Document:

Exhibit
10.1

    

    Execution
Copy

    

    EIGHTH
AMENDMENT TO AMENDED AND RESTATED

    FIRST
LIEN CREDIT AGREEMENT

     

    This
EIGHTH AMENDMENT TO AMENDED AND RESTATED FIRST LIEN CREDIT AGREEMENT (“Amendment”), dated as
of November 17, 2010, is by and among Energy XXI Gulf Coast, Inc., a Delaware
corporation (the “Borrower”), the
lenders party to the First Lien Credit Agreement described below (the “Lenders”), and The
Royal Bank of Scotland plc, as administrative agent for the Lenders (in such
capacity, the “Administrative
Agent”), and the other parties in the capacities herein
identified.

     

    RECITALS

     

    WHEREAS,
the Borrower, the Lenders, the Administrative Agent and certain other Persons
are parties to the Amended and Restated First Lien Credit Agreement, dated as of
June 8, 2007, as modified by the Consent Regarding Amended and Restated
First Lien Credit Agreement dated as of July 27, 2007, as amended by that
certain First Amendment to Amended and Restated First Lien Credit Agreement
dated effective as of November 19, 2007, as amended by that certain Waiver,
Consent and Second Amendment to Amended and Restated First Lien Credit Agreement
dated effective as of December 1, 2008, as amended by the Third Amendment to
Amended and Restated First Lien Credit Agreement dated as of April 6, 2009,
as modified by the Waiver and Consent to Amended and Restated First Lien Credit
Agreement dated as of June 30, 2009, as amended and modified by the Waiver,
Consent and Fourth Amendment to Amended and Restated First Lien Credit Agreement
dated as of September 11, 2009 and as amended and modified by the
Fifth Amendment to Amended and Restated First Lien Credit Agreement dated as of
December 11, 2009, as amended and modified by the Sixth Amendment to
Amended and Restated First Lien Credit Agreement dated as of February 5,
2010, and as amended and modified by the Seventh Amendment to Amended and
Restated First Lien Credit Agreement dated as of October 15, 2010 (as so
modified, and as amended, supplemented and amended, herein the “2007 First Lien
Credit Agreement”, and the 2007 First Lien Credit Agreement as amended,
supplemented, amended and restated or otherwise modified from time to time, the
“First Lien Credit
Agreement”); and

     

    WHEREAS,
pursuant to a Purchase and Sale Agreement, dated on or about November 19, 2010,
(as amended, supplemented, amended and restated or otherwise modified from time
to time as permitted under the Loan Documents, the “Exxon Acquisition
Agreement”), by and between EXXI GOM, as buyer, and Exxon Mobil
Corporation, Mobil Oil Exploration & Producing Southeast Inc. and ExxonMobil
Pipeline Company, as sellers (collectively “Exxon”), EXXI GOM
intends to acquire from such sellers, the “Interests” as defined in the Exxon
Acquisition Agreement (the “Exxon
Acquisition”);

     

    WHEREAS,
the Borrower expects to pay fees and expenses in connection with the Exxon
Acquisition;

     

    WHEREAS,
in order to help consummate the Exxon Acquisition and to pay transaction costs
relating thereto and to financing such acquisition, the Borrower (i) has
requested an increase in the Revolving Loan Commitment Amount and the Borrowing
Base and (ii) expects to incur additional unsecured indebtedness of an amount up
to $1,000,000,000.

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    WHEREAS,
the Borrower further intends to use the proceeds of the increase in the
Borrowing Base, the Permitted Unsecured Indebtedness and the proceeds from the
issuance of its Capital Securities to Intermediate Holdco, if any, to (i) pay,
prepay, redeem, defease, purchase, acquire or otherwise retire certain
Indebtedness under the Second Lien Notes and PP Notes (the “Bond Prepayment”) not
paid, prepaid, redeemed, defeased, purchased, acquired or otherwise retired
pursuant to that certain Waiver Regarding Amended and Restated First Lien Credit
Agreement, dated as of November 17, 2010 (the “Waiver”), (ii) prepay
certain Indebtedness under the First Lien Credit Agreement and (iii) pay the
fees, expenses and premiums associated with the foregoing payments, prepayments,
redemptions, defeasance, purchases, acquisitions, and other
retirements;

     

    WHEREAS,
the Borrower has requested that the Administrative Agent, the Swing Line Lender,
the Issuer, and the Lenders amend the First Lien Credit Agreement in certain
respects as set forth herein.

     

    NOW,
THEREFORE, in consideration of the premises and the mutual covenants,
representations and warranties contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:

     

    AGREEMENT

     

    Section
1.          Definitions.  Capitalized
terms used herein but not defined herein shall have the meanings as given them
in the First Lien Credit Agreement, unless the context otherwise
requires.

     

    Section
2.          Amendments to First Lien
Credit Agreement.

     

    (a)           Amendment to the preamble of
the First Lien Credit Agreement.  The preamble to the First
Lien Credit Agreement is hereby amended by deleting the phrase “RBS SECURITIES
INC. (“RBS
Securities”) and BNP PARIBAS SECURITIES CORP. (“BNPPSC”), as Lead
Arrangers (in such capacity the “Lead Arrangers”), and
BNPPSC as Syndication Agent (in such capacity, the “Syndication Agent”)
for the Lenders” and replacing it in its entirety with the phrase “RBS
SECURITIES INC. (“RBS
Securities”), UBS Securities LLC (“UBS Securities”) and
BNP PARIBAS SECURITIES CORP. (“BNPPSC”), as Lead
Arrangers (in such capacity the “Lead Arrangers”),
BNPPSC and UBS LOAN FINANCE LLC (“UBS”) as
Co-Syndication Agents (in such capacity, each, a “Syndication Agent”
and together, the “Syndication Agents”)
for the Lenders, and CAPITAL ONE, NATIONAL ASSOCIATION and REGIONS BANK, as
Co-Documentation Agents (in such capacity, the “Co-Documentation
Agents”)”.

     

    
      
         

      

      
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    (b)           Amendment to Section 1.1 of
the First Lien Credit Agreement.  Section 1.1 of the First Lien
Credit Agreement is hereby amended by adding the following new defined terms in
alphabetical order:

     

    “Amendment No. 8”
means that certain Eighth Amendment to Amended and Restated First Lien Credit
Agreement, dated as of November 17, 2010, by and among the Borrower, the Lenders
and the Administrative Agent.

     

    “Co-Documentation
Agents” is defined in the preamble.

     

    “Exxon” means,
collectively, Exxon Mobil Corporation, Mobil Oil Exploration & Producing
Southeast Inc. and ExxonMobil Pipeline Company.

     

    “Exxon Acquisition”
means the acquisition of certain properties from Exxon pursuant to the terms of
the Exxon Acquisition Agreement.

     

    “Exxon Acquisition
Agreement” shall have the meaning ascribed thereto in Amendment No.
8.

     

    “Permitted Unsecured Debt
Documents” means one or more indentures, note purchase agreements, credit
agreements or similar financing documents governing the issuance of Permitted
Unsecured Indebtedness.

     

    “Permitted Unsecured
Indebtedness” shall have the meaning set forth in Section 7.2.2(j) of
this Agreement.

     

    (c)           Amendment to Section 1.1 of
the First Lien Credit Agreement.  Section 1.1 of the First Lien
Credit Agreement is hereby amended by replacing the following defined terms in
their entirety with the following:

     

    “Agents” means each of
the Administrative Agent, the Syndication Agents, the Co-Documentation Agents
and the Lead Arrangers.

     

    “EBITDA” means, for
any applicable period and with the respect to the Borrower and its consolidated
Subsidiaries, the sum of (a) Net Income, plus (b) to the extent deducted in
determining Net Income, the sum of (i) amounts attributable to
amortization, depletion and depreciation of assets, (ii) income tax
expense, (iii) Interest Expense for such period, and (iv) reasonable
transaction fees and expenses incurred in connection with negotiation, execution
and delivery of this Agreement, the other Loan Documents and the negotiation,
execution and delivery and consummation of the Exxon Acquisition and any
Permitted Unsecured Indebtedness or refinancing thereof; provided, however, that (A) for
the Fiscal Quarter ending December 31, 2010, EBITDA for such Fiscal Quarter
shall be deemed to be equal to $152,383,974, (B) for the Fiscal Quarter ending
September 30, 2010, EBITDA for such Fiscal Quarter shall be deemed to be equal
to $152,383,974, (C) for the Fiscal Quarter ending June 30, 2010, EBITDA
for such Fiscal Quarter shall be deemed to be equal to $169,156,843 and (D) for
the Fiscal Quarter ending March 31, 2010, EBITDA for such Fiscal Quarter shall
be deemed to be equal to $171,664,332; provided, further, that any
calculation of EBITDA hereunder for any applicable period shall be made using an
EBITDA for such applicable period calculated on a pro forma basis (inclusive of
any acquisitions and/or divestitures, if any, of assets or equity interests made
during such applicable period as if such acquisitions or divestitures had been
made at the beginning of such applicable period).

     

    
      
         

      

      
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    “Interest Expense”
means, for any applicable period, the aggregate cash interest expense (both
accrued and paid and net of interest income paid during such period to the
Borrower and its Subsidiaries) of the Borrower and its Subsidiaries for such
applicable period, including the portion of any payments made in respect of
Capitalized Lease Liabilities allocable to interest expense, but excluding
one-time write-offs of unamortized upfront fees and other upfront fees and
expenses associated with this Agreement and the other Loan Documents, the
Existing Credit Agreement and the “Loan Documents” thereunder, the PP Debt
Documents, the Second Lien Note Documents and the Permitted Unsecured Debt
Documents.

     

    “Issuer” means, as
applicable, RBS, BNP Paribas or UBS AG, Stamford Branch, in its capacity as an
issuer of the Letters of Credit pursuant to the terms of this
Agreement.  At the request of the Administrative Agent and with the
Borrower’s consent (not to be unreasonably withheld), another Lender may issue
one or more Letters of Credit hereunder.

     

    “Lead
Arranger” means, collectively, RBS Securities, UBS Securities and
BNPPSC.

     

    “Letter of Credit Commitment
Amount” means, on any date, a maximum amount of $300,000,000, as such
amount may be permanently reduced from time to time pursuant to Section
2.2.

     

    “Revolving Loan Commitment
Amount” means, on any date, $925,000,000, as such amount may be reduced
from time to time pursuant to Section 2.2 or
increased pursuant to Section
2.8.

     

    “Stated Maturity Date”
means the last business day of the month which is four (4) years from the
“Effective Date” as defined in Amendment No. 8; provided that notwithstanding
the foregoing, in the event that all or any portion of the PP Notes remain
outstanding ninety (90) days prior to June 15, 2013, then such date that is
ninety (90) days prior to June 15, 2013 shall be the Stated Maturity
Date.

     

    
      
         

      

      
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    “Total Debt” means, on
any date and without duplication, the outstanding principal amount of all
Indebtedness of the Borrower and its Subsidiaries of the type referred to in
clause (a)
(which, in the case of the Loans, PP Debt, Second Lien Indebtedness and
Permitted Unsecured Indebtedness, shall be deemed to equal the actual daily
amount of the Loans, PP Notes, Second Lien Notes or Permitted Unsecured
Indebtedness, as the case may be, outstanding for such date), clause (b) (which, in
the case of Letter of Credit Outstandings shall be deemed to equal the actual
daily amount of Letter of Credit Outstandings for such date less the amount of
any cash collateral in respect thereof, if any, held in an account maintained
with (or on behalf of) the Administrative Agent, BNP Paribas and/or UBS AG,
Stamford Branch (as the case may be)), clause (c), clause (f) (but
excluding any current non-cash asset or liability (including in respect of
Hedging Agreements) described in or calculated pursuant to the requirements of
Statement of Financial Accounting Standards 133 and 143, in each case as amended
(provided that, for the avoidance of doubt, the calculation of Total Debt shall
include any current assets or liabilities in respect of the termination of any
Hedging Agreement), and clause (g), in each
case of the definition of “Indebtedness” (exclusive of intercompany Indebtedness
between the Borrower and its Subsidiaries but including the Indebtedness in
respect of principal hereunder and under the PP Notes, the Second Lien Notes,
and the Permitted Unsecured Indebtedness, as the case may be) and any Contingent
Liability in respect of any of the foregoing.

     

    (d)           Amendment to Section 2.1.2
of the First Lien Credit Agreement.  Section 2.1.2 of the First
Lien Credit Agreement is hereby amended by replacing the phrase “$20,000,000”
with the phrase “$125,000,000”.

     

    (e)           Amendment to Section 3.3.2
of the First Lien Credit Agreement.  Section 3.3.2 of the First
Lien Credit Agreement is hereby amended by deleting the phrase “January 8, 2010”
and replacing it in its entirety with the phrase “November 17,
2010”.

     

    (f)           Amendment to Section
5.2.1(b) of the First Lien Credit Agreement.  Section 5.2.1(b)
of the First Lien Credit Agreement is hereby amended by deleting the phrase
“June 30, 2009” and replacing it in its entirety with the phrase “June 30,
2010”.

     

    (g)           Amendment to Section
5.2.1(d) of the First Lien Credit Agreement.  Section 5.2.1(d)
of the First Lien Credit Agreement is hereby amended by deleting the phrase “the
Indenture” and replacing it in its entirety with the phrase “the PP Debt
Documents, the Second Lien Note Documents and the Permitted Unsecured Debt
Documents”.

     

    (h)           Amendment to Section 6.6 of
the First Lien Credit Agreement.  Section 6.6 of the First Lien
Credit Agreement is hereby amended by deleting the phrase “June 30, 2009” and
replacing it in its entirety with the phrase “June 30, 2010”.

     

    (i)           Amendment to Section
7.1.7(a) of the First Lien Credit Agreement.  Section 7.1.7(a)
of the First Lien Credit Agreement is hereby amended by adding the phrase “and
the Exxon Acquisition” at the end of such section.

     

    
      
         

      

      
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    (j)           Amendment to Section 7.2.2
of the First Lien Credit Agreement.  Section 7.2.2 of the First
Lien Credit Agreement is hereby amended by (i) renumbering clause (j) as clause
(k), (ii) replacing the phrase “clauses (c), (e), (g), or (j)” with the phrase
“clauses (c), (e), (g), (j) or (k)”, and (iii) adding the following new clause
(j) immediately following clause (i):

     

    “(j)    
     Indebtedness incurred in an amount not to exceed
an aggregate outstanding principal amount of up to $1,000,000,000; and, the
refinancing of all or any applicable portion of such Indebtedness so long as
such refinancing is on terms and conditions that are, taken as a whole, no less
favorable to the Lenders (which, for the avoidance of doubt, shall not be
determined by reference to the specific requirements of the term “No Less
Favorable Terms and Conditions” and may be for an increased principal amount of
such refinanced Indebtedness as long as it otherwise satisfies the terms of this
clause (j)), provided, however, that such
Indebtedness (x) is unsecured, (y) does not have a maturity date that is
prior to the date that is six (6) months after the Stated Maturity Date, and (z)
will be used solely to (i) pay for the redemption, exchange or refinancing,
including any premiums associated therewith, of the Second Lien Notes and the PP
Notes that have not been previously paid, prepaid, redeemed, defeased,
purchased, acquired or otherwise retired (provided that such $1,000,000,000
amount of such Indebtedness shall be reduced by the amount of any refinancing of
the Second Lien Notes or the PP Notes accomplished otherwise pursuant to the
terms of Section 7.2.2(g) of this Agreement), (ii) pay amounts owed in
connection with the consummation of the Exxon Acquisition,  (iii)
repay outstanding Indebtedness under this Agreement, and (iv) pay for the
purchase price and any fees and expenses associated with the Exxon Acquisition
and financings, refinancing and the payments contemplated in this clause (j)
(the “Permitted
Unsecured Indebtedness”);”

     

    (k)           Amendment to Section
7.2.4(a) of the First Lien Credit Agreement.  Section 7.2.4(a)
is hereby deleted and replaced in its entirety with the following:

     

    “(a)  The
Borrower will not permit the Total Leverage Ratio as of the last day of any
Fiscal Quarter to be greater than 3.5 to 1.00.”

     

    (l)           Amendment to Section
7.2.11(c) of the First Lien Credit Agreement.  Section
7.2.11(c) of the First Lien Credit Agreement is hereby amended by (i) deleting
the word “or” immediately preceding clause (ii), and (ii) adding the phrase “,
or (iii) the Permitted Unsecured Debt Documents, unless the Borrower has
provided prior notice of the amendment, supplement, waiver or other modification
to the Administrative Agent and the Administrative Agent has consented to such
amendment, supplement, waiver or other modification” immediately following the
phrase “the Second Lien Note Documents”.

     

    (m)           Amendment to Section 7.2.13
of the First Lien Credit Agreement.  Section 7.2.13 of the
First Lien Credit Agreement is hereby amended by adding the phrase “or in the
Permitted Unsecured Debt Documents” immediately following the phrase “the Second
Lien Note Documents”.

     

    
      
         

      

      
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    (n)       Amendment to Section
7.2.20(e) of the First Lien Credit Agreement.  Section
7.2.20(e) of the First Lien Credit Agreement is hereby amended by deleting the
phrase “$6,000,000” and replacing it with the phrase “$12,000,000”.

     

    (o)       Amendment to Article VII of
the First Lien Credit Agreement.  The First Lien Credit
Agreement is hereby amended by adding the following Section 7.2.22 after Section
7.2.21:

     

    “SECTION
7.2.22.  No
Prepayment of Permitted Unsecured Notes.  The Borrower will
not, and will not permit any of its Subsidiaries to, prior to the date that is
one hundred eighty (180) days after the Stated Maturity Date:

     

    (a)  make
any payment or prepayment of principal of, or premium or interest on, any
Permitted Unsecured Indebtedness other than:  (i) with respect to
interest, (A) on the stated, scheduled dates for payment of interest set forth
in the Permitted Unsecured Debt Documents or (B) upon any refinancing of
Permitted Unsecured Indebtedness permitted hereunder, or (ii) with respect to
principal, (A) on the date of the stated maturity indicated in the Permitted
Unsecured Debt Documents with respect to the payment of principal on the
Permitted Unsecured Indebtedness, (B) on each scheduled date for payment of
principal or as required in connection with a mandatory prepayment, redemption
or defeasance of the Permitted Unsecured Indebtedness under the Permitted
Unsecured Debt Documents, so long as on the date of such payment (1) no
Default or Event of Default or Borrowing Base Deficiency has occurred and is
continuing or would result therefrom and (2) the Borrower has paid any
Obligations required to be paid hereunder pursuant to the terms of this
Agreement, or (C) upon any refinancing of Permitted Unsecured Indebtedness
permitted by this Agreement;

     

    (b)  redeem,
retire, purchase, defease or otherwise acquire any Permitted Unsecured
Indebtedness (except as set forth in clause (a));
or

     

    (c)  make
any deposit (including the payment of amounts into a sinking fund or other
similar fund) for any of the foregoing purposes other than, in each case, in
connection with a refinancing of Permitted Unsecured Indebtedness (to the extent
of such Indebtedness being refinanced) permitted by this
Agreement.”

     

    (p)       Amendment to Section 9.13 of
the First Lien Credit Agreement.  Section 9.13 of the First
Lien Credit Agreement is hereby amended by deleting the phrase “neither the
Syndication Agent nor either of the Lead Arrangers” and replacing it with the
phrase “none of the Syndication Agents, the Co-Documentation Agents or the Lead
Arrangers”.

     

    (q)      Amendment to Schedule II of
the First Lien Credit Agreement.  Schedule II of the First Lien
Credit Agreement is hereby deleted and replaced in its entirety with a new
Schedule II attached as Exhibit B
hereto.

     

    
      
         

      

      
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    Section
3.         Consent to Prepayment of
Second Lien Indebtedness and PP Debt.  Subject to the terms of
this Amendment, and notwithstanding the prohibitions regarding the PP Debt and
the Second Lien Indebtedness in Sections 7.2.15 and 7.2.21, respectively, of the
First Lien Credit Agreement and the Intercreditor Agreement, the Lenders hereby
consent to the Borrower paying, prepaying, redeeming, defeasing, purchasing,
acquiring or otherwise retiring each of the PP Debt and the Second Lien
Indebtedness not paid, prepaid, redeemed, defeased, purchased, acquired or
otherwise retired pursuant to the Waiver and agree that the Borrower’s
undertaking of the Bond Prepayment in accordance with and as contemplated by the
terms of this Section 3 shall not constitute a Default or Event of Default as a
result of a violation of such Sections 7.2.15 and 7.2.21 of the First Lien
Credit Agreement.  The consent by the Lenders described in this
Section 3 is limited to the Bond Prepayment and shall not be construed to be a
consent to or a permanent waiver of Sections 7.2.15 or 7.2.21 of the Credit
Agreement or any other terms, provisions, covenants, warranties or agreements
contained in any Loan Document.

     

    Section
4.         Conditions to
Effectiveness.  This Amendment shall be deemed effective
(subject to the conditions herein contained) as of the date (the “Effective Date”) upon
the Administrative Agent’s receipt of counterparts hereof duly executed by the
Borrower, the Administrative Agent, the Swing Line Lender, the Issuers and all
of the Lenders and upon the prior or concurrent satisfaction of each of the
following conditions:

     

    (a)           the
Administrative Agent shall have received from each Obligor, as applicable, (a) a
copy of a good standing certificate, dated a date reasonably close to the
Effective Date, for such Obligor from the jurisdiction in which such Obligor is
organized and each other jurisdiction in which such Obligor is qualified to do
business and (b) a certificate, dated as of the Effective Date, duly executed
and delivered by such Obligor’s Secretary or Assistant Secretary, managing
member or general partner, as applicable, as to

     

    (1)           resolutions
of such Obligor’s Board of Directors (or other managing body, in the case of an
Obligor that is not a corporation) then in full force and effect authorizing, to
the extent relevant, the execution, delivery and performance of this Amendment
and each other Loan Document to be executed by such Obligor in connection
herewith;

     

    (2)           the
incumbency and signatures of those of its officers, managers, managing member or
general partner (or officers or managers of its managing member or general
partner), as applicable, authorized to act with respect to this Amendment and
each Loan Document to be executed by such Obligor; and

     

    (3)           the
Organic Documents of such Obligor and the full force and validity
thereof;

     

    upon
which certificates each Secured Party may conclusively rely until it shall have
received a further certificate of the Secretary, Assistant Secretary, managing
member or general partner (or Secretary or Assistant Secretary of the managing
member or general partner), as applicable, of any such Obligor canceling or
amending the prior certificate of such Obligor.

     

    
      
         

      

      
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    (b)          the
Administrative Agent shall have received from each party hereto counterparts (in
such number as may be requested by the Administrative Agent) of this Amendment
signed on behalf of such party;

     

    (c)           the
Administrative Agent shall have received for its own account, or for the account
of each Lender, as the case may be, all fees, costs and expenses due and payable
pursuant to Sections 3.3 of
the First Lien Credit Agreement, the fees referred to in the letter dated
November 17, 2010 between the Borrower and the Administrative Agent and, if then
invoiced, 10.3
of the First Lien Credit Agreement;

     

    (d)          the
Administrative Agent shall have received, and each shall be in form and
substance satisfactory to it, a copy of the Exxon Acquisition Agreement
certified by the Borrower as being true, correct and complete copies
thereof;

     

    (e)           the
Lenders shall have received a reserve report with respect to the interests being
acquired pursuant to the Exxon Acquisition dated as of December 1,
2010;

     

    (f)           the
Exxon Acquisition pursuant to the Exxon Acquisition Agreement shall have been,
or shall contemporaneously with the Effective Date be, consummated substantially
pursuant to the terms of the Exxon Acquisition Agreement;

     

    (g)          the
Administrative Agent shall have received certificates of insurance coverage of
Borrower satisfactory to the Administrative Agent, including insurance covering
the properties acquired pursuant to the Exxon Acquisition;

     

    (h)          the
Administrative Agent shall have received title opinions or other information in
form and substance reasonably satisfactory to the Administrative Agent with
respect to the Mortgaged Properties constituting at least 85% of the total value
of the Proved Developed Producing Reserves to be acquired by the Borrower in
connection with the Exxon Acquisition;

     

    (i)           the
Borrower shall have delivered Mortgages or supplements to existing Mortgages
covering at least 85% of the total value of the Proved Reserves and Proved
Developed Producing Reserves to be acquired pursuant to the Exxon
Acquisition;

     

    (j)         
  after giving effect to all borrowings on the such effective date,
the Borrower shall have unused availability under the Borrowing Base of at least
$100,000,000;

     

    (k)           the
Borrower shall have delivered to the Administrative Agent the annual projections
for the Borrower for the three year period immediately following the Effective
Date prepared in good faith based on available information and estimates
determined to be reasonable at the time such projections were
prepared;

     

    (l)          
 the commodity hedging agreements the Borrower had in effect on
November 8, 2010 shall remain in effect or have been replaced with hedging
agreements with equal or superior total hedge value.

     

    
      
         

      

      
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    (m)       
  the Administrative Agent shall have received opinions, dated the
Effective Date and addressed to the Administrative Agent and all Lenders, from
Looper, Reed & McGraw, New York and Texas counsel to the Obligors in form
and substance satisfactory to the Administrative Agent.

     

    (n)           the
Administrative Agent shall have received a proforma consolidated balance sheet
of the Borrower as of the Effective Date, after giving effect to the Exxon
Acquisition, in a form reasonably acceptable to the Administrative Agent;
and

     

    (o)          the
Administrative Agent and each Lender shall have received all Patriot Act
disclosures requested by them, if any, prior to execution of this
Amendment.

     

    Notwithstanding
the foregoing, this Amendment shall not become effective and the agreements
hereunder will be terminated unless each of the foregoing conditions is
satisfied (or waived by all of the Lenders in writing) on or prior to March 31,
2011.

     

    Section
5.         Conditions
Subsequent.  Within fourteen (14) days following the Effective
Date, but in no event later than December 31, 2010, the Borrower shall have
entered into hedging agreements reasonably satisfactory to the Administrative
Agent.

     

    Section
6.         Redetermination of the
Borrowing Base.  The Borrower and the Lenders hereby agree that
effective as of the Effective Date, the Borrowing Base shall be equal to
$700,000,000 until such time as the Borrowing Base is redetermined or otherwise
adjusted pursuant to the terms of the First Lien Credit
Agreement.  The Borrower and the Lenders hereby agree that this
determination of the Borrowing Base shall be deemed to be the determination as
required under Section
2.8.5 of the First Lien Credit Agreement.

     

    Section
7.          Representations and
Warranties.  The Borrower hereby represents and warrants that
after giving effect hereto:

     

    (a)           the
representations and warranties of the Obligors contained in the Loan Documents
(other than Section 6.17 of the First Lien Credit Agreement solely with respect
to the Lehman Hedging Agreement (as defined in the Second Amendment)) are true
and correct in all material respects, other than those representations and
warranties that expressly relate solely to a specific earlier date, which shall
remain correct in all material respects as of such earlier date;

     

    (b)           the
execution, delivery and performance by the Borrower and each other Obligor of
this Amendment and the other Loan Documents have been duly authorized by all
necessary corporate or other action required on their part and this Amendment,
along with the First Lien Credit Agreement as amended hereby and the other Loan
Documents, constitutes the legal, valid and binding obligation of each Obligor a
party thereto enforceable against them in accordance with its terms, except as
its enforceability may be affected by the effect of bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to or affecting the rights or remedies of creditors
generally;

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    (c)           neither
the execution, delivery and performance of this Amendment by the Borrower and
each other Obligor, the performance by them of the First Lien Credit Agreement
as amended hereby nor the consummation of the transactions contemplated hereby
does or shall contravene, result in a breach of, or violate (i) any provision of
any Obligor’s certificate or articles of incorporation or bylaws or other
similar documents, or agreements, (ii) any law or regulation, or any order or
decree of any court or government instrumentality, or (iii) any indenture,
mortgage, deed of trust, lease, agreement or other instrument to which any
Obligor or any of its Subsidiaries is a party or by which any Obligor or any of
its Subsidiaries or any of their property is bound, except in any such case to
the extent such conflict or breach has been waived by a written waiver document,
a copy of which has been delivered to Administrative Agent on or before the date
hereof;

     

    (d)           no
Material Adverse Effect has occurred since June 30, 2010; and

     

    (e)           no
Default or Event of Default or Borrowing Base Deficiency has occurred and is
continuing.

     

    Section
8.          Loan Document;
Ratification.

     

    (a)           This
Amendment is a Loan Document.

     

    (b)           The
Borrower and each other Obligor hereby ratifies, approves and confirms in every
respect all the terms, provisions, conditions and obligations of the First Lien
Credit Agreement as amended hereby and each of the other Loan Documents (other
than the Lehman Hedging Agreement (as defined in the Second Amendment)),
including without limitation all Mortgages, Security Agreements, Guaranties,
Control Agreements and other Security Documents, to which it is a
party.

     

    Section
9.         Costs And
Expenses.  As provided in Section 10.3 of the First Lien Credit
Agreement, the Borrower agrees to reimburse Administrative Agent for all fees,
costs, and expenses, including the reasonable fees, costs, and expenses of
counsel or other advisors for advice, assistance, or other representation, in
connection with this Amendment and any other agreements, documents, instruments,
releases, terminations or other collateral instruments delivered by the
Administrative Agent in connection with this Amendment.

     

    Section
10.      GOVERNING
LAW.  THIS AMENDMENT SHALL BE DEEMED A CONTRACT AND INSTRUMENT
MADE UNDER THE LAWS OF THE STATE OF NEW YORK AND SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK AND THE
LAWS OF THE UNITED STATES OF AMERICA, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS
OF LAW.

     

    Section
11.       Severability.  Any
provision of this Amendment that is prohibited or unenforceable in any
jurisdiction shall, as to such provision and such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions of this Amendment or affecting the validity or
enforceability of such provision in any other jurisdiction.

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    Section
12.       Counterparts.  This
Amendment may be executed in any number of counterparts, all of which taken
together shall constitute one and the same instrument, and any party hereto may
execute this Amendment by signing one or more counterparts.  Any
signature hereto delivered by a party by facsimile or electronic transmission
shall be deemed to be an original signature hereto.

     

    Section
13.       No
Waiver.  The express waivers set forth herein are limited to
the extent expressly provided in this Amendment and, except as expressly set
forth in this Amendment, the execution, delivery and effectiveness of this
Amendment shall not operate as a waiver of any default of the Borrower or any
other Obligor or any right, power or remedy of the Administrative Agent or the
other Secured Parties under any of the Loan Documents, nor constitute a waiver
of (or consent to departure from) any terms, provisions, covenants, warranties
or agreements of any of the Loan Documents.  The parties hereto
reserve the right to exercise any rights and remedies available to them in
connection with any present or future defaults with respect to the First Lien
Credit Agreement or any other provision of any Loan Document.

     

    Section
14.       Successors and
Assigns.  This Amendment shall be binding upon the Borrower and
its successors and permitted assigns and shall inure, together with all rights
and remedies of each Secured Party hereunder, to the benefit of each Secured
Party and the respective successors, transferees and assigns.

     

    Section
15.       Entire
Agreement.  THIS AMENDMENT, THE FIRST LIEN CREDIT AGREEMENT AND
THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT OF THE PARTIES WITH
RESPECT TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES.

     

    THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

     

    [Signature
Pages Follow]

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

    In
Witness Whereof, the parties hereto have caused this Amendment to be duly
executed and delivered by their respective duly authorized officers as of the
date first written above.

     

    
      
        	 
      	
                BORROWER:

              
	 
      	 
      
	 
      	
                ENERGY
      XXI GULF COAST, INC.

              
	 
      	 
      	 
      
	 
      	
                By:

              	
                /s/ Rick Fox

              
	 
      	
                Name:

              	
                Rick
      Fox

              
	 
      	
                Title:

              	
                Chief
      Financial Officer

              

      

    

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

    
      
        	 
      	
                ADMINISTRATIVE AGENT, ISSUERS AND
      LENDERS:

              
	 
      	 
      
	 
      	
                THE
      ROYAL BANK OF SCOTLAND plc, as Administrative Agent, Issuer and
      Lender

              
	 
      	 
      
	 
      	
                By:

              	
                /s/ Phillip R. Ballard

              
	 
      	
                Name:

              	
                Phillip
      R. Ballard

              
	 
      	
                Title:

              	
                Managing
      Director

              

      

    

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    
      	 
      	
              BNP
      PARIBAS, as Issuer and Lender

            
	 
      	 
      
	 
      	
              By:

            	
              /s/ Douglas R. Liftman

            
	 
      	
              Name:

            	
              Douglas
      R. Liftman

            
	 
      	
              Title:

            	
              Managing
      Director

            
	 
      	 
      	 
      
	 
      	
              By:

            	
              /s/ Greg Smothers

            
	 
      	
              Name:

            	
              Greg
      Smothers

            
	 
      	
              Title:

            	
              Director

            

    

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    
      	 
      	
              AMEGY
      BANK NATIONAL ASSOCIATION, as Lender

            
	 
      	 
      
	 
      	
              By:

            	
              /s/ Charles W. Patterson

            
	 
      	
              Name:

            	
              Charles
      W. Patterson

            
	 
      	
              Title:

            	
              Senior
      Vice President

            

    

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    
      	 
      	
              THE
      BANK OF NOVA SCOTIA, as Lender

            
	 
      	 
      
	 
      	
              By:

            	
              /s/ J Frazell

            
	 
      	
              Name:

            	
              J
      Frazell

            
	 
      	
              Title:

            	
              Director

            

    

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    
      	 
      	
              TORONTO
      DOMINION (TEXAS) LLC, as Lender

            
	 
      	 
      
	 
      	
              By:

            	
              /s/ Debbi L. Brito

            
	 
      	
              Name:

            	
              Debbi
      L. Brito

            
	 
      	
              Title:

            	
              Authorized
      Signatory

            

    

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    
      	 
      	
              CAPITAL
      ONE, NATIONAL ASSOCIATION, as Lender

            
	 
      	 
      
	 
      	
              By:

            	
              /s/ Peter Shen

            
	 
      	
              Name:

            	
              Peter
      Shen

            
	 
      	
              Title:

            	
              Vice
      President

            

    

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    
      	 
      	
              NATIXIS,
      as Lender

            
	 
      	 
      
	 
      	
              By:

            	
              /s/ Donovan C. Broussard

            
	 
      	
              Name:

            	
              Donovan
      C. Broussard

            
	 
      	
              Title:

            	
              Managing
      Director

            
	 
      	 
      	 
      
	 
      	
              By:

            	
              /s/ Liana Tchernysheva

            
	 
      	
              Name:

            	
              Liana
      Tchernysheva

            
	 
      	
              Title:

            	
              Director

            

    

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    
      	 
      	
              ALLIED
      IRISH BANKS p.l.c., as Lender

            
	 
      	 
      
	 
      	
              By:

            	
              /s/ Mark Connelly

            
	 
      	
              Name:

            	
              Mark
      Connelly

            
	 
      	
              Title:

            	
              Senior
      Vice President

            
	 
      	 
      	 
      
	 
      	
              By:

            	
              /s/ Vaughn Buck

            
	 
      	
              Name:

            	
              Vaughn
      Buck

            
	 
      	
              Title:

            	
              Director

            

    

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    
      	 
      	
              CREDIT
      SUISSE AG, CAYMAN ISLANDS BRANCH, as Lender

            
	 
      	 
      
	 
      	
              By:

            	
              /s/ Mikhail Faybusovich

            
	 
      	
              Name:

            	
              Mikhail
      Faybusovich

            
	 
      	
              Title:

            	
              Vice
      President

            
	 
      	 
      	 
      
	 
      	
              By:

            	
              /s/ Vipul Dhadda

            
	 
      	
              Name:

            	
              Vipul
      Dhadda

            
	 
      	
              Title:

            	
              Associate

            

    

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    
      	 
      	
              UBS
      LOAN FINANCE LLC, as Lender

            
	 
      	 
      
	 
      	
              By:

            	
              /s/ Irja R. Otsa

            
	 
      	
              Name:

            	
              Irja
      R. Otsa

            
	 
      	
              Title:

            	
              Associate
      Director Banking Products Services, US

            
	 
      	 
      	 
      
	 
      	
              By:

            	
              /s/ Michael Cerniglia

            
	 
      	
              Name:

            	
              Michael
      Cerniglia

            
	 
      	
              Title:

            	
              Director
      Banking Products Services, US

            

    

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    
      	 
      	
              ING
      CAPITAL LLC, as Lender

            
	 
      	 
      
	 
      	
              By:

            	
              /s/ Juli Bieser

            
	 
      	
              Name:

            	
              Juli
      Bieser

            
	 
      	
              Title:

            	
              Director

            

    

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

    
      	 
      	
              REGIONS
      BANK, as Lender and

            
	 
      	
              as
      Swing Line Lender

            
	 
      	 
      
	 
      	
              By:

            	
              /s/ Kelly L. Elmore III

            
	 
      	
              Name:

            	
              Kelly
      L. Elmore III

            
	 
      	
              Title:

            	
              Senior
      Vice President

            

    

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

     

    
      	 
      	
              UBS
      AG, STAMFORD BRANCH, as Issuer

            
	 
      	 
      
	 
      	
              By:

            	
              /s/ Irja R. Otsa

            
	 
      	
              Name:

            	
              Irja
      R. Otsa

            
	 
      	
              Title:

            	
              Associate
      Director Banking Products Services, US

            
	 
      	 
      	 
      
	 
      	
              By:

            	
              /s/ April Varner-Nanton

            
	 
      	
              Name:

            	
              April
      Varner-Nanton

            
	 
      	
              Title:

            	
              Director
      Banking Products Services, US

            

    

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

     

    
      	 
      	
              ACKNOWLEDGED
      AND AGREED AS OF THE DATE FIRST ABOVE WRITTEN:

            
	 
      	 
      
	 
      	
              ENERGY
      XXI GOM, LLC

            
	 
      	 
      
	 
      	
              By:

            	
              /s/ Rick Fox

            
	 
      	
              Name:

            	
              Rick
      Fox

            
	 
      	
              Title:

            	
              Chief
      Financial Officer

            
	 
      	 
      
	 
      	
              ENERGY
      XXI TEXAS ONSHORE, LLC

            
	 
      	 
      
	 
      	
              By:

            	
              /s/ Rick Fox

            
	 
      	
              Name:

            	
              Rick
      Fox

            
	 
      	
              Title:

            	
              Chief
      Financial Officer

            
	 
      	 
      
	 
      	
              ENERGY
      XXI ONSHORE, LLC

            
	 
      	 
      
	 
      	
              By:

            	
              /s/ Rick Fox

            
	 
      	
              Name:

            	
              Rick
      Fox

            
	 
      	
              Title:

            	
              Chief
      Financial Officer

            

    

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

     

    
      	 
      	
              ACKNOWLEDGED
      AND AGREED AS OF THE DATE FIRST ABOVE WRITTEN IN ITS CAPACITY AS GUARANTOR
      UNDER ITS LIMITED RECOURSE GUARANTY AND GRANTOR UNDER ITS PLEDGE AGREEMENT
      AND IRREVOCABLE PROXY DELIVERED IN CONNECTION WITH THE FIRST LIEN CREDIT
      AGREEMENT:

            
	 
      	 
      
	 
      	
              ENERGY
      XXI U.S.A., INC

            
	 
      	 
      
	 
      	
              By:

            	
              /s/ Rick Fox

            
	 
      	
              Name:

            	
              Rick
      Fox

            
	 
      	
              Title:

            	
              Chief
      Financial Officer

            

    

     

    
      
         

      

      
        16Unassociated Document

    
       

      Exhibit 10.1

       

      Execution

      

      Dated 22 November
2010

      

      HARBIN
ELECTRIC, INC.

      as
Borrower

      

      and

      

      CHINA DEVELOPMENT BANK CORPORATION
HONG KONG BRANCH

      (国家开发银行股份有限公司香港分行)

      as
Lender

       

        
          

        

      

       

      USD35,000,000
and RMB100,000,000

      TERM
LOAN FACILITY AGREEMENT

       

      
        

      

      
      

      

      KING
& WOOD

      9/F.,
Hutchison House

      Central,
Hong Kong

      

      Tel.:
(852) 2848 4848

      Fax:
(852) 2845 2995

      Ref.:
710110036/CR/JL

      

      HRBN - Term Loan Facility
Agreement

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      Execution

       

      CONTENTS

      

      
        
          
            	
                    CLAUSE

                  	
                    PAGE

                  
	 
      	 
      	 
      
	
                    1.

                  	
                    DEFINITIONS
      AND INTERPRETATION

                  	
                    1

                  
	 
      	 
      	 
      
	
                    2.

                  	
                    THE
      FACILITY

                  	
                    10

                  
	 
      	 
      	 
      
	
                    3.

                  	
                    PURPOSE

                  	
                    11

                  
	 
      	 
      	 
      
	
                    4.

                  	
                    CONDITIONS
      OF UTILISATION

                  	
                    11

                  
	 
      	 
      	 
      
	
                    5.

                  	
                    UTILISATION

                  	
                    12

                  
	 
      	 
      	 
      
	
                    6.

                  	
                    REPAYMENT

                  	
                    13

                  
	 
      	 
      	 
      
	
                    7.

                  	
                    PREPAYMENT
      AND CANCELLATION

                  	
                    13

                  
	 
      	 
      	 
      
	
                    8.

                  	
                    INTEREST

                  	
                    15

                  
	 
      	 
      	 
      
	
                    9.

                  	
                    INTEREST
      PERIODS

                  	
                    16

                  
	 
      	 
      	 
      
	
                    10.

                  	
                    CHANGES
      TO THE CALCULATION OF INTEREST

                  	
                    16

                  
	 
      	 
      	 
      
	
                    11.

                  	
                    FEES

                  	
                    17

                  
	 
      	 
      	 
      
	
                    12.

                  	
                    TAX
      GROSS UP AND INDEMNITIES

                  	
                    18

                  
	 
      	 
      	 
      
	
                    13.

                  	
                    INCREASED
      COSTS

                  	
                    20

                  
	 
      	 
      	 
      
	
                    14.

                  	
                    MITIGATION
      BY THE LENDER

                  	
                    20

                  
	 
      	 
      	 
      
	
                    15.

                  	
                    OTHER
      INDEMNITIES

                  	
                    21

                  
	 
      	 
      	 
      
	
                    16.

                  	
                    COSTS
      AND EXPENSES

                  	
                    22

                  
	 
      	 
      	 
      
	
                    17.

                  	
                    REPESENTATIONS
      AND WARRANTIES

                  	
                    23

                  
	 
      	 
      	 
      
	
                    18.

                  	
                    UNDERTAKINGS

                  	
                    23

                  
	 
      	 
      	 
      
	
                    19.

                  	
                    EVENTS
      OF DEFAULT

                  	
                    23

                  
	 
      	 
      	 
      
	
                    20.

                  	
                    CHANGES
      TO THE PARTIES

                  	
                    24

                  
	 
      	 
      	 
      
	
                    21.

                  	
                    DISCLOSURE
      OF INFORMATION

                  	
                    25

                  
	 
      	 
      	 
      
	
                    22.

                  	
                    PAYMENT
      MECHANICS

                  	
                    26

                  
	 
      	 
      	 
      
	
                    23.

                  	
                    SET-OFF

                  	
                    27

                  
	 
      	 
      	 
      
	
                    24.

                  	
                    NOTICES

                  	
                    27

                  
	 
      	 
      	 
      
	
                    25.

                  	
                    CALCULATIONS
      AND CERTIFICATES

                  	
                    28

                  
	 
      	 
      	 
      
	
                    26.

                  	
                    PARTIAL
      INVALIDITY

                  	
                    28

                  
	 
      	 
      	 
      
	
                    27.

                  	
                    REMEDIES
      AND WAIVERS

                  	
                    28

                  
	 
      	 
      	 
      
	
                    28.

                  	
                    AMENDMENTS
      AND WAIVERS

                  	
                    29

                  
	 
      	 
      	 
      
	
                    29.

                  	
                    COUNTERPARTS

                  	
                    29

                  
	 
      	 
      	 
      
	
                    30.

                  	
                    GOVERNING
      LAW

                  	
                    29

                  
	 
      	 
      	 
      
	
                    31.  

                  	
                    ENFORCEMENT

                  	
                    29

                  

          

        

      

      

      HRBN - Term Loan Facility
Agreement

      
        
           

        

        
          - i
-

          
            

          

        

        
           

        

      

      

      Execution

      

      
        
          
            	
                    SCHEDULE
      1

                  	
                    31

                  
	 
      	 
      
	
                    COMMITMENTS

                  	
                    31

                  
	 
      	 
      
	
                    SCHEDULE
      2

                  	
                    32

                  
	 
      	 
      
	
                    CONDITIONS
      PRECENDENT

                  	
                    32

                  
	 
      	 
      
	
                    SCHEDULE
      3

                  	
                    35

                  
	 
      	 
      
	
                    UTILISATION
      REQUEST

                  	
                    35

                  
	 
      	 
      
	
                    SCHEDULE
      4

                  	
                    36

                  
	 
      	 
      
	
                    REPRESENTATIONS
      AND WARRANTIES

                  	
                    36

                  
	 
      	 
      
	
                    SCHEDULE
      5

                  	
                    40

                  
	 
      	 
      
	
                    UNDERTAKINGS

                  	
                    40

                  
	 
      	 
      
	
                    SCHEDULE
      6

                  	
                    46

                  
	 
      	 
      
	
                    EVENTS
      OF DEFAULT

                  	
                    46

                  
	 
      	 
      
	
                    SCHEDULE
      7

                  	
                    50

                  
	 
      	 
      
	
                    DEBT
      SERVICE ACCOUNT

                  	
                    50

                  
	 
      	 
      
	
                    EXECUTION

                  	
                    51

                  

          

        

      

       

      HRBN - Term Loan Facility
Agreement

      
        
           

        

        
          - ii
-

          
            

          

        

        
           

        

      

      Execution

      

      THIS AGREEMENT is dated 22
November 2010 and made between:

      

      
        	
                1

              	
                HARBIN ELECTRIC, INC., a
      limited liability company incorporated under the laws of the State of
      Nevada with its principal place of business at No. 9 Ha Ping Xi Lu, Ha
      Ping Lu Ji Zhong Qu, Harbin Kai Fa Qu, Harbin, People's Republic of China
      150060 as borrower (the “Borrower”);
      and

              

      

      

      
        	
                2

              	
                CHINA DEVELOPMENT BANK CORPORATION HONG
      KONG BRANCH ( 国家开发银行股份有限公司香港分行) of Suite 3307-15,
      33/F., One International Finance Centre, No. 1 Harbour View Street,
      Central, Hong Kong as lender (the “Lender”).

              

      

      

      IT IS AGREED as
follows:

      

      
        	
                1.

              	
                DEFINITIONS
      AND INTERPRETATION

              

      

      

      
        	
                1.1

              	
                Definitions

              

      

      
        	
                 
      

              	
                In
      this Agreement:

              

      

      

      
        	
                 
      

              	
                “Authorised Person” means
      a person duly authorised to act on behalf of any of the Obligors, as the
      case may be, and any permitted attorney-in-fact or delegate of such
      person.

              

      

      

      
        	
                 
      

              	
                “Availability Period”
      means the period six (6) months from and including the date of this
      Agreement.

              

      

      

      
        	
                 
      

              	
                “Available Facility”
      means, in relation to a Facility, at any time the Lender's Commitment
      under that Facility
      minus:

              

      

      

      
        	
                 
      

              	
                (a)

              	
                the
      aggregate amount of any outstanding Loans under that Facility;
      and

              

      

      

      
        	
                 
      

              	
                (b)

              	
                in
      relation to any proposed Utilisation, the aggregate amount of any Loan
      that is due to be made under that Facility on or before the proposed
      Utilisation Date.

              

      

      

      “Baring Asia” means Baring
Private Equity Asia Group Limited.

      

      “Break Costs” means the amount
(if any) by which:

      

      
        	
                 
      

              	
                (a)

              	
                the
      interest which the Lender should have received pursuant to the terms of
      this Agreement for the period from the date of receipt of all or any part
      of the principal amount of a Loan or Unpaid Sum to the last day of the
      current Interest Period in respect of that Loan or Unpaid Sum, had the
      principal amount or Unpaid Sum received been paid on the last day of that
      Interest Period;

              

      

      

      
        	
                 
      

              	
                exceeds:

              

      

      

      
        	
                 
      

              	
                (b)

              	
                the
      amount of interest which the Lender would be able to obtain by placing an
      amount equal to the principal amount or Unpaid Sum received by it on
      deposit with a leading bank in the Relevant Interbank Market for a period
      starting on the business day following receipt or recovery and ending on
      the last day of the current Interest
Period.

              

      

      

      HRBN - Term Loan Facility
Agreement

      
        
           

        

        
          -1-

          
            

          

        

        
           

        

      

      

      
        Execution

      

      

      
        	
                 
      

              	
                “Commitment”  means
       Facility A  Commitment  or  Facility B
       Commitment; and “Commitments” means both
      of them.

              

      

      

      
        	
                 
      

              	
                “Common Stock” means any
      stock of any class of the Borrower which has no preference in respect of
      dividends or of amounts payable in the event of any voluntary or
      involuntary liquidation, dissolution or winding up of the Borrower and
      which is not subject to redemption by the
  Borrower.

              

      

      

      
        	
                 
      

              	
                “Consortium Agreement”
      means a consortium agreement dated 10 October 2010 between Baring Asia and
      the Share Pledgor.

              

      

      

      
        	
                 
      

              	
                “Debt Service Account”
      has the meaning ascribed to it in Schedule 7 (Debt Service
      Account).

              

      

      

      
        	
                 
      

              	
                “Default Notice” means a
      notice issued in accordance with this Agreement by the Lender to the
      Borrower notifying the Borrower of the occurrence of an Event of
      Default.

              

      

      

      
        	
                 
      

              	
                “Event of Default” means
      any event or circumstance specified as such in Schedule 6 (Events of
      Default).

              

      

      

      
        	
                 
      

              	
                “Facility” means Facility
      A or Facility B; and “Facilities” means both
      of them.

              

      

      

      
        	
                 
      

              	
                “Facility A” means the US
      Dollar term loan facility made available under this Agreement as described
      in Clause 2 (The
      Facility).

              

      

      

      
        	
                 
      

              	
                “Facility A Commitment”
      means the amount under the heading “Facility A Commitment” in Schedule 1
      (Commitments) to
      the extent not cancelled or reduced by the Lender under this
      Agreement.

              

      

      

      
        	
                 
      

              	
                “Facility A Margin” means
      three per cent. (3%) per annum.

              

      

      

      
        	
                 
      

              	
                “Facility A Loan” means,
      as the context requires, a loan made or to be made under Facility A or the
      principal amount outstanding at any time of that
  loan.

              

      

      

      
        	
                 
      

              	
                “Facility B” means the
      RMB term loan facility made available under this Agreement as described in
      Clause 2 (The
      Facility).

              

      

      

      
        	
                 
      

              	
                “Facility B Commitment”
      means the amount under the heading “Facility B Commitment” in Schedule 1
      (Commitments) to
      the extent not cancelled or reduced by the Lender under this
      Agreement.

              

      

      

      
        	
                 
      

              	
                “Facility B Margin” means
      two and a half per cent. (2.5%) per
annum.

              

      

      

      
        	
                 
      

              	
                “Facility B Loan” means,
      as the context requires, a loan made or to be made under Facility B or the
      principal amount outstanding at any time of that
  loan.

              

      

      

      HRBN - Term Loan Facility
Agreement

      
        
           

        

        
          -2-

          
            

          

        

        
           

        

      

      

      Execution

      

      “Finance Documents” means the
followings:-

      

      
        	
                 
      

              	
                (a)

              	
                this
      Agreement;

              

      

      

      
        	
                 
      

              	
                (b)

              	
                the
      Security Documents; and

              

      

      

      
        	
                 
      

              	
                (c)

              	
                any
      other document or agreement designated in writing as such by the Borrower
      and the Lender.

              

      

      

      “Financial Indebtedness” means
any indebtedness for or in respect of:

      

      
        	
                 
      

              	
                (a)

              	
                moneys
      borrowed;

              

      

      

      
        	
                 
      

              	
                (b)

              	
                any
      amount raised by acceptance under any acceptance credit
      facility;

              

      

      

      
        	
                 
      

              	
                (c)

              	
                any
      amount raised pursuant to any note purchase facility or the issue of
      bonds, notes, debentures, loan stock or any similar
      instrument;

              

      

      

      
        	
                 
      

              	
                (d)

              	
                the
      amount of any liability in respect of any lease or hire purchase contract
      which would, in accordance with the general applicable accounting
      standards, be treated as a finance or capital
  lease;

              

      

      

      
        	
                 
      

              	
                (e)

              	
                receivables
      sold or discounted (other than any receivables to the extent they are sold
      on a non-recourse basis);

              

      

      

      
        	
                 
      

              	
                (f)

              	
                any
      amount raised under any other transaction (including any forward sale or
      purchase agreement) having the commercial effect of a
      borrowing;

              

      

      

      
        	
                 
      

              	
                (g)

              	
                any
      derivative transaction entered into in connection with protection against
      or benefit from fluctuation in any rate or price (and, when calculating
      the value of any derivative transaction, only the marked to market value
      shall be taken into account);

              

      

      

      
        	
                 
      

              	
                (h)

              	
                any
      counter-indemnity obligation in respect of a guarantee, indemnity, bond,
      standby or documentary letter of credit or any other instrument issued by
      a bank or financial institution;
and

              

      

      

      
        	
                 
      

              	
                (i)

              	
                the
      amount of any liability in respect of any guarantee or indemnity for any
      of the items referred to in paragraphs (a) to (h)
  above.

              

      

      

      
        	
                 
      

              	
                “Final Maturity Date”
      means the date falling thirty-six (36) months after the first Utilisation
      Date.

              

      

      

      
        	
                 
      

              	
                “GAAP” means United
      States Generally Accepted Accounting
Principles.

              

      

      

      
        	
                 
      

              	
                “Group” means the
      Borrower and its subsidiaries from time to
time.

              

      

      

      
        	
                 
      

              	
                “Group Companies” means
      the members of the Group; and “Group Company” means
      each of them.

              

      

      

      
        	
                 
      

              	
                “Hong Kong” means the
      Hong Kong Special Administrative Region of the People's Republic of
      China.

              

      

      

      
        	
                 
      

              	
                “Interest Payment Date”
      means the last day of each Interest
Period.

              

      

      

      
        HRBN - Term Loan Facility
Agreement

      

      
        
           

        

        
          -3-

          
            

          

        

        
           

        

      

      

      
        Execution

      

      

      
        	
                 
      

              	
                “Interest Period” means,
      in relation to a Loan, each period determined in accordance with Clause 9
      (Interest
      Periods) and, in relation to an Unpaid Sum, each period determined
      in accordance with Clause 8.3 (Default
      interest).

              

      

      

      
        	
                 
      

              	
                “LIBOR” means, in
      relation to any Loan:

              

      

      

      
        	
                 
      

              	
                (a)

              	
                the
      applicable Screen Rate; or

              

      

      

      
        	
                 
      

              	
                (b)

              	
                if
      no Screen Rate is available for US Dollars for the Interest Period of that
      Loan, the arithmetic mean of the rates (rounded upwards to four decimal
      places) quoted by the Reference Banks to leading banks in the London
      interbank market (as supplied to the Lender at its
    request),

              

      

      

      
        	
                 
      

              	
                as
      of 11:00am (London time) on the Quotation Day for which an interest rate
      is to be determined for the offering of deposits in US Dollars and for a
      period of comparable to the Interest Period for that
  Loan.

              

      

      

      
        	
                 
      

              	
                “Loan” means a Facility A
      Loan or a Facility B Loan.

              

      

      

      
        	
                 
      

              	
                “Margin” means in
      relation to a Facility A Loan, Facility A Margin and in relation to a
      Facility B Loan, Facility B Margin.

              

      

      

      
        	
                 
      

              	
                “Material Adverse Change”
      means any event or circumstance that has or could reasonably be expected
      to have a material adverse effect.

              

      

      

      
        	
                 
      

              	
                “Obligors” means the
      Borrower, the Share Pledgor and any other person (other than the Lender)
      who is a party to a Finance Document; and “Obligor” means any of
      them.

              

      

      

      
        	
                 
      

              	
                “Original Financial
       Statements” means the audited and consolidated financial
      statements of the Group for the financial year ended 31 December
      2009.

              

      

      

      
        	
                 
      

              	
                “Party” means a party to
      this Agreement.

              

      

      

      
        	
                 
      

              	
                “Permitted Holders” means
      the Share Pledgor and its estate, spouse, ancestors and lineal
      descendants, the legal representatives of any of the foregoing and the
      trustees of any bona fide trusts of which the foregoing are the sole
      beneficiaries or the grantors, or any entity of which the foregoing
      beneficially own, individually or collectively with any of the foregoing,
      at least 80% of the total voting power of the voting shares of such
      entity.

              

      

      

      
        	
                 
      

              	
                “Permitted Security
      Interest” means

              

      

      

      
        	
                 
      

              	
                (i)

              	
                the
      Security Interests created pursuant to the Security
    Documents;

              

      

      

      
        	
                 
      

              	
                (ii)

              	
                any
      Security Interest arising or constituted under any retention of title or
      similar provision in a supplier's or vendor's terms and conditions of
      supply or sale of goods or materials acquired by the Borrower in the
      ordinary course of business and provided no default exists in respect of
      the obligations which the Security Interest
  secures;

              

      

      

      
        	  	
                (iii)

              	
                
                  any
      Security Interest for any Taxes which are not yet due or remain payable
      without penalty (other than those which are currently being contested in
      good faith by appropriate proceedings and in respect of which the Borrower
      has made adequate reserve (being not less than an amount which would be
      required to be reserved in accordance with GAAP)) provided always that no
      document has been filed, registered, recorded or lodged with any court,
      registry, office, or regional, provincial, governmental or other authority
      by any person for the purpose of perfecting or preserving such Security
      Interest or the priority
thereof;

                

              

      

      

      HRBN - Term Loan Facility
Agreement

      
        
           

        

        
          -4-

          
            

          

        

        
           

        

      

      

      Execution

      

      
        	
                 
      

              	
                (iv)

              	
                any
      Security Interest arising or constituted by any lease, rental, hire,
      conditional sale or similar agreement entered into by the Borrower
      relating to the assets acquired by it in the ordinary course of business
      (and not for the primary purpose of raising finance) provided always that
      the entry into and performance of such arrangements does not contravene
      any provision of any of the Finance
Documents;

              

      

      

      
        	
                 
      

              	
                (v)

              	
                any
      Security Interest on property acquired by the Borrower after the date
      hereof which existed on such property at the time of its acquisition (but
      which was not created in anticipation thereof) provided that the terms
      thereof and the acquisition of such property do not contravene any
      provision of any of the Finance Documents and the principal amount secured
      thereby has not been increased in contemplation of, or since the
      acquisition of that property by the
Borrower;

              

      

      

      
        	
                 
      

              	
                (vi)

              	
                any
      netting or set-off arrangement entered into by the Borrower in the
      ordinary course of its banking arrangements for the purpose of netting
      debit and credit balances.

              

      

      

      
        	
                 
      

              	
                “Potential Event of
      Default” means any event or circumstance specified in Schedule 6
      (Events of
      Defaults) which would (with the expiry of a grace period, the
      giving of notice, the making of any determination under the Finance
      Documents or any combination of any of the foregoing) be an Event of
      Default.

              

      

      

      
        	
                 
      

              	
                “PRC” means the People's
      Republic of China excluding, for the purpose of this Agreement, Hong
      Kong.

              

      

      

      
        	
                 
      

              	
                “Quotation Day” means, in
      relation to any currency for any period for which an interest rate is to
      be determined, the day as determined by the Lender in accordance with
      market practice in the Relevant Interbank Market (and if quotation would
      normally be given by leading banks in the Relevant Interbank Market on
      more than one day, the Quotation Day will be the last of those
      days).

              

      

      

      
        	
                 
      

              	
                “Reference Banks” means
      such banks as may be appointed by the
Lender.

              

      

      

      
        	
                 
      

              	
                “Related Business” means
      any designing, developing, manufacturing, supplying, and servicing of
      electric motors including linear motors, specialty micro-motors, and
      industrial rotary motors.

              

      

      

      
        	
                 
      

              	
                “Release Date” means the
      date on which the Lender has certified that the Secured Indebtedness has
      been irrevocably and unconditionally paid and discharged in
      full.

              

      

      

      
        	
                 
      

              	
                “Relevant Interbank
      Market” means in relation to US Dollars, the London interbank
      market and, in relation to RMB, the Shanghai interbank
    market.

              

      

      

      HRBN - Term Loan Facility
Agreement

      
        
           

        

        
          -5-

          
            

          

        

        
           

        

      

      Execution

      

      
        	
                 
      

              	
                “Repayment Dates” means
      the dates falling twenty-four (24) and thirty-six (36) months respectively
      after the first Utilisation Date (irrespective of the Facility under which
      the first Utilisation is made); and “Repayment Date” means
      each of them.

              

      

      

      
        	
                 
      

              	
                “Screen Rate”
      means:

              

      

      

      
        	
                 
      

              	
                (a)

              	
                in
      relation to LIBOR, the British Bankers' Association Interest Settlement
      Rate for the relevant currency and period;
and

              

      

      

      
        	
                 
      

              	
                (b)

              	
                in
      relation to SHIBOR, the Shanghai Interbank Offered Rate calculated by
      National Interbank Funding Center for the relevant currency and
      period,

              

      

      

      
        	
                 
      

              	
                displayed
      on the appropriate page of the (in relation to LIBOR) Reuters screen and
      (in relation to SHIBOR) the website www.shibor.org. If the agreed page is
      replaced or service ceases to be available, the Lender may specify another
      page or service displaying the appropriate rate after consultation with
      the Borrower.

              

      

      

      
        	
                 
      

              	
                “Security Documents”
      means

              

      

      

      
        	
                 
      

              	
                (a)

              	
                the
      Share Pledge Agreement; and

              

      

      

      
        	
                 
      

              	
                (b)

              	
                any
      other security documents for the time being or from time to time
      constituting security for the Secured Indebtedness and any other document
      which may be designated a Security Document with the consent of the
      Borrower

              

      

      

      
        	
                 
      

              	
                and
      shall include all notices, acknowledgements or other documents required
      pursuant thereto or in connection therewith and reference to “Security Document” includes reference to
      any one thereof.

              

      

      

      
        	
                 
      

              	
                “Secured Indebtedness”
      means all present and future indebtedness, obligations and liability
      (whether actual or contingent and whether owed on a joint and several
      basis, or in any capacity whatsoever) of the Obligors to the Lender under
      the Finance Documents.

              

      

      

      
        	
                 
      

              	
                “Security Interest”
      means (i) a mortgage, charge, pledge, lien or other encumbrance securing
      any obligation of any person, (ii) any arrangement under which money or
      claims to, or for 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
      payment of sums owed or payable to any person or (iii) any other type of
      preferential arrangement (including title transfer and retention
      arrangements) having a similar
effect.

              

      

      

      
        	
                 
      

              	
                “Share Pledge Agreement”
      means a pledge and security agreement entered or to be entered into
      between the Share Pledgor as pledgor and the Lender as pledgee in respect
      of the Common Stock including all amendments attached thereto pursuant to
      the terms of the Share Pledge
Agreement.

              

      

      

      
        	
                 
      

              	
                “Share Pledgor” means
      Mr. Yang Tianfu (杨天夫), holder of PRC passport No.
    G33266303.

              

      

      

      
        	
                 
      

              	
                “Share Value” has the
      meaning ascribed to it in the Share Pledge
  Agreement.

              

      

      

      
        HRBN - Term Loan Facility
Agreement

      

      
        
           

        

        
          -6-

          
            

          

        

        
           

        

      

      

      
        Execution

      

      

      
        	
                 
      

              	
                “SHIBOR” means, in
      relation to any Loan:

              

      

      

      
        	
                 
      

              	
                (a)

              	
                the
      applicable Screen Rate; or

              

      

      

      
        	
                 
      

              	
                (b)

              	
                if
      no Screen Rate is available for RMB for the Interest Period of that Loan,
      the arithmetic mean of the rates (rounded upwards to four decimal places)
      quoted by the Reference Banks to leading banks in the Shanghai interbank
      market (as supplied to the Lender at its
  request),

              

      

      

      
        	
                 
      

              	
                as
      of 11:30am (Beijing time) on the Quotation Day for which an interest rate
      is to be determined for the offering of deposits in RMB and for a period
      of comparable to the Interest Period for that
  Loan.

              

      

      

      
        	
                 
      

              	
                “Tax” means any tax,
      levy, impost, duty or other charge or withholding of a similar nature
      (including any penalty or interest payable in connection with any failure
      to pay or any delay in paying any of the
same).

              

      

      

      
        	
                 
      

              	
                “Tax Deduction” has the
      meaning given to such term in Clause 12.1 (Tax
      definitions).

              

      

      

      
        	
                 
      

              	
                “Trading Day” shall mean
      (a) if the Common Stock is listed or admitted for trading on the New York
      Stock Exchange, a day on which trades may be made on such exchange, (b) if
      the Common Stock is quoted on the Nasdaq Stock Market, a day on which
      trades may be made thereon or (c) if the Common Stock is not so listed,
      admitted for trading or quoted, any day other than a Saturday or Sunday or
      a day on which banking institutions in the State of New York are
      authorized or obligated by law or executive order to
  close.

              

      

      

      
        	
                 
      

              	
                “Trading Market” has the
      meaning ascribed to it in the Share Pledge
  Agreement.

              

      

      

      
        	
                 
      

              	
                “Unpaid Sum” means any
      sum due and payable but unpaid by the Borrower under this
      Agreement.

              

      

      

      
        	
                 
      

              	
                “Utilisation” means a
      utilisation of a Facility.

              

      

      

      
        	
                 
      

              	
                “Utilisation Date” means
      the date of a Utilisation, being the date on which the relevant Loan is to
      be made.

              

      

      

      
        	
                 
      

              	
                “Utilisation Request”
      means a notice substantially in the form set out in Schedule 3 (Utilisation
      Request).

              

      

      

      
        	
                1.2

              	
                Construction

              

      

      

      (a)
 Unless a contrary indication appears, any reference in this Agreement
to:

      

      
        	
                 
      

              	
                (i)

              	
                the
      “Borrower”, the
      “Lender”, any
      “Obligor” or any
      “Party” shall be
      construed so as to include its successors in title, permitted assigns and
      permitted transferees;

              

      

      

      
        	
                 
      

              	
                (ii)

              	
                “affiliate” of any
      specified person means:

              

      

      

      
        	
                 
      

              	
                (a)

              	
                any
      other person directly or indirectly controlling or controlled by or under
      direct or indirect common control with such specified person,
      or

              

      

      

      HRBN - Term Loan Facility
Agreement

      
        
           

        

        
          -7-

          
            

          

        

        
           

        

      

    

    

    Execution

    

    
      	
               
      

            	
              (b)

            	
              any
      other person who is a director or officer
of:

            

    

    

    
      	
               
      

            	
              (1)

            	
              such
      specified person,

            

    

    

    
      	
               
      

            	
              (2)

            	
              any
      subsidiary of such specified
person,

            

    

    

    
      	
               
      

            	
              (3)

            	
              any
      person described in (a) above, or

            

    

    

    
      	
               
      

            	
              (c)

            	
              any
      spouse, parent, child, brother or sister of any personal described in (a)
      or (b) above;

            

    

    

    
      	
               
      

            	
              (iii)

            	
              “applicable law or
      regulation” includes any law, regulation, rule, official directive,
      request or guideline (whether or not having the force of law) of any
      governmental, intergovernmental or supranational body, agency, department
      or regulatory, self-regulatory or other authority or
      organisation;

            

    

     

    
      	
               
      

            	
              (iv)

            	
              a
      document is in “agreed
      form” if it is agreed and initialled for the purpose of
      identification as such by the Borrower and the
  Lender;

            

    

    

    
      	
               
      

            	
              (v)

            	
              “assets” includes present
      and future properties, revenues and rights of every
      description;

            

    

    

    
      	
               
      

            	
              (vi)

            	
              “authorisation”
      means:

            

    

    

    
      	
               
      

            	
              (a)

            	
              an
      authorisation, consent, approval, resolution, licence, exemption, filing,
      notarisation, lodgement or registration;
or

            

    

    

    
      	
               
      

            	
              (b)

            	
              in
      relation to anything which will be fully or partly prohibited or
      restricted by law if a government agency intervenes or acts in any way
      within a  specified  period  after lodgement,  filing,
       registration or notification, the expiry of that period without
      intervention or action;

            

    

    

    
      	
               
      

            	
              (vii)

            	
              “business day” means a
      day (other than a Saturday or Sunday) on which banks are open for general
      business in New York, Hong Kong and (if such reference relates to a date
      for a payment in US Dollars) London or (if such reference relates to a
      date for a payment in RMB)
Shanghai;

            

    

     

    
      	 	
              (viii)

            	
              “contractual
      obligations” means, as to any person, any provision of any security
      issued by such person or of any agreement, undertaking, contract,
      indenture, mortgage, deed of trust or other instrument or arrangement
      (whether in writing or otherwise) to which such person is a party or by
      which it or any of such person's property is
  bound;

            

    

     

    
      	
               
      

            	
              (ix)

            	
              “control” means the power
      to direct the management and policies of a body corporate, whether through
      the ownership of voting capital, by contract or otherwise and “controlled” shall be
      construed accordingly;

            

    

    

    
      	
               
      

            	
              (x)

            	
              a
      “Finance Document”
      or any other agreement or instrument is a reference to that Finance
      Document or other agreement or instrument as amended, novated,
      supplemented, extended or restated;

            

    

    

    HRBN - Term Loan Facility
Agreement

    
      
         

      

      
        -8-

        
          

        

      

      
         

      

    

    

    Execution

    

    
      	
               
      

            	
              (xi)

            	
              “governmental agency”
      means any government or any governmental agency, semi-governmental or
      judicial entity or authority (including, without limitation, any stock
      exchange or any self-regulatory organisation established under
      statute);

            

    

    

    
      	
               
      

            	
              (xii)

            	
              “holding company” means,
      in relation to a company or corporation, any other company or corporation
      in respect of which it is a
subsidiary;

            

    

    

    
      	
               
      

            	
              (xiii)

            	
              “including” shall be
      construed as “including without limitation” (and cognate expressions shall
      be construed similarly);

            

    

    

    
      	
               
      

            	
              (xiv)

            	
              “indebtedness” includes
      any obligation (whether incurred as principal or as surety) for the
      payment or repayment of money, whether present or future, actual or
      contingent;

            

    

    

    
      	
               
      

            	
              (xv)

            	
              “indirect tax” means any
      goods and services tax, consumption tax, value added tax or any tax of a
      similar nature;

            

    

    

    
      	
               
      

            	
              (xvi)

            	
              “material adverse effect”
      means a material adverse effect on (a) the property, business, operations,
      financial condition, liabilities or capitalization of the Group , taken as
      a whole, (b) the ability of any Obligor to perform its payment obligations
      or any of its material obligations under any of the Finance Documents to
      which it is a party, (c) the validity or enforceability of any of the
      Finance Documents, (d) the material rights and remedies of the Lender
      under any of the Finance Documents or (e) the timely repayment of the Loan
      or payment of interest accrued or any other amount payable by the Borrower
      under this Agreement;

            

    

    

    
      	
               
      

            	
              (xvii)

            	
              “month” means a period
      starting on one day in a calendar month and ending on the numerically
      corresponding day in the next calendar month, except
  that:

            

    

    

    
      	
               
      

            	
              (a)

            	
              if
      the numerically corresponding day is not a business day, that period shall
      end on the next business day in that calendar month in which that period
      is to end if there is one, or if there is not, on the immediately
      preceding business day;

            

    

    

    
      	
               
      

            	
              (b)

            	
              if
      there is no numerically corresponding day in the calendar month in which
      that period is to end, that period shall end on the last business day in
      that calendar month; and

            

    

    

    
      	
               
      

            	
              (c)

            	
              if
      an Interest Period begins on the last business day of a calendar month,
      that Interest Period shall end on the last business day in the calendar in
      which that Interest Period is to
end;

            

    

    

    The above
rules will apply only to the last month of any period.

     

    
      	 	
              (xviii)

            	
              “subsidiary”
      means in relation to any company or corporation, a company or
      corporation:

            

    

     

    
      	
               
      

            	
              (a)

            	
              which
      is controlled, directly or indirectly, by the first mentioned company or
      corporation;

            

    

    

    HRBN - Term Loan Facility
Agreement

    
      
         

      

      
        -9-

        
          

        

      

      
         

      

    

    

    Execution

    

    
      	
               
      

            	
              (b)

            	
              more
      than half the issued equity share capital of which is beneficially owned,
      directly or indirectly, by the first mentioned company or corporation;
      or

            

    

    

    
      	
               
      

            	
              (c)

            	
              which
      is a subsidiary of another subsidiary of the first mentioned company or
      corporation, and for this purpose, a company or corporation shall be
      treated as being controlled by another if that other company or
      corporation is able to direct its affairs and/or to control the
      composition of its board of directors or equivalent
  body;

            

    

    

    
      	 	
              (xix)

            	
              a
      “person”
      includes any individual, firm, company, corporation, government, state or
      agency of a state or any association, trust, joint venture, consortium or
      partnership (whether or not having separate legal
      personality);

            

    

     

    
      	
               
      

            	
              (xx)

            	
              a
      provision of law is a reference to that provision as amended or
      re-enacted; and

            

    

     

    
      	 	
              (xxi)

            	
              unless
      a contrary indication appears, a time of day is a reference to Hong Kong
      time.

            

    

     

    
      	
              (b)

            	
              Clause
      and Schedule headings are for ease of reference
  only.

            

    

    

    
      	
              (c)

            	
              Unless
      a contrary indication appears, a term used in any other Finance Document
      or in any notice given under or in connection with any Finance Document
      has the same meaning in that Finance Document or notice as in this
      Agreement.

            

    

    

    
      	
              (d)

            	
              A
      Potential Event of Default or an Event of Default is “continuing” if it has
      not been remedied or waived.

            

    

    

    
      	
              (e)

            	
              Where
      this Agreement specifies an amount in a given currency (the “specified currency”)
      “or its
      equivalent”, the “equivalent” is a
      reference to the amount of any other currency which, when converted into
      the specified currency utilising the Lender's spot rate of exchange for
      the purchase of the specified currency with that other currency at or
      about 11 a.m. on the relevant date, is equal to the relevant amount in the
      specified currency.

            

    

    

    
      	
              1.3

            	
              Currency
      Symbols

            

    

    
      	
               
      

            	
              (a)

            	
              “USD” or “US Dollars” or “Dollars” denotes the
      lawful currency of the United States of
America.

            

    

    

    
      	
               
      

            	
              (b)

            	
              “RMB” denotes the lawful
      currency of the PRC.

            

    

    

    
      	
              2.

            	
              THE
      FACILITY

            

    

    

    
      	
              2.1

            	
              The
    Facility

            

    

    
      	
               
      

            	
              Subject
      to the terms of this Agreement, the Lender make available to the
      Borrower:

            

    

    

    
      	
               
      

            	
              (a)

            	
              a
      US Dollar term loan facility in an aggregate amount equal to the Facility
      A Commitment; and

            

    

    

    
      	
               
      

            	
              (b)

            	
              a
      RMB term loan facility in an aggregate amount equal to the Facility B
      Commitment.

            

    

    

    HRBN - Term Loan Facility
Agreement

    
      
         

      

      
        -10-

        
          

        

      

      
         

      

    

    

    Execution

    

    
      	
              2.2

            	
              Commitments

            

    

    
      	
              (a)

            	
              Subject
      to paragraph (b) below, on the date of this Agreement, the currency and
      amount of the Commitment of the Lender in respect of each Facility is the
      currency and amount set out in Schedule 1 (Commitments) in respect
      of that Facility.

            

    

    

    
      	
              (b)

            	
              The
      Commitments of the Lender are subject to any cancellation or reduction
      thereof in accordance with this
Agreement.

            

    

    

    
      	
              3.

            	
              PURPOSE

            

    

    

    
      	
              3.1

            	
              PURPOSE

            

    

    
       

      The
Borrower shall apply all amounts borrowed by it under the Facilities for working
capital requirements of the Group.

    

    

    
      	
              3.2

            	
              Monitoring

            

    

     

    The
Lender shall not be bound to monitor or verify the application of any amount
borrowed pursuant to this Agreement.

    

    
      	
              4.

            	
              CONDITIONS
      OF UTILISATION

            

    

    

    
      	
              4.1

            	
              The
      Borrower may not deliver the first Utilisation Request unless all
      conditions precedent set out in Part A of Schedule 2 (Conditions Precedent)
      have been satisfied in accordance with this Clause 4 (Conditions of
      Utilisation). The Lender shall notify the Borrower promptly upon
      being satisfied with the same.

            

    

    

    
      	
              4.2

            	
              The
      Borrower's right to submit a Utilisation Request (including the first
      Utilisation Request) is further subject to all conditions precedent set
      out in Part B of Schedule 2 (Conditions Precedent)
      having been satisfied in accordance with this Clause 4 (Conditions of
      Utilisation).

            

    

    

    
      	
              4.3

            	
              The
      Borrower shall be deemed to have satisfied the conditions precedent in
      this Clause 4 (Conditions of
      Utilisation) if:

            

    

    
      
        	 	 	 
	
                 
      

              	
                (i)

              	
                the
      documents and other evidence referred to in Schedule 2 (Conditions Precedent) and any
      documentary evidence relating to the satisfaction of the conditions
      precedent set out in Schedule 2 (Conditions Precedent)
      are delivered to the Lender in form and substance satisfactory to it;
      and

              

      

    

    

    
      	
               
      

            	
              (ii)

            	
              no
      Material Adverse Change has occurred and no change in applicable law or
      regulation or in the interpretation thereof shall be applicable that
      either restrains or prevents or imposes materially adverse conditions upon
      the transactions contemplated by or in connection with the Finance
      Documents.

            

    

    

    HRBN - Term Loan Facility
Agreement

    
      
         

      

      
        -11-

        
          

        

      

      
         

      

    

    

    
      Execution

    

    

    
      	
              4.4

            	
              All
      copies of documents delivered to the Lender as required under this Clause
      4 (Conditions of
      Utilisation) shall be certified by an Authorised Person as being
      true and complete copies of the
originals.

            

    

    

    
      	
              5.

            	
              UTILISATION

            

    

    

    
      	
              5.1

            	
              Delivery of a Utilisation
      Request

            

    

    The
Borrower may utilise a Facility by delivery to the Lender of a duly completed
Utilisation Request not later than 10:00am (Hong Kong time) on the third
business day before the proposed Utilisation Date.

    

    
      	
              5.2

            	
              Completion of Utilisation
      Request

            

    

    
      	
              (a)

            	
              Each
      Utilisation Request is irrevocable and will not be regarded as having been
      duly completed unless:

            

    

    

    
      	
               
      

            	
              (i)

            	
              it
      identifies the Facility to be
utilised;

            

    

    

    
      	
               
      

            	
              (ii)

            	
              the
      proposed Utilisation Date is a business day within the Availability Period
      applicable to that Facility;

            

    

    

    
      	
               
      

            	
              (iii)

            	
              the
      currency and amount of the Utilisation comply with Clause 5.3 (Currency and amount);
      and

            

    

    

    
      	
               
      

            	
              (iv)

            	
              the
      bank account specified in the Utilisation Request to which the proceeds of
      the Utilisation are to be credited is a bank account of the Borrower
      maintained with a bank acceptable to the Lender or such other account as
      is acceptable to the Lender.

            

    

    

    
      	
              (b)

            	
              Only
      one Loan may be requested in each Utilisation
  Request.

            

    

    

    
      	
              5.3

            	
              Currency and
      amount

            

    

    
      	
              (a)

            	
              The
      currency specified in each Utilisation Request utilising Facility A and
      Facility B must be US Dollars and RMB
  respectively.

            

    

    

    
      	
              (b)

            	
              The
      amount of the proposed Loan must be an amount which is not more than the
      Available Facility in respect of the corresponding Facility and which is a
      minimum of USD5,000,000 (in the case of Facility A) or RMB20,000,000 (in
      the case of Facility B) or, if less, the Available Facility in respect of
      that Facility.

            

    

    

    
      	
              5.4

            	
              Advance

            

    

    
      	
               
      

            	
              If the conditions set out in
      Clause 4 (Conditions of
      Utilisation) and 5.1
      (Delivery of
      a Utilisation
      Request) to 5.3
      (Currency and
      amount) above have
      been met, the Lender shall make the Loan available to the
      Borrower on the Utilisation
Date.

            

    

    

    
      	
              5.5

            	
              Cancellation of Available
      Facility

            

    

    
      	
               
      

            	
              On the expiry of the Availability
      Period (in the principal financial centre of the country of the relevant
      currency):

            

    

    

    
      	
               
      

            	
              (a)

            	
              the
      Available Facility (if any) in respect of each Facility shall be
      immediately and automatically
      reduced to zero; and

            

    

    

    HRBN - Term Loan Facility
Agreement

    
      
         

      

      
        -12-

        
          

        

      

      
         

      

    

    

    Execution

    

    
      	
               
      

            	
              (b)

            	
              the
      Commitment under each Facility shall be immediately and automatically
      reduced by the amount (if any) of the Available Facility in respect of
      that Facility immediately before the reduction to zero of that Available
      Facility in accordance with paragraph (a)
above.

            

    

     

    
      	
              6.

            	
              REPAYMENT

            

    

    

    
      	
              6.1

            	
              Repayment of
      Loans

            

    

    The
Borrower shall repay the Facility A Loans in two (2) equal instalments on the
Repayment Dates. The Borrower shall repay the Facility B Loans in two (2) equal
instalments on the Repayment Dates.

    

    
      	
              6.2

            	
              Reborrowing

            

    

    
      	
               
      

            	
              The
      Borrower may not reborrow any part of a Facility which is
      repaid.

            

    

     

    
      	
              7.

            	
              PREPAYMENT
      AND CANCELLATION

            

    

     

    
      	
              7.1

            	
              Illegality

            

    

    
      	
               
      

            	
              If,
      at any time, it is or will become unlawful in any applicable jurisdiction
      for the Lender to perform any of its obligations as contemplated by this
      Agreement or to make, fund or allow to remain outstanding any
      Loan:

            

    

     

    
      	
               
      

            	
              (a)

            	
              upon
      the Lender notifying the Borrower of that event, the Commitments of the
      Lender will be immediately cancelled;
and

            

    

    

    
      	
               
      

            	
              (b)

            	
              the
      Borrower shall repay the Loans on the last day of the Interest Period of
      each Loan occurring after the Lender has notified the Borrower or, if
      earlier, the date specified by the Lender in the notice delivered to the
      Borrower (being no earlier than the last day of any applicable grace
      period permitted by law).

            

    

    

    
      
        	
                7.2

              	
                Cancellation

              

      

      The
Facilities may not be cancelled except as otherwise provided in this
Agreement.

    

    

    
      	
              7.3

            	
              Change of
      Control

            

    

    

    
      	
               
      

            	
              (a)

            	
              Upon
      the occurrence of a Change of
Control:

            

    

    

    
      	
               
      

            	
              (i)

            	
              the
      Borrower shall promptly notify the Lender upon becoming aware of that
      event; and

            

    

    

    
      	
               
      

            	
              (ii)

            	
              the
      Lender may, by not less than 30 days notice to the Borrower, cancel the
      Facilities and declare all outstanding Loans together with accrued
      interest, and all other amounts accrued under the Finance Documents
      immediately due and payable, whereupon the Facilities will be cancelled
      and all such outstanding amounts will become immediately due and
      payable.

            

    

    

    
      	
               
      

            	
              (b)

            	
              For
      the purpose of this Clause 7.3 (Change of Control), a
      “Change of
      Control” means the occurrence of any of the following
      event:-

            

    

    

    HRBN - Term Loan Facility
Agreement

    
      
         

      

      
        -13-

        
          

        

      

      
         

      

    

    

    Execution

    

    
      	
               
      

            	
              (i)

            	
              the
      Permitted Holders cease to be the beneficial owners, directly or
      indirectly, of a majority of the total voting power of the voting shares
      of the Borrower or of at
      least 30% of the total voting power of the voting shares of the Borrower
      or any person or persons, acting together, other than the Permitted
      Holders become the beneficial owner(s) of a higher percentage of the total
      voting power of the voting shares of the Borrower than that of which the
      Permitted Holders are beneficial owners, directly or indirectly, whether
      as a result of the issuance of securities of the Borrower, any merger,
      consolidation, liquidation or dissolution of the Borrower, any direct or
      indirect transfer of securities by the Permitted Holders or otherwise (for
      this purpose, the Permitted Holders will be deemed to beneficially own any
      voting shares of the specified company held by a parent company so long as
      the Permitted Holders beneficially own, directly or indirectly, in the
      aggregate a majority of the total voting power of the voting shares of
      such parent company); or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              the
      sale, transfer, assignment, lease, conveyance or other disposition,
      directly or indirectly, of all or substantially all the assets of the
      Borrower and its subsidiaries, considered as a whole (other than a
      disposition of such assets as an entirety or virtually as an entirety to a
      wholly owned subsidiary or one or more Permitted Holders), shall have
      occurred, or the Borrower merges consolidates or amalgamates with or into
      any other person (other than one or more Permitted Holders) or any other
      person (other than one or more Permitted Holders) merges, consolidates or
      amalgamates with or into the Borrower, in any such event pursuant to a
      transaction in which the outstanding voting shares of the Borrower is
      reclassified into or exchanged for cash, securities or other assets, other
      than such transaction where:

            

    

     

    
      	
               
      

            	
              (1)

            	
              the
      outstanding voting shares of the Borrower is reclassified into or
      exchanged for other voting shares of the Borrower or for the voting shares
      of the surviving entity, and

            

    

    

    
      	
               
      

            	
              (2)

            	
              the
      holders of the voting shares of the Borrower immediately prior to such
      transaction own, directly or indirectly, not less than a majority of the
      voting shares of the Borrower or the surviving entity immediately after
      such transaction and in substantially the same proportion as before the
      transaction; or

            

    

    

    
      	
               
      

            	
              (iii)

            	
              individuals
      who on the date of this Agreement constitute the board of directors
       (together with any  new directors  whose election  or
      appointment by such board or whose nomination for election by the
      shareholders of the Borrower is approved by a vote of not less than
      three-fourths of the directors then still in office who are either
      directors on the date of this Agreement or whose election or nomination
      for election has been previously so approved) cease for any reason to
      constitute a majority of the board of directors then in office; or the
      shareholders of the Borrower shall have approved any plan of liquidation
      or dissolution of the Borrower.

            

    

     

    HRBN - Term Loan Facility
Agreement

    
      
         

      

      
        -14-

        
          

        

      

      
         

      

    

    

    Execution

    

    
      	
              7.4

            	
              Voluntary
      Prepayment

            

    

     

    
      	
               
      

            	
              (a)

            	
              The
      Borrower may, if it gives the Lender not less than one (1) month's (or
      such shorter period as the Lender may agree) prior notice, prepay on an
      Interest Payment Date or a Repayment Date the whole or any part of any
      Loan (but, if in part, being an amount that is an integral multiple of
      USD500,000 (in the case of a Facility A Loan) or RMB2,000,000 (in the case
      of a Facility B Loan)).

            

    

    

    
      	
               
      

            	
              (b)

            	
              A
      Loan may be prepaid only after the last day of the Availability Period
      (or, if earlier, the day on which the Available Facility is
      zero).

            

    

    

    
      	
              7.5

            	
              Restrictions

            

    

    
      	
              (a)

            	
              
                Any
      notice of cancellation or prepayment given by any Party under this Clause
      7 (Prepayment
      and Cancellation) shall be irrevocable and, unless a contrary
      indication appears in this Agreement, shall specify the date or dates upon
      which the relevant cancellation or prepayment is to be made and the amount
      of that cancellation or
prepayment.

              

            

    

    

    
      	
              (b)

            	
              Any
      prepayment under this Agreement shall be made together with accrued
      interest on the amount prepaid and, subject to any Break Costs, without
      premium or penalty.

            

    

    

    
      	
              (c)

            	
              The
      Borrower may not reborrow any part of a Facility which is
      prepaid.

            

    

    

    
      	
              (d)

            	
              The
      Borrower shall not repay or prepay all or any part of any Loan or reduce
      any Commitment except at the times and in the manner expressly provided
      for in this Agreement.

            

    

    

    
      	
              (e)

            	
              
                If
      any Commitment is reduced in accordance with this Agreement, the amount of
      such reduction may not be subsequently
  reinstated.

              

            

    

     

    
      	
              (f)

            	
              Any
      prepayment under Clause 7.3 (Change of Control) or
      Clause 7.4 (Voluntary
      Prepayment) shall satisfy the obligations under Clause 6.1 (Repayment of Loans) in
      inverse chronological order.

            

    

     

    
      	
              8.

            	
              INTEREST

            

    

     

    
      	
              8.1

            	
              Calculation of
      interest

            

    

    The rate
of interest on each Loan for each Interest Period is the percentage rate per
annum which is the aggregate of the applicable:

    

    
      	
               
      

            	
              (a)

            	
              Margin;
      and

            

    

    

    
      	
               
      

            	
              (b)

            	
              in
      relation to a Facility A Loan, LIBOR and in relation to a Facility B Loan,
      SHIBOR.

            

    

    

    
      	
              8.2

            	
              Payment of
      interest

            

    

    The
Borrower shall pay accrued interest on that Loan on each Interest Payment
Date.

    

    HRBN - Term Loan Facility
Agreement

    
      
         

      

      
        -15-

        
          

        

      

      
         

      

    

    

    
      Execution

    

    

    
      	
              8.3

            	
              Default
      interest

            

    

    
      	
               
      

            	
              (a)

            	
              If
      the Borrower fails to pay any amount payable by it under this Agreement on
      its due date, interest shall accure on the Unpaid Sum from the due date to
      the date of actual payment (both before and after judgment) at a rate
      which is five per cent. (5%) higher than the rate which
      would have been payable if the Unpaid Sum had, during the period of
      non-payment, constituted a Loan for successive Interest Periods, each of a
      duration selected by the Lender (acting reasonably). Any interest accruing
      under this Clause 8.3 (Default
      interest) shall be
      immediately payable by the Borrower on demand by the
      Lender.

            

    

    

    
      	
               
      

            	
              (b)

            	
              If
      any Unpaid Sum consists of all or part of a Loan which became due on a day
      which was not the last day of an Interest Period relating to that Loan the
      first Interest Period for that Unpaid Sum shall have a duration equal to
      the unexpired portion of the current Interest Period relating to that
      Loan.

            

    

    

    
      	
               
      

            	
              (c)

            	
              Default
      interest (if unpaid) arising on an Unpaid Sum will be compounded with the
      Unpaid Sum at the end of each Interest Period applicable to that Unpaid
      Sum but will remain immediately due and
payable.

            

    

    

    
      	
              8.4

            	
              Notification of rates of
      interest

            

    

    The
Lender shall promptly notify the Borrower of the determination of a rate of
interest under this Agreement.

    

    
      	
              9.

            	
              INTEREST
      PERIODS

            

    

    

    
      	
              9.1

            	
              Interest
      Periods

            

    

    
      
        	 	 	 
	
                 
      

              	
                (a)

              	
                Each
      Interest Period for a Loan shall be of a duration of six (6)
      months.

              

      

    

    

    
      	
               
      

            	
              (b)

            	
              Each
      Interest Period for a Loan shall start on the Utilisation Date or (if a
      Loan has already been made, whether or not in respect of the same
      Facility) on the last day of the preceding Interest Period of such
      Loan.

            

    

    

    
      	
               
      

            	
              (c)

            	
              An
      Interest Period shall not extend beyond the Final Maturity
      Date.

            

    

    

    
      	
              9.2

            	
              Non-Business
      Days

            

    

    If an
Interest Period would otherwise end on a day which is not a business day, that
Interest Period will instead end on the next business day in that calendar month
(if there is one) or the preceding business day (if there is not).

    

    
      	
              9.3

            	
              Consolidation of
      Loans

            

    

    If the
Interest Periods of two or more Loans end on the same date, those Loans will be
consolidated into, and treated as, a single Loan on the last day of that
Interest Period PROVIDED THAT a Facility A Loan and a Facility B Loan will not
be consolidated into, nor be treated as, a single Loan.

    

    
      	
              10.

            	
              CHANGES
      TO THE CALCULATION OF INTEREST

            

    

    

    
      	
              10.1

            	
              Absence
      of quotations

            

    

    Subject
to Clause 10.2 (Market
disruption), if LIBOR or SHIBOR (as the case may be) is to be determined
by reference to the Reference Banks but a Reference Bank does not supply a
quotation by noon on the Quotation Day, the applicable LIBOR or SHIBOR (as the
case may be) shall be determined on the basis of the quotations of the remaining
Reference Banks.

    

    HRBN - Term Loan Facility
Agreement

    
      
         

      

      
        -16-

        
          

        

      

      
         

      

    

    

    Execution

    

    
      	
              10.2

            	
              Market
      disruption

            

    

    
      	
              (a)

            	
              Subject
      to any alternative basis agreed and consented to as contemplated by
      paragraphs (a) and (b) of Clause 10.3 (Alternative basis of interest
      or funding), if a Market Disruption Event occurs in relation to a
      Loan for any Interest Period, then the rate of interest on that Loan for
      the Interest Period shall be the rate per annum which is the sum
      of:

            

    

    

    
      	
               
      

            	
              (i)

            	
              the
      Margin; and

            

    

    

    
      	
               
      

            	
              (ii)

            	
              the
      rate notified to the Borrower by the Lender as soon as practicable and in
      any event before interest is due to be paid in respect of that Interest
      Period to be that which expresses as a percentage rate per annum the cost
      to the Lender of making, funding or allowing to remain outstanding that
      Loan from whatever source it may reasonably
  select.

            

    

    

    
      	
              (b)

            	
              In
      this Agreement “Market
      Disruption Event” means:

            

    

    

    
      	
               
      

            	
              (i)

            	
              at
      or about noon on the Quotation Day for the relevant Interest Period the
      Screen Rate is not available or the Screen Rate is zero or negative and
      none or only one of the Reference Banks supplies a rate to the Lender to
      determine LIBOR for US Dollars or SHIBOR for RMB (as the case may be) for
      the relevant Interest Period;

            

    

    

    
      	
               
      

            	
              or

            

    

    

    
      	
               
      

            	
              (ii)

            	
              before
      noon (Hong Kong time) on the business day immediately following the
      Quotation Day for the relevant Interest Period, the Lender (acting in good
      faith) notifies the Borrower that the cost to it of obtaining matching
      deposits in the Relevant Interbank Market would be in excess of LIBOR or
      SHIBOR (as the case may be).

            

    

    

    
      	
              10.3

            	
              Alternative basis of interest
      or funding

            

    

    
      	
              (a)

            	
              If
      a Market Disruption Event occurs and the Lender or the Borrower so
      requires, the Lender and the Borrower shall enter into negotiations (for a
      period of not more than thirty days) with a view to agreeing a substitute
      basis for determining the rate of
interest.

            

    

    

    
      	
              (b)

            	
              Any
      alternative basis agreed pursuant to paragraph (a) above in writing by the
      Lender and the Borrower shall be binding on each of
  them.

            

    

    

    
      	
              (c)

            	
              For
      the avoidance of doubt, in the event that no substitute basis is agreed at
      the end of the thirty day period, the rate of interest shall continue to
      be determined in accordance with the terms of this
    Agreement.

            

    

    

    
      	
              10.4

            	
              Break
    Costs

            

    

    The
Borrower shall, within three business days of demand by the Lender, pay to the
Lender its Break Costs attributable to all or any part of a Loan or Unpaid Sum
being paid by the Borrower on a day other than the last day of an Interest
Period for that Loan or Unpaid Sum.

     

    
      	
              11.

            	
              FEES

            

    

     

    The
Borrower shall pay to the Lender an arrangement fee in the amount of five
hundred thousand US Dollars (US$500,000) within one (1) month of the date of
this Agreement.

    

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Agreement

    
      
         

      

      
        -17-

        
          

        

      

      
         

      

    

    

    
      Execution

    

    

    
      	
              12.

            	
              TAX
      GROSS UP AND INDEMNITIES

            

    

    

    
      	
              12.1

            	
              Tax
      definitions

            

    

    
      	
              (a)

            	
              In
      this Clause 12 (Tax
      Gross Up and Indemnities):

            

    

    

    
      	
               
      

            	
              “Tax Credit” means a
      credit against, relief or remission for, or repayment of any
      Tax.

            

    

    

    
      	
               
      

            	
              “Tax Deduction” means a
      deduction or withholding for or on account of Tax from a payment under a
      Finance Document.

            

    

    

    
      	
               
      

            	
              “Tax Payment” means an
      increased payment made by the Borrower to the Lender under Clause 12.2
      (Tax gross-up) or
      a payment under Clause 12.3 (Tax
      indemnity).

            

    

    

    
      	
              (b)

            	
              Unless
      a contrary indication appears, in this Clause 12 (Tax Gross Up and
      Indemnities) a reference to “determines” or “determined” means a
      determination made in the absolute discretion of the person making the
      determination.

            

    

    

    
      	
              12.2

            	
              Tax
    gross-up

            

    

    
      	
              (a)

            	
              
                All
      payments to be made by the Borrower to the Lender under the Finance
      Documents shall be made free and clear of and without any Tax Deduction
      unless the Borrower is required to make a Tax Deduction, in which case the
      sum payable by the Borrower (in respect of which such Tax Deduction is
      required to be made) shall be increased to the extent necessary to ensure
      that the Lender receives a sum net of any deduction or withholding equal
      to the sum which it would have received had no such Tax Deduction been
      made or required to be made.

              

            

    

    

    
      	
              (b)

            	
              The
      Borrower shall promptly upon becoming aware that the Borrower must make a
      Tax Deduction (or that there is any change in the rate or the basis of a
      Tax Deduction) notify the Lender
accordingly.

            

    

    

    
      	
              (c)

            	
              If
      the Borrower is required to make a Tax Deduction, the Borrower shall make
      that Tax Deduction and any payment required in connection with that Tax
      Deduction within the time allowed and in the minimum amount required by
      law.

            

    

    

    
      	
              (d)

            	
              
                Within
      thirty days of making either a Tax Deduction or any payment required in
      connection with that Tax Deduction, the Borrower shall deliver to the
      Lender evidence reasonably satisfactory to the Lender that the Tax
      Deduction has been made or (as applicable) any appropriate payment paid to
      the relevant taxing
authority.

              

            

    

    

    
      	
              12.3

            	
              Tax
      indemnity

            

    

    
      	
              (a)

            	
              
                Without
      prejudice to Clause 12.2 (Tax gross-up), if the
      Lender is required to make any payment of or on account of Tax on or in
      relation to any sum received or receivable under the Finance Documents
      (including any sum deemed for purposes of Tax to be received or receivable
      by the Lender whether or not actually received or receivable) or if any
      liability in respect of any such payment is asserted, imposed, levied or
      assessed against the Lender, the Borrower shall, within three business
      days of demand of the Lender, promptly indemnify the Lender, together with
      any interest, penalties, costs and expenses payable or incurred in
      connection therewith, provided that this Clause 12.3 (Tax indemnity) shall
      not apply to:

              

            

    

    

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        -18-

        
          

        

      

      
         

      

    

    

    Execution

    

    
      	
               
      

            	
              (i)

            	
              any
      Tax imposed on and calculated by reference to the net income actually
      received or receivable by the Lender (but, for the avoidance of doubt, not
      including any sum deemed for purposes of Tax to be received or receivable
      by the Lender but not actually receivable) by the jurisdiction in which
      the Lender is incorporated; or

            

    

    

    
      	
               
      

            	
              (ii)

            	
              any
      Tax imposed on and calculated by reference to the net income of the office
      or offices of the Lender through which the Lender will perform its
      obligations under this Agreement actually received or receivable by the
      Lender (but, for the avoidance of doubt, not including any sum deemed for
      purposes of Tax to be received or receivable by the Lender but not
      actually receivable) by the jurisdiction in which such office or offices
      the Lender is/are located.

            

    

     

    
      	
              (b)

            	
              The
      Lender intending to make a claim under paragraph (a) shall notify the
      Borrower of the event giving rise to the
claim.

            

    

     

    
      	
              12.4

            	
              Tax
    credit

            

    

    
      	
               
      

            	
              If
      the Borrower makes a Tax Payment and the Lender determines
      that:

            

    

     

    
      	
               
      

            	
              (a)

            	
              a
      Tax Credit is attributable to that Tax Payment;
  and

            

    

    

    
      	
               
      

            	
              (b)

            	
              the
      Lender has obtained, utilised and retained that Tax
  Credit,

            

    

    

    the
Lender shall pay an amount to the Borrower which the Lender determines will
leave it (after that payment) in the same after-Tax position as it would have
been in had the Tax Payment not been required to be made by the
Borrower.

    

    
      	
              12.5

            	
              Stamp
    taxes

            

    

    
      	
               
      

            	
              The
      Borrower shall:

            

    

    

    
      	
               
      

            	
              (a)

            	
              pay
      all stamp duty, registration and other similar Taxes payable in respect of
      any Finance Document, and

            

    

    

    
      	
               
      

            	
              (b)

            	
              within
      three business days of demand, indemnify the Lender against any cost, loss
      or liability the Lender incurs in relation to any stamp duty, registration
      or other similar Tax paid or payable in respect of any Finance
      Document.

            

    

    

    
      	
              12.6

            	
              Indirect
    tax

            

    

    
      	
              (a)

            	
              All
      consideration expressed to be payable under a Finance Document by any
      Obligor to the Lender shall be deemed to be exclusive of any indirect tax.
      If any indirect tax is chargeable on any supply made by the Lender to any
      Party in connection with a Finance Document, that Party shall pay to the
      Lender (in addition to and at the same time as paying the consideration)
      an amount equal to the amount of the indirect
  tax.

            

    

    

    
      	
              (b)

            	
              Where
      a Finance Document requires any Party to reimburse the Lender for any
      costs or expenses, that Party shall also at the same time pay and
      indemnify the Lender against all indirect tax incurred by the Lender in
      respect of the costs or expenses to the extent the Lender reasonably
      determines that it is not entitled to credit or repayment in respect of
      the indirect tax.

            

    

    

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Agreement

    
      
         

      

      
        -19-

        
          

        

      

      
         

      

    

    

    
      Execution

    

    

    
      	
              13.

            	
              INCREASED
      COSTS

            

    

    

    
      	
              13.1

            	
              Increased
      costs

            

    

    
      	
              (a)

            	
              Subject
      to Clause 13.3 (Exceptions) the
      Borrower shall, within three business days of a demand by the Lender, pay
      the Lender the amount of any Increased Costs incurred by the Lender or any
      of its affiliates as a result of (i) the introduction of or any change in
      (or in the interpretation, administration or application of) any law or
      regulation or (ii) compliance with any applicable law or regulation made
      after the date of this Agreement. The term “applicable law or regulation”
      in this paragraph (a) shall include, without limitation, any law or
      regulation concerning capital adequacy, prudential limits, liquidity,
      reserve assets or Tax.

            

    

    

    
      	
              (b)

            	
              In
      this Agreement “Increased
      Costs” means:

            

    

    

    
      	
               
      

            	
              (i)

            	
              a
      reduction in the rate of return from a Facility or on the Lender's (or its
      affiliate's) overall capital (including, without limitation, as a result
      of any reduction in the rate of return on capital brought about by more
      capital being required to be allocated by the
  Lender);

            

    

    

    
      	
               
      

            	
              (ii)

            	
              an
      additional or increased cost; or

            

    

    

    
      	
               
      

            	
              (iii)

            	
              a
      reduction of any amount due and payable under any Finance
      Document,

            

    

    
    

    which
is incurred or suffered by the Lender or any of its affiliates to the extent
that it is attributable to the undertaking, funding or performance by the Lender
of any of its obligations under any Finance Document or the making, funding or
allowing to remain outstanding any Loan or Unpaid Sum.
  

    
      	
              13.2

            	
              Increased cost
      claims

            

    

    
      	
              (a)

            	
              The
      Lender intending to make a claim pursuant to Clause 13.1 (Increased costs) shall
      notify the Borrower of the event giving rise to the
  claim.

            

    

     

    
      	
              13.3

            	
              Exceptions

            

    

    Clause
13.1 (Increased costs)
does not apply to the extent any Increased Cost is:

    

    
      	
               
      

            	
              (a)

            	
              attributable
      to a Tax Deduction required by law to be made by the
    Borrower;

            

    

    

    
      	
               
      

            	
              (b)

            	
              compensated for by Clause 12.3
      (Tax
      indemnity) (or would
      have been compensated for under Clause 12.3 (Tax
      indemnity) but was
      not so compensated solely because the exclusion in
      paragraph (a) of Clause 12.3 (Tax
      indemnity)
      applied);
      or

            

    

    

    
      	
               
      

            	
              (c)

            	
              attributable to the wilful breach
      by the Lender or its affiliates of any applicable law or
      regulation.

            

    

    

    
      	
              14.

            	
              MITIGATION
      BY THE LENDER

            

    

    

    
      	
              14.1

            	
              Mitigation

            

    

    
      	
              (a)

            	
              The
      Lender shall, in consultation with the Borrower, take all reasonable steps
      to mitigate any
      circumstances which arise and which would result in any amount becoming
      payable under
      or pursuant to, or cancelled pursuant to, any of Clause 7.1 (Illegality), Clause
      12

            

    

    

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Agreement

    
      
         

      

      
        -20-

        
          

        

      

      
         

      

    

    

    Execution

    

    (Tax gross-up and indemnities)
or Clause 13 (Increased
costs), including (but not limited to):

     

    
      	
               
      

            	
              (i)

            	
              providing
      such information as the Borrower may reasonably request in order to permit
      the Borrower to determine its entitlement to claim any exemption or other
      relief (whether pursuant to a double taxation treaty or otherwise) from
      any obligation to make a Tax Deduction;
and

            

    

    

    
      	
               
      

            	
              (ii)

            	
              in relation to any circumstances
      which arise following the date of this Agreement, transferring its rights and
      obligations under the Finance Documents to another affiliate or another
      office.

            

    

    

    
      	
              (b)

            	
              Paragraph
      (a) above does not in any way limit the obligations of any Obligor under
      the Finance Documents.

            

    

     

    
      	
              14.2

            	
              Limitation of
      liability

            

    

    
      	
              (a)

            	
              The
      Borrower shall indemnify the Lender for all costs and expenses reasonably
      incurred by the Lender as a result of steps taken by it under Clause 14.1
      (Mitigation).

            

    

    

    
      	
              (b)

            	
              The
      Lender is not obliged to take any steps under Clause 14.1 (Mitigation) if, in the
      opinion of the Lender (acting reasonably), to do so might be prejudicial
      to it.

            

    

    

    
      	
              14.3

            	
              Conduct of business by the
      Lender

            

    

    No
provision of this Agreement will:

    

    
      	
               
      

            	
              (a)

            	
              interfere
      with the right of the Lender to arrange its affairs (tax or otherwise) in
      whatever manner it thinks fit;

            

    

    

    
      	
               
      

            	
              (b)

            	
              oblige
      the Lender to investigate or claim any credit, relief, remission or
      repayment available to it or the extent, order and manner of any claim;
      or

            

    

    

    
      	
               
      

            	
              (c)

            	
              oblige
      the Lender to disclose any information relating to its affairs (tax or
      otherwise) or any computations in respect of
  Tax.

            

    

    

    
      	
              15.

            	
              OTHER
      INDEMNITIES

            

    

    

    
      	
              15.1

            	
              Currency
      indemnity

            

    

    
      	
              (a)

            	
              If
      any sum due from the Borrower under the Finance Documents (a “Sum”), or any order,
      judgment or award given or made in relation to a Sum, has to be converted
      from the currency (the “First Currency”) in
      which that Sum is payable into another currency (the “Second Currency”) for
      the purpose of:

            

    

     

    
      	
               
      

            	
              (i)

            	
              making
      or filing a claim or proof against the Borrower;
  or

            

    

    

    
      	
               
      

            	
              (ii)

            	
              obtaining
      or enforcing an order, judgment or award in relation to any litigation or
      arbitration proceedings,

            

    

    

    The Borrower shall as an independent
obligation, within three business days of demand, indemnify the Lender against
any cost, loss or liability arising out of or as a result of the conversion
including any discrepancy between (A) the rate of exchange used to convert
that Sum from the First Currency into the Second Currency and (B) the
rate or rates of exchange available to that person at the time of its receipt of
that Sum.

    

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        -21-

        
          

        

      

      
         

      

    

    

    
      Execution

    

    

    
      	
              (b)

            	
              The
      Borrower waives any right it may have in any jurisdiction to pay any
      amount under the Finance Documents in a currency or currency unit other
      than that in which it is expressed to be
  payable.

            

    

    

    
      	
              15.2

            	
              Other
      indemnities

            

    

    The Borrower shall, within three
business days of demand, indemnify the Lender against any cost, loss or liability incurred by
the Lender as a result of:

    

    
      	
               
      

            	
              (a)

            	
              the
      occurrence of any Event of Default;

            

    

    

    
      	
               
      

            	
              (b)

            	
              investigating
      any event which it reasonably believes is an Event of Default or Potential
      Event of Default;

            

    

    

    
      	
               
      

            	
              (c)

            	
              the
      information produced or approved by any Obligor being or being alleged to
      be misleading and/or deceptive in any
respect;

            

    

    

    
      	
               
      

            	
              (d)

            	
              any
      enquiry, investigation, subpoena (or similar order) or litigation with
      respect to any Obligor or with respect to the transactions contemplated or
      financed under this Agreement;

            

    

    

    
      	
               
      

            	
              (e)

            	
              a
      failure by an Obligor to pay any amount due under a Finance Document on
      its due date or in the relevant
currency;

            

    

    

    
      	
               
      

            	
              (f)

            	
              funding,
      or making arrangements to fund, a Loan requested by the Borrower in a
      Utilisation Request but not made by reason of the operation of any one or
      more of the provisions of this Agreement (other than by reason of default
      or negligence by the Lender alone);

            

    

    

    
      	
               
      

            	
              (g)

            	
              acting
      or relying on any notice, request or instruction which it reasonably
      believes to be genuine, correct and appropriately authorised;
      or

            

    

    

    
      	
               
      

            	
              (h)

            	
              a
      Loan (or part of a Loan) not being prepaid in accordance with a notice of
      prepayment given by the Borrower.

            

    

    

    
      	
              16.

            	
              COSTS
      AND EXPENSES

            

    

    

    
      	
              16.1

            	
              Transaction
      expenses

            

    

    The
Borrower shall, within three business days of demand, pay the Lender the amount
of all costs and expenses (including legal fees) reasonably incurred by it in
connection with the negotiation, preparation, printing and execution
of:

    

    
      	
               
      

            	
              (a)

            	
              this
      Agreement and any other documents referred to in this Agreement;
      and

            

    

    

    
      	
               
      

            	
              (b)

            	
              any
      other Finance Documents.

            

    

    

    
      	
              16.2

            	
              Amendment
      costs

            

    

    If an
Obligor requests an amendment, waiver or consent, the Borrower shall, within
three business days of demand, reimburse the Lender for the amount of all costs
and expenses (including legal fees) reasonably incurred by the Lender in
responding to, evaluating, negotiating or complying with that request or
requirement.

    

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      Execution

    

    

    
      	
              16.3

            	
              Enforcement
      costs

            

    

    The
Borrower shall, within three business days of demand, pay to the Lender the
amount of all costs and expenses (including legal fees) incurred by the Lender
in connection with the enforcement of, or the preservation of any rights under,
any Finance Document.

    

    
      	
              17.

            	
              REPESENTATIONS
      AND WARRANTIES

            

    

    

    
      	
              17.1

            	
              Matters
      represented

            

    

    The
Borrower makes the representations and warranties set out in Schedule 4 (Representations and
Warranties) to the Lender.

    

    
      	
              17.2

            	
              Reliance

            

    

    The Borrower acknowledges the reliance
by the Lender on the representations and warranties in entering into this
Agreement and each other Finance Document to which it is a party.

    

    
      	
              17.3

            	
              Repetition

            

    

    The
representations and warranties set out in Schedule 4 (Representations and
Warranties) shall be deemed to be repeated in the manner and at this
provided for in Clause 2 (Repetition) of Schedule 4
(Representations and
Warranties).

    

    
      	
              18.

            	
              UNDERTAKINGS

            

    

    

    
      	
              18.1

            	
              Content

            

    

    The
Borrower undertakes to the Lender that it shall comply with the undertakings
contained in Schedule 5 (Undertakings).

    

    
      	
              18.2

            	
              Duration

            

    

    The
undertakings in Schedule 5 (Undertakings) shall, save as
otherwise provided herein, remain in force from the date of this Agreement until
the Release Date.

    

    
      	
              18.3

            	
              “Know your customer”
      checks

            

    

    

    The
Borrower shall promptly upon the request of the Lender supply, or procure the
supply of, such documentation and other evidence as is reasonably requested by
the Lender for conducting any “know you customer” or other similar procedures
under applicable laws and regulations.

    

    
      	
              19.

            	
              EVENTS
      OF DEFAULT

            

    

    

    
      	
              19.1

            	
              Events of
      Default

            

    

    Each of
the events set out in Schedule 6 (Events of Defaults) shall
constitute an Event of Default (howsoever caused and resulting).

    

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Agreement

    
      
         

      

      
        -23-

        
          

        

      

      
         

      

    

    

    
      Execution

    

    

    
      	
              19.2

            	
              Acceleration

            

    

    On and at
any time after the occurrence of an Event of Default which is continuing the
Lender may by notice to the Borrower:

    

    
      	
               
      

            	
              (a)

            	
              without
      prejudice to any Loans then
outstanding:

            

    

    

    
      	
               
      

            	
              (i)

            	
              cancel
      the Commitments  (and  reduce them  to
      zero), whereupon they shall immediately be cancelled (and reduced to
      zero); or

            

    

    

    
      	
               
      

            	
              (ii)

            	
              cancel  any  part  of
      any  Commitment  (and reduce  such
      Commitment  accordingly), whereupon the relevant part shall
      immediately be cancelled (and  the
      relevant    Commitment    shall be
      immediately reduced accordingly);
and/or

            

    

    

    
      	
               
      

            	
              (b)

            	
              declare
      that all or part of the Loans, together with accrued interest, and all
      other amounts accrued or outstanding under the Finance Documents be
      immediately due and payable, whereupon they shall become immediately due
      and payable; and/or

            

    

    

    
      	
               
      

            	
              (c)

            	
              declare
      that all or part of the Loans be payable on demand, whereupon they shall
      immediately become payable on demand by the
  Lender.

            

    

    

    
      	
              20.

            	
              CHANGES
      TO THE PARTIES

            

    

    

    
      	
              20.1

            	
              Successors and
      assigns

            

    

    This
Agreement shall be binding upon and enure to the benefit of each Party and its
or any subsequent successors, transferees and assigns.

    

    
      	
              20.2

            	
              No assignments and transfers by
      the Borrower

            

    

    The
Borrower shall not be entitled to assign or transfer all or any of its rights,
benefits and obligations hereunder without the prior written consent of the
Lender.

    

    
      	
              20.3

            	
              Assignments and transfers by
      Obligors

            

    

    An
Obligor may not assign or transfer any of its rights or obligations under any
Finance Document, except with the prior written consent of the
Lender.

    

    
      	
              20.4

            	
              Assignments and transfers by
      Lender

            

    

    The
Lender may, subject to Clause 20.5 (Restrictions), at any time,
assign all or any of its rights and benefits hereunder and under any Finance
Documents to which it is a party or transfer all or any of its rights, benefits
and obligations hereunder and under any Finance Documents to which it is a
party.

    

    
      	
              20.5

            	
              Restrictions

            

    

    The
Borrower  shall  not become  liable as a result of
any assignment  or transfer  as
contemplated  by  Clause  20.4  (Assignments and transfers by
Lender) above to pay an amount or amounts pursuant to Clause 12 (Tax Gross Up and Indemnities)
and Clause 13 (Increased
Costs) in excess of the amount, if any, which at the time of such
assignment or transfer would have been payable had no such assignment or
transfer occurred, unless:

    

    
      	  	
              20.5.1

            	
              such
      assignment or transfer was made to avoid the occurrence of any
      illegality;

            

    

    

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Agreement

    
      
         

      

      
        -24-

        
          

        

      

      
         

      

    

    

    Execution

    

    
      	
               
      

            	
              20.5.2

            	
              any
      assignment or transfer was made following an Event of Default which had
      occurred and not been remedied; or

            

    

    

    
      	
               
      

            	
              20.5.3

            	
              such
      assignment or transfer was requested by or otherwise made at the
      instigation of the Borrower.

            

    

    

    
      	
              21.

            	
              DISCLOSURE
      OF INFORMATION

            

    

    The
Lender may deliver copies of the Finance Documents and/or disclose any
information received by it under or pursuant to any Finance Document or any
other information about any Obligor or the Finance Documents as the Lender shall
consider appropriate (if, in relation to
paragraphs  (i)(i)  and  (i)(ii) below,
the  person  to whom the copies and/or information are
to  be delivered  or disclosed has undertaken  to
keep  such information confidential on terms set out in this Clause 21
(Disclosure of
Information) to:

     

    
      	
               
      

            	
              (a)

            	
              any
      of its affiliates;

            

    

    

    
      	
               
      

            	
              (b)

            	
              its
      head office and any other branch;

            

    

    

    
      	
               
      

            	
              (c)

            	
              any
      of its professional  advisers  and any
      other  person providing services  to it (provided
      that  such person is under a duty of
      confidentiality,  contractual  or otherwise, to the
      Lender);

            

    

    

    
      	
               
      

            	
              (d)

            	
              any
      Obligor;

            

    

    

    
      	
               
      

            	
              (e)

            	
              any
      person permitted by any Obligor;

            

    

    

    
      	
               
      

            	
              (f)

            	
              any
      person to the extent required for the purpose of any litigation,
      arbitration or regulatory proceedings or
  procedure;

            

    

    

    
      	
               
      

            	
              (g)

            	
              any  person  to
      whom, and to the
      extent  that,  information  is required to
      be disclosed by any applicable law or regulation;
  and

            

    

    

    
      	
               
      

            	
              (h)

            	
              any
      other person:

            

    

    

    
      	
               
      

            	
              (i)

            	
              to
      (or through) whom the Lender assigns or transfers (or may potentially
      assign or transfer) all or  any of its rights and
      obligations  under this Agreement;
or

            

    

    

    
      	
               
      

            	
              (ii)

            	
              with
      (or through) whom the Lender enters into (or may potentially enter into)
      any sub-participation in relation to, or any other transaction under
      which  payments  are  to  be  made  by  reference  to,
      a  Facility,  this Agreement or any
      Obligor;

            

    

    

    This
Clause 21 (Disclosure of
Information) supersedes any previous agreement relating to the
confidentiality of such information.

    

    HRBN - Term Loan Facility
Agreement

    
      
         

      

      
        -25-

        
          

        

      

      
         

      

    

     

    
      Execution

    

    

    
      	
              22.

            	
              PAYMENT
      MECHANICS

            

    

    

    
      	
              22.1

            	
              Payments by the
      Borrower

            

    

    
      	
              (a)

            	
              On
      each date on which the Borrower is required to make a payment under a
      Finance Document, the Borrower shall make the same available to the Lender
      (unless a contrary indication appears in a Finance Document) for value on
      the due date at the time and in such funds specified by the Lender as
      being customary at the time for settlement of transactions in the relevant
      currency in the place of payment.

            

    

    

    
      	
              (b)

            	
              Payment
      shall be made to such account with such bank as the Lender
      specifies.

            

    

    

    
      	
              22.2

            	
              Payment by the
      Lender

            

    

    Subject
to any requirement in Clause 5.2 (Completion of Utilisation Request), any
amounts payable to the Borrower under this Agreement shall be paid into the bank
account specified by the Borrower and acceptable to the Lender or in such manner
as the Lender and the Borrower shall from time to time agree.

    

    
      	
              22.3

            	
              Partial
      payments

            

    

    
      	
              (a)

            	
              If
      the Lender receives a payment that is insufficient to discharge all the
      amounts then due and payable by the Borrower under this Agreement, the
      Lender shall, save only as expressly provided in paragraph (b) below,
      apply that payment towards the obligations of the Borrower under this
      Agreement in the following order:

            

    

    

    
      	
               
      

            	
              (i)

            	
              first, in or towards
      payment of any unpaid fees, costs and expenses of the Lender under the
      Finance Documents;

            

    

    

    
      	
               
      

            	
              (ii)

            	
              secondly, in or towards
      payment of any accrued interest or commitment fees due but unpaid under
      this Agreement;

            

    

    

    
      	
               
      

            	
              (iii)

            	
              thirdly, in or towards
      payment of any principal due but unpaid under this Agreement;
      and

            

    

     

    
      	
               
      

            	
              (iv)

            	
              fourthly, in
      or  towards payment  of any other  sum due
      but  unpaid under the Finance
  Documents.

            

    

     

    
      	
              (b)

            	
              The
      Lender may vary the order set out in sub-paragraphs (a)(ii) to (iv)
      above.

            

    

    

    
      	
              (c)

            	
              Paragraphs
      (a) and (b) above will override any appropriation made by the
      Borrower.

            

    

    

    
      	
              22.4

            	
              No set-off by the
      Borrower

            

    

    All
payments  to be made
by  the  Borrower  under the Finance Documents
shall  be calculated and be made without (and free and clear of
any  deduction  for) set-off or counterclaim.

    

    
      	
              22.5

            	
              Business
      Days

            

    

    
      	
              (a)

            	
              Any
      payment which is due to be made on a day that is not a business day shall
      be made on the next business day in the same calendar month (if there is
      one) or the preceding business day (if there is
  not).

            

    

     

    HRBN - Term Loan Facility
Agreement

    
      
         

      

      
        -26-

        
          

        

      

      
         

      

    

    

    Execution

    

    
      	
              (b)

            	
              During
      any extension of the due date for payment of any principal or Unpaid Sum
      under paragraph (a) above, interest is payable on the principal or Unpaid
      Sum at the rate payable on the original due
  date.

            

    

    
      
        	 	 
	
                22.6

              	
                Currency of
      account

              
	 	 

      

    

    
      	
              (a)

            	
              Subject
      to paragraphs (b), (c) and (d) below, US Dollars is the currency of
      account and payment for any sum due from the Borrower under any Finance
      Document.

            

    

    

    
      	
              (b)

            	
              Any
      repayment or prepayment of a Loan or payment of interest (including
      default interest) in respect of Facility B shall be made in
      RMB.

            

    

    

    
      	
              (c)

            	
              Each
      payment in respect of costs, expenses or Taxes shall be made in the
      currency in which the costs, expenses or Taxes are
    incurred.

            

    

    

    
      	
              (d)

            	
              Any
      amount expressed to be payable in a currency other than US Dollars shall
      be paid in that other currency.

            

    

    

    
      	
              23.

            	
              SET-OFF

            

    

     

    The
Lender may set off any matured obligation due from the Borrower under the
Finance
Documents  against  any  matured  obligation  owed
by the Lender  to the Borrower,  regardless of the place of
payment, booking branch or currency of either obligation. If the obligations are
in different  currencies,
the  Lender  may  convert  either  obligation
at a market rate of exchange in its usual course of business for the purpose of
the set-off. If either obligation is unliquidated or unascertained, the Lender
may set off in an amount estimated by it in good faith to be the amount of that
obligation without prejudice to the duty of the Lender to account for any
surplus upon the amount becoming liquidated or ascertained.

     

    
      	
              24.

            	
              NOTICES

            

    

    

    
      	
              24.1

            	
              Communications in
      writing

            

    

    Any
communication to be made under or in connection with this Agreement shall be
made in writing and, unless otherwise stated, may be made by fax or
letter.

    

    
      	
              24.2

            	
              Addresses

            

    

    The
address and fax number (and the department or officer, if any, for whose
attention the communication is to be made) of each Party for any communication
or document to be made or delivered under or in connection with this Agreement
is that identified with its name below or any substitute address, fax number or
department or officer as the Parties may notify each other by not less than five
business days' notice.

    

    
      	
              24.3

            	
              Delivery

            

    

    
      	
              (a)

            	
              Any
      communication or document made or delivered by one person to another under
      or in connection with this Agreement will be
  effective:

            

    

     

    
      	
               
      

            	
              (i)

            	
              if
      by way of fax, only when received in legible form;
  or

            

    

    

    
      	
               
      

            	
              (ii)

            	
              if  by
      way  of  letter,  only
      when  it  has  been  left  at  the
      relevant address  or five business days after being deposited in
      the post postage prepaid in an envelope addressed to it at that
      address;

            

    

    

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Agreement

    
      
         

      

      
        -27-

        
          

        

      

      
         

      

    

    

    Execution

    

    and, if a
particular department or officer is specified as part of its address details
provided under Clause 24.2 (Addresses), if addressed to
that department or officer.

     

    
      	
              (b)

            	
              Any
      communication or document to be made or delivered to the Lender will be
      effective only when actually received by the Lender and then only if it is
      expressly marked for the attention of the department or officer identified
      with the Lender's signature below (or any substitute department or officer
      as the Lender shall specify for this
purpose).

            

    

     

    
      	
              24.4

            	
              English
      language

            

    

    
      	
              (a)

            	
              Any
      notice given under or in connection with any Finance Document must be in
      English.

            

    

    

    
      	
              (b)

            	
              All
      other documents provided under or in connection with this Agreement must
      be:

            

    

    

    
      	
               
      

            	
              (i)

            	
              in
      English; or

            

    

    

    
      	
               
      

            	
              (ii)

            	
              if
      not in English, and if so required by the Lender, accompanied by a
      certified English translation and, in this case, the English translation
      will prevail unless the document is a constitutional, statutory or other
      official document.

            

    

    

    
      	
              25.

            	
              CALCULATIONS
      AND CERTIFICATES

            

    

    

    
      
        	
                25.1

              	
                Accounts

              

      

      In any
litigation or arbitration proceedings arising out of or in connection with a
Finance Document, the entries made in the accounts maintained by the Lender
are prima facie
evidence of the matters to which they relate.

    

    

    
      
        	
                25.2

              	
                Certificates and
      determinations

              

      

      Any
certification or determination by the Lender of a rate or amount under any
Finance Document is, in the absence of manifest error, conclusive evidence of
the matters to which it relates.

    

    

    
      
        	
                25.3

              	
                Day count
      convention

              

      

      Any
interest accruing under this Agreement will accrue from day to day and is
calculated on the basis of the actual number of days elapsed and a year of 360
days (or as may be customary in the relevant market).

    

    

    
      	
              26.

            	
              PARTIAL
      INVALIDITY

            

    

    

    
      	
               
      

            	
              If,
      at any time, any provision of the Finance Documents is or becomes illegal,
      invalid or unenforceable in any respect under any law of any jurisdiction,
      neither the legality, validity or enforceability of the remaining
      provisions nor the legality, validity or enforceability of such provision
      under the law of any other jurisdiction will in any way be affected or
      impaired.

            

    

     

    
      	
              27.

            	
              REMEDIES
      AND WAIVERS

            

    

     

    
      	
               
      

            	
              No
      failure to exercise, nor any delay in exercising, on the part of the
      Lender, any right or remedy under the Finance Documents shall operate as a
      waiver, nor shall any single or partial exercise of any right or remedy
      prevent any further or other exercise or the exercise of any other right
      or remedy. The rights and remedies provided in this Agreement are
      cumulative and not exclusive of any rights or remedies provided by
      law.

            

    

     

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Agreement

    
      
         

      

      
        -28-

        
          

        

      

      
         

      

    

    

    Execution

    

    
      	
              28.

            	
              AMENDMENTS
      AND WAIVERS

            

    

     

    
      	
               
      

            	
              Any
      term of the Finance Documents may be only amended or waived with the
      written consent of the Party against whom the amendment or waiver is
      claimed to be binding.

            

    

     

    
      	
              29.

            	
              COUNTERPARTS

            

    

     

    
      	
               
      

            	
              Each
      Finance Document may be executed in any number of counterparts, and this
      has the same effect as if the signatures on the counterparts were on a
      single copy of the Finance
Document.

            

    

     

    
      	
              30.

            	
              GOVERNING
      LAW

            

    

     

    
      	
               
      

            	
              This
      Agreement, and all non-contractual obligations arising from or in
      connection with this Agreement, are governed by Hong Kong
    law.

            

    

     

    
      	
              31.

            	
              ENFORCEMENT

            

    

    

    
      	
              31.1

            	
              Jurisdiction of Hong Kong
      courts

            

    

    
      	
              (a)

            	
              The
      courts of Hong Kong have exclusive jurisdiction to settle any dispute
      arising out of or in connection with this Agreement (including any dispute
      relating to any non-contractual obligation arising from or in connection
      with this Agreement and any dispute regarding the existence, validity or
      termination of this Agreement) (a “Dispute”).

            

    

    

    
      	
              (b)

            	
              The
      Parties agree that the courts of Hong Kong are the most appropriate and
      convenient courts to settle Disputes and accordingly no Party will argue
      to the contrary.

            

    

    

    
      	
              (c)

            	
              This
      Clause 31.1 (Jurisdiction of Hong Kong
      courts) is for the benefit of the Lender only. As a result, the
      Lender shall not be prevented from taking proceedings relating to a
      Dispute in any other courts with jurisdiction. To the extent allowed by
      law, the Lender may take concurrent proceedings in any number of
      jurisdictions.

            

    

    

    
      
        	
                31.2

              	
                Service of
      process

              

      

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

    

    

    
      	
               
      

            	
              (a)

            	
              irrevocably
      agrees to appoint in Hong Kong an agent for service of process in relation
      to any proceedings before the Hong Kong courts in connection with any
      Finance Document prior to the first Utilisation Date;
  and

            

    

    

    
      	
               
      

            	
              (b)

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

            

    

    

    
      	
              31.3

            	
              Waiver of
      immunities

            

    

    
      	
               
      

            	
              The
      Borrower irrevocably waives, to the extent permitted by applicable law,
      with respect to itself and its revenues and assets (irrespective of their
      use or intended use), all immunity on the grounds of sovereignty or other
      similar grounds from:

            

    

     

    
      	
               
      

            	
              (a)

            	
              suit;

            

    

    

    
      	
               
      

            	
              (b)

            	
              jurisdiction
      of any court;

            

    

    

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        -29-

        
          

        

      

      
         

      

    

    

    Execution

    

    
      	
               
      

            	
              (c)

            	
              relief
      by way of injunction or order for specific performance or recovery of
      property;

            

    

    

    
      	
               
      

            	
              (d)

            	
              attachment
      of its assets (whether before or after judgment);
  and

            

    

    

    
      	
               
      

            	
              (e)

            	
              execution
      or enforcement of any judgment to which it or its revenues or assets might
      otherwise be entitled in any proceedings in the courts of any jurisdiction
      (and irrevocably agrees, to the extent permitted by applicable law, that
      it will not claim any immunity in any such
  proceedings).

            

    

    

    HRBN - Term Loan Facility
Agreement

    
      
         

      

      
        -30-

        
          

        

      

      
         

      

    

    

    Execution

    

    SCHEDULE
1

    

    COMMITMENTS

    

    Facility A
Commitment

    

    USD35,000,000

    

    Facility B
Commitment

    

    RMB100,000,000

    

    HRBN - Term Loan Facility
Agreement

    
      
         

      

      
        -31-

        
          

        

      

      
         

      

    

    

    Execution

    

    SCHEDULE
2

     

    CONDITIONS
PRECENDENT

    PART
A - Conditions Precedent to the First Utilisation

     

    
      	
              1.

            	
              Constitutive and Registration
      Documents

            

    

    

    
      	
              1.1

            	
              Receipt
      of copies of constitutive and organisational documents and all documents
      evidencing the registration of the corporate Obligors with the appropriate
      authorities and their qualification to conduct their business as follows,
      each as certified by such Obligor's Secretary or Assistant
      Secretary:

            

    

    

    
      	
               
      

            	
              1.1.1

            	
              the
      certificate of incorporation or certificates of formation, including
      restatements and amendments thereof, and the certificate on change of
      registered office or registered agent if
  applicable;

            

    

    

    
      	
               
      

            	
              1.1.2

            	
              the bylaws or limited liability
      company agreement or limited partnership agreement or other equivalent
      governing documents, including amendments and supplements
      thereof;

            

    

    

    
      	 	
              1.1.3

            	
              other
      certificates, agreements or merger or consolidation, plans of
      reorganization, or other instruments which are filed with Nevada Secretary
      of State under Chapter 78 (Private
      Companies) of the Nevada Revised Statutes with the effect of
      amending or supplementing the certificate of incorporation;
      and

            

    

     

    
      	 	
              1.1.4

            	
              the
      certificate of good standing in such Obligor's jurisdiction of formation
      or incorporation and any other jurisdiction in which it conducts business
      where a qualification to conduct business as a foreign entity is
      required.

            

    

     

    
      	
              1.2

            	
              Receipt
      of copies of passport or other identification documents of the Share
      Pledgor.

            

    

    

    
      	
              2.

            	
              Corporate
      Documents

            

    

    

    
      	
              2.1

            	
              Corporate approvals:
      Evidence (in the form of copies of resolutions in agreed forms and/or
      certified extracts from the commercial register) that all corporate or
      constitutional action required by any relevant law, regulation or
      constitutional document to be taken by the corporate Obligors to
      authorise:

            

    

    

    
      	 	
              2.1.1

            	
              the
      entry into the Finance Documents to which it is a
  party;

            

    

     

    
      	 	
              2.1.2

            	
              the
      execution by it of the Finance Documents to which it is a party;
      and

            

    

     

    
      	 	
              2.1.3

            	
              an
      Authorised Person to sign on behalf of it all other documents, notices and
      communications required to be given by or on its behalf, under or for the
      purposes of the Finance Documents,

            

    

    

    
      	
               
      

            	
              has
      been duly taken.

            

    

    

    
      	
              2.2

            	
              Specimen signatures:
      Receipt of original specimen signatures of the Authorised Person or
      Authorised Persons referred to in Clause 2.1.3 of this
      Schedule.

            

    

    

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        -32-

        
          

        

      

      
         

      

    

    

    
      Execution

    

    

    
      	
              3.

            	
              Finance
      Documents

            

    

    

    
      	
              3.1

            	
              Finance Documents:
      Execution and receipt of originals
of:

            

    

    

    
      	
               
      

            	
              3.1.1

            	
              each
      Finance Document; and

            

    

    

    
      	
               
      

            	
              3.1.2

            	
              each
      document to be delivered to the Lender pursuant to the Finance Documents
      prior to the Utilisation.

            

    

    

    
      	
              3.2

            	
              Security Documents:
      Receipt of written confirmation from the Borrower's counsel, confirming
      that the Security Documents have been registered or otherwise perfected
      under applicable laws and
regulations.

            

    

    

    
      	
              3.3

            	
              Notices: Receipt of
      copies of each of the notices for the time being required to be given
      pursuant to the terms of the Finance Documents, together with
      acknowledgements from each person to whom notice was given, in the form
      required by each such document.

            

    

    

    
      	
              3.4

            	
              Stamp duties, etc.:
      Evidence that all stamp, registration and similar taxes and other fees
      payable in connection with the Finance Documents have been
      paid.

            

    

    

    
      	
              3.5

            	
              Fees: Payment of all
      fees which, under the terms of this Agreement, are due prior to the
      Utilisation Date.

            

    

    

    
      	
              4.

            	
              Legal
    Issues

            

    

    

    
      	
              4.1

            	
              Legal opinions: Receipt
      of legal opinions in agreed form
from:

            

    

    

    
      	
               
      

            	
              4.1.1

            	
              King
      & Wood, the Hong Kong legal counsel to the Lender, relating to matters
      of Hong Kong law relevant to the Finance Documents;
  and

            

    

    

    
      
        	 	
                4.1.2

              	
                Loeb
      & Loeb, the Nevada and New York legal counsel to the Borrower relating
      to matters of the United States federal laws, the laws of the State of
      Nevada and the laws of the State of New
York.

              

      

    

    

    
      	
              5.

            	
              Others

            

    

    

    
      	
              5.1

            	
              Process agents: Evidence
      of the acceptance by the process agents named in the Finance Documents of
      their appointment pursuant to the provisions of the Finance
      Documents.

            

    

    

    
      	
              5.2

            	
              Debt Service Account:
      Evidence of the Debt Service Account having been opened and maintained in
      accordance with Clause 1 (Opening and maintenance of
      Debt Service Account) of Schedule 7
      (Debt Service
      Account).

            

    

    

    
      	
              5.3

            	
              Audited Reports: Receipt
      of copies of the Original Financial
Statements.

            

    

    

    
      	
              5.4

            	
              Consortium Agreement:
      Evidence of any necessary consent and/or waiver of Baring Asia having been
      obtained for the transactions contemplated in the Finance Documents in
      connection with the obligations of the Share Pledgor under the Consortium
      Agreement.

            

    

    

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        -33-

        
          

        

      

      
         

      

    

    

    Execution

     

    PART
B - Conditions Precedent to each Utilisation

     

    
      	
              6.

            	
              Utilisation
      Request

            

    

     

    
      	
               
      

            	
              The
      Utilisation Request, duly completed and duly executed by an Authorised
      Person.

            

    

    

    
      	
              7.

            	
              Additional Share
      Pledge

            

    

    

    
      	
              7.1

            	
              (Except
      for the first Utilisation) Execution and receipt of the original amendment
      to the Share Pledge Agreement in the form set out in Schedule II to the
      Share Pledge Agreement in respect of additional shares of the Common Stock
      of the Borrower having a Share Value not less than (a) (in the case where
      the Common Stock of the Borrower is listed or quoted on a Trading Market)
      200% or (b) (in any other case) 143% of the aggregate of the proposed
      Utilisation and an amount determined by the Lender to be an approximation
      of the expected interest payments in respect of the Loan so made within
      the twelve (12) month period following the proposed Utilisation
      Date.

            

    

    

    
      	
              7.2

            	
              Receipt
      of any other document required to be delivered and/or evidence of any step
      required to be taken having been so taken under Section 14(c) of the Share
      Pledge Agreement in respect of such
amendment.

            

    

    

    
      	
              7.3

            	
              Receipt
      of the items referred to Clauses 3.2, 3.3 and 3.4 of this Schedule in
      respect of such amendment.

            

    

    

    
      	
              8.

            	
              Representations and
      Warranties

            

    

    

    
      	
               
      

            	
              All
      representations and warranties in the Finance Documents are true in all
      material respects on and as of the Utilisation Date, before and after
      giving effect to the Utilisation and to the application of the proceeds
      therefrom, as though made on and as of such date (save for those
      representations and warranties which, by their terms, are made as of a
      specified date, which representations and warranties shall be true in all
      material respects as of such specified date only and save also as
      otherwise provided in Clause 2 (Repetition) of Schedule
      4 (Representations and
      Warranties)).

            

    

     

    
      	
              9.

            	
              No Events of
      Default

            

    

     

    
      	
               
      

            	
              No
      Event of Default or Potential Event of Default has occurred and is
      continuing, or would result from the
  Utilisation.

            

    

    

    HRBN - Term Loan Facility
Agreement

    
      
         

      

      
        -34-

        
          

        

      

      
         

      

    

    

    Execution

    

    SCHEDULE
3

    

    UTILISATION
REQUEST

     

    From:
Harbin Electric, Inc.

    
    

    
      	
              To:

            	
              China
      Development Bank Corporation Hong Kong
Branch

            

    

     

    Dated:

     

    Dear Sirs

    Harbin
Electric, Inc. - USD35,000,000 and RMB10,000,000 Term Loan Facility
Agreement

     

    Dated
22 November 2010 (the “Facility Agreement”)

    

    
      	
              1.

            	
              We
      refer to the Facility Agreement. This is a Utilisation Request. Terms
      defined in the Facility Agreement shall have the same meaning in this
      Utilisation Request.

            

    

    

    
      	
              2.

            	
              We
      wish to borrow a Loan on the following
terms:

            

    

    

    
      
        	
                Proposed
      Utilisation Date:

              	
                [•]
      2010 (or, if that is not a business day, the

              
	 
      	
                next
      business day)

              
	
                Facility
      to be utilised:

              	
                [Facility
      A] / [Facility B]

              
	
                Amount:

              	
                USD
      [•] / RMB [*]

              

      

    

    

    
      	
              3.

            	
              We
      confirm that each condition specified in Clause 4 (Conditions of
      Utilisation) and Schedule 2 (Conditions precedent)
      is satisfied on the date of this Utilisation
  Request.

            

    

    

    
      	
              4.

            	
              The
      proceeds of this Loan shall be credited to the following
      account:-

            

    

    

    
      
        
          	
                  Account
      Holder:

                	
                  [•]

                
	 
      	 
      
	
                  Bank:

                	
                  [•]

                
	 
      	 
      
	
                  Branch:

                	
                  [•]

                
	 
      	 
      
	
                  Account
      No.:

                	
                  [•]

                

        

      

    

    

    
      	
              5.

            	
              This
      Utilisation Request is irrevocable.

            

    

    

    
      
        
          	
                  Yours
      faithfully

                
	 
      
	
                   
        

                
	
                  authorised
      signatory for

                
	
                  Harbin
      Electric, Inc.

                

        

      

    

    

    HRBN - Term Loan Facility
Agreement

    
      
         

      

      
        -35-

        
          

        

      

      
         

      

    

    

    Execution

    

    SCHEDULE
4

     

    REPRESENTATIONS
AND WARRANTIES

     

    
      	
              1.

            	
              The
      Borrower represents and warrants to the Lender that as at the date
      hereof:

            

    

     

    
      	
              (a)

            	
              Status and Due
      Authorisation

            

    

    

    
      	
               
      

            	
              (i)

            	
              Each
      corporate Obligor is a company with limited liability duly incorporated
      and validly existing under the laws of its place of incorporation with
      power to enter into each Finance Document to which it is a party and to
      exercise its rights and perform its obligations thereunder and all
      corporate and other action required to authorise its execution of each
      Finance Document to which it is a party and the performance of its
      obligations thereunder have been duly taken. It has the power to own its
      assets and carry on its business as it is being
  conducted.

            

    

    

    
      	
               
      

            	
              (ii)

            	
              The
      Share Pledgor has the  capacity  and  power
      to enter into  each Finance
      Document  to  which  he  is
      a  party and  to exercise  his rights and
      perform his obligations thereunder and all action required to authorise
      his execution of each Finance Document to which he is a party and the
      performance of his obligations thereunder have been duly
      taken.

            

    

    

    
      	
              (b)

            	
              Execution, Delivery and
      Performance

            

    

    

    
      	
               
      

            	
              The
      execution,  delivery  and  performance  by
      each of the Obligors of the Finance Documents to which it is a party and
      its exercise of its rights and performance of its obligations thereunder
      does not and will not:

            

    

     

    
      	
               
      

            	
              (i)

            	
              conflict
      with any existing agreement or other instrument to which it is a party or
      which is binding upon it or any of its assets other than any such conflict
      which has been effectively waived by the relevant counterparty prior to
      the date of this Agreement;

            

    

    

    
      	
               
      

            	
              (ii)

            	
              (in
      the case of a corporate Obligor) conflict with its memorandum and articles
      of association or constitutional
documents;

            

    

    

    
      	
               
      

            	
              (iii)

            	
              conflict
      with any applicable law, regulation or official or judicial order
      currently in effect; or

            

    

     

    
      	
               
      

            	
              (iv)

            	
              result
      in the existence of, or oblige it to create any security interest over all
      or any of its present or future revenues or assets save as expressly
      contemplated by the Security
Documents.

            

    

    

    
      	
              (c)

            	
              Authorisations

            

    

     

    
      	
               
      

            	
              
                All
      authorisations and necessary approvals from any governmental or regulatory
      body and all material third party consents required in connection with the
      entry into, performance, validity, enforceability or admissibility in
      evidence of, and the transactions contemplated by, the Finance Documents
      to which the Borrower or any other Obligor is a party and to enable the
      Borrower or any other Obligor or any other Group Company to conduct its
      business and perform its obligations as contemplated in the Finance
      Documents, which are then required to have been obtained or effected in
      accordance with such Finance Documents or applicable law or regulation
      including all applicable securities laws and regulations in the United
      States are in full force and effect and with respect to any authorisations
      and necessary approvals which are not required to be obtained or effected
      until a later date, the Borrower has reasonable grounds to believe that
      such authorisations and necessary approvals will be obtained and will be
      in full force and effect when so
required.

              

            

    

     

    HRBN - Term Loan Facility
Agreement

    
      
         

      

      
        -36-

        
          

        

      

      
         

      

    

    

    Execution

    

    
      	
              (d)

            	
              Binding
      Obligations

            

    

     

    
      	
               
      

            	
              The
      obligations expressed to be assumed by each of the Borrower and the other
      Obligors in each Finance Document to which it is a party are legal and
      valid obligations binding on the Borrower or such Obligor, as the case may
      be, and enforceable in accordance with the terms of such Finance
      Document.

            

    

     

    
      	
              (e)

            	
              No
      Proceedings

            

    

     

    
      	
               
      

            	
              No
      litigation,  arbitration or  administrative proceeding
      of  or before any court, arbitral  body or agency has
      been started or threatened against the Borrower or any other Group Company
      or any  other  Obligor  or any of their
      respective  affiliates which could  reasonably be
      expected to have a material adverse effect or otherwise affect the
      legality, validity, binding effect or enforceability of any Finance
      Document.

            

    

     

    
      	
              (f)

            	
              No Event of
      Default

            

    

     

    
      	
               
      

            	
              No
      Event of Default or Potential Event of Default has occurred and is
      continuing or would result from the making of the
    Utilisation.

            

    

     

    
      	
              (g)

            	
              Law and
      Jurisdiction

            

    

     

    
      	
               
      

            	
              The
      choice of Hong Kong law or the laws of the State of New York (as the case
      may be) as the governing law in the Finance Documents will be recognised
      and upheld in the jurisdictions in which the relevant Obligors are
      incorporated or reside.  Any judgment  obtained in
      Hong Kong or in the State of New York (as the case may be) in relation to
      a Finance Document  will be recognised and
      enforced  in the jurisdictions in  which the relevant
      Obligors are incorporated or
reside.

            

    

     

    
      	
              (h)

            	
              Deduction of
      Tax

            

    

     

    
      	
               
      

            	
              Neither
      the Borrower nor any other Obligor is required under any applicable law to
      make any deduction for or on account of Tax from any payment it may make
      under any Finance Document, save for
      any  withholding  tax which may arise in
      respect  of any interest payable by the Borrower hereunder under
      the applicable federal laws of the United States or the laws of the State
      of Nevada.

            

    

     

    
      	
              (i)

            	
              Full
      Disclosure

            

    

     

    
      	
               
      

            	
              Any
      written information provided by the Borrower was true and accurate in all
      material respects as at the date it was provided or as at the date (if
      any) at which it is stated and any financial projections have been
      prepared on the basis of recent information and on the basis of
      reasonable  assumptions.  Nothing has
      occurred  or been omitted  and no information has been
      given or withheld that results in the information provided taken as a
      whole being untrue or misleading in any material
  respect.

            

    

    

    HRBN - Term Loan Facility
Agreement

    
      
         

      

      
        -37-

        
          

        

      

      
         

      

    

    

    Execution

    

    
      	
              (j)

            	
              Financial
      Statements

            

    

     

    
      	
               
      

            	
              The
      Original Financial Statements were prepared in accordance with GAAP
      consistently applied and give a true and fair view and represent the
      financial condition and operations of the Group during the financial year
      save to the extent expressly disclosed in such financial
      statements.

            

    

     

    
      	
              (k)

            	
              Security

            

    

     

    
      	
               
      

            	
              Each
      Security Document confers the Security Interests purported to be conveyed
      thereby over the assets referred to in such Security Document and such
      assets are not subject to any prior Security
  Interests.

            

    

     

    
      	
              (l)

            	
              Claims Pari
      Passu

            

    

     

    
      	
               
      

            	
              The
      claims of the Lender against each of the Borrower and the other Obligors
      under the Finance Documents will rank at least pari passu as to
      priority of payments with the claims of all its other unsecured,
      unsubordinated creditors save those whose claims are preferred solely by
      any bankruptcy, insolvency, liquidation or other similar laws of general
      application.

            

    

     

    
      	
              (m)

            	
              Immunity

            

    

     

    
      	
               
      

            	
              Neither
      the Borrower, any other Obligor nor any of its assets are entitled to
      immunity from suit, execution, attachment or other legal
      process.

            

    

     

    
      	
              (n)

            	
              Taxes, Returns and
      Payments

            

    

     

    
      	
               
      

            	
              Each
      of the Borrower and the other Group Companies has filed or caused to be
      filed all tax returns which are required to be filed by it and has paid or
      caused to be paid all taxes shown to be due or payable on such returns or
      on any assessment received by it, to the extent such taxes have become due
      and payable in a timely manner, except those taxes the validity,
      application or amount of which is being contested by it in good faith (and
      for the payment of which adequate reserves have been provided, being not
      less than an amount which would be required to be reserved in accordance
      with the applicable accounting standards) by appropriate proceedings being
      diligently pursued.

            

    

     

    
      	
              (o)

            	
              No
      Winding-up

            

    

     

    
      	
               
      

            	
              No
      corporate action nor any other steps have been taken or legal proceedings
      have been started or (to the best of the Borrower's knowledge and belief)
      threatened for the bankruptcy, winding-up, dissolution, administration or
      insolvent re-organisation or for the appointment of a receiver,
      administrator, administrative receiver, trustee or similar officer of any
      Obligor or any Group Company or to any or all of its assets or
      revenues.

            

    

     

    
      	
              (p)

            	
              Nevada

            

    

     

    
      	
               
      

            	
              The Lender is not and will not be
      deemed to be resident, domiciled or carrying on business in the State of
      Nevada or the United States by reason only of the execution, delivery,
      performance or enforcement of the Finance Documents to which any of them
      is party. It is not necessary under the laws of the State of Nevada or the
      federal laws of the United States (i) in order to enable the Lender to
      enforce its rights under the Finance Documents or (ii) by reason of the
      execution, delivery and performance of the Finance Documents by the
      Lender that it be licensed, qualified or otherwise entitled to carry on
      business in the State of Nevada or the United
  States.

            

    

     

    HRBN - Term Loan Facility
Agreement

    
      
         

      

      
        -38-

        
          

        

      

      
         

      

    

    

    Execution

    

    
      	
              2.

            	
              REPETITION

            

    

     

    
      	
               
      

            	
              The
      Borrower shall be deemed to have repeated each of the representations and
      warranties set out in Clause 1 (Representations and
      Warranties) of this Schedule 4 on the date on which a Utilisation
      Request is issued and on each Utilisation Date with reference to the facts
      and circumstances then subsisting.

            

    

    

    HRBN - Term Loan Facility
Agreement

    
      
         

      

      
        -39-

        
          

        

      

      
         

      

    

    

    Execution

    

    SCHEDULE
5

     

    UNDERTAKINGS

     

    PART
A - INFORMATION UNDERTAKINGS

     

    
      	
              1.

            	
              INFORMATION
      COVENANTS

            

    

    

    
      	
              1.1

            	
              Financial
      Statements

            

    

    

    
      	
               
      

            	
              The
      Borrower shall:

            

    

    
      	
               
      

            	
              1.1.1

            	
              within
      90 days of the end of each of its financial years, deliver to the Lender,
      in sufficient copies, its audited consolidated financial statements for
      such financial year.

            

    

    

    
      	
               
      

            	
              1.1.2

            	
              within
      45 days of the end of each quarter of its financial year, deliver to the
      Lender, in sufficient copies, its unaudited consolidated financial
      statements for such quarter of the financial
  year.

            

    

    

    
      	
              1.2

            	
              Requirements as to Financial
      Statements

            

    

     

    
      	
               
      

            	
              The
      Borrower shall ensure that each set of financial statements delivered by
      it pursuant to Clause 1.1 (Financial Statements)
      of this Schedule 5 (Undertakings) is
      certified by a director of the Borrower as having been prepared in
      accordance with GAAP.

            

    

     

    
      	
              1.3

            	
              Compliance
      Certificate

            

    

     

    
      	 	
              1.3.1

            	
              The
      Borrower shall deliver to the Lender, within 90 days after the end of each
      financial year of the Borrower, a compliance certificate stating that a
      review of the activities of the Borrower during the preceding financial
      year has been made with a view to determining whether the Borrower and its
      subsidiaries have kept, observed, performed and fulfilled their
      obligations under this Agreement, and further stating, as to the person
      signing such certificate , that to the best of his or her knowledge the
      Borrower has kept, observed, performed and fulfilled each and every
      covenant contained in this Agreement and there is no default in the
      performance or observance of any of the terms, provisions and conditions
      of this Agreement (or, if a Potential Event of Default or Event of Default
      shall have occurred, (subject  to  Clause 1.5 (Insider
      Information) of this Schedule) describing all such Potential Event
      of Default or Events of Default of which he or she may have knowledge and
      what action the Borrower is taking or proposes to take with respect
      thereto) and that to the best of his or her knowledge no event has
      occurred and remains in existence by reason of which repayment of the
      Loan(s) and payment of any interest accrued and any other amount payable
      under this Agreement is prohibited or if such event has occurred, a
      description of the event and what action the Borrower is taking or
      proposes to take with respect
thereto.

            

    

    

    
      	 	
              1.3.2

            	
              Each
      compliance certificate delivered pursuant to Clause 1.3.1 of this Schedule
      shall be signed by a director of the
Borrower.

            

    

     

    HRBN - Term Loan Facility
Agreement

    
      
         

      

      
        -40-

        
          

        

      

      
         

      

    

    

    Execution

    

    
      	
              1.4

            	
              Other
      Information

            

    

     

    
      	
               
      

            	
              The
      Borrower shall supply to the Lender (in sufficient
  copies):

            

    

     

    
      	
               
      

            	
              1.4.1

            	
              all
      documents dispatched by the Borrower to its shareholders (or any class of
      them) or its creditors generally at the same time as they are
      despatched;

            

    

    

    
      	
               
      

            	
              1.4.2

            	
              promptly,
      any announcement, notice or other document relating specifically to the
      Borrower posted onto any electronic website maintained by any stock
      exchange on which shares in or other securities of the Borrower are listed
      or any electronic website required by any such stock exchange to be
      maintained by or on behalf of the
Borrower;

            

    

    

    
      	
               
      

            	
              1.4.3

            	
              (subject
      to Clause 1.5 (Insider
      Information) of this Schedule) promptly upon becoming aware of
      them, the details of any litigation, arbitration or administrative
      proceedings which are current, threatened or pending against the Borrower
      or any other Group Company, and which might, if adversely determined, have
      a material adverse effect;

            

    

    

    
      	
               
      

            	
              1.4.4

            	
              (subject
      to Clause 1.5 (Insider
      Information) of this Schedule) promptly, such further information
      regarding the financial condition, business and operations of the Borrower
      or any other Group Company as the Lender may reasonably request;
      and

            

    

    

    
      	
               
      

            	
              1.4.5

            	
              promptly,
      notice of any change in any Authorised Person of any corporate Obligor
      signed by a director or company secretary of such corporate Obligor
      accompanied by the specimen signature of any new Authorised
      Person.

            

    

    

    
      	
              1.5

            	
              Insider
      Information

            

    

     

    
      	
               
      

            	
              The
      Borrower hereby acknowledges that the Lender does not wish to receive
      material non-public information with respect to the Borrower or its
      securities for the purpose of United States federal and state securities
      laws (“Insider
      Information”). The Borrower hereby agrees that it will use
      commercially reasonable efforts to omit any Insider Information from any
      notice, document or information required to be provided to the Lender
      under Clauses 1.3 (Compliance
      Certificate), 1.4 (Other Information) and
      2.1 (Notification and
      Default) of this Schedule and that by delivering such notice,
      document or information to the Lender, the Borrower shall be deemed to
      have authorized the Lender to treat such notice, document or information
      as not containing any material non-public information (although it may be
      sensitive and proprietary) with respect to the Borrower or its securities
      for purposes of United States federal and state securities
      laws.

            

    

    

    PART
B - POSITIVE UNDERTAKINGS

     

    
      	
              2.

            	
              POSITIVE
      UNDERTAKINGS

            

    

     

    
      	
               
      

            	
              The
      Borrower shall comply with the following positive
    covenants:

            

    

    

    
      HRBN - Term Loan Facility
Agreement

    

    
      
         

      

      
        -41-

        
          

        

      

      
         

      

    

    

    Execution

    

    
      
        	
                2.1

              	
                Notification of
      Default

              

      

    

     

    Subject to Clause 1.5 (Insider Information) of this
Schedule, the Borrower shall promptly inform the Lender of the occurrence of any
Event of Default or Potential Event of Default of which it becomes aware and,
upon receipt of a written request to that effect from the Lender, confirm to the
Lender that, save as previously notified to the Lender or as notified in such
confirmation, no Event of Default or Potential Event of Default has, to the best
of its knowledge, occurred.

    

    
      	
              2.2

            	
              Corporate
      Existence

            

    

    

    
      	
               
      

            	
              The
      Borrower shall and shall procure each corporate Obligor and each other
      Group Company maintain its corporate existence and its right to carry on
      operations.

            

    

    

    
      	
              2.3

            	
              Authorisations

            

    

    

    
      	
               
      

            	
              The
      Borrower shall obtain, maintain in full force and effect and comply with
      the terms of and if requested, supply certified copies to the Lender of
      each authorisation, approval and registration required under any
      applicable law or regulation including all applicable securities laws and
      regulations in the United States to enable it to perform its obligations
      under, or for the validity, enforceability or admissibility of, any
      Finance Document.

            

    

    

    
      	
              2.4

            	
              Ranking

            

    

    

    
      	
               
      

            	
              The
      Borrower shall ensure that at all times the claims of Event of Default or
      Potential Event of Default against each of the Borrower and the other
      Obligors under the Finance Documents will rank at least pari passu with the
      claims of its other unsecured creditors other than those whose claims are
      preferred by any bankruptcy, insolvency, liquidation or other similar laws
      of general application.

            

    

    

    
      
        	
                2.5

              	
                Compliance with Law and
      Taxes

              

      

    

    

    
      	
               
      

            	
              The
      Borrower shall and shall procure each other Group Company to comply in all
      material respects with all applicable laws and regulations to which it is
      subject and to file all relevant tax returns and pay all taxes promptly
      upon the same becoming due except to the extent taxes are being contested
      in good faith (and adequate reserves have been provided in relation
      thereto in an amount not less than that which would be required to be
      reserved in accordance with GAAP).

            

    

    

    
      	
              2.6

            	
              Accounting
      Records

            

    

    

    
      	
               
      

            	
              The
      Borrower shall and shall procure each other Group Company at all times
      maintain proper and accurate books and records prepared in accordance with
      GAAP.

            

    

    

    
      	
              2.7

            	
              Security - General
      Covenants

            

    

    

    
      	
               
      

            	
              (i)

            	
              The
      Borrower shall duly make all such filings and registrations with the
      relevant authorities as may be necessary in connection with the creation,
      perfection or protection of any security interest which it may, or may be
      required to, create in connection with the Security Documents (including,
      without limitation, any mortgage amendment registration formalities and
      foreign security amendment registration formalities in connection with a
      change in the particulars of any of the Security
    Documents);

            

    

    

    HRBN - Term Loan Facility
Agreement

    
      
         

      

      
        -42-

        
          

        

      

      
         

      

    

    

    Execution

    

    
      	
               
      

            	
              (ii)

            	
              The
      Borrower shall promptly make payment of all relevant fees, charges and
      taxes payable in relation to any Security Documents and all notarisation
      and registration fees in relation to the Security Documents from time to
      time and produce to the Lender copies of receipts or other evidence of
      such payments duly certified by an Authorised
  Person;

            

    

    

    
      	
               
      

            	
              (iii)

            	
              The
      Borrower shall procure that no person shall be or become entitled to
      assert any proprietary or other like right or interest which might affect
      the value of the subject matter under any of the Security Documents
      without the prior written consent of the
Lender;

            

    

    

    
      	
               
      

            	
              (iv)

            	
              The
      Borrower shall at all times keep the Lender indemnified against all
      actions, suits, claims, costs and expenses which may be incurred or
      sustained on account of the non-payment of any sum pursuant to this Clause
      2.7 (Security –
      General Covenants) or any other
      provision of a Security Document or the breach or non-performance of the
      covenants, obligations and agreements herein
  contained;

            

    

    

    
      	
               
      

            	
              (v)

            	
              The Borrower shall provide the
      Lender with copies of all notices to or from all relevant government authorities
      or otherwise relating to the Security Documents within fourteen (14) days of the
      service of such notices and comply with all governmental or other legal
      requirements and notices in respect of the Security Documents;
    and

            

    

    

    
      	
               
      

            	
              (vi)

            	
              The Borrower shall take and
      procure to be taken all such action as is reasonably available to it to register,
      perfect and protect the security intended to be conferred on the Lender by or pursuant to
      the terms of the Security
Documents.

            

    

    

    
      	
              2.8

            	
              Access

            

    

    

    
      	
               
      

            	
              The Borrower shall and shall
      procure each other Group Company to allow the Lender, its representatives or the auditors
      or consultants engaged by the Lender to have reasonable access to any premises of the
      Borrower or any other Group Company so as to carry out inspection or conduct financial
      review or audit on them upon prior reasonable notice to the Borrower. The Borrower shall,
      and shall procure each other Group Company to, fully cooperate with the Lender and its
      auditors and consultants and provide such information as requested for the purpose of
      the review or audit.

            

    

    

    
      	
              2.9

            	
              Application of Facility
      Amount

            

    

    

    
      	
               
      

            	
              The
      Borrower shall utilise the proceeds of the Facility for the purposes set
      out in Clause 3.1 (Purpose).

            

    

    

    
      	
              2.10

            	
              Debt Service
      Account

            

    

    

    
      	
               
      

            	
              The
      Borrower shall at all times maintain and operate the Debt Service Account
      strictly in accordance with the
      provisions in Schedule 7 (Debt Service Account)
      notwithstanding any other terms upon
      which monies have been deposited in the Debt Service
    Account.

            

    

    

    
      HRBN - Term Loan Facility
Agreement

    

    
      
         

      

      
        -43-

        
          

        

      

      
         

      

    

    

    Execution

    

    
      	
              2.11

            	
              Additional
      Collateral

            

    

     

    
      	
               
      

            	
              Within
      five (5) business days after the occurrence of a Triggering Event (as
      defined in the Share Pledge Agreement), the Borrower shall notify the
      Lender and provide such additional security as is required pursuant to the
      Share Pledge Agreement.

            

    

     

    PART
C - NEGATIVE UNDERTAKINGS

     

    
      	
              3.

            	
              NEGATIVE
      UNDERTAKINGS

            

    

     

    
      	
               
      

            	
              Save
      as otherwise agreed by the Lender, the Borrower shall comply with the
      following negative covenants.

            

    

     

    
      	
              3.1

            	
              Financing and
      Guarantees

            

    

     

    
      	
               
      

            	
              The
      Borrower shall not and shall procure each other Group Company not to make
      any financing, grant any credit (save in the ordinary course of business)
      or give any guarantee or indemnity (save as contemplated in any Finance
      Document) to or for the benefit of any person, or otherwise voluntarily
      assume any liability, whether actual or contingent, in respect of any
      obligation of any other person.

            

    

     

    
      	
              3.2

            	
              Negative
      Pledge

            

    

     

    
      	
               
      

            	
              The
      Borrower shall not and shall procure each other Group Company not to
      create or permit to subsist any Security Interest over all or any of its
      present or future revenues or assets other than Permitted Security
      Interests.

            

    

     

    
      	
              3.3

            	
              No
      Amendments

            

    

     

    
      	
               
      

            	
              The
      Borrower shall not and shall procure each other Group Company not to cause
      or agree to the amendment, modification or variation of the terms of its
      memorandum and articles of association or articles of association (or such
      equivalent constitutional documents), in any material respect and shall
      not terminate, amend, vary or grant any waivers under any of the Finance
      Documents save as otherwise specifically provided for
    herein.

            

    

     

    
      	
              3.4

            	
              Disposals

            

    

     

    
      	
               
      

            	
              The
      Borrower shall not and shall procure each other Group Company not to sell,
      lease, transfer or otherwise dispose of any asset by one or more
      transactions or series of transactions (whether related or not) other than
      in the ordinary course of the Related Business. The Borrower shall not and
      shall procure each other Group Company not to directly or indirectly
      dispose of a substantial part of its assets or undertaking related to the
      Related Business without the consent of the Lender in
    writing.

            

    

     

    
      	
              3.5

            	
              Merger

            

    

     

    
      	
               
      

            	
              The
      Borrower shall not and shall procure each other Group Company not to merge
      or consolidate with any other person or participate in any other type of
      corporate reconstruction without the consent of the Lender in
      writing.

            

    

     

    HRBN - Term Loan Facility
Agreement

    
      
         

      

      
        -44-

        
          

        

      

      
         

      

    

    

    Execution

    

    
      	
              3.6

            	
              Financial
      Year

            

    

    

    
      	
               
      

            	
              The
      Borrower shall not and shall procure each other Group Company not to
      permit any change to its financial year end without the consent of the
      Lender.

            

    

     

    
      	
              3.7

            	
              Shareholder
      Loan

            

    

     

    
      	
               
      

            	
              Where
      the Borrower applies any of the proceeds of the Facilities to fund any
      shareholder loan to any Group Company, the Borrower shall not assign,
      transfer or otherwise deal with any interest in such shareholder loan or
      the relevant shareholder loan agreement or any part thereof or create or
      permit to subsist any Security Interest thereon or agree or purport to do
      any of the foregoing without the prior written consent of the
      Lender.

            

    

    

    HRBN - Term Loan Facility
Agreement

    
      
         

      

      
        -45-

        
          

        

      

      
         

      

    

    

    Execution

    

    SCHEDULE
6

    

    EVENTS
OF DEFAULT

    

    Each of
the following events or circumstances set out below shall constitute an Event of
Default.

     

    
      	
              1.

            	
              Failure to
      Pay

            

    

     

    
      	
               
      

            	
              Any
      Obligor fails to pay any amount payable under any Finance Document when
      due.

            

    

     

    
      	
              2.

            	
              Misrepresentation

            

    

     

    
      	
               
      

            	
              Any
      representation or warranty made by any Obligor in any Finance Document or
      in any notice or certificate delivered by it pursuant thereto or in
      connection therewith is or proves to have been incorrect or misleading
      when made or deemed to be made.

            

    

     

    
      	
              3.

            	
              Obligations

            

    

    

    
      	
              3.1

            	
              Any
      Obligor fails duly to perform or comply with any obligation expressed to
      be assumed by it in Clause 2.1 (Notification of
      Default), Clause 2.2 (Corporate Existence),
      Clause 2.4 (Ranking), Clause 3.1
      (Financing and
      Guarantees) and Clause 3.2 (Negative Pledge) of
      Schedule 5 (Undertakings) or any of
      the covenants in Schedule 7 (Debt Service
      Account).

            

    

    

    
      	
              3.2

            	
              Any
      Obligor fails duly to perform or comply with any other obligation
      expressed to be assumed by it in any Finance Document to which it is a
      party and, if capable of remedy, such failure is not remedied within
      fifteen (15) days after the Lender has given notice to the Borrower or
      such Obligor or the Borrower or such Obligor becomes aware of the failure
      to perform or comply.

            

    

    

    
      	
              4.

            	
              Cross
      default

            

    

    

    
      	
              4.1

            	
              Any
      Financial Indebtedness of the Borrower or any other Group Company in an
      aggregate amount in excess of USD5,000,000 or its equivalent is not paid
      when due nor within any originally applicable grace
  period.

            

    

    

    
      	
              4.2

            	
              Any
      Financial Indebtedness of the Borrower or any other Group Company in an
      aggregate amount in excess of USD5,000,000 or its equivalent is declared
      to be or otherwise becomes due and payable prior to its specified maturity
      as a result of an event of default (however
  described).

            

    

    

    
      	
              4.3

            	
              Any
      commitment for any Financial Indebtedness of the Borrower or any other
      Group Company in an aggregate amount in excess of USD5,000,000 or its
      equivalent is cancelled or suspended by a creditor of the Borrower or the
      Borrower or any of its subsidiaries as a result of an event of default
      (however described).

            

    

    

    
      	
              4.4

            	
              Any
      creditor of the Borrower or any other Group Company becomes entitled to
      declare any Financial Indebtedness of the Borrower or any other Group
      Company in an aggregate amount in excess of USD5,000,000 or its equivalent
      due and payable prior to its specified maturity as a result of an event of
      default (however described).

            

    

    

    
      HRBN - Term Loan Facility
Agreement

    

    
      
         

      

      
        -46-

        
          

        

      

      
         

      

    

    

    
      Execution

    

    

    
      	
              5.

            	
              Insolvency
      Events

            

    

    
      	
              5.1

            	
              The
      Borrower, or any other Group
Company:

            

    

    

    
      	
               
      

            	
              (a)

            	
              files
      a petition in bankruptcy or takes any action for its rehabilitation,
      liquidation, winding-up or
dissolution;

            

    

    

    
      	
               
      

            	
              (b)

            	
              commences
      a voluntary case or gives notice of intention to make a proposal under any
      Bankruptcy Law;

            

    

    

    
      	
               
      

            	
              (c)

            	
              consents
      to the entry of an order for relief against it in an involuntary case or
      consents to its dissolution or winding
up;

            

    

    

    
      
        	 	
                (d)

              	
                consents
      to the appointment of a receiver, interim receiver, receiver and manager,
      liquidator, trustee or custodian of it or for all or substantially all of
      its property;

              

      

    

     

    
      
        	 	
                (e)

              	
                makes
      a general assignment for the benefit of its
  creditors;

              

      

    

     

    
      
        	 	
                (f)

              	
                is
      unable or admits in writing its inability to pay its debts as they become
      due otherwise admits its insolvency;
or

              

      

    

     

    
      
        	 	
                (g)

              	
                stops,
      suspends or threatens to stop or suspend payment of all or a material part
      of its indebtedness, by reason of actual or anticipated financial
      difficulties, or commences negotiations with one or more of its creditors
      with a view to rescheduling any of its
  indebtedness.

              

      

    

    

    
      	
              5.2

            	
              Any
      bankruptcy or insolvency proceedings or other proceedings under any
      Bankruptcy Law are commenced against the Borrower, the Borrower or any of
      its subsidiaries.

            

    

    

    
      	
              5.3

            	
              A
      court of competent jurisdiction enters an order or decree under any
      Bankruptcy Law that:

            

    

    
      	
               
      

            	
              (a)

            	
              is
      for relief against the Borrower or any other Group
  Company;

            

    

    

    
      	
               
      

            	
              (b)

            	
              appoints
      a receiver, interim receiver, receiver and manager, liquidator, trustee or
      custodian of the Borrower or any other Group Company;
  or

            

    

    

    
      	
               
      

            	
              (c)

            	
              orders
      the liquidation of the Borrower or any other Group
  Company.

            

    

    

    
      	
              5.4

            	
              For
      the purpose of this Clause 5 (Insolvency Event),
      “Bankruptcy Law”
      means any law in any jurisdiction relating to bankruptcy, insolvency,
      winding up, liquidation, reorganisation or relief of the
      debtors.

            

    

    

    
      	
              6.

            	
              Judgment

            

    

    

    
      	
               
      

            	
              Any
      legal proceedings, judgment or arbitration award (when aggregated with any
      outstanding unstayed or unsatisfied proceedings judgement or award against
      the Borrower, the Borrower or any of the subsidiaries) in excess of
      US$5,000,000 or its equivalent aggregate is rendered against the Borrower
      or any other Group Company, and remains unstayed or unsatisfied for 30
      consecutive days.

            

    

    

    HRBN - Term Loan Facility
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        -47-

        
          

        

      

      
         

      

    

    

    
      Execution

    

    

    
      	
              7.

            	
              Expropriation

            

    

    
      	
               
      

            	
              The
      confiscation, expropriation or nationalization by any governmental agency
      of any assets of the Borrower or any other Group Company if such
      confiscation, expropriation or nationalization would have a material
      adverse effect; or if such revocation or repudiation could reasonably be
      expected to have a material adverse effect, the revocation or repudiation
      by any government agency of any previously granted authorisation that is
      material to the operation of the Related Business; or the imposition or
      introduction of material and discriminatory taxes, tariffs, royalties,
      customs or excise duties imposed on the Borrower or other Group Company,
      or the material and discriminatory withdrawal or suspension of material
      privileges or specifically granted material rights of a fiscal
      nature.

            

    

     

    
      	
              8.

            	
              Repudiation

            

    

     

    
      	
               
      

            	
              Any
      Obligor repudiates any Finance Document to which it is a party or does or
      causes to be done any act or thing evidencing an intention to repudiate
      any Finance Document to which it is a
party.

            

    

     

    
      	
              9.

            	
              Illegality

            

    

     

    
      	
               
      

            	
              (a)

            	
              At
      any time it is or becomes unlawful for any of the Obligors to perform or
      comply with any or all of its material obligations under any Finance
      Document to which it is a party.

            

    

    

    
      	
               
      

            	
              (b)

            	
              At
      any time any of the material obligations of any of the Obligors under any
      Finance Document to which it is a party are not or cease to be legal,
      valid and binding.

            

    

    

    
      	
               
      

            	
              (c)

            	
              Any
      authorisation or necessary approval referred to in Clause 2.3 (Authorisations) of
      Schedule 5 (Undertakings) is
      revoked, terminated or withdrawn and such has or is likely to have a
      material adverse effect.

            

    

    

     

    
      	
              10.

            	
              Security
      Documents

            

    

     

    
      	
               
      

            	
              The
      security purported to be created by any of the Security Documents shall
      cease to constitute a valid, first ranking, security interest in the
      assets expressed to be subject thereto or is or becomes subject to any
      other security interest (other than a Security Interest permitted under
      the Finance Documents); or any Security Document shall (i) cease to be in
      full force and effect or (ii) cease to give the Lender all of the material
      rights, powers and privileges purported to be created
    thereby.

            

    

    

    
      	
              11.

            	
              Constitutive
      Documents

            

    

    
      	
               
      

            	
              The
      Borrower or any other Group Company amends or modifies their respective
      constitutive documents in such a manner that would have a material adverse
      effect.

            

    

    

    
      	
              12.

            	
              Other
      Business

            

    

    
      	
               
      

            	
              The
      Borrower shall, or shall permit or any other Group Company to, directly or
      indirectly, engage in or carry on any business other than in the ordinary
      course of business presently engaged in by it (including with respect to
      an arrangements with respect to the business) as consistent with the past
      custom and practice of the Group and permitted under all necessary
      licenses, consents, authorizations, approvals orders, certificates and
      permits duly obtained by the Borrower or any other Group
      Company.

            

    

    

    
      	
              13.

            	
              Disposal of Related
      Business

            

    

    
      	
               
      

            	
              The
      Borrower shall, or shall permit or any other Group Company, directly or
      indirectly, dispose of or agree to dispose of a substantial part of its
      assets or undertaking relating to the Related Business, without the prior
      written consent of the Lender.

            

    

    

    HRBN - Term Loan Facility
Agreement

    
      
         

      

      
        -48-

        
          

        

      

      
         

      

    

    

    
      Execution

    

    

    
      	
              14.

            	
              Listing Status of the
      Borrower

            

    

    
      	
               
      

            	
              The
      Borrower fails to maintain the trading of its Common Stock on the New York
      Stock Exchange or the Nasdaq Global Select Market or the Nasdaq Global
      Market without the prior written consent of the
  Lender.

            

    

    

    
      	
              15.

            	
              Material Adverse
      Change

            

    

    There has
occurred a Material Adverse Change.

    

    HRBN - Term Loan Facility
Agreement

    
      
         

      

      
        -49-

        
          

        

      

      
         

      

    

    

    Execution

    

    SCHEDULE
7

    

    DEBT
SERVICE ACCOUNT

    

    
      	
              1.

            	
              Opening and maintenance of Debt
      Service Account

            

    

    

    
      	
               
      

            	
              The
      Borrower shall open and maintain a bank account (the “Debt Service Account”)
      with the Lender for the purpose set out in this
  Schedule.

            

    

    

    
      	
              2.

            	
              Operation of Debt Service
      Account

            

    

    

    
      	
              2.1

            	
              
                The
      Borrower undertakes, until the Release Date, not to make or authorise any
      withdrawals from the Debt Service Account except in accordance with the
      following provisions of this Clause 2 (Operation of Debt Service
      Account) and this
Schedule.

              

            

    

    

    
      	
              2.2

            	
              At
      any time during the period of thirty (30) days prior to any Interest
      Payment Date or Repayment Date, the Borrower shall ensure that the credit
      balance of the Debt Service Account is not less than the scheduled
      repayment of the Loan(s) and payment of interest accrued and any other
      amount payable under the Finance Documents for that Interest Payment Date
      or Repayment Date.

            

    

    

    
      	
              2.3

            	
              
                The
      Borrower may make or authorise withdrawals and transfers from Debt Service
      Account only with the Lender's consent and for the purposes of repayment
      of the Loan(s) outstanding or any part thereof or in payment of any
      interest accrued and any other amounts due and payable by the Borrower
      under the Finance Documents.

              

            

    

    

    
      
        	
                2.4

              	
                
                  The
      Lender is authorised to make withdrawals and transfers from the Debt
      Service Account in such amount and at such time as it shall determine for
      the purposes set out in this
Schedule.

                

              

      

    

    

    HRBN - Term Loan Facility
Agreement

    
      
         

      

      
        -50-

        
          

        

      

      
         

      

    

    

    Execution

    

    EXECUTION

    

    IN
WITNESS WHEREOF the parties have executed this Agreement on the date first
mentioned above.

    

    BORROWER

    

    HARBIN
ELECTIC, INC.

    

    
      
        
          
            
              
                
                  	
                          By

                        	
                          :

                        	
                          YANG
      TIANFU

                        
	 
      	 
      	 
      
	
                          Address

                        	
                          :

                        	
                          No.
      9 Ha Ping Xi Lu, Ha Ping Lu Ji Zhong Qu Harbin Kai Fa Qu, r

                        
	 
      	 
      	
                          Harbin,
      People's Republic of China 150060

                        
	 
      	 
      	 
      
	
                          Fax

                        	
                          :

                        	
                          86-451-8611-6799

                        

                

              

            

          

        

      

    

    

    LENDER

     

    CHINA
DEVELOPMENT BANK CORPORATION HONG KONG BRANCH

     

    
      
        
          	
                  By

                	
                  :

                	WU
      PING WANG
	 
      	 
      	 
      
	
                  Address

                	
                  :

                	
                  Suite
      3307-15, 33/F., One International Finance Centre, No. 1
      Harbour

                
	 
      	 
      	
                  View
      Street, Central, Hong Kong

                
	 
      	 
      	 
      
	
                  Fax

                	
                  :

                	
                  +852
      2530 4083

                
	 
      	 
      	 
      
	
                  Attention

                	
                  :

                	
                  Mr.
      Meng Zhongwen

                

        

      

    

    

    HRBN - Term Loan Facility
Agreement

    
      
         

      

      
        -51-

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