Document:

exv10w20

Exhibit 10.20

THIS NOTE AND THE SECURITIES ISSUABLE UPON THE CONVERSION HEREOF HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR APPLICABLE STATE SECURITIES
LAWS. THEY MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE (A) ABSENCE OF (I) A
REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER THE SECURITIES ACT OR (II) AN
OPINION OF COUNSEL TO THE HOLDER THAT SUCH REGISTRATION IS NOT REQUIRED OR (B) UNLESS SOLD PURSUANT
TO RULE 144 OR RULE 144A OF THE SECURITIES ACT.

SECURED CONVERTIBLE PROMISSORY NOTE

			
	 	 	 
	US$5,000,000
	 	August 13, 2008

     FOR VALUE RECEIVED, Eastern Well Holdings Limited  a company organized and existing under
the laws of Hong Kong Special Administrative Region (“Borrower”), hereby promises to pay to Carlyle
Asia Growth Partners IV, L.P., a company organized and existing under the laws of the Cayman
Islands (“Holder”) or its registered assigns or successors in interest or order, the sum of Five
Million U.S. Dollars (US$5,000,000) plus any interest that has been compounded thereon pursuant to
Section 2.1 (“Principal Amount”), plus accrued interest (“Entire Outstanding Amount”), on the
Maturity Date (as defined below) in accordance with Section 3.1, unless this Note is earlier offset
pursuant to Section 4.1.

     This Note is issued in connection with that certain Letter of Intent for Investment and
Cooperation  dated July 28, 2008 by and among the Borrower and the Holder (the “Letter of
Intent”), which Letter of Intent contemplates a proposed issuance by the Borrower of certain
convertible notes (“Convertible Notes”) to the Holder, subject to the terms and conditions set
forth therein (the “Contemplated Transaction”).

     This Note is secured by a security interest granted to the Holder pursuant to a Share Mortgage
(the “Share Mortgage”) dated August 13, 2008 between the Holder and Mr. Sun Kwok Ping  (the
“Founder”), and guaranteed by the Founder pursuant to a Guarantee (the “Guarantee”) dated August
13, 2008 between the Holder and the Founder.

     The following terms shall apply to this Note:

ARTICLE I

CERTAIN DEFINITIONS

     1.1 As used in this Note, the following terms, unless the context otherwise requires, have
the following meanings:

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          (a) “Affiliate” means, in respect of any person, any other person which controls, is
controlled by, or is under common control with, such person. For the purposes of this definition,
“control,” when used with respect to any person, means the power to direct the management and
policies of such person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, and the terms “controls” or “controlled” have meanings
correlative to the foregoing.

          (b) “Borrower Party” means any of the Borrower, the Founder and all other entities (i) that
are directly or indirectly controlled by the Borrower or the Founder or (ii) whose results of
operations and financial conditions would be consolidated with those of the Borrower for financial
reporting purposes in accordance with PRC GAAP, including without limitation, Shanghai Nuobo
Trading Co., Ltd.  and Jiangxi Nobao Electro Co.,
Ltd. , each of which a company organized and
existing under the laws of the People’s Republic of China. The Borrower Parties as of the date
hereof are set forth on Schedule 1 hereto.

          (c) “Business Day” means a weekday that the banks in the Hong Kong Special Administrative
Region and the People’s Republic of China are generally open for business.

          (d) “Indebtedness” means, with respect to any person or entity, whether recourse is to all or
a portion of the assets of such person or entity, and whether or not contingent, (i) any obligation
of such person or entity for money borrowed, (ii) any obligation of such person or entity evidenced
by bonds, debentures, notes, guarantees or other similar instruments, including, without
limitation, any such obligations incurred in connection with the acquisition of properties or
businesses, excluding trade accounts payable made in the ordinary course of business, (iii) any
reimbursement obligation of such person or entity with respect to letters of credit, bankers’
acceptances or similar facilities issued for the account of such person or entity, (iv) any
obligation of such person or entity issued or assumed as the deferred purchase price of properties
or services (but excluding trade accounts payable or accrued liabilities arising in the ordinary
course of business), (v) any obligations of such person or entity under or in respect of
capitalized lease, (vi) the principal amount of any interest hedging obligations or exchange rate
swap obligations of such person or entity at the time of determination, (vii) any attributable
indebtedness with respect to any sale and leaseback transaction to which such person or entity is a
party and (viii) any obligation of the type referred to in clauses (i) through (vii) of this
definition of another person or entity and all dividends and distributions of another person or
entity the payment of which, in either case, such person or entity has guaranteed or is responsible
or liable, directly or indirectly, as obligor, guarantor or otherwise.

          (e) “Lien”  means any mortgage, deed of trust, pledge, hypothecation, assignment,
encumbrance, lien (statutory or other) or preference, priority, right or other security interest or
preferential arrangement of any kind or nature whatsoever.

          (f) “Liquidation Event” means a liquidation pursuant to a filing of a petition for bankruptcy
under applicable law or any other insolvency or debtor’s relief, an assignment for the benefit of
creditors, or a voluntary or involuntary liquidation, dissolution or winding up of the affairs of
the Borrower.

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          (g) “Material Adverse Effect” means any change, event or circumstance that is or would have a
material adverse effect on (i) the business, properties or condition (financial or otherwise),
results of operations or prospects of any Borrower Party individually or taken as a whole, (ii)
the validity or enforceability of this Note and any agreement contemplated by the Note Documents
against any party thereto other than the Holder, (iii) the ability of any Borrower Party to
perform its obligations under the Note Documents or in connection with the transactions
contemplated under the Note Documents, and (iv) the decision by a reasonable investor whether to
consummate the Contemplated Transaction.

          (h) “Note Documents” means this Note, the Share Mortgage and the Guarantee.

          (i) “PRC GAAP” means generally accepted accounting principles in the People’s Republic of
China.

          (j) “Restricted Payment” means any dividend or other distribution (whether in cash, securities
or other property) with respect to any capital stock or other equity interest of  any Borrower
Party, or any payment (whether in cash, securities or other property), including any sinking fund
or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation
or termination of any such capital stock or other equity interest or of any option, warrant or
other right to acquire any such capital stock or other equity interest.

          (k) “Solvent” means, with respect to any person, that as of the date of determination both
(i) (a) the then fair saleable value of the property of such person is (x) greater than the total
amount of liabilities (including contingent liabilities) of such person and (y) not less than the
amount that will be required to pay the probable liabilities on such person’s then existing debts
as they become absolute and matured considering all financing alternatives and potential asset
sales reasonably available to such person; (b) such person’s capital is not unreasonably small in
relation to its business or any contemplated or undertaken transaction; and (c) such person does
not intend to incur, or believe (nor should it reasonably believe) that it will incur, debts
beyond its ability to pay such debts as they become due; and (ii) such person is “solvent” within
the meaning given that term and similar terms under applicable laws relating to fraudulent
transfers and conveyances. For purposes of this definition, the amount of any contingent liability
at any time shall be computed as the amount that, in light of all of the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to become an actual
or matured liability.

ARTICLE II

INTEREST

     2.1 Interest Rate. Unless this Note is offset in accordance with Section 4.1,
interest on the outstanding Principal Amount of this Note shall accrue from the date of this Note
and shall be payable in arrears together with, at the same time and in the same manner as payment
of, the Principal Amount (whether on Maturity Date or earlier by acceleration), until the date on
which this Note is repaid in full. Subject to Section 5.2, interest on the outstanding Principal
Amount of this Note shall accrue at an annual rate equal to eight percent (8%) on the outstanding

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Principal Amount from the date hereof to the date that is ninety (90) days after the Notice Date
(as defined below) and thereafter at an annual rate equal to ten percent (10%) on the outstanding
Principal Amount (the “Interest Rate”). Interest on the outstanding Principal Amount of the Note
shall be computed on the basis of the actual number of days elapsed and a year of three hundred and
sixty (360) days.

ARTICLE III

PAYMENTS

     3.1 Payment on Demand. Subject to Section 4.1, the Entire Outstanding Amount shall be
immediately due and payable, without presentment, further notice, protest, grace period or other
requirements of any kind, all of which hereby are expressly waived by the Borrower, on the date
that is one-hundred-eighty (180) days after the date of a written notice (the “Notice Date”) given
by the Holder to the Borrower requesting payment of the Entire Outstanding Amount, which notice may
be given at any time if the Holder decides, in its sole discretion, not to consummate the
Contemplated Transaction (the “Maturity Date”). On the Maturity Date, the Borrower shall pay the
Entire Outstanding Amount to the Holder in U.S. Dollars, by wire transfer of immediately available
funds to an account designated in writing by the Holder.

     3.2 No Set-off or Prepayment. Subject to Section 4.1, all payments of the Entire
Outstanding Amount shall be made to the Holder without set-off or counterclaim and free and clear
of and without deduction of any kind. Subject to Section 4.1, this Note may not be prepaid without
the prior written consent of the Holder.

ARTICLE IV

OFFSET; CONTEMPLATED TRANSACTION

     4.1 Note Offset. In the event of and conditioned upon the closing of the sale and
purchase of the Convertible Notes in the Contemplated Transaction, the Borrower shall offset the
purchase price of the Convertible Notes in the Contemplated Transaction by the Principal Amount
then outstanding and this Note and all obligations hereunder shall thereafter be deemed satisfied
and paid (it being understood that no interest shall be deemed to have accrued on this Note if this
Note is offset in the foregoing manner).

     4.2 Taxes. The Borrower will pay any and all original issuance, transfer, stamp and
other similar taxes that may be payable in respect of the issue or delivery of the
Convertible Notes pursuant to the offset of this Note under Section 4.1.

     4.3 Contemplated Transaction. Notwithstanding anything to the contrary contained in
the Letter of Intent, for so long as this Note remains outstanding or until the Notice Date, the
Holder shall be entitled (but not obligated) to invest in the Borrower by consummating the
Contemplated Transaction substantially as described in the Letter of Intent, and the exclusivity
provision set forth in the Letter of Intent under the paragraph with the heading  shall continue
to be effective and binding on the Borrower (except that the expiration of the exclusivity as
provided in the Letter of Intent shall not apply).

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ARTICLE V

EVENTS OF DEFAULT

     5.1 Events of Default. The occurrence of any of the following constitutes an event of
default under this Note if such event is not remedied (provided that such event is capable of being
remedied) within five (5) days of its occurrence (“Event of Default”):

          (a) Failure to Pay Principal or Interest. The Borrower fails to pay the Principal
Amount, interest or other sum due under this Note when due.

          (b) Breach of Covenant. The Borrower breaches any covenant or other term or condition
under the Note Documents.

          (c) Breach of Representations and Warranties. Any representation or
warranty made by any Borrower Party in the Note Documents shall be false or misleading.

          (d) Receiver or Trustee. Any Borrower Party shall make an assignment for the benefit
of creditors, or apply for or consent to the appointment of a receiver or trustee for them or for a
substantial part of their property or business; or such a receiver or trustee shall otherwise be
appointed.

          (e) Judgments. Any money judgment, writ or similar final process shall be entered or
filed against any Borrower Party or any of its property or other assets, and shall remain
unvacated, unbonded, unappealed, unsatisfied, or unstayed for a period of thirty (30) days.

          (f) Bankruptcy. Bankruptcy, insolvency, reorganization, or liquidation
proceedings or other proceedings or relief under any bankruptcy law or any law, or the issuance of
any notice in relation to such event, shall be instituted by or against any Borrower Party.

          (g) Cross Default. A default by any Borrower Party of any term, covenant,
representation, warranty or undertaking of any agreement to which such Borrower Party is a party or
by which any of such Borrower Party’s assets are bound, or the occurrence of any event or condition
under any Indebtedness of any Borrower Party that results in the acceleration of the maturity of or
default under such Indebtedness, where such acceleration or default, if capable of remedy, is not
cured within the applicable notice or cure period.

          (h) Moratorium and Nationalization. (a) The confiscation, expropriation or
nationalization by any governmental authority of any property or assets of any Borrower Party; or
(b) the revocation or repudiation by any governmental authority of any previously granted
governmental permits or licenses to any Borrower Party or that affect the operations of its
business; or (c) the imposition or introduction of discriminatory taxes, tariffs, royalties,
customs or excise duties imposed on any Borrower Party, or the discriminatory withdrawal or
suspension of material privileges or specifically granted material rights of a fiscal nature.

          (i) Security Interest. The Share Mortgage, the Guarantee or any of the
security provided for therein shall, at any time, cease to be in full force and effect for any
reason

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other than the satisfaction in full of all obligations under this Note and discharge of this Note
or any security interest created thereunder shall be declared invalid or unenforceable or any
Borrower Party under the Share Mortgage or the Guarantee shall assert, in any pleading in any court
of competent jurisdiction, that any such security interest is invalid or unenforceable.

          (j) Material Adverse Effect. The occurrence of a Material Adverse Effect.

     5.2 Acceleration. Upon the occurrence and during the continuance of an Event of
Default, unless waived by the Holder in writing, the Entire Outstanding Amount shall be immediately
due and payable, without presentment, further notice, protest, grace period or other requirements
of any kind, all of which hereby are expressly waived by the Borrower. Following the occurrence and
during the continuance of an Event of Default, the interest rate on this Note shall be thirteen
percent (13%) on the outstanding Principal Amount, compounded annually. Upon the occurrence and
during the continuance of an Event of Default, the Holder may exercise all rights and remedies
under this Note, the Share Mortgage, the Guarantee or applicable law.

ARTICLE VI

SENIOR STATUS OF NOTE

     6.1 Senior Status of Note. The obligations of the Borrower under this Note shall rank
senior to all other Indebtedness of the Borrower, whether now or hereinafter existing. Upon any
Liquidation Event, the Holder will be entitled to receive, before any distribution or payment is
made upon, or set apart with respect to, any other indebtedness of the Borrower or any class of
capital stock or the Borrower, the Entire Outstanding Amount.

ARTICLE VII

REPRESENTATIONS AND WARRANTIES

     As a material inducement to the Holder to purchase this Note, the Borrower hereby represents,
warrants and covenants to the Holder, on behalf of itself and the other Borrower Parties, that:

     7.1 Organization, Good Standing and Qualification. Each Borrower Party is duly
organized, validly existing and in good standing under the laws of its place of organization, has
all requisite corporate power and authority to carry on its business and is duly qualified to
transact business and is in good standing in each jurisdiction in which such qualification is
required by applicable law.

     7.2 Authorization. Each party to any Note Document (other than the Holder) has duly
executed and delivered such Note Document. All corporate action on the part of each party to any
Note Document (other than the Holder), its officers, directors and shareholders necessary for the
authorization, execution and delivery of such Note Document, the performance of all obligations of
each party (other than the Holder) under such Note Document and the authorization, issuance and
delivery of the Note, has been taken, and the Note Documents, when executed and delivered by the
respective parties thereto (other than the Holder), shall constitute valid and legally binding
obligations of such respective parties, enforceable against such

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respective parties in accordance with their terms except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance, and other laws of general
application affecting enforcement of creditors’ rights generally, and as limited by laws relating
to the availability of specific performance, injunctive relief or other equitable remedies.

     7.3 No Violation. Neither the execution and delivery of the Note Documents by the
parties thereto (other than the Holder) nor the performance by such parties of their obligations
under the Note Documents will: (i) violate any provisions of the memorandum of association,
articles of association, business license or any other constitutional documents of any such party;
(ii) with or without the giving of notice or the passage of time, or both, violate, or be in
conflict with, or constitute a default under, or cause or permit the termination or the
acceleration of the maturity of, any Indebtedness of any such party; (iii) require notice to or the
consent of any third party to any agreement or commitment to which such party is a party, or by
which it or its properties is bound or subject; (iv) result in the creation or imposition of any
Lien upon any property or assets of any such party under any agreement or commitment to which it is
a party, or by which it or the properties thereof are bound or subject; or (v) violate any
applicable law.

     7.4 Governmental Consents. No consent, approval, order or authorization of, or
registration, qualification, designation, declaration or filing with, any federal, state or local
governmental authority on the part of any of the parties to the Note Documents (other than the
Holder) is required in connection with the offer, sale or issuance of the Note or the
consummation of any other transactions contemplated by the Note Documents.

     7.5  Capitalization; Subsidiaries.

          (a) Schedule 1 to this Note lists each Borrower Party, and correctly sets forth the
capitalization of such Borrower Party, the nature of legal entity which the Borrower Party
constitutes, the jurisdiction in which the Borrower Party was organized, a list of all outstanding
securities of the Borrower Party and the holders thereof and a brief summary of the Borrower
Party’s principal business.

          (b) There are no outstanding options, warrants, rights (including conversion or preemptive
rights and rights of first refusal or similar rights) or agreements, orally or in writing, for the
purchase or acquisition from any Borrower Party of any of its securities or any other agreements to
participate in the profits of any Borrower Party. There are no outstanding rights or obligations of
any Borrower Party to repurchase or redeem any of its securities. No Borrower Party is a party or
subject to any contract that affects or relates to the voting or giving of written consents with
respect to, or the right to cause the registration of, any share or other security of any Borrower
Party.

          (c) In respect of each Borrower Party that is organized and existing under the laws of the
People’s Republic of China, except as disclosed in Schedule 1 hereto, the full amount of
the registered capital of such Borrower Party has been contributed, such contribution has been duly
verified by a certified accountant registered in the People’s Republic of China and the accounting
firm employing such accountant, and the report of the certified accountant evidencing such
verification has been registered with the relevant governmental authority.

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          (d) Except as disclosed in Schedule 1 hereto, none of the Borrower Parties has any
subsidiary, or is a participant in any joint venture, partnership or other similar arrangement, or
otherwise owns (directly or indirectly) any share or interest in any other entity.

          (e) No debt or equity securities of any Borrower Party is subject to any Lien (other than
pursuant to the Note Documents).

     7.6 Valid Issuance of Securities. This Note has been duly and validly issued, fully-paid and nonassessable. The offer, issue and sale of this Note is exempt from the registration
and prospectus delivery requirements of the U.S. Securities Act of 1933, as amended and have been
registered or qualified (or are exempt from registration and qualification) under the registration,
permit or qualification requirements of all applicable state securities laws within the time
periods required by such laws. Neither the Borrower nor any authorized agent acting on its behalf
will take any action hereafter that would cause the loss of such exemptions.

     7.7 Financial Statements.

          (a) The Borrower has furnished to the Holder the unaudited consolidated balance sheets of the
Borrower as of the end of each monthly period from January 1, 2008 to July 31, 2008, the related
unaudited consolidated statements of operations, shareholders’ equity and cash flows for each
monthly period from January 1, 2008 to July 31, 2008 (“Financial Statements”).

          (b) The Financial Statements were prepared in accordance with PRC GAAP, are true, correct and
complete in all respects, and fairly and accurately present the financial position of the Borrower
on the dates of such statements and the results of the operations of the Borrower for the periods
covered thereby. The Financial Statements show all indebtedness, obligations and other
liabilities, direct or contingent, of the Borrower as of the respective date thereof, including
liabilities for any taxes, commitments and indebtedness.

          (c) All of the accounts receivable owing to any Borrower Party, including without limitation
all accounts receivable set forth on the Financial Statements, constitute valid and enforceable
claims, and are good and collectible in the ordinary course of business, and, net of any reserves
shown on the Financial Statements (which reserves are adequate and were calculated on a basis
consistent with PRC GAAP), no further goods or services are required to be provided in order to
complete the sales and to entitle any Borrower Party to collect in full. There are no material
contingent or asserted claims, refusals to pay, or other rights of set-off with respect to any
Borrower Party to the knowledge of any of the Borrower Parties after due inquiry.

     7.8 Absence of Undisclosed Liabilities. None of the Borrower Parties has, except as
and to the extent reflected or reserved against in the Financial Statements, had any material
accrued or contingent liability or liabilities or obligations (contractual or otherwise) arising
out of any transaction or state of facts existing prior to or on the date hereof or arising other
than in the ordinary course of business since July 31, 2008 (whether such liability is accrued, to
become due, contingent or otherwise) in excess of RMB1,000,000 in the aggregate.

     7.9 Use of Proceeds. The Borrower will apply the Principal Amount to acquire assets,
expand its business and use as working capital. No part of Principal Amount will be used,

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directly or indirectly, for the purpose of repaying any Indebtedness of any Borrower Party or for
the purpose of acquiring or investing in any securities of any entity other than the Borrower
Parties.

     7.10 Litigation. There is no action, suit, proceeding or investigation pending or,
to each of the Borrower Parties’ knowledge, currently threatened against any Borrower Party, nor is
any Borrower Party aware that there is any basis for the foregoing. None of the Borrower Parties is
a party to or subject to the provisions of any order, writ, injunction, judgment or decree of any
court or government agency or instrumentality specifically applicable to it. There is no action,
suit, proceeding or investigation by any of the Borrower Parties currently pending or which any of
the Borrower Parties intends to initiate.

     7.11 Compliance with Law; Permits.

          (a) Each Borrower Party is, and at all times has been, in compliance with any and all law
applicable to it or to the conduct or operation of its business or the ownership or use of any of
its properties and assets (including intellectual and intangible property).

          (b) None of the Borrower Parties is in violation of its business license, or any provision of
its memorandum of association, articles of association, or equivalent constitutional documents as
in effect.

          (c) None of the Borrower Parties is in violation of, or default under any material provision
of any instrument, mortgage, deed of trust, loan, contract, commitment, judgment, decree, order or
obligation to which it is a party or by which it or any of its properties are bound.

     7.12 Solvency. Each Borrower Party is Solvent, and after giving effect to the Note and
obligations being incurred in connection herewith and with other Note Documents, will be Solvent.

     7.13 No Cross-Default Provisions. None of the Borrower Parties is a party to any
agreement relating to Indebtedness which contains a cross-default provision, such that a default
under one agreement would result in a default under another agreement.

     7.14 Taxes. Each of the Borrower Parties has filed or caused to be filed all tax returns that
are required by any government authority to be filed by it, and has paid or caused to be paid all
Taxes shown to be due and payable on such returns or on any assessments received by it, including
payroll taxes, except to the extent subject to a contest maintained in good faith by appropriate
proceedings and with respect to which the applicable Borrower Party has set on its books adequate
reserves with respect thereto.

ARTICLE VIII

COVENANTS

     8.1 Negative Covenants. So long as this Note remains outstanding, without the prior
written consent of the Holder, the Borrower shall not, and shall cause each other Borrower Party

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not to, effect any of the following transactions (other than pursuant to or as contemplated by the
Note Documents):

          (a) Create, incur, assume or suffer to exist any Lien upon any of its properties, revenues or
incomes, whether now owned or hereafter acquired.

          (b) Create, incur, assume or suffer to exist any Indebtedness or prepay, forgive or discharge
in whole or in part any outstanding Indebtedness.

          (c) Guarantee, directly or indirectly, any Indebtedness of any person or entity.

          (d) Convey, sell, lease, assign, transfer or otherwise dispose of any of its material
properties, whether now on or hereafter acquired.

          (e) Enter into with any person or entity any agreement which prohibits or limits the ability
of any Borrower Party to create, incur, assume or suffer to exist any Lien upon any of its
properties, revenues or income, whether now owned or hereafter acquired.

          (f) Merge, dissolve, liquidate, consolidate with or into another entity, or dispose of
(whether in one transaction or in a series of transactions) all or substantially all of its
properties (whether now owned or hereafter acquired) to or in favor of any person or entity.

          (g) Declare or make, directly or indirectly, any Restricted Payment, or incur any obligation
(contingent or otherwise) to do so.

          (h) Engage in any line of business different from design, manufacture, installation,
management and sale of ground source heat pump systems.

          (i) Enter into any transaction of any kind with any shareholders, officers, directors or
affiliates of any Borrower Party or members of their immediate families, whether or not in the
ordinary course of business, other than on fair and reasonable terms as favorable to the respective
Borrower Party as would be obtainable by such Borrower Party in a comparable arm’s length
transaction with a person or entity other than any shareholders, officers, directors or affiliates
of any Borrower Party or members of their immediate families.

          (j) Issue, sell, create or authorize any shares of any class or series of its securities, or
issue, grant or create any warrants, subscriptions, options, convertible securities, or other
commitments to issue shares or other securities that are potentially exchangeable or exercisable
for, or convertible into, shares of its capital stock.

          (k) Initiate any litigation, action, suit, proceeding, claim or arbitration (other than for
the routine collection of accounts receivable) or settle or agree to settle any litigation, action,
suit, proceeding, claim or arbitration.

     8.2 Taxes. Any and all payments by the Borrower Parties hereunder that are made to or
for the benefit of the Holder shall be made free and clear of and without deduction for any and all
present or future taxes, levies, imposts, deductions, charges or withholdings and penalties,
interests and all other liabilities with respect thereto (collectively, “Taxes”), excluding taxes

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imposed on the Holder’s net income or capital and franchise taxes imposed on the Holder by the
jurisdiction under the laws of which the Holder is organized or any political subdivision thereof
(all such nonexcluded Taxes being hereinafter referred to as “Covered Taxes”). If any of the
Borrower Parties shall be required by law to deduct any Covered Taxes from or in respect of any sum
payable hereunder to the Holder, the sum payable shall be increased as may be necessary so that
after making all required deductions of Covered Taxes (including deductions of Covered Taxes
applicable to additional sums payable under this paragraph), the Holder receives an amount equal to
the sum it would have received had no such deductions been made. The Borrower Parties shall make
such deductions and the Borrower Parties shall pay the full amount so deducted to the relevant
taxation authority or other authority in accordance with applicable law. In addition, the Borrower
Parties agree to pay any present or future stamp, documentary, excise, privilege, intangible or
similar levies that arise at any time or from time to time from any payment made under the Note or
from the execution or delivery by the Borrower Parties or from the filing or recording or
maintenance of, or otherwise with respect to the exercise by the Holder of its rights under the
Note (collectively, “Other Taxes”). The Borrower Parties will indemnify the Holder for the full
amount of Covered Taxes imposed on or with respect to amounts payable hereunder and Other Taxes,
and any liability (including penalties, interest and expenses) arising therefrom or with respect
thereto. Payment of this indemnification shall be made within thirty (30) days from the date the
Holder provides the Borrower with a certificate certifying and setting forth in reasonable detail
the calculation thereof as to the amount and type of such Taxes. Any such certificates submitted by
the Holder in good faith to the Borrower shall, absent manifest error, be final, conclusive and
binding on all parties. The obligation of the Borrower Parties under this Section 8.2 shall survive
the payment and termination of this Note. Within thirty (30) days after the Borrower Parties having
received a receipt for payment of Covered Taxes and/or Other Taxes, the Borrower Parties shall
furnish to the Holder, the original or certified copy of a receipt evidencing payment thereof.

ARTICLE IX

MISCELLANEOUS

     9.1 Failure or Indulgence Not Waiver. No failure or delay on the part of Holder
hereof in the exercise of any power, right or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such power, right or privilege preclude
other or further exercise thereof or of any other right, power or privilege. All rights and
remedies existing hereunder are cumulative to, and not exclusive of, any rights or remedies
otherwise available.

     9.2 Notices. Any notice required or permitted pursuant to this Note shall be given in writing
and shall be given either personally or by sending it by next-day or second-day courier service,
fax, electronic mail or similar means to the address as shown on the signature page hereto (or at
such other address as such party may designate by fifteen (15) days’ advance written notice to the
other parties to this Note given in accordance with this section). Where a notice is sent by
next-day or second-day courier service, service of the notice shall be deemed to be effected by
properly addressing, pre-paying and sending by next-day or second-day service through an
internationally-recognized courier a letter containing the notice, with a confirmation of delivery,
and to have been effected at the expiration of two (2) days after the letter containing

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the same is sent as aforesaid. Where a notice is sent by fax or electronic mail, service of the
notice shall be deemed to be effected by properly addressing, and sending such notice through a
transmitting organization, with a written confirmation of delivery, and to have been effected on
the day the same is sent as aforesaid.

     9.3 Amendment Provision. The term “Note” and all reference thereto, as used throughout this
instrument, shall mean this instrument as originally executed, or if later amended or supplemented,
then as so amended or supplemented. Any provision of this Note may be amended, supplemented or
waived, if such amendment, supplement or waiver is in writing and signed by the Borrower and the
Holder.

     9.4 Assignability. This Note shall be binding upon the Borrower and its successors
and assigns, and shall inure to the benefit of the Holder and its successors and assigns. Subject
to applicable laws and regulations, this Note and all rights hereunder may be transferred or
assigned in whole or in part by the Holder to any of its Affiliates prior to the occurrence of any
Event of Default, and upon the occurrence and during the continuance of any Event of Default, to
any person. The Borrower shall assist the Holder in consummating any such transfer or assigned.
The Borrower may not assign this Note without the consent of the Holder. A transfer of this Note
may be effected only by a surrender hereof to the Borrower and the issuance by the Borrower of a
new note or notes in replacement thereof.

     9.5 Cost of Collection. If default is made in the payment of this Note, Borrower shall
pay the Holder hereof reasonable costs of collection, including attorneys’ fees.

     9.6 Governing Law; Rules of Construction. THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF
THE BORROWER HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION, WITHOUT
REGARD TO CONFLICTS OF LAWS PRINCIPLES.

     9.7 Dispute Resolution.

          (a) Any dispute, controversy or claim arising out of, in connection with or relating to this
Note (or the interpretation, breach, termination or validity thereof), shall be first resolved
through consultation between the parties. Such consultation shall begin immediately after one
party hereto has delivered to the other party hereto a written request for such consultation (the
“Request for Consultation”). If within thirty (30) days following the date on which the Request for
Consultation is delivered the dispute cannot be resolved, the dispute shall be submitted to
arbitration upon the request of either party with written notice to the other (the “Arbitration
Notice”).

          (b) The arbitration shall be conducted in Hong Kong under the UNCITRAL Arbitration Rules in
force at the time of the initiation of the arbitration. The arbitration shall be administered by
the Hong Kong International Arbitration Centre (the “HKIAC”) in accordance with the HKIAC
Procedures for the Administration of International Arbitration in force at the time of the
initiation of the arbitration. There shall be a single arbitrator. If the parties do not agree on
the nomination of an arbitrator within thirty (30) days after the delivery of the

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Arbitration Notice to the other party, the appointment shall be made by the Secretary General of
the HKIAC. The arbitration shall be conducted in the English language.

          (c) The arbitrator shall decide any dispute submitted by the parties strictly in accordance
with the substantive law of Hong Kong and shall not apply any other substantive law.

          (d) Each party shall cooperate with the other in making full disclosure of and providing
complete access to all information and documents requested by the other in connection with such
arbitration proceedings, subject only to any doctrine of legal privilege or any confidentiality
obligations binding on such party.

          (e) The costs of arbitration shall be borne by the losing party, unless otherwise determined
by the arbitration tribunal.

          (f) When any dispute occurs and when any dispute is under arbitration, except for the matters
in dispute, the parties shall continue to fulfill their respective obligations and shall be
entitled to exercise their rights under this Note.

          (g) The award of the arbitration tribunal shall be final and binding upon the parties, and the
prevailing party may apply to a court of competent jurisdiction for enforcement of such award.

          (h) Either party shall be entitled to seek preliminary injunctive relief from any court
of competent jurisdiction pending the constitution of the arbitration tribunal.

     9.8 Maximum Payments. Nothing contained herein shall be deemed to establish or
require the payment of a rate of interest or other charges in excess of the maximum permitted by
applicable law. In the event that the rate of interest required to be paid or other charges
hereunder exceed the maximum permitted by such law, any payments in excess of such maximum shall be
credited against amounts owed by the Borrower to the Holder and thus refunded to the Borrower.

     9.9 Construction. Each party acknowledges that its legal counsel participated in the
preparation of this Note and, therefore, stipulates that the rule of construction that ambiguities
are to be resolved against the drafting party shall not be applied in the interpretation of this
Note to favor any party against the other.

     9.10 No Redemption. This Note may not be redeemed or called by the Borrower or any
other person (other than the Holder) without the consent of the Holder.

     9.11 Non-Business Days. Whenever any payment or any action to be made shall be due
on a date other than a Business Day, such payment may be due or action shall be required on the
next succeeding Business Day and, for such payment, such next succeeding Business Day shall be
included in the calculation of the amount of accrued interest payable on such date.

[Remainder of page intentionally left blank.]

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IN WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by an authorized officer
as of the date first set forth above.

	 	 	 	 	 
	 	EASTERN WELL HOLDINGS LIMITED

 	 
	 	By:  	/s/ Sun Kwok Ping
 	 
	 	 	Name:  	Sun Kwok Ping 	 
	 	 	Title:  	Director 	 
	 

Address:

Room 3, 21/F, Fast East Consortium Building

121 Des Voeux Road Central

Hong Kong

Attention: Sun Kwok Ping 

Fax: 00852-21849811

 

 

ACCEPTED AND AGREED:

HOLDER:

	 	 	 	 	 
	 	CARLYLE ASIA GROWTH PARTNERS IV, L.P.

 	 
	 	By:  	/s/ Daniel A. Daniello
 	 
	 	 	Name:  	Daniel A. Daniello 	 
	 	 	Title:  	Director 	 
	 

Address:

c/o Carlyle Asia Investment Advisors Limited

Attention: Nicholas Shao

Fax: 86-21-6103-3220

 

 

SCHEDULE 1

BORROWER PARTIES

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Shareholders and	 	 
	Borrower Party	 	Capitalization	 	Nature	 	Jurisdiction	 	Shareholding	 	Business
	Borrower

	 	HK$10,000 divided
into 10,000
ordinary shares of
HK$1.00 each
	 	Limited liability

company
	 	Hong Kong
	 	Founder: 90%

 Mr. Zhao Genglong: 10%
	 	Holding company
	 
	 	 	 	 	 	 	 	 	 	 
	Founder

	 	N/A
	 	N/A
	 	N/A
	 	N/A
	 	N/A
	 
	 	 	 	 	 	 	 	 	 	 
	Shanghai Nuobo
Trading Co., Ltd.

	 	RMB10,000,000 (paid
up in full)
	 	Limited liability

company
	 	PRC
	 	Borrower: 100%
	 	Wholesale and
commission agency
of heating, air
conditioning and
energy saving
equipment and
accessories; import
and export of such
equipment and
accessories; and
provision of
relevant technical
services
	 
	 	 	 	 	 	 	 	 	 	 
	Jiangxi Nobao
Electro Co., Ltd.

	 	US$13,000,000 (of

which US$540,000

was paid up)
	 	Limited liability

company
	 	PRC
	 	Borrower: 100%
	 	Manufacture,

processing,

assembly,

 

 

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Shareholders and	 	 
	Borrower Party	 	Capitalization	 	Nature	 	Jurisdiction	 	Shareholding	 	Business
	

	 	 	 	 	 	 	 	 	 	research and
development of Nobo
branded electrical
appliance and
parts; agency of
relevant electric
appliance; import
and export; and
distribution of
imported heat pumpsexv10w21

Exhibit 10.21

Execution Copy

THIS NOTE AND THE SECURITIES ISSUABLE UPON THE CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR APPLICABLE STATE SECURITIES LAWS.
THEY MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE (A) ABSENCE OF (I) A
REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER THE SECURITIES ACT OR (II) AN
OPINION OF COUNSEL TO THE HOLDER THAT SUCH REGISTRATION IS NOT REQUIRED OR (B) UNLESS SOLD PURSUANT
TO RULE 144 OR RULE 144A OF THE SECURITIES ACT.

SECURED CONVERTIBLE PROMISSORY NOTE

			
	US$10,000,000
	 	January 22, 2009

     FOR VALUE RECEIVED, EASTERN WELL HOLDINGS LIMITED, a company organized and existing under the
laws of Hong Kong Special Administrative Region (the “Borrower”), hereby promises to pay to CHINA
ENVIRONMENT FUND III, L.P., a limited liability partnership duly organized and existing under the
laws of the Cayman Island (the “Holder”) or its registered assigns or successors in interest or
order, the sum of Ten Million U.S. Dollars (US$10,000,000) (the “Principal Amount”), in lawful
money of the United States of America in immediately available funds, plus any interest that has
been compounded thereon pursuant to Section 2.2 (the “Entire Outstanding Amount”), on the Maturity
Date (as defined below) in accordance with Section 3.1, unless this Note is earlier offset pursuant
to Section 4.1 or converted into Series A preferred shares of the Borrower (the “Series A Preferred
Shares”) in accordance with Article X.

     This Note is issued in connection with that certain Term Sheet (the “Term Sheet”) dated
January 22, 2009 by and among the Borrower, the Holder and Sun Kwok Ping (the “Founder”), which
contemplates a proposed issuance by the Borrower of this secured convertible promissory note (this
“Note”) to the Holder, subject to the terms and conditions set forth herein (the “Contemplated
Transaction”).

     This Note is convertible into Series A Preferred Shares of the Borrower, subject to the terms
and conditions set forth in Article X. Upon the conversion, the Holder will be entitled to all
rights and benefits thereof as provided in the Memorandum and Articles of Association and the
Shareholders Agreement of the Borrower, each as amended from time to time.

     This Note is secured by a security interest granted to the Holder pursuant to a Share Mortgage
(the “Share Mortgage”) between the Holder, the Borrower and the Founder and is guaranteed by the
Founder pursuant to a Guarantee (the “Guarantee”) dated January 22, 2009 between the Holder and the
Founder.

     The following terms shall apply to this Note:

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ARTICLE I

CERTAIN DEFINITIONS

     1.1 As used in this Note, the following terms, unless the context otherwise requires, have
the following meanings:

          (a) “Affiliate” means, in respect of any person, any other person which controls, is
controlled by, or is under common control with, such person. For the purposes of this definition,
“control”, when used with respect to any person, means the power to direct the management and
policies of such person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, and the terms “controls” or “controlled” have meanings
correlative to the foregoing.

          (b) “Borrower Party” means any of the Borrower, the Founder and all other entities (i) that
are directly or indirectly controlled by the Borrower or the Founder or (ii) whose results of
operations and financial conditions would be consolidated with those of the Borrower for financial
reporting purposes in accordance with the PRC GAAP, including without limitation, Shanghai Nobo
Commerce & Trade Co., Ltd.
 and Jiangxi Nobao Electric Co., Ltd.
, each of which a company organized and existing under the laws of
the People’s Republic of China. The Borrower Parties as of the date hereof are set forth on
Schedule 1 hereto.

          (c) “Business Day” means a weekday that the banks in the Hong Kong Special Administrative
Region and the People’s Republic of China are generally open for business.

          (d) “Hong Kong” means Hong Kong Special Administrative Region of the People’s Republic of
China.

          (e) “Indebtedness” means, with respect to any person or entity, whether recourse is to all or
a portion of the assets of such person or entity, and whether or not contingent, (i) any obligation
of such person or entity for money borrowed, (ii) any obligation of such person or entity evidenced
by bonds, debentures, notes, guarantees or other similar instruments, including, without
limitation, any such obligations incurred in connection with the acquisition of properties or
businesses, excluding trade accounts payable made in the ordinary course of business, (iii) any
reimbursement obligation of such person or entity with respect to letters of credit, bankers’
acceptances or similar facilities issued for the account of such person or entity, (iv) any
obligation of such person or entity issued or assumed as the deferred purchase price of properties
or services (but excluding trade accounts payable or accrued liabilities arising in the ordinary
course of business), (v) any obligations of such person or entity under or in respect of
capitalized lease, (vi) the principal amount of any interest hedging obligations or exchange rate
swap obligations of such person or entity at the time of determination, (vii) any attributable
indebtedness with respect to any sale and leaseback transaction to which such person or entity is a
party and (viii) any obligation of the type referred to in clauses (i) through (vii) of this
definition of another person or entity and all dividends and distributions of another person or

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entity the payment of which, in either case, such person or entity has guaranteed or is responsible
or liable, directly or indirectly, as obligor, guarantor or otherwise.

          (f) “Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment, encumbrance,
lien (statutory or other) or preference, priority, right or other security interest or preferential
arrangement of any kind or nature whatsoever.

          (g) “Liquidation Event” means a liquidation pursuant to a filing of a petition for bankruptcy
under applicable law or any other insolvency or debtor’s relief, an assignment for the benefit of
creditors, or a voluntary or involuntary liquidation, dissolution or winding up of the affairs of
the Borrower. A sale of all or substantially all of the assets of the Borrower (and the Borrower
Parties), or a merger or consolidation of the Borrower or its any material subsidiary following
which the shareholders of the Borrower do not own a majority of the outstanding economic interest
or voting power of the surviving entity, or the exclusive license of all or substantially all of
the intellectual property rights of the Borrower (and the Borrower Parties) to third parties, shall
be deemed a liquidation, dissolution or winding up of the Borrower, unless the Holder agree
otherwise.

          (h) “Material Adverse Effect” means any change, event or circumstance that
is or would have a material adverse effect on (i) the business, properties or condition
(financial
or otherwise), results of operations or prospects of any Borrower Party individually or taken
as a
whole, (ii) the validity or enforceability of this Note and any agreement contemplated by the
Note Documents against any party thereto other than the Holder, (iii) the ability of any
Borrower
Party to perform its obligations under the Note Documents or in connection with the
transactions
contemplated under the Note Documents, and (iv) the decision by a reasonable investor whether
to consummate the Contemplated Transaction.

          (i) “Note Documents” means this Note, the Share Mortgage and the
Guarantee.

          (j) “PRC GAAP” means generally accepted accounting principles in the People’s Republic of
China.

          (k) “Restricted Payment” means any dividend or other distribution (whether in cash, securities
or other property) with respect to any capital stock or other equity interest of any Borrower
Party, or any payment (whether in cash, securities or other property), including any sinking fund
or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation
or termination of any such capital stock or other equity interest or of any option, warrant or
other right to acquire any such capital stock or other equity interest.

          (l) “Solvent” means, with respect to any person, that as of the date of determination both (i)
(a) the then fair saleable value of the property of such person is (x) greater than the total
amount of liabilities (including contingent liabilities) of such person and (y) not less than the
amount that will be required to pay the probable liabilities on such person’s then existing debts
as they become absolute and matured considering all financing alternatives and potential asset
sales reasonably available to such person; (b) such person’s capital is not unreasonably small in
relation to its business or any contemplated or undertaken transaction; and

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(c) such person does not intend to incur, or believe (nor should it reasonably believe) that it
will incur, debts beyond its ability to pay such debts as they become due; and (ii) such person is
“solvent” within the meaning given that term and similar terms under applicable laws relating to
fraudulent transfers and conveyances. For purposes of this definition, the amount of any contingent
liability at any time shall be computed as the amount
that, in light of all of the facts and circumstances existing at such time, represents the amount
that can reasonably be expected to become an actual or matured liability.

ARTICLE II

PRINCIPAL AMOUNT AND INTEREST

     2.1 Principal Amount. The Borrower agrees to sell and issue to the Holder, and the
Holder agrees to purchase from the Borrower, this Note in the Principal Amount of up to
US$10,000,000, in accordance with the payment schedule set forth in Section 8 and subject to the
terms and conditions specified in this Note. The purchase price of this Note shall be offset in
accordance with Section 4.1.

     2.2 Interest Rate. Unless this Note is offset in accordance with Section 4.1 or
converted in accordance with Article X, interest on the outstanding Principal Amount of this Note
shall accrue from the date when the Holder pays the relevant Principal Amount to the Borrower
pursuant to Article VIII and shall be payable in arrears together with, at the same time and in the
same manner as payment of, the Principal Amount (whether on Maturity Date or earlier by
acceleration), until the date on which this Note is repaid in full. Subject to Section 5.2,
interest on the outstanding Principal Amount of this Note shall accrue at an annual rate equal to
eight percent (8%) on the outstanding Principal Amount from the date when the Holder pays the
relevant Principal Amount to the Borrower pursuant to Article VIII to the date that is ninety (90)
days after the Notice Date (as defined below) and thereafter at an annual rate equal to ten percent
(10%) on the outstanding Principal Amount (the “Interest Rate”). Interest on the outstanding
Principal Amount of the Note shall be computed on the basis of the actual number of days elapsed
and a year of three hundred and sixty (360) days.

ARTICLE III

REPAYMENT

     3.1 Repayment on Demand. Subject to Section 4.1, unless this Note is converted into
Series A Preferred Shares pursuant to Article X, the Entire Outstanding Amount shall be immediately
due and payable, without presentment, further notice, protest, grace period or other requirements
of any kind, all of which hereby are expressly waived by the Borrower, on the date that is
one-hundred-eighty (180) days after the date of a written notice (the “Notice Date”) given by the
Holder to the Borrower requesting payment of the Entire Outstanding Amount, which notice may be
given at any time if the Holder decides, in its sole discretion, not to consummate the Contemplated
Transaction (the “Maturity Date”). On the Maturity Date, the Borrower shall pay the Entire
Outstanding Amount to the Holder in U.S. Dollars, by wire transfer of immediately available funds
to an account designated in writing by the Holder.

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     3.2 No Set-off or Prepayment. Subject to Section 4.1, all payments of the Entire
Outstanding Amount shall be made to the Holder without set-off or counterclaim and free and clear
of and without deduction of any kind. Subject to Section 4.1, this Note may not be prepaid without
the prior written consent of the Holder.

ARTICLE IV

OFFSET; CONTEMPLATED TRANSACTION

     4.1 Note Offset. In the event of and conditioned upon the closing of the sale and
purchase of this Note in the Contemplated Transaction, the Borrower shall offset the purchase price
of this Note in the Contemplated Transaction by the Principal Amount then outstanding under this
Note and all obligations hereunder shall thereafter be deemed satisfied and paid (it being
understood that no interest shall be deemed to have accrued on this Note if this Note is offset in
the foregoing manner), subject to Article X.

     4.2 Taxes. The Borrower will pay any and all original issuance, transfer, stamp and
other similar taxes that may be payable in respect of the issue or delivery of the Convertible
Notes pursuant to the offset of this Note under Section 4.1.

     4.3 Series A Financing Transactions and Exclusivity. Notwithstanding anything to the
contrary contained in the Term Sheet, for so long as this Note remains outstanding or until the
Notice Date, the Holder shall be entitled (but not obligated) to invest in the Borrower by
consummating the Series A financing transactions substantially as described in the Term Sheet, and
the exclusivity provision set forth in the Term Sheet shall continue to be effective and binding on
the Borrower (except that the expiration of the exclusivity as provided in the Term Sheet shall not
apply).

ARTICLE V

EVENTS OF DEFAULT

     5.1 Events of Default. The occurrence of any of the following constitutes an event of
default under this Note, if such event is not remedied (provided that such event is capable of
being remedied) within five (5) days of its occurrence (“Event of Default”):

          (a) Failure to Pay Principal or Interest. The Borrower fails to pay the Principal
Amount, interest or other sum due under this Note when due.

          (b) Breach of Covenant. The Borrower breaches any covenant or other term or condition
under the Note Documents.

          (c) Breach of Representations and Warranties. Any representation or warranty made
by any Borrower Party in the Note Documents shall be false or misleading.

          (d) Receiver or Trustee. Any Borrower Party shall make an assignment for the benefit
of creditors, or apply for or consent to the appointment of a receiver or trustee for

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them or for a substantial part of their property or business; or such a receiver or trustee shall
otherwise be appointed.

          (e) Judgments. Any money judgment, writ or similar final process shall be entered or
filed against any Borrower Party or any of its property or other assets, and shall remain
unvacated, unbonded, unappealed, unsatisfied, or unstayed for a period of thirty (30) days.

          (f) Bankruptcy. Bankruptcy, insolvency, reorganization, or liquidation proceedings or
other proceedings or relief under any bankruptcy law or any law, or the issuance of any notice in
relation to such event, shall be instituted by or against any Borrower Party.

          (g) Cross Default. A default by any Borrower Party of any term, covenant,
representation, warranty or undertaking of any agreement to which such Borrower Party is a party or
by which any of such Borrower Party’s assets are bound, or the occurrence of any event or condition
under any Indebtedness of any Borrower Party that results in the acceleration of the maturity of or
default under such Indebtedness, where such acceleration or default, if capable of remedy, is not
cured within the applicable notice or cure period.

          (h) Moratorium and Nationalization. (a) The confiscation, expropriation or
nationalization by any governmental authority of any property or assets of any Borrower Party;
or (b) the revocation or repudiation by any governmental authority of any previously granted
governmental permits or licenses to any Borrower Party or that affect the operations of its
business; or (c) the imposition or introduction of discriminatory taxes, tariffs, royalties,
customs
or excise duties imposed on any Borrower Party, or the discriminatory withdrawal or suspension
of material privileges or specifically granted material rights of a fiscal nature.

          (i) Security Interest. The Share Mortgage, the Guarantee or any of the
security provided for therein shall, at any time, cease to be in full force and effect for any
reason
other than the satisfaction in full of all obligations under this Note and discharge of this
Note or
any security interest created thereunder shall be declared invalid or unenforceable or any
Borrower Party under the Share Mortgage or the Guarantee shall assert, in any pleading in any
court of competent jurisdiction, that any such security interest is invalid or unenforceable.

          (j) Material Adverse Effect. The occurrence of a Material Adverse
Effect.

     5.2 Acceleration. Upon the occurrence and during the continuance of an Event of
Default, unless waived by the Holder in writing, the Entire Outstanding Amount shall be immediately
due and payable, without presentment, further notice, protest, grace period or other requirements
of any kind, all of which hereby are expressly waived by the Borrower. Following the occurrence and
during the continuance of an Event of Default, the interest rate on this Note shall be thirteen
percent (13%) on the outstanding Principal Amount, compounded annually. Upon the occurrence and
during the continuance of an Event of Default, the Holder may exercise all rights and remedies
under this Note, the Share Mortgage, the Guarantee or applicable law.

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ARTICLE VI

SENIOR STATUS OF NOTE

     6.1 Senior Status of Note. The obligations of the Borrower under this
Note shall rank senior to all other Indebtedness of the Borrower, whether now or
hereinafter existing. Upon any Liquidation Event, the Holder will be entitled to
receive, before any distribution or payment is made upon, or set apart with
respect to, any other indebtedness of the Borrower or any class of capital stock
or the Borrower, the Entire Outstanding Amount.

ARTICLE VII

REPRESENTATIONS AND WARRANTIES

     As a material inducement to the Holder to purchase this Note, the Borrower
hereby represents, warrants and covenants to the Holder, on behalf of itself and
the other Borrower Parties, that:

     7.1 Organization, Good Standing and Qualification. Each Borrower
Party is duly organized, validly existing and in good standing under the laws of
its place of organization, has all requisite corporate power and authority to
carry on its business and is duly qualified to transact business and is in good
standing in each jurisdiction in which such qualification is required by
applicable law.

     7.2 Authorization. Each party to any Note Document (other than the
Holder) has duly executed and delivered such Note Document in accordance with
this Note. All corporate action on the part of each party to any Note Document
(other than the Holder), its officers, directors and shareholders necessary for
the authorization, execution and delivery of such Note Document, the performance
of all obligations of each party (other than the Holder) under such Note Document
and the authorization, issuance and delivery of the Note, has been taken, and the
Note Documents, when executed and delivered by the respective parties thereto
(other than the Holder), shall constitute valid and legally binding obligations
of such respective parties, enforceable against such respective parties in
accordance with their terms except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance, and other laws of
general application affecting enforcement of creditors’ rights generally, and as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies.

     7.3 No Violation. Neither the execution and delivery of the Note
Documents by the parties thereto (other than the Holder) nor the performance by
such parties of their obligations under the Note Documents will: (i) violate any
provisions of the memorandum of association, articles of association, business
license or any other constitutional documents of any such party; (ii) with or
without the giving of notice or the passage of time, or both, violate, or be in
conflict with, or constitute a default under, or cause or permit the termination
or the acceleration of the maturity of, any Indebtedness of any such party; (iii)
require notice to or the consent of any third party to any agreement or
commitment to which such party is a party, or by which it or its properties is
bound or subject (except for the consent of Carlyle Asia Growth Partners IV, L.P
(“Carlyle”)); (iv) result in the creation or imposition of any Lien upon any
property or assets of any such party under any agreement or commitment to which
it is a party, or by which it or the properties thereof are bound or subject; or
(v) violate any applicable law.

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     7.4 Governmental Consents. No consent, approval, order or authorization of, or
registration, qualification, designation, declaration or filing with, any federal, state or local
governmental authority on the part of any of the parties to the Note Documents (other than the
Holder) is required in connection with the offer, sale or issuance of the Note or the consummation
of any other transactions contemplated by the Note Documents.

     7.5 Capitalization; Subsidiaries.

          (a) Schedule 1 to this Note lists each Borrower Party, and correctly sets forth the
capitalization of such Borrower Party, the nature of legal entity which the Borrower Party
constitutes, the jurisdiction in which the Borrower Party was organized, a list of all outstanding
securities of the Borrower Party and the holders thereof and a brief summary of the Borrower
Party’s principal business.

          (b) There are no outstanding options, warrants, rights (including conversion or preemptive
rights and rights of first refusal or similar rights) or agreements, orally or in writing, for the
purchase or acquisition from any Borrower Party of any of its securities or any other agreements to
participate in the profits of any Borrower Party. There are no outstanding rights or obligations of
any Borrower Party to repurchase or redeem any of its securities. No Borrower Party is a party or
subject to any contract that affects or relates to the voting or giving of written consents with
respect to, or the right to cause the registration of, any share or other security of any Borrower
Party.

          (c) In respect of each Borrower Party that is organized and existing under the laws of the
People’s Republic of China, except as disclosed in Schedule 1 hereto, the full amount of
the registered capital of such Borrower Party has been contributed, such contribution has been duly
verified by a certified accountant registered in the People’s Republic of China and the accounting
firm employing such accountant, and the report of the certified accountant evidencing such
verification has been registered with the relevant governmental authority.

          (d) Except as disclosed in Schedule 1 hereto, none of the Borrower Parties has any
subsidiary, or is a participant in any joint venture, partnership or other similar arrangement, or
otherwise owns (directly or indirectly) any share or interest in any other entity.

          (e) No debt or equity securities of any Borrower Party is subject to any Lien (other than the
security granted to Carlyle as disclosed to the Holder and those to be made pursuant to the Note
Documents).

     7.6 Valid Issuance of Securities. This Note has been duly and validly issued,
fully-paid and nonassessable. The offer, issue and sale of this Note is exempt from the
registration and prospectus delivery requirements of the U.S. Securities Act of 1933, as amended
and have been registered or qualified (or are exempt from registration and qualification) under the
registration, permit or qualification requirements of all applicable state securities laws within
the time periods required by such laws. Neither the Borrower nor any authorized agent acting on its
behalf will take any action hereafter that would cause the loss of such exemptions.

     7.7 Financial Statements.

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          (a) The Borrower has furnished to the Holder the unaudited consolidated balance sheets of the
Borrower as of the end of each monthly period from January 1, 2008 to December 31, 2008, the
related unaudited consolidated statements of operations, shareholders’ equity and cash flows for
each monthly period from January 1, 2008 to December 31, 2008 (“Financial Statements”).

          (b) The Financial Statements were prepared in accordance with the PRC GAAP, are true, correct
and complete in all respects, and fairly and accurately present the financial position of the
Borrower on the dates of such statements and the results of the operations of the Borrower for the
periods covered thereby. The Financial Statements show all indebtedness, obligations and other
liabilities, direct or contingent, of the Borrower as of the respective date thereof, including
liabilities for any taxes, commitments and indebtedness.

          (c) All of the accounts receivable owing to any Borrower Party, including without limitation
all accounts receivable set forth on the Financial Statements, constitute valid and enforceable
claims, and are good and collectible in the ordinary course of business, and, net of any reserves
shown on the Financial Statements (which reserves are adequate and were calculated on a basis
consistent with PRC GAAP), no further goods or services are required to be provided in order to
complete the sales and to entitle any Borrower Party to collect in full. There are no material
contingent or asserted claims, refusals to pay, or other rights of set-off with respect to any
Borrower Party to the knowledge of any of the Borrower Parties after due inquiry.

     7.8 Absence of Undisclosed Liabilities. None of the Borrower Parties has, except as
and to the extent reflected or reserved against in the Financial Statements, had any material
accrued or contingent liability or liabilities or obligations (contractual or otherwise) arising
out of any transaction or state of facts existing prior to or on the date hereof or arising other
than in the ordinary course of business since July 31, 2008 (whether such liability is accrued, to
become due, contingent or otherwise) in excess of RMB 1,000,000 in the aggregate.

     7.9 Litigation. There is no action, suit, proceeding or investigation pending or, to
each of the Borrower Parties’ knowledge, currently threatened against any Borrower Party, nor is
any Borrower Party aware that there is any basis for the foregoing. None of the Borrower Parties is
a party to or subject to the provisions of any order, writ, injunction, judgment or decree of any
court or government agency or instrumentality specifically applicable to it. There is no action,
suit, proceeding or investigation by any of the Borrower Parties currently pending or which any of
the Borrower Parties intends to initiate.

     7.10 Compliance with Law; Permits.

          (a) Each Borrower Party is, and at all times has been, in compliance with any and all law
applicable to it or to the conduct or operation of its business or the ownership or use of any of
its properties and assets (including intellectual and intangible property).

          (b) None of the Borrower Parties is in violation of its business license, or any provision of
its memorandum of association, articles of association, or equivalent constitutional documents as
in effect.

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          (c) None of the Borrower Parties is in violation of, or default under any material provision
of any instrument, mortgage, deed of trust, loan, contract, commitment, judgment, decree, order or
obligation to which it is a party or by which it or any of its properties are bound.

          (d) Each Borrower Party (except for the Founder) has obtained all permits, licenses,
authorizations, qualifications and consents, and completed all registration and filing, as required
by the law of its jurisdiction for conducting its business as currently being conducted.

     7.11 Solvency. Each Borrower Party is Solvent, and after giving effect to the Note and
obligations being incurred in connection herewith and with other Note Documents, will be Solvent.

     7.12 No Cross-Default Provisions. None of the Borrower Parties is a party to any
agreement relating to Indebtedness which contains a cross-default provision, such that a default
under one agreement would result in a default under another agreement.

     7.13 Taxes. Each of the Borrower Parties has filed or caused to be filed all tax
returns that are required by any government authority to be filed by it, and has paid or caused to
be paid all Taxes shown to be due and payable on such returns or on any assessments received by it,
including payroll taxes, except to the extent subject to a contest maintained in good faith by
appropriate proceedings and with respect to which the applicable Borrower Party has set on its
books adequate reserves with respect thereto.

ARTICLE VIII

PAYMENT OF PRINCIPAL AMOUNT AND CONDITIONS PRECEDENT

     8.1 Payment of Principal Amount. The Principal Amount shall be paid by the Holder to
the Borrower in three installments, as follows:

          (a) First Payment — US$1,000,000: The Holder shall pay US$1,000,000 of the Principal Amount to
the bank account designated by the Borrower within three (3) Business Days following the execution
of this Note, subject to the fulfillment, to the satisfaction of the Holder, or the waiver by the
Holder, of the following conditions by the Borrower and the Founder.

               (i) The representations and warranties made by the Borrower in
Section 7 hereof shall be true and correct and complete when made, and shall be true
and correct and complete as of the date of the First Payment with the same force and effect
as if they had been made on and as of such date, subject to changes contemplated by this Note.

               (ii) The Borrower shall have obtained all approvals, consents and
waivers required by the applicable laws at its jurisdiction that is necessary for
execution of the Note Documents and the consummation of the transactions contemplated hereby
and thereby, including, but not limited to: (i) all permits, authorizations, approvals,

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consents or permits of any governmental authority or regulatory body of the competent
jurisdiction, if necessary, and (ii) all consents or waivers by any relevant third party.

               (iii) The Borrower shall have provided to the Holder the originals or
certified copies of the shareholders’ resolutions and/or the board resolutions of the
Borrower, as required under the laws of Hong Kong, to adopt, among other things, the
execution of the Note Documents to which it is a party, the performance of its
obligations
hereunder and thereunder.

               (iv) There has been no Material Adverse Effect on any Borrower Party.

               (v) The Founder shall have entered into the Guarantee with the Holder
to secure the Borrower’s obligations under this Note, in the form and substance to the
satisfaction of the Borrower, which Guarantee shall take effect on the third (3rd) day
following the completion of the Second Payment.

               (vi) The Founder and the Borrower shall have entered into the undated
Share Mortgage with the Holder to secure the Borrower’s obligations under this Note, in
the form and substance to the satisfaction of the Borrower, which Share Mortgage shall
take effect on the third (3rd) day following the completion of the Second Payment.

          (b) Second Payment — US$5,000,000: The Holder shall pay US$5,000,000 of
the Principal Amount to the Joint Account (as defined below) within ten (10) Business Days
after the fulfillment, to the satisfaction of the Holder, or the waiver by the Holder, of the
following conditions by the Borrower and the Founder:

               (i) The representations and warranties made by the Borrower in
Section 7 hereof shall be true and correct and complete when made, and shall be true
and correct and complete as of the date of the Second Payment with the same force and
effect as if they had been made on and as of such date, subject to changes contemplated by
this Note.

               (ii) There has been no Material Adverse Effect on any Borrower Party.

               (iii) The Borrower shall have established a bank account which
requires the signatures of both (1) the person designated by the Borrower and (2) the
person designated by the Holder, for the withdraw and transactions of the amount in
such account (the “Joint Account”).

          (c) Third Payment — US$4,000,000: The Holder shall pay the remaining
US$4,000,000 of the Principal Amount to the bank account designated by the Borrower within
ten (10) Business Days after the fulfillment, to the satisfaction of the Holder, or the waiver
by the Holder, of the following conditions by the Borrower and the Founder.

               (i) The representations and warranties made by the Borrower in Section 7 hereof shall
be true and correct and complete when made, and shall be true and correct and complete as of
the date of the Third Payment with the same force and effect

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as if they had been made on and
as of such date, subject to changes contemplated by this Note.

               (ii) There has been no Material Adverse Effect on any Borrower Party.

               (iii) All of the US$5,000,000 Second Payment shall have been used to
repay and settle the US$5,000,000 principal amount owed by the Borrower to Carlyle
(the “Carlyle Principal Amount”) under the secured and convertible note dated August
13, 2009 by and between the Borrower and Carlyle (the “Previous Carlyle Note”). The
Borrower shall have paid to Carlyle all other outstanding amount under the Previous
Carlyle Note, if any.

               (iv)The Borrower shall have obtained from Carlyle a receipt
evidencing the Borrower’s repayment of the entire outstanding amount under the
Previous Carlyle Note.

               (v) The Founder shall have obtained a document from Carlyle
certifying that (1) all of the (A) security interest created on the shares of the
Borrower by the Founder in favor of Carlyle pursuant to the share mortgage dated August 13, 2008 by
and between the Founder and Carlyle (the “Previous Carlyle Share Mortgage”) and (B)
the guarantee provided by the Founder in favor of Carlyle pursuant to the guarantee
dated August 13, 2008 by and between the Founder and Carlyle (the “Previous Carlyle Guarantee”) ((A) and (B) collectively the “Previous Carlyle Security”) have been fully
discharged and released, (2) Carlyle has no claim against the Borrower and the Founder
in connection with the Previous Carlyle Note, Previous Carlyle Share Mortgage and
Previous Carlyle Guarantee. The Founder shall have taken all actions required under the
Hong Kong law as advised by the Hong Kong legal counsel of the Borrower to give full
discharge and release of the Previous Carlyle Security.

               (vi) The Share Mortgage and the Guarantee shall have taken effect, and
the Founder and the Borrower shall have delivered to the Holder each of the documents
required to be delivered to the Holder under Section 2.2 of the Share Mortgage.

               (vii) The Borrower shall have delivered to the Holder a legal opinion
issued by the Hong Kong legal counsel, in the form and substance to the satisfaction of
the Holder, on matters including, among other things, (1) the validity of the discharge
and release of the Previous Carlyle Security, as a result no other Lien on the shares of
the Borrower except for those created under the Note Documents, (2) the validity and
enforceability of this Note, the Share Mortgage and the Guarantee, and (3) the due
incorporation and shareholding structure of the Borrower.

     8.2 Payment to Bank Account. The Holder’s payment obligations shall be fully
discharged when the relevant Principal Amount has reached the bank account designated by the
Borrower (for the First Payment and Third Payment) and the Joint Account (for the Second Payment),
and thereafter the Borrower shall not have any claim against the Holder with respect to the
relevant Principal Amount.

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ARTICLE IX

COVENANTS

     9.1 Negative Covenants. So long as this Note remains outstanding, without the prior
written consent of the Holder, the Borrower shall not, and shall ensure each other Borrower Party
not to, effect any of the following transactions (other than pursuant to or as contemplated by the
Note Documents):

          (a) Create, incur, assume or suffer to exist any Lien upon any of its properties, business,
revenues or incomes, whether now owned or hereafter acquired.

          (b) Create, incur, assume or suffer to exist any Indebtedness or prepay, forgive or discharge
in whole or in part any outstanding Indebtedness, or provide loans or financial aids to any third
party.

          (c) Guarantee, directly or indirectly, any Indebtedness of any person or entity.

          (d) Convey, sell, lease, assign, transfer or otherwise dispose of any of its material
properties, assets or business, whether now on or hereafter acquired.

          (e) Enter into with any person or entity any agreement which prohibits or limits the ability
of any Borrower Party to create, incur, assume or suffer to exist any Lien upon any of its
properties, revenues or income, whether now owned or hereafter acquired.

          (f) Merge, dissolve, liquidate, consolidate with or into another entity, or dispose of
(whether in one transaction or in a series of transactions) all or substantially all of its
properties (whether now owned or hereafter acquired) to or in favor of any person or entity.

          (g) Declare or make, directly or indirectly, any Restricted Payment, or incur any obligation
(contingent or otherwise) to do so.

          (h) Engage in any line of business different from design, manufacture,
installation, management and sale of ground source heat pump systems.

          (i) Enter into any transaction of any kind with any shareholders, officers,
directors or affiliates of any Borrower Party or members of their immediate families, whether
or not in the ordinary course of business, other than on fair and reasonable terms as favorable
to the respective Borrower Party as would be obtainable by such Borrower Party in a comparable arm’s
length transaction with a person or entity other than any shareholders, officers, directors or
affiliates of any Borrower Party or members of their immediate families.

          (j) Issue, sell, create or authorize any shares of any class or series of its securities, or
issue, grant or create any warrants, subscriptions, options, convertible securities, or other
commitments to issue shares or other securities that are potentially exchangeable or exercisable
for, or convertible into, shares of its capital stock,

          (k) Convey, sell, transfer, or create any Lien on its equity interest or shares, or enter into
any commitment to sell, transfer or create any Lien on any of its equity interest or shares.

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          (l) Initiate any litigation, action, suit, proceeding, claim or arbitration (other than for
the routine collection of accounts receivable) or settle or agree to settle any litigation, action,
suit, proceeding, claim or arbitration.

     9.2 Taxes. Any and all payments by the Borrower Parties hereunder that are made to or
for the benefit of the Holder shall be made free and clear of and without deduction for any and all
present or future taxes, levies, imposts, deductions, charges or withholdings and penalties,
interests and all other liabilities with respect thereto (collectively, “Taxes”), excluding taxes
imposed on the Holder’s net income or capital and franchise taxes imposed on the Holder by the
jurisdiction under the laws of which the Holder is organized or any political subdivision thereof
(all such nonexcluded Taxes being hereinafter referred to as “Covered Taxes”). If any of the
Borrower Parties shall be required by law to deduct any Covered Taxes from or in respect of any sum
payable hereunder to the Holder, the sum payable shall be increased as may be necessary so that
after making all required deductions of Covered Taxes (including deductions of Covered Taxes
applicable to additional sums payable under this paragraph), the Holder receives an amount equal to
the sum it would have received had no such deductions been made. The Borrower Parties shall make
such deductions and the Borrower Parties shall pay the full amount so deducted to the relevant
taxation authority or other authority in accordance with applicable law. In addition, the Borrower
Parties agree to pay any present or future stamp, documentary, excise, privilege, intangible or
similar levies that arise at any time or from time to time from any payment made under the Note or
from the execution or delivery by the Borrower Parties or from the filing or recording or
maintenance of, or otherwise with respect to the exercise by the Holder of its rights under the
Note (collectively, “Other Taxes”). The Borrower Parties will indemnify the Holder for the full
amount of Covered Taxes imposed on or with respect to amounts payable hereunder and Other Taxes,
and any liability (including penalties, interest and expenses) arising therefrom or with respect
thereto. Payment of this indemnification shall be made within thirty (30) days from the date the
Holder provides the Borrower with a certificate certifying and setting forth in reasonable detail
the calculation thereof as to the amount and type of such Taxes. Any such certificates submitted by
the Holder in good faith to the Borrower shall, absent manifest error, be final, conclusive and
binding on all parties. The obligation of the Borrower Parties under this Section 9.29.2 shall
survive the payment and termination of this Note. Within thirty (30) days after the Borrower
Parties having received a receipt for payment of Covered Taxes and/or Other Taxes, the Borrower
Parties shall furnish to the Holder, the original or certified copy of a receipt evidencing payment
thereof.

     9.3 Use of Proceeds. The Borrower will apply the Principal Amount as follows: (a) the
Second Payment shall be used to repay the Carlyle Principal Amount, and (b) the First Payment and
Third Payment shall be used as working capital of the business of the Borrower Parties. No part of
Principal Amount will be used, directly or indirectly, for the purpose of repaying any Indebtedness
of any Borrower Party or for the purpose of acquiring or investing in any securities of any entity
other than the Borrower Parties, other than pursuant to or as contemplated by the Note Document.
The Borrower shall repay the Carlyle Principal Amount within one (1) Business Day after it receives
the Second Payment from the Holder.

     9.4 Due Diligence Investigation. Within three (3) months following the execution of
this Note, the Holder shall have the right to undertake legal and financial due diligence
investigation against the Borrower Parties (the “DD Investigation”). The Borrower shall, and

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shall
cause each other Borrower Party to, provide all necessary cooperation and assistance for the Holder
to complete the DD Investigation.

     9.5 Further Guarantee for Repayment. In case that the Holder has sent the written
notice requesting the repayment of the Entire Outstanding Amount in accordance with Section 3.1,
and the Borrower does not have sufficient fund to repay the Entire Outstanding Amount on the
Maturity Date, then in addition to the security provided under the Share Mortgage and Guarantee,
the Borrower shall cause the revenues of Shanghai Nobo Commerce
& Trade Co., Ltd.
 and
Jiangxi Nobao Electric Co., Ltd.
 be used in priority to repay the Entire Outstanding
Amount under this Note, in the manner permitted under the laws of China.

     9.6 Indemnification. The Borrower shall indemnify and keep indemnified the Holder,
from and against all reasonable losses, liabilities, damages, costs, charges and expenses which the
Holder may incur in connection with or arising out of the Previous Carlyle Note, Previous Carlyle
Share Mortgage or Previous Carlyle Guarantee, and against all reasonable losses, liabilities,
damages, actions, proceedings, claims, demands, costs, charges and expenses which may be incurred,
sustained or arise in respect of the non-performance or non-observance of any of the undertakings
and agreements on the part of the Borrower herein contained.

     9.7 Holder’s Right to Attend Board Meeting. The Borrower agrees that following the
completion of the Third Payment, it shall invite a representative of the Holder (the
“Representative”) to attend all meetings of the board of directors of the Borrower Parties, in a
non-voting observer capacity and, in this respect, it shall give the Representative copies of all
notices, minutes, consents, and other materials that it provides to other directors of the Borrower
Parties at the same time and in the same manner as provided to other directors of the Borrower
Parties; provided, however, that the Representative shall agree to hold in confidence and trust and
to act in a fiduciary manner with respect to all information so provided.

ARTICLE X

CONVERSION

     10.1 Conversion. In the event that the Holder decides to proceed with the Series A
equity financing described in the Term Sheet (the “Series A Financing”) after the DD Investigation,
then so long as the Entire Outstanding Amount has not been repaid pursuant to Section 3.1, the
Holder shall convert all (but not part) of the outstanding Principal Amount under this Note into
Series A Preferred Shares of the Borrower, upon the closing of the Series A Financing, at the
conversion price that equals to (1) 100% of the price per Series A Preferred determined in the
Series A Financing if the Holder is the sole investor participating in the Series A Financing, or
(2) 95% of the price per Series A Preferred determined in the Series A Financing if the Holder is
not the sole investor participating in the Series A Financing.

     10.2 Conversion Notice. When the Holder decides to convert this Note, it shall deliver
to the Borrower a written notice (“Conversion Notice”) at the address shown on the
signature page hereto or such other address as specified in writing by the Borrower from time to
time. Following the receipt of the number of Series A Preferred Shares that this Note is
convertible

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into and the registration of the Holder as the holder of such Series A Preferred Shares
in the Borrower’s register of members, this Note and the Borrower’s obligation to pay the Entire
Outstanding Amount shall be deemed automatically discharged (except for any penalty that may occur
under this Note).

     10.3 No Fraction Share. No fractional shares of the Borrower’s capital shares will be
issued upon conversion of this Note. In lieu of any fractional share to which the Holder would
otherwise be entitled, the Borrower will pay to the Holder in cash the amount of the unconverted
Principal Amount of this Note that would otherwise be converted into such fractional share.

     10.4 Consequence of Conversion. Upon the closing of the conversion: (1) the Holder
shall be deemed to have subscribed for such number of Series A Preferred Shares that the Holder is
entitled to receive upon such conversion, (2) the rights, preferences, privileges and restrictions
of such Series A Preferred Shares shall be the same as those of the other Series A Preferred Shares
issued at the Series A Financing, and (3) the outstanding Principal Amount so converted shall be
deemed to have been used to satisfy the subscription price for such Series A Preferred Shares and
the Entire Outstanding Amount shall be reduced to zero. The Borrower shall be deemed to agree that
the reduction in the Principal Amount shall constitute full payment for such number of Series A
Preferred Shares to be issued upon conversion of this Note and the Holder shall have no obligations
to make any other payment for such number of Series A Preferred Shares.

ARTICLE XI

MISCELLANEOUS

     11.1 Failure or Indulgence Not Waiver. No failure or delay on the part of Holder
hereof in the exercise of any power, right or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such power, right or privilege preclude
other or further exercise thereof or of any other right, power or privilege. All rights and
remedies existing hereunder are cumulative to, and not exclusive of, any rights or remedies
otherwise available.

     11.2 Notices. Any notice required or permitted pursuant to this Note shall be given in
writing and shall be given either personally or by sending it by next-day or second-day courier
service, fax, electronic mail or similar means to the address as shown on the signature page hereto
(or at such other address as such party may designate by fifteen (15) days’ advance written notice
to the other parties to this Note given in accordance with this section). Where a notice is sent by
next-day or second-day courier service, service of the notice shall be deemed to be effected by
properly addressing, pre-paying and sending by next-day or second-day service through an
internationally-recognized courier a letter containing the notice, with a confirmation of delivery,
and to have been effected at the expiration of two (2) days after the letter containing the same is
sent as aforesaid. Where a notice is sent by fax or electronic mail, service of the notice shall be
deemed to be effected by properly addressing, and sending such notice through a transmitting
organization, with a written confirmation of delivery, and to have been effected on the day the
same is sent as aforesaid.

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     11.3 Amendment Provision. The term “Note” and all reference thereto, as used
throughout this instrument, shall mean this instrument as originally executed, or if later amended
or supplemented, then as so amended or supplemented. Any provision of this Note may be amended,
supplemented or waived, if such amendment, supplement or waiver is in writing and signed by the
Borrower and the Holder.

     11.4 Assignability. This Note shall be binding upon the Borrower and its successors
and assigns, and shall inure to the benefit of the Holder and its successors and assigns. Subject
to applicable laws and regulations, this Note and all rights hereunder may be transferred or
assigned in whole or in part by the Holder to any of its Affiliates prior to the occurrence of any
Event of Default, and upon the occurrence and during the continuance of any Event of Default, to
any person. The Borrower shall assist the Holder in consummating any such transfer or
assigned. The Borrower may not assign this Note without the consent of the Holder. A transfer
of this Note may be effected only by a surrender hereof to the Borrower and the issuance by the
Borrower of a new note or notes in replacement thereof.

     11.5 Cost of Collection. If default is made in the payment of this Note, the Borrower
shall pay the Holder hereof reasonable costs of collection, including attorneys’ fees.

     11.6 Governing Law; Rules of Construction. THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF
THE BORROWER HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION, WITHOUT REGARD TO CONFLICTS
OF LAWS PRINCIPLES.

     11.7 Dispute Resolution.

          (a) For the benefit of the Holder, the Borrower irrevocably agrees that the courts of Hong
Kong are to have non-exclusive jurisdiction to settle any disputes which may arise out of or in
connection with this Note and that, accordingly, any legal action or proceedings arising out of or
in connection with this Note (“Proceedings”) may be brought in those courts and the Holder
irrevocably submits to the non-exclusive jurisdiction of those courts.

          (b) Nothing in this Section shall limit the right of the Holder to take proceedings against
the Borrower in any other court of competent jurisdiction nor shall the taking of Proceedings in
one or more jurisdictions preclude the Holder from taking Proceedings in any other jurisdiction,
whether concurrently or not.

          (c) The Borrower irrevocably waives any objection which it may at any time have to the laying
of the venue of any Proceedings in any court referred to in this Section and any claim that any
such Proceedings have been brought in an inconvenient forum.

          (d) The Borrower irrevocably consents to any process in any Proceeding anywhere being served
by mailing a copy by post in accordance with Section 11.2 of this Note. Nothing shall affect the
right to serve any process in any other manner permitted by law.

          (e) To the extent that the Borrower has or hereafter may acquire any immunity (sovereign or
otherwise) from any legal action, suit or proceeding, from jurisdiction of

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any court or from
set-off or any legal process (whether service or notice, attachment prior to judgment, attachment
in aid of execution of judgment, execution of judgment or otherwise) with respect to itself or any
of its property, the Borrower hereby irrevocably waives and agrees not to plead or claim such
immunity in respect of its obligations under this Note.

          (f) The costs of the Proceedings shall be borne by the losing party, unless otherwise
determined by the court.

     11.8 Maximum Payments. Nothing contained herein shall be deemed to establish or
require the payment of a rate of interest or other charges in excess of the maximum permitted by
applicable law. In the event that the rate of interest required to be paid or other charges
hereunder exceed the maximum permitted by such law, any payments in excess of such maximum shall be
credited against amounts owed by the Borrower to the Holder and thus refunded to the Borrower.

     11.9 Construction. Each party acknowledges that its legal counsel participated in the
preparation of this Note and, therefore, stipulates that the rule of construction that ambiguities
are to be resolved against the drafting party shall not be applied in the interpretation of this
Note to favor any party against the other.

     11.10 No Redemption. This Note may not be redeemed or called by the Borrower or any
other person (other than the Holder) without the consent of the Holder.

     11.11 Non-Business Days. Whenever any payment or any action to be made shall be due on
a date other than a Business Day, such payment may be due or action shall be required on the next
succeeding Business Day and, for such payment, such next succeeding Business Day shall be included
in the calculation of the amount of accrued interest payable on such date.

     11.12 Confidentiality. The parties acknowledge that the existence and the terms of
this Note and any oral or written information exchanged between the parties in connection with the
preparation and performance this Note are regarded as confidential information. Each party shall
maintain confidentiality of all such confidential information, and without obtaining the written
consent of the other party, it shall not disclose any relevant confidential information to any
third parties, except for the information that: (a) is or will be in the public domain (other than
through the receiving party’s unauthorized disclosure); (b) is under the obligation to be
disclosed pursuant to the applicable laws or regulations, rules of any stock exchange, or
orders of the court or other government authorities; or (c) is required to be disclosed by any
party to its shareholders, investors, legal counsels or financial advisors regarding the
transaction contemplated hereunder, provided that such shareholders, investors, legal counsels or
financial advisors shall be bound by the confidentiality obligations similar to those set forth in
this Section. This Section shall survive the termination of this Agreement for any reason.

     11.13 Effectiveness. Subject to Section 11.14, this Note shall become effective upon
execution and shall terminate on the first date on which there is no outstanding amount of the
Entire Outstanding Amount, such termination to be without prejudice to any claims for damages or
other remedies that the Holder may have under this Note or applicable law.

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     11.14 Termination Before First Payment. This Note may be terminated by the
Holder, any time but not later than the date of the First Payment, by written notice to the
Borrower without further compensation or liabilities on the part of the Holder, if (i) the
Borrower has committed a material breach of any of its obligations hereunder and such breach
has not been cured to the satisfaction of the Holder within ten (10) Business Days after the
Holder notifying the breaching Borrower of the same; OR (ii) the First Payment has not
occurred within three (3) months from the signing date of this Note on the condition that:
(A) the right to termination shall not be available to Holder if it is then in material
default of any of its obligations hereunder, and (B) the right to terminate this Note shall
not be available to the Holder if its breach of any provision of this Note has been the
cause of, or resulted in, the failure of the First Payment within the three (3) month
period. Such termination under this Section 11.14 shall be without prejudice to any claims
for damages or other remedies that the Holder may have under this Note or applicable law.

     11.15 Expenses. The Borrower shall reimburse, at the completion of the Third
Payment, the Holder for its DD Investigation and legal expenses, including one legal counsel
selected by the Holder, incurred in connection with the Contemplated Transaction hereunder.

[Remainder of page intentionally left blank.]

19

 

Execution Copy

IN WITNESS WHEREOF, the Borrower has caused this Note to be signed in its name by an authorized
officer as of the date first set forth above.

	 	 	 	 	 
	 	EASTERN WELL HOLDINGS LIMITED

 	 
	 	By:  	/s/ Sun Kwok Ping	 
	 	 	Name:  	Sun Kwok Ping
  	 
	 	 	Title:  	Director 	 
	 

	 	 	 
	 

	 	Address:
	 
	 	 
	 

	 	Room 3, 21/F, Fast East Consortium Building
	 

	 	121 Des Voeux Road Central
	 

	 	Hong Kong
	 

	 	Attention: Sun Kwok Ping
 
	 

	 	Fax: 00852-21849811

ACCEPTED AND AGREED:

HOLDER:

	 	 	 	 	 
	 	CHINA ENVIRONMENT FUND III, L.P.

 	 
	 	By:  	/s/ Shelbychen	 
	 	 	Name:  	Shelbychen 	 
	 	 	Title:  	 	 
	 

	 	 	 
	 

	 	Address:
	 
	 	 
	 

	 	A2302, SP Tower, Tsinghua Science Park,
	 

	 	Beijing, 100084, P.R. China
	 

	 	Attention: Shelby Chen
	 

	 	Fax: 8610-8215 1150

 

 

Execution Copy

SCHEDULE 1

BORROWER PARTIES

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Shareholders and	 	 
	Borrower Party	 	Capitalization	 	Nature	 	Jurisdiction	 	Shareholding	 	Business
	Borrower

	 	HK$10,000
	 	Limited liability

company
	 	Hong Kong
	 	Founder: 100%
	 	Holding company
	 
	 	 	 	 	 	 	 	 	 	 
	Founder

	 	N/A
	 	N/A
	 	N/A
	 	N/A
	 	N/A
	 
	 	 	 	 	 	 	 	 	 	 
	Shanghai Nobo
Commerce & Trade Co.,
Ltd. 

	 	Registered

Capital: RMB

10,000,000
	 	Limited liability

company
	 	PRC
	 	Borrower: 100%
	 	wholesale and
commission (except
for auction) of
Heating &
Ventilation
equipment, air
conditioning
equipment, energy
saving equipment
and accessories,
import and export
of the
aforementioned
products, provision
of related
technical
consulting services
	 
	 	 	 	 	 	 	 	 	 	 
	Jiangxi Nobao
Electric Co., Ltd. 

	 	Registered Capital:

US$15,000,000
	 	Limited liability

company
	 	PRC
	 	Borrower: 100%
	 	manufacture,
process,
installation, R&D
and operate Nabao
electronic products
and parts, agency
for the import or
export of relevant
electronic
products, and
distribution and
sale of the
imported ground
source heat pump
systems

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