Credit Facility Agreement (This document is an English summary from the original Chinese version)

1.

Scope of Business

2.

Types of Loan and Commitment Amount

RMB Short-Term Loan: RMB 30 million;

Bank’s Acceptance Credit: RMB 15 million;

Factor Credit: RMB 15 million; and

Commercial Invoice Discount: RMB 20 million.

3.

Use of the Line of Credit

4.

 Separate Agreements Required: 

For RMB Short-Term Loan: RMB Loan Agreement (Short Term);

For Bank’s Acceptance Credit: Bank’s Acceptance Credit Agreement; and

For Settlement Financing Business: (1) Agreements: (i) Domestic Commercial Invoice Discount Agreement; and (ii) Domestic General Factor Agreement; and (2) Applications: (i) Application for Domestic Invoice Discount Amount; (ii) Application for Domestic Commercial Invoice Discount; (iii)Application for Domestic Factor Business; (iv) Application for Change of Domestic Factor Credit Amount; and (v) Application for Domestic Factor Financing.

5.

 Term of the Agreement 

6.

Conditions Precedent on Extending Credit Facility:  

6.1

Submit an application for the specific type of loan to the Lender before the expiration date of the Agreement under Section 5;

6.2

Reserve and execute relevant corporate documents, record, seal, lists of personnel, sample of signature relevant to this Agreement and the Separate Agreements;

6.3

Set up accounts necessary for drawing credit facility as required by the Lender;

6.4

Complete all necessary legal and administrative procedures and submit to the Lender copies or appropriate photocopies of documents concerned. In case these formalities shall be performed by the Lender according to the stipulations of laws and regulations, the Borrower agrees to provide all necessary assistance;

6.5

Satisfy the conditions precedent as specified in the Separate Agreements;

6.6

Provide deposit or execute the security agreement required by the Lender; and

6.7

Agree to make presentation and warranty under Section 10 of this Agreement.

6.8

Other conditions deemed necessary by the Lender.

7.

Obligations of the Lender 

8.

Obligations of the Borrower

8.1

Timely payment of all necessary fees pursuant to this Agreement and respective specific Separate Agreements;

8.2

Timely provision of reserve in accordance with this Agreement and respective specific Separate Agreements;

8.3

Timely payment of all debts, including but not limited to, principals, interests, penalties and relevant fees pursuant to this Agreement and respective specific Separate Agreements; and

8.4

Use the loans obtained according to the use specified in this Agreement and respective specific Separate Agreements.

9.

Security Interest

10.

 Representations and Warranties

10.1

The Borrower is a duly organized, validly existing enterprise legal person and in good standing under Chinese laws, has duly gone through the industrial and commercial registration formalities, has all necessary power and the performance of this Agreement and respective specific Separate Agreements is within the Borrower’s powers;

10.2

Execution and performance of this Agreement and respective specific Separate Agreements are based on the true expression of intention of the Borrower. The Borrower has obtained all lawful and valid corporate authorization in accordance with its articles of association or other internal rules and regulations. The execution and performance of this Agreement and respective specific Separate Agreements will not violate any agreements, contracts and other legal documents which have legal binding effect on the Borrower;

10.3

All documents, financial statements, and other materials provided by the Borrower to the Lender pursuant to this Agreement and specific Separate Agreements are true, complete, accurate and valid;

10.4

The transaction for which the Borrower applies for loans from the Lender is true and legitimate, not for any illegal purposes, such as money laundry. That the Borrower provides with the Lender any documents can not be deemed that the Lender is liable for reviewing the truth and legitimacy of the transactions in which the Borrower is engaging;

10.5

The Borrower has not disguised any events which will affect the financial status and performance capabilities of the Borrower and the mortgagor;

10.6

 The Borrower hereby warrants:

(i)

To provide the Lender with financial statements on a regular basis (including, but limited to, annul, quarterly and monthly reports) and other related materials;

(ii)

To accept and coordinate the examination and supervision by the Lender to the use of the loans and the production, operation and financial activities of the Borrower;

(iii)

To immediately inform the Lender of any material change of the Borrower, including but not limited to decrease of registered capital, transfer of material assets or equity, sealing up the collaterals, dissolution, bankruptcy, etc., which would affect the Borrower’s financial status or capability to perform its obligations pursuant to this Agreement;

(iv)

Not to enter into any division, merger, acquisition, reorganizes, contracting, or joint venture or cooperation with foreign investors, etc. without written consent from the Lender; and

(v)

Any matter not covered by this Agreement, the Borrower agrees to handle them according to international practice and the relevant provisions of the Lender.

11.

Adjustment or Termination of the Line of Credit

11.1

Occurrence of Events of Default under Section 12;

11.2

The Lender believes there is material negative news with regard to the market or of the industry that the Borrower is engaged in;

11.3

The Lender believes that certain restrictive policies or laws enacted by the domestic government, foreign governments or international organizations have or could have material adverse impact on the industry that the Borrower is engaged in. 

12.

Events of Default

12.1

The occurrence of any of the following will constitute an Event of Default by the Borrower:

(i)

The Borrower fails to make the payment when the payment is due under this Agreement and any other specific Separate Agreements;  

(ii)

The Borrower fails to provide reserves in accordance with this Agreement and any other specific Separate Agreements;  

(iii)

The Borrower uses the proceeds of the loan for purposes outside of the scope as agreed upon by the Parties under this Agreement and specific Separate Agreements;

(iv)

Any representation furnished by the Borrower proves to be incorrect or the Borrower breaches any of its representations/warranties under this Agreement;

(v)

The Borrower breaches other obligations contained in this Agreement and specific Separate Agreements; and

(vi)

Occurrence of an event of default under other agreements between the Borrower and the Lender.

12.2

 In the event of 12.1, the Lender is entitled to take one or all of following actions:

(i)

Without any prior notice to the Borrower, declare the principal of and accrued interest on the loans, and any other amount due under the specific Separate Agreements due immediately and payable in full; 

(ii)

Without any prior notice to the Borrower, deduct payment (including principal, interests, penalties, fees, etc.) due directly from any accounts the Borrower has with the Lender and other branches of Bank of China; 

(iii)

Dispose of the secured properties; and

(iv)

Other actions deemed necessary by the Lender.  

13.

Change of Exchange Rate - Borrower takes the risk of the change of exchange rates.

14.

Others 

14.1

Without prior written consent from the Lender, the Borrower shall not assign any rights or obligations under this Agreement to a third party;

14.2

The Borrower acknowledges that Lender is entitled to assign and delegate its rights or obligations under this Agreement to other branches of Bank of China if necessary. Upon the Lender’s authorization, any other branch of Bank of China is entitled to all rights under this Agreement, including but not limited to, the right to file claims with a court or submit disputes under this Agreement to certain arbitral institutions. The Borrower waives to make any objections to litigation or arbitration qualification of other branches of Bank of China.

14.3

This Agreement shall have legal binding effects on the lawful successors and assignees of both Parties on condition that other stipulations under this Agreement are not affected. 

15.

Reservation

15.1

Failure to exercise any rights under this Agreement or require the Borrower to perform any obligations by the Lender does not constitute the Lender’s waiver or exemption of such rights or obligations, nor constitute the Lender’s waiver or exemption of any other rights or any other obligations of the Borrower under this Agreement.

15.2

Any tolerance, extension or delay to execute the rights under this Agreement by the Lender shall not affect any enjoyable rights of the Lender under this Agreement and other laws and regulations, nor be deemed a waiver of the aforesaid rights of the Lender.

16.

Amendment, Termination and Interpretation of Contract

16.1

Unless otherwise stipulated in this Agreement, this Agreement may be amended, supplemented or terminated based on mutual written agreement between both Parties. Any amendments and supplements to this Agreement shall constitute an integral part of this Agreement.

16.2

Any unenforceable provision of this Agreement will not affect the enforceability of all the remaining provisions of this Agreement. 

17.

Dispute Settlement

17.1

The Agreement will be governed by laws of People’s Republic of China;

17.2

Any disputes, which cannot be settled through consultation, shall be adjudicated by the court in the jurisdiction where the Lender or the branch of Bank of China that exercises the rights and obligations under this Agreement domiciles. 

18.

Notarization: no notarization is required under the Agreement.

19.

Effectiveness of the Agreement

20.

Special Note

/s/ Yuncong Ma

September 27, 2007

Place: Jinzhou Tiebei Branch

 

 

/s/ Jun Wang

September 27, 2007

Place: Jinzhou Tiebei Branch