Guaranty Contract

Article 1

Guaranty Scope

Article 2

Guaranty Method

Article 3

Guaranty Term

Article 4

Independence of Guaranty Contract

Article 5

Change of Master Contract

I.  

Once Party B and debtor have changed the master contract provisions through agreement (including but not limited to the repayment currency, repayment method, loan account No., repayment account No., expense utilization plan, repayment plan, interest startup and settlement date, startup date or stop date of debts fulfillment validity under the condition of not extending the debts fulfillment validity), Party A agrees to bear joint and several guaranty liabilities for the debts under changed master contract.

II.  

Party A’s guaranty liability is not reduced or exempted due to any of the following conditions:

(I)  

Party B or debtor has undergone system modification, merging, integration, separation, capital increase/reduction, joint venture, joint business operation and name change;

(II)  

Party B has entrusted a third party to fulfill its due obligations under the master contract.

III.  

In case of transfer invalidation, cancellation or elimination of debts or credits under the master contract, Party A shall continue to bear the joint guaranty liabilities for Party B according to the contract.

Article 6

Guaranty Liabilities

I.  

Once the debts under the master contract are expired or Party B announces in advance the expiration of debts according to the master contract or legal stipulations but the debtor fails to fulfill in full amount and in a timely manner or debtor breaches other provisions of the master contract, Party A shall immediately bear guaranty liabilities within the guaranty scope.

II.  

No matter whether Party B has other guaranty of credits under the master contract (including but not limited to various guaranty methods such as guaranty, mortgage, pledge, guaranty letter and standby L/C), when above other guarantee is valid and established, whether Party B raises right statement to other guarantor, whether third party has agreed to bear total or partial debts under the master contract and whether other guaranty is provided by the debtor, Party A’s guaranty liabilities under the contract are not reduced or exempted. Party B can directly require Party A to bear guaranty liabilities within the guaranty scope according to the contract; Party A can not raise any objections.

III.  

Once Party A only provides guaranty for partial debts under the master contract, Party A agrees that even though debtor repays and Party B realizes partial elimination of other guaranty rights or debts under the master contract due to any other reason, Party A shall still bear guaranty liabilities for the rest debts within the guaranty scope according to this contract.

IV.  

Once Party A only provides guaranty for partial debts under the master contract and debts under the master contract after undertaking of guaranty liabilities are not completely repaid, Party A promises to declare (including pre-exercise) the subrogation right or claim right to the debtor or other guarantor and shall not lead to any damage against Party B’s interests. Besides, it agrees that repayment of debts under the master contract is prior to Party A’s subrogation right or claim right.

(I)  

Party A agrees not to declare subrogation right or claim right to the debtor or other guarantor; once Party A has realized the above rights due to any reason, it shall utilize the expense to first repay Party B’s credits without repayment;

(II)  

Once the debts under the master contract have object guaranty, Party A agrees not to declare rights to the guaranteed articles or expense upon treatment by reason of exercising the subrogation right or due to any other reason. It shall utilize the above guaranteed articles and expense to first repay Party B’s credits without repayment;

(III)  

Once the debtor or other guarantor has provided counter-guaranty for Party A, Party A shall utilize the expense based on above counter-guaranty to first repay Party B’s credits without repayment.

V.  

Party A has adequately known the interest rate risks. Once Party B adjusts the interest rate, interest calculation or settlement methods according to the master contract or national interest rate policy change so that debtor has increased the repayment interest, penalty interest and compound interest, Party A shall also bear joint guaranty liabilities for the increased part.

Except for the debts under the master contract, once the debtor bears other expired debts for Party B, Party B has the right to receive the debtor’s RMB or other currency expense in the account opened with China Construction Bank, and repay any debt due first. Party A’s guaranty liabilities are not reduced or exempted due to this.

Article 7

Party A’s other obligations

I.  

Party A shall supervise the debtor’s loan utilization condition (including purpose) and accept Party B’s supervision of fund, property and business status. According to Party B’s relevant requirements, Party A shall provide relevant information, documents and materials such as financial statement and guarantee the accuracy, authenticity, completeness and validation; Party A can not provide guaranty beyond its financial capacity for the third party without Party B’s written approval;

II.  

In case of contracting, trusteeship (takeover), leasing, stock system modification, reduction of registered capital, investment, joint business, merging, integration, purchasing and re-organization, separation, joint-funded, application for business suspension and rectification, application for disbandment, cancellation, application for bankruptcy, change to controlling shareholder/actual controller or major assets transfer, close down and out of business, huge penalty by authoritative institution, registration cancellation, revoking of business license, serious legal dispute, serious difficulties or worse financial status of production and business operation, fulfillment failure of normal obligations by the legal representative or main responsible person or losing or possible losing of guaranty abilities due to any reason, Party A shall immediately n otify Party B in written form and implement the undertaking, transfer or inheritance of guaranty liabilities under the contract according to Party B’s relevant requirements or provide new guaranty as approved by Party B for the fulfillment of master contract;

III.  

In case of any changes in Party A’s name, legal representative (principal), address, business scope, registered capital or Articles of Association in the company (enterprise), it shall notify Party B within five working days upon change and attach changed materials.

Article 8

Miscellaneous

I.  

Allocation and charging of payable expense

II.  

Utilization of Party A’s information

III.  

Announcement urging

IV.  

Evidence effect of Party B’s record

V.  

Rights reservation

VI.  

Debtor’s disbandment or bankruptcy

VII.  

Party A’s disbandment or bankruptcy

VIII.  

In case of any change in Party A’s communication address or contact method, it shall immediately notify Party B in written form; in case of any losses arising from timely notification failure, Party A shall bear relevant losses by itself.

IX.  

Conditions to the Effectiveness of the Contract

X.  

Once Party A or debtor fails to strictly adhere to relevant laws, stipulations or regulations concerning environmental protection, energy saving, discharge reduction and pollution reduction or in case of any possible energy consumption and pollution risks, Party B has the right to exercise the guaranty rights under the contract in advance and adopt other remedial measures permitted by the contract or law.

Article 9

Party A’s Representations and Warranties

I.  

Party A has clearly known Party B’s business scope and authorized power.

II.  

Party A has read all the provisions of the contract and master contract. In response to Party A’s requirements, Party B has specified relevant provisions of this contract and master contract. Party A has known and adequately understood the meaning provisions in this contract and master contract and its legal consequence.

III.  

Party A is legally qualified to be the guarantor. Party A’s guaranty conduct under the contract is in strict adherence to relevant laws, administrative stipulations, regulations, Party A’s Articles of Association or internal organization documents; besides, it has gained the approval of internal authoritative institution and/or national authoritative institution. Party A shall bear all the responsibilities arising from the fact that it has no right to sign the contract, such responsibilities include (but not limited to) total compensation for Party B’s incurred losses.

IV.  

Party A has confirmed that it has adequately known the following: the debtor’s assets, debts, business, credits and reputation, whether it has the legal capacity and power to sign the master contract as well as all the contents of master contract.

Article 9

Information of contract parties

Article 10

Agreement to Article 1

I.  

All the debts under the master contract include (but not limited to) total principal, interest (including compound interest and penalty interest), breach penalty, compensation, other expense paid by debtor to Party B (including but not limited to relevant handling fee, telecom expense, sundry expense and relevant bank expense rejected by foreign beneficiary), Party B’s expense in realizing credits and guaranty rights (including but not limited to lawsuit expense, arbitration expense, property safeguard expense, travel expense, enforcement expense, evaluation expense, auction expense, notarization expense, transportation expense, announcement expense and attorney’s fee).

II.  

The principal under the master contract (currency: RMB) (In Words: RMB Three million one hundred and fifty thousand yuan) and interest

Article 11

Agreement of Article 7 (3)

Article 12

Dispute Resolution

(1)  

Instituting legal proceedings in the People’s Court of competent jurisdiction at Party B’s domicile.

(2)  

Submitting to (blank) Arbitration Commission (place of arbitration:  (blank)) for arbitration in accordance with the arbitration rules of the Arbitration Commission in force at the time of application. The arbitration award shall be final, and binding upon both parties.

I.  

Party A has clearly known Party B’s business scope and authorized power.

II.  

Party A has read all the provisions of the contract and master contract. In response to Party A’s requirements, Party B has specified relevant provisions of this contract and master contract. Party A has known and adequately understood the meaning of provisions in this contract and master contract and its legal consequence.

III.  

Party A is legally qualified to be the guarantor. Party A’s guaranty conduct under the contract is in strict adherence to relevant laws, administrative stipulations, regulations, Party A’s Articles of Association or internal organization documents; besides, it has gained the approval of internal authoritative institution and/or national authoritative institution. Party A shall bear all the responsibilities arising from the fact that it has no right to sign the contract, such responsibilities shall include (but not limited to) total compensation for Party B’s incurred losses.

IV.  

Party A confirmed it has adequately known the followings: debtor’s assets, debts, business, credits and reputation, whether it has the legal capacity and power of signing the master contract as well as all the contents of master contract.