English Translation of Shanghai Pudong Development Bank Working Capital Loan Agreement

1.

The loan under this Agreement is a short-term working capital loan.

2.

The amount of the loan under this Contract is: RMB 10 million.

3.

The loan hereunder shall be used for the purchase of raw material.

4.

The term of the loan hereunder is from August 1, 2011 to August 1, 2012, one year (or 12 months), from the first withdrawal date. The actual withdrawal date and due date are subject to the date recorded on the loan note between the Borrower and the Creditor. The last due date shall not exceed the term of loan set forth in this Agreement. The loan note shall form an integral part of this Agreement.

5.

The interest rate of the loan is

Serial

Withdraw period by

Withdraw amount

1)

August 1, 2011

RMB ten million

2)

MM-DD-YYYY

3)

MM-DD-YYYY

4)

MM-DD-YYYY

5)

MM-DD-YYYY

MM-DD-YYYY

Serial

Repay by

Repayment amount

1)

August, 1, 2011

RMB ten million

2)

MM-DD-YYYY

3}

MM-DD-YYYY

4}

MM-DD-YYYY

5)

MM-DD-YYYY

6)

MM-DD-YYYY

MM-DD-YYYY

1.

The Borrower irrevocably agrees and acknowledges that loan under this Agreement shall be with

drawn at the Creditor’s discretion all the time. The Creditor can perform regular or ad hoc supervisions on the date at its own discretion to determine whether to continue to extend any further loan; the Creditor has the right to require the Borrower to pay off all loans at any time despite any provision stated otherwise in this Agreement or any other documents. Without prior notice to the Borrower, the Creditor has the right to cease to issue loan, reclaim part of or all loans or terminate the Agreement.

2.

Loan under this Agreement shall be used in accordance with the provisions under this Agreement, the Borrower shall not be engaged in misappropriating, misusing the loan for fixed asset investment and equity investment. The loan may not be used for manufacturing or operation neither prohibited by the government, nor can it be used for other purposes that are not consistent with the use as working capital.

3.                 Unless otherwise agreed in this Agreement, the interest shall be calculated from the date of first drawdown and the actual days of the term of the loan. The actual days of the term of the loan include the first day but exclude the last day. Daily interest rate= monthly rate / 30, monthly interest rate = annual interest rate/ 12.

2.

The Creditor has the right to require the borrower to pay penalty interests per day in accordance with the overdue interest rate agreed in the Agreement hereof for the overdue principal since the date due (“Due date of the loan” includes the condition in which the creditor to reclaim the loan in advance), until the payoff of the principal and interest by the Borrower.

3.

Should the Borrower fail to use the loan for the purpose as set forth in the Agreement, the Creditor is entitled to claim penalty interest on any balance of loan used by the Borrower in breach of this Agreement for the days of breach since the date of misuse happens, until the liquidation of principal and interest by the Borrower.

4.

Interests that are not paid by the Borrower (including regular interest, penalty interest for overdue and misappropriated loan), the Borrower shall pay the compound interest accumulated since the date overdue in accordance with the penalty interest rate stipulated in the Agreement on the interest paying date (the 2nd day after the settlement date).

5.

Interest rate marketization or the market is collapsed

1.

Before the first withdrawal, the Borrower shall meet the following conditions, while the Creditor has no obligation to examine the authenticity of the following documents or conditions:

2.

Except for the first withdrawal, the Borrower should satisfy the following conditions prior to each withdrawal, but the Creditor has no obligation for examining the authenticity of the following documents or conditions:

1.

A general settlement account and a capital deposit account of the Borrower, and a special account for working capital loan agreed by the two parties (if any) should have been established with the Creditor when this Agreement is signed (see part 1 of this Agreement). The Borrower agrees that the Creditor shall have supervision on the above described account of the Borrower.

2.

Provided that no special account for working capital loan has been opened, a general settlement account shall be used for the distribution and payment of the loan.

 

Provided that a special account for working capital loan has been opened, it shall be used for the distribution and payment of the loan and the interest for the capital in this account shall be calculated as what of demand deposit. The Borrower agrees that, the special account for working capital loan shall have reserved specimen seal from the Borrower and supervision specimen seal from the Creditor. Without the Creditor’s written consent, the Borrower shall not arbitrarily change the reserved specimen seal for the exclusive working capital loan account.

 

3.

The Borrower acknowledges that the capital deposit account is the account for income and for repayment provision. The repayment of principal and interest of the loan under this Agreement shall be deducted from this capital deposit account. The income cash flow or the whole cash flow of the Borrower shall enter this capital deposit account.

The Borrower warrants that, the remaining balance in the capital deposit account shall not be less than the amount of the due principal and interest payable at current period at any repayment date or within the three days prior to the repayment date for the principle and interest. The Borrower acknowledges that, the Creditor is entitled to restrict or refuse the external payment of the borrower which may lead the remaining balance within the capital deposit account to be less than the amount of the due principal and interest payable at current period, so as to ensure the remaining balance within the capital deposit account has sufficient balance to pay for the due principal and interest payable at current period.

1.

The Borrower agrees that, the Creditor is entitled to perform management and control for the payment of the loan capital through the ways of “payment by the creditor upon authorization” or/and “payment by borrower itself”, so to supervise the usage of the loan is in accordance with this Agreement.

2.

The Borrower agrees that, if the business relationship of credit loan between the Borrower and the Creditor is newly established, and the credit status of the Borrower is ordinary, or a single payment exceeds the amount agreed in this Agreement (see Part 1 of this contract), or other conditions determined by the Creditor happen, the payment of loan shall be through the way “payment by the creditor upon authorization”.

3.

When the loan capital is required for payment externally by the Borrower, the proof materials that comply with the requirement should be submitted to the Creditor, which should include but not limit to:

4.

Provided that no special account for working capital loan has been opened, the Borrower shall submit withdrawal request form (see annex 1 of this Agreement) to the creditor within three (3) working days prior to withdrawal date specified, and specify either payment by the creditor upon authorization or payment by the Borrower itself. The Borrower acknowledges that, the Creditor is entitled to examine if the Borrower’s related materials are in compliance with the payment condition in this Agreement, and the Creditor is granted the right to decide the payment methods for the corresponding loan.

5.

Provided that a special account for working capital loan has been opened, in the case of payment by the creditor upon authorization, the Borrower shall submit payment request form (see annex3 of this Agreement) with reserved specimen seal of the exclusive working capital loan account to the creditor within three (3) working days prior to payment date specified. The Creditor is entitled to examine if the Borrower’s related materials are complied with the payment condition in this Agreement. After examination and consent, it shall pay the loan fund to the counterparty of the Borrower with the supervision specimen seal of the exclusive working capital loan account on the vouchers. In the case of payment by the Borrower itself, the Borrower shall submit payment request form (see annex 3 of this Agreement) to the creditor within three (3) working days prior to payment date specified. After the Creditor consented, the Borrower shall fill in the vouchers (the amount for each summary voucher shall not exceed the amount that the Creditor authorized in this agreement). After verification, the Creditor shall seal the summary voucher with the supervision specimen seal of the working capital loan, and transfer the related funds to the Borrower’s general settlement account.

6.

The Borrower acknowledges that it shall pay the transfer fee generated at the payment of the loan capital, and when this fee occurs, the Creditor is entitled to deduct this amount directly.

7.

During the drawdown and payment for the loan, if any following circumstances happen to the Borrower, the Creditor shall have the right to request the Borrower to supplement its conditions for withdrawal and payment of the loan, or amend the method to pay the loan, cease to drawdown or pay the loan:

(1)

Its credit standing decreases;

(2)

Low profit for its main business:

(3)

Abnormal use of the loan capital:

1.

The Borrower shall repay the principal and interest of the loan and any other related charges timely and sufficiently in accordance with this Agreement. The Borrower hereby irrevocably authorizes the Creditor to positively deduct the previously described amount of credit from the account of the Borrower established with the creditor upon the due date of the loan or the other conditions agreed in this Agreement.

2.

If the Borrower intends to repay the loan in advance, it shall submit written request to the Creditor within ten (10) bank working days prior to the expected repayment date, and get the written consent of the Creditor. If no written consent is granted by the Creditor, the Borrower shall continue to repay the principle and interest in accordance the term agreed in this Agreement. If the Borrower repays the loan in advance without written consent of the Creditor, the Creditor shall charge a one-time penalty to the Borrower (see part 1of the Agreement).

3.

In case that the Borrower cannot make timely repayment in a good reason, it shall submit a request for an extension of the loan within thirty (30) bank working days prior to the repayment term, and prepare necessary materials for processing the extension of the loan. If the loan under this Agreement has securities interest with guaranty, mortgage or pledge, written consents from the guarantor, mortgagor or pledgor are also necessary. The Creditor is entitled to decide whether to agree with the extension request. If the Borrower fails to submit extension request, or fails to get the consent from the Creditor, the loan shall be converted to overdue loan since the due date.

1.

It is duly incorporated and validly existing, and has the full ability of civil rights and acts required for execution and performance of this Agreement;

2.

Its execution and performance of this Agreement is its true declaration of intent, has obtained legal and valid authorization according to its articles of association or other internal constitutional document, and will not violate any agreement, contract and other legal documents binding upon the Borrower; it has or will obtain all approvals, permits, filings or registrations required for its execution and performance of this Agreement;

3.

The signing and implementation of the Agreement shall not violate the law that Borrower should comply with, related documents, determination and rules of related institutions, and shall not be conflict with any other obligations of any contract or agreement that has been signed by the Borrower.

4.

The Borrower shall make sure to provide all financial statement forms (if any) complying with the law of People’s Republic of China (in the purpose of this Agreement, not include the laws of Hong Kong, Macao and Taiwan areas), which should be duly, completely and fairly reflect the financial conditions of the Borrower; to provide the creditor with true, effective, accurate and complete materials, documents and information of itself and its warrantor, without any concealing or omission.

5.

All documents, certificates and materials of it and its guarantor provided to the Borrower hereunder are true, complete, accurate and valid;

6.

The Borrower shall ensure to complete the filing, registration or other procedures that bring this Agreement into effectiveness, and pay for the related tax and charge.

7.

Since the issuance of the latest audited financial statements, there is no material adverse change to the operational and financial state of the Borrower.

8.

In its business activities, the Borrow shall strictly obey the law and regulations, perform various businesses according to business license or legally specified business scope of the Borrower, have the ability of continuous operating, and have the source of legal repayment.

9.

The Borrower shall not give up any credit in due, nor shall deal with the major properties in gratuitous or other inappropriate ways.

10.

The Borrower has disclosed the truth and conditions it knows or should know that may affect the Creditor’s decision for this loan.

11.

The Borrower acknowledges that no delayed payment would happen during the term of the Agreement, including but not limiting to wage, medical and disability grant, and survivors' benefits, etc.

12.

The Borrower ensures that its credit status is fine and has no significant adverse record.

13.

The Borrower ensures that there is no state or event that may significantly impact the implementation ability of contact of Borrower.

1.

The Borrower warrants that it will carry out its business legally, and use the loan in accordance with the intended use stated in this Agreement. The Borrower should provide various financial accounting materials, including monthly and annual reports periodically pursuant to the requirement of the Creditor, and coordinate with the supervision by the Creditor. The Creditor may inspect and supervise the usage of the loan in various ways at any time.

2.

The Borrower shall repay the principal and interest of loan under this Agreement in accordance with the time, amount, currency and interest rate agreed hereof in the Agreement, request form and Loan Note. The actual time for repay, amount, currency, and interest rate shall be subject to the contents in the Loan Note.

3.

The Borrower warrants that, if any significant adverse event that might sufficiently impact the financial status or implementation of guarantee obligation occurs, the Borrower shall timely provide additional new guaranty that is approved by the Creditor.

4.

The Borrower shall not have the following behaviors prior to the written consent by the creditor.

5.

The Borrower shall notify the Creditor immediately on the date when the following events occur, and deliver the original notice (with seal) to the creditor within five (5) bank working days after the occurrence of the event.

6.

The Borrower shall not to repay other loan in priority which violates the regular sequence, and shall not sign any contract or agreement which may lead the loan under this Agreement to be in a subordinate status.

7.

The Borrower shall repay the principal and interest under this Agreement in a same currency. If different currencies are used, the Borrower shall exchange the currency into the same currency of the loan under the Agreement by itself or by authorizing the Creditor prior to handle the exchange in accordance with the provisions agreed in the “Deduction Agreement” under this Agreement; the fees generated from the exchange shall be afforded by the Borrower. For repayment in other currencies deducted from the guarantor in accordance with the “Deduction Agreement” under the guaranty contract is performed, of which the charge is afforded by Borrower, the Borrower shall also be liable for the fees generated.

8.

At the time when specific situation or change occurs under this Agreement, the Borrower shall provide the Creditor with other warranties approved by the Creditor. These specific situation and change include but not limit to the termination of producing, shut down or disbandment, stop business for rectification, bankruptcy, other significant change in business operation or financial situation, encountering lawsuit or arbitration by its legal representative, board of directors, supervision members or senior management, the value decrease of the guaranty, any breach of the warranty contract or request for terminating the warranty contract.

9.

The Creditor is entitled to perform follow-up on site or non-on site after supervision with the business and financial conditions, usage of the loan capital and the repayment situation. The Borrower has the obligation to positively coordinate with the Creditor to perform payment and post follow-up management and other related inspection.

10.

The Creditor is entitled to reclaim the loan in accordance with the capital reclaim situation of the Borrower.

1.

The Borrower agrees that, at the time any debt in connection with the loan in this Agreement is due, the Creditor has the right to deduct funds directly from the general settlement account and / or capital deposit account the Borrower opened with Shanghai Pudong Development Bank Co., Ltd. to settle the debt due and payable. When funds in general settlement account and / or capital deposit account are insufficient to pay off the debt, the Creditor is entitled to deduct the funds from any other account the Borrower opened at any branch of Shanghai Pudong Development Bank Co., Ltd.

2.

Unless otherwise provided by state competent authority, fund from the deduction shall primarily be used for paying off fees due and payable but the Borrower doest repay yet, then used to pay off the interests due and not paid, and lastly used to pay off the principal due and not paid.

3.

If the deduction is of currency inconsistent with the currency needed to pay off, it should be dealt with in the following manners:

1.

The notice that one party sends to the other party under this Agreement shall be sent to the address listed in the signature page of this Agreement, until the other party notifies the change of address in written. Notices delivered to the above mentioned address shall be deemed as duly delivery on the following dates: for letter, the date would be the seventh (7) bank business day after it is sent by registered mail if it is delivered personally, the date would be the sign-off date of recipients; for fax or e-mail, the date would be the date of fax or e-mail is sent. However, all notices, demands or other communications sent or delivered to the Creditor shall be deemed to be duly delivery when the Creditor has actually received them. And all notices, demands sent to the creditor by fax or e-mail should be confirmed after hand delivery or mailing the original (with official seal) to the creditor.

2.

The borrower agrees that, summons or notices for any proceedings against it shall be deemed to be duly given as long as they are sent to the principal address listed in the signature page of the Agreement. If the Creditor is not notified of the change of above address, is does not take effect to creditor.

1.

This Agreement shall come into effect after both the Borrower and the Creditor stamp official seals on it and signed or sealed by the legal representatives or the persons authorized of both parties, and shall be terminated after all outstanding loans under the Agreement have been paid off.

2.

After the Agreement takes into effect, any party shall not modify or terminate the Agreement unless otherwise specified in the Agreement. The modification or termination of the Agreement, if required, shall be subject to the written agreement of both parties hereto through consultation.

(1)

Representations and warranties made in this Agreement or any notice, authorization, approval, consent, certificates and other documents made by the Borrower under this Agreement are incorrect and misleading, or have been identified to be incorrect or misleading, or have been confirmed to have been lapsed or revoked or with no legal effect.

(2)

The Borrower has violated “other terms agreed by both parties” (if any) in the first part of this Agreement, or any item agreed upon in the article VIII of second part.

(3)

Borrower has significant cross breaches for the Agreement, including but not limited to the breach of any terms in any other loan contract, agreement the borrower has signed; or any due and unpaid debt under other loan contract, agreement the borrower has signed.

(4)

Transferring, disposal of or threatening to transfer or dispose of the major assets and equity.

(5)

The guarantor has no or will have no appropriate guaranty capabilities for the loan, or violates the signed warranty document.

(6)

Contracting, leasing, joint stock restructure, joint operation, merger, acquisition, joint venture, division, decrease of registered capital, changes in equity, equity transfer and other events happen to the Borrower.

(7)

Major economic disputes, deteriorated financial situation. or any other event that may endanger or cause serious losses to the execution of the Creditor’s rights under the Agreement.

(8)

The Borrower or its controlling shareholders, implementation controlling persons or affiliated persons are involved in significant litigation, arbitration; or significant assets are sealed-up, distained, frozen, enforcement or be performed other measures with the same effect; or the litigation, arbitration or other enforcement measures that the legal representative / responsible person, directors, supervisors or senior managers involved in have led to adversely influence to the solvency of the borrower.

(9)

Fail to use the loan for the purpose as stipulated in the Agreement, or fail to repay the loan in the way agreed in this Agreement.

(10)

Provide documents which are false or omit material facts for loan application;

(11)

Do not meet or exceed the related financial constraining targets as agreed in the Agreement.

(12)

Capital flow in general settlement accounts / capital deposit accounts is abnormal.

(13)

The Borrower has other violation behaviors of the Agreement that would impair the normal performance of this Agreement, or other behaviors that bring damage to the legitimate interests of the Creditor.

i.

Request the Borrower to rectify within the period designated.

ii.

Cease to issue loan, reclaim part of or all loans or terminate the Agreement.

iii.

Declare the loan is due under other loan agreements between the Creditor and the Borrower, request the Borrower to repay the loan principals, interests, and other expenses.

iv.

Claim penalty interest and collect compound interest for overdue loan and/or misappropriation of loan.

v.

Deduct all the liabilities hereunder from the accounts opened with any branch of Shanghai Pudong Development Bank.

vi.

Request the borrower to supplement conditions for loan drawdown and payment, or amend the loan payment method.

vii.

Request the Borrower to provide other guaranties approved by the Creditor.

viii.

Other necessary measures prescribed by law.