GuaranteeAgreement

1.1  

Classification of guarantee: provision of counter guarantee against the credit line according to letter of credit the Bank issued to the Trustor and trust receipt.

1.2  

Purpose of guarantee: the Trustor applies the credit line issued by the Bank to open letter of credit.

1.3  

the Beneficiary or the Creditor of this agreement (name and address):

1.4  

The master contract of the guarantee made by the guarantor under this agreement: the Trustor applied to the Beneficiary or the Creditor by June, 2006 for the credit line of RMB22,000,000.00, and the contract number is: Borrow 2008 Trade 614001R.

1.5  

Guarantee amount of this agreement: RMB22,000,000.00.

1.6  

Guarantee term: 1 year.

1.7  

Other major terms:

1.8  

The Trustor entrusts the Guarantor to provide guarantee to the Beneficiary or the Creditor. Within the term all the occurring expenses, such as notarization fees, evaluation fees, appraisal fees, insurance fees, mortgage fees, witness fees, etc., shall be at the cost of the Trustor.

1.9  

The Trustor and the Guarantor have agreed on condition that the Suretyship Contract or the guarantee letter the Guarantor issued to the Beneficiary or the Creditor is not compliant with this agreement, this agreement shall apply.

2.1  

The guarantee fee of the agreement is RMB560,000.00, being calculated based on the yearly rate.

2.2  

Guarantee term: 1 year.

2.3  

Guarantee amount: RMB560,000.00

2.4  

Payment options: Cash or cash cheque (cash/transfer)

2.5  

Time of payment: the Trustor shall issue a cash cheque at RMB560,000.00 as the payment guarantee to the Guarantor in 20 days before the Guarantor issue the Suretyship Contract or guarantee letter to the Beneficiary or the Creditor, and simultaneously start transferring agreed amount of guarantee fee to the specified account of the Trustor in cash since the day when the Guarantor issues the Suretyship Contract or guarantee letter to the Beneficiary or the Creditor until the total amount reaches RMB560,000.00, and in the end the Guarantor, after confirming having received all the guarantee fee at RMB560,000.00, shall issue a cash cheque with the total amount of  RMB560,000.00 back to the Trustor. If the Trustor fails to deliver the guarantee fee as required in time and amount after the Guarantor issues the Suretyship Contract or guarantee letter to the Beneficiary or the Creditor, the Guarantor is entitled to cash the cheque that the Trustor issued in advance as the guarantee fee.

2.6  

Overdue guarantee fee: on the condition that the Trustor fails to execute the terms in the master Suretyship Contract on schedule, which lead to the overdue guarantee, then the Trustor is obliged to pay the Guarantor for overdue guarantee fee. Overdue guarantee fee is based on the total of overdue guarantee principal and interest, and shall be calculated and collected according to 3% per month; monthly charge will still periods less than a calendar month. The Guarantor shall collect 5‰ of the overdue guarantee fee as penalty for breach of contract from the Trustor in case of the overdue delivery of guarantee fee without the written consent of the Guarantor.

3.1  

After the Guarantor issues the above guarantee to the Beneficiary or the Creditor, the Trustor shall deposit no less than 30% of the credit line as guarantee money to the account specified by the Bank before applying for opening each letter of credit to the Bank. The guarantee money is performance bond, serving as counter guarantee against the guarantee that the Trustor executes the master contract with the Beneficiary or the Creditor.

3.2  

The Trustor shall provide the Guarantor with the following mode of guarantee before the Guarantor provides the Beneficiary or the Creditor with the above guarantee:

3.3  

The above counter Suretyship Contract or agreement shall be signed separately, and constitutes a part of this Agreement, having the same legal effect as this agreement.

3.4  

The Trustor commits that the Guarantor shall be the only beneficiary of the above counter guarantee measures, and means the exclusive right. If the Trustor re-mortgages or re-pledges, sub-mortgages or sub-pledges, assigns, transfers, leases or uses the above counter guarantee for other purposes that may affect the interest of the Guarantor before or after signing this Agreement, then the Guarantor is entitled to claim the Trustor for criminal responsibility.

4.1  

Before the Guarantor signs the Suretyship Contract or opens guarantee letter with the Beneficiary or the Creditor, the Trustor is obliged to provide the Guarantor with the original copies of the following documents, or the true and complete duplicates testified with the corporate chop and the signature of the legal representative of the Trustor. The original copy of the first document shall be returned to the Trustor after being validated; whereas the copy of this document with the corporate chop shall be retained.

6.1  

The Trustor shall provide the application in written form or the written consent of the Beneficiary or the Creditor while asking the Guarantor to modify the contents of Suretyship Contract or guarantee letter. On the condition that the Trustor increases guarantee amount or extend the guarantee term, the Trustor shall increase or extend the counter guarantee collateral correspondingly, and pay the Guarantor for the guarantee fee of the enhanced amount or extended term. Otherwise, the Guarantor shall not accept the application of modification.

6.2  

The modification shall not take effect until the Guarantor issues the confirmation letter in written form upon agreeing on the guarantee modification of this Agreement.

7.1  

The Trustor and the Guarantor shall obey the terms described in this Agreement, and the following situations will be regarded as events of default.

7.2  

The Guarantor is entitled to take all the following measures or partially when, before or after the above situation occurs:

(1)  

Require the Trustor to continue offering the counter guarantor with the approval and acceptance of the Guarantor;

(2)  

Require the Trustor or the third party to sign the collateral or pledge contract with the Guarantor as specified in this Guarantee Agreement, and keep on the registration procedures of relative collateral or pledge;

(3)  

Require the Trustor or the third party to adopt other remedial measures, i.e. taking its assets as collateral or pledge to the Guarantor, and work on the registration procedures of relative collateral or pledge;

(4)  

The Guarantor is entitled to terminate this Agreement on one party, and require the Trustor to be liable for compensation for the harm and losses of the Guarantor;

(5)  

Entitled to investigate against the Trustor the liabilities for breaching this Agreement.

8.1  

The Trustor pledges to fulfill its payment and other obligations specified in the contracts or agreements or other relative contracts and agreements (the “Contract” and “Agreement”) signed with the Beneficiary or the Creditor.

8.2  

On the condition that the Beneficiary or the Creditor claims for compensation from the Guarantor in accordance with the regulations in the Suretyship Contract or Guarantee Letter under the loan contract or agreement or other relative contract or agreement, and the Guarantor testifies the claim documents, receipts or certificate comply with the regulations of the Suretyship Contract or Guarantee Letter, the Guarantor, while prepaying for the Trustor to the Beneficiary or the Creditor in order to fulfill its guarantee obligations, shall absolutely have the right of recourse against the Trustor and its successors or assignees, which won’t be affected by any commands directed by the senior authorizations of the Trustor or any contract or agreement signed between the Trustor and any units.

8.3  

On the condition that the Trustor fails to fulfill its payment or obligations as stated in the above contract or agreement signed with the Beneficiary or the Creditor and enables the Guarantor to be liable for the guarantee obligations against the Beneficiary or the Creditor for the principal, interest, penalty interest, compound interest, penalty, compensation, expenses for ensuring the proprietyization of the creditor’s credits, then the Trustor shall be liable for the following obligations:

(1)  

Pay the Guarantor for all the above advance payment;

(2)  

Pay the Guarantor for the interest of above expenses in accordance with the loan interest rate stipulated by the bank for the corresponding period (shall be calculated from the day that the actual advance payment of the Guarantor to the Beneficiary or the Creditor until the day that the Trustor repays the Guarantor for the above expenses);

(3)  

Pay the Guarantor for the penalty at 1‰ per day of the total delivered amount (i.e. penalty = total amount that the Guarantor has paid X 1‰ X actual days that the Guarantor advanced)

8.4  

The Trustor shall pay the Guarantor all the advance payment, corresponding interest, and penalty unconditionally within 7 days after receiving the notice of claim from the Guarantor.

8.5  

On the condition that the Trustor breaches the terms of the above contract or agreement signed with the Beneficiary or the Creditor and enforces the Guarantor to be responsible for the guarantee obligations against the Beneficiary or the Creditor, then the Trustor shall be liable for the following obligations other than those stated in article 8.3 of this Agreement:

(1)  

When the Beneficiary or the Creditor brings litigation or arbitration to the Guarantor, or during the process of reconciliation, the Trustor shall be responsible for all the expenses on the cost of the Guarantor (including but not limited to the litigation or arbitration fee, property preservation or Property Preservation fee, enforcement fee, evaluation fee, auction fee, appraisal fee, legal fees, travel expenses, investigation and evidence collection fee, etc.) .

(2)  

The Trustor shall be responsible for all the expenses on the cost of the Guarantor (including but not limited to the litigation or arbitration fee, property preservation or Property Preservation fee, enforcement fee, evaluation fee, auction fee, appraisal fee, legal fees, travel expenses, investigation and evidence collection fee, etc.) occured in order to resourse advance payment from the Trustor.

8.6  

On the condition that the Trustor fails to fulfill its payment and other obligations as stated in the above contract or agreement signed with the Beneficiary or the Creditor and enables the Guarantor to be liable for the guarantee obligations against the Beneficiary or the Creditor, or the Trustor breaches the terms of this Guarantee Agreement, the Guarantor is entitled to select one or several requirements in the counter guarantee provided by the Trustor (stated in Section 3 of this Agreement, and the counter guarantee contract or agreement shall apply) to require the Trustor or the third party be liable for the prior guarantee responsibility.

8.7  

On the condition that the Trustor fails to fulfill its obligations as stated in the master contract signed with the Beneficiary or the Creditor and enables the Guarantor to be liable for the guarantee obligations against the Beneficiary or the Creditor, the Trustor shall approve and authorize the Guarantor to release the fact about its/his breaches and relative information at financial organizations, monitoring organizations, government departments, new media, internet media or other enterprises, public institutions without reservation, and waive its/his right of defense.

9.1  

This Guarantee Agreement shall be deemed to be a contract made under the laws of the People’s Republic Of china, and for all purposes shall be governed by and construed in accordance with such laws. Any disputes arising from the performance of this Agreement shall be resolved through a friendly negotiation of each party concerned. Where all the parties fail to solve it, the dispute shall be resolved through the following mode:

(1)  

bring a suit directly at the local people's court where the Guarantor is located.

10.1  

 This Agreement shall take effect in accordance with the following regulations:

10.1.1  

On the condition that the Trustor is natural person, the Agreement becomes effective with the signature and humbprint of witness of the Trustor and signature of legal representative or authorized representative and chop of the Guarantor.

10.1.2  

On the condition that the Trustor is a legal person, the Agreement becomes effective with the signature and corporate chop of legal representative or authorized representative of both parties.

10.2  

 This Guarantee Agreement shall be deemed to terminate after the rights and obligations are fulfilled.

11.1  

 The other issues that both parties agreed hereinof:

11.2  

 This Agreement has two identical duplicates and a copy of which shall be kept by each of the two parties, holding the same legal effects.

11.3  

 Special reminder: the Guarantor has made a hint on all the articles in this Agreement, and made explanation correspondingly in answer to the request of the Trustor; moreover, the Trustor has studied and analyzed each articles of this Agreement and has got comprehensive and accurate understanding; therefore, both parties has reached an agreement to the meaning of each article of this Agreement.