DEEDOF GUARANTEE by CHINAHOUSING AND LAND DEVELOPMENT, INC. DatedNovember 5, 2008 ______________________________ XianBaqiao Project ______________________________ TABLEOF CONTENTS

(1)

CHINA HOUSING AND LAND DEVELOPMENT, INC., a corporation established under the laws of the State of Nevada, the United States of America, with its registered address at 1000 E William ST., Suite 204 Carson City, NV ###-###-####, the United States of America (the “Guarantor”).

 

(2)

SUCCESS HILL INVESTMENTS LIMITED, a company incorporated under the laws of the Hong Kong Special Administrative Region (“Hong Kong”), with its registered address at Flat/RM 1508, 15/F, Hing Yip Commercial Centre, 272-284 Des Voeux Road Central, Hong Kong (the “HK SPV”); and

(3)

Prax Capital Real Estate Holding Limited, a company established under the laws of Hong Kong, with its registered address at Flat/RM 1508, 15/F, Hing Yip Commercial Centre, 272-284 Des Voeux Road Central, Hong Kong (“Prax”, together with the HK SPV, the “Beneficiaries”, and each a “Beneficiary”).

 

(a)

Initially capitalised terms in this Deed have, unless expressly defined otherwise in this Deed, the same meaning attributed to such terms in the Framework Agreement.

 

(b)

For the purposes of this Deed, the construction works of the Project shall be deemed to have been “Completed” upon, and the terms “Complete” and “Completion” shall mean, (i) the issuance of a Project Completion Filing Form (竣工验收备案表) with respect to all of the units for the Project duly completed and approved by all relevant government authorities in PRC, (ii) the production of satisfactory evidence to Prax confirming that the Construction Costs have been fully settled, and (iii) the issuance of written confirmation from Prax that the Project’s improvements conform to the Final Plans and Specifications.

 

(c)

A “person” shall be construed as a reference to any person, firm, company, corporation, government, state or agency of a state or any association or partnership (whether or not having separate legal personality), or two (2) or more of the foregoing.

 

(d)

The terms “include” and “including” shall be construed as if followed by the phrase “without limitation”.

 

(a)

the Project Company shall develop, construct and sell (including effecting pre-sales), or cause to be developed, constructed and sold, the Project and its residential units in accordance with the relevant milestones and time periods set forth in the Approved Budget and Business Plan;

 

(b)

New Land shall fund or otherwise provide the Funded Pre-Construction Costs to the Project Company in accordance with the Framework Agreement, the Approved Budget and Business Plan and the Joint Venture Agreement;

 

(c)

the Project Company shall cause the Project to be Completed for an Aggregate Development Cost that does not exceed the equivalent amount or amounts specified in the Approved Budget and Business Plan (as adjusted or otherwise amended by the respective board of directors of the HK SPV and the Project Company pursuant to the Shareholders’ Agreement and/or the Joint Venture Agreement, as applicable, the “Budgeted Development Costs”);

 

(d)

if the Class A Shareholders exercise the Put Option under the Shareholders Agreement, CHL SPV (or any Class B Shareholders succeeding to CHL SPV’s interest in the HK SPV) shall timely purchase, or cause another affiliate of the Guarantor to purchase, from the Class A Shareholders all of the Class A Shares for the Exit Price, pay the Exit Price and timely perform its other covenants and obligations under the Shareholders Agreement in connection with such purchase;

 

(e)

the Project Company shall, and the CHL SPV (or any Class B Shareholders succeeding to the CHL SPV’s interest in the HK SPV) shall cause the Project Company to, distribute the profits of the Project Company to the HK SPV strictly in accordance with the provisions of the Joint Venture Agreement and the Project Company Articles of Association;

 

(f)

the HK SPV shall, and the CHL SPV (or any Class B Shareholders succeeding to the CHL SPV’s interest in the HK SPV) shall cause the HK SPV to, distribute the profits of the HK SPV to the Class A Shareholders strictly in accordance with the provisions of the Shareholders Agreement; and

 

(g)

the CHL SPV (or any Class B Shareholders succeeding to the CHL SPV’s interest in the HK SPV) shall cause the officers and directors of the HK SPV and the Project Company appointed by, or appointed in the direction of, the CHL SPV (or any Class B Shareholders succeeding to the CHL SPV’s interest in the HK SPV) to take such actions and execution such documents and instruments to effect the distributions referred to in sub-sections (e) and (f) above.

 

(a)

The Guarantor acknowledges that if the Guaranteed Obligations are not fully performed as provided in Clause 2.1 by the Obligors, then the Guarantor personally shall perform the Guaranteed Obligations, or cause the Guaranteed Obligations to be performed.  If the Guarantor fails to timely and fully perform its obligations under this Deed within the time period designated by any Beneficiary in its sole discretion after such Beneficiary delivers a written notice to the Guarantor, then the following shall apply:

 

(i)

Any Beneficiary shall be at liberty to apply to an arbitration panel in accordance with Clause 20.1 below for a mandatory order declaring the Guarantor to be liable as aforesaid and ordering it to specifically perform its contractual obligations hereunder.

 

(ii)

If the Aggregate Development Costs exceed the Budgeted Development Costs, such excess shall be paid by the Guarantor or its subsidiaries to the HK SPV or the Project Company (at the direction of Prax in its sole discretion) upon demand by any Beneficiary.

 

(iii)

If by reason of the Guarantor's failure, neglect or refusal to perform, or cause to be performed, the Guaranteed Obligations and its other obligations under this Deed, any Beneficiary elects to incur expenses whether by making payment to the Project Company, the HK SPV or to any other parties to ensure Completion of the Project following a breach by the Guarantor of its obligations hereunder, such expenses shall forthwith be recoverable from the Guarantor as damages.

 

(iv)

The Beneficiaries shall be at liberty to claim damages from the Guarantor either by way of primary remedy (without seeking a mandatory order as aforesaid) or (in case any Beneficiary does seek a mandatory order as aforesaid but the courts shall decline to make such order) as an alternative to a mandatory order.

 

(a)

the liability of the Guarantor shall continue and/or be reinstated, as applicable, as if the payment, discharge, avoidance or reduction of the Reduced Amount had not occurred; and

 

(b)

the Beneficiaries shall be entitled to recover the value or amount of that payment from the applicable Obligor and the Guarantor, if the payment is a payment the Guarantor is required to tender hereunder, as if the payment, discharge, avoidance or reduction of the Reduced Amount had not occurred.

 

(a)

the granting of any time, indulgence, concession, compromise, waiver or consent whatsoever at any time given to any Obligor or any other person;

 

(b)

any amendment, modification or variation of any Transaction Document or any other agreement;

 

(c)

any change in the time, manner or place of payment of, or in any other term of, the Transaction Document or any other amendment or waiver of or consent to any departure from any Transaction Document (other than this Deed);

 

(d)

the illegality, invalidity or unenforceability of any obligation or liability of any Obligor or any other person;

 

(e)

the invalidity or irregularity in the execution of any Transaction Document or any other agreement;

 

(f)

any lack of or deficiency in the powers of any Obligor or any other person to enter into or perform any of its obligations or liabilities under any Transaction Document or any other agreement or any irregularity in the exercise thereof or any lack of or deficiency in authority by any person purporting to act on behalf of any Obligor or any other person;

 

(g)

the insolvency, liquidation, incapacity, disability, limitation, change of constitution or status, death, or bankruptcy of any Obligor or any other person;

 

(h)

any other Transaction Document, indemnity, guarantee or other security or right or remedy being or becoming held by or available to the Beneficiaries, or by any of the same being or becoming wholly or partly void, voidable, unenforceable or impaired, or by the Beneficiaries at any time exercising or failing to exercise, releasing, refraining from enforcing, varying or in any other way dealing with any of the same, or any power, right, remedy or security the Beneficiaries may now or hereafter have from or against any Obligor or any other person;

 

(i)

any release, waiver, exercise, omission to exercise or renewal of any rights against any Obligor or any other person or any compromise, arrangement or settlement with any of the same;

 

(j)

any change, restructuring or termination of the company or corporate structure or existence of any Obligor or any other person;

 

(k)

any defence based on applicable statutes of limitations, or any existence or reliance on any representation by the Beneficiaries, or any other circumstance that might otherwise constitute a defence available to, or a discharge of any Obligor or any other person;

 

(l)

any failure of the Beneficiaries to disclose to the Guarantor or any other person any information relating to the financial condition, operations, properties or prospects of any Obligor or any person now or in the future known to the Beneficiaries (the Guarantor waiving any duty on the part of any Beneficiary to disclose such information); and/or

 

(m)

any act, omission, matter, circumstance or event which would or may, but for the provisions of this Clause 4.3, operate to impair, prejudice, discharge or otherwise affect this Deed or the obligations or liabilities of the Guarantor hereunder.

 

(a)

The Guarantor further waives for the benefit of the Beneficiaries:

 

(i)

any right to require the Beneficiaries to proceed against any Obligor or to pursue any other remedy in its powers;

 

(ii)

any defence based on any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in any other aspects more burdensome than that of a principal;

 

(iii)

demands, presentments, protests and notices of any kind (except for notices expressly required to be given under this Deed), including, without limiting the generality of the foregoing, notice of the existence, creation or incurring of new or additional indebtedness or of any action or non-action on the part of any Obligor under the Transaction Documents or any other instrument, or any other person whosoever, in connection with any obligation or evidence of indebtedness held by the Beneficiaries under the Transaction Documents;

 

(iv)

any right of subrogation and any right to enforce any remedy which any Beneficiary now has or may hereafter have against any Obligor and any benefit of, and any right to participate in, any security now or hereafter held by the Beneficiaries; provided, however, the Guarantor’s right of subrogation against the Obligors shall be re-instated after the Guaranteed Obligations have been fully performed and the Guarantor’s obligations under this Deed have been fully performed; and

 

(v)

to the fullest extent permitted by applicable Laws, any defences or benefits that may be derived from or afforded by any principles or provisions of law, statutory or otherwise, which limit the liability of or exonerate indemnifiers, guarantors or sureties, or which may conflict with the terms of this Deed.

 

(b)

The Guarantor, by execution hereof, represents to the Beneficiaries that the relationship between the Guarantor and each Obligor is such that the Guarantor has access to all relevant facts and information concerning the Project and each Obligor, and that the Beneficiaries can rely upon the Guarantor having such access.  The Guarantor hereby waives and agrees not to assert any duty on the part of the Beneficiaries to disclose to the Guarantor any facts that it may now or hereafter know about the Project or each Obligor, regardless of whether the Beneficiaries have reason to believe that any such facts materially increase the risk beyond that which the Guarantor intends to assume, or have reason to believe that such facts are unknown to the Guarantor, or have a reasonable opportunity to communicate such facts to the Guarantor.  The Guarantor is fully responsible for being and keeping informed of the financial condition of the Obligors and all circumstances bearing on the risk of delay of construction and development of the Project.  The Guarantor further acknowledges that it will receive substantial direct and indirect benefits from the transactions contemplated by the Transaction Documents and that the waivers set forth in this clause and in any other provision of this Deed are knowingly made in contemplation of such benefits.

 

(c)

This Deed (or any provision hereof) may be enforced, and any demand hereunder may be made, without the Beneficiaries first having recourse to any other security or rights, or taking any other steps or proceedings against any Obligor.  Further, this Deed may be enforced for any balance due after resorting to any one or more other means of obtaining payment or discharge of the monies, obligations and liabilities secured hereby.  In connection therewith and in furtherance thereof, the Guarantor hereby expressly waives any right it may have to first require the Beneficiaries to proceed against or enforce any other rights or claim payment from any person before claiming from the Guarantor under this Deed.

 

(a)

This Deed is legally binding, valid and enforceable against the Guarantor in accordance with its terms.

 

(b)

This Deed is in the proper form for its enforcement in the jurisdiction of the Guarantor’s incorporation and the jurisdictions where the Guarantor has material assets.

 

(a)

any of the Laws applicable to the Guarantor;

 

(b)

the Guarantor’s constitutional documents; or

 

(c)

any document which is binding upon the Guarantor or any of its assets.

 

(a)

No default is outstanding or will result from the Guarantor’s entry into of, or the Guarantor’s performance of any transaction contemplated by, this Deed.

 

(b)

No other event or circumstance is outstanding which constitutes a default, or with the giving of written notice and for the passage of time would constitute a default, of the Guarantor under any document which is binding on the Guarantor or any of its assets.

 

(a)

The Guarantor’s execution and delivery of this Deed constitutes, and the Guarantor’s performance of its obligations under this Deed will constitute, private and commercial acts performed for private and commercial purposes.

 

(b)

The Guarantor will not be entitled to claim immunity from suit, execution, attachment or other legal process in any proceedings taken in its jurisdiction of incorporation in relation to this Deed.

 

(a)

to enable the Guarantor lawfully to enter into and comply with its obligations in this Deed;

 

(b)

to make this Deed admissible in evidence in the Guarantor’s jurisdiction of incorporation and the jurisdictions where the Guarantor has material assets; and

 

(c)

for the Guarantor to carry on its business as currently carried on,

 

(a)

the Guarantor shall supply to Prax:

 

(A)

its audited financial statements for each of its financial years within one hundred twenty (120) days after the end of the relevant financial year; and

 

(B)

its unaudited financial statements for the first half-year of each of its financial years within sixty (60) days after the end of the relevant financial period;

 

(b)

the Guarantor shall make all payments and perform all of its obligations under this Deed in accordance with the terms of this Deed;

 

(c)

the Guarantor shall preserve and keep in full force and effect its existence as a corporation incorporated under the Laws of the State of Nevada, United States of America or of any other State of the United States of America, and all material franchises, rights and privileges under the Laws of the jurisdiction of its formation, and all material qualifications, licenses and permits applicable to the ownership, administration and management of its assets;

 

(d)

at all times, the Guarantor shall comply with all restrictions and limitations in its organizational documents;

 

(e)

the Guarantor shall obtain and maintain in full force and effect all authorisations from time to time required from any governmental or other authorities or from any of its shareholders or creditors for or in connection with the execution, validity and performance of this Deed, and take immediate steps to obtain and thereafter maintain in full force and effect any other authorisations which may become necessary or advisable for any of the foregoing purposes and comply with all conditions attached to all authorisations obtained;

 

(f)

the Guarantor shall remain a publicly listed company on the National Association of Securities Dealers Automated Quotation System (NASDAQ) stock exchange or such other national stock exchange of the United States of America acceptable to the Beneficiaries; and

 

(g)

the Guarantor’s obligations under this Deed at all times shall rank at least pari passu with all of its unsecured and unsubordinated obligations, except for obligations mandatorily preferred by Laws applying to companies generally.

 

(a)

the CHL SPV shall remain a wholly (i.e. 100%) owned direct subsidiary of the Guarantor;

 

(b)

upon the proposed occurrence of (i) any sale, transfer, assignment or other disposition of all or substantially all of the assets of CHL or (ii) any merger, reorganization or consolidation of CHL (each of such event or transaction, the “Proposed Transaction”), CHL shall, immediately after the board of directors and shareholders’ meeting (or similar organ with the authority to approve such transaction) approve such Proposed Transaction, notify Prax of the details of the Proposed Transaction in the form and substance reasonably acceptable to Prax for Prax’s review; provided that the Proposed Transaction does not have materially adverse affect on the Beneficiaries’ interests and rights under the Transaction Documents and any transferee, assignee or successor in the Proposed Transaction have provided Prax with written undertakings reasonably acceptable to Prax that it shall continue to perform, and cause its Affiliates to continue to perform, this Deed and the relevant Transaction Documents, Prax shall not unreasonably exercise its rights to revoke or object to the Proposed Transaction and, if Prax does not serve any notice of revocation of or objection to the Proposed Transaction within ten (10) Business Days following its receipt of CHL’s notification, Prax shall be deemed as waiving its right to revoke or object to the Proposed Transaction;

 

(c)

the Guarantor shall not, and shall not consent to, the filing of any bankruptcy, insolvency, insolvent corporate reorganization, insolvent company arrangement, civil rehabilitation, special liquidation, moratorium, readjustment of debt, appointment of a conservator, trustee, supervisor, inspector or receiver, or similar debtor relief by any Obligor; and

 

(d)

the Guarantor shall not, and shall not consent to, authorize or permit any person to mortgage, pledge, assign for security purposes, sell, convey, assign or transfer any direct or indirect ownership in any Obligor.

 

(a)

The obligations, responsibility and liability on the part of the Guarantor herein shall be personal to the Guarantor, and shall not be affected, diminished or prejudiced by the release, discharge, surrender, variation, substitution or dissipation of all or any portion of this Deed.

 

(b)

A separate action or actions may be brought and prosecuted against the Guarantor, whether or not any action is brought against any Obligor or any other person, or whether or not any Obligor or any other person is joined in such actions or actions.

 

The Guarantor hereby irrevocably appoints Prax (with full power of substitution) to be its attorney in its name and on its behalf to, upon the Guarantor’s failure to timely and fully perform its obligations under this Deed (after the expiration of the cure period designated by the a Beneficiary pursuant to Clause 2.2(a) above), execute, sign, do and perform all assurances, deeds, instruments, acts and things whatsoever which, in the reasonable opinion of Prax, are necessary or expedient for the Guarantor to execute, sign, do or perform for the purpose of carrying out any of the undertakings, covenants and obligations declared or imposed by this Deed upon the Guarantor or for giving to Prax on behalf of the Guarantor the full benefit of any of the provisions hereof, and generally to use the Guarantor’s name in the exercise of all or any of the rights, remedies and powers conferred on the Guarantor including in particular, but without prejudice to the generality of the foregoing, the right of recovery of any sums at any time and from time to time due and payable, under or pursuant to this Deed.  The Guarantor covenants that it will ratify and confirm all that the attorney appointed pursuant to this Clause shall lawfully do or cause to be done by virtue of these presents.

 

The Guarantor represents to and undertakes with the Beneficiaries that it has not taken and will not take any security in respect of its liability under this Deed from any Obligor.  So long as no Discharge Event has occurred, the Guarantor shall not exercise any right of subrogation, contribution (including any right to seek contribution) or any other rights of a surety, or enforce any security or other right or claim, against any Obligor (whether in respect of its liability under this Deed or otherwise).  In addition, until such time as a Discharge Event has occurred, the Guarantor shall not assert a claim in the insolvency or liquidation of Obligor in competition with the Beneficiaries.

 

(a)

all costs, charges and expenses (including legal and other fees on a full indemnity basis and all other out-of-pocket expenses) incurred by the Beneficiaries in connection with the execution and registration of this Deed, the preparation, execution and registration any other documents required in connection herewith and/or any amendment to or extension of, or the giving of any consent or waiver in connection with, this Deed or in releasing or re-assigning this Deed; and

 

(b)

all costs, charges and expenses (including legal and other fees on a full indemnity basis and all other out-of-pocket expenses) incurred by the Beneficiaries in exercising any of its powers hereunder or in suing for or seeking to recover any sums due hereunder or otherwise preserving or enforcing its rights hereunder or in defending any claims brought against the Beneficiaries in respect of this Deed.

 

(a)

The Guarantor shall indemnify, defend and hold each Beneficiary harmless from and against any and all losses, liabilities, claims, damages, expenses, obligations, penalties, actions, judgments, suits, costs or disbursements of any kind or nature whatsoever, including the Beneficiaries’ first party losses, all third party claims against any of the Beneficiaries and any attorney’s fees, directly or indirectly incurred or accruing by reason of (i) any failure of any of the Obligors to fully and timely perform all of the Guaranteed Obligations, (ii) any failure of the Guarantor to fully and timely perform any of its obligations under this Deed, and (iii) any acts performed by the Beneficiaries pursuant to the provisions of this Deed (including without limitation Clause 8 hereof), except as a result of such Beneficiary’s fraud, gross negligence or wilful misconduct.  All sums paid by the Guarantor pursuant to this Clause, and all other sums expended by the Beneficiaries to which they shall be entitled to be indemnified under or pursuant to this Deed, shall be payable by the Guarantor to each Beneficiary upon demand.

 

(a)

If an amount due to any Beneficiaries from the Guarantor in one currency (the “first currency”) is received by the relevant Beneficiaries in another currency (the “second currency”), the Guarantor’s obligation to such Beneficiaries in respect of such amount shall only be discharged to the extent that such Beneficiaries may purchase the first currency with the second currency in accordance with normal banking procedure. If the amount of the first currency which may be so purchased (after deducting any costs of exchange and any other related costs) is less than the amount so due, the Guarantor shall, upon receiving written notice,  indemnify such Beneficiary against the shortfall.

The Guarantor shall indemnify each Beneficiary as required under Clause 12.1 and 12.2 within five (5) Business Days of their receipt of a written demand from any Beneficiary for indemnity under this clause.

The indemnity obligation of the Guarantor under Clause 12.1 and 12.2 shall each be an obligation of the Guarantor independent of, and in addition to, its other obligations under this Deed and shall take effect notwithstanding any time or other concession granted to any Obligor or any judgment or order being obtained or the filing of any claim in the liquidation, dissolution or bankruptcy (or any similar proceeding) of any Obligor.

 

(a)

Scope of Force Majeure.  Force majeure events include, but are not limited to, acts of God, war, terrorism, civil commotion, riot, blockade or embargo, delays of carriers, fire, explosion, labor dispute, casualty, accident, earthquake, epidemic, flood, windstorm, or by reason of any law, order, proclamation, regulation, ordinance, demand, expropriation, requisition or requirement or any other act of any governmental authority, including military action, court orders, judgments or decrees, or any other cause beyond the reasonable control of the Guarantor and each of the Obligors, whether or not foreseeable.  Notwithstanding the foregoing, the Guarantor’s or any Obligor’s lack of funds, insolvency or difficulty in making any payment or performing any indemnification obligation under this Deed shall not constitute a force majeure event or entitle Guarantor to any relief under this Clause 12.5.

 

(b)

Notice.  Should the Guarantor be prevented from performing the terms and conditions of this Deed due to the occurrence of any force majeure event, the Guarantor shall send notice to the Beneficiaries within seven (7) days from the date on which the Guarantor has knowledge, or should have knowledge of the occurrence of the force majeure event stipulating the occurrence thereof and stating in the notice that such event is an event of force majeure.  The Guarantor’s failure to deliver such notice prior to the expiration of the above seven-day period shall constitute Guarantor’s affirmative and automatic waiver of any right to obtain relief under this Clause 12.5 or any similar defense or relief available under applicable law.

 

(c)

Performance.  Any delay or failure in performance of this Deed caused by a force majeure event shall not constitute default by the Guarantor under this Deed.  Upon the occurrence of a force majeure event where notice has been given by the Guarantor as required by Clause 12.5(b) above, the Guarantor shall be excused from the performance of the obligation only to the extent that such performance is prevented by the force majeure event; provided, however (i) the Guarantor shall take, at its sole cost and expense, those actions required by the Beneficiaries to mitigate losses arising from the force majeure event, (ii) upon the lapsing of the force majeure event, the Guarantor immediately shall resume the performance of those obligations affected by such force majeure event, and (iii) the Guarantor shall update the Beneficiaries in a regular and diligent manner regarding the current status of the force majeure event, the actions being taken by Guarantor to mitigate losses arising from such force majeure event and the ending or termination of the force majeure event.

 

(a)

the legality, validity or enforceability in that jurisdiction of any other term of this Deed; or

 

(b)

the legality, validity or enforceability in other jurisdictions of that or any other term of this Deed.

 

(a)

In the event of any dispute arising from or in connection with this Deed, the dispute shall be submitted to resolution by arbitration before China International Economic and Trade Arbitration Commission (“CIETAC”), Shanghai Sub-Commission in accordance with the CIETAC Arbitration Rules presently in force.  There shall be a single arbitrator.  If the Guarantor and the Beneficiaries do not agree to appoint an arbitrator who has consented to participate within twenty (20) days after the issuance of a notice of arbitration by any party, the relevant appointment shall be made by CIETAC Shanghai Sub-Commission.

 

(b)

Any proceedings shall take place in Shanghai and be conducted in Chinese.  The arbitral award shall be final and binding upon all parties.  If any party obtains an arbitration award against the other party in connection with a dispute arising from or in connection with this Deed, such party shall be entitled to cover its costs and reasonable attorney’s fees (including the reasonable value of in-house attorney services) and disbursements incurred in connection therewith and in any appeal or enforcement proceeding thereafter, in addition to all other recoverable costs, as determined by the arbitrator.

 

(c)

References in this Clause to a dispute in connection with this Deed include any dispute as to the existence, validity or termination of this Deed.

 

(a)

agrees not to claim any immunity from proceedings brought by a Beneficiary against it in relation to this Deed and to ensure that no such claim is made on its behalf;

 

(b)

consents generally to the giving of any relief or the issue of any process in connection with those proceedings; and

 

(c)

waives all rights of immunity in respect of it or its assets.