waiver of
immunity

 

The Chargor waives generally all immunity it or its assets or revenues
may otherwise have in any jurisdiction, including immunity in respect of:

 

30.5.1      the giving of any
relief by way of injunction or order for specific performance or for the
recovery of assets or revenues; and/or

 

30.5.2      the issue of any
process against its assets or revenues for the enforcement of a judgment or, in
an action in rem, for the arrest,
detention or sale of any of its assets and revenues.

 

IN
WITNESS WHEREOF this
Deed has been signed on behalf of the Security Agent and
executed as a deed by the Chargor
and is intended to be and is hereby delivered by it as a deed on the date
specified above.

 

26

 

 

 

 

SCHEDULE 1

PARTICULARS OF THE SHARES

 

	
  Beneficial owner

  	
   

  	
  Shares (ordinary shares of          each in

  the issued capital of the Company)

  	
   

  	
  Registered holder

  
	
  Premium Sino Finance Limited

  	
   

  	
   

  	
   

  	
  Premium Sino Finance Limited

  

 

27

 

SCHEDULE 2

FORM OF SUPPLEMENT

 

	
  From:

  	
  Premium Sino Finance Limited as Chargor

  	
   

  
	
   

  	
   

  	
   

  
	
  To:

  	
  [DB Trustees (Hong Kong)
  Limited] as Security Agent

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
  [                        ]

  	
   

  

 

SUPPLEMENT TO SHARE CHARGE

 

This Supplement now witnesses as follows:

 

We refer to the share charge dated [          ] between DB Trustees
(Hong Kong) Limited as security agent and Premium Sino
Finance Limited as chargor (as amended and/or supplemented from time
to time, the “Deed”).  Unless otherwise defined herein, terms and
expressions defined in or construed for the purposes of the Deed shall have the
same meaning in this Supplement.  This
Supplement is supplemental to the Deed.

 

Without prejudice to the provisions of the Deed, the Chargor hereby
charges as beneficial owner and by way of first fixed charge all its rights,
title and interest in and to the shares of and/or interests in the Company
specified in the Schedule hereto (the “Relevant
Additional Shares”) and the Related Assets relating thereto, in favour
of the Security Agent for the payment and discharge of all of the Secured
Obligations.

 

The provisions of Clauses 16 (Effectiveness of Security),
24 (Changes to Parties), 28 (Counterparts), 29 (Governing Law)
and 30 (Jurisdiction) of the Deed shall apply to
this Supplement as if set out in full herein mutatis
mutandis, and as if any reference therein to the Deed included a
reference to this Supplement.

 

IN WITNESS WHEREOF this Supplement has
been signed on behalf of the Security Agent and executed as a deed by the Chargor
and is intended to be and is hereby delivered by the Chargor as a deed on the
date specified above.

 

28

 

SIGNED, SEALED AND DELIVERED

as a DEED for and on behalf
of

and EXECUTED AS A DEED by

PREMIUM SINO FINANCE LIMITED

by

 

in the presence of:

 

 

(Name of witness)

 

Name:

 

Address:

 

 

Schedule

 

	
  Description of Relevant

  Additional Shares

  	
   

  	
  Share certificate

  number

  representing

  Relevant

  Additional

  Shares

  	
   

  	
  Registered Holder

  	
   

  	
  Beneficial Owner

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

29

 

SCHEDULE 3

 

SHARE
TRANSFER

 

The Undersigned, Premium
Sino Finance Limited, (the “Transferor”),
for value received does hereby transfer to
                                  
(the “Transferee”), the
              shares
standing in its name in the undertaking called SinoTech Energy Limited to hold
the same unto the Transferee.

 

	
  Signed by the
  Transferor

  	
   

  	
   

  
	
  in the presence
  of:

  	
   

  	
  ,

  
	
   

  	
  Premium
  Sino Finance Limited

  	
   

  

 

 

(Name of witness)

 

Name:

 

 

	
  Signed by the
  Transferee

  	
   

  	
   

  
	
  in the presence
  of:

  	
   

  	
  ,

  

 

 

(Name of witness)

 

Name:

 

 

Dated this             day of                20

 

30

 

SCHEDULE 4

 

LETTER
OF RESIGNATION

 

	
  To:

  	
  The
  Secretary

  
	
   

  	
  SinoTech
  Energy Limited

  
	
   

  	
  PO
  Box 309

  
	
   

  	
  Ugland
  House

  
	
   

  	
  Grand
  Cayman

  
	
   

  	
  Cayman
  Islands

  
	
   

  	
  KY1-1104

  

 

[ ]
201[ ]

 

Dear
Sirs

 

Letter of Resignation

 

I
hereby resign as a director of SinoTech Energy Limited (the “Company”) with effect from the date hereof
and confirm that I have no claims against the Company for loss of office,
arrears of pay or otherwise howsoever.

 

Yours
faithfully

 

 

	
   

  	
   

  
	
  [Director]

  	
   

  

 

31

 

LETTER
OF AUTHORISATION

 

To:          DB Trustees (Hong Kong) Limited (the
“Security Agent”)

 

[ ]
201[ ]

 

Dear
Sirs

 

Authorisation re Letter of Resignation

 

You
are hereby authorised to complete and date the letter of resignation I have
deposited with you today in respect of my directorship of SinoTech Energy
Limited by dating the same at any time after an Event of Default has occurred
(as defined in the Share Charge between Premium Sino Finance Limited and the
Security Agent dated
           day of
                    
2010).

 

Yours
faithfully

 

 

	
   

  	
   

  
	
  [Director]

  	
   

  

 

32

 

SCHEDULE 5

 

IRREVOCABLE
PROXY

 

SinoTech Energy Limited

 

The
undersigned, Premium Sino Finance Limited, being the legal owner of
           issued shares (the
“Shares”) in the share capital of
SinoTech Energy Limited (the “Company”),
a company incorporated in the Cayman Islands, hereby makes, constitutes and
appoints DB Trustees (Hong Kong) Limited (the “Attorney”) as the true and lawful attorney and proxy of the
undersigned with full power to appoint a nominee or nominees to act hereunder
from time to time and to vote the Shares represented by the Share Certificate(s) of
the Company at all general meetings of shareholders or stockholders of the
Company with the same force and effect as the undersigned might or could do and
to requisition and convene a meeting or meetings of the shareholders of the
Company for the purpose of appointing or confirming the appointment of new
directors of the Company and/or such other matters as may in the opinion of the
Attorney be necessary or desirable for the purpose of implementing the Share
Charge referred to below and the undersigned hereby ratifies and confirms all
that the said attorney or its nominee or nominees shall do or cause to be done
by virtue hereof.

 

The
Shares have been charged to the Attorney pursuant to a Share Charge dated
                    
2010 between Premium Sino Finance Limited and the Attorney (the “Share Charge”).

 

This
power and proxy is given to secure a proprietary interest of the donee of the
power or the performance of an obligation owed to the donee and is irrevocable
and shall remain irrevocable as long as the Share Charge is in force.

 

IN WITNESS whereof this instrument has been duly executed this [
] 2010 as a deed.

 

 

	
  [EXECUTED and

  	
  )

  	
   

  	
   

  
	
  DELIVERED as a DEED by

  	
  )

  	
   

  	
   

  
	
  Premium
  Sino Finance Limited

  	
  )

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  ]

  
	
   

  	
   

  	
  Director

  	
   

  

 

33

 

SCHEDULE 6

 

NOTICE
OF CHARGE

 

[letterhead of Premium Sino Finance
Limited]

 

	
  To:

  	
  SinoTech
  Energy Limited

  
	
   

  	
  PO
  Box 309

  
	
   

  	
  Ugland
  House

  
	
   

  	
  Grand
  Cayman

  
	
   

  	
  Cayman
  Islands

  
	
   

  	
  KY1-1104

  

 

[ ]
2010

 

Dear
Sirs

 

Re: Share Charge

 

We
hereby notify you that pursuant to a Share Charge dated
           day of
                    
2010 between us (the “Chargor”) and
DB Trustees (Hong Kong) Limited (the “Security Agent”)
(the “Share Charge”), the Chargor
has granted a security interest over the
           shares standing in
its name in SinoTech Energy Limited and at any time after the Security Agent
notifies you that an Event of Default (as defined in the Share Charge) has
occurred you may take such steps to register the Security Agent or its nominee
as the registered holder of the shares pursuant to the Share Charge.

 

Yours
faithfully

 

 

for
and on behalf of

Premium Sino Finance Limited

 

34

 

SCHEDULE 7

 

DIRECTOR’S
MEMORANDUM

 

SinoTech Energy Limited

PO Box 309

Ugland House

Grand Cayman

Cayman Islands

KY1-1104

 

To:          DB Trustees (Hong Kong) Limited (the
“Security Agent”)

 

[ ]
201[ ]

 

Dear
Sirs

 

Re: Share Charge

 

I
confirm that we have been instructed by Premium Sino Finance Limited (the “Chargor”) to make and have accordingly made an annotation of
the existence of the Share Charge between the Chargor and the Security Agent
noting the existence of the security interests created in favour of the
Security Agent, by the Share Charge in the Register of Members of SinoTech
Energy Limited.

 

Yours
sincerely

 

 

	
   

  	
   

  
	
  Director

  	
   

  

 

35

 

EXECUTION

 

THE CHARGOR

 

	
  SIGNED, SEALED AND DELIVERED

  	
   

  
	
  as a DEED for and on
  behalf of

  	
   

  
	
  and EXECUTED AS A DEED by

  	
   

  	
  L.S

  
	
  PREMIUM SINO FINANCE LIMITED

  	
   

  
	
  by

  	
   

  

 

	
  /s/ Liu Qingzeng

  	
   

  
	
   

  	
   

  
	
  in the presence of:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Ma Bowen

  	
   

  
	
   

  	
   

  
	
  (Name of witness)

  	
   

  

 

Name:  Ma Bowen

 

Address:  No. 19 Ronghua
South Road, Beijing Economic and Technological

 

Development Area, Beijing, P.R. China

 

 

	
  Address:

  	
  

  
	
   

  	
   

  
	
  Telephone:

  	
  +86-22-6635-1185

  
	
   

  	
   

  
	
  Fax:

  	
  +86-22-6635-1181

  
	
   

  	
   

  
	
  Attention:

  	
  Mr Liu Qingzeng

  

 

SIGNATURE PAGE TO SHARE
CHARGE OVER CAYMAN CO

 

 

The Security Agent

 

	
  SIGNED for and on behalf
  of

  	
   

  	
   

  
	
  DB TRUSTEES (HONG KONG) LIMITED

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Aric Kay-Russell

  	
   

  	
  /s/Ng Yue Min

  

 

	
  Address:

  	
  48/F, Cheung Kong Center, 2 Queen’s Road Central, Hong Kong

  
	
   

  	
   

  
	
   

  	
   

  
	
  Fax:

  	
  +852 2203 7320/7323

  
	
   

  	
   

  
	
  Attention:

  	
  Managing Director

  

 

SIGNATURE PAGE TO SHARE
CHARGE OVER CAYMAN COExhibit 10.42

 

	
  

  	
  

  

 

EXECUTION
COPY

 

 

DATED  OCTOBER 11, 2010

 

 

SINOTECH ENERGY LIMITED

as Chargor

 

 

in favour of

 

 

DB TRUSTEES
(HONG KONG) LIMITED

as Security Agent

 

 

	
   

  	
   

  	
   

  

 

 

CAYMAN CO DEBENTURE

 

 

	
   

  	
   

  	
   

  

 

 

CONTENTS

 

	
  Clause

  	
   

  	
  Page

  
	
   

  	
   

  
	
  1.

  	
  Definitions And Interpretation

  	
  1

  
	
  2.

  	
  Payment Of Secured
  Obligations

  	
  3

  
	
  3.

  	
  Fixed Charges, Assignments
  And Floating Charge

  	
  4

  
	
  4.

  	
  Crystallisation Of Floating
  Charge

  	
  5

  
	
  5.

  	
  Perfection Of Security

  	
  6

  
	
  6.

  	
  Further Assurance

  	
  9

  
	
  7.

  	
  Negative Pledge And
  Disposals

  	
  11

  
	
  8.

  	
  Investments

  	
  12

  
	
  9.

  	
  Accounts

  	
  13

  
	
  10.

  	
  Monetary Claims

  	
  14

  
	
  11.

  	
  Insurances

  	
  15

  
	
  12.

  	
  Real Property

  	
  18

  
	
  13.

  	
  General Undertakings

  	
  19

  
	
  14.

  	
  Enforcement Of Security

  	
  20

  
	
  15.

  	
  Powers Of Sale

  	
  20

  
	
  16.

  	
  Appointment Of Receiver Or
  Administrator

  	
  21

  
	
  17.

  	
  Powers Of Receiver

  	
  22

  
	
  18.

  	
  Application Of Monies

  	
  25

  
	
  19.

  	
  Receipt And Protection Of
  Purchasers

  	
  26

  
	
  20.

  	
  Power Of Attorney

  	
  26

  
	
  21.

  	
  Representations

  	
  27

  
	
  22.

  	
  Effectiveness Of Security

  	
  29

  
	
  23.

  	
  Release Of Security

  	
  31

  
	
  24.

  	
  Subsequent Security
  Interests

  	
  31

  
	
  25.

  	
  Currency Conversion And
  Indemnity

  	
  32

  
	
  26.

  	
  Costs, Expenses And
  Indemnity

  	
  32

  
	
  27.

  	
  Payments Free Of Deduction

  	
  33

  
	
  28.

  	
  Discretion And Delegation

  	
  33

  
	
  29.

  	
  Set-Off

  	
  33

  
	
  30.

  	
  Changes To Parties

  	
  34

  
	
  31.

  	
  Amendments And Waivers

  	
  35

  
	
  32.

  	
  Perpetuity Period

  	
  35

  
				

 

i

 

	
  33.

  	
  Notices

  	
  35

  
	
  34.

  	
  Counterparts

  	
  35

  
	
  35.

  	
  Governing Law

  	
  35

  
	
  36.

  	
  Jurisdiction

  	
  35

  
	
   

  	
   

  	
   

  
	
  SCHEDULE
  1 FORM OF NOTICE OF ASSIGNMENT OF INSURANCE

  	
  37

  
	
   

  	
   

  
	
  SCHEDULE
  2 FORM OF NOTICE OF CHARGE OF ACCOUNTS

  	
  41

  

 

ii

 

THIS DEBENTURE is made on

 

BY

 

(1)         SINOTECH ENERGY LIMITED,
an exempted company incorporated in the Cayman Islands with company number
241866 (the “Chargor”)

 

in favour of

 

(2)         DB TRUSTEES (HONG KONG) LIMITED  as security trustee for the Secured Parties on the terms and conditions
set out in the Security Trust Deed (the “Security Agent”,
which expression shall include its successors, assigns and transferees).

 

NOW THIS DEBENTURE WITNESSES as follows:

 

1.           DEFINITIONS
AND INTERPRETATION

 

1.1         Definitions

 

Unless otherwise defined in this Debenture or
unless the context otherwise requires, terms and expressions defined in or
construed for the purposes of the Security Trust Deed shall bear the same
meanings when used herein.  In addition:

 

“Account” means
any account (including, without limitation, any subdivision or sub-account
thereof) opened or maintained by the Chargor with any bank, financial
institution or other person (and any replacement, renewal and/or re-designation
thereof), the debt or debts represented thereby together with (in each case)
all Related Rights.

 

“Charged Property”
means all the assets and/or undertaking of the Chargor which from time to time
are the subject of the security created or expressed to be created in favour of
the Security Agent by or pursuant to this Debenture.

 

“Collateral Rights”
means all rights, powers and remedies of the Security Agent provided by or
pursuant to this Debenture or by law.

 

“Effective Date” has the meaning ascribed thereto in the deed
of amendment dated                                           in relation to the
Security Trust Deed.

 

“Facility Agreement”
means the facility agreement dated 8 January 2010 made between, among others,
Tianjin New Highland Science and Technology Development Co., Ltd. as borrower, Superport Limited, Deutsche Bank AG, Hong Kong Branch as arranger,
calculation agent and facility agent and DB Trustees (Hong Kong) Limited as
security agent, as amended and restated by an amendment agreement dated 11 January 2010 and a
second amendment agreement dated                              made between, among others, Tianjin New Highland
Science and Technology Development Co., Ltd. as borrower and Deutsche Bank AG,
Hong Kong Branch as facility agent.

 

“Fixed Charge
Property” has the meaning ascribed thereto in Clause 7.2 (No Disposal of Interests).

 

“Insurance Policy”
means any policy of insurance in which the Chargor may from time to time have
an interest.

 

1

 

“Intellectual Property”
means any patents, trade marks, service marks, designs, business names,
copyrights, design rights, moral rights, inventions, confidential information,
knowhow and other intellectual property rights and interests, whether
registered or unregistered, the benefit of all applications and rights to use
such assets and all Related Rights.

 

“Investments”
means:

 

(a)             any
stocks, shares, debentures, securities and/or other investments;

 

(b)            all
interests in collective investment schemes;

 

(c)             all
warrants, options and/or other rights to subscribe for or acquire any
Investments; and/or

 

(d)            all
other Equity Interests in any person,

 

(in each case) whether held directly by or to
the order of the Chargor or by any trustee, nominee, fiduciary or clearance
system on its behalf (including, without limitation, the Shares) and all
Related Rights (including without limitation all rights against any such
trustee, nominee, fiduciary or clearance system); provided that “Investments” shall exclude
any shares in Holdco (which are or will be the subject of Transaction Security
under one or more Transaction Finance Documents).

 

“Monetary Claims”
means any book and/or other debts and/or monetary claims owing to the Chargor
and any proceeds thereof (including without limitation any claims or sums of
money deriving from or in relation to any Intellectual Property, any Investment, the proceeds of any Insurance Policy, any court order
or judgment, any other contract or agreement to which the Chargor is a party
and any other assets, property, rights or undertaking of the Chargor).

 

“Real Property”
means:

 

(a)             any
real or immovable property (whether freehold, leasehold or otherwise); and/or

 

(b)            any
buildings, fixtures, fittings, fixed plant or machinery from time to time
situated on or forming part of such real or immovable property,

 

and includes all Related Rights.

 

“Receiver” means
a receiver or receiver and manager or an administrative receiver of the whole
or any part of the Charged Property and that term will include any appointee
made under a joint and/or several appointment.

 

“Related Rights”
means, in relation to any asset:

 

(a)             the
proceeds of sale of any part of that asset;

 

(b)            all
rights under any licence, agreement for sale, lease or other disposal in
respect of that asset;

 

2

 

(c)             all
rights, powers, benefits, claims, contracts, warranties, remedies, Security,
guarantees, indemnities and/or covenants for title in respect of that asset;

 

(d)            any
moneys and proceeds paid or payable in respect of that asset; and/or

 

(e)             (in
the case where such asset comprises any share, equity interest or other
security) all dividends, distributions, interest and monies payable in respect
thereof and any rights, assets, shares and/or securities deriving therefrom or
accruing thereto whether by way of redemption, bonus, preference, option,
substitution, conversion or otherwise.

 

“Secured Obligations” has the meaning given to it in the
Security Trust Deed.

 

“Security Trust Deed” means the security
trust deed dated 11 January 2010 between, among others, Tianjin New Highland
Science and Technology Development Co., Ltd., Deutsche Bank AG, Hong Kong
Branch as Facility Agent and DB Trustees (Hong Kong) Limited as Security Agent,
as amended by a deed of amendment dated                               .

 

“Tangible Moveable Property”
means any plant, machinery, office equipment, computers, vehicles and other
chattels (excluding any for the time being forming part of the Chargor’s stock
in trade or work in progress) and all Related Rights.

 

1.2         Construction

 

In this Debenture:

 

1.2.1         the rules of construction set out in clauses 1.3 (Construction) of the Security Trust Deed
shall apply to this Debenture mutatis
mutandis;

 

1.2.2         any reference to the Chargor, the Facility Agent, the
Security Agent or any or all of the Secured Parties shall be construed so as to
include its or their (and any subsequent) successors and any permitted assigns
and transferees in accordance with their respective interests;

 

1.2.3         any reference to the Security Trust Deed or any other
agreement or instrument shall be a reference to the Security Trust Deed or that
other agreement or instrument as amended or novated from time to time; and

 

1.2.4         save where the context otherwise requires, references
in this Debenture to any Clause or Schedule shall be to a clause or schedule
contained in this Debenture.

 

1.3         Designation

 

This is the Cayman Co Debenture as defined in the Facility Agreement.

 

2.           PAYMENT
OF SECURED OBLIGATIONS

 

2.1         Covenant
to Pay

 

The Chargor covenants with the Security Agent
that it shall pay, discharge and satisfy each of the Secured Obligations on
their due date in accordance with their respective terms provided that neither
such covenant nor the Security constituted by this Debenture

 

3

 

shall extend to or include any liability or sum
which would, but for this proviso, cause such covenant or Security to be
unlawful or prohibited by any applicable law.

 

2.2         Interest
on Demands

 

If the Chargor fails to pay any sum on the due
date for payment of that sum the Chargor shall pay interest on such sum (before
and after any judgment and to the extent interest at a default rate is not
otherwise being paid on such sum) from the date of demand until the date of
payment of such sum in full by the Chargor, calculated on a daily basis at the
rate determined in accordance with the provisions of clause 9.3 (Default Interest) of the Facility Agreement (for such
purpose only, in the form subsisting as at the date of this Debenture).

 

3.           FIXED
CHARGES, ASSIGNMENTS AND FLOATING CHARGE

 

3.1         Fixed
Charges

 

The Chargor hereby charges as beneficial owner
with full title guarantee in favour of the Security Agent as trustee for the
Secured Parties, as security for the payment and discharge of the Secured
Obligations, by way of first fixed charge (which so far as it relates to land
in Hong Kong shall be and take effect as a charge by way of legal charge to the
extent that the Chargor’s interest therein constitutes a legal estate) all the
Chargor’s right, title and interest from time to time in and to each of the
following assets:

 

3.1.1         the Real Property;

 

3.1.2         the Tangible Moveable Property;

 

3.1.3         the Accounts;

 

3.1.4         any and all goodwill of the Chargor and rights in
relation to the uncalled capital of the Chargor;

 

3.1.5         the Intellectual Property;

 

3.1.6         the Investments and all Related Rights (excluding any
equity interest in any entity established in the PRC but including, to the
extent permitted under applicable PRC laws and regulations, Related Rights
relating to such equity interest); and

 

3.1.7         all Monetary Claims and all Related Rights other than
those which are otherwise subject to a valid assignment (at law or in equity)
pursuant to this Debenture.

 

3.2         Assignments

 

The Chargor hereby assigns and agrees to assign
absolutely as beneficial owner with full title guarantee to the Security Agent
as trustee for the Secured Parties as security for the payment and discharge of
the Secured Obligations, by way of security with first ranking priority, all
the Chargor’s right, title and interest from time to time in and to the
Insurance Policies and all Monetary Claims and Related Rights in relation
thereto.

 

4

 

3.3         Floating
Charge

 

3.3.1         The Chargor hereby charges as beneficial owner with
full title guarantee in favour of the Security Agent as trustee for the Secured
Parties, as security for the payment and discharge of the Secured Obligations,
by way of first floating charge, all present and future assets and undertaking
of the Chargor.

 

3.3.2         The floating charge created by Clause 3.3.1 above
shall be deferred in point of priority to all fixed Security (whether by way of
charge or assignment) validly and effectively created by the Chargor under the
Transaction Finance Documents in favour of the Security Agent as trustee for
the Secured Parties as security for the Secured Obligations.

 

4.           CRYSTALLISATION
OF FLOATING CHARGE

 

4.1         Crystallisation:  By Notice

 

The Security Agent may at any time by notice in
writing to the Chargor convert any floating charge created under this Debenture
with immediate effect into a fixed charge as regards any property or assets
specified in the notice if:

 

4.1.1         an Event of Default has occurred and is continuing; or

 

4.1.2         the Security Agent considers that any of the Charged
Property may be in jeopardy or in danger of being seized or sold pursuant to
any form of legal process; or

 

4.1.3         the Security Agent considers that it is desirable in
order to protect the priority of the Security constituted by this Debenture.

 

4.2         Crystallisation:  Automatic

 

Notwithstanding Clause 4.1 (Crystallisation: 
By Notice) and without prejudice to any law which may have a
similar effect, any floating charge created by this Debenture will
automatically be converted (without notice) with immediate effect into a fixed
charge as regards all the assets subject to the floating charge if:

 

4.2.1         the Chargor creates or attempts to create any Security
(other than Security that is permitted under this Debenture and that is
permitted under the Facility Agreement), over any of the Charged Property; or

 

4.2.2         any person levies or attempts to levy any distress,
execution or other process against any of the Charged Property; or

 

4.2.3         a petition is presented for the compulsory winding-up
of the Chargor; or

 

4.2.4         a meeting is convened for the passing of a resolution
for the voluntary winding-up of the Chargor; or

 

4.2.5         an application is presented or made for a warrant of
execution, writ of fieri facias,
garnishee order or charging order in respect of any of the assets of the
Chargor; or

 

5

 

4.2.6         a resolution is passed or an order is made for the
winding-up, dissolution, administration or re-organisation of the Chargor; or

 

4.2.7         any event occurs under the laws of any jurisdiction
having a similar or analogous effect to any of those events referred to in
sub-clauses 4.2.3 to 4.2.6.

 

5.           PERFECTION
OF SECURITY

 

5.1         Perfection

 

5.1.1         The
Chargor shall,
immediately after execution of this Debenture, enter particulars of the
security created hereby in its register of mortgages and charges and deliver a
copy of such register to the Security Agent.

 

5.1.2         If at any time after the date of this Debenture, the
Chargor applies to have itself registered as a non-Hong Kong company under Part XI of the Companies Ordinance (Cap.
32), it shall forthwith notify the Security Agent.  Without prejudice to the foregoing, upon its
being registered as a non-Hong Kong company
under Part XI of the Companies Ordinance (Cap. 32), it shall (a) forthwith
notify the Security Agent and provide the Security Agent with the details of
such registration and (b) promptly (and in any case within five weeks after the
date of such registration) take all steps to comply with the requirements under
section 91(5) of the Companies Ordinance (Cap. 32) in respect of this Debenture
and the security created hereby.

 

5.2         Notices
of Assignment

 

The Chargor shall deliver to the Security Agent
(or procure the delivery to the Security Agent of):

 

5.2.1         (in respect of each Insurance Policy subsisting at the
date of this Debenture) on or prior to the Effective Date:

 

(a)       a notice of
assignment to the insurer(s) under such Insurance Policy substantially in the
form of Schedule 1 (Form Of Notice Of
Assignment Of Insurance) (or otherwise in form and substance
satisfactory to the Security Agent) duly executed by, or on behalf of, the
Chargor and each other insured party under such Insurance Policy; and

 

(b)       an acknowledgment to
such notice of assignment, duly executed by or behalf of each such insurer, in
the form of the acknowledgment attached to such notice of assignment;

 

5.2.2         (in respect of each Insurance Policy effected or
coming into existence after the date of this Debenture) forthwith upon the
effecting or coming to existence of such Insurance Policy:

 

(a)       a notice of
assignment to the insurer(s) under such Insurance Policy substantially in the
form of Schedule 1 (Form Of Notice Of
Assignment Of Insurance) (or otherwise in form and substance
satisfactory to the Security Agent) duly executed by, or on behalf of, the
Chargor and each other insured party under such Insurance Policy; and

 

6

 

(b)       an acknowledgment to
such notice of assignment, duly executed by or behalf of each such insurer, in
the form of the acknowledgment attached to such notice of assignment; and

 

5.2.3         in respect of any other asset which is the subject of
an assignment pursuant to Clause 3.2 (Assignments)
promptly upon the request of the Security Agent from time to time, a notice of
assignment in respect of such asset in such form as the Security Agent may
require, and the Chargor shall procure that such notice is promptly
acknowledged (in accordance with the terms of such notice) by each person to
whom such notice is expressed to be given and promptly deliver such executed
acknowledgment to the Security Agent.

 

5.3         Notices
of Charge

 

5.3.1         The Chargor shall deliver to the Security Agent (or
procure the delivery to the Security Agent of):

 

(a)       in respect of each
Account that has already been established on or before the Effective Date (other than any Account opened or maintained by the
Chargor with the Security Agent), a notice of charge substantially in the form
of Schedule 2 (Form Of Notice Of charge of
Accounts) (or otherwise in form and substance satisfactory to the
Security Agent) on or prior to the Effective Date, duly executed by or on behalf of the Chargor, and the acknowledgement
thereto (in accordance with the terms of such notice) duly executed by or on
behalf of each of the banks, financial institutions and/or persons with which
such Account is opened or maintained; and

 

(b)       in respect of each
Account that is established after the Effective Date, a notice of charge substantially in the form of Schedule 2 (Form Of Notice Of charge of Accounts) (or
otherwise in form and substance satisfactory to the Security Agent) promptly
upon such establishment, duly executed by or on behalf of the Chargor, and the
Chargor shall ensure that such notice is promptly duly acknowledged (in
accordance with the terms of such notice) by or on behalf of each of the banks,
financial institutions and/or persons with which such Account is opened or
maintained and promptly deliver a copy of such acknowledgement to the Security
Agent.

 

5.3.2         The execution of this Debenture by the Chargor and the
Security Agent shall constitute notice to the Security Agent of the charge
created over any Account opened or maintained with the Security Agent from time
to time.

 

5.3.3         The Chargor shall deliver to the Security Agent (or
procure the delivery to the Security Agent of), in respect of any other asset
which is the subject of a charge pursuant to Clause 3.3 (Floating Charge) or any fixed charge
arising from conversion (whether automatic or by notice) of any floating charge
created hereunder a notice of charge in respect of such asset in such form as
the Security Agent may require from time to time promptly upon demand of the
Security Agent, and procure that such notice is promptly duly acknowledged (in
accordance with the terms of such notice) by or on behalf of each person to

 

7

 

 

whom
such notice is expressed to be given, and shall promptly deliver such executed
acknowledgment to the Security Agent.

 

5.4         Real
Property:  Delivery of Documents of Title

 

The Chargor shall:

 

5.4.1         on or prior to the Effective Date, deliver to the Security Agent (or procure the delivery to the Security
Agent of) all deeds, certificates and other documents of title relating to all
Real Property held by or on behalf of the Chargor at the date of this
Debenture; and

 

5.4.2         forthwith upon the acquisition by the Chargor of any
interest in any Real Property, deliver to the Security Agent (or procure the
delivery to the Security Agent of) all deeds, certificates and other documents
of title relating to such interest and execute in favour of the Security Agent
such charge or Security over such Real Property in such form as the Security
Agent may require as security for the Secured Obligations (in addition to this
Debenture).

 

The Security Agent shall be entitled to hold
and retain all such deeds, certificates and other documents of title delivered
pursuant to this Clause 5.4 (Real
Property:  Delivery of Documents of Title)
during the subsistence of this Debenture.

 

5.5         Further
Advances

 

Subject
to the terms of the Facility Agreement each Lender is under an obligation to
make further advances to the Borrower in accordance with the provisions of the
Facility Agreement and that obligation will be deemed to be incorporated into
this Debenture as if set out in this Debenture.

 

5.6         Insurance:  Delivery of Insurance Policies

 

The Chargor shall, promptly upon the request of
the Security Agent, deposit or procure the deposit of all Insurance Policies
with the Security Agent.

 

5.7         Investments:  Delivery of Documents of Title

 

The Chargor shall:

 

5.7.1         on or prior to the Effective Date, deposit with the Security Agent (or procure the deposit with the
Security Agent of) the following in respect of the Investments existing as at
the date of this Debenture (excluding any Investment in the form of equity
interest in any entity established in the PRC):

 

(a)       all certificates or
other documents of title to such Investments;

 

(b)       undated share
transfer forms or, as the case may be, other appropriate instruments of
transfer in respect of such Investments executed in blank by or on behalf of
the Chargor  in such form as the Security Agent may request;

 

(c)       (in the case of any
Investments constituting any shares in any company incorporated in Hong Kong
(including without limitation the Shares)) undated sold notes in respect of
such Investments executed in blank by or on behalf of the Chargor;

 

8

 

(d)       an acknowledgment
from each person (if any) holding any of the Investments as its nominee  in such form as the Security Agent may request; and

 

(e)       such other documents in respect of such Investments which are necessary
or desirable to facilitate the exercise of any collateral Rights in connection
with such Investments (as notified to the Chargor by the Security Agent in
writing prior to the date of this Debenture);

 

5.7.2         promptly upon any acquisition of any Investments
and/or the accrual, offer or issue of any stocks, shares, warrants or other
securities in respect of or derived from any Investments (excluding any such
items in the form of equity interest in any entity established in the PRC),
notify the Security Agent of that occurrence and procure the delivery to the
Security Agent of:

 

(a)       all certificates and
other documents of title representing such items;

 

(b)       undated share
transfer forms or, as the case may be, other appropriate instruments of
transfer in respect of such items executed in blank by or on behalf of the
Chargor, in each case in such form as the Security Agent shall request;

 

(c)       (in the case of any
shares in any company incorporated in Hong Kong) undated sold notes in respect
of such shares executed in blank by or on behalf of the Chargor;

 

(d)       an acknowledgment from each person (if any) holding
such items as its nominee in such form as the Security Agent shall request; and

 

(e)       such other documents in respect of such items which are necessary or
desirable to facilitate the exercise of any collateral Rights in connection
with such items (as notified to the Chargor by the Security Agent in writing
prior to the date of this Debenture);

 

5.7.3         procure that, where any nominee holding any Investment
(excluding any equity interest in any entity established in the PRC) ceases to
be or act as such, the successor nominee (or, if more than one, each successor
nominee) shall forthwith execute and deliver to the Security Agent an
acknowledgment in respect of such Investment in such form as the Security Agent shall
require.

 

5.8         Intellectual
Property

 

The
Chargor shall, if requested by the Security Agent, execute all such documents
and do all acts that the Security Agent may require to record the interest of
the Security Agent in any registers relating to any registered Intellectual
Property.

 

6.           FURTHER
ASSURANCE

 

6.1         Further
Assurance:  General

 

6.1.1         The Chargor shall promptly at its own cost do all such
acts and/or execute all such documents (including without limitation
assignments, transfers, mortgages, charges, notices and instructions) as the
Security Agent may specify 

 

9

 

(and in such form as the Security Agent may require in favour of the
Security Agent or its nominee(s)):

 

(a)       to perfect the
Security created or intended to be created in respect of the Charged Property
(which may include, without limitation, the execution by the Chargor of a
mortgage, charge or assignment over all or any of the assets constituting, or
intended to constitute, any part of Charged Property) or for the exercise of
the Collateral Rights;

 

(b)       to confer on the
Security Agent Security over any property and assets of the Chargor located in
any jurisdiction outside Hong Kong equivalent or similar to the Security
intended to be conferred by or pursuant to this Debenture;

 

(c)       to confer on the
Security Agent the Security contemplated herein over any Real Property (or any
interest therein) acquired after the date hereof; and/or

 

(d)       to facilitate the
realisation of the Charged Property.

 

6.2         Necessary
Action

 

The Chargor shall from time to time take all
such action (whether or not requested to do so by the Security Agent) as is or
shall be available to it (including without limitation obtaining and/or
effecting all Authorisations) as may be necessary for the purpose of the
creation, perfection, protection or maintenance of any Security conferred or
intended to be conferred on the Security Agent by or pursuant to this
Debenture.

 

6.3         Consents

 

The Chargor shall:

 

6.3.1         deliver to the Security Agent promptly upon execution
of this Debenture, all consents necessary to enable the assets (which are in
existence at the date of this Debenture and expressed to be subject to a fixed
charge or an assignment pursuant to Clause 3 (Fixed
Charges, Assignments and Floating Charge)  to be the subject of an effective fixed
charge or, as the case may be, assignment pursuant to Clause 3 (Fixed Charges, Assignments and Floating Charge);
and

 

6.3.2         obtain and deliver to the Security Agent, promptly
upon acquisition of any assets or the coming into existence of any assets of
the Chargor after the date of this Debenture (which assets, in either case, are
expressed to be subject to a fixed charge or an assignment pursuant to Clause 3
(Fixed Charges, Assignments and Floating
Charge), all consents necessary to enable such assets to be the
subject of an effective fixed charge or, as the case may be, assignment
pursuant to Clause 3 (Fixed Charges,
Assignments and Floating Charge).

 

6.4         Implied
Covenants for Title

 

The obligations of the Chargor under this
Debenture shall be in addition to any covenants for title deemed to be included
in this Debenture under the Conveyancing and Property Ordinance (Cap. 219)
and/or general law.

 

10

 

7.           NEGATIVE
PLEDGE AND DISPOSALS

 

7.1         Negative
Pledge

 

The Chargor undertakes that it shall not, at
any time during the subsistence of this Debenture, create or permit to subsist
any Security or Quasi-Security over all or any part of the Charged Property,
except (only in the case of any asset that does not constitute Fixed Charge
Property or any part thereof) Permitted Security.

 

7.2         No
Disposal of Interests

 

The Chargor undertakes that, save as permitted
under the Facility Agreement, it shall not and shall not agree to at any time
during the subsistence of this Debenture:

 

7.2.1         execute or enter into any conveyance, transfer, lease,
assignment or disposal of, or other right to use or occupy, all or any part of
the Charged Property which is expressed to be subject to any fixed charge or
assignment pursuant to Clause 3.1 (Fixed
Charges) or 3.2 (Assignments)
or any fixed charge arising upon any crystallisation of any floating charge
created hereunder (collectively the “Fixed
Charge Property”) or any agreement for any of the foregoing;

 

7.2.2         create any legal or equitable estate or other interest
in, or over, or otherwise relating to, all or any part of the Fixed Charge
Property;

 

7.2.3         grant or vary, or accept any surrender, or
cancellation or disposal of, any lease, tenancy, licence, consent or other
right to occupy in relation to all or any part of the Fixed Charge Property;

 

7.2.4         allow any person any right to use or occupy or to
become entitled to assert any proprietary interest in, or right over, all or
any of the Fixed Charge Property;

 

7.2.5         sell, transfer or otherwise dispose of any Charged
Property (other than any Fixed Charge Property) other than as permitted under
the Facility Agreement (in the form subsisting as at the date of this
Debenture); or

 

7.2.6         assign or otherwise dispose of any interest in any
Account (and, without prejudice to the foregoing, no right, title or interest
in relation to any Account maintained with the Security Agent, or the credit
balance standing to any such Account shall be capable of assignment or other
disposal).

 

7.3         Other
adverse actions

 

The Chargor undertakes that it shall not, at
any time during the subsistence of this Debenture:

 

7.3.1         create, grant or permit to subsist any restriction on
the ability of the Security Agent to transfer or realise, all or any of his
right, title and interest in the Charged Property or any part thereof; or

 

7.3.2         do or permit to be done any act or thing which could
reasonably be expected to jeopardise the rights of the Security Agent in the
Charged Property or any part thereof or which could reasonably be expected to
adversely and affect or diminish the value of the Charged Property or any part
thereof.

 

11

 

8.           INVESTMENTS

 

8.1         Investments:
dividends

 

8.1.1         Any and all dividends and/or distributions received,
recovered, paid or delivered to the order of the Chargor in respect of any or
all of the Investments (including, without limitation, any equity interest in
any entity established in the PRC) at any time on or after the occurrence of an
Event of Default (as long as any Event of Default is continuing) shall be
promptly paid and delivered to (and the Chargor shall promptly deliver such
dividends and/or distributions to) the Security Agent for application in
accordance with this Debenture.

 

8.1.2         Without prejudice to the foregoing, the Chargor shall
promptly inform the Security Agent of the receipt of any dividend or
distribution (whether or not in cash) in respect of any or all of the
Investments (including, without limitation, any equity interest in any entity
established in the PRC).

 

8.2         Investments:  Before Event of Default

 

Prior to the occurrence of an Event of Default
which is continuing the Chargor shall be entitled to exercise all voting rights
in relation to any or all of the Investments (excluding any equity interest in
any entity established in the PRC) provided that
the Chargor shall not exercise such voting rights in any manner, or otherwise
permit or agree to any (a) variation of the rights attaching to or conferred by
any of the Investments or (b) increase in the issued share capital, registered
capital or equity interest of any company, corporation or entity whose
shares/securities/equity interests are charged or subject to security under
this Debenture, except (in the case of such increase) where such increase is
permitted under the Facility Agreement and any and all such additional shares,
registered capital or equity interests are paid for in full and immediately
made subject to the security constituted under this Debenture upon their
issuance.

 

8.3         Investments:  After Event of Default

 

The Security Agent may, upon and/or after the
occurrence of an Event of Default (as long as any Event of Default is
continuing), at its discretion (in the name of the Chargor or otherwise and
without any further consent or authority from the Chargor):

 

8.3.1         exercise (or refrain from exercising) any voting
rights in respect of the Investments (excluding any Investment in the form of
any equity interest in any entity established in the PRC);

 

8.3.2         apply all dividends, distributions, interest and other
monies arising from all or any of the Investments (including without
limitation, any Investment in the form of any equity interest in any entity
established in the PRC to the extent permitted under applicable laws and
regulations of the PRC) in accordance with Clause 18 (Application of Monies);

 

8.3.3         transfer all or any of the Investments (excluding any
Investment in the form of any equity interest in any entity established in the
PRC) into the name of such nominee(s) of the Security Agent as it shall think
fit; and

 

8.3.4         exercise (or refrain from exercising) the powers and
rights conferred on or exercisable by the legal or beneficial owner of the
Investments, including

 

12

 

without limitation the right, in relation to any company, corporation or
entity whose shares, equity interests or other securities are included in the
Charged Property or any part thereof, to concur or participate in:

 

(a)       the reconstruction,
amalgamation, sale or other disposal of such company, corporation or entity or
any of its assets or undertaking (including without limitation the exchange,
conversion or reissue of any shares, equity interests or securities as a
consequence thereof);

 

(b)       the release,
modification or variation of any rights or liabilities attaching to such
shares, equity interests or securities; and

 

(c)       the exercise,
renunciation or assignment of any right to subscribe for any shares, equity
interests or securities,

 

in
each case in such manner and on such terms as the Security Agent may think fit,
and the proceeds of any such action shall form part of the Charged Property and
may be applied by the Security Agent in accordance with Clause 18 (Application of Monies).

 

8.4         Investments:  Payment of Calls

 

The Chargor shall pay when due all calls or
other payments which may be or become due in respect of any of the Investments,
and in any case of default by the Chargor in such payment, the Security Agent
may, if it thinks fit, make such payment on behalf of the Chargor in which case
any sums paid by the Security Agent shall be reimbursed by the Chargor to the
Security Agent on demand and shall carry interest from the date of payment by
the Security Agent until reimbursed in full at the rate and in accordance with
Clause 2.2 (Interest on Demands).

 

8.5         Investments:  Exercise of Rights

 

The Chargor shall not exercise any of its
rights and powers in relation to any of the Investments in any manner which, in
the opinion of the Security Agent, would prejudice the value of, or the ability
of the Security Agent to realise, the Security created by this Debenture.

 

9.           ACCOUNTS

 

9.1         Accounts:  Notification and Variation

 

The Chargor, during the subsistence of this
Debenture:

 

9.1.1         shall deliver to the Security Agent on the date of
this Debenture (and, if any change occurs thereafter, on the date of such
change), details of each Account maintained by it with any bank, financial
institution or entity (other than those maintained with the Security Agent);
and

 

9.1.2         shall not, without the Security Agent’s prior written
consent, permit or agree to any variation of the rights attaching to any
Account or close any Account.

 

13

 

9.2         Accounts:  Operation Before Default

 

Without prejudice to the Collateral Rights, as
long as no Default is continuing, the Chargor may from time to time withdraw
amounts from any Account subject to the terms of the Finance Documents.

 

9.3         Accounts:  Operation After Default

 

9.3.1         At any time while any Default is continuing, the
Chargor may not withdraw or transfer any amount from any Account except with
the prior written consent of the Security Agent.

 

9.3.2         Without prejudice to any other Collateral Rights, the
Security Agent shall, as long as any Default is continuing, be entitled without
notice or further demand, immediately to exercise all the rights, powers and
remedies possessed by it according to law as legal and beneficial owner of any
and all amounts standing to the credit of the Accounts (and as assignee and/or
chargee of the Chargor’s right, title and interest therein and thereto) and to:

 

(a)       demand and receive
all and any monies standing to the credit of any or all of the Accounts; and/or

 

(b)       apply, transfer or
set-off any or all of the credit balances from time to time on any or all of
the Accounts in or towards the payment or other satisfaction of all or part of
the Secured Obligations in accordance with Clause 18 (Application of Monies).

 

9.4         Accounts:
set-off

 

Without prejudice to any other Collateral
Rights, the Security Agent shall from time to time be entitled, without notice
or demand to or on the Chargor, to set-off, apply or transfer any or all of the
amounts standing to the credit of any or all of the Accounts (held or
maintained by the Chargor with the Security Agent) against, or in or towards
the satisfaction of all or any part of the Secured Obligations when such
Secured Obligations are due and payable but unpaid.

 

10.         MONETARY
CLAIMS

 

The Chargor shall not at any time during the
subsistence of the Debenture, without the prior written consent of the Security
Agent:

 

(a)             deal
with any Monetary Claims except that the Chargor may (subject to the other
provisions of the Finance Documents) get in and realise any Monetary Claims in
a prudent manner and pay the proceeds of those Monetary Claims into an Account
or as the Security Agent may require (and such proceeds shall be held upon
trust by the Chargor for the Security Agent on behalf of the Secured Parties
prior to such payment in); or

 

(b)            factor
or discount any of the Monetary Claims or enter into any agreement for such
factoring or discounting.

 

14

 

11.         INSURANCES

 

11.1       Insurance:
Insurances Required to be Effected

 

The Chargor shall at all times during the
subsistence of this Debenture effect and maintain insurance in accordance with
the provisions of the Facility Agreement.

 

11.2       Insurance:
Terms of Insurance

 

The Chargor undertakes with the Security Agent
(for and on behalf of the Secured Parties) that it shall ensure that each of
the insurances required to be effected and maintained pursuant to Clause 11.1 (Insurance: Insurances Required to be Effected)
and/or any other provision of the Transaction Documents shall be:

 

11.2.1       effected in the name of the Chargor or, if required by the Security
Agent, in the joint names of the Chargor and the Security Agent (and/or such
other person(s) as the Security Agent may nominate), provided that (in each
case) the interest of the Security Agent shall be duly noted on such insurance;

 

11.2.2       endorsed with appropriate “loss-payee” clauses to the effect that the
proceeds of such insurance shall be paid in accordance with Clause 11.3 (Insurance:  Payment of Proceeds);

 

11.2.3       on terms that the relevant insurer undertakes to notify the Security
Agent of:

 

(a)       any amendment,
variation, cancellation, suspension, termination or expiry of such insurance at
least fourteen (14) days before such amendment, variation, cancellation,
suspension, termination or expiry (as the case may be) is due to take effect;

 

(b)       without prejudice to
sub-Clause 11.2.3(a), any default by any insured party in the payment of any
premium or other sum payable by it under such insurance as soon as reasonably
practicable after such default; and

 

(c)       any failure by any
insured party to renew such insurance due to expire at least fourteen (14) days
prior to such expiry;

 

11.2.4       on terms that none of the Security Agent or any other Secured Party
shall be liable for the payment of any premium or other sum payable in
connection with, or for any obligation of the Chargor under or in connection
with, such insurance;

 

11.2.5       on terms that such insurance shall not be invalidated or prejudiced as
against a mortgagee or security holder by any misrepresentation, act, omission,
neglect or failure to make disclosure on the part of any insured person or its
agents or any tenant, lessee, licensee or occupier of any of the Charged
Property or by any circumstances beyond the control of any insured party;

 

11.2.6       on terms that each relevant insurer waives any and all rights of
subrogation which it may otherwise have against any or all of the Security
Agent (as loss payee or otherwise), the insured parties and/or their respective
subsidiaries, affiliates, officers and employees; and

 

15

 

11.2.7       on terms that (other than any unpaid premium) each relevant insurer
waives any and all rights of set-off, deduction and/or counterclaim which it
may otherwise have in respect of any insurance proceeds payable (or payable but
for such right of set-off, deduction and/or counterclaim) to any insured party
and/or the Security Agent (as loss-payee or otherwise).

 

11.3       Insurance:  Payment of Proceeds

 

In relation to each Insurance Policy, the
Chargor shall procure that, subject to the provisions of the Facility
Agreement:

 

11.3.1       at all times prior to the service of a notice by or on behalf of the
Security Agent on the relevant insurer to the effect that an Event of Default
has occurred and is continuing or this Debenture has become enforceable, the
proceeds of:

 

(a)       any third party
liability insurance which provides for direct payment of the relevant proceeds
to the relevant third party shall be paid to such third party, unless the
Chargor shall have otherwise discharged its liability to such third party in
which case such proceeds shall be paid to the Chargor for its reimbursement;
and

 

(b)       any other insurance
shall be paid:

 

(i)        to the Chargor (subject to the provisions of the Facility Agreement) for
application towards the repair, replacement, rebuilding and/or reinstatement of
the Charged Property and/or making good the loss or damage in respect of which
such insurance has been effected within 3 Months of its receipt of such
proceeds; or

 

(ii)       if so directed by the Security Agent, to the Security Agent; and

 

11.3.2       at all times after the service of a notice by or on behalf of the
Security Agent on the relevant insurer to the effect that an Event of Default
has occurred and is continuing or this Debenture has become enforceable, the
proceeds of:

 

(a)       any third party
liability insurance which provides for direct payment of the relevant proceeds
to the relevant third party shall be paid to such third party, unless the
Chargor shall have otherwise discharged its liability to such third party in
which case such proceeds shall be paid to the Security Agent; and

 

(b)       any other insurance
shall be paid to the Security Agent.

 

11.4       Insurance:  General Undertakings

 

At all times during the subsistence of this
Debenture, the Chargor shall:

 

11.4.1       promptly pay all premiums and other moneys payable under all Insurance
Policies and promptly upon request, produce to the Security Agent a copy of
each Insurance Policy and evidence (acceptable to the Security Agent) of the
payment of such premiums and monies;

 

16

 

11.4.2       do all such things and take such steps as may be necessary to ensure
that all insurances required to be effected pursuant to any or all of the
Transaction Documents (including without limitation this Debenture) are so
effected and remain in full force and effect;

 

11.4.3       not at any time do or omit to do anything whereby any Insurance Policy
would be likely to be rendered invalid, void, voidable, unenforceable,
suspended, impaired or liable to forfeiture, cancellation or termination or
render any sum paid out thereunder repayable in whole or in part or otherwise
prejudice or materially adversely affect the Security Agent’s rights in
connection therewith;

 

11.4.4       procure that no material amendment or variation to the terms of any
insurance required to be effected pursuant to the Transaction Documents
(including without limitation this Debenture) shall be made without the prior
written consent of the Security Agent and that, without prejudice to the
foregoing, no reduction in limit or coverage or increase in deductibles or
excesses in relation to any such insurance shall be made without the prior
written consent of the Security Agent;

 

11.4.5       notify the Security Agent of any circumstance of which the Chargor has
knowledge (giving full details thereof) which give rise or may give rise to a
claim under any Insurance Policy which exceeds or is likely to exceed
USD1,000,000 (or the equivalent thereof) and thereafter from time to time
inform the Security Agent as to the conduct and progress of each such claim;
and

 

11.4.6       upon the request of the Security Agent, provide such information as the
Security Agent may require in connection with any Insurance Policy.

 

11.5       Application
of Insurance Proceeds

 

Where the Chargor shall have received any
proceeds of any Insurance Policy which ought to have been paid to the Security
Agent pursuant to Clause 11.3 (Insurance: Payment of
Proceeds), the Chargor shall promptly pay over such proceeds to the
Security Agent and shall at all times prior to such payment hold the same on
trust for the Security Agent.

 

11.6       Insurance:
Handling of Claims

 

The Chargor shall, at all times prior to the
occurrence of an Event of Default which is continuing, be entitled to make and deal
with all claims in respect of any or all of the Insurance Policies except for
any settlement, waiver, discontinuance of compromise of any claim in an amount
of not less than USD1,000,000 (or the equivalent thereof) which shall require
the prior written consent of the Security Agent.  After the occurrence of an Event of Default
(as long as any Event of Default is continuing), the Chargor shall cease to be
entitled to make or deal with any claim in respect of any Insurance Policy and
the Security Agent shall be entitled to (but shall not be obliged to) make or
deal with any such claim at its discretion to the exclusion of the Chargor.

 

17

 

 

11.7       Insurance:
Default

 

If the Chargor defaults in complying with any
of the foregoing provisions of this Clause 11 (Insurances),
the Security Agent may effect or renew any relevant insurance on such terms, in
such name(s) and in such amount(s) and/or take any steps to remedy such default
as it considers appropriate, and all moneys expended by the Security Agent in
doing so shall be reimbursed by the Chargor to the Security Agent on demand and
shall carry interest from the date of payment by the Security Agent until
reimbursed in full at the rate specified in Clause 2.2 (Interest on Demands).

 

12.         REAL
PROPERTY

 

12.1       General
Property Undertaking

 

The Chargor shall:

 

12.1.1       repair and keep in good and substantial repair and condition to the
satisfaction of the Security Agent all the Real Property at any time forming
part of the Charged Property;

 

12.1.2       not at any time without the prior written consent of the Security Agent
sever or remove any of the fixtures forming part of such Real Property or any
fitting, plant or machinery (other than work in progress) on or in the Charged
Property (except for the purpose of any necessary repairs or replacement
thereof);

 

12.1.3       not, except with the prior written consent of the Security Agent, use or
permit the use of such Real Property or any part thereof for purposes other
than those for which it may be lawfully used;

 

12.1.4       comply with and observe and perform (i) all applicable laws and all
applicable requirements of all planning and environmental legislation, regulations
and bye-laws relating to such Real Property or any part thereof, (ii) any
conditions attaching to any planning permissions and/or consents relating to or
affecting such Real Property or any part thereof, (iii) any notices, orders
and/or directives orders made or issued by any planning, environmental or other
public body in respect of such Real Property or any part thereof and (iv) all
restrictive and other covenants, stipulations and obligations now or at any
time affecting such Real Property or any part thereof insofar as they are
subsisting and capable of being enforced; and

 

12.1.5       within fourteen days after the receipt by the Chargor of any material
application, requirement, demand, order, directive or notice served or given by
any government department or any other competent authority with respect to such
Real Property or any part thereof give notice of and deliver a copy of the same
to the Security Agent, and thereafter keep the Security Agent informed from
time to time of the steps/actions taken in relation to the same.

 

18

 

12.2       Lease
Covenants

 

The Chargor shall, in relation to any lease,
agreement for lease or other right to occupy to which all or any part of the
Charged Property is at any time subject:

 

12.2.1       pay the rents (if the Chargor is the lessee or the beneficiary of such
right to occupy) and observe and perform in all material respects the
covenants, conditions and obligations imposed (if the Chargor is the lessor or
the grantor of such right to occupy) on the lessor or, (if the Chargor is
lessee or the beneficiary of such right to occupy) on the lessee;

 

12.2.2       (where the Chargor is the lessor or the grantor of such right to occupy)
duly and efficiently enforce all of its rights and remedies against any tenant,
lessee, licensee or occupier of all of any part of such Charged Property; and

 

12.2.3       (where the Chargor is the lessee or the beneficiary of such right to
occupy) not do any act or thing whereby any lease or other document which gives
any right to occupy any part of the Charged Property becomes or may become
subject to determination or any right of re-entry or forfeiture prior to the
expiration of its term.

 

12.3       Entitlement
to Remedy

 

If the Chargor fails to comply with any of the
undertakings contained in this Clause 12 (Real
Property), the Security Agent shall be entitled (with such agents,
contractors and others as it sees fit), without becoming a mortgagee in
possession, to do such things as may in the opinion of the Security Agent be
required to remedy such failure and all monies spent by the Security Agent in
doing so shall be reimbursed by the Chargor on demand with interest from the
date of payment by the Security Agent until reimbursed in full in accordance
with Clause 2.2 (Interest on Demands).

 

13.         GENERAL
UNDERTAKINGS

 

13.1       Intellectual
Property

 

The Chargor shall during the subsistence of
this Debenture in respect of any and all Intellectual Property (including,
including without limitation, the Relevant Trademarks):

 

13.1.1       take all such steps and do all such acts as may be necessary to preserve
and maintain the subsistence and the validity of any such Intellectual
Property;

 

13.1.2       use reasonable endeavours to prevent any infringement in any material
respect of such Intellectual Property;

 

13.1.3       make registrations and pay all registration fees and taxes necessary to
maintain such Intellectual Property in full force and effect and record its
interest in such Intellectual Property;

 

13.1.4       not use or permit any such Intellectual Property to be used in any way
or take any step or omit to take any step in respect of such Intellectual
Property which could reasonably be expected to materially and adversely affect
the existence or value of such Intellectual Property or imperil the right of
any member of the Group to use such Intellectual Property;

 

19

 

13.1.5       not discontinue the use of such Intellectual Property; and

 

13.1.6       not sell, lease, license or otherwise dispose of any its rights in
respect of such Intellectual Property.

 

13.2       Information
and Access

 

The Chargor shall from time to time on request
of the Security Agent, furnish the Security Agent with such information as the
Security Agent may require about the Chargor’s business and affairs, the
Charged Property and/or the Chargor’s compliance with the terms of this
Debenture and the Chargor shall permit the Security Agent, its representatives,
professional advisers and contractors, free access at all reasonable times and
on reasonable notice to (a) inspect and take copies and extracts from the
books, accounts and records of the Chargor and (b) to view the Charged Property
or any part thereof (without becoming liable as mortgagee in possession).

 

14.         ENFORCEMENT
OF SECURITY

 

14.1       Enforcement

 

Upon and after the occurrence of an Event of
Default (as long as any Event of Default is continuing) or if the Chargor
requests the Security Agent to exercise any of its powers under this Debenture,
the Security created by or pursuant to this Debenture is immediately
enforceable and the Security Agent may, without notice to the Chargor or prior
authorisation from any court, in its absolute discretion:

 

14.1.1       enforce all or any part of such Security (at the times, in the manner
and on the terms it thinks fit) and take possession of and hold or dispose of
all or any part of the Charged Property; and

 

14.1.2       whether or not it has appointed a Receiver, exercise all or any of the
powers, authorities and discretions conferred by the Conveyancing and Property
Ordinance (Cap. 219) (as varied or extended by this Debenture) on mortgagees
and by this Debenture on any Receiver or otherwise conferred by law on
mortgagees and/or Receivers.

 

14.2       No
Liability as Mortgagee in Possession

 

Neither the Security Agent nor any Receiver
shall be liable to account as a mortgagee in possession in respect of all or
any part of the Charged Property or be liable for any loss upon realisation or
for any neglect, default or omission in connection with the Charged Property to
which a mortgagee or a mortgagee in possession might otherwise be liable.

 

15.         POWERS OF
SALE

 

15.1       Extension
of Powers

 

The power of sale or other disposal conferred
on the Security Agent and on any Receiver by this Debenture shall operate as a
variation and extension of the statutory power of sale under Sections 51 and 53
of the Conveyancing and Property Ordinance (Cap. 219) and such power shall
arise (and the Secured Obligations shall be deemed due and payable for that
purpose) on execution of this Debenture.

 

20

 

15.2       Restrictions

 

The restrictions contained in paragraph 11 of
the Fourth Schedule to the Conveyancing and Property Ordinance (Cap. 219) shall
not apply to this Debenture or to the exercise by the Security Agent of its
right to consolidate all or any of the Security created by or pursuant to this
Debenture with any other Security in existence at any time or to its power of
sale, which powers may be exercised by the Security Agent without notice to the
Chargor on or at any time after the occurrence of an Event of Default (as long
as any Event of Default is continuing). Any restrictions on the consolidation
of Security shall be excluded to the fullest extent permitted by law.

 

15.3       Power of
Leasing

 

The statutory powers of leasing, surrendering
leases and accepting surrenders of leases conferred by the Fourth Schedule to
the Conveyancing and Property Ordinance (Cap. 219) may be exercised by the
Security Agent at any time on or after the occurrence of an Event of Default
(as long as any Event of Default is continuing) and, without prejudice to the
foregoing, the Security Agent and/or any Receiver may, whether or not the
Security Agent and/or such Receiver shall then be in possession of the relevant
property proposed to be leased/let/made subject to the relevant option, make
any lease or agreement for lease, accept surrenders of leases and/or grant
options on such terms (including without limitation as to premium and length of
term) as it shall think fit, without the need to comply with any
requirements/restrictions imposed by the Fourth Schedule to the Conveyancing
and Property Ordinance (Cap. 219).

 

16.         APPOINTMENT
OF RECEIVER OR ADMINISTRATOR

 

16.1       Appointment
and Removal

 

Upon and after the occurrence of an Event of
Default (as long as any Event of Default is continuing) or if requested to do
so by the Chargor, the Security Agent may by deed or otherwise (acting through
an authorised officer of the Security Agent), without prior notice to the Chargor:

 

16.1.1       appoint one or more persons to be a Receiver of the whole or any part of
the Charged Property;

 

16.1.2       appoint two or more Receivers of separate parts of the Charged Property;

 

16.1.3       remove (so far as it is lawfully able) any Receiver so appointed; and/or

 

16.1.4       appoint another person(s) as an additional or replacement Receiver(s).

 

16.2       Capacity
of Receivers

 

Each person appointed to be a Receiver pursuant
to Clause 16.1 (Appointment and Removal)
shall be:

 

16.2.1       entitled to act individually or together with any other person appointed
or substituted as Receiver;

 

16.2.2       for all purposes deemed to be the agent of the Chargor which shall be
solely responsible for his acts, defaults and liabilities and for the payment
of his

 

21

 

remuneration
and no Receiver shall at any time act as agent for the Security Agent; and

 

16.2.3       entitled to remuneration for his services at a rate to be fixed by the
Security Agent from time to time.

 

16.3       Statutory
Powers of Appointment

 

The powers of appointment of a Receiver herein
contained shall be in addition to all statutory and other powers of appointment
of the Security Agent under the Conveyancing and Property Ordinance (Cap. 219)
(as varied and extended by this Debenture) or otherwise and such powers shall
remain exercisable from time to time by the Security Agent in respect of all or
any part of the Charged Property.

 

17.         POWERS OF
RECEIVER

 

17.1       Powers of
Receiver

 

Every Receiver shall (subject to any restrictions
in the instrument appointing him but notwithstanding any winding-up or
dissolution of the Chargor) have and be entitled to exercise, in relation to
the Charged Property (and any assets of the Chargor which, when got in, would
be Charged Property) or that thereof in respect of which he was appointed, and
as varied and extended by the provisions of this Debenture (in the name of or
on behalf of the Chargor or in his own name and, in each case, at the cost of
the Chargor):

 

17.1.1       all the powers conferred by the Conveyancing and Property Ordinance
(Cap. 219) on mortgagors and on mortgagees in possession and on receivers
appointed under that Ordinance;

 

17.1.2       all the powers and rights of an absolute owner and power to do or omit
to do anything which the Chargor itself could do or omit to do; and

 

17.1.3       the power to do all things (including without limitation bringing or
defending proceedings in the name or on behalf of the Chargor) which seem to
the Receiver to be incidental or conducive to (a) any of the functions, powers,
authorities or discretions conferred on or vested in him or (b) the exercise of
any Collateral Rights (including without limitation realisation of all or any
part of the Charged Property) or (c) bringing to his hands any assets of the
Chargor forming, or which when got in would be, part of the Charged Property.

 

17.2       Additional
Powers of Receiver

 

In addition to and without prejudice to the
generality of the foregoing, every Receiver shall (subject to any limitations
or restrictions expressed in the instrument appointing him but notwithstanding
any winding-up or dissolution of the Chargor) have the following powers in
relation to the Charged Property (and any assets of the Chargor which, when got
in, would be part of the Charged Property), in respect of which he was
appointed (and every reference in this Clause 17.2 to the “Charged
Property” shall be read as a reference to that part of the Charged
Property in respect of which such Receiver was appointed):

 

22

 

17.2.1       Take Possession

 

power to enter upon, take immediate possession
of, collect and get in the Charged Property including without limitation rents
and other income whether accrued before or after the date of his appointment
and for that purpose to make, or to require the directors of the Chargor to
make, calls conditionally or unconditionally upon the holders of the Chargor’s
share capital in respect of any such capital of the Chargor which remains
uncalled and to enforce payment of calls so made and any previous unpaid calls
by taking proceedings in the name of the Chargor or in his own name;

 

17.2.2       Proceedings and Claims

 

power to bring, prosecute, enforce, defend and
abandon applications, claims, disputes, actions, suits and proceedings in
connection with the business of the Chargor or all or any part of the Charged
Property or the Debenture in the name of the Chargor or in his own name and to
submit to arbitration, negotiate, compromise and settle any such applications,
claims, disputes, actions, suits or proceedings and in addition to take or
defend proceedings for the compulsory winding-up of the Chargor and proceedings
for directions under Section 255 of the Companies Ordinance (Cap. 32);

 

17.2.3       Carry on Business

 

power to carry on and manage, or concur in the
carrying on and management of or to appoint a manager of, the whole or any part
of the Chargor’s business in such manner as he shall in his absolute discretion
think fit including without limitation the power to enter into any contract or
arrangement and to perform, repudiate, rescind or vary any contract to which
the Chargor is a party and power to supervise, control and finance any
subsidiary of the Chargor or any other body corporate (including without
limitation any referred to in Clause 17.2.6 below) and its business and the
conduct thereof and to change the situation of the registered office of the
Chargor or any such subsidiary or other body corporate;

 

17.2.4       Deal with Charged Property

 

without the need to observe the restrictions
imposed by paragraph 11 of the Fourth Schedule to the Conveyancing and Property
Ordinance (Cap. 219), power, in relation to the Charged Property and each and
every part thereof, to sell, transfer, convey, grant or accept surrenders of
leases, vary, terminate or surrender leases, grant, vary or terminate licences
or rights of user (in each case with or without consideration) or concur in any
of the foregoing by the Chargor or any other receiver or manager of the Chargor
(including without limitation to or in relation to the Security Agent or any of
the other Secured Parties) in such manner and generally on such terms as he
thinks fit including without limitation, without the consent of the Chargor,
the severing and separate disposal from the premises to which they were affixed
of fixtures and plant and machinery;

 

23

 

17.2.5       Acquisitions

 

power to purchase, lease, hire or otherwise
acquire any assets or rights of any description which he shall in his absolute
discretion consider necessary or desirable for the carrying on, improvement or
realisation of the whole or any part of the Charged Property or the business of
the Chargor or otherwise for the benefit of the whole or any part of the
Charged Property;

 

17.2.6       New Subsidiary

 

power to promote, procure the formation or
otherwise acquire the share capital of, any body corporate with a view to such
body corporate becoming a subsidiary of the Chargor or otherwise and
purchasing, leasing or otherwise acquiring an interest in the whole or any part
of the Charged Property or carrying on any business in succession to the
Chargor or any subsidiary of the Chargor;

 

17.2.7       Landlord and Tenant

 

power to make allowances to and re-arrangements
with any lessees, tenants or other persons from whom any rents and profits may
be receivable (including granting any licences and operating any rent reviews)
and to exercise any powers and discretions conferred on a landlord or a tenant
by any statutory provision or by general law from time to time in force in
relation to all or any part of the Charged Property;

 

17.2.8       Repairs etc

 

power to undertake, effect or complete any work
of repair, refurbishment, decoration, modification, building, improvement or
development of all or any part of the Charged Property as he may think
expedient and to apply for and obtain any planning permissions, building
regulation approvals and any other permissions, consents or licences in each
case as he may in his absolute discretion think fit and to acquire (or acquire
an interest in) any such property as he may think expedient;

 

17.2.9       Insurance

 

power to effect, maintain or renew indemnity
and other insurances and to obtain bonds and performance guarantees;

 

17.2.10     Employment

 

power to employ, engage, dismiss or vary the
terms of employment or engagement of such employees, workmen, servants,
officers, managers, agents and advisers on such terms as to remuneration and
otherwise as he shall think fit including without limitation power to engage
his own firm in the conduct of the receivership;

 

24

 

17.2.11     Borrowing

 

power to raise or borrow money from the
Security Agent or any of the other Secured Parties or any other person to rank
either in priority to the Security constituted by this Debenture or any part of
it or otherwise and with or without a mortgage or charge on the Charged
Property or any part of it on such terms as he shall in his absolute discretion
think fit (and no person lending such money shall be concerned to see or
enquire as to the propriety or purpose of the exercise of such power or the
application of money so raised or borrowed);

 

17.2.12     Redemption of Security

 

power to redeem, discharge or compromise any
Security whether or not having priority to the Security constituted by this
Debenture or any part of it;

 

17.2.13     Covenants, Guarantees and Indemnities

 

power to enter into bonds, covenants,
guarantees, commitments, indemnities and other obligations or liabilities as he
shall think fit, to make all payments needed to effect, maintain or satisfy
such obligations or liabilities and to use the company
seal of the Chargor; and

 

17.2.14     Exercise of Powers in the Chargor’s Name

 

power to exercise any or all of the above
powers on behalf of and in the name of the Chargor (notwithstanding any
winding-up or dissolution of the Chargor) or on his own behalf.

 

17.3       Terms of
Disposition

 

In making any sale or other disposal of all or
any part of the Charged Property or any acquisition in the exercise of their
respective powers (including without limitation a disposal by a Receiver to any
subsidiary of the Chargor or other body corporate as is referred to in Clause
17.2.6) a Receiver or the Security Agent may accept or dispose of as, and by
way of consideration for, such sale or other disposal or acquisition, cash,
shares, loan capital or other obligations, including without limitation
consideration fluctuating according to or dependent upon profit or turnover and
consideration the amount whereof is to be determined by a third party.  Any such consideration may, if thought
expedient by the Receiver or the Security Agent, be nil or may be payable or
receivable in a lump sum or by instalments. 
Any contract for any such sale, disposal or acquisition by the Receiver
or the Security Agent may contain conditions excluding or restricting the
personal liability of the Receiver or the Security Agent.

 

18.         APPLICATION
OF MONIES

 

18.1       Order of
Application

 

Save as otherwise expressly provided in this
Debenture, all moneys received or recovered by the Security Agent or any
Receiver pursuant to this Debenture or the powers conferred by it shall
(subject to the claims of any person having prior rights thereto and subject to
Clause 18.2 (Suspense Account), and by way of
variation of the

 

25

 

Conveyance and Property Ordinance (Cap. 219))
be applied in accordance with clause 6 (Application of Proceeds)
of the Security Trust Deed.

 

18.2       Suspense
Account

 

All monies received, recovered or realised
under this Debenture by the Security Agent or any Receiver or the powers
conferred by it (including the proceeds of any conversion of currency) may in
its discretion be credited to and held in any suspense or impersonal account
pending their application from time to time in or towards the discharge of any
of the Secured Obligations in accordance with Clause 18.1 (Order of Application).

 

18.3       Application
by the Chargor

 

Any application under this Clause 18 shall
override any application by the Chargor.

 

19.         RECEIPT
AND PROTECTION OF PURCHASERS

 

19.1       Receipt
and Consideration

 

The receipt of the Security Agent or any
Receiver shall be conclusive discharge to a purchaser of any part of the
Charged Property from the Security Agent or such Receiver and in making any
sale or disposal of any part of the Charged Property or making any acquisition,
the Security Agent or any Receiver may do so for such consideration, in such
manner and on such terms as it thinks fit.

 

19.2       Protection
of Purchasers

 

No purchaser or other person dealing with the
Security Agent or any Receiver shall be bound to inquire whether the right of
the Security Agent or such Receiver to exercise any of its powers has arisen or
become exercisable or be concerned with any propriety or regularity on the part
of the Security Agent or such Receiver in such dealings.  The protection given to purchasers from a
mortgagee in Sections 52 and 55 of the Conveyancing and Property Ordinance
(Cap. 219) shall apply equally to purchaser(s) and other person(s) dealing with
the Security Agent or any Receiver.

 

20.         POWER OF
ATTORNEY

 

20.1       Appointment
and Powers

 

The Chargor by way of security irrevocably
(within the meaning of Section 4 of the Powers of Attorney Ordinance (Cap. 31))
appoints the Security Agent and any Receiver severally, upon or after the
occurrence of an Event of Default (as long as any Event of Default is
continuing), to be its attorney and in its name, on its behalf and as its act
and deed to execute, deliver and perfect all documents and do all things which
the Security Agent or such Receiver may consider to be necessary for:

 

20.1.1       carrying out any obligation imposed on the Chargor by this Debenture or
any other agreement binding on the Chargor to which the Security Agent is party
(including without limitation the execution and delivery of any deeds, charges,
assignments or other Security and any transfers of the Charged Property or any
part thereof); and

 

20.1.2       enabling the Security
Agent and any Receiver to exercise, or delegate the exercise of, any of the
rights, powers and authorities conferred on them by or pursuant to this
Debenture or by law (including, without limitation, upon or

 

26

 

after the occurrence of an Event of Default (as long as any Event of
Default is continuing), the exercise of any right of a legal or beneficial
owner of the Charged Property or any part thereof).

 

20.2       Ratification

 

The Chargor shall ratify and confirm all things
done and all documents executed by any attorney in the exercise or purported
exercise of all or any of his powers.

 

21.         REPRESENTATIONS

 

21.1       Representations

 

The Chargor represents and warrants to the
Security Agent that:

 

21.1.1       it is an exempted  company incorporated with limited liability and validly existing under the laws of the Cayman Islands; and

 

21.1.2       subject to any general principles of law as at the date of this
Debenture limiting its obligations which are specifically referred to in any
legal opinion delivered pursuant to the terms of the Second Amendment Agreement:

 

(a)       each of the
obligations expressed to be assumed by it in this Debenture are legal, valid,
binding and enforceable obligations; and

 

(b)       (without limiting the
generality of Clause 21.1.2(a) above), this Debenture creates the security
interests which it purports to create and such security interests are valid and
effective;

 

21.1.3       the entry into and performance by it of, and the transactions
contemplated by, this Debenture do not and will not:

 

(a)       conflict with any law
or regulation applicable to it;

 

(b)       conflict with its
constitutional documents;

 

(c)       conflict with any
agreement or instrument binding upon it or any of its assets; or

 

(d)       result in the
existence of or oblige it to create any Security over all or any of its assets
(other than the Security constituted pursuant to this Debenture);

 

21.1.4       it has the power to enter into, perform and deliver, and has taken all
necessary action to authorise its entry into, performance and delivery of, this
Debenture;

 

21.1.5       no limit on its powers will be exceeded as a result of the grant of
Security contemplated by this Debenture;

 

21.1.6       all Authorisations required or desirable:

 

(a)       to enable it lawfully
to enter into, exercise its rights and comply with its obligations in this
Debenture;

 

27

 

 

(b)       to make this
Debenture admissible in evidence in its jurisdiction of incorporation and/or
Hong Kong; and/or

 

(c)       to enable it to
create the Security expressed to be created by it pursuant to this Debenture
and to ensure that such Security has the priority and ranking it is expressed
to have,

 

have been obtained or effected and are in full
force and effect;

 

21.1.7       the choice of the laws of Hong Kong as the governing law of this
Debenture will be recognised and enforced in its jurisdiction of incorporation
and in the Hong Kong courts;

 

21.1.8       any judgment obtained in the Hong Kong courts in relation to this
Debenture will, subject to the legal qualifications specifically referred to in
any legal opinion delivered pursuant to Clause 5 (Conditions of Utilisation) of the Facility Agreement, be
recognised and enforced in its jurisdiction of incorporation and/or Hong Kong;

 

21.1.9       under the law of its jurisdiction of incorporation it is not necessary
that this Debenture be filed, recorded or enrolled with any court or other
authority in that jurisdiction or that any stamp, registration or similar tax be paid on or in relation to this Debenture, except for any stamp duty
payable in the Cayman Islands specifically referred to in any legal opinion
accepted pursuant to Schedule 1 (Conditions Precedent)
to the second amendment agreement to the Facility Agreement;

 

21.1.10     there are no restrictions on the Chargor’s ability to assign all or any
of its rights under any Insurance Policy, whether contained in any Insurance
Policy or in any other document (except any Finance Document, and except for
any consent of any counterparty to any Insurance Policy which has already been
obtained);

 

21.1.11     all consents necessary to enable any asset that is expressed to be
subject to any fixed charge or assignment under Clause 3 (Fixed Charges, Assignments and Floating Charge)
to be the subject of an effective fixed charge or, as the case may be,
assignment pursuant to Clause 3 (Fixed
Charges, Assignments and Floating Charge) have been obtained and are
in full force and effect;

 

21.1.12     it has obtained all consents necessary to ensure that no other party to
any agreement or arrangement entered into by the Chargor becomes or shall
become entitled to terminate or rescind such agreement or arrangement as a
consequence of the Chargor entering into this Debenture;

 

21.1.13     it is, and will be, the sole legal and beneficial owner of the Charged
Property (subject to the Security constituted pursuant to this Debenture);

 

21.1.14     it has not sold or otherwise disposed of, or created, granted or
permitted to subsist any Security over, all or any of its right, title and
interest in the Charged Property (other than the Security constituted pursuant
to this Debenture and other than as expressly permitted under this Debenture); and

 

28

 

21.1.15     as at the date of this Debenture, the Chargor is not registered as a
non-Hong Kong company under Part XI of the Companies Ordinance (Cap. 32) nor
has it made any application to be so registered.

 

21.2       Repetition

 

All of the representations and warranties in
Clause 21.1 (Representations) are
made by the Chargor to the Security Agent on the date of this Debenture and
each of the representations and warranties set out in sub-Clauses 21.1.1 to
21.1.14 above shall be deemed to be repeated by the Chargor on the date of each
Utilisation Request, on each Utilisation Date and on the first day of each
Interest Period relating to each Loan and (for so long as the Release Date has
not occurred) on each date falling on the last day of each successive period of
three Months from and including the Facility Release Date, in each case by
reference to the facts and circumstances existing at the date on which such
representation or warranty is deemed to be made or repeated.

 

22.         EFFECTIVENESS
OF SECURITY

 

22.1       Continuing
Security

 

The Security created by or pursuant to this
Debenture shall remain in full force and effect as a continuing security for
the Secured Obligations unless and until discharged by the Security Agent.  No part of the Security from time to time
intended to be constituted by this Debenture will be considered satisfied or
discharged by any intermediate payment, discharge or satisfaction of the whole
or any part of the Secured Obligations.

 

22.2       Cumulative
Rights

 

The Security created by this Debenture and the
Collateral Rights shall be cumulative, in addition to and independent of every
other Security which any or all of the Secured Parties may at any time hold for
any or all of the Secured Obligations or any rights, powers and remedies
provided by law.  No prior Security held
by any Secured Party over the whole or any part of the Charged Property shall
merge into the Security constituted by this Debenture.

 

22.3       Chargor’s
Obligations

 

None of the obligations of the Chargor under
this Debenture or the Collateral Rights shall be affected by an act, omission,
matter, thing or event which, but for this Clause 22.3, would reduce, release
or prejudice any of its obligations under this Debenture (without limitation
and whether or not known to it or any Secured Party) including:

 

22.3.1       any time, waiver or consent granted to, or composition with, any Obligor
or other person;

 

22.3.2       the release of any Obligor or any other person under the terms of any
composition or arrangement with any creditor of any member of the Group;

 

22.3.3       the taking, variation, compromise, exchange, renewal or release of, or
refusal or neglect to perfect, take up or enforce, any rights against, or
Security over assets of, any Obligor or other person or any non-presentation or
non-observance of any formality or other requirement in respect of any
instrument or any failure to realise the full value of any Security;

 

29

 

22.3.4       any incapacity or lack of power, authority or legal personality of or
dissolution or change in the members or status of any Obligor or any other
person;

 

22.3.5       any amendment (however fundamental) or replacement of a Transaction
Document or any other document or Security or of the Secured Obligations;

 

22.3.6       any variation of the terms of the trust upon which the Security Agent
holds any Transaction Security;

 

22.3.7       any unenforceability, illegality or invalidity of any obligation of any
person under any Transaction Document or any other document or Security;

 

22.3.8       any insolvency or similar proceedings;

 

22.3.9       any claims or set-off right that the Chargor may have; or

 

22.3.10     any law, regulation or decree or order of any jurisdiction affecting any
Obligor.

 

22.4       Remedies
and Waivers

 

No failure on the part of the Security Agent to
exercise, or any delay on its part in exercising, any Collateral Right shall
operate as a waiver thereof, nor shall any single or partial exercise of any
Collateral Right preclude any further or other exercise of that or any other
Collateral Right.

 

22.5       No
Liability

 

None of the Security Agent, its nominee(s) or
any Receiver shall be liable by reason of (a) taking any action permitted by
this Debenture or (b) any neglect or default in connection with all or any part
of the Charged Property or (c) taking possession of or realising all or any
part of the Charged Property, except in the case of gross negligence or wilful
default upon its part (as finally judicially determined).

 

22.6       Partial
Invalidity

 

If, at any time, any provision of this
Debenture is or becomes illegal, invalid or unenforceable in any respect under
the law of any jurisdiction, neither the legality, validity or enforceability
of the remaining provisions of this Debenture under such laws nor of such
provision under the laws of any other jurisdiction shall in any way be affected
or impaired thereby and, if any part of the Security intended to be created by
or pursuant to this Debenture is invalid, unenforceable or ineffective for any
reason, that shall not affect or impair any other part of that Security.

 

22.7       No Prior
Demand

 

The Security Agent shall not be obliged to make
any demand of or enforce any rights or claim against any Obligor or any other person,
to take any action or obtain judgment in any court against any Obligor or any
other person or to make or file any proof or claim in a liquidation, bankruptcy
or insolvency of any Obligor or any other person or to enforce or seek to
enforce any other Security in respect of any or all of the Secured Obligations
before exercising any Collateral Right.

 

30

 

22.8       Deferral
of rights

 

Until the occurrence of the Release Date, the
Chargor will not (unless the Security Agent otherwise directs) exercise any
rights which it may have by reason of performance by it of its obligations
under this Debenture:

 

22.8.1       to be indemnified by any Obligor;

 

22.8.2       to claim any contribution from any guarantor of any Obligor’s obligations
under any or all of the Transaction Documents; and/or

 

22.8.3       to take the benefit (in whole or in part and whether by way of
subrogation or otherwise) of any rights of the Secured Parties under the
Transaction Documents or of any other guarantee or Security taken pursuant to,
or in connection with, the Transaction Documents by any Secured Party.

 

22.9       Settlement
conditional

 

Any settlement, discharge or release hereunder
in relation to the Chargor or all or any part of the Charged Property shall be
conditional upon no Security or payment by any or all of the Obligors to, or
recovery from any or all of the Obligors by, any or all of the Secured Parties
being avoided or reduced by virtue of any bankruptcy, insolvency, liquidation
or similar laws of general application or any similar event or for any other
reason and shall in those circumstances be void.

 

23.         RELEASE
OF SECURITY

 

23.1       Redemption
of Security

 

After the occurrence of the Release Date, the
Security Agent shall, at the request (with reasonable notice) and cost of the
Chargor, release and cancel the Security constituted by this Debenture and
procure the reassignment to the Chargor of the property and assets assigned to
the Security Agent pursuant to this Debenture (to the extent not otherwise
sold, assigned or otherwise disposed of or applied in accordance with this
Debenture), in each case subject to Clauses 23.2 (Avoidance of Payments) and 22.9 (Settlement conditional) and without recourse to, or any
representation or warranty by, the Security Agent or any of its nominees.

 

23.2       Avoidance
of Payments

 

If the Security Agent considers that any amount
paid or credited to or recovered by any Secured Party by or from any Obligor is
capable of being avoided or reduced by virtue of any bankruptcy, insolvency,
liquidation or similar laws, the liability of the Chargor under this Debenture
and the Security constituted by this Debenture shall continue and such amount
shall not be considered to have been irrevocably paid.

 

24.         SUBSEQUENT
SECURITY INTERESTS

 

If the Security Agent (acting in its capacity
as security agent or trustee or otherwise) or any of the other Secured Parties
at any time receives or is deemed to have received notice of any subsequent
Security or other interest affecting all or any part of the Charged Property or
any assignment or transfer of the Charged Property which is prohibited by the
terms of this Debenture or any Transaction Document, all payments thereafter by
or on behalf of any or all of the Obligors to the Security Agent (whether in

 

31

 

its capacity as security agent or trustee or
otherwise) or any of the other Secured Parties shall be treated as having been
credited to a new account of the Security Agent or, as the case may be, that
other Secured Party and not as having been applied in reduction of the Secured
Obligations as at the time when (or at any time after) the Security Agent or
any other Secured Party received such notice of such subsequent Security or
other interest or such assignment or transfer.

 

25.         CURRENCY
CONVERSION AND INDEMNITY

 

25.1       Currency
Conversion

 

For the purpose of or pending the discharge of
any of the Secured Obligations the Security Agent may convert any money
received, recovered or realised or subject to application by it under this
Debenture from one currency to another, as the Security Agent may think fit,
and any such conversion shall be effected at the Security Agent’s spot rate of
exchange (or, if so such spot of exchange is quoted by the Security Agent, such
other rate of exchange as may be available to the Security Agent) for the time
being for obtaining such other currency with such first-mentioned currency.

 

25.2       Currency
Indemnity

 

If any sum (a “Sum”)
owing by the Chargor under this Debenture or any order or judgment given or
made in relation to this Debenture has to be converted from the currency (the “First Currency”) in which such Sum is payable into another
currency (the “Second Currency”) for the purpose
of:

 

25.2.1       making or filing a claim or proof against the Chargor;

 

25.2.2       obtaining an order or judgment in any court or other tribunal;

 

25.2.3       enforcing any order or judgment given or made in relation to this
Debenture; or

 

25.2.4       applying the Sum in satisfaction of any of the Secured Obligations,

 

the Chargor shall indemnify the Security Agent
from and against any loss suffered or incurred as a result of any discrepancy
between (a) the rate of exchange used for such purpose to convert such Sum from
the First Currency into the Second Currency and (b) the rate or rates of
exchange available to the Security Agent at the time of such receipt or
recovery of such Sum.

 

26.         COSTS,
EXPENSES AND INDEMNITY

 

26.1       Costs and
expenses

 

The Chargor shall, on demand of the Security
Agent, reimburse the Security Agent on a full indemnity basis for all costs and
expenses (including legal fees and any value added tax) incurred by the
Security Agent in connection with (a) the execution of this Debenture or
otherwise in relation to this Debenture, (b) the perfection or enforcement of
the Security constituted by this Debenture and/or (c) the exercise of any
Collateral Right, together with interest from the date such costs and expenses
were incurred to the date of reimbursement of the same by the Chargor, calculated
in accordance with the provisions of the Facility Agreement (applying mutatis mutandis as if the same were an
Unpaid Sum thereunder).

 

32

 

26.2       Stamp
taxes

 

The Chargor shall pay all stamp, registration
and other Taxes to which this Debenture, the Security contemplated in this
Debenture and/or any judgment given in connection with this Debenture is, or at
any time may be, subject and shall, from time to time, indemnify the Security
Agent on demand against any liabilities, costs, claims and/or expenses
resulting from any failure to pay or delay in paying any such Tax.

 

26.3       Indemnity

 

The Chargor shall, notwithstanding any release
or discharge of all or any part of the Security constituted by this Debenture,
indemnify the Security Agent and each other Secured Party (through the Security
Agent), their respective agents, attorneys and any Receiver against any action,
proceeding, claims, losses, liabilities and costs which it may sustain as a
consequence of any breach by the Chargor of the provisions of this Debenture,
the exercise or purported exercise of any of the rights and powers conferred on
any of them by this Debenture or otherwise relating to the Charged Property or
any part thereof.

 

27.         PAYMENTS
FREE OF DEDUCTION

 

All payments to be made to the Security Agent
under this Debenture shall be made free and clear of and without deduction for
or on account of Tax unless the Chargor is required to make such payment
subject to the deduction or withholding of Tax, in which case the sum payable
by the Chargor in respect of which such deduction or withholding is required to
be made shall be increased to the extent necessary to ensure that, after the
making of such deduction or withholding, the person on account of whose
liability to Tax such deduction or withholding has been made receives and
retains (free from any liability in respect of any such deduction or
withholding) a net sum equal to the sum which it would have received and so
retained had no such deduction or withholding been made or required to be made.

 

28.         DISCRETION
AND DELEGATION

 

28.1       Discretion

 

Any liberty or power which may be exercised or
any determination which may be made under this Debenture by the Security Agent
or any Receiver may, subject to the terms and conditions of the Facility
Agreement, be exercised or made in its absolute and unfettered discretion
without any obligation to give reasons.

 

28.2       Delegation

 

Each of the Security Agent and any Receiver
shall have full power to delegate (either generally or specifically) the
powers, authorities and discretions conferred on it by this Debenture
(including without limitation the power of attorney under Clause 20 (Power of Attorney)) on such terms and
conditions as it shall see fit which delegation shall not preclude any
subsequent exercise, any subsequent delegation or any revocation of such power,
authority or discretion by the Security Agent or any Receiver.

 

29.         SET-OFF

 

The Security Agent may set off any matured
obligation due from the Chargor under any or all of the Transaction Documents
(to the extent beneficially owned by the Security

 

33

 

Agent) against any matured obligation owed by
the Security Agent to the Chargor, regardless of the place of payment, booking
branch or currency of either obligation. 
If such obligations are in different currencies, the Security Agent may
convert either obligation at a market rate of exchange in its usual course of business
for the purpose of such set-off.

 

30.         CHANGES
TO PARTIES

 

30.1       Successors

 

This Debenture shall be binding upon and enure
to the benefit of each party hereto and its and/or any subsequent successors
and permitted assigns and transferees. 
Without prejudice to the foregoing, this Debenture shall remain in
effect despite any amalgamation or merger (however effected) relating to the
Security Agent; and references to the Security Agent herein shall be deemed to
include any person who, under the laws of its jurisdiction of incorporation or
domicile, has assumed the rights and obligations of the Security Agent under
this Debenture or to which, under such laws, those rights and obligations have
been transferred.

 

30.2       No
Assignment or Transfer by the Chargor

 

The Chargor may not assign or transfer any or
all of its rights (if any) and/or obligations under this Debenture.

 

30.3       Assignment
and Transfer by Security Agent to Successor

 

The Security Agent may:

 

30.3.1       assign all or any of its rights under this Debenture; and

 

30.3.2       transfer all or any of its obligations (if any) under this Debenture,

 

to any successor Security Agent in accordance
with the provisions of the Security Trust Deed provided that it is acknowledged
that such transfer shall not in any way prejudice the priority of the Security
constituted by this Debenture (which shall be assigned to such successor
Security Agent pursuant to the terms of the Security Trust Deed).  Upon such assignment and transfer taking
effect, the successor Security Agent shall be and be deemed to be acting as
security agent and trustee for the Secured Parties for the purposes of this
Debenture and in place of the former Security Agent.

 

30.4       Assignment
by other Secured Parties

 

Each Secured Party (other than the Security
Agent) may assign all or any of its rights under this Debenture (whether direct
or indirect).  The Chargor irrevocably
and unconditionally confirms that:

 

30.4.1       it consents to any assignment or transfer by any Secured Party of its
rights and/or obligations made in accordance with the provisions of the
applicable Transaction Documents;

 

30.4.2       it shall continue to be bound by the terms of this Debenture,
notwithstanding any such assignment or transfer; and

 

30.4.3       the assignee or transferee of such Secured Party shall acquire an
interest in this Debenture upon such assignment or transfer taking effect.

 

34

 

30.5       Disclosure

 

The Chargor agrees to any disclosure of any
information made in accordance with clause 23.9 (Disclosure of information) of the Facility Agreement.

 

31.         AMENDMENTS AND WAIVERS

 

Any provision of this Debenture may be amended or
waived only by agreement in writing between the Chargor and the Security Agent.

 

32.         PERPETUITY
PERIOD

 

The perpetuity period under the rule against
perpetuities, if applicable to this Debenture, shall be the period of eighty
years from the date of the Facility Agreement.

 

33.         NOTICES

 

The provisions of Clause 30 (Notices) of the Facility Agreement in the
form subsisting as at the date of this Debenture shall apply to this Debenture mutatis mutandis.

 

34.         COUNTERPARTS

 

This Debenture may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument.

 

35.         GOVERNING
LAW

 

This Debenture is governed by the laws of Hong
Kong.

 

36.         JURISDICTION

 

36.1       Hong Kong
Courts

 

The courts of Hong Kong have exclusive
jurisdiction to settle any dispute (a “Dispute”)
arising out of, or connected with this Debenture (including a dispute regarding
the existence, validity or termination of this Debenture or the consequences of
its nullity).

 

36.2       Convenient
Forum

 

The parties hereto agree that the courts of
Hong Kong are the most appropriate and convenient courts to settle Disputes
between them and, accordingly, that they will not argue to the contrary.

 

36.3       Exclusive
Jurisdiction

 

This Clause 36 (Jurisdiction) is for the benefit of the Security Agent
only.  As a result and notwithstanding
Clause 36.1 (Hong Kong Courts),
nothing herein shall prevent the Security Agent from taking proceedings
relating to a Dispute in any other courts with jurisdiction.  To the extent allowed by law the Security
Agent may take concurrent proceedings in any number of jurisdictions.

 

36.4       Service
of process

 

Without prejudice to any other mode of service
allowed under any relevant law, the Chargor:

 

36.4.1       irrevocably appoints International Petroleum Services Corporation
Limited of 1/F., Sunning Plaza, 10 Hysan Avenue, Causeway Bay, Hong Kong as its
agent

 

35

 

for
service of process in relation to any proceedings before the Hong Kong courts
in connection with this Debenture; and

 

36.4.2       agrees that failure by a process agent to notify the Chargor of any
process will not invalidate the proceedings concerned.

 

36.5       Waiver of
immunity

 

The Chargor waives generally all immunity it or
its assets or revenues may otherwise have in any jurisdiction, including
immunity in respect of:

 

36.5.1       the giving of any relief by way of injunction or order for specific
performance or for the recovery of assets or revenues; and/or

 

36.5.2       the issue of any process against its assets or revenues for the
enforcement of a judgment or, in an action in
rem, for the arrest, detention or sale of any of its assets and
revenues.

 

IN WITNESS WHEREOF this Debenture has been signed on behalf of the Security Agent and executed as a deed
by the Chargor and is intended to be and is hereby delivered by it as a deed on
the date specified above.

 

36

 

 

SCHEDULE 1

FORM OF NOTICE OF ASSIGNMENT OF INSURANCE

 

To:          [name of insurer under relevant
Insurance Policy]

 

Date: [            ]

 

Dear Sirs,

 

We hereby give you notice that [name of Chargor] (the “Chargor”) has assigned, absolutely and by way of security
with first-ranking priority, to [name of
Security Agent] in its capacity as security trustee for and on
behalf of certain creditors (the “Security Agent”,
which expression shall include its subsequent successors, assigns and
transferees) pursuant to a debenture entered into by the Chargor in favour of
the Security Agent dated                      (as amended from time to time, the “Debenture”) all of the Chargor’s rights,
title and interests under, in and to [insert details of relevant
insurance policy] and all renewals and/or extensions thereof
(collectively the “Policy of Insurance”),
including without limitation all proceeds thereof or thereunder.

 

With effect from your receipt of this notice we
irrevocably and unconditionally instruct you to:

 

1.           note
the interest of the Security Agent on the Policy of Insurance;

 

2.           notify
the Security Agent of:

 

(c)             any
amendment, variation, cancellation, suspension, termination or expiry of the
Policy of Insurance at least fourteen (14) days before such amendment, variation,
cancellation, suspension, termination or expiry (as the case may be) is due to
take effect;

 

(d)            without
prejudice to paragraph 2(c), any default by any insured party under the Policy
of Insurance in the payment of any premium or other sum payable by any insured
party under the Policy of Insurance as soon as reasonably practicable after
such default; and

 

(e)             any
failure by any insured party under the Policy of Insurance to renew the Policy
of Insurance at least fourteen (14) days prior to the expiry thereof;

 

3.           pay
all proceeds of the Insurance Policy as follows (and that the Policy of
Insurance shall contain appropriate endorsements and loss-payable clauses to
such effect):

 

(a)             at
all times prior to the service of a notice by or on behalf of the Security
Agent on you to the effect that an “Event of Default” for the purposes of the
Debenture has occurred or the Debenture has become enforceable (an “Enforcement Notice”), the proceeds of the Policy of
Insurance shall:

 

(i)        (in the case where
the Policy of Insurance is a third party liability insurance which provides for
direct payment of the relevant proceeds to the relevant third party) be paid to
such third party, unless the Chargor shall have otherwise discharged its
liability to such third party in which

 

37

 

case
such proceeds shall be paid to the Chargor at the following account of the
Chargor (which has been charged by the Chargor in favour of the Security
Agent):  [insert
details of the relevant Account] (the “Chargor Account”); or

 

(ii)       (in any other case)
be paid to:

 

(1)       the Chargor at the
above-mentioned account of the Chargor Account; or

 

(2)       if so directed by the
Security Agent, the Security Agent; and

 

(b)            at
all times after the service of an Enforcement Notice by or on behalf of the
Security Agent on you, the proceeds of the Policy of Insurance shall:

 

(i)        (in the case where
the Policy of Insurance is a third party liability insurance which provides for
direct payment of the relevant proceeds to the relevant third party) be paid to
such third party, unless we shall have otherwise discharged our liability to
such third party in which case such proceeds shall be paid to the Security
Agent; or

 

(ii)       (in any other case)
be paid to the Security Agent;

 

4.           treat:

 

(a)             us
as being entitled to make and deal with all claims in respect of the Policy of
Insurance at all times prior to the service of an Enforcement Notice by or on
behalf of the Security Agent on you, except that any settlement, waiver,
discontinuance of compromise of any claim in an amount of not less than
USD1,000,000 (or the equivalent thereof) shall require the prior written
consent of the Security Agent; and

 

(b)            the
Security Agent as the sole person being entitled to make and deal with any
claim in respect of the Policy of Insurance (to the exclusion of us) at all
times after the service of an Enforcement Notice by or on behalf of the
Security Agent on you;

 

5.           treat
us as being solely liable to perform any or all of our obligations (including
without limitation the payment of any premium) under the Policy of Insurance
and that the Security Agent shall not in any way be responsible or liable in
respect of any such obligation or any failure by us to perform any such
obligation; and

 

6.           disclose
to the Security Agent, without further approval from us, such information
regarding the Policy of Insurance as the Security Agent may from time to time
request and to send it copies of all notices issued by you under the Policy of
Insurance.

 

Neither this notice nor any of the instructions
contained herein may be revoked or varied without the prior written consent of
the Security Agent.

 

38

 

Please acknowledge receipt of this notice and
your agreement to the terms hereof by signing the acknowledgement on a copy of
this notice and returning it to the Security Agent at [       ] marked for the attention of [    ].

 

This notice and/or the acknowledgment hereto
may be executed in any number of counterparts, and this has the same effect as
if signatures on such counterparts were on a single copy of this letter and the
acknowledgment hereto.

 

This notice is governed by the laws of Hong
Kong.

 

Yours faithfully,

 

 

	
   

  	
   

  
	
   

  
	
  For and on behalf of

  
	
  [Chargor]

  

 

 

Acknowledgment

 

To:          [insert name of Security Agent] as Security Agent

 

[name of
Chargor] (the “Chargor”)

 

We acknowledge receipt of a notice (the “Notice”) in the terms set out above from the Chargor and
confirm that we have not received notice of any previous assignments or charges
of or over any of the rights, title and interests and benefits under, in or to
the Policy of Insurance or any proceeds thereof or thereunder and that we
consent to the assignment referred to in the Notice and that we will comply with
the terms of the Notice.  Unless
otherwise defined herein, terms and expressions defined in the Notice shall
have the same meaning herein.

 

Without prejudice to the foregoing, we further
confirm and agree that:

 

1.           no
amendment, variation, cancellation, suspension, termination or expiry of the
Policy of Insurance (as defined in the Notice) shall be effective unless we
have given the Security Agent at least fourteen (14) days prior written notice
thereof;

 

2.           the
Policy of Insurance has been endorsed with appropriate endorsements and
loss-payee clauses to the effect of paragraph 3 of the Notice;

 

3.           the
Security Agent shall not be liable for the payment of any premium or other sum
payable in connection with, or for any obligation of any insured party under or
in connection with, the Policy of Insurance;

 

4.           the
Policy of Insurance shall not be invalidated or prejudiced as against a
mortgagee or security holder (including without limitation the Security Agent)
by any misrepresentation, act, omission, neglect or failure to make disclosure
on the part of any 

 

39

 

insured
person or its agents or any tenant, lessee, licensee or occupier of any
property the subject of the Policy of Insurance or by any circumstances beyond
the control of any insured party;

 

5.           we
hereby waive any and all rights of subrogation which we may otherwise have
against any or all of the Security Agent (as loss payee or otherwise), the
insured parties under the Policy of Insurance and/or their respective
subsidiaries, affiliates, officers and employees; and

 

6.           (other
than any unpaid premium) we hereby waive any and all rights of set-off,
deduction and/or counterclaim which we may otherwise have in respect of any
insurance proceeds payable (or payable but for such right of set-off, deduction
and/or counterclaim) to any insured party and/or the Security Agent (as
loss-payee or otherwise) in respect of the Policy of Insurance.

 

This acknowledgement is governed by the laws of
Hong Kong.  The Notice and this
acknowledgment may be executed in any number of counterparts, and this has the
same effect as if signatures on such counterparts were on a single copy of the
Notice and this acknowledgment.

 

For and on behalf of

[insert name of relevant
insurer]

 

 

	
  By:

  	
   

  	
   

  
	
   

  
	
   

  
	
  Dated:

  

 

40

 

SCHEDULE 2

FORM OF NOTICE OF CHARGE OF ACCOUNTS

 

To:          [bank, financial
institution or person with whom the relevant Account(s) are maintained]

 

Date: [                                        ]

 

Dear Sirs,

 

We hereby give you notice that by a debenture
(as amended from time to time, the “Debenture”)
dated                               between
(1) [name of Chargor] (the “Chargor”) and (2) [name of Security Agent] as security
trustee (the “Security Agent” which expression
shall include its successors, assigns and transferees), the Chargor has charged
to the Security Agent all of the Chargor’s right, title and interest in and to
each of the accounts maintained with you listed below (including any
replacement, renewal or re-designation thereof) and all monies standing to the
credit of such account(s) from time to time (the “Charged
Account(s)”).

 

	
  NAME OF ACCOUNT

  	
   

  	
  ACCOUNT NUMBER

  
	
  [ · ]

  	
   

  	
  [ · ]

  

 

With effect from the date of your receipt of this
notice, the terms and conditions of any or all of the Charged Account(s) (and
the rights of the Chargor relating thereto) may not be varied or waived without
the Security Agent’s consent.

 

With effect from the time when you receive a
notice from the Security Agent to the effect that a “Default” for the purposes
of the Debenture has occurred and is continuing or the security created by the
Debenture has become enforceable (an “Enforcement
Notice”):

 

(a)         any
existing payment instructions affecting any or all of the Charged Account(s) are
to be terminated and all payments and communications in respect of any or all
of the Charged Account(s) should be made, or sent, to the Security Agent or as
it shall direct; and

 

(b)         all
rights, interests and benefits whatsoever accruing to or for the benefit of the
Chargor arising from any or all of the Charged Account(s) belong to the
Security Agent.

 

The Chargor hereby irrevocably authorises and
instructs you, with effect from your receipt of an Enforcement Notice from the
Security Agent:

 

(i)          to
hold all sums from time to time standing to the credit in the Charged Account(s)
to the order of the Security Agent;

 

(ii)         to
pay, transfer or release all or any part of the sums from time to time standing
to the credit of the Charged Account(s) in accordance with (and only in
accordance with) the written instructions of the Security Agent at any time or
times (to the exclusion of the Chargor);

 

41

 

(iii)        to comply with the
terms of any written notice or instructions in any way relating to, or
purporting to relate to, the Debenture, the sums standing to the credit of the
Charged Account(s) from time to time or the debts represented thereby which you
receive at any time from the Security Agent without any reference to or further
authority from the Chargor and without any enquiry by you as to the
justification for or validity of such notice or instruction; and

 

(iv)        not to comply with
the terms at any written notice or instructions in any way relating to, or
purporting to relate to, the Debenture, the sums standing to the credit of the
Charged Account(s) from time to time or the debts represented thereby which you
receive from any other person (including the Chargor) other than the Security
Agent.

 

We also hereby irrevocably authorise and
instruct you to disclose to the Security Agent without any reference to or
further authority from us and without any enquiry by you as to the
justification of such disclosure, such information relating to any or all of
the Charged Account(s) and the sums therein as the Security Agent may at any
time and from time to time request.

 

Neither this notice nor any of the instructions
herein may be revoked or varied without the prior written consent of the
Security Agent.

 

Without prejudice to the validity of this
notice and the instructions contained herein, please acknowledge receipt of
this notice and your agreement to the terms hereof by signing the
acknowledgement on a copy of this notice and returning it to the Security Agent
at [       ] marked for the attention of
[    ].

 

This notice and/or the acknowledgment hereto
may be executed in any number of counterparts, and this has the same effect as
if signatures on such counterparts were on a single copy of this letter and the
acknowledgment hereto.

 

This notice is governed by the laws of Hong
Kong.

 

Yours faithfully

 

 

	
   

  	
   

  
	
  for and on behalf of

  
	
  [Chargor]

  

 

42

 

 

Acknowledgment

 

To:          [name of Security Agent]
as Security Agent

 

[name of
Chargor] (the “Chargor’)

 

Date:       [           ]

 

At the request of the Chargor we acknowledge
receipt of the notice of charge from the Chargor dated [·] (the “Notice”) in respect
of the Charged Account(s).  Unless
otherwise defined herein, terms and expressions herein shall have the meaning
ascribed to them in the Notice.

 

We confirm that:

 

(i)          we
consent to the charge over the Charged Account(s) referred to in the
Notice.  We accept the instructions and
authorisations contained in the Notice and we undertake to act in accordance
with the terms of the Notice;

 

(ii)         the
balance standing to each of the Charged Account(s) at today’s date is as
follows [   ·   ];

 

(iii)        no fees or periodic
charges are payable in respect of any of the Charged Account(s) and there are
no restrictions on (a) the payment of the credit balance on any of the Charged
Account(s) (except, in the case of a time deposit, the expiry of the relevant
period) or (b) the assignment or charge of the Charged Account(s) to the
Security Agent or any third party;

 

(iv)        we have not received
notice of any previous assignments of, charges over or trusts in respect of,
any of the Charged Account(s) and we will not, without the Security Agent’s
prior written consent (a) exercise any right of combination, consolidation or
set-off which we may have in respect of any of the Charged Account(s) or (b) amend
or vary any rights attaching to any of the Charged Account(s);

 

(v)         with
effect from our receipt of an Enforcement Notice from the Security Agent, we
will act only in accordance with the instructions given by persons authorised
by the Security Agent in respect of any or all of the Charged Account(s);

 

(vi)        we shall send all
statements and other notices given by us relating to the Charged Account(s) to
the Security Agent as well as to the Chargor; and

 

(vii)       at all times after we
receive an Enforcement Notice from the Security Agent, we shall not permit any amount
to be withdrawn from any of the Charged Account(s) without the prior written
consent of the Security Agent.

 

The Notice and this acknowledgment may be
executed in any number of counterparts, and this has the same effect as if
signatures on such counterparts were on a single copy of the Notice and this
acknowledgment.

 

This acknowledgment is governed by the laws of
Hong Kong.

 

For and on behalf of

[                                    ]

 

43

 

EXECUTION

 

THE CHARGOR

 

	
  SIGNED, SEALED AND DELIVERED

  	
   

  
	
  as a DEED for
  and on behalf of

  	
   

  
	
  and EXECUTED AS A DEED
  by

  	
  L.S

  
	
  SINOTECH
  ENERGY LIMITED

  	
   

  
	
  by

  	
   

  

 

 

	
  /s/ Liu
  Qingzeng

  	
   

  
	
  in the presence of:

  

 

 

	
  /s/ Zheng Yao

  	
   

  
	
   

  
	
  (Name of witness)

  
	
   

  
	
  Name: Zheng Yao

  

 

Address:            No. 19 Ronghua South Road, Beijing Eco-Tech Development Area, Beijing
100176, P.R.C.

 

 

Address:            3/F,
No. 19 Ronghua South Road

 

Beijing Economic-Technological Development Area

 

Beijing 100176, People’s Republic of China

 

 

Telephone:         +86
10 8712 5555

 

Fax:                      +86 10 8712 5500

 

 

Attention:          Chief
Executive Officer

 

SIGNATURE
PAGE TO THE CAYMAN CO DEBENTURE

 

 

The Security Agent

 

SIGNED for and on behalf of

DB TRUSTEES (HONG KONG)
LIMITED

By:

 

 

	
  /s/ Aric Kay-Russell

  	
   

  	
  /s/Ng Yue Min

  

 

 

Address:            48/F, Cheung Kong Center, 2 Queen’s Road Central, Hong Kong

 

Fax:                    +852 2203 7320/7323

 

Attention:          Managing Director

 

SIGNATURE
PAGE TO THE CAYMAN CO DEBENTURE

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