Document:

ex10_11.htm

    
       Exhibit
10.11 

       

    

     Short-term
Loan Contract 

    

     Contract
NO. 2008-0012, Nanxin
Branch, CIB Shenzhen 

     Lender: CIB
Shenzhen 

     Postcode:
518052 

     Phone#
26077176  Fax# 26077085 

    

     Borrower: Shenzhen
Xie Qin Industrial Ltd. 

     Postcode:
518054 

     Phone#
26012478  Fax# 26012225 

    

     This
contract was signed at CIB Shenzhen Branch, CIB Building, Futian district,
Shenzhen. 

    

     The
Borrower applied for a short-term loan from The Lender for business use, The
Lender agreed to provide a loan to the Borrower. The Lender and the Borrower
reached an agreement on the following Terms and Conditions: 

    

    
       I. 
       General
Contract 

    

     This
Contract is a sub-contract of General Credit
Line Contract, NO.
2008-0004, Nanxin Branch, CIB Shenzhen, which provides
RMB30,000,000
credit line to the Borrower. The credit line starts on September
25, 2008 and ends on September
25, 2009. 

    

    
       II.       
Loan
amount 

    

     The
Lender agreed to provide a loan of RMB5,
000,000 

    

    
       III.      The
use of Loan 

    

     This
loan shall be used for customs
duty. 

    

    
       IV.     
Loan
Duration 

    

     This
loan duration will be 6
months, which starts on September
25, 2008 and ends on March 25,
2009. 

    

    
       V.      
Loan
interest 

    

     Interest
for this loan is
6.831% per year. This interest is fixed regardless of the national bank
interest change. 

    

    
       VI.      Interest
payment 

    

     Interest
shall be paid on the
20th of
each month, the Borrower shall pay interest on a monthly basis, and the Borrower
shall pay off the interest before the due date of the loan. 

    

    
      	
               VII.   

            	
               Defaut
      interest and compound interest 

            

    

    
      	
               1   

            	
               For
      amounts overdue on the loan and if the loan is used for purposes not
      stipulated in this contract, the Lender has the right to charge defaut
      interest on the overdue amount or the amount used for other purposes as
      per the stipulated interest. For overdue interest, the Lender has the
      right to charge compound
interest. 

            

    

     

    
      
        
        

      

      
         1 

        
          

        

      

      
        
        

      

       

    

    
      	
               2   

            	
               For
      overdue loan, defaut interest shall be charged as
    follows: 

            

    

    
      	   	
               2.1   

            	
               The
      Lender shall charge defaut interest and compound interest for overdue
      period, the defaut interest rate is a 50%
      increase on the fixed loan
interest. 

            

    

    
      	
               3   

            	
               For
      loan used for other purposes not stipulated in this contract, defaut
      interest shall be charged as
follows: 

            

    

    
      	   	
               3.1   

            	
               The
      Lender shall charge default interest and compound interest for the period
      the amount was used, the default interest rate is a 100%
      increase on the fixed loan
interest. 

            

    

    
      	
               4   

            	
               The
      charge of compound interest shall be in complying with the terms and
      conditions of this contract. 

            

    

    

    
      	
               VIII.   

            	
               Repaying
      of principal and interest 

            

    

    
      	
               1   

            	
               The
      Borrower should pay off principal and interest on the date stipulated in
      this contract. 

            

    

    
      	
               2   

            	
               The
      Borrower shall get the Lender’s consent if the Borrower wants to prepay
      the loan, and the Lender has the right to charge interest based on the
      loan duration stipulated in this
contract. 

            

    

    
      	
               3   

            	
               Loan
      under this contract is a loan of foreign currency, the Borrower shall pay
      off the principal and interest in the same currency as was
      borrowed. 

            

    

    
      	
               4   

            	
               The
      Borrower hereby irrepealably authorizes the Lender to access any of the
      Borrower’s bank accounts for principal and interest as per Term #11 and
      Terms#12. 

            

    

    

    
      	
               IX.   

            	
               Guarantee 

            

    

    
      	
               1   

            	
               The
      first guarantee for Contract
      NO. 2008-0004A Nanxin Branch, CIB Shenzhen, The
      Highest Credit Line Guarantee Contract is the guarantee of the
      guarantor SinoHub
      Electronics Shenzhen
Ltd. 

            

    

    
      	
               2   

            	
               The
      second guarantee for Contract
      NO. 2008-0004B Nanxin Branch, CIB Shenzhen, The
      Highest Credit Line Guarantee Contract is the guarantee of the
      guarantor Shenzhen
      Yin Zhao Co., Ltd. 

            

    

    
      	
               3   

            	
               The
      third guarantee for Contract
      NO. 2008-0004A Nanxin Branch, CIB Shenzhen, The
      Highest Credit Line Guarantee Contract is the personal guarantee of
      Lei
      Xia as a pledgor. 

            

    

    
      	
               4   

            	
               The
      fourth guarantee for Contract
      NO. 2008-0004B Nanxin Branch, CIB Shenzhen, The
      Highest Credit Line Guarantee Contract is the personal guarantee of
      Christina
      Cui as a pledgor. 

            

    

    
      	
               5   

            	
               The
      fifth guarantee (mortgage) for Contract
      NO. 2008-0004 Nanxin Branch, CIB Shenzhen, The
      Highest Mortgage Contract is a Mortgage on a property owned
      jointly (50/50) by HENRY
      THOMAS COCHRAN and LINDA MARIE HETUE (together the
      Mortgagor). 

            

    

     

    
      	
               X.   

            	
               Representations
      and Warranties 

            

    

    
      	
               1   

            	
               The
      Borrower hereby represents to the
Lender: 

            

    

    
      	   	
               1.1   

            	
               The
      Borrower is a registered company, and legally exists during the loan
      duration. The Borrower has the right to sign and fulfill this
      contract. 

            

    

    
      	   	
               1.2   

            	
               The
      loan under this contract has been approved by the Board of Directors or
      the CEO of the Borrower, and is in comply with Laws, regulations, policies
      and Articles of Association. Otherwise, the Borrower shall take all the
      responsibilities and the Lender is not
  responsible. 

            

    

     

    
      
        
        

      

      
         2 

        
          

        

      

      
        
        

      

       

    

    
      	   	
               1.3   

            	
               Unless
      specified in the information provided to the Lender, the Borrower shall
      have no mortgage, pledge, lien and other debt, no outstanding litigation,
      arbitration and insolvency
proceedings. 

            

    

    
      	   	
               1.4   

            	
               The
      Borrower did not cover up any of the following events that have taken
      place or are about to occur so that the Lender may not agree with granting
      loans: 

            

    

    
      	   	   	
               1.4.1   

            	
               The
      Borrower or the Borrower's principal leaders involved in a major violation
      of law and regulations, or
claims, 

            

    

    
      	   	   	
               1.4.2   

            	
               Pending
      litigation, arbitration case, 

            

    

    
      	   	   	
               1.4.3   

            	
               The
      Borrower’s debt or assumed debt, or guarantee, mortgage, pledge security
      provided to a third-party, 

            

    

    
      	   	   	
               1.4.4   

            	
               The
      Borrower occurred in an event of default with any other
      loaners  under
contract, 

            

    

    
      	   	   	
               1.4.5   

            	
               Other
      things that may affect the financial condition and liquidity situation of
      the Borrower. 

            

    

    

    
      	
               2   

            	
               The
      Borrower hereby warrants to the
Lender: 

            

    

    
      	   	
               2.1   

            	
               The
      Borrower shall provide authentic documents, statements, certifications as
      per the Lender’s request. 

            

    

    
      	   	
               2.2   

            	
               The
      Borrower shall open a bank account at CIB Shenzhen, and make transactions
      through that bank account. 

            

    

    
      	   	
               2.3   

            	
               The
      use of the loan shall be in compliance with this contact and the loan
      shall not be diverted for other use. The Borrower shall not use the loan
      for equity investment, or for speculation in securities, futures, real
      estate or the like. The Borrower shall not use the loan for
      inter-enterprise lending activities or other illegal activities. And the
      Borrower shall not divert or misappropriate funds derived from the
      loan. 

            

    

    
      	   	
               2.4   

            	
               The
      Borrower shall at any time agree and cooperate with the Lender to inspect
      the use the loan, business operations, financial activities, inventory of
      goods, assets and liabilities, bank deposits and cash on
      hand. 

            

    

    
      	   	
               2.5   

            	
               The
      Borrower shall provide full and approved guarantees that have been agreed
      to by the Lender. 

            

    

    
      	   	
               2.6   

            	
               The
      Borrower shall not reduce the registered capital in any
      way. 

            

    

    
      	   	
               2.7   

            	
               Without
      the written consent of the Lender, the Borrower shall not transfer part or
      all of the obligations under this contract to a third
      party. 

            

    

    
      	   	
               2.8   

            	
               Major
      changes in the ownership and business operation adjustment (including, but
      not limited to, signing a joint venture or co-operation contract with a
      foreign corporation, or a Hong Kong, Macao or Taiwan corporation; revoking
      the license of, closing, shutting down of production, changing of
      products, spin-off of any business, acquisition, merger; re-establish or
      alteration to a joint-stock company; making investments in joint-stock
      companies or investment companies by using fixed assets such as houses and
      equipment, or intangible assets such as trademarks, patents, proprietary
      technology, land use rights,  transactions on property rights,
      business operation rights by leasing, contracting, joint venture) shall
      get the written consent of the Lender in
  advance. 

            

    

    

    
      
        
        

      

      
         3 

        
          

        

      

      
        
        

      

       

    

    
      	
               3   

            	
               Guarantor
      (or mortgagor, pledgor) hereby
commits: 

            

    

     When
the Borrower fails to fulfill obligations, regardless that the Lender may have
other guaranties under this contract (including but not limited to, warranty,
mortgage, pledge, bank line, or any other forms of guaranty methods), the Lender
has the right to request a guarantor (or mortgagor, pledgor) to take all
responsibilities under this contract, without exercising other guaranty
rights. 

    

    
      	
               XI.   

            	
               Advance
      loan collection 

            

    

     Under
the following circumstances the Lender has the right to collect the loan ahead
of schedule. The Lender has the right to access to any of the Borrowers accounts
for recovery of money. 

    
      	
               1   

            	
               The
      Borrower owes loan interest. 

            

    

    
      	
               2   

            	
               The
      Borrower has an operating loss or a sharp economic
      decline. 

            

    

    
      	
               3   

            	
               The
      Borrower is involved in or is about to be involved in litigation,
      arbitration or other legal
disputes. 

            

    

    
      	
               4   

            	
               The
      Borrower provides untrue reports or
  information. 

            

    

    
      	
               5   

            	
               The
      Borrower uses the loan for purposes not stipulated in this
      contract. 

            

    

    
      	
               6   

            	
               The
      Borrower refuses to have the Lender to inspect or supervise its operating
      and financial activities, or refuses to provide reports or
      information. 

            

    

    
      	
               7   

            	
               The
      Borrower has major personnel
changes. 

            

    

    
      	
               8   

            	
               Other
      situations that may jeopardize the loan
  security. 

            

    

    

    
      	
               XII.   

            	
               Liabilities 

            

    

    
      	
               1   

            	
               The
      following circumstances constitute a breach of this
      Contract: 

            

    

    
      	   	
               1.1   

            	
               The
      Borrower does not repay principal and interest on time in accordance with
      this contract. 

            

    

    
      	   	
               1.2   

            	
               The
      Borrower violates the Representations and Warranties as per Chapter 10 in
      this contract. 

            

    

    
      	   	
               1.3   

            	
               The
      Borrower violates other provisions of this
  contract. 

            

    

    

    
      	
               2   

            	
               When
      a breach of this Contract happens, the Lender has the right to take one or
      all of the actions as follows: 

            

    

    
      	   	
               2.1   

            	
               Order
      the Borrower to correct violations in a time
  limit. 

            

    

    
      	   	
               2.2   

            	
               Stop
      the Borrower from withdrawing
money. 

            

    

    
      	   	
               2.3   

            	
               Terminate
      the loan contract, and require the Borrower to repay mature or undue
      principal and interest. 

            

    

    
      	   	
               2.4   

            	
               The
      Lender has the right to charge defaut interest for overdue loan
      amounts. 

            

    

    
      	   	
               2.5   

            	
               The
      Lender has the right to charge defaut interest on non-specified use of the
      loan. 

            

    

    
      	   	
               2.6   

            	
               The
      Lender has the right to charge compound interest on overdue loan
      amounts. 

            

    

    
      	   	
               2.7   

            	
               The
      Lender has the right to recover money from any of the Borrower’s bank
      accounts for owed principal and interest, and exchange the currency as per
      the bank rate when necessary. 

            

    

    
      	   	
               2.8   

            	
               The
      Lender has the right to take legal means to recover the loan principal and
      interest; all costs arising from litigation activities shall be borne by
      the Borrower. 

            

    

     

    
      
        
        

      

      
         4 

        
          

        

      

      
        
        

      

      
        

        
          	
                   3   

                	
                   In
      the case that the Lender does not provide loans to the Borrower in
      accordance with the agreed date and the amount, which results in a loss
      for the Borrower, the Lender shall pay the
  loss. 

                

        

         

      

    

    
      	
               4   

            	
               The
      Lender has the right to take actions in accordance with the provisions of
      this contract when a guarantor (or mortgagor, pledgor) has any of the
      following situations: 

            

    

    
      	   	
               4.1   

            	
               The
      guarantor violates this contract, or the guarantor’s credit has
      deteriorated, or the guarantor is not competent to support the
      guarantee. 

            

    

    
      	   	
               4.2   

            	
               The
      Mortgagor violates this contract, intentionally damages collateral, or the
      collateral value has been or may be significantly reduced, or other
      incidents happen which damage the Lender’s lien on the
      mortgage. 

            

    

    
      	   	
               4.3   

            	
               Any
      pledgor violates this contract, or any pledged property value has been or
      may significantly reduced, or the right to pledge must be fulfilled before
      the settlement of the loan, or other incidents happen which damage the
      Lender’s right on the pledge. 

            

    

    

    
      	
               XIII.   

            	
               Jurisdiction 

            

    

     The
signing, legal validity, interpretation, performance or disputes of this
contract shall apply to the law of the People's Republic of China. During the
term of the contract, all controversy and dispute shall be dealt through
negotiation. If the parties are unable to reach an agreement, either the Lender
or the Borrower may demand for arbitration by the Shenzhen Arbitration
Committee. 

    

    
      	
               XIV.   

            	
               Term
      of this Contract 

            

    

     This
contract shall enter into force after the following conditions: 

    
      	
               1   

            	
               Both
      parties have signed or chopped this
  contract. 

            

    

    
      	
               2   

            	
               The
      guarantee contracts under this contract have entered into
      force. 

            

    

    
      	
               3   

            	
               The
      Lender requests for a notarization for this contract, and notarization
      procedures are fulfilled
legally. 

            

 This
contract shall cease to be in effect once the loan principal and interest and
other debts are paid. 

    

    
      	
               XV.   

            	
               Copies 

            

    

     This
Agreement will be executed in triplicate, both parties and the notary agency
will have one copy. 

    

    
      	
               XVI.   

            	
               Supplementary
      provisions 

            

    

    

    

     Signature
Page Follows 

    

     5ex10_12.htm

    
       Exhibit
10.12 

       
 Loan for Export Rebates Custody Account 

    

     Contract
No :  Borrow
2008 Credit Line 267001R 

    

     Party
A : Shenzhen
Xie Qin Industrial Ltd.  

     Address
: 6/F, No. 5
Qiongyu Road, Central Area, Technology Park, Nanshan District, Shenzhen,
China 

     The
legal representative : Christina Cui
  Postcode : 518057 

     Phone
: 86-755-26612106
Fax : 86-755-26612060 

    

     Party
B : Shenzhen
Branch, China Construction Bank 

     Address
: East Bldg,
Financial center, Hongling Road, Luohu District,
Shenzhen 

     The
legal representative : Tian Hui
Yu     Postcode : 518010 

     Phone
: 82389079             Fax
: 82389543 

    

     Party
A applied for a loan to the Export Rebates Custody Account, Party B agreed to
provide a loan for Party A. To clear the rights and obligations of both parties,
Party A and Party B agreed on the following terms and conditions in accordance
with relevant laws and regulations: 

    

    
      	
               1 

            	
               Representations
      and Warranties of Party A 

            

            
Party A is incorporated in Shenzhen and is authorized to operate import and
export business. Party A shall meet the following requirements during the term
of contract: 

    
      	
                
      

            	
               1.1 

            	
               Party
      A shall open an Export Rebates Custody Account at China Construction Bank
      under the permission of the Import and Export Tax Administration of
      Shenzhen. And Party A agrees to use recognized tax rebate receivables as
      the guarantee of repayment. 

            

    

    
      	
                
      

            	
               1.2 

            	
               Party
      A shall not be one of the “D” type enterprises at the Import and Export
      Tax Administration of Shenzhen. 

            

    

    
      	
                
      

            	
               1.3 

            	
               Party
      A shall have good tax records for the past two years, no outstanding tax,
      no tax evasion, no tax fraud, and no tax
  avoidance. 

            

    

    
      	
                
      

            	
               1.4 

            	
               Party
      A shall have good “Cancel after Verification” records, no violation of
      foreign exchange management policy or customs import and export policies
      and regulations. 

            

    

    
      	
                
      

            	
               1.5 

            	
               Export
      products shall not be sensitive products or products in sensitive areas
      according to Shenzhen Customs. 

            

    

    
      	
                
      

            	
               1.6 

            	
               Party
      A shall have good business operations, financial situation, standard
      corporate management, good reputation at banks, and reasonable assets and
      net assets. 

            

    

    

    
      	
               2 

            	
               Amount
      of Loan 

            

    

     Party
B provides RMB15
million loan to the Export Rebates Custody Account of Party
A. 

     During
the term of the loan stipulated in this contract, Party A can reuse the loan, as
long as the total amount of used loan and the balance is within the total amount
of the loan. 

     

    
      
        
        

      

      
         1 

        
          

        

      

      
        
        

      

    

    
      

      
        	
                 3 

              	
                 Term
      for the loan 

              

      

       The
loan starts on May 12,
2008, and ends on May 11, 2009. The
loan shall not be valid for more than one year. The repayment time of the loans
submitted during the term shall not be affected by the end of the
term. 

       Any
unused loan amount shall be terminated when the term of loan
ends. 

       Repayment
time refers to the period between the withdraw time and the regulated pay-off
time. 

    
      	
               4 

            	
               The
      Use of Loan 

            

    

     Within
the term and the amount of the loan, Party A can apply for loans successively.
Loan amount, interest rates, duration, and the use of loan shall be in
compliance with the Applications and Notice of withdrawal issued by Party B to
Party A. 

     The
term of each approved loan shall not be longer than four
months. 

    

    
      	
               5 

            	
               Interest Rate, Interest
      Calculation,
      Interest Payment and
Fees 

            

    

    
      	
                
      

            	
               5.1 

            	
               Loan
      interest rate 

            

    

     The
loan interest rate is 10%
above the benchmark interest rate, and the loan interest rate is fixed during
the loan term. 

    

    
      	
                
      

            	
               5.2 

            	
               Defaut
      interest 

            

    

    
      	
                
      

            	
               5.2.1 

            	
               Defaut
      interest shall be charged on a monthly
base 

            

    

    
      	
                
      

            	
               5.2.2 

            	
               If
      Party A does not use the loan for a stipulated purpose, Party A shall pay
      defaut interest, which is 120%
      above the benchmark interest
rate. 

            

    

    
      	
                
      

            	
               5.2.3 

            	
               If
      Party A does not pay off a loan at the stipulated time, Party A shall pay
      defaut interest, which is 65%
      above the benchmark interest
rate. 

            

    

    
      	
                
      

            	
               5.3 

            	
               The
      date at which interest begins to be owed (the Value Date) is the day when
      Party B wires the loan amount to Party A’s bank
    account. 

            

    

    
      	
                
      

            	
               5.3.1 

            	
               The
      benchmark interest rate refers to the rate that is published by the
      People's Bank of China on the Value Date. When the loan interest rate is
      adjusted, or when there is defaut interest, the benchmark interest rate
      shall be the rate published by the People's Bank of China on date of the
      adjustment. When the People's Bank of China does not publish a benchmark
      interest rate, both parties agree to use the benchmark interest rate,
      which is recognized by the industry, unless otherwise
      agreed. 

            

    

    
      	
                
      

            	
               5.4 

            	
               Loan
      interest shall be charged since the day Party B wires the loan to Party
      A’s bank account. Loan interest under this contract shall be charged on a
      daily base. Daily interest rate=monthly interest rate/30=annual annual
      rate/360. If Party A does not pay-off interest on time, Party B shall
      charge compound interest starting on the second day after the interest was
      due. 

            

    

    
      	
                
      

            	
               5.5 

            	
               Interest
      payment 

            

    

    
      	
                
      

            	
               5.5.1 

            	
               Interest
      under this contract shall be charged on the 20th
      day of each month. 

            

    

    
      	
                
      

            	
               5.6 

            	
               Party
      A shall pay Party B a loan management fee, which is 0.5 % of the
      loan. 

            

    

    

    
      	
               6 

            	
               Granting
      of loans 

            

    

    
      	
                
      

            	
               6.1 

            	
               Conditions
      of Application 

            

    

     Party
A shall submit to Party B a complete set of export rebate documents which
includes: VAT, export declaration forms, Foreign Exchange Management and Control
Form, export invoices, application form for export rebate, detailed report on
purchase of goods for export, detailed report on exports tax rebate or the like.
Party B shall review those documents and decide the granting of
loan. 

     

    
      
        
        

      

      
         2 

        
          

        

      

      
        
        

      

    

    
      

      
        	
                  
      

              	
                 6.2 

              	
                 Prerequisites
      for granting the loan 

              

      

       Party
B is obligated to grant the loan if all of the following conditions are
met: 

      
        	
                  
      

              	
                 6.2.1 

              	
                 Party
      A has well finished procedures under loan approval, registration, delivery
      and other legal formalities in accordance with relevant laws and
      regulations. 

              

      

    

    
      	
                
      

            	
               6.2.2 

            	
               Guarantee
      required by Party B has come into
force. 

            

    

    
      	
                
      

            	
               6.2.3 

            	
               Party
      A does not violate any of the provisions in this
    contract. 

            

    

    
      	
                
      

            	
               6.2.4 

            	
               Party
      A paid off management fees 10
      days after the signing of this
  contract. 

            

    

    
      	
                
      

            	
               6.2.5 

            	
               Party
      A has signed a Pledge Contract on Custody Account with Party B. During the
      term of the loan, Party A agrees to have Party B supervise the custody
      account, and Party A shall not wire money from the custody account without
      the permission of Party B. 

            

    

    
      	
                
      

            	
               6.2.6 

            	
               The
      loan amount shall not be greater than 90% of the
      total export rebate amount. 

            

    

    
      	
                
      

            	
               6.2.7 

            	
               Party
      B must have approved the loan
application. 

            

    

    

    
      	
                
      

            	
               6.3 

            	
               Loans
      under this contract shall be wired to the RMB bank account at China
      Construction Bank of Party A. 

            

    

    
      	
               7 

            	
               Loan
      Repayment 

            

    

    
      	
                
      

            	
               7.1 

            	
               Repayment
      principles 

            

    

    
      	
                
      

            	
               7.1.1 

            	
               If
      the loan principle or interest is overdue for more than 90 days, or if
      Party A has shut down production and operation (even though the loan is
      not due), or if it is required by laws and regulations, Party A shall
      repay the principle first, and then the
  interest. 

            

    

    
      	
                
      

            	
               7.1.2 

            	
               For
      circumstances other than Chapter 7.1.1, Party A
      shall repay the interest first, or interest paid off with
      principal. 

            

    

    
      	
                
      

            	
               7.2 

            	
               Interest
      payment 

            

    

     Party
A shall pay off interest on the due date. When the loan is due, interest shall
be paid off with principal. 

    
      	
                
      

            	
               7.3 

            	
               Principal
      payment 

            

    

     Party
A shall pay-off principal in according to the schedule on the Loan
application. 

    

    
      	
               8 

            	
               Guarantee
      of the Loan 

            

    

     The
guarantee method under this contract is pledge. 

    

    
      	
               9 

            	
               Rights
      and obligations of Party A 

            

    

    
      	
                
      

            	
               9.1 

            	
               Party
      A has the right to request Party B not to disclose any trade secrets on
      corporate information or business operations, unless the disclosure is
      required by rules and
regulations. 

            

    

    
      	
                
      

            	
               9.2 

            	
               Party
      A shall submit financial and business operation information under the
      requirements of Party B. Such information shall include, tax registration,
      tax report, export rebate, and import and export data for the last year.
      Party A has to guarantee the authenticity, integrity and effectiveness of
      the information submitted. 

            

    

    
      	
                
      

            	
               9.3 

            	
               Party
      A shall open a bank account at China Construction Bank, and have all the
      transactions under this contract processed through that
      account. 

            

    

    
      	
                
      

            	
               9.4 

            	
               Party
      A shall actively cooperate with Party B to inspect and supervise the
      business operation, financial activities, and the use of loans under this
      contract. 

            

    

    
    

    
    

    
    

    
    

    
    

     

    
      
        
        

      

      
         3 

        
          

        

      

      
        
        

      

    

    
      	
            	
               9.5 

            	
               Party
      A shall use the loans for a purpose agreed by both
      parties. 

            

      
        	
                  
      

              	
                 9.6 

              	
                 Party
      A shall pay off principle and interest on the due date agreed by both
      parties. 

              

      

      
        	
                  
      

              	
                 9.7 

              	
                 Party
      A shall not surreptitiously withdraw funds or transfer capital to evade
      the debt. 

              

      

      
        	
                  
      

              	
                 9.8 

              	
                 During
      the term of this contract, Party A shall get the permission of Party B
      before making a guarantee (which may affect the liquidity of Party A) for
      a third party. 

              

      

      
        	
                  
      

              	
                 9.9 

              	
                 Party
      A shall promptly provide a new recognized guarantee to Party B when the
      following situations happen to the guarantor: shutting down of production
      or business, cancellation of business registration, cancellation of
      business license, bankruptcy, loss of business, losing some
      or all of the capabilities as a guarantor. When the value of the
      collateral or pledge of this contract is reduced, lost or destroyed, Party
      A shall also provide a new recognized guarantee to Party B
      promptly. 

              

      

    

    
      	   	
               9.10 

            	
               Party
      A shall promptly inform Party B by written notice when there are changes
      in corporate name, legal representative (person in charge), address,
      business scope, or registered
capital. 

            

    

    
      	   	
               9.11 

            	
               When
      situations (which may be detrimental to the rights of Party B) such as
      contracting, leasing, joint-stock reforming, affiliation, merging,
      acquisition, separation, equity participation, business rectification,
      applying for dissolution happen to Party A , Party A shall inform Party B
      within 30
      working days by written notice, and Party A shall pay-off the
      outstanding debt and implement guarantee obligations under the
      requirements of Party B. 

            

    

    
      	   	
               9.12 

            	
               When
      situations (which may badly affect the liquidity of Party A) such as
      shutting down of production or business, suspension of business
      registration, revocation of license, involvement in illegal activates or
      major lawsuits, having serious difficulties in production and operation or
      financial deterioration happen to Party A, Party A shall inform Party B
      immediately by written notice, and Party A shall pay off the outstanding
      debt and implement guarantee obligations under the requirements of Party
      B. 

            

    

    
      	   	
               9.13 

            	
               Legal
      fees, insurance, evaluation fees, registration fees, custody fees,
      identification fees, and notary fees under this contract shall be paid by
      Party A. 

            

    

    
      	   	
               9.14 

            	
               If
      Party A is a group company, Party A shall submit a timely report on
      transactions whose amount is above 10% of the net assets. The report shall
      include: (1) relationships between the transaction parties; (2)
      transaction items and the nature of the transaction; (3) transaction
      amount and corresponding proportion; (4) pricing policies (including
      transactions which are not money related or are just a token
      payment). 

            

    

    
      	   	
               9.15 

            	
               If
      necessary, Party B has the right to participate in foreign investment,
      asset restructuring and other major issues of Party A, in order to
      effectively implement the repayment and guarantee its
      rights. 

            

    

    

    
      	
               10 

            	
               Rights
      and obligations of Party B 

            

    

    
      	   	
               10.1 

            	
               Party
      B has the right to know the business operation, financial activities, tax
      affairs, and import and export activities of Party A, and Party B has the
      right to request for relevant information from Party
  A. 

            

    

    
      	   	
               10.2 

            	
               When
      there are changes in the export rebate law, or Party A has a decline in
      credit, Party B has the right to adjust or terminate the
      loan. 

            

    

    
      	   	
               10.3 

            	
               Party
      B has the right to recover any designated collection from the bank account
      of Party A at China Construction
Bank. 

            

    

    
      	   	
               10.4 

            	
               Party
      B shall provide the loan in accordance with the time and amount under this
      contract, but Party B shall not be liable for the delay caused by Party
      A. 

            

    

    
      	   	
               10.5 

            	
               Party
      B shall not disclose any of the financial information, or business
      operation information of Party A, unless the disclosure is required by
      laws and regulations. 

            

    

    
       

      
        
        

      

      
         4 

        
          

        

      

      
        
        

      

    

    
      

      
        	
                 11 

              	
                 Liabilities 

              

      

      
        	   	
                 11.1 

              	
                 Breach
      of Contract 

              

      

      
        	
                  
      

              	
                 11.1.1 

              	
                 Breach
      of Contract by Party A shall
mean: 

              

      

      
        	
                  
      

              	
                 11.1.1.1 

              	
                 Party
      A does not provide authentic, complete, valid financial information,
      business operation information or other
  information. 

              

      

      
        	
                  
      

              	
                 11.1.1.2 

              	
                 Party
      A does not use the loan for the stipulated
  purpose. 

              

      

    

    
      	
                
      

            	
               11.1.1.3 

            	
               Party
      A does not pay off loan principle and interest on
  time. 

            

    

    
      	
                
      

            	
               11.1.1.4 

            	
               Party
      A refuses to allow or impedes Party B’s ability to supervise and inspect
      the use of the loan. 

            

    

    
      	
                
      

            	
               11.1.1.5 

            	
               Party
      A transfers capital or withdraws funds to evade the debt to Party
      B. 

            

    

    
      	
                
      

            	
               11.1.1.6 

            	
               Party
      A cannot pay-off the loan because of business or financial deterioration,
      or Party A is involved or about to be involved in a significant
      litigation, arbitration, or other legal
  disputes. 

            

    

    
      	
                
      

            	
               11.1.1.7 

            	
               Party
      A has other debts, which have been or are likely to affect Party A to
      fulfill obligations to Party B. 

            

    

    
      	
                
      

            	
               11.1.1.8 

            	
               Party
      A does not honor other debts at maturity to China Construction
      Bank. 

            

    

    
      	
                
      

            	
               11.1.1.9 

            	
               Party
      A is having contracting, leasing, affiliation, merging, separation, equity
      participation, joint-stock reforming or other changes of business
      operation, which have been or are likely to be detrimental to the rights
      of Party B. 

            

    

    
      	
                
      

            	
               11.1.1.10 

            	
               Party
      A has bad records like tax arrearages, tax evasion, tax fraud, tax
      avoidance, or Party A violates the Foreign Exchange Control policies or
      customs regulations. 

            

    

    
      	
                
      

            	
               11.1.1.11 

            	
               Party
      A has changes in shareholders or equity, which have been or are likely to
      be detrimental to the rights of Party
B. 

            

    

    
      	
                
      

            	
               11.1.1.12 

            	
               Other
      situations that may be detrimental to the rights of Party
      B. 

            

    

    
      	
                
      

            	
               11.1.1.13 

            	
               Party
      A violates other provisions in this
  contract. 

            

    

     

    
      

      
        	
                  
      

              	
                 11.1.2 

              	
                
                   When
      the following situations happen to the guarantor, and Party A does not
      provide a new guarantee under the requirements of Party B, it constitutes
      a breach of contract of Party
A: 

                

              

      

      
      

    

    
    

    
      	
                
      

            	
               11.1.2.1 

            	
               The
      guarantor is having contracting, leasing, affiliation, merging,
      separation, equity participation, joint-stock reforming, bankruptcy,
      revoking, or other situations that affect the ability of the
      guarantor. 

            

    

    
      	
                
      

            	
               11.1.2.2 

            	
               The
      guarantor provides a third party with a guarantee, which is beyond the
      ability of the guarantor. 

            

    

    
      	
                
      

            	
               11.1.2.3 

            	
               The
      guarantor has lost or is likely to lose his guarantee
      ability. 

            

    

    
      	
                
      

            	
               11.1.2.4 

            	
               Other
      violations against the guarantee
contract. 

            

    

    

    
      	
                
      

            	
               11.1.3 

            	
               When
      any of the following situations happen to the mortgagor, and Party A does
      not provide a new guarantee under the requirements of Party B, it
      constitutes a breach of contract of Party
A: 

            

    

    
      	
                
      

            	
               11.1.3.1 

            	
               The
      mortgagor does not insure the collateral, or the mortgagor does not use
      the insurance indemnity in accordance with the mortgage
      contract. 

            

    

    
    

    
    

    
    

    
    

    
    

     

    
      
        
        

      

      
         5 

        
          

        

      

      
        
        

      

    

    
      

      
      

      
      

      
        	
                  
      

              	
                 11.1.3.2 

              	
                 When
      the collateral value is reduced or destructed by a third party, the
      mortgagor does not use the insurance indemnity in accordance with the
      mortgage contract. 

              

      

      
        	
                  
      

              	
                 11.1.3.3 

              	
                 The
      mortgagor transfers, leases, or re-mortgage assets without the written
      consent of Party B. 

              

      

      
        	
                  
      

              	
                 11.1.3.4 

              	
                 The
      mortgagor disposes of the collateral without the written consent of Party
      B, and the mortgagor does not use the earnings in accordance with the
      mortgage contract. 

              

      

      
        	
                  
      

              	
                 11.1.3.5 

              	
                 The
      collateral is reduced, lost or destroyed, but the mortgagor does not
      recover the value of the collateral in time, or provide other recognized
      guarantee. 

              

      

      
        	
                  
      

              	
                 11.1.3.6 

              	
                 Other
      violations against the mortgage
contract. 

              

      

       

    

    
      	
                
      

            	
               11.1.4 

            	
               When
      the following situations happen to the pledgor, and Party A does not
      provide a new guarantee under the requirements of Party B, it constitutes
      a breach of contract of Party
A: 

            

    

    
      	
                
      

            	
               11.1.4.1 

            	
               The
      pledgor does not insure the pledge, or the pledgor does not use the
      insurance indemnity in accordance with the pledge
      contract. 

            

    

    
      	
                
      

            	
               11.1.4.2 

            	
               When
      the pledge value is reduced or destroyed by a third party and the pledgor
      does not use the insurance indemnity in accordance with the pledge
      contract. 

            

    

    
      	
                
      

            	
               11.1.4.3 

            	
               The
      pledgor disposes of the pledge without the written consent of Party B, and
      the pledgor does not use the earnings in accordance with the pledge
      contract. 

            

    

    
      	
                
      

            	
               11.1.4.4 

            	
               The
      pledge is reduced, lost or destroyed, and the pledgor does not recover the
      value of the collateral in time, or provide other recognized
      guarantee. 

            

    

    
      	
                
      

            	
               11.1.4.5 

            	
               Other
      violations against the pledge
contract. 

            

    

    

    
      	
                
      

            	
               11.1.5 

            	
               When
      the guarantee contract does not enter into force, the guarantor loses some
      or all of its abilities, or the guarantor refuses to fulfill its
      obligations and Party A does not provide a new guarantee under the
      requirements of Party B, this will be deemed as breach of contract by
      Party A. 

            

    

    

    
      	   	
               11.2 

            	
               Remedial
      Measures 

            

    

     Party
B has the right to exercise one or more of the following measures when the
circumstances of above Chapter
11.1 happen: 

    
      	
                
      

            	
               11.2.1 

            	
               Party
      B shall adjust or cancel the loan, or modify the loan
      term. 

            

    

    
      	
                
      

            	
               11.2.2 

            	
               Terminate
      the loan and request repayment
immediately. 

            

    

    
      	
                
      

            	
               11.2.3 

            	
               Charge
      a penalty, which shall be 144.54 % of the
      principle balance. 

            

    

    
      	
                
      

            	
               11.2.4 

            	
               For
      an undue loan, Party B shall charge compound interest in accordance with
      the contract. For an overdue loan (including loans terminated in advance),
      Party B shall charge defaut interest and compound interest in accordance
      with the contract. 

            

    

    
      	
                
      

            	
               11.2.5 

            	
               If
      Party A does not use the loan for the stipulated purpose, Party B shall
      charge defaut interest and compound interest for the used loan in
      accordance with the contract. 

            

    

    
      	
                
      

            	
               11.2.6 

            	
               Party
      B has the right to recover any designated collection of this contract from
      the bank account of Party A at China Construction
  Bank. 

            

    

    
      	
                
      

            	
               11.2.7 

            	
               Party
      B has the right to exercise the
guarantee. 

            

    

    
      	
                
      

            	
               11.2.8 

            	
               Party
      B has the right to request for a new recognized
    guarantee. 

            

    

    
      	
                
      

            	
               11.2.9 

            	
               Party
      B has the right to terminate this
contract. 

            

    

    
       

      
        
        

      

      
         6 

        
          

        

      

      
        
        

      

    

    
      

      
        	
                 12 

              	
                 Bank
      In Charge 

              

      

       Party
B authorizes Cheng Dong Branch of CCB as the bank in charge. After the entry
into force of this contract, Cheng Dong Branch has the right to perform the
contract (in whole or in part), debt collection, litigation or arbitration,
implementation, and chop on related materials or documents. 

      

      
        	
                 13 

              	
                 Amendment
      to the Contract 

              

      

       Any
amendment to this contract shall be agreed in writting by both parties, unless
otherwise agreed. 

      

      
        	
                 14 

              	
                 Other
      issues agreed                                   . 

              

      

       

    

    
      	
               15 

            	
               Dispute
      settlement methods 

            

    

     During
the term of the contract, all controversy and dispute shall be dealt with
through negotiation. If the two parties are unable to reach an agreement, either
Party can institute legal proceedings in the People’s Court at the place of
Party B. 

     In the
litigation or arbitration, terms or conditions that are not controversial shall
continue to be fulfilled. 

    

    
      	
               16 

            	
               Effective
      conditions of the contract 

            

    

     This
contract shall enter into force after the legal representative (primary person
responsible) or authorized person of both parties sign and chop on the
contract. 

    

    
      	
               17 

            	
               Agreement
      documents 

            

    

     This
Agreement will be executed in quadruplicate. 

     All
the legal documents under this contract (including but not limited to:
applications, notices, warranties or the like) are an integral part of this
contract. 

    

    
      	
               18 

            	
               Acknowledgements 

            

    

    
      	   	
               18.1 

            	
               Party
      A is well aware of the business line and authorization of Party
      B. 

            

    

    
      	   	
               18.2 

            	
               Party
      A has read through this contract. Party B has made explanations on
      corresponding provisions. Party A is well aware of meanings of the
      contract, and the legal
consequences. 

            

    

    
      	   	
               18.3 

            	
               Party
      A has the right to sign this
contract. 

            

    

    

     Signature
Page Follows 

     

     

      7

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