Document:

Exhibit
10.43

 

EXECUTION
COPY

 

DATED
OCTOBER 11, 2010

 

 

	
  (1)

  	
  SINOTECH
  ENERGY LIMITED

  	
   

  
	
   

  	
  as
  Mortgagor

  	
   

  
	
   

  	
   

  	
   

  
	
  (2)

  	
  DB
  TRUSTEES (HONG KONG) LIMITED

  	
   

  
	
   

  	
  as Security Agent

  	
   

  

 

 

EQUITABLE
SHARE MORTGAGE

IN RESPECT
OF SHARES OF SUPERPORT
LIMITED

 

 

i

 

TABLE OF
CONTENTS

 

	
  CLAUSE

  	
   

  	
   

  	
  PAGE

  
	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
  DEFINITIONS AND INTERPRETATION

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  REPRESENTATION AND WARRANTIES

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  COVENANT TO PAY

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  SECURITY

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  RIGHTS IN RESPECT OF MORTGAGED SHARES

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  PRESERVATION OF SECURITY

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  ENFORCEMENT OF SECURITY

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  APPOINTMENT OF A RECEIVER

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  POWERS OF A RECEIVER

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  FURTHER ASSURANCES

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
  INDEMNITIES

  	
   

  	
  19

  
	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
  POWER OF ATTORNEY

  	
   

  	
  19

  
	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
  EXPENSES

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
  14.

  	
  RELEASE

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  
	
  15.

  	
  NOTICES

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  
	
  16.

  	
  ASSIGNMENTS

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  
	
  17.

  	
  SET-OFF

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  
	
  18.

  	
  SUBSEQUENT SECURITY INTERESTS

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  
	
  19.

  	
  MISCELLANEOUS

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  
	
  20.

  	
  LAW AND JURISDICTION

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  
	
  SCHEDULE 1

  	
   

  	
  27

  
	
   

  	
   

  	
   

  
	
  SCHEDULE 2

  	
   

  	
  29

  
	
   

  	
   

  	
   

  
	
  SCHEDULE 3

  	
   

  	
  30

  
	
   

  	
   

  	
   

  
	
  SCHEDULE 4

  	
   

  	
  32

  
	
   

  	
   

  	
   

  
	
  SCHEDULE 5

  	
   

  	
  33

  
	
   

  	
   

  	
   

  
	
  SCHEDULE 6

  	
   

  	
  35

  

 

ii

 

THIS MORTGAGE is made on
                                                    
2010

 

BETWEEN

 

(1)                                  SINOTECH ENERGY LIMITED, an exempted company incorporated under the laws of
the Cayman Islands with company number 241866 and having its registered office
at PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands (the “Mortgagor”); and

 

(2)                                  DB TRUSTEES (HONG KONG) LIMITED, as security trustee for and on behalf of the Secured
Parties (as defined in the Security Trust Deed, defined below) (the “Security Agent”).

 

WHEREAS

 

(A)                              By the Facility Agreement, the Lenders (as defined in
the Security Trust Deed) agreed to make available to Tianjin New Highland
Science and Technology Development Co., Ltd. (the “Borrower”)
a facility on the terms and conditions contained in the Facility Agreement (as
defined below).

 

(B)                                The Mortgagor will be on commencement of the Security
Period the legal and beneficial owner of 100% of the ordinary shares of US$1.00
par value per each share in the capital of the Company.

 

(C)                                As security for the Secured Obligations (as defined
below), the Mortgagor has agreed to mortgage and charge in favour of the
Security Agent, inter alia, its legal and
beneficial interest in all of the issued shares in the Company.

 

(D)                               Premium Sino Finance Limited is currently the legal
and beneficial owner of 90 ordinary shares of US$1.00 par value in the capital
of the Company and such shares are mortgaged in favour of the Security Agent
pursuant to an Equitable Share Mortgage dated 12 January 2010 (the “Original Holdco Share Mortgage”) made between Premium Sino
Finance Limited and the Security Agent . The Original Holdco Share Mortgage is
to be released after completion of the Relevant Permitted Reorganisation (as
defined below).

 

(E)                                 It is a condition to the Lenders agreeing to the
Relevant Permitted Reorganisation that the Mortgagor shall execute this
Mortgage in favour of the Security Agent and the same is executed by the
Mortgagor in consideration of the Lenders agreeing to the Relevant Permitted
Reorganisation and for other good and valuable consideration (the sufficiency
of which the Mortgagor hereby acknowledges).

 

(F)                                 It is intended that this document takes effect as a
deed notwithstanding the fact that a party may only execute this document under
hand.

 

NOW THIS MORTGAGE WITNESSETH

 

1.                                      DEFINITIONS AND INTERPRETATION

 

1.1                                 In this Mortgage, unless the context otherwise requires, words and
expressions which are capitalised but not defined herein (including in the
recitals hereto) shall have the same meanings as are given to them in the
Security Trust Deed.  In addition, the
following definitions shall apply:

 

1

 

“BVI Act”
means the BVI Business Companies Act, 2004 (as amended) of the
British Virgin Islands;

 

“BVI Working Day”
means a day on which government offices are ordinarily open for business in the
British Virgin Islands;

 

“Cayman Companies Law”
means the Companies Law (2010 Revision) of the Cayman Islands;

 

“CLP Ordinance”
means the Conveyancing and Law of Property Act of the British Virgin
Islands;

 

“Company” means Superport Limited, a BVI Business
Company with company number 1525496 and registered office at Offshore
Incorporations Limited, P.O. Box 957, Offshore Incorporations Centre, Road
Town, Tortola, British Virgin Islands;

 

“Event of Default”
means an Event of Default as defined in the Security Trust Deed;

 

“Initial Mortgaged Shares”
means those shares in the Company which will be registered in the name of and
beneficially owned by the Mortgagor immediately following completion of the
Relevant Permitted Reorganisation and any shares acquired in respect of any or
all of the Initial Mortgaged Shares by reason of a division or combination of
shares, share dividend, reclassification or otherwise;

 

“Insolvency Act”
means the Insolvency Act, 2003 (as amended) of the British Virgin
Islands;

 

“Facility Agreement”
means the loan agreement dated 8 January 2010 between the Borrower as
borrower, International Petroleum Services Corporation Limited, the Company,
Deutsche Bank AG, Hong Kong Branch as arranger and facility agent, the Security
Agent and the financial institutions listed therein as Lenders (as amended
pursuant to an amendment agreement dated 11 January 2010 and as further
amended and restated pursuant to a second amendment agreement dated
                                              
2010 and as may be further amended and/or restated from time to time);

 

“Mortgage” means
this equitable share mortgage;

 

“Mortgaged Shares”
means the Initial Mortgaged Shares and all and any other shares, warrants and
other securities of any kind (including loan capital) of the Company now or at
any time in the future legally and/or beneficially owned by the Mortgagor or in
which the Mortgagor has any interest and all rights, benefits and advantages
now or at any time in the future deriving from or incidental to any of the
Mortgaged Shares, including, without limitation:

 

(a)           all
dividends or other distributions (whether in cash, securities or other
property), interest and other income paid or payable in relation to any
Mortgaged Shares;

 

(b)           all shares, securities, rights,
monies or other property whether certificated or uncertificated accruing,
offered or issued at any time by way of redemption, conversion, exchange,
substitution, preference, option or otherwise in respect of any Mortgaged
Shares (including but not limited to proceeds of sale); and

 

(c)           all certificates and other evidence
of title to as of the Mortgaged Shares now and from time to time hereunder
deposited with the Security Agent;

 

2

 

“Parties” means
the parties to this Mortgage;

 

“Register of Charges”
means the register of mortgages and charges of the Mortgagor maintained by the
Mortgagor in accordance with the Cayman Companies Law;

 

“Register of Directors”
means the register of directors of the Company maintained by the Company in
accordance with Section 118 of the BVI Act;

 

“Register of
Members” means the register of members of the Company maintained by
the Company in accordance with Section 41 of the BVI Act;

 

“Registrar of
Corporate Affairs” means the Registrar of Corporate Affairs of the British Virgin
Islands appointed under Section 229 of the BVI Act;

 

“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 the
Facility Agreement;

 

“Secured
Obligations” has the meaning ascribed to such term in the Security
Trust Deed;

 

“Security Interest”
means:

 

(a)                                  a mortgage, charge, pledge, lien, assignment by way of
security or other encumbrance or security arrangement (including any hold back
or “flawed asset” arrangement) securing any
obligation of any person;

 

(b)                                 any arrangement under which money or claims to, or the
benefit of, a bank or other account may be applied, set off or made subject to
a combination of accounts so as to effect discharge of any sum owed or payable
to any person;

 

(c)                                  any other type of arrangement having a similar effect;
or

 

(d)                                 agreements to create the foregoing;

 

“Security Period”
means the period commencing on the date of completion of the Relevant Permitted
Reorganisation and ending on the Release Date;

 

“Security Trust Deed”
means the security trust deed dated 11 January 2010 and amended by a deed
of amendment dated
                                                            
2010 between, among others, the Mortgagor and the Security Agent; and

 

“Transaction Documents”
has the meaning ascribed to such term in the Security Trust Deed.

 

1.2                                 In construing this Mortgage (including the recitals), unless otherwise
specified:

 

(a)                                  the rules of interpretation contained in Clause
1.3 (Construction) of the Security Trust Deed
shall apply to the construction of the Mortgage mutatis
mutandis;

 

(b)                                 references to any Party or Secured Party shall be
construed so as to include that Party’s or that Secured Party’s respective
successors in title, permitted assigns and permitted transferees;

 

3

 

(c)                                  “including” and “in particular” shall not be construed restrictively but
shall mean respectively “including, without prejudice to the generality of the
foregoing” and “including, without limitation”, and “in particular, but without
prejudice to the generality of the foregoing”;

 

(d)                                 references to a “person” shall
be construed so as to include any individual, firm, company or other body
corporate, government, state or agency of a state, local or municipal authority
or government body or any joint venture, association or partnership (whether or
not having separate legal personality); and in each case, its successors and
assigns and persons deriving title under or through it, in whole or in part,
and any person which replaces any party to any document in its respective role
thereunder, whether by assuming the rights and obligations of the party being
replaced or whether by executing a document in or substantially in the form of
the document it replaces;

 

(e)                                  “variation”
includes any variation, amendment, accession, novation, restatement,
modification, assignment, transfer, supplement, extension, deletion or
replacement however effected and “vary” and “varied” shall be construed accordingly;

 

(f)                                    “writing”
includes facsimile transmission legibly received except in relation to any
certificate, notice or other document which is expressly required by this
Mortgage to be signed and “written” has a
corresponding meaning;

 

(g)                                 references to the “consent”
of the Security Agent shall be construed as the consent of the Security Agent
acting in its absolute discretion;

 

(h)                                 “management control”
in relation to a company, corporation or entity means the power (whether by way
of ownership of shares, proxy, contract, agency or otherwise) to:

 

(i)                                     cast, or control the casting of, more than one-half of
the maximum number of votes that might be cast at a general meeting (or
equivalent decision making person) of such company, corporation or entity; and

 

(ii)                                  appoint or remove at least a majority of the directors
or other equivalent officers of such company, corporation or entity (which
majority has right to exercise more than half of the voting rights capable of
being exercised at the board of directors or equivalent body of such company,
corporation or entity); and

 

(iii)                               give directions with respect to the operating and
financial policies of such company, corporation or entity with which the
directors or other equivalent officers of such company, corporation or entity
are obliged to comply;

 

(i)                                     subject to Clause 19.3, references to this
Mortgage or to any other document include references to this Mortgage or such
other document as varied in any manner from time to time, even if changes are
made to:

 

(i)                                     the composition of the parties to this Mortgage or
such other document or to the nature or amount (including any increase) of any
facilities made available or liability assumed under such other document; or

 

(ii)                                  the nature or extent of any obligations under such
other document;

 

4

 

(j)                                     references to uncertificated shares are to shares the
title to which can be transferred by means of an electronic or other entry and
references to certificated shares are to shares which are not uncertificated
shares;

 

(k)                                  references to the singular shall include the plural
and vice versa and references to the masculine shall include the feminine or
neuter and vice versa;

 

(l)                                     references to clauses and schedules are to clauses of,
and schedules to, this Mortgage;

 

(m)                               references to any statute or statutory provision shall
be construed as a reference to the same as it may have been, or may from time
to time be amended, modified or re-enacted;

 

(n)                                 headings and titles are for convenience only and do
not affect the interpretation of this Mortgage; and

 

(o)                                 this Mortgage is a “Security
Document” and a “Finance Document”
under the terms of the Security Trust Deed and the Facility Agreement.

 

2.                                      REPRESENTATION AND WARRANTIES

 

2.1                                 The Mortgagor hereby represents and warrants to the Security Agent (for
the benefit of each Secured Party) on the date of this Mortgage and on
completion of the Relevant Permitted Reorganisation that:

 

(a)                                  the Mortgagor has been duly incorporated and
registered as an exempted company with limited liability under the Cayman
Companies Law and is validly existing and in good standing under the laws of
the Cayman Islands;

 

(b)                                 the Mortgagor has the power to own its assets and
carry on its business as it is being conducted;

 

(c)                                  the Mortgagor shall be, with effect from the
completion of the Relevant Permitted Reorganisation the sole legal and
beneficial owner of the Mortgaged Shares free from any Security Interest (other
than that created by this Mortgage and the Original Holdco Share Mortgage
(until the same is released as described in paragraph D of the recitals of this
Mortgage)) or other interest and any options or rights of pre-emption;

 

(d)                                 the Mortgagor shall with effect from completion of the
Relevant Permitted Reorganisation be the direct legal and beneficial owner of
100% of the issued shares of and equity interests in the Company, free and
clear of any Security (except for any Transaction Security, as defined in the
Security Trust Deed and the Original Holdco Share Mortgage (until the same is
released as described in paragraph D of the recitals of this Mortgage));

 

(e)                                  any Mortgaged Shares are or will be when mortgaged and
charged, duly authorised, validly issued, fully paid, non-assessable, freely
transferable and constitute shares in the capital of a BVI Business
Company.  To the extent they are in
existence there are no moneys or liabilities outstanding or payable in
respect of any such shares nor will there be any and they have not been
redeemed nor cancelled in any way nor will they be;

 

5

 

(f)                                    no person has or is entitled to any conditional
or unconditional option, warrant or other right to subscribe for, purchase or
otherwise acquire any issued or unissued shares, or any interest in
shares, in the capital of the Company, (other than that created by this
Mortgage and pursuant to the Warrant Instruments and the Original Holdco Share
Mortgage (until the same is released as described in paragraph D of the
recitals of this Mortgage));

 

(g)                                 the Mortgaged Shares are freely transferable on the
books of the Company and no consents or approvals are required (other than
pursuant to the Original Holdco Share Mortgage (until the same is released as
described in paragraph D of the recitals of this Mortgage)) in order to
register a transfer of the Mortgaged Shares;

 

(h)                                 the Mortgaged Shares are not issued with any
preferred, deferred or other special rights or restrictions whether in regard
to dividends, voting, return of any amount paid on account of shares or
otherwise which are not expressly set out in the memorandum and articles of
association of the Company;

 

(i)                                     there are no covenants, agreements, conditions,
interest, rights or other matters whatsoever which adversely affect the
Mortgaged Shares, (other than that created by this Mortgage and pursuant to the
Warrant Instruments and the Original Holdco Share Mortgage (until the same is
released as described in paragraph D of the recitals of this Mortgage));

 

(j)                                     other than the existence of the Original Holdco Share
Mortgage, the Mortgagor has not received any notice of an adverse claim by any
person in respect of the ownership of the Mortgaged Shares or any interest in
the Mortgaged Shares;

 

(k)                                  the Mortgagor has full power and authority to:

 

(i)                                     execute and deliver this Mortgage and the other
Transaction Documents to which it is a party;

 

(ii)                                  be the legal and beneficial owners of the Mortgaged
Shares; and

 

(iii)                               comply with the provisions of, and perform all its
obligations under this Mortgage and the other Transaction Documents to which it
is a party;

 

(l)                                     the Mortgagor has duly executed and delivered this
Mortgage and the other Transaction Documents to which it is a party;

 

(m)                               this Mortgage and each other Transaction Document to
which the Mortgagor is a party constitutes the Mortgagor’s legal, valid and
binding obligations enforceable against the Mortgagor in accordance with its
terms subject to any general principles of law limiting its obligations or
qualifications specifically referred to in any legal opinion delivered pursuant
to the Facility Agreement;

 

(n)                                 the execution and performance of its obligations and
liabilities under this Mortgage and each other Transaction Document to
which the Mortgagor is a party will not:

 

(i)                                     contravene any law or regulation or any order of any
governmental or other official authority, body or agency or any judgment, order
or decree of any court having jurisdiction over it; or

 

6

 

(ii)                                  conflict with, or result in any breach of any of the
terms of, or constitute a default under, any agreement or other instrument to
which it is a party or any licence or other authorisation to which it is
subject or by which it or any of its property is bound; or

 

(iii)                               contravene or conflict with any provision of its
memorandum and articles of association;

 

(o)                                 it is not unable to pay its debts within the meaning
of the Cayman Companies Law and it has not taken any action nor have any steps
been taken or legal proceedings been started or threatened in writing against
it for:

 

(i)                                     winding up, dissolution or reorganisation;

 

(ii)                                  the enforcement of any Security Interest over its
assets; or

 

(iii)                               the appointment of a liquidator, receiver,
administrative receiver, administrator, trustee or similar officer of it or of
any or all of its assets;

 

(p)                                 it is not in breach (nor would be in breach with the
giving of notice, passing of time, or satisfaction of any other condition)
or in default under any deed, instrument or any agreement to which it is a
party or which is binding on it or any of its assets;

 

(q)                                 to the best of its knowledge, no action,
litigation, arbitration or administrative proceeding has been commenced or is
pending or threatened in writing against it, nor is there subsisting any
unsatisfied judgment or award given against it by any court, board of
arbitration or other body;

 

(r)                                    all licences, consents, exemptions, clearance filings,
registration, payments of taxes, notarisation and authorisations as are or may
be necessary or desirable for the proper conduct of its business, trade, and
ordinary activities and for the performance and discharge of its obligations
and liabilities under this Mortgage and each other Transaction Document to
which the respective Mortgagor is a party and which are required in connection
with the execution, delivery, validity, enforceability or admissibility in
evidence of this Mortgage and each other Transaction Document to which the
respective Mortgagor is a party and the creation of security over the Mortgaged
Shares have been obtained and are in full force and effect;

 

(s)                                  it has not taken any action whereby the rights
attaching to the Mortgaged Shares are altered or diluted save to the extent
such alteration or dilution is expressly permitted under this Mortgage or any
other Transaction Document;

 

(t)                                    the Mortgagor has taken all corporate and other action
required to approve its execution, delivery, performance and enforceability of
this Mortgage and each other Transaction Document to which the Mortgagor
is a party; and

 

(u)                                 this Mortgage creates the Security Interests it
purports to create with the ranking and priority it is expressed to have.

 

2.2                                 The Mortgagor also represents and warrants to and undertakes with the
Security Agent that the foregoing representations and warranties will be true
and accurate throughout the continuance of this Mortgage with reference to the
facts and circumstances subsisting from time to time.

 

7

 

3.                                      COVENANT TO PAY

 

3.1                                 The Mortgagor hereby covenants with the Security Agent as primary
obligor and not merely as surety:

 

(a)                                  to pay and discharge the Secured Obligations in the
manner provided in the relevant Transaction Documents and to pay all amounts,
interest, expenses, claims, liabilities, losses, costs, duties, fees, charges
or other moneys as are stated in this Mortgage and the Transaction
Documents to be payable by the Mortgagor to or be recoverable from the Mortgagor
by the Security Agent (or in respect of which the Mortgagor agree in this
Mortgage to indemnify the Security Agent) at the times and in the manner
specified in this Mortgage; and

 

(b)                                 to pay interest on all amounts, interest, expenses,
claims, liabilities, losses, costs, duties, fees, charges or other moneys
referred to in Clause 3.1(a) from the date on which the relevant
amount, interest, expense, liability, loss, cost, duty, fee, charge or other
money is paid or discharged by the Security Agent until the date of
reimbursement thereof to the Security Agent (both before and after any relevant
judgment) at the rate applicable to default interest as set out in
Clause 9.3 (Default Interest) of the Facility
Agreement (in the form subsisting as at the date of this Mortgage).

 

4.                                      SECURITY

 

4.1                                 As continuing security for the Secured Obligations, the Mortgagor as
legal and beneficial owner with title guarantee hereby with effect from the
commencement of the Security Period:

 

(a)                                  mortgages to the Security Agent by way of a first
equitable mortgage all its right, title and interest in and to the Mortgaged
Shares;

 

(b)                                 charges to the Security Agent, by way of a first fixed
charge, all of its right, title and interest in and to the Mortgaged Shares
including all benefits, present and future, actual and contingent accruing in
respect of the Mortgaged Shares (to the extent not effectively mortgaged under
Clause 4.1(a)); and

 

(c)                                  assigns, and agrees to assign, absolutely by way of
security to the Security Agent all its rights, present and future, relating to
any of the Mortgaged Shares (to the extent not effectively mortgaged under
Clause 4.1(a)).

 

4.2                                 The Mortgagor hereby agrees to deliver, or cause to be delivered, to the
Security Agent on:

 

(a)                                  or prior to the Effective Date (as defined in the deed
of amendment dated
                                
2010 relating to the Security Trust Deed), the corporate documents, resolutions
and authorities of the Mortgagor required to authorise the execution of this
Mortgage;

 

(b)                                 completion of the Relevant Permitted Reorganisation,
executed but undated share transfer certificates in respect of the Initial
Mortgaged Shares in favour of the Security Agent or its nominees (as the
Security Agent shall direct) in the form set out in Schedule 1 to this Mortgage
and any other documents which from time to time may be requested by the
Security Agent in order to enable the Security Agent or its nominees to be
registered as the owner or otherwise obtain legal title to the Initial

 

8

 

Mortgaged Shares at
any time after the occurrence of an Event of Default which is continuing;

 

(c)                                  completion of the Relevant Permitted Reorganisation,
all share certificates representing the Initial Mortgaged Shares and
a certified copy of the Register of Members of the Company showing the
Mortgagor as the registered owner of the Initial Mortgaged Shares;

 

(d)                                 completion of the Relevant Permitted Reorganisation,
an executed irrevocable proxy and an executed irrevocable power of attorney
made in respect of the Mortgaged Shares in favour of the Security Agent in
respect of all general meetings and written resolutions of the Company
respectively in the form set out in Schedule 2 to this Mortgage;

 

(e)                                  completion of the Relevant Permitted Reorganisation,
executed but undated letters of resignation and release together with letters
of authority to date the same from each of the directors and officers (if any)
of the Company in the forms set out in Parts I and II of Schedule 3 to
this Mortgage;

 

(f)                                    completion of the Relevant Permitted Reorganisation,
an executed irrevocable letter of undertaking and confirmation from the Company
to the Security Agent in the form set out in Schedule 4 to this Mortgage;

 

(g)                                 completion of the Relevant Permitted Reorganisation,
executed but undated written resolutions of all the directors of the Company in
the form set out in Schedule 5 to this Mortgage; and

 

(h)                                 completion of the Relevant Permitted Reorganisation,
executed irrevocable letter of instruction from the Company to its registered
agent in the form set out in Schedule 6 to this Mortgage.

 

4.3                                 Except as otherwise permitted under the Facility Agreement (in the form
subsisting on the date of this Mortgage), the Mortgagor will 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 or
registered agent, 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.

 

4.4                                 The Mortgagor will deliver, or cause to be delivered, to the Security
Agent immediately upon (without prejudice to Clause 4.3) the accrual, offer or
issue of any shares acquired in respect of the Mortgaged Shares by reason of a
division or combination of shares, share dividend, reclassification or
otherwise, the items listed in Clauses 4.2(b) and 4.2(c), in respect of all
such further Mortgaged Shares.

 

4.5                                 The Mortgagor will deliver or cause to be delivered to the Security
Agent immediately upon (without prejudice to Clause 4.3):

 

(a)                                  the appointment of any further director or officer of
the Company, the items listed in Clause 4.2(e) (with respect to each newly
appointed director or officer); and

 

(b)                                 the appointment or resignation of any director of the
Company, the item listed in Clause 4.2(g).

 

9

 

4.6                                 The Mortgagor shall, immediately after execution of this Mortgage create
and maintain a Register of Charges to the extent this has not already been done
and enter particulars of the security interests created pursuant to this
Mortgage in the Register of Charges and immediately after entry of such
particulars has been made, provide the Security Agent with a certified true
copy of the updated Register of Charges.

 

4.7                                 The Mortgagor shall immediately upon completion of the Relevant
Permitted Reorganisation, procure that the following notation be entered on the
Register of Members of the Company and that a copy of such annotated
Register of Members be filed with the Registrar of Corporate Affairs:

 

“All the shares registered
in the name of SinoTech Energy Limited are mortgaged and charged in favour of
DB Trustees (Hong Kong) Limited pursuant to a share mortgage dated
                                      ,
as amended from time to time.  The date
on which this annotation was entered in the Register of Members is [registered
agent to complete].”

 

4.8                                 The Mortgagor shall, upon completion of the Relevant Permitted
Reorganisation, provide the Security Agent with a certified true copy of the
Register of Members of the Company with the annotation referred to in
Clause 4.7.

 

5.                                      RIGHTS IN RESPECT OF MORTGAGED
SHARES

 

5.1                                 Unless and until the occurrence of an Event of Default as long as an
Event of Default which is continuing:

 

(a)                                  the Mortgagor shall be entitled to exercise all voting
and consensual powers pertaining to the Mortgaged Shares or any part thereof
for all purposes not inconsistent with the terms of this Mortgage or the other
Transaction Documents; and

 

(b)                                 the Mortgagor shall be entitled to receive and retain
any dividends, interest or other moneys or assets accruing on or in respect of
the Mortgaged Shares or any part thereof (except as otherwise provided in the
other Transaction Documents).

 

5.2                                 The Mortgagor shall pay all calls, instalments or other payments and
shall discharge all other obligations, which may become due in respect of any
of the Mortgaged Shares.  The Security
Agent may at any time, if it thinks fit make such payments or discharge such
obligations on behalf of the Mortgagor. 
Any sums so paid by the Security Agent in respect thereof shall be
repayable on demand and pending such repayment shall constitute part of the
Secured Obligations.

 

5.3                                 The Security Agent shall not have any duty to ensure that any dividends,
interest or other moneys and assets receivable in respect of the Mortgaged
Shares are duly and punctually paid, received or collected as and when the same
become due and payable or to ensure that the correct amounts (if any) are paid
or received on or in respect of the Mortgaged Shares or to ensure the taking up
of any (or any offer of any) stocks, shares, rights, moneys or other property
paid, distributed, accruing or offered at any time by way of redemption, bonus,
rights, preference, or otherwise on or in respect of, any of the Mortgaged
Shares.

 

5.4                                 The Mortgagor hereby authorises the Security Agent to arrange at any
time and from time to time after the occurrence of an Event of Default (as long
as an Event of Default is continuing) for the Mortgaged Shares or any part
thereof to be registered in the name of the Security Agent (or its nominee)
thereupon to be held, as so registered, subject to the terms of this 

 

10

 

Mortgage
and at the request of the Security Agent, the Mortgagor shall without
delay procure that the foregoing shall be done.

 

6.                                      PRESERVATION OF SECURITY

 

6.1                                 It is hereby agreed and declared that:

 

(a)                                  the security created by this Mortgage shall be held by
the Security Agent as a continuing security for the payment and discharge of
the Secured Obligations and the security so created shall not be satisfied by
any intermediate payment or satisfaction of any part of the Secured
Obligations;

 

(b)                                 the Security Agent shall not be bound to enforce any
other security before enforcing the security created by this Mortgage;

 

(c)                                  no delay or omission on the part of the Security
Agent in exercising any right, power or remedy under this Mortgage shall impair
such right, power or remedy or be construed as a waiver thereof nor shall any
single or partial exercise of any such right, power or remedy preclude any
further exercise thereof or the exercise of any other right, power or
remedy.  The rights, powers and remedies
herein provided are cumulative and not exclusive of any rights, powers and
remedies provided by law and may be exercised from time to time and as often as
the Security Agent may deem expedient; and

 

(d)                                 any waiver by the Security Agent of any terms of this
Mortgage shall only be effective if given in writing and then only for the
purpose and upon the terms for which it is given.

 

6.2                                 Any settlement or discharge under this Mortgage between the Security
Agent and the Mortgagor shall be conditional upon no security or payment
to the Security Agent or any other Secured Party by the Company or the
Mortgagor or any other person being avoided or set aside or ordered to be
refunded or reduced by virtue of any provision or enactment relating to
bankruptcy, insolvency, administration or liquidation for the time being in
force and, if such condition is not satisfied, the Security Agent shall be
entitled to recover from the Mortgagor on demand the value of such security or
the amount of any such payment as if such settlement or discharge had not
occurred the payment of which amounts shall, for the avoidance of doubt, form
part of the Secured Obligations.

 

6.3                                 The rights of the Security Agent under this Mortgage and the security
hereby constituted shall not be affected by any act, omission, matter or thing
which, but for this provision, might operate to impair, affect or discharge
such rights and security, in whole or
in part, including whether or not known to or discoverable by the
Company, the Mortgagor, the Security Agent or any other person:

 

(a)                                  any time or waiver granted to or composition with the
Company, the Mortgagor or any other person;

 

(b)                                 the taking, variation, compromise, renewal or release
of or refusal or neglect to perfect or enforce any rights, remedies or
securities against the Company, the Mortgagor or any other person;

 

(c)                                  any legal limitation, disability, incapacity or other
circumstances relating to the Company, the Mortgagor or any other person;

 

11

 

(d)                                 any amendment or supplement to any Transaction
Document or any other document or security (including any amendment the effect
of which is to change the nature or amount of any facilities made available
thereunder or to change the nature or extent of any obligations thereunder);

 

(e)                                  the dissolution, liquidation, amalgamation,
reconstruction or reorganisation of the Company, the Mortgagor or any other
person; or

 

(f)                                    the unenforceability, invalidity or frustration of any
obligations of the Company, the Mortgagor or any other person under any
Transaction Document or any other document or security.

 

6.4                                 Until the Release Date, the Mortgagor shall not by virtue of any payment
made hereunder on account of the Secured Obligations or by virtue of any
enforcement by the Security Agent of its rights under, or the security
constituted by, this Mortgage or any Transaction Document or by virtue of
any relationship between or transaction involving the Mortgagor and/or the
Company (whether such relationship or transaction shall constitute the
Mortgagor a creditor of the Company, a guarantor of the obligations of the
Company or in part subrogated to the rights of others against the Company or
otherwise howsoever and whether or not such relationship or transaction shall
be related to, or in connection with, the subject matter of this Mortgage):

 

(a)                                  exercise any rights of subrogation against the Company
or any other person in relation to any rights, security or moneys held or
received or receivable by the Security Agent or any person;

 

(b)                                 exercise any right of contribution from any co-surety
liable in respect of such moneys and liabilities under any other guarantee,
security or agreement;

 

(c)                                  exercise any right of set-off or counterclaim against
the Company or any such co-surety;

 

(d)                                 receive, claim or have the benefit of any payment,
distribution, security or indemnity from the Company or any such co-surety; or

 

(e)                                  unless so directed by the Security Agent (when the
Mortgagor will prove in accordance with such directions), claim as a creditor
of the Company or any such co-surety in competition with the Security Agent.

 

The Mortgagor shall hold in trust for the
Security Agent and forthwith pay or transfer (as appropriate) to the Security
Agent any such payment (including an amount to any such set-off), distribution
or benefit of such security, indemnity or claim in fact received by it.

 

6.5                                 Until the Release Date, the Security Agent may at any time keep in a
separate account or accounts (without liability to pay interest thereon) in the
name of the Security Agent for as long as it may think fit, any moneys received
recovered or realised under this Mortgage or under any other guarantee,
security or agreement relating in whole or in part to the Secured Obligations
without being under any intermediate obligation to apply the same or any part
thereof in or towards the discharge of the Secured Obligations or any other
amount owing or payable under the Transaction Documents; provided that the
Security Agent shall be obliged to apply amounts standing to the credit of such
account or accounts once the aggregate amount held by the Security Agent in any
such account or accounts opened pursuant hereto is sufficient to satisfy the
outstanding amount of the Secured Obligations in full.

 

12

 

6.6                                 The Mortgagor shall not, without the prior written consent of the
Security Agent (but subject to the provisions of the Transaction Warrant Instruments
and the Transaction Documents):

 

(a)                                  cause or permit any rights attaching to the Mortgaged
Shares to be varied or abrogated;

 

(b)                                 cause or permit any of the Mortgaged Shares to be
consolidated, sub-divided or converted or the capital of the Company to be
re-organised, exchanged or repaid; or

 

(c)                                  cause or permit anything to be done which may
depreciate, jeopardise or otherwise prejudice the value of the security hereby
given.

 

6.7                                 The Mortgagor hereby covenants that during the Security Period it will
remain the legal and beneficial owner of the Mortgaged Shares (subject to the
Security Interests hereby created) and that it will not:

 

(a)                                  create or suffer the creation of any Security
Interests (other than those created by this Mortgage) or any other interest on
or in respect of the whole or any part of the Mortgaged Shares or any of its
interest therein;

 

(b)                                 sell, assign, transfer or otherwise dispose of any of
its interest in the Mortgaged Shares except with the prior consent in writing
of the Security Agent; or

 

(c)                                  permit the Register of Members for the Company to be
maintained outside of the British Virgin Islands or by a service provider
other than the person to whom the letter of instructions in Schedule 6 has been
given (unless in the latter case, the Mortgagor have executed and delivered a
new letter of instruction in substantially the form of Schedule 6 to the new
service provider).

 

6.8                                 At no time after the completion of the Relevant Permitted
Reorganisation, shall the Mortgagor cease to legally and beneficially own
directly 100% of the shares in the Company (of each class) of and equity
interests in the Company, free from Security (other than Transaction Security
and the Original Holdco Share Mortgage (if any)) and shall not cease to have management
control over the Company.

 

6.9                                 The Mortgagor shall remain liable to perform all the obligations assumed
by it in relation to the Mortgaged Shares and the Security Agent shall be under
no obligation of any kind whatsoever in respect thereof or be under any
liability whatsoever in the event of any failure by the Mortgagor to perform
its obligations in respect thereof.

 

6.10                           The Mortgagor shall ensure that it shall not, without the prior written
consent of the Security Agent, use its voting rights to permit the Company to
amend its memorandum or articles of association in a way which could be
expected to adversely affect the interests of the Security Agent or any of the
Secured Parties.

 

6.11                           The Mortgagor shall procure that the Company shall not:

 

(a)                                  create or permit to subsist any Security Interest upon
the whole or any part of its assets, except as permitted under the Facility
Agreement (in the form subsisting as at the date of this Mortgage) or by the
Security Agent;

 

(b)                                 register any transfer of the Mortgaged Shares to any
person except to the Security Agent or its nominees pursuant to the provisions
of this Mortgage;

 

13

 

(c)                                  issue any replacement share certificates in respect of
any of the Mortgaged Shares except for any such replacement in connection with
a transfer of Mortgaged Shares;

 

(d)                                 continue its existence under the laws of any
jurisdiction other than the British Virgin Islands;

 

(e)                                  do anything which might prejudice its status as a
BVI Business Company;

 

(f)                                    issue, allot or grant warrants or options with respect
to any additional shares, except as permitted under the Facility Agreement (in
the form subsisting as at the date of this Mortgage);

 

(g)                                 exercise any rights of forfeiture over any of the
Mortgaged Shares; or

 

(h)                                 purchase, redeem, otherwise acquire, cancel,
sub-divide, amalgamate, reclassify or otherwise restructure any of the
Mortgaged Shares,

 

during the Security Period without the prior
written consent of the Security Agent.

 

6.12                           The Mortgagor shall procure that the Company irrevocably waives in
favour of the Security Agent:

 

(a)                                  any first and paramount lien; and

 

(b)                                 any rights of forfeiture,

 

which it may have over the Mortgaged Shares.

 

6.13                           The Mortgagor shall procure that the Company shall irrevocably consent
to any transfer of the Mortgaged Shares by the Security Agent or its nominee to
any other person pursuant to the exercise of the Security Agent’s rights under
this Mortgage.

 

6.14                           The Mortgagor shall procure that the Company shall comply with its
memorandum and articles of association and otherwise conduct its affairs in a
way which does not prejudice the Security Agent’s legal and economic
interests in relation to the Mortgaged Shares.

 

6.15                           The Mortgagor shall not without the prior written consent of the
Security Agent participate in any vote concerning a members’ liquidation or
compromise pursuant to Section 177 of the BVI Act or Part II of
the Insolvency Act.

 

7.                                      ENFORCEMENT OF SECURITY

 

7.1                                 At any time after the occurrence of an Event of Default (as long as an
Event of Default is continuing) or if a demand is made for the payment of the
Secured Obligations the security hereby constituted shall become immediately
enforceable and the rights of enforcement of the Security Agent under this
Mortgage shall be immediately exercisable upon and at any time thereafter and,
without prejudice to the generality of the foregoing the Security Agent without
further notice to the Mortgagor may, whether acting on its own behalf or through
a receiver or agent:

 

(a)                                  solely and exclusively exercise all voting and/or
consensual powers pertaining to the Mortgaged Shares or any part thereof and
may exercise such powers in such manner as the Security Agent may think fit;

 

14

 

(b)                                 date and present to the Company or any other person
any undated documents provided to it pursuant to Clause 4 or any other
provision of this Mortgage, including to remove the then existing directors and
officers (with or without cause) by dating and presenting the undated, signed
letters of resignation delivered pursuant to this Mortgage to appoint such
persons as directors of the Company as it shall deem appropriate;

 

(c)                                  receive and retain all dividends, interest or other moneys
or assets accruing on or in respect of the Mortgaged Shares or any part
thereof, such dividends, interest or other moneys or assets to be held by the
Security Agent, as additional security mortgaged and charged under and subject
to the terms of this Mortgage and any such dividends, interest and other
moneys or assets received by the Mortgagor after such time shall be held in
trust by the Mortgagor for the Security Agent and paid or transferred to the
Security Agent on demand;

 

(d)                                 take possession of, get in, assign, exchange, sell,
transfer, grant options over or otherwise dispose of the Mortgaged Shares or
any part thereof at such place and in such manner and at such price or prices
as the Security Agent may deem fit, and thereupon the Security Agent shall have
the right to deliver, assign and transfer in accordance therewith the Mortgaged
Shares so sold, transferred, granted options over or otherwise disposed of
including by way of changing the ownership of the Mortgaged Shares as shown on
the Register of Members;

 

(e)                                  borrow or raise money either unsecured or on the
security of the Mortgaged Shares (either in priority to the Mortgage or
otherwise);

 

(f)                                    settle, adjust, refer to arbitration, compromise and
arrange any claims, accounts, disputes, questions and demands with or by any
person who is or claims to be a creditor of the Mortgagor or relating to the
Mortgaged Shares;

 

(g)                                 bring, prosecute, enforce, defend and abandon actions,
suits and proceedings in relation to the Mortgaged Shares or any business of
the Mortgagor;

 

(h)                                 redeem any security (whether or not having priority to
the Mortgage) over the Mortgaged Shares and to settle the accounts of any
person with an interest in the Mortgaged Shares;

 

(i)                                     exercise and do (or permit the Mortgagor or any
nominees of the Mortgagor to exercise and do) all such rights and things as the
Security Agent would be capable of exercising or doing if it were the absolute
beneficial owner of the Mortgaged Shares;

 

(j)                                     do anything else it may think fit for the realisation
of the Mortgaged Shares or incidental to the exercise of any of the rights
conferred on the Security Agent under or by virtue of any document to which the
Mortgagor is a party; and

 

(k)                                  exercise all rights and remedies afforded to it under
this Mortgage and applicable law.

 

7.2                                 The Security Agent shall not be obliged to make any enquiry as to the
nature or sufficiency of any payment received by it under this Mortgage or to
make any claim or to take any action to collect any moneys assigned by this Mortgage
or to enforce any rights or benefits assigned to the Security Agent by this
Mortgage or to which the Security Agent may at any time be entitled hereunder.

 

15

 

7.3                                 Upon any sale of the Mortgaged Shares or any part thereof by the
Security Agent, the purchaser shall not be bound to see or enquire whether the
Security Agent’s power of sale has become exercisable in the manner provided in
this Mortgage and the sale shall be deemed to be within the power of the
Security Agent, and the receipt of the Security Agent for the purchase money
shall effectively discharge the purchaser who shall not be concerned with the
manner of application of the proceeds of sale or be in any way answerable
therefor.

 

7.4                                 Any money received or realised under the powers
conferred by this Mortgage shall be paid or applied in the order as set out in
Clause 7 (Application of Proceeds) of the Security
Trust Deed.

 

7.5                                 The Security Agent may, at any time after demand and
until the irrevocable and unconditional payment to the Security Agent of all
Secured Obligations, place and keep to the credit of a suspense account any
money received or realised by the Security Agent by virtue of this
Mortgage.  The Security Agent shall
have no intermediate obligation to apply such money in or towards the
discharge of any Secured Obligations. 
Amounts standing to the credit of any such suspense account shall bear
interest at a rate considered by the Security Agent in good faith to be a fair
market rate.

 

7.6                                 Until all Secured Obligations have been unconditionally and irrevocably
paid and discharged in full, the Security Agent may refrain from applying or
enforcing any other moneys, security or rights held by it in respect of the
Secured Obligations or may apply and enforce such moneys, security or
rights in such manner and in such order as it shall decide in its unfettered
discretion.

 

7.7                                 Neither the Security Agent nor its agents, managers, officers,
employees, delegates and advisers shall be liable for any claim, demand,
liability, loss, damage, cost or expense incurred or arising in connection with
the exercise or purported exercise of any rights, powers and discretions
hereunder in the absence of dishonesty or wilful default.

 

7.8                                 The Security Agent shall not by reason of the taking of possession of
the whole or any part of the Mortgaged Shares or any part thereof be liable to
account as mortgagee-in-possession or for anything except actual receipts or be
liable for any loss upon realisation or for any default or omission for which a
mortgagee-in-possession might be liable.

 

7.9                                 The following shall apply with respect to statutory restrictions:

 

(a)                                  the restriction on the consolidation of mortgages and
on power of sale imposed by Sections 35 and 40 respectively of the
CLP Ordinance shall not apply to the security constituted by this
Mortgage;

 

(b)                                 for the purposes of Section 66(5) of the
BVI Act there are no limitations on the remedies available to a
mortgagee, chargee or receiver in respect of mortgages or charges of shares;

 

(c)                                  for the purposes of Section 66(7)(a) and
Section 66(7)(b) of the BVI Act, the remedies available in
Section 66(5) of the BVI Act shall not be exercisable until:

 

(i)                                     a period of one hour has elapsed from the
occurrence of an Event of Default; and

 

(ii)                                  the Event of Default has not been rectified within
one hour of service of a notice specifying the default and requiring
rectification thereof.

 

16

 

7.10                           For the purpose of all rights and powers implied or granted by statute,
the Secured Obligations are deemed to have fallen due on the date of this
Mortgage.  The power of sale and other
powers conferred by Sections 38 and 39 of the CLP Ordinance and all
other enforcement powers conferred by this Mortgage shall be immediately
exercisable at any time after the occurrence of an Event of Default (as long as
an Event of Default is continuing).

 

7.11                           If there is any ambiguity or conflict between the powers contained in
the Insolvency Act and/or the CLP Ordinance and those contained in
this Mortgage, those contained in this Mortgage shall prevail.

 

7.12                           Section 46(1) of the CLP Ordinance shall not apply to this
Mortgage.

 

7.13                           Section 46(6) of the CLP Ordinance shall not apply to a
receiver appointed under this Mortgage.

 

8.                                      APPOINTMENT OF A RECEIVER

 

8.1                                 At any time after:

 

(a)                                  the occurrence of an Event of Default (as long as an
Event of Default is continuing); or

 

(b)                                 a request has been made by the Mortgagor to the
Security Agent for the appointment of a receiver over its assets or in respect
of that Mortgagor,

 

then notwithstanding the terms of any other
agreement between the Mortgagor and any person, the Security Agent may (unless
precluded by law) appoint in writing any person or persons to be a receiver or
receiver and manager of all or any part of the Mortgaged Shares as the Security
Agent may choose in its entire discretion.

 

8.2                                 Where more than one receiver is appointed, the appointees shall have
power to act jointly or separately unless the Security Agent shall specify to
the contrary.

 

8.3                                 The Security Agent may from time to time determine the remuneration of a
receiver.

 

8.4                                 The Security Agent may remove a receiver from all or any of the
Mortgaged Shares of which he is the receiver and after the receiver has vacated
office or ceased to act in respect of any of the Mortgaged Shares, appoint a
further receiver over all or any of the Mortgaged Shares in respect of which he
shall have ceased to act.

 

8.5                                 Such an appointment of a receiver shall not preclude:

 

(a)                                  the Security Agent from making any subsequent
appointment of a receiver over all or any Mortgaged Shares over which a
receiver has not previously been appointed or has ceased to act; or

 

(b)                                 the appointment of an additional receiver to act while
the first receiver continues to act.

 

8.6                                 The receiver shall be the agent of the Mortgagor (which shall be solely
liable for his acts, defaults and remuneration) unless and until the
Mortgagor is placed into liquidation, after which time he shall act as
principal.  The receiver shall not at any
time become the agent of the Security Agent.

 

17

 

9.                                      POWERS OF A RECEIVER

 

9.1                                 In addition to those powers conferred by law, a receiver shall have and
be entitled to exercise in relation to the Mortgagor all the powers set out
below:

 

(a)                                  to exercise all rights of the Security Agent under or
pursuant to this Mortgage including all voting and other rights attaching to
the Mortgaged Shares;

 

(b)                                 to make any arrangement or compromise with others as
he shall think fit;

 

(c)                                  to appoint managers, officers and agents for the above
purposes at such remuneration as the receiver may determine;

 

(d)                                 to redeem any prior encumbrance and settle and pass
the accounts of the encumbrancer and any accounts so settled and passed shall
(subject to any manifest error) be conclusive and binding on the Mortgagor and
the money so paid shall be deemed an expense properly incurred by the receiver;

 

(e)                                  to pay the proper administrative charges in respect of
time spent by its agents and employees in dealing with matters raised by the
receiver or relating to the receivership of the Mortgagor; and

 

(f)                                    to do all such other acts and things as may be
considered by the receiver to be incidental or conducive to any of the above
matters or powers or otherwise incidental or conducive to the preservation,
improvement or realisation of the Mortgaged Shares or the value thereof.

 

10.                               FURTHER ASSURANCES

 

10.1                           The Mortgagor shall at its own expense promptly do all such acts or
execute all such documents (including assignments, transfers, mortgages,
charges, notices and instructions) as the Security Agent may specify and in
such form as the Security Agent may require in order to:

 

(a)                                  perfect or protect the security created or intended to
be created under or evidenced by this Mortgage (which may include the execution
of a legal mortgage, charge, assignment or other security over all or any
of the assets which are, or are intended to be, the subject of this Mortgage)
or for the exercise of any rights, powers and remedies of the Security Agent
provided by or pursuant to this Mortgage, the Transaction Documents or by law;

 

(b)                                 confer on the Security Agent security over any
property and assets of the Mortgagor located in any jurisdiction which is (to
the extent permitted by local law) equivalent or similar to the security
intended to be conferred by or pursuant to this Mortgage; or

 

(c)                                  following an Event of Default (as long as an Event of
Default is continuing), facilitate the realisation of the assets which are, or
are intended to be, the subject of this Mortgage.

 

10.2                           Without limiting the other provisions of this Mortgage, the Mortgagor
shall at its own expense take all such action as is available to it (including
making all filings and registrations) as may be necessary for the purpose of
the creation, perfection, protection or maintenance of any

 

18

 

security
conferred or intended to be conferred on the Security Agent by or pursuant to
this Mortgage.

 

11.                               INDEMNITIES

 

11.1                           The Mortgagor will indemnify and save harmless the Security Agent, any
receiver and each agent or attorney appointed under or pursuant to this
Mortgage from and against any and all expenses, claims, liabilities, losses,
taxes, costs, duties, fees and charges suffered, incurred or made by the
Security Agent or such receiver, agent or attorney:

 

(a)                                  in the exercise or purported exercise of any rights,
powers or discretions vested in them pursuant to this Mortgage;

 

(b)                                 in the preservation or enforcement of the Security
Agent’s rights under this Mortgage or the priority thereof;

 

(c)                                  on the release of any part of the Mortgaged Shares from
the security created by this Mortgage; or

 

(d)                                 arising out of any breach by the Mortgagor of any term
of this Mortgage,

 

and the Security Agent or such receiver, agent
or attorney may retain and pay all sums in respect of the same out of money
received under the powers conferred by this Mortgage.  All amounts suffered, incurred or paid by the
Security Agent or such receiver, agent or attorney or any of them shall be
recoverable on a full indemnity basis provided that nothing in this
Clause 11.1 shall require the Mortgagor to indemnify and save harmless the
Security Agent from and against any expenses, claims, liabilities, losses,
taxes, costs, duties, fees and charges suffered, incurred or made by the
Security Agent as a result of the Security Agent’s fraud or wilful default.

 

11.2                           If, under any applicable law or regulation, and whether pursuant to a
judgment being made or registered against the Mortgagor or the bankruptcy or
liquidation of the Mortgagor or for any other reason any payment under or in
connection with this Mortgage is made or fails to be satisfied in a currency
(the “Payment Currency”) other than the
currency in which such payment is due under or in connection with this Mortgage
(the “Contractual Currency”), then to the
extent that the amount of such payment actually received by the Security Agent
when converted into the Contractual Currency at the rate of exchange,
falls short of the amount due under or in connection with this Mortgage, the
Mortgagor, as a separate and independent obligation, shall indemnify and
hold harmless the Security Agent against the amount of such shortfall.  For the purposes of this Clause 11.2, “rate of exchange” means the rate at which the Security Agent
is able on or about the date of such payment to purchase the Contractual
Currency with the Payment Currency and shall take into account any premium
and other costs of exchange with respect thereto.

 

12.                               POWER OF ATTORNEY

 

12.1                           The Mortgagor, by way of security and in order more fully to secure the
performance of its obligations hereunder, hereby irrevocably appoints the
Security Agent and the persons deriving title under it (including, but without
any limitation, any receiver) jointly and also severally
(with full power of substitution and delegation) to be its attorney-in-fact:

 

(a)                                  to execute and complete in favour of the Security
Agent or its nominees or of any purchaser any documents which the Security
Agent may from time to time require for 

 

19

 

perfecting the Security
Agent’s title to, for vesting any of the assets and property hereby mortgaged
or charged in the Security Agent or its nominees or in any purchaser or for any
of the purposes contemplated in Clause 7.1 hereof;

 

(b)                                 to give effectual discharges for payments, to take and
institute on non-payment (if the Security Agent in its sole discretion so
decides) all steps and proceedings in the name of the Mortgagor or of the
Security Agent for the recovery of such moneys, property and assets hereby
mortgaged or charged;

 

(c)                                  to agree accounts and make allowances and give time or
other indulgence to any surety or other person liable;

 

(d)                                 so as to enable the Security Agent to carry out in the
name of the Mortgagor any obligation imposed on the Mortgagor by this Mortgage
(including the execution and delivery of any deeds, charges, assignments or
other security and any transfers of the Mortgaged Shares and the exercise of
all the Mortgagor’s rights and discretions in relation to the Mortgaged
Shares);

 

(e)                                  so as to enable the Security Agent and any receiver or
other person to exercise, or delegate the exercise of, any of the rights,
powers and authorities conferred on them by or pursuant to this Mortgage or by
law (including the exercise of any right of a legal and beneficial owner of the
Mortgaged Shares); and

 

(f)                                    generally for it and in its name and on its behalf and
as its act and deed or otherwise execute, seal and deliver and otherwise
perfect and do any such legal assignments and other assurances, charges, authorities
and documents over the moneys, property and assets hereby charged, and all such
deeds, instruments, acts and things which may be required for the full exercise
of all or any of the powers conferred or which may be deemed proper on or in
connection with any of the purposes aforesaid.

 

12.2                           Notwithstanding any other provision of Clause 12.1, such power
shall not be exercisable by or on behalf of the Security Agent as the case may
be until:

 

(a)                                  an Event of Default (as long as an Event of Default is
continuing) has occurred; or

 

(b)                                 the Mortgagor has failed to comply with
Clause 10.

 

12.3                           The power hereby conferred shall be a general power of attorney and the
Mortgagor hereby ratifies and confirms and agrees to ratify and confirm any
instrument, act or thing which any attorney appointed pursuant hereto may
execute or do.  In relation to the power
referred to herein, the exercise by the Security Agent of such power shall be
conclusive evidence of its right to exercise the same.

 

13.                               EXPENSES

 

13.1                           The Mortgagor shall pay to the Security Agent on demand all costs, fees
and expenses (including, but not limited to, legal fees and expenses) and
taxes thereon:

 

(a)                                  reasonably incurred by the Security Agent or for which
the Security Agent may become liable in connection with:

 

(i)                                     the negotiation, preparation and execution of this
Mortgage;

 

20

 

(ii)                                  any variation of, or amendment or supplement to, any
of the terms of this Mortgage; or

 

(iii)                               any consent or waiver required from the Security Agent
in relation to this Mortgage; and

 

(b)                                 incurred by the Security Agent or for which the
Security Agent may become liable in connection with the preserving or enforcing
of, or attempting to preserve or enforce, any of its rights under this Mortgage
or the priority hereof

 

and in the case referred to in
Clauses 13.1(a)(ii) and 13.1(a)(iii) regardless of whether the same is
actually implemented, completed or granted, as the case may be.

 

13.2                           The Mortgagor shall pay promptly all registration, stamp, documentary
and other like duties and taxes to which this Mortgage may be subject or give
rise and shall indemnify the Security Agent on demand against any and all
liabilities with respect to or resulting from any delay or omission on the part
of the Mortgagor to pay any such duties or taxes.

 

14.                               RELEASE

 

14.1                           Subject to Clauses 6.2 and 14.2 after the occurrence of the Release
Date, the Security Agent shall (at the request and cost of the Mortgagor)
execute such documents and do all such reasonable acts as may be necessary to
release the Mortgaged Shares from the security constituted by this
Mortgage.  Such release shall not
prejudice the rights of the Security Agent under Clause 11.

 

14.2                           If the Security Agent considers in good faith that any amount received
in payment or purported payment of the Secured Obligations is capable of being
avoided or reduced by virtue of any insolvency or other similar laws:

 

(a)                                  the liability of the Mortgagor under this Mortgage and
the security constituted by this Mortgage shall continue and such amount shall
not be considered to have been irrevocably paid; and

 

(b)                                 the Security Agent may keep any security held by it in
respect of the Mortgagor’ liability under the Transaction Documents in order to
protect the Secured Parties against any possible claim under insolvency
law.  If a claim is made against a
Secured Party prior to the discharge of any such security, the Security
Agent may keep the security until that claim has finally been dealt with.

 

15.                               NOTICES

 

15.1                           Any notice required to be given hereunder shall be in
writing in the English language and shall be served in accordance with Clause
30 (Notices) of the Facility
Agreement (in the form subsisting as at the date of this Mortgage) mutatis mutandis by sending the same to the relevant address
as set out below:

 

The Mortgagor

 

To:                                                                              SinoTech Energy Limited

 

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

 

21

 

                                                                                                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

 

The Security Agent

 

To:                                                                              DB Trustees (Hong Kong) Limited

 

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

 

Fax:                                                                           +852 2203
7320/7323

 

Attention:                                         Managing Director

 

16.                               ASSIGNMENTS

 

16.1                           This Mortgage shall be binding upon and shall enure to the benefit of
the Mortgagor, the Security Agent and each of their respective successors
and (subject as hereinafter provided) assigns and references in this Mortgage
to any of them shall be construed accordingly.

 

16.2                           The Mortgagor may not assign or transfer all or any part of its rights
and/or obligations under this Mortgage.

 

16.3                           The Security Agent may assign or transfer all or any part of its rights
or obligations under this Mortgage to any assignee or transferee without the
consent of the Mortgagor.

 

17.                               SET-OFF

 

17.1                           The
Mortgagor authorises the Security Agent (but the Security Agent shall not be
obliged to exercise such right), after the occurrence of an Event of Default
(as long as an Event of Default is continuing) to set-off against the Secured
Obligations any amount or other obligation (contingent or otherwise) owing by
the Security Agent to the Mortgagor.

 

18.                               SUBSEQUENT SECURITY INTERESTS

 

18.1                           If the Security Agent or any other Secured Party at any time receives or
is deemed to have received notice of any subsequent Security Interest affecting
all or any part of the Mortgaged Shares or any assignment or transfer of the
Mortgaged Shares which is prohibited by the terms of this Mortgage, all
payments thereafter by or on behalf of the Mortgagor to the Security Agent or
any other Secured Party shall be treated as having been credited to a new
account of the Mortgagor and not as having been applied in reduction of the
Secured Obligations as at the time when the Security Agent or any other Secured
Party received such notice.

 

22

 

19.                               MISCELLANEOUS

 

19.1                           The Security Agent, at any time and from time to time, may delegate by
power of attorney or in any other manner to any person or persons all or any of
the powers, authorities and discretions which are for the time being
exercisable by the Security Agent under this Mortgage in relation to the
Mortgaged Shares or any part thereof. 
Any such delegation may be made upon such terms and be subject to such
regulations as the Security Agent may think fit.  The Security Agent shall not be in any way
liable or responsible to the Mortgagor for any loss or damage arising from any
act, default, omission or misconduct on the part of any such delegate
provided the Security Agent has acted reasonably in selecting such delegate.

 

19.2                           If any of the clauses, conditions, covenants or restrictions (the “Provision”) of this Mortgage or any deed or document
emanating from it shall be found to be void but would be valid if some part
thereof were deleted or modified, then the Provision shall apply with such
deletion or modification as may be necessary to make it valid and effective.

 

19.3                           This Mortgage (together with any documents referred to herein)
constitutes the whole agreement between the Parties relating to its subject
matter and no variations hereof shall be effective unless made in writing and
signed by each of the Parties.

 

19.4                           Each document, instrument, statement, report, notice or other
communication delivered in connection with this Mortgage shall be in English or
where not in English shall be accompanied by a certified English translation
which translation shall with respect to all documents of a contractual nature
and all certificates and notices to be delivered hereunder be the governing
version and upon which in all cases the Security Agent and the Secured Parties
shall be entitled to rely.

 

19.5                           This Mortgage may be executed in counterparts each of which when
executed and delivered shall constitute an original but all such counterparts
together shall constitute one and the same instrument.

 

19.6                           The parties intend that this Mortgage takes effect as a deed
notwithstanding the fact that the Security Agent may only execute it under
hand.

 

19.7                           Nothing in this Mortgage shall constitute or be deemed to constitute a
partnership between any of the Secured Parties and the Security Agent.

 

20.                               LAW AND JURISDICTION

 

20.1                           This Mortgage shall be governed by and construed in accordance with the
laws of the British Virgin Islands and the Parties hereby irrevocably
submit to the non-exclusive jurisdiction of the courts of the
British Virgin Islands, provided that nothing in this clause shall affect
the right of the Security Agent to serve process in any manner permitted by law
or limit the right of the Security Agent to take proceedings with respect to
this Mortgage against the Mortgagor in any jurisdiction nor shall the taking of
proceedings with respect to this Mortgage in any jurisdiction preclude the
Security Agent from taking proceedings with respect to this Mortgage in any
other jurisdiction, whether concurrently or not.

 

20.2                           The Mortgagor shall at all times maintain an agent for service of
process in the British Virgin Islands. Such agent shall be Superport Limited
(Company Number 1525496) of P.O. Box 957, Offshore Incorporations Centre, Road
Town, Tortola, British Virgin Islands and any writ, judgment or other notice of
legal process shall be sufficiently served on the Mortgagor if delivered to
such agent at its address set out above. The Mortgagor undertakes not to revoke
the authority of the above agent and if, for any reason, such agent no longer
serves as agent of the Mortgagor to receive service of process the Mortgagor
shall promptly appoint 

 

23

 

another
such agent and advise the Security Agent of the new agent’s name and address
for service.

 

24

 

IN WITNESS whereof this Equitable Share Mortgage has been entered into by the
parties on the day and the year first before written.

 

EXECUTED AS A DEED by SINOTECH 

ENERGY LIMITED:

 

	
  /s/ Liu Qingzeng

  	
   

  
	
   

  	
   

  
	
  (Name of
  Authorized Signatory)

  	
   

  
	
  Name:

  	
  Liu Qingzeng

  	
   

  
	
  Title:

  	
  Director

  	
   

  

 

 

in the presence of:

 

 

	
  /s/ Zheng Yao

  	
   

  
	
   

  	
   

  
	
  (Name of witness)

  	
   

  
	
  Name:

  	
  Zheng Yao

  	
   

  
	
  Address:

  	
  19, Beijing Eco-Tech Development Area

  	
   

  
	
  Occupation:

  	
  Manager

  	
   

  

 

SIGNATURE PAGE TO THE
EQUITABLE SHARE MORTGAGE

 

 

EXECUTED AS A DEED by DB TRUSTEES

(HONG KONG) LIMITED:

 

 

	
  /s/ Aric
  Kay-Russell

  	
   

  	
  /s/Ng Yue Min

  

 

(Name of Authorized
Signatory)

Name:

Title:

 

 

in the presence of:

 

 

(Name of witness)

 

Name:

Address:

Occupation:

 

SIGNATURE PAGE TO THE
EQUITABLE SHARE MORTGAGE

 

 

SCHEDULE
1

 

SUPERPORT LIMITED

 

(THE “COMPANY”)

 

SHARE
TRANSFER CERTIFICATE

 

[LEFT
UNDATED]

 

SHARE TRANSFER CERTIFICATE
DATED                                                            
(the “Transferor”)
does hereby transfer to
                                                              
of                                                               
(the “Transferee”)
                                                                      
(the “Shares”) of a par value of
                
each.

 

SIGNED by the Transferor by:

 

 

(Name of Authorized
Signatory)

Name:

Title:

 

 

in the presence of:

 

 

(Name of witness)

Name:

Address:

Occupation:

 

27

 

And I/we do hereby agree to take the Shares.

 

SIGNED by the Transferee by:

 

 

(Name of Authorized
Signatory)

Name:

Title:

 

 

in the presence of:

 

 

(Name of witness)

Name:

Address:

Occupation:

 

28

 

SCHEDULE
2

 

SUPERPORT LIMITED

 

IRREVOCABLE
APPOINTMENT OF PROXY AND POWER OF ATTORNEY

 

We, SINOTECH ENERGY LIMITED,
hereby irrevocably appoint DB TRUSTEES (HONG KONG)
LIMITED (and its successors, assignees and transferees) as our:

 

1.                                       proxy to vote at meetings of the Shareholders of Superport Limited (the “Company”) in respect of any existing or further shares in
the Company which may have been or may from time to time be issued and/or
registered in our name; and

 

2.                                       duly authorised representative and duly appointed
attorney-in-fact to sign resolutions in writing of the Company  in respect of any existing or further shares in the Company
which may have been or may from time to time be issued and/or registered in our
name.

 

This proxy and this power of attorney are
irrevocable by reason of being coupled with the interest of DB Trustees (Hong Kong) Limited as mortgagee of the
aforesaid shares.

 

IN WITNESS whereof this instrument has been duly executed as a deed this
         day of
                            .

 

EXECUTED AS A DEED by SINOTECH 

ENERGY LIMITED:

 

 

(Name of Authorized
Signatory)

Name:

Title:

 

 

in the presence of:

 

 

(Name of witness)

Name:

Address:

Occupation:

 

29

 

SCHEDULE
3

 

PART I

 

LETTER OF
RESIGNATION FROM DIRECTOR

 

[LEFT UNDATED]

 

[Do not
date]

 

Board of Directors

 

SUPERPORT LIMITED

Offshore Incorporations Limited

P.O. Box 957

Offshore Incorporations Centre

Road Town, Tortola

British Virgin Islands

 

Dear Sirs

 

LETTER OF RESIGNATION RE: SUPERPORT LIMITED (THE “COMPANY”)

 

I hereby resign as a Director of the Company
and confirm that I have no claims against the Company for loss of office,
arrears of pay or otherwise howsoever arising, but to the extent that I may
have any such claim, I hereby irrevocably waive the same.

 

This resignation is to be effective as at the
date hereof.

 

Yours faithfully

 

 

[Name of Director]

Director

 

30

 

SCHEDULE 3

 

PART II

 

LETTER OF
AUTHORISATION FROM DIRECTOR

 

Date:

 

DB TRUSTEES (HONG KONG) LIMITED (and its successors, assignees and transferees)

 

Dear Sirs

 

SHARE MORTGAGE DATED [    ] (AS AMENDED AND SUPPLEMENTED FROM TIME TO
TIME, THE “MORTGAGE”) BETWEEN SINOTECH ENERGY LIMITED AS MORTGAGOR AND DB
TRUSTEES (HONG KONG) LIMITED AS SECURITY AGENT IN RESPECT OF SHARES IN SUPERPORT LIMITED (THE “COMPANY”)

 

I refer to (a) my executed but undated
letter of resignation as a Director of the
Company and (b) the executed but undated written resolutions of all
the directors of the Company signed by me provided in accordance with the
Mortgage.

 

I hereby authorise you to date, deliver, and
give full effect to and otherwise complete the resignation letter and the
undated written resolutions referred to above in the event of an Event of
Default (as defined in the Mortgage as long as an Event of Default is
continuing).

 

I hereby authorise you to send them to the
Company’s registered office thereby terminating my directorship of the Company
without compensation for loss of office. 
I acknowledge and agree that your discretion to act in this regard is to
be exercised solely in the interests of the Security Agent relating to the
Mortgage executed over shares in the Company in your favour.

 

I confirm that you may delegate the authority
conferred by this letter to any of your successors and assigns as Security
Agent in relation to the Mortgage.

 

Yours faithfully

 

 

[Name of Director]

Director

 

31

 

SCHEDULE
4

 

LETTER OF
UNDERTAKING AND CONFIRMATION FROM SUPERPORT LIMITED TO

 

DB TRUSTEES
(HONG KONG) LIMITED

 

Date:

 

DB TRUSTEES (HONG KONG) LIMITED (and its successors, assignees and transferees)

 

Dear Sirs

 

SUPERPORT LIMITED (THE “COMPANY”)

 

We refer to the equitable share mortgage in
respect of Shares of  the Company  dated
[               ]
(as amended and supplemented from time to time, the “Mortgage”)
between SINOTECH ENERGY LIMITED as mortgagor
(the “Mortgagor”) and DB TRUSTEES (HONG KONG) LIMITED as security agent (the “Security Agent” (such expression to include its successors,
assignees and transferees)) whereby, inter alia,
the Mortgagor granted a mortgage and charge over the Mortgaged Shares in favour
of the Security Agent.

 

Capitalised words and expressions used in this
letter which are not expressly defined herein have the meanings ascribed to
them in the Mortgage.

 

This letter of undertaking and confirmation is
given pursuant to Clauses 4.2(f) and 4.8 of the Mortgage.

 

1.                                       For valuable consideration receipt of which is hereby
acknowledged, the Company hereby irrevocably and unconditionally undertakes to
register (and hereby permits the Security Agent or its nominee(s), if it/they
have custody of the original Register of Members to register) in the Company’s
Register of Members any and all share transfers to the Security Agent or its
nominee in respect of the Mortgaged Shares submitted to the Company by the
Security Agent.

 

2.                                       The Company hereby confirms that it has instructed its
registered agent to make an annotation of the existence of the Mortgage and the
security interests created thereby in the Company’s Register of Members pursuant
to Clause 4.8 of the Mortgage.

 

	
  SIGNED for and on behalf of SUPERPORT LIMITED by:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Name of Authorized Signatory)

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

32

 

SCHEDULE
5

 

SUPERPORT LIMITED

(the “Company”)

 

 

WRITTEN
RESOLUTIONS OF THE DIRECTORS

OF THE
COMPANY DATED                 

 

 

1.                                      SUPERPORT LIMITED (THE “COMPANY”)

 

1.1                                 Written resolution of all the directors made pursuant to the articles of
association of the Company.

 

2.                                      SHARE TRANSFER

 

2.1                                 IT
IS RESOLVED that the following
transfer(s) of the shares of the Company be approved with immediate
effect:

 

3.                                      CHANGES IN DIRECTORS

 

3.1                                 IT
IS RESOLVED that:

 

(a)                                  the following persons be appointed as directors of the
Company with immediate effect:

 

(b)                                 that the resignation of the following persons as
directors of the Company be accepted with immediate effect:

 

4.                                      CHANGE IN OFFICER(S)

 

4.1                                 IT
IS RESOLVED that:

 

(a)                                  the resignation of the following person(s) as
officer(s) of the Company be accepted with immediate effect:

 

(b)                                 the following persons be appointed as officer(s) of
the Company with the positions specified below with immediate effect:

 

33

 

5.                                      REGISTER OF MEMBERS

 

5.1                                 IT
IS RESOLVED that the Register of
Members of the Company be updated to record the transfer of the shares to the
transferee referred to above and the registered agent of the Company be hereby
authorised and instructed to:

 

(a)                                  update the original Register of Members if it retains
the original or update its copy of the Register of Members if it retains a copy
of the Register of Members to record the transferee as the registered holder of
the relevant shares; and

 

(b)                                 provide a copy of the updated Register of Members to
the transferee.

 

6.                                      REGISTER OF DIRECTORS

 

6.1                                 IT
IS RESOLVED that the Register of
Directors of the Company be updated to record the above changes in directors
and secretary and the registered agent be hereby authorised and instructed to:

 

(a)                                  update the original Register of Directors and provide
a copy of the updated Register of Directors to the transferee; and

 

(b)                                 make the necessary filings with the Registrar of
Companies to reflect the change of directors.

 

	
   

  	
   

  	
   

  
	
  [Name]

  Director

  	
   

  	
  [Name]

  Director

  

 

[To be signed by all the directors of the
Company]

 

34

 

SCHEDULE
6

 

FORM OF
LETTER OF INSTRUCTIONS FROM SUPERPORT
LIMITED TO
REGISTERED AGENT

 

Date:

 

Offshore Incorporations Limited

P.O. Box 957

Offshore Incorporations Centre

Road Town, Tortola

British Virgin Islands

 

Dear Sirs

 

SUPERPORT LIMITED (THE “COMPANY”) – INSTRUCTIONS
TO REGISTERED AGENT

 

1.                                       We irrevocably instruct that as from the date hereof,
the following shall be an instructing party for the Company:

 

DB Trustees (Hong Kong)
Limited (and its successors,
assignees and transferees)

 

(the “New Instructing Party”),
until such time as you are informed otherwise by the New Instructing
Party.  As from the period starting from
the date on which the New Instructing Party (or any successor-in-title) informs
you that there has been an Event of Default (as defined in the Share Mortgage
between SinoTech Energy Limited and DB Trustees (Hong Kong) Limited dated
[               ]
in respect of shares in the Company (as amended and supplemented from time to
time, the “Mortgage”)) [which is continuing]
and ending on the date on which the New Instructing Party (or its
successor-in-title) informs you that such Event of Default no longer subsists,
you will be irrevocably instructed to regard the New Instructing Party (or its
successor-in-title) as the sole instructing party for the Company and without
limiting the foregoing if at any time the New Instructing Party instructs
you to register the Security Agent or its nominee (or any successor-in-title) as
the registered holder of any of the shares the subject of the Mortgage you are
hereby authorised and instructed to do so and update the original Register of
Members accordingly without notice to us or consent from us.

 

2.                                       We irrevocably instruct you to make an annotation of
the existence of the Mortgage and the security interests created thereby in the
Company’s Register of Members pursuant to Clause 4.8 of the Mortgage.

 

Yours faithfully

 

 

(Name of Director)

Name:

 

35Exhibit 10.44

 

 

EXECUTION COPY

 

DATED

 

INTERNATIONAL
PETROLEUM SERVICES CORPORATION LIMITED

as Chargor

 

in favour of

 

DB TRUSTEES
(HONG KONG) LIMITED

as Security Agent

 

 

PARENTCO
DEBENTURE

 

 

 

CONTENTS

 

	
  Clause

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  1.

  	
  Definitions And Interpretation

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  Payment Of Secured
  Obligations

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  Fixed Charges, Assignments
  And Floating Charge

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  Crystallisation Of Floating
  Charge

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  Perfection Of Security

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  Further Assurance

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  Negative Pledge And Disposals

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  Investments

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  Accounts

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  Monetary Claims

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
  Insurances

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
  Real Property

  	
   

  	
  19

  
	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
  General Undertakings

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
  14.

  	
  Enforcement Of Security

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  
	
  15.

  	
  Powers Of Sale

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  
	
  16.

  	
  Appointment Of Receiver Or
  Administrator

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  
	
  17.

  	
  Powers Of Receiver

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  
	
  18.

  	
  Application Of Monies

  	
   

  	
  26

  
	
   

  	
   

  	
   

  	
   

  
	
  19.

  	
  Receipt And Protection Of
  Purchasers

  	
   

  	
  27

  
	
   

  	
   

  	
   

  	
   

  
	
  20.

  	
  Power Of Attorney

  	
   

  	
  27

  
	
   

  	
   

  	
   

  	
   

  
	
  21.

  	
  Representations

  	
   

  	
  28

  
	
   

  	
   

  	
   

  	
   

  
	
  22.

  	
  Effectiveness Of Security

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  
	
  23.

  	
  Release Of Security

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  
	
  24.

  	
  Subsequent Security
  Interests

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  
	
  25.

  	
  Currency Conversion And
  Indemnity

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  
	
  26.

  	
  Costs, Expenses And
  Indemnity

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  
	
  27.

  	
  Payments Free Of Deduction

  	
   

  	
  34

  
	
   

  	
   

  	
   

  	
   

  
	
  28.

  	
  Discretion And Delegation

  	
   

  	
  34

  
	
   

  	
   

  	
   

  	
   

  
	
  29.

  	
  Set-Off

  	
   

  	
  34

  
	
   

  	
   

  	
   

  	
   

  
	
  30.

  	
  Changes To Parties

  	
   

  	
  35

  
	
   

  	
   

  	
   

  	
   

  
	
  31.

  	
  Amendments And Waivers

  	
   

  	
  36

  
	
   

  	
   

  	
   

  	
   

  
	
  32.

  	
  Perpetuity Period

  	
   

  	
  36

  

 

2

 

	
  33.

  	
  Notices

  	
   

  	
  36

  
	
   

  	
   

  	
   

  	
   

  
	
  34.

  	
  Counterparts

  	
   

  	
  36

  
	
   

  	
   

  	
   

  	
   

  
	
  35.

  	
  Governing Law

  	
   

  	
  36

  
	
   

  	
   

  	
   

  	
   

  
	
  36.

  	
  Jurisdiction

  	
   

  	
  36

  
	
   

  	
   

  	
   

  	
   

  
	
  Schedule 1 FORM OF
  NOTICE OF ASSIGNMENT OF INSURANCE

  	
   

  	
  38

  
	
   

  	
   

  	
   

  
	
  Schedule 2 FORM OF
  NOTICE OF ASSIGNMENT OF ASSIGNED ACCOUNTS

  	
   

  	
  42

  
	
   

  	
   

  	
   

  
	
  Schedule 3 FORM OF
  NOTICE OF CHARGE OF ACCOUNTS

  	
   

  	
  45

  
	
   

  	
   

  	
   

  
	
  Schedule 4 FORM OF
  PARENTCO WITHDRAWAL REQUEST

  	
   

  	
  48

  

 

3

 

THIS DEBENTURE is made on

 

BY

 

(1)         INTERNATIONAL PETROLEUM SERVICES CORPORATION LIMITED, a company incorporated in Hong Kong with company
number 1165755 (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, other than the Assigned Account.

 

“Assigned Account”
means the account maintained by the Chargor with Deutsche Bank AG, Hong Kong
Branch with account number 0016212-05-0 (including any replacement, renewal
and/or designation thereof).

 

“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.

 

“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, the Chargor, 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            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).

 

1

 

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

 

“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 and all Related Rights (including without limitation all
rights against any such trustee, nominee, fiduciary or clearance system).

 

“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).

 

“Parentco Withdrawal
Request” means a withdrawal request substantially in the form of
Schedule 4 (Form of Parentco Withdrawal Request).

 

“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;

 

2

 

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

 

(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            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.

 

“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

 

1.3.1         This is the Parentco Debenture as defined in the
Security Trust Deed.

 

1.3.2         The Assigned Account is the Parentco Controlled
Account as defined in the Facility Agreement.

 

3

 

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 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
purposes 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 

 

4

 

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 each of the following
assets:

 

3.2.1         the Insurance Policies;

 

3.2.2         the Assigned Account,

 

and
(in each case) all Monetary Claims and Related Rights in relation thereto.

 

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

 

5

 

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

 

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

 

The Chargor shall, within five weeks of the
date of execution hereof, deliver or cause to be delivered to the Hong Kong
Companies Registry for registration required particulars of this Debenture
together with this Debenture.

 

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 Initial Utilisation 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

 

(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

 

6

 

 

5.2.3         in respect of the Assigned Account, on or prior to the
Initial Utilisation Date:

 

(a)       a notice of
assignment to the bank, financial institution or person with whom the Assigned
Account is maintained substantially in the form of Schedule 2 (Form Of Notice Of Assignment of Assigned Accounts) (or otherwise in form and substance satisfactory
to the Security Agent) duly executed by, or on behalf of, the Chargor; and

 

(b)       an acknowledgment to
such notice of assignment, duly executed by or behalf of each such bank,
financial institution or person with whom the Assigned Account is maintained,
in the form of the acknowledgment attached to such notice of assignment; and

 

5.2.4         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 Initial Utilisation
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 3 (Form Of Notice Of charge of Accounts)
(or otherwise in form and substance satisfactory to the Security Agent) on or
prior to the Initial Utilisation 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 Initial Utilisation Date, a notice of
charge substantially in the form of Schedule 3 (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.

 

7

 

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
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 Initial Utilisation 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 Initial Utilisation Date, deposit
with the Security Agent (or procure the deposit with the Security Agent of) the
following in respect of the 

 

8

 

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)
undated sold notes in respect of such Investments executed in blank by or on
behalf of the Chargor;

 

(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;

 

(e)       (in the case of any
Investments constituting any shares in any company incorporated in Hong Kong)
an undated letter of resignation executed by each director of such company in
such form as the Security Agent may request;

 

(f)        (in the case of any
Investments constituting any shares in any company incorporated in Hong Kong)
undated written resolutions of the board of directors of such company executed
by all of the directors of such company in such form as the Security Agent may
request; and

 

(g)       (in the case of any
Investments constituting any shares in any company incorporated in Hong Kong) a
letter of undertaking and authorisation executed by each director of such
company in such form as the Security Agent may request;

 

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; and

 

9

 

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

 

5.7.3         (in the case of any shares in any company incorporated
in Hong Kong) promptly upon any change in any director of such company after
the date of this Debenture, procure the delivery to the Security Agent of:

 

(a)       (in the case of a new
director) an undated letter of resignation executed by such director of such
company in such form as the Security Agent may request;

 

(b)       undated written
resolutions of the board of directors of such company executed by all of the
directors of such company in such form as the Security Agent may request; and

 

(c)       (in the case of a new
director) a letter of undertaking and authorisation executed by such director
of such company in such form as the Security Agent may request; and

 

5.7.4         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
may request.

 

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 (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;

 

10

 

(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.

 

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 

 

11

 

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.

 

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 

 

12

 

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 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

 

13

 

(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.

 

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 

 

14

 

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         Assigned
Accounts

 

9.4.1         The Chargor shall not be entitled to receive, withdraw
or otherwise transfer any credit balance from time to time on any Assigned
Account except as permitted pursuant to paragraph 6 of Schedule 6 (Bank Accounts) to the Facility Agreement (or, after the
Facility Release Date, Transaction Written Consent prior to Warrant Release
Date or each Swap Counterparty after Facility Release Date and Warrant Release
Date but prior to Hedging Release Date).

 

9.4.2         Without prejudice to any other Collateral Rights, the
Security Agent shall, upon the occurrence of an Event of Default, be entitled
without notice to exercise from time to time all rights, powers and remedies
held by it as assignee of the Chargor’s right, title and interest to the
Assigned Account and to:

 

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

 

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

 

9.4.3         For the purposes of paragraph 6 of Schedule 6 (Bank Accounts) of the Facility Agreement, a Parentco
Withdrawal Request means a withdrawal request substituting in the form of
Schedule 4 (Form of Parentco Withdrawal Request).

 

9.5         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 

 

15

 

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.

 

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

 

16

 

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

 

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.

 

17

 

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;

 

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 

 

18

 

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.

 

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.

 

19

 

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;

 

20

 

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.

 

21

 

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 

 

22

 

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):

 

23

 

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;

 

24

 

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;

 

25

 

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 

 

26

 

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 

 

27

 

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 a limited liability company incorporated and
validly existing under the laws of Hong Kong; 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 Clause 5 (Conditions  of Utilisation) of the Facility 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;

 

28

 

(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;

 

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

 

29

 

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
21.1.15 (except sub-Clause 21.1.15) 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;

 

30

 

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.

 

31

 

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 

 

32

 

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).

 

33

 

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 

 

34

 

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.

 

35

 

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                    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:

 

36.4.1                      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

 

36.4.2                     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.

 

37

 

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:

 

(a)                                     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;

 

(b)                                    without prejudice to paragraph 2(a), 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

 

(c)                                     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 and is continuing 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 

 

38

 

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.

 

39

 

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 

 

40

 

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:

 

41

 

SCHEDULE 2

FORM OF NOTICE OF ASSIGNMENT OF ASSIGNED ACCOUNTS

 

To:                             [bank, financial
institution or person with whom the Assigned Account is 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
assigned to the Security Agent by way of security all of the Chargor’s right,
title and interest in and to the account maintained with you listed below
(including any replacement, renewal or re-designation thereof) and all monies
standing to the credit of such account from time to time (the “Assigned Account”).

 

	
  NAME OF ACCOUNT

  	
   

  	
  ACCOUNT NUMBER

  
	
  [  ·  ]

  	
   

  	
  [  ·  ]

  

 

With effect from the date of your receipt of
this notice:

 

(a)                           the terms and conditions of the Assigned Account (and
the rights of the Chargor relating thereto) may not be varied or waived without
the Security Agent’s consent;

 

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

 

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

 

The Chargor hereby irrevocably authorises and
instructs you:

 

(i)                              to hold all sums from time to time standing to the
credit in the Assigned Account 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 Assigned Account 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):

 

(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 Assigned Account 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

 

42

 

(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 Assigned Account 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 the Assigned
Account 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]

 

 

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 assignment from the Chargor dated [·] (the “Notice”) in respect
of the Assigned Account.  Unless
otherwise defined herein, terms and expressions herein shall have the meaning
ascribed to them in the Notice.

 

We confirm that:

 

43

 

(i)                              we consent to the assignment over the Assigned Account
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 the Assigned Account at today’s
date is [·];

 

(iii)                        no fees or periodic charges are payable in respect of
the Assigned Account and there are no restrictions on (a) the payment of
the credit balance on the Assigned Account (except, in the case of a time
deposit, the expiry of the relevant period) or (b) the assignment or
charge of the Assigned Account 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, the Assigned Account 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 the Assigned Account or (b) amend or vary any rights attaching to the
Assigned Account;

 

(v)                          we will act only in accordance with the instructions
given by persons authorised by the Security Agent in respect of the Assigned
Account;

 

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

 

(vii)                    we shall not permit any amount to be withdrawn from
any of the Assigned Account 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

[                                    ]

 

 

44

 

SCHEDULE 3

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);

 

45

 

(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]

 

 

Acknowledgment

 

To:         [name of Security Agent] as Security Agent

 

[name of
Chargor] (the “Chargor’)

 

 

Date:       [           ]

 

46

 

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

 

[                                    ]

 

47

 

SCHEDULE 4

FORM OF PARENTCO WITHDRAWAL REQUEST

 

From:     [Name of Chargor]

 

To:                            [name of Security Agent] as Security Agent

 

[name of Facility Agent] as Facility Agent

 

Dated:

 

Dear Sirs

 

Debenture dated                                   between
[name of Chargor] as chargor and
DB Trustees (Hong Kong) Limited and security agent (as amended from time to
time, the “Debenture”)

 

1.                                 We refer to the
Debenture.  This is a Parentco Withdrawal
Request.  Terms defined in or construed
for the purposes of the Debenture have the same meaning in this Parentco
Withdrawal Request unless given a different meaning in this Parentco Withdrawal
Request.

 

2.                                 We wish to make a
withdrawal from the Parentco Controlled Account as set out in paragraph 3
below.  We certify that all of the amount
to be so withdrawn shall be applied in accordance with paragraph
[(b)(i)(A)]/[(b)(i)(B)]/[(b)(i)(C)](1) of paragraph 6 of Schedule 6 (Bank Accounts) of the Facility Agreement.

 

3.                                 [We wish to make
withdrawal of [insert proposed withdrawal amount]
standing to the credit of the Parentco Controlled Account on [insert proposed withdrawal date].  All of the amounts so withdrawn shall be
remitted directly to the following account of Holdco: [insert
account details].  We enclose
a copy of the written notification of the Calculation Agent that the
Calculation Agent is satisfied that the payment of dividends by us to Holdco
out of the amount to be so withdrawn under this Parentco Withdrawal Request is
permitted under paragraph (b) of Clause 21.14 (Restricted
payments) of the Facility Agreement.](2)

 

OR

 

[We wish to make withdrawal of [insert proposed withdrawal
amount] standing to the credit of the Parentco Controlled Account on
[insert proposed withdrawal date].  All of the amount so withdrawn shall be
remitted directly to the following account: [insert
account details].  We enclose
a copy of the written consent of the Facility Agent with 

 

(1) Select
appropriate alternative.

 

(2) In the case
where the Chargor certifies that the amount to be so withdrawn shall be applied
in accordance with paragraph 6(b)(i)(A) of Schedule 6 (Bank Accounts) to the Facility Agreement.

 

48

 

respect to such withdrawal and the account into which such amount so
withdrawn is to be paid.](3)

 

OR

 

[We wish to make withdrawal of [insert proposed withdrawal
amount] standing to the credit of the Parentco Controlled Account on
[insert proposed withdrawal date].  All of the amount so withdrawn shall be
remitted directly to the following account: [insert account
details of the Founder].  We
confirm that (a) the amount of Permitted Loan(s) has been reduced on
[insert relevant date] (through
repayment of cash) by an amount not less than the amount to be so withdrawn and
(b) no withdrawal (other than the withdrawal that is the subject of such
Parentco Withdrawal Request) from the Parentco Controlled Account has been made
or requested on account of or in connection with such reduction in the amount
of Permitted Loan(s).  We enclose a copy
of the certificate from the Facility Agent that the Facility Agent (acting on
the instructions of Majority Lenders) is satisfied that (i) the
application of the amount to be so withdrawn under this Parentco Withdrawal
Request is permitted under paragraph (g) of Clause 21.14 (Restricted payments) of the Facility
Agreement, (ii) the amount of Permitted Loan(s) has been reduced
(through repayment in cash) by an amount not less than the amount to be so
withdrawn and (iii) no withdrawal (other than the withdrawal that is the
subject of such Parentco Withdrawal Request) from the Parentco Controlled Account
has been made or requested on account of or in connection with such reduction
in the amount of Permitted Loans.](4)

 

4.                              This Parentco
Withdrawal Request is irrevocable and is governed by the laws of Hong Kong.

 

 

Yours faithfully

 

	
   

  	
   

  	
   

  

 

authorised signatory for

 

[Name of Chargor]

 

 

(3) In the case
where the Chargor certifies that the amount to be so withdrawn shall be applied
in accordance with paragraph 6(b)(i)(B) of Schedule 6 (Bank Accounts) to the Facility Agreement.

 

(4) In the case
where the Chargor certifies that the amount to be so withdrawn shall be applied
in accordance with paragraph 6(b)(i)(C) of Schedule 6 (Bank Accounts) to the Facility Agreement.

 

49

 

EXECUTION

 

	
  THE CHARGOR

  	
   

  
	
   

  	
   

  
	
  THE COMMON SEAL of

  	
  )

  
	
  INTERNATIONAL PETROLEUM
  SERVICES 

  CORPORATION LIMITED

  	
  )

  )

  
	
  was hereunto affixed in the presence of:

  	
  )

  

 

 

	
   

  	
   

  

 

Name:

 

Title:

 

 

	
  Address:

  	
  

  
	
   

  	
   

  
	
  Telephone:

  	
  +86-22-6635-1185

  
	
   

  	
   

  
	
  Fax:

  	
  +86-22-6635-1181

  
	
   

  	
   

  
	
  Attention:

  	
  Mr
  Liu Qingzeng

  

 

SIGNATURE PAGE TO THE PARENTCO DEBENTURE

 

50

 

The Security Agent

 

	
  SIGNED for and on behalf of

  	
  )

  
	
  DB TRUSTEES (HONG KONG)
  LIMITED

  	
  )

  
	
  By:

  	
  )

  
	
   

  	
  )

  

 

 

	
  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 PARENTCO DEBENTURE

 

51

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