UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 20-F
 
(Mark One)
                     
¨
REGISTRATION STATEMENT PURSUANT TO SECTION 12(B) OR 12(G) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
  
¨
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
  
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
  
þ
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report December 16, 2010

For the transition period from                      to                     

Commission file number: 000-53826

Plastec Technologies, Ltd.
(formerly GSME Acquisition Partners I)
(Exact name of Registrant as specified in its charter)

N/A
(Translation of Registrant’s name into English)

Cayman Islands
(Jurisdiction of incorporation or organization)

Unit 01, 21/F, Aitken Vanson Centre, 61 Hoi Yuen Road, Kwun Tong, Kowloon, Hong Kong
(Address of principal executive offices)
 
Securities registered or to be registered pursuant to Section 12(b) of the Act:

None
(Title of Class)
 
Securities registered or to be registered pursuant to Section 12(g) of the Act:

Title of each class 
 
Name of exchange on which each class is to be registered
Units
 
OTCBB
Ordinary Shares
 
OTCBB
Warrants
 
OTCBB

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None
(Title of Class)

Indicate the number of outstanding shares of each of the Issuer’s classes of capital or ordinary shares as of the close of the period covered by the shell company report: 9,246,351 ordinary shares.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  o    No þ

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes o    No o  

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ     No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o    Accelerated filer  o    Non-accelerated filer  þ

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

US GAAP o
International Financial Reporting Standards as issued
by the International Accounting Standards Board    þ
 Other    o
If “Other” has been checked in response to the previous question indicate by check mark which financial statement item the registrant has elected to follow.
Item 17  o      Item 18  o

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).                                                                                           Yes o   No o

 
 
 

INTRODUCTION

On December 16, 2010, Plastec Technologies, Ltd. (formerly GSME Acquisition Partners I) (the “Company”) consummated the transactions contemplated by the Amended and Restated Agreement and Plan of Reorganization, dated as of September 13, 2010, as amended (“Merger Agreement”), among the Company, GSME Acquisition Partners I Sub Limited (“Merger Sub”), Plastec International Holdings Limited (“Plastec”) and each of Sun Yip Industrial Company Limited (BVI), Tiger Power Industries Limited (BVI), Expert Rank Limited (BVI), Fine Colour Limited (BVI), Cathay Plastic Limited (BVI), Greatest Sino Holdings Limited (BVI), Colourful Asia International Limited (BVI) and Top Universe Management Limited (BVI), pursuant to which, among other things, Plastec became a wholly owned subsidiary of the Company.  In connection with the above-referenced transaction, GSME Acquisition Partners I changed its name to Plastec Technologies, Ltd.  Unless otherwise indicated and except where the context otherwise requires, references in this shell company report on Form 20-F to:

•
  “we,” “us” or “the Company” refer to Plastec Technologies, Ltd., including its direct and indirect subsidiaries; and
 
•
“shares” or “ordinary shares” refer to our ordinary shares.

FORWARD-LOOKING STATEMENTS

This shell company report contains forward-looking statements as defined in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). This shell company report on Form 20-F contains forward-looking statements that involve risks and uncertainties. All statements other than statements of historical facts are forward-looking statements. These forward-looking statements include information about our possible or assumed future results of operations or our performance. Words such as “expects,” “intends,” “plans,” “believes,” “anticipates,” “estimates,” and variations of such words and similar expressions are intended to identify the forward-looking statements. Although we believe that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to be correct. These statements involve known and unknown risks and are based upon a number of assumptions and estimates which are inherently subject to significant uncertainties and contingencies, many of which are beyond our control. Actual results may differ materially from those expressed or implied by such forward-looking statements.  Readers are cautioned to review all of the risks set forth in the section titled “Risk Factors” included in the Company’s proxy statement filed with the Securities and Exchange Commission (“SEC”) on October 28, 2010 as an exhibit to the Company’s Report of Foreign Private Issuer on Form 6-K (hereinafter referred to as the “Proxy Statement”).
 
                 We undertake no obligation to publicly update or revise any forward-looking statements contained in this shell company report, or the documents to which we refer you in this shell company report, to reflect any change in our expectations with respect to such statements or any change in events, conditions or circumstances on which any statement is based.

 
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PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

A.  Directors and Senior Management
 
On December 16, 2010, the Company consummated the transactions contemplated by the Merger Agreement among the Company, Merger Sub, Plastec and each of Sun Yip Industrial Company Limited (BVI), Tiger Power Industries Limited (BVI), Expert Rank Limited (BVI), Fine Colour Limited (BVI), Cathay Plastic Limited (BVI), Greatest Sino Holdings Limited (BVI), Colourful Asia International Limited (BVI) and Top Universe Management Limited (BVI), pursuant to which, among other things, Plastec became a wholly owned subsidiary of the Company.
 
The directors and executive officers upon consummation of the transactions contemplated by the Merger Agreement are described in the Proxy Statement.  The information in the section entitled “Management of GSME Following the Merger” beginning on page 102 of the Proxy Statement is incorporated herein by reference.

The business address of each of Kin Sun Sze-To, Chin Hien Tan, Ho Leung Ning and Chung Wing Lai is Unit 01, 21/F, Aitken Vanson Centre, 61 Hoi Yuen Road, Kwun Tong, Kowloon, Hong Kong.  The business address of Eli D. Scher is 762 West Beijing Road, Shanghai, China 200041.  The Business address of J. David Selvia is c/o New China Capital Management, Ltd., 14/F, St. John’s Bldg., 33 Garden Road, Central, Hong Kong.  The business address of Joseph Yiu Wah Chow is Room 501, 502 and 508, Mirror Tower, 61 Mody Road, Tsimshatsui East, Kowloon, Hong Kong.
 
B. Advisors
 
Graubard Miller, The Chrysler Building, 405 Lexington Avenue, New York 10174, has acted as counsel for the Company.   Maples and Calder, PO Box 309, Ugland House, South Church Street, George Town, Grand Cayman KY1-1104, Cayman Islands, has acted as Cayman Islands and British Virgin Islands counsel for the Company.

The principal banker for the Company in connection with the merger was Cohen & Company Securities, LLC, 135 East 57th Street, New York, New York 10022.
 
C. Auditors
 
From the Company’s inception through the consummation of the transactions contemplated by the Merger Agreement, Crowe Horwath LLP (“Crowe”) acted as the Company’s independent registered public accounting firm.  The business address of Crowe is 488 Madison Avenue, Floor 3, New York, NY 10022-5722.
 
Plastec’s previous auditors were Grant Thornton (“GT”).  On November 29, 2010, GT resigned as Plastec's auditors in connection with GT’s recent merger with BDO Limited (“BDO”).  The report of GT regarding Plastec's financial statements for the fiscal year ended April 30, 2010 did not contain any adverse opinion or disclaimer of opinion and was not qualified or modified as to uncertainty, audit scope or accounting principles.  During the year ended April 30, 2010 through November 29, 2010, the date of resignation, there were no disagreements with GT on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedures, which disagreements, if not resolved to the satisfaction of GT would have caused it to make reference to such disagreements in its report.
 
Plastec provided GT with a copy of this Form 20-F prior to its filing with the SEC and requested that GT furnish Plastec with a letter addressed to the SEC stating whether it agrees with the above statements and, if it does not agree, the respects in which it does not agree.  A copy of such letter, dated December 16, 2010, is filed as Exhibit 4.21 to this Form 20-F.
 
Concurrent with the resignation of GT, Plastec engaged BDO, as its accounting firm.  Prior to engaging BDO, Plastec did not consult with BDO regarding the application of accounting principles to a specific completed or contemplated transaction or regarding the type of audit opinion that might be rendered by BDO on the Plastec's financial statements, and BDO did not provide any written or oral advice that was an important factor considered by Plastec in reaching a decision as to any such accounting, auditing or financial reporting issue.  The engagement of BDO was approved by the Board of Directors of Plastec. The business address of BDO is 25 th Floor, Wing On Centre, 111 Connaught Road Central, Hong Kong.

 
3
 
 
Plastec’s auditors, for PCAOB purposes, prior to GT were Dominic K.F. Chan & Co. (“Dominic”).  On October 8, 2010, Dominic was succeeded by GT as Plastec’s auditors.  The report of Dominic regarding Plastec's financial statements for the fiscal years ended April 30, 2009 and 2008 did not contain any adverse opinion or disclaimer of opinion and was not qualified or modified as to uncertainty, audit scope or accounting principles.  During the year ended April 30, 2009 and 2008 through October 8, 2010, the date Dominic was succeeded by GT, there were no disagreements with Dominic on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedures, which disagreements, if not resolved to the satisfaction of Dominic would have caused it to make reference to such disagreements in its report.
 
Plastec provided Dominic with a copy of this Form 20-F prior to its filing with the SEC and requested that Dominic furnish Plastec with a letter addressed to the SEC stating whether it agrees with the above statements and, if it does not agree, the respects in which it does not agree.  A copy of such letter, dated December 16, 2010, is filed as Exhibit 4.22 to this Form 20-F.

Plastec engaged GT to succeed Dominic.  Prior to engaging GT, Plastec did not consult with GT regarding the application of accounting principles to a specific completed or contemplated transaction or regarding the type of audit opinion that might be rendered by GT on the Plastec's financial statements, and GT did not provide any written or oral advice that was an important factor considered by Plastec in reaching a decision as to any such accounting, auditing or financial reporting issue.  The engagement of GT was approved by the Board of Directors of Plastec.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
 
     Not Applicable.

ITEM 3. KEY INFORMATION

A.  Selected Financial Data

Reference is made to the disclosure contained in the Proxy Statement in the section entitled “Selected Historical Consolidated Financial Information” beginning on page 10 of the Proxy Statement, which information is incorporated herein by reference.

B.  Capitalization and Indebtedness

As of December 16, 2010 (after taking into account all conversions of public shares and the issuance of shares in connection with the merger), the Company has 9,246,351 ordinary shares and 7,200,000 warrants, each to purchase one ordinary share, issued and outstanding and unit purchase options to purchase an aggregate of 360,000 units, each unit consisting of one ordinary share and one warrant, issued and outstanding.  The Company has no outstanding debt.

C.  Reasons for the Offer and Use of Proceeds

      Not applicable

D.  Risk Factors

The risks associated with the Company’s business are described in the Proxy Statement in the section entitled “Risk Factors” beginning on page 15 of the Proxy Statement and are incorporated herein by reference.

 
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ITEM 4. INFORMATION ON THE COMPANY

A.  History and development of the company

The Company is a Cayman Islands exempted company that was formed on March 27, 2008 for the purpose of acquiring an operating business that has its principal operations located in the People’s Republic of China through a merger, share exchange, asset acquisition, plan of arrangement, recapitalization, reorganization or similar business combination, or control of such operating business through contractual arrangements . The registered office of the Company is PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands and the registered agent of the Company is Maples Corporate Services Limited, PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands .   The address of the Company’s principal executive office is Unit 01, 21/F, Aitken Vanson Centre, 61 Hoi Yuen Road, Kwun Tong, Kowloon, Hong Kong.  On December 16, 2010, the Company consummated the transactions contemplated by the Merger Agreement (as defined in the Introduction of this shell company report). The material terms of the Merger Agreement are contained in the Company’s Proxy Statement, in the sections entitled “The Merger Proposal,” beginning on page 35 of the Proxy Statement and “The Merger Agreement,” beginning on page 47 of the Proxy Statement, which information is incorporated herein by reference.

B.  Business overview

All of the Company’s business is conducted through Plastec.  Reference is made to the disclosure contained in the Proxy Statement in the section entitled “Business of Plastec” beginning on page 75 of the Proxy Statement and the section entitled “Plastec’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” beginning on page 91 of the Proxy Statement, which information is incorporated herein by reference.

C.  Organizational structure

Upon consummation of the merger, Plastec became a wholly owned subsidiary of the Company.  Reference is made to the disclosure contained in the Proxy Statement in the Section entitled “Business of Plastec – History and Development” beginning on page 75 of the Proxy Statement, which includes a summary of Plastec’s organization and structure, which information is incorporated herein by reference.

D.  Property, plants and equipment

The Company’s principal executive office is located at Unit 01, 21/F, Aitken Vanson Centre, 61 Hoi Yuen Road, Kwun Tong, Kowloon, Hong Kong.  Reference is made to the disclosure contained in the Proxy Statement in the Section entitled “Business of Plastec – Properties” beginning on page 89 of the Proxy Statement, which includes a summary of the land use rights and manufacturing plants and processing factories leased by Plastec, which information is incorporated herein by reference.

ITEM 4A. UNRESOLVED STAFF COMMENTS

      None.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

Reference is made to the disclosure contained in the Proxy Statement in the sections entitled “Plastec’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” beginning on page 91 of the Proxy Statement, “Business of Plastec” beginning on page 75 of the Proxy Statement and “Other Information Relating to GSME” beginning on page 71 of the Proxy Statement, which information is incorporated herein by reference.

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
 
Directors and Executive Officers
 
The directors and executive officers the Company upon the consummation of the transactions contemplated by the Merger Agreement are described in the Proxy Statement in the section entitled “Management of GSME Following the Merger” beginning on page 102 of the Proxy Statement, which information is incorporated herein by reference.

 
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Compensation
 
The executive compensation of the Company’s executive officers and directors is described in the Proxy Statement in the section entitled “Management of GSME Following the Merger – Director Compensation” and “ – Executive Compensation” beginning on page 105 of the Proxy Statement, which information is incorporated herein by reference.
 
Board Practices
 
Effective upon consummation of the merger, the Company’s board of directors is comprised of seven directors with each director serving until the Company’s next annual general meeting and until his successor is elected and qualified. Reference is made to the disclosure contained in the Proxy Statement in the section entitled “Management of GSME Following the Merger – Board Committees” beginning on page 104 of the Proxy Statement for information on the Company’s board committees, which information is incorporated herein by reference.
 
Employees
 
Reference is made to the disclosure contained in the Proxy Statement in the section entitled “Management of GSME Following the Merger – Employees” beginning on page 90 of the Proxy Statement for information on the employees of Plastec, which information is incorporated herein by reference.
 
Share Ownership
 
Ownership of the Company’s shares by executive officers and directors upon consummation of the merger is reflected in the Beneficial Ownership of Securities chart included in Item 7A. of this report.

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

        A. Major Shareholders

BENEFICIAL OWNERSHIP OF SECURITIES

The following table sets forth information regarding the beneficial ownership of the Company’s Ordinary Shares, by:
 
·
each person who is the owner of more than 5% of the Company’s ordinary shares outstanding after the consummation of the merger;
 
·
each person who became an executive officer or director of the Company upon consummation of the merger; and
 
·
all of the Company’s directors and executive officers as a group.

Information does not give effect to the issuance of the earnout shares to be issued to the former shareholders of Plastec upon Plastec achieving certain financial targets.

Name and Address of Beneficial Owner (1)
 
Amount and Nature of
Beneficial Ownership
   
Percent of Class
 
Kin Sun Sze-To
    3,725,155 (2)     40.3 %
Chin Hien Tan
    202,356       2.2 %
Eli D. Scher(3)
    400,000 (4)     4.2 %
Ho Leung Ning
    98,342 (5)     1.1 %
J. David Selvia(6)
    0 (7)     0 %
Chung Wing Lai
    0       0 %
Joseph Yiu Wah Chow(8)
    0       0 %
Jing Dong Gao(3)
    4,527,262 (9)     36.4 %
Cathay Plastic Limited (BVI)(6)
    2,326,628 (10)     25.2 %
All directors and executive officers of the Company as a group (7 individuals)
    4,425,853 (4)     46.4 %

 
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(1)
Unless otherwise indicated, the business address of each of the individuals is Unit 01, 21/F, Aitken Vanson Centre, 61 Hoi Yuen Road, Kwun Tong, Kowloon, Hong Kong.
(2)
Represents shares held by Sun Yip Industrial Company Limited (BVI) and Tiger Power Industries Limited (BVI) which Mr. Sze-To controls.  Does not include an aggregate of 1,570,000 ordinary shares currently held by Cathay Plastic Limited (BVI) which Mr. Sze-To has been given the right to acquire pursuant to a put/call option agreement between the two parties during the period commencing on November 25, 2011 and ending on December 2, 2011.
(3)
The business address of this individual is 762 West Beijing Road, Shanghai, China 200041.
(4)
Includes 300,000 shares issuable upon exercise of warrants which are currently exercisable.
(5)
Represents shares held by Expert Rank Limited (BVI), which is owned 100% by Mr. Ning.
(6)
The business address of this individual or entity is c/o New China Capital Management, Ltd., 14/F, St. John’s Bldg., 33 Garden Road, Central, Hong Kong.
(7)
Does not include shares held by Cathay Plastic Limited (BVI) (“Cathay”) of which Mr. Selvia is Managing Director.
(8)
The business address of Mr. Chow is Room 501, 502 and 508, Mirror Tower, 61 Mody Road, Tsimshatsui East, Kowloon, Hong Kong.
(9)
Includes 3,192,000 shares issuable upon exercise of warrants which are currently exercisable.
(10)
Includes an aggregate of 1,570,000 ordinary shares currently held by Cathay Plastic Limited (BVI) which Mr. Sze-To has been given the right to acquire pursuant to a put/call option agreement between the two parties during the period commencing on November 25, 2011 and ending on December 2, 2011.

In connection with the Company’s initial public offering, the Company’s initial shareholders placed an aggregate of 1,200,000 ordinary shares in escrow pursuant to an escrow agreement, as amended, with Continental Stock Transfer & Trust Company, as escrow agent.  In connection with the merger with Plastec, the parties amended the terms of the escrow agreement to include an aggregate of approximately 2,400,000 warrants held by the initial shareholders and to provide additional restrictions on all of the securities’ release from escrow.  Pursuant to the escrow agreement, as amended, an aggregate of 240,000 ordinary shares were released from escrow upon consummation of the merger.  The remaining ordinary shares will not be released from escrow until (i) with respect to 25% of such shares, when the closing price of our ordinary shares exceeds $12.00 for any 20 trading days within a 30-trading day period following the consummation of our initial business combination, (ii) with respect to 25% of such shares, when the closing price of our ordinary shares exceeds $14.00 for any 20 trading days within a 30-trading day period following the consummation of our initial business combination, (iii) with respect to 25% of such shares, when the closing price of our ordinary shares exceeds $16.00 for any 20 trading days within a 30-trading day period following the consummation of our initial business combination and (iv) with respect to 25% of such shares, when the closing price of our ordinary shares exceeds $20.00 for any 20 trading days within a 30-trading day period following the consummation of our initial business combination.   However, such shares will only be released from escrow if, in addition to meeting the price targets referred to above, the Company raises in one or more equity financings an aggregate of approximately $20 million by December 16, 2011 (or a pro rata portion of such shares if less than $20 million is raised).  The insider warrants will also not be released from escrow unless the Company raises the required $20 million by December 16, 2011 (or a pro rata portion of such warrants if less than $20 million is raised).  Notwithstanding the foregoing, such shares and warrants may be released from escrow earlier than as described above if, within those time periods, the Company consummates a subsequent liquidation, merger, stock exchange or other similar transaction which results in all of its shareholders having the right to exchange their shares for cash, securities or other property.

 
7
 
 
B.  Related Party Transactions
 
Information regarding certain relationships and related party transactions of the Company and Plastec are described in the Proxy Statement in the section entitled “Certain Relationships and Related Transactions” beginning on page 109 of the Proxy Statement and is incorporated herein by reference.  The information included in Item 7, Part A above is also incorporated herein by reference.

Information regarding the independence of the Company’s directors is provided in the Proxy Statement in the section entitled “Management of GSME Following the Merger – Independence of Directors” beginning on page 103 of the Proxy Statement and is incorporated herein by reference.
 
C.  Interest of Experts and Counsel
 
Not applicable.
 
ITEM 8. FINANCIAL INFORMATION
 
A. Consolidated Statements and Other Financial Information
 
Please see “Item 17. Financial Statements” for a list of the financial statements filed as part of this shell company report.
 
B. Significant Changes
 
Not applicable.
 
ITEM 9. THE OFFER AND LISTING
 
A. Offer and Listing Details
 
The description of the Company’s securities is contained in the Proxy Statement in the section entitled “Description of Securities” beginning on page 112 of the Proxy Statement and is incorporated herein by reference.
 
B. Plan of Distribution
 
Not applicable.
 
C. Markets
 
The Company’s units, ordinary shares and warrants are currently quoted on the Over-the-Counter Bulletin Board under the symbols GSMEF, GSMXF and GSMWF .
 
D. Selling Shareholders
 
Not applicable.
 
E. Dilution
 
Not applicable.
 
F. Expenses of the Issue
 
Not applicable.

 
8
 
 
ITEM 10. ADDITIONAL INFORMATION
 
        A. Share Capital
 
     The Company is authorized to issue US$101,000 divided into 100,000,000 ordinary shares of a par value of $0.001 each and 1,000,000 preferred shares of a par value of US$0.001 each.  A fter taking into account all conversions of public shares and the issuance of shares in connection with the merger, there are currently 9,246,351     fully paid ordinary shares issued and outstanding.  There are currently 7,200 ,000   warrants issued and outstanding, each to purchase one ordinary share, and unit purchase options issued and outstanding to purchase an aggregate of 360,000 units, each unit consisting of one ordinary share and one warrant.
 
An aggregate of 7,054,583 ordinary shares were issued to the former shareholders of Plastec upon the consummation of the merger as consideration for all of the outstanding capital stock of Plastec on December 16, 2010.   In addition, the former shareholders of Plastec will be issued up to an additional 9,723,988 shares if certain targets are met for the years 2011 through 2013.   Additional information regarding the merger consideration paid by the Company to the former shareholders of Plastec is provided in the Proxy Statement in the section entitled “The Merger Proposal – Merger Consideration” beginning on page 36 of the Proxy Statement and is incorporated herein by reference.
 
        B. Memorandum and Articles of Association
 
The following represents a summary of certain key provisions of the Company’s  second amended and restated memorandum and articles of association (“Memorandum and Articles”). The summary does not purport to be a summary of all of the provisions of the Memorandum and Articles and of all relevant provisions of Cayman Islands law governing the management and regulation of Cayman Islands exempted companies.
 
Incorporation
 
The Company was incorporated in the Cayman Islands on March 27, 2008 under the Cayman Islands Companies Law (as amended) (the “Companies Law”) with company registration number 207509 .   The Company’s authorized share capital is $101,000 divided into 100,000,000 ordinary shares of a par value of US$0.001 each and 1,000,000 preferred shares of a par value of US$0.001 each.
 
Objects and Purposes
 
The Company’s Memorandum and Articles grants the Company full power and authority to carry out any object not prohibited by the Companies Law or as the same may be revised from time to time, or any other law of the Cayman Islands.
 
Directors
 
The Company has seven directors with each director serving until the Company’s next annual general meeting and until his successor is elected and qualified.  There is no cumulative voting with respect to the election of directors, with the result that the holders of more than 50% of the shares eligible to vote for the election of directors can elect all of the directors.
 
Subject to their fiduciary duties and the Memorandum and Articles, directors may engage in transactions with the Company and vote on such transactions, provided the nature of the interest is disclosed in accordance with the procedures under the Memorandum and Articles. Directors also may exercise all the powers of the Company to borrow money and to mortgage or charge its undertaking, property and uncalled capital or any part thereof and to issue debentures, debenture stock, mortgages, bonds and other such securities whether outright or as security for any debt, liability or obligation of the Company or of any third party.
 
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Rights and Obligations of Shareholders
 
Dividends
 
Subject to the Companies Law, directors may declare dividends and distributions on the Company’s ordinary shares in issue and authorize payment on the dividends or distributions out of lawfully available funds. No dividend or distribution may be paid except out of the realized or unrealized profits of the Company, or out of the share premium account or as otherwise permitted by the Companies Law.
 
Voting Rights
 
Subject to any rights or restrictions attached to any shares, every member who (being an individual) is present in person or by proxy or, if a corporation or other non-natural person is present by its duly authorized representative or proxy has one vote for every share of which he is the holder.
 
In the case of joint holders of record the vote of the senior holder who tenders a vote, whether in person or by proxy, is accepted to the exclusion of the votes of the other joint holders, and seniority is determined by the order in which the names of the holders stand in the Register of Members.
 
A member of unsound mind, or in respect of whom an order has been made by any court, having jurisdiction in lunacy, may vote, whether on a show of hands or on a poll, by his committee, receiver, curator bonis, or other person on such member's behalf appointed by that court, and any such committee, receiver, curator bonis or other person may vote by proxy.
 
No person is entitled to vote at any general meeting or at any separate meeting of the holders of a class of shares unless he is registered as a member on the record date for such meeting or unless all calls or other monies then payable by him in respect of shares have been paid.
 
Votes may be cast either personally or by proxy. A member may appoint more than one proxy to attend and vote at a meeting.
 
A member holding more than one share need not cast the votes in respect of his shares in the same way on any resolution and therefore may vote a share or some or all such shares either for or against a resolution and/or abstain from voting a share or some or all of the shares and, subject to the terms of the instrument appointing him, a proxy appointed under one or more instruments may vote a share or some or all of the shares in respect of which he is appointed either for or against a resolution and/or abstain from voting.
 
Any person in consequence of the death or bankruptcy or winding-up of a member (or in any other way than by transfer) who becomes the holder of a share may vote at any general meeting in respect thereof in the same manner as if he were the registered holder of such Shares, provided that forty-eight hours at least before the time of the holding of the meeting or adjourned meeting, as the case may be, at which he proposes to vote, he satisfies the directors of his entitlement to such shares, or the directors have previously admitted his right to vote at such meeting in respect thereof.
 
Change to Rights of Shareholders
 
Shareholders may change the rights of their class of shares by:
 
 
·
getting the written consent of three-quarters of the shareholders of that class; or
 
 
·
passing a special resolution at a general meeting of the shareholders of that class.
 
There are no general limitations on the rights to own shares specified by the Memorandum and Articles.
 
General Meetings
 
A general meeting may be convened by a majority of directors at any time.  Additionally, the directors shall convene an extraordinary general meeting of the Company upon a members’ requisition (a requisition of members of the Company holding at the date of deposit of the requisition not less than 10% in par value of the capital of the Company which as at that date carries the right of voting at general meetings of the Company).  The requisition must state the objects of the meeting and must be signed by the requisitionists and deposited at the registered office, and may consist of several documents in like form each signed by one or more requisitionists.

 
10
 
 
If the directors do not within twenty-one days from the date of the deposit of the requisition duly proceed to convene a general meeting to be held within a further twenty-one days, the requisitionists, or any of them representing more than one-half of the total voting rights of all of them, may themselves convene a general meeting, but any meeting so convened shall not be held after the expiration of three months after the expiration of the said twenty-one days.
 
A general meeting convened as aforesaid by requisitionists shall be convened in the same manner as nearly as possible as that in which general meetings are to be convened by Directors.
 
Notice of a general meeting is to be given to all shareholders.  All business transacted at an extraordinary general meeting or an annual general meeting is considered special business except:
 
 
·
the declaration and sanctioning of dividends;
 
 
·
consideration and adoption of the accounts and balance sheet and the reports of directors and auditors and other documents required to be annexed to the balance sheet;
 
 
·
the election of directors;
 
 
·
appointment of auditors (where special notice of the intention for such appointment is not required by applicable law) and other officers;
 
 
·
the fixing or remuneration of the auditors, and the voting of remuneration or extra remuneration to the directors;
 
 
·
the granting of any mandate or authority to the directors to offer, allot, grant options over or otherwise dispose of the unissued shares in the capital of the Company representing not more than 20% in nominal value of its existing share capital; and
 
 
·
the granting of any mandate or authority to the directors to repurchase the securities of the Company.
 
A quorum of shareholders is required to be present at any meeting in order to carry out business.  The holders of a majority of the shares being individuals present in person or by proxy or if a corporation or other non-natural person by its duly authorized representative or proxy shall be a quorum.
 
Changes in Capital
 
The Company may increase its share capital by ordinary resolution. The new shares will be subject to all of the provisions to which the original shares are subject. The Company may also by ordinary resolution:
 
 
·
consolidate and divide all or any of the Company’s share capital into shares of a larger amount;
 
 
·
sub-divide existing shares into shares of a smaller amount; and
 
 
·
cancel any shares which, at the date of the resolution, are not held or agreed to be held by any person.
 
The Company may reduce the Company’s share capital and any capital redemption reserve by special resolution in accordance with relevant provisions of Cayman Islands law.
 
Indemnity
 
Pursuant to the Company’s Memorandum and Articles, every director, agent or officer of the Company shall be indemnified out of the assets of the Company against any liability incurred by him as a result of any act or failure to act in carrying out his functions other than such liability (if any) that he may incur by his own actual fraud or willful default. No such director, agent or officer shall be liable to the Company for any loss or damage in carrying out his functions unless that liability arises through the actual fraud or willful default of such director, agent or officer.  Additionally, the Company intends to enter into indemnification agreements with each of its officers and directors whereby the Company will agree to indemnify, and advance expenses to, each officer and director to the fullest extent permitted by applicable law.

 
11
 
 
        C. Material Contracts
 
On December 16, 2010, the Company consummated its merger with Plastec pursuant to the terms of the Merger Agreement (as defined in Item 1A. of this shell company report). The material terms of the Merger Agreement are contained in the Proxy Statement in the sections entitled “The Merger Proposal” beginning on page 35 of the Proxy Statement and “The Merger Agreement” beginning on page 47 of the Proxy Statement, and are hereby incorporated by reference, as well as the Company’s Report of Foreign Private Issuer on Form 6-K filed with the Securities and Exchange Commission on December 9, 2010.

At the closing of the merger (the “Closing”), Merger Sub merged with and into Plastec with Plastec surviving the merger and becoming a wholly owned subsidiary of the Company.  In connection with the merger, the Company issued to the former shareholders of Plastec an aggregate of 7,054,583 ordinary shares.   In addition, the former shareholders of Plastec will be issued up to an additional 9,723,988 shares if certain targets are met for the years 2011 through 2013.

After payment to converting shareholders, approximately $10 million was disbursed from the trust account to the Company.  After payment of transaction related expenses, including the payment of an additional $0.30 per share to converting shareholders, it is expected that approximately $7.4 million will be made available for the Company’s continued working capital requirements.  The Company was supposed to obtain the funds to pay the additional $0.30 per share by drawing down on a letter of credit posted by Cohen & Company Securities, LLC in connection with the Company’s initial public offering.  The Company was then to issue to Cohen & Company Securities, LLC an interest-bearing promissory note in the amount drawn down.   The Company determined instead to pay the additional $0.30 per share rather than drawing on the letter of credit to save interest payments that would have been required to be paid to Cohen & Company Securities, LLC under the promissory note.  Additionally, in connection with the closing, the Company entered into an agreement with the underwriters from its initial public offering whereby such underwriters agreed that the deferred underwriting discounts and commissions they were entitled to be paid upon consummation of the merger would no longer be owed.

At the Closing, the Company entered into an escrow agreement (the “Escrow Agreement”) with certain of the former shareholders of Plastec.  Pursuant to the Escrow Agreement, 10%, or an aggregate of 472,796, of the shares issued to the former shareholders of Plastec (except Cathay Plastic Limited (BVI)) were placed in escrow (the “Escrow Fund”).  The shares shall be held in the Escrow Fund until thirty days after the Company has filed its Annual Report on Form 20-F for the fiscal year ending April 30, 2011.  The shares held in the Escrow Fund are to be used to indemnify the Company and Plastec for losses suffered by either resulting from the inaccuracy or breach of any representation or warranty of Plastec or its former shareholders contained in the Merger Agreement or delivered pursuant thereto, or from the breach or non-fulfillment of any covenant or agreement of Plastec or its former shareholders contained in the Merger Agreement.

Additionally, the Company’s founders agreed that a portion of the ordinary shares and warrants held by them would be held in escrow subject to forfeiture and cancellation in the event the Company did not raise up to approximately $20 million in equity financings by December 16, 2011.

Effective at the Closing, amendments to certain employment agreements were entered into between a subsidiary of Plastec and each of Kin Sun Sze-To, the Company’s Chairman of the Board and Chief Executive Officer, Chin Hien Tan, the Company’s Chief Operating Officer, and Ho Leung Ning, the Company’s Chief Financial Officer (collectively, the “Employment Agreements”) to provide for their  services to be extended to cover the Company with no additional compensation in terms of base salary.  The material terms of the Employment Agreements, as amended, are contained in the Proxy Statement in the section entitled “Management of GSME Following the Merger – Executive Compensation” beginning on page 105 of the Proxy Statement and are hereby incorporated by reference.
 
        D. Exchange Controls and Other Limitations Affecting Security Holders
 
Cayman Islands
 
Under Cayman Islands law, there are currently no restrictions on the export or import of capital, including foreign exchange controls or restrictions that affect the remittance of dividends, interest or other payments to nonresident holders of our shares.

 
12
 
 
        E. Taxation
 
The following is a general summary of certain material Cayman Islands and U.S. federal income tax considerations and tax considerations relating to the Company’s and Plastec’s business. The discussion is not intended to be,   nor should it be construed as, legal or tax advice to any particular   prospective shareholder. The discussion is based on laws and relevant   interpretations thereof in effect as of the date hereof, all of which are   subject to change or different interpretations, possibly with retroactive   effect.
 
Cayman Islands Taxation
 
The Government of the Cayman Islands does not, under existing legislation, impose any income, corporate or capital gains tax, estate duty, inheritance tax, gift tax or withholding tax upon the company or its shareholders. The Cayman Islands are not party to any double taxation treaties.
 
The Company has received an undertaking from the Governor-in-Cabinet of the Cayman Islands that, in accordance with section 6 of the Tax Concessions Law (1999 Revision) of the Cayman Islands, for a period of 20 years from the date of the undertaking, no law which is enacted in the Cayman Islands imposing any tax to be levied on profits, income, gains or appreciations shall apply to the Company or its operations and, in addition, that no tax to be levied on profits, income, gains or appreciations or which is in the nature of estate duty or inheritance tax shall be payable (i) on the shares, debentures or other obligations of the Company or (ii) by way of the withholding in whole or in part of a payment of dividend or other distribution of income or capital by the Company to its members or a payment of principal or interest or other sums due under a debenture or other obligation of the Company.

United States Taxation
 
Disclosure regarding United States federal income taxation is contained in the Proxy Statement in the section entitled “The Merger Proposal – Material U.S. Federal Income Tax Considerations” beginning on page 45 of the Proxy Statement and is incorporated herein by reference.

Tax considerations relating to Plastec’s business

Disclosure regarding tax considerations relating to the Plastec’s business is contained in the Proxy Statement in the section entitled “Plastec’s Management’s Discussion and Analysis of Financial Condition and Results of Operations – Income Tax” beginning on page 95 of the Proxy Statement and is incorporated herein by reference.
 
        F. Dividends and Paying Agents
 
                The Company has not paid any cash dividends on its ordinary shares to date.  The Company currently intends to declare regular annual cash dividends equal to 30% of Plastec’s yearly net income, although the actual payment of such future dividends will be entirely within the sole discretion of the Company’s board of directors at such times.  The Company does not currently have a paying agent.
 
        G. Statement by Experts
 
                 Not applicable.
 
         H. Documents on Display
 
                   The Company files annual reports on Form 20-F and furnishes certain reports and other information with the SEC as required by the Exchange Act for its status as a foreign private issuer. You may read and copy any report or other document filed or furnished by the Company, including the exhibits, at the SEC’s public reference room located at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. Such materials can also be obtained on the SEC’s site on the internet at http://www.sec.gov .

 
13
 
 
The Company will also provide without charge to each person, including any beneficial owner, upon written or oral request of that person, a copy of any and all of the information that has been incorporated by reference in this shell company report. Please direct such requests to the Company, Attention Kin Sun Sze-To, Unit 01, 21/F, Aitken Vanson Centre, 61 Hoi Yuen Road, Kwun Tong, Kowloon, Hong Kong.
 
         I. Subsidiary Information
 
        Not applicable.
 
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
Reference is made to the disclosure contained in the Proxy Statement in the section entitled “Plastec’s Management’s Discussion and Analysis of Financial Condition and Results of Operations – Market Risks” beginning on page 100 of the Proxy Statement for information on the market risks applicable to Plastec, which information is incorporated herein by reference.
 
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
 
None.
 
PART III
 
ITEM 17. FINANCIAL STATEMENTS
 
The financial statements and financial information of the Company and Plastec are contained in the Proxy Statement in the section entitled “Selected Historical Consolidated Financial Information” beginning on page 10 of the Proxy Statement, in the section entitled “Selected Unaudited Pro Forma Condensed Combined Financial Information” beginning on page 13 of the Proxy Statement, in the section “Unaudited Pro Forma Condensed Combined Financial Information” beginning on page 59 of the Proxy Statement and the financial statements beginning on page F-1 of the Proxy Statement, which information is incorporated herein by reference.

The financial statements of Plastec for its fiscal year ended April 30, 2010 included in the Proxy Statement were not prepared in accordance with the standards of the Public Company Accounting Oversight Board (“PCAOB”).  The 2010 financial statements of Plastec prepared in accordance with the standards of the PCAOB are included after the signature page to this shell company report on Form 20-F.
 
ITEM 18. FINANCIAL STATEMENTS
 
Not applicable.

 
14
 
 
ITEM 19. EXHIBITS
 
Exhibit No.
 
Description
1.1
 
Form of Second Amended and Restated Memorandum and Articles of Association (included as Annex C to the Proxy Statement and incorporated herein by reference).
2.1
 
Amended and Restated Agreement and Plan of Reorganization, dated as of September 13, 2010, among Plastec Technologies, Ltd. (formerly GSME Acquisition Partners I), GSME Acquisition Partners I Sub Limited, Plastec International Holdings Limited and each of Sun Yip Industrial Company Limited (BVI), Tiger Power Industries Limited (BVI), Expert Rank Limited (BVI), Fine Colour Limited (BVI), Cathay Plastic Limited (BVI), Greatest Sino Holdings Limited (BVI), Colourful Asia International Limited (BVI) and Top Universe Management Limited (BVI) (included as Annex A to the Proxy Statement and incorporated herein by reference).
2.2
 
Amendment No. 1, dated as of December 9, 2010, to Amended and Restated Agreement and Plan of Reorganization, dated as of September 13, 2010, among Plastec Technologies, Ltd. (formerly GSME Acquisition Partners I), GSME Acquisition Partners I Sub Limited, Plastec International Holdings Limited and each of Sun Yip Industrial Company Limited (BVI), Tiger Power Industries Limited (BVI), Expert Rank Limited (BVI), Fine Colour Limited (BVI), Cathay Plastic Limited (BVI), Greatest Sino Holdings Limited (BVI), Colourful Asia International Limited (BVI) and Top Universe Management Limited (BVI) (included as Exhibit 2.1 to the Company’s Report of Foreign Private Issuer on Form 6-K filed with the Securities and Exchange Commission on December 9, 2010 and incorporated herein by reference).
4.1
 
Form of Indemnity Escrow Agreement among Plastec Technologies, Ltd. (formerly GSME Acquisition Partners I), Kin Sun Sze-To and Ho Leung Ning as the representatives of all the former shareholders of Plastec International Holdings Limited, Jing Dong Gao and Eli D. Scher, acting as the committee representing the interests of the Registrant, and Continental Stock Transfer & Trust Company *
4.2
 
First Amendment to Employment Contract between Sun Line Industrial Limited and Kin Sun Sze-To. *
4.3
 
First Amendment to Employment Contract between Sun Line Industrial Limited and Chin Hien Tan. *
4.4
 
First Amendment to Employment Contract between Sun Line Industrial Limited and Ho Leung Hing. *
4.5
 
Intentionally Omitted.
4.6
 
Dongguan Sun Chuen Manufacturing Plant lease. * †
4.7
 
Dongguan Sun Line Processing Factory lease. * †
4.8
 
Shenzhen Broadway Processing Factory lease. * †
4.9
 
Kunshan Broadway Manufacturing Plant lease. * †
4.10
 
Zhuhai Sun Line Manufacturing Plant lease. * †
4.11
 
Zhuhai Sun Line Manufacturing Plant lease (#2). * †
4.12
 
Sun Line Industrial Ltd. lease. *
4.13
 
Sun Line (Macao Commercial Offshore) Co. Limited lease. * †
4.14
 
Dongguan Sun Line Processing Agreement. * †
4.15
 
Shenzhen Broadway Processing Agreement. * †
4.16
 
Amendment No. 1, dated as of December 16, 2010, to Stock Escrow Agreement, dated as of November 19, 2009, among Plastec Technologies, Ltd. (formerly GSME Acquisition Partners I), MCK Capital Co., Limited, Eli D. Scher, Lawrence S. Wizel, Cohen & Company Securities, LLC and Continental Stock Transfer & Trust Company (included as Exhibit 10.1 to the Company’s Report of Foreign Private Issuer on Form 6-K filed with the Securities and Exchange Commission on December 9, 2010 and incorporated herein by reference) .
4.17
 
Registration Rights Agreement.*
4.18
 
Amendment No. 1 to Registration Rights Agreement, dated as of November 19, 2009, between Plastec Technologies, Ltd. (formerly GSME Acquisition Partners I) and its initial shareholders.*
4.19
 
Amendment No. 1 to Unit Purchase Options.*
4.20
 
Agreement between Plastec Technologies, Ltd. (formerly GSME Acquisition Partners I) and certain Underwriters.*
4.21
 
Letter from Grant Thornton to Plastec International Holdings Limited.*
4.22
 
Letter from Dominic K.F. Chan & Co. to Plastec International Holdings Limited.*
8.1
  
List of Subsidiaries.*
 
* Filed herewith.
†   These exhibits are in Chinese. Summaries of such exhibits are contained in the Proxy Statement in the section entitled “Business of Plastec-Production Facilities and Capacity ” beginning on page 83 of the Proxy Statement and the section entitled “Business of Plastec-Properties ” beginning on page 89 of the Proxy Statement, all of which information is incorporated herein by reference.
 
 
15
 
 
SIGNATURES
 
     The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and has duly caused and authorized the undersigned to sign this report on its behalf.
 
 
   
PLASTEC TECHNOLOGIES, LTD.
 
       
 
By:  
/s/ Kin Sun Sze-To
 
   
Kin Sun Sze-To
 
Dated:     December 22, 2010
 
Chief Executive Officer
 

 
16
 
 
Plastec International Holdings Limited
(incorporated in the British Virgin Islands with limited liability)
 
Report and
Financial Statements
For the year ended 30 April 2010
 


 
 
 

Plastec International Holdings Limited
 
Contents
  
 
Page
   
Report of Independent Registered Public Accounting Firm
1
   
Consolidated Statement of Comprehensive Income
2
   
Consolidated Statement of Financial Position
3
   
Consolidated Statement of Cash Flows
4
   
Consolidated Statement of Changes in Equity
5
   
Notes to the Financial Statements
6

Expressed in Hong Kong dollars ("HK$")

 
 
 
 
 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS
PLASTEC INTERNATIONAL HOLDINGS LIMTIED                                                                                 
(incorporated in the British Virgin Islands with limited liability)
 
We have audited the accompanying consolidated statement of financial position of Plastec International Holdings Limited and subsidiaries (the "Group") as of 30 April 2010, and the related consolidated statement of comprehensive income, changes in equity, and cash flows for the year ended 30 April 2010. These consolidated financial statements are the responsibility of the Group's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.
 
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Group is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
 
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Plastec International Holdings Limited and its subsidiaries at 30 April 2010, and the results of the Group's operations and cash flows for the year ended 30 April 2010, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

BDO Limited
Certified Public Accountants
 
Hong Kong, 15 December 2010
 
BDO Limited
 
BDO Limited, a Hong Kong limited company, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms.

 
 
 

Plastec International Holdings Limited
2
Financial statements for the year ended 30 April 2010
 
 
Consolidated statement of comprehensive income
for the year ended 30 April 2010

   
Notes
   
2010
HK$'000
   
2009
HK$'000
 
                   
Revenue
    5       966,755       913,444  
                         
Cost of sales
            (810,187 )     (749,649 )
                         
Gross profit
            156,568       163,795  
                         
Other revenue and net income
    6       5,501       2,342  
                         
Selling and distribution costs
            (17,227 )     (14,431 )
                         
Administrative expenses
            (86,945 )     (83,841 )
                         
Finance costs
    7       (2,733 )     (5,355 )
                         
Profit before income tax
    8       55,164       62,510  
                         
Income tax expense
    9       (10,857 )     (772 )
                         
Profit for the year
            44,307       61,738  
                         
Other comprehensive income
                       
Exchange gain/(loss) on translation of financial statements of foreign operations
            1,756       (58 )
Total comprehensive income for the year
            46,063       61,680  

 
 
 

Plastec International Holdings Limited
3
Financial statements for the year ended 30 April 2010
 
 
Consolidated statement of financial position as at 30 April 2010
 
   
Notes
   
2010
   
2009
   
1 May 2008
 
         
HK$'000
   
HK$'000
   
HK$'000
 
               
(Restated)
   
(Restated)
 
ASSETS AND LIABILITIES
                       
                         
Non-current assets
                       
Property, plant and equipment
    12       458,725       450,017       387,253  
Prepaid lease payments
    13       1,091       1,091       1,116  
Deposits and prepayments
    17       38,238       29,354       5,105  
              498,054       480,462       393,474  
                                 
Current assets
                               
Inventories
    15       74,298       83,163       100,140  
Trade receivables
    16       242,097       173,885       241,059  
Deposits, prepayments and other receivables
    17       11,714       11,523       8,519  
Prepaid lease payments
    13       25       25       25  
Cash and cash equivalents
    18       151,304       95,039       115,350  
              479,438       363,635       465,093  
                                 
Current liabilities
                               
Trade and other payables and accruals
    19       (188,258 )     (133,166 )     (152,929 )
Borrowings
    20       (123,738 )     (65,084 )     (106,766 )
Dividend payable
            (60,000 )     (50,000 )      -  
Tax payable
            (18,678 )     (15,457 )     (26,834 )
              (390,674 )     (263,707 )     (286,529 )
                                 
Net current assets
            88,764       99,928       178,564  
                                 
Total assets less current liabilities
            586,818       580,390       572,038  
                                 
Non-current liabilities
                               
Borrowings
    20       (5,570 )     (15,563 )     (22,418 )
Deferred tax liabilities
    21       (15,156 )     (14,798 )     (11,271 )
              (20,726 )     (30,361 )     (33,689 )
                                 
Net assets
            566,092       550,029       538,349  
                                 
EQUITY
                               
Equity attributable to Company's owners
                               
Share capital
    22       98       98       98  
Reserves
    23       565,994       549,931       538,251  
Total equity
            566,092       550,029       538,349  
 
[ILLEGIBLE]    [ILLEGIBLE]
Director
 
Director
 
 
 
 

Plastec International Holdings Limited
4
Financial statements for the year ended 30 April 2010
 
 
Consolidated statement of cash flows
for the year ended 30 April 2010
 
   
Notes
   
2010
   
2009
 
         
HK$'000
   
HK$'000
 
Cash flows from operating activities
                 
Profit before income tax
          55,164       62,510  
Adjustments for:
                     
Amortisation of prepaid lease payments
    8       25       25  
Bad debt written off
    8       -       324  
Depreciation
    8       120,850       103,162  
Finance lease charges
    7       1,631       2,816  
Net (gain)/loss on disposal of property, plant and equipment
    6/8       (1,077 )     29,031  
Written off of property, plant and equipment
    8       40,348       -  
Provision for impairment loss of inventories
    8       5,571       -  
Interest income
    6       (60 )     (240 )
Interest expense
    7       1,102       2,539  
Operating profit before working capital changes
            223,554       200,167  
Decrease in inventories
            3,294       16,977  
(lncrease)/Decrease in trade receivables
            (68,212 )     66,850  
Decrease /(Increase) in deposits, prepayments and other receivables
            1,336       (31,349 )
lncrease/(Decrease) in trade and other payables and accruals
            55,092       (15,008 )
Decrease in bills payable
            -       (4,619 )
Cash generated from operations
            215,064       233,018  
Income tax paid
            (7,278 )     (8,624 )
Net cash generated from operating activities
            207,786       224,394  
                         
Cash flows from investing activities
                       
Deposits paid for acquisition of property, plant and equipment
            (11,420 )     (1,009 )
Interest received
            60       240  
Proceeds from disposal of property, plant and equipment
            6,456       3,850  
Purchase of property, plant and equipment
            (173,313 )     (183,602 )
Net cash used in investing activities
            (178,217 )     (180,521 )
                         
Cash flows from financing activities
                       
Proceeds from finance lease
            -       6,612  
Capital element of finance lease payments
            (18,674 )     (23,826 )
Proceeds from bank loans
            254,656       252,197  
Repayment of bank loans
            (187,321 )     (293,620 )
Interest paid
            (1,102 )     (2,675 )
Interest element of finance lease payments
            (1,631 )     (2,816 )
Dividend paid to Company's owners
            (20,000 )     -  
Net cash generated from /(used in) financing activities
            25,928       (64,128 )
                         
Net increase/(decrease) in cash and cash equivalents
            55,497       (20,255 )
Effect of foreign exchange rate changes
            768       (56 )
Cash and cash equivalents at the beginning of the year
            95,039       115,350  
Cash and cash equivalents at the end of the year
            151,304       95,039  
 
 
 
 

Plastec International Holdings Limited
5
Financial statements for the year ended 30 April 2010
 
 
Consolidated statement of changes in equity
for the year ended 30 April 2010
 
   
Attributable to the owners of the Company
 
   
Share
capital
HK$'000
   
Share
premium*
HK$'000
   
Capital
reserve*
HK$'000
   
Other
reserve*
HK$'000
   
Exchange
reserve*
HK$'000
   
Retained
profits*
HK$'000
   
Total
HK$'000
 
                                           
Balance at 1 May 2008
    98       104,744       8,592       34       6,190       418,691       538,349  
                                                         
Transactions with owners
                                                       
Dividend declared and approved
    -       -       -       -       -       (50,000 )     (50,000 )
                                                         
Profit for the year
    -       -       -       -       -       61,738       61,738  
                                                         
Other comprehensive income
                                                       
Exchange loss on translation of financial statements of foreign operations
    -        -        -       -       (58 )     -       (58 )
Total comprehensive income for the year
    -       -       -       -       (58 )     61,738       61,680  
                                                         
Balance at 30 April 2009 and at 1 May 2009
    98       104,744       8,592       34       6,132       430,429       550,029  
                                                         
Transactions with owners
                                                       
Dividend declared and approved
    -       -       -       -       -       (30,000 )     (30,000 )
                                                         
Profit for the year
    -       -       -       -       -       44,307       44,307  
                                                         
Other comprehensive income
                                                       
Exchange gain on translation of financial statements of foreign operations
    -        -        -        -       1,756        -       1,756  
Total comprehensive income for the year
    -       -       -       -       1,756       44,307       46,063  
                                                         
Balance at 30 April 2010
    98       104,744       8,592       34       7,888       444,736       566,092  
 
*
These reserve accounts comprise the consolidated reserves of approximately HK$565,994,000 (2009: HK$549,931,000) in the consolidated statement of financial position as at 30 April 2010.

 
 
 
 
Plastec International Holdings Limited
6
Financial statements for the year ended 30 April 2010
 
 
Notes to the financial statements
for the year ended 30 April 2010
1. 
GENERAL INFORMATION
Plastec International Holdings Limited (the "Company") is a limited liability company incorporated in the British Virgin Islands ("BVI") and domiciled in Hong Kong. The address of its registered office is Sea Meadow House, Blackburne Highway, P.O. Box 116, Road Town, Tortola, BVI and its principal place of business is Unit 01, 21/F., Aitken Vanson Centre, 61 Hoi Yuen Road, Kwun Tong, Kowloon, Hong Kong.
 
The principal activity of the Company is investment holding. The principal activities of the Company's subsidiaries are manufacturing of plastic parts of electronic appliances. Details of the Company's subsidiaries are set out in Note 14 to the financial statements. The Company and its subsidiaries are referred to as the "Group" hereafter.
 
The financial statements for the year ended 30 April 2010 were approved for issue by the board of directors on 15 December 2010.
 
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2.1
Basis of preparation
The financial statements on pages 2 to 36 have been prepared in accordance with International Financial Reporting Standards ("IFRSs") issued by the International Accounting Standards Board ("IASB") which collective term includes all applicable individual International Financial Reporting Standards and Interpretations issued by the IASB.
 
The significant accounting policies that have been used in the preparation of these financial statements are summarised below. These policies have been consistently applied to all the years presented unless otherwise stated.
 
The financial statements have been prepared on historical cost basis. The measurement bases are fully described in the accounting policies below. The adoption of new or amended IFRSs and the impacts on the Group's financial statements, if any, are disclosed in Note 3.

 
 
 
 
Plastec International Holdings Limited
7
Financial statements for the year ended 30 April 2010
 
 
2. 
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
2.1         Basis of preparation (Continued)
It should be noted that accounting estimates and assumptions are used in preparation of the financial statements. Although these estimates are based on management's best knowledge and judgement of current events and actions, actual results may ultimately differ from those estimates. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 4.
 
2.2         Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries (see Note 2.3 below) made up to 30 April.
 
Subsidiaries are consolidated from the date on which control is transferred to the Group. They are excluded from consolidation from the date that control ceases.
 
Intra-group transactions, balances and unrealised gains and losses on transactions between group companies are eliminated in preparing the consolidated financial statements. Where unrealised losses on intra-group asset sales are reversed on consolidation, the underlying asset is also tested for impairment from the Group's perspective. Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group.
 
2.3         Subsidiaries
Subsidiaries are entities over which the Group has the power to control the financial and operating policies so as to obtain benefits from their activities. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.
 
In consolidated financial statements, acquisition of subsidiaries (other than those under common control) is accounted for by applying the purchase method. This involves the estimation of fair value of all identifiable assets and liabilities, including contingent liabilities of the subsidiary, at the acquisition date, regardless of whether or not they were recorded in the financial statements of the subsidiary prior to acquisition. On initial recognition, the assets and liabilities of the subsidiary are included in the consolidated statement of financial position at their fair values, which are also used as the bases for subsequent measurement in accordance with the Group's accounting policies.

 
 
 

Plastec International Holdings Limited
8
Financial statements for the year ended 30 April 2010
 
 
2.           SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
2.4         Foreign currency translation
These financial statements are presented in Hong Kong dollars (HK$), which is also the functional currency of the Company.
 
In the individual financial statements of the consolidated entities, foreign currency transactions are translated into the functional currency of the individual entity using the exchange rates prevailing at the dates of the transactions. At the reporting date, monetary assets and liabilities denominated in foreign currencies are translated at the foreign exchange rates ruling at the reporting date. Foreign exchange gains and losses resulting from the settlement of such transactions and from the reporting date retranslation of monetary assets and liabilities are recognised in the profit or loss.
 
Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined and are reported as part of the fair value gain or loss. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
 
In the consolidated financial statements, all individual financial statements of foreign operations, originally presented in a currency different from the Group's presentation currency, have been converted into Hong Kong dollars. Assets and liabilities have been translated into Hong Kong dollars at the closing rates at the reporting date. Income and expenses have been converted into the Hong Kong dollars at the exchange rates ruling at the transaction dates, or at the average rates over the reporting period provided that the exchange rates do not fluctuate significantly. Any differences arising from this procedure have been recognised in other comprehensive income and accumulated separately in the exchange reserve in equity.
 
When a foreign operation is sold, such exchange differences are reclassified from equity to profit or loss as part of the gain or loss on sale.
 
2.5         Revenue recognition
Revenue comprises the fair value of the consideration received or receivable for the sale of goods, net of rebates and discounts. Provided it is probable that the economic benefits will flow to the Group and the revenue and costs, if applicable, can be measured reliably, revenue is recognised as follows:
 
 
-
Sales of goods are recognised upon transfer of the significant risks and rewards of ownership to the customer. This is usually taken as the time when the goods are delivered and the customer has accepted the goods.
 
 
-
Interest income is recognised on a time-proportion basis using the effective interest method.
 
 
-
Dividend is recognised when the right to receive payment is established.
 
 
 
 
 
Plastec International Holdings Limited
9 
Financial statements for the year ended 30 April 2010
 
 
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
2.6
Property, plant and equipment
Property, plant and equipment, other than construction in progress, are stated at acquisition cost less accumulated depreciation and impairment losses. The cost of an asset comprises its purchase price and any directly attributable costs of bringing the asset to its working condition and location for its intended use.
  
Depreciation is provided to write off the cost less their residual values over their estimated useful lives, using the straight-line method, at the following rates per annum:
 
Buildings
 
5%
Plant and machineries
 
10%-33.5%
Furniture, fixtures and equipment
 
5%-20%
Leasehold improvements
 
15%-20%
Computer equipment
 
20%-33.33%
Motor vehicles
 
20%
Moulds
 
20%-50%
 
The assets' estimated residual values, depreciation methods and estimated useful lives are reviewed, and adjusted if appropriate, at each reporting date.
 
Construction in progress represents assets in the course of construction for production or for its own use purpose. It is stated at cost less any impairment loss and is not depreciated. Cost includes direct costs incurred during the periods on construction, installation and testing plus interest charges arising from borrowings used to finance these assets during the construction period, if any. Construction in progress is reclassified to the appropriate category of property, plant and equipment and depreciation commences when the construction work is completed and the asset is ready for use.
 
The gain or loss arising on retirement or disposal is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in the profit or loss.
 
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other costs, such as repairs and maintenance are charged to the profit or loss during the financial period in which they are incurred.

 
 
 
 
Plastec International Holdings Limited
10 
Financial statements for the year ended 30 April 2010
 
 
2. 
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
2.7
Prepaid lease payments
Upfront payments made to acquire land held under an operating lease are stated at costs less accumulated amortisation and any accumulated impairment losses. The determination if an arrangement is or contains a lease and the lease is an operating lease is detailed in Note 2.9. Amortisation is calculated on a straight line basis over the term of the lease/right of use except where an alternative basis is more representative of the time pattern of benefits to be derived by the Group from use of the land.
 
2.8
Impairment of non-financial assets
The Group's property, plant and equipment, prepaid lease payments and the Company's interests in subsidiaries are subject to impairment testing.
 
For the purposes of assessing impairment, where an asset does not generate cash inflows largely independent from those from other assets, the recoverable amount is determined for the smallest group of assets that generate cash inflows independently (i.e. a cash-generating unit). As a result, some assets are tested individually for impairment and some are tested at cash-generating unit level.
 
An impairment loss is recognised as an expense immediately for the amount by which the asset's or cash-generating unit's carrying amount exceeds its recoverable amount unless the relevant asset is carried at a revalued amount under another standard, in which case the impairment loss is treated as a revaluation decrease under that standard. The recoverable amount is the higher of fair value, reflecting market conditions less costs to sell and value in use, based on an internal discounted cash flow evaluation.
 
An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount and only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
 
2.9
Leases
An arrangement, comprising a transaction or a series of transactions, is or contains a lease if the Group determines that the arrangement conveys a right to use a specific asset or assets for an agreed period of time in return for a payment or a series of payments. Such a determination is made based on an evaluation of the substance of the arrangement and is regardless of whether the arrangement takes the legal form of a lease.

 
 
 
 
Plastec International Holdings Limited
11 
Financial statements for the year ended 30 April 2010
 
 
2. 
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
2.9
Leases (Continued)
(i)       Classification of assets leased to the Group
Assets that are held by the Group under leases which transfer to the Group substantially all the risks and rewards of ownership are classified as being held under finance leases. Leases which do not transfer substantially all the risks and rewards of ownership to the Group are classified as operating leases.
 
(ii)      Assets acquired under finance leases
Where the Group acquires the use of assets under finance leases, the amounts representing the fair value of the leased asset, or, if lower, the present value of the minimum lease payments of such assets, are included in property, plant and equipment and the corresponding liabilities, net of finance charges, are recorded as obligation under finance leases.
 
Subsequent accounting for assets held under finance lease agreements corresponds to those applied to comparable acquired assets. The corresponding finance lease liability is reduced by lease payments less finance charges.
 
Finance charges implicit in the lease payments are charged to profit or loss over the period of the leases so as to produce an approximately constant periodic rate of charge on the remaining balance of the obligations for each accounting period. Contingent rentals are charged to profit or loss in the accounting period in which they are incurred.
 
(iii)     Operating lease charges as the lessee
Where the Group has the right to use of assets held under operating leases, payments made under the leases are charged to profit or loss on a straight line basis over the lease terms except where an alternative basis is more representative of the time pattern of benefits to be derived from the leased assets. Lease incentives received are recognised in profit or loss as an integral part of the aggregate net lease payments made. Contingent rental are charged to profit or loss in the accounting period in which they are incurred.
 
2.10
Financial assets
The Group's accounting policies for financial assets other than interests in subsidiaries are set out below. Financial assets are classified into the categories of loans and receivables and cash and cash equivalents.
 
Management determines the classification of its financial assets at initial recognition depending on the purpose for which the financial assets were acquired and where allowed and appropriate, re-evaluates this designation at every reporting date.
 
All financial assets are recognised when, and only when, the Group becomes a party to the contractual provisions of the instrument. When financial assets are recognised initially, they are measured at fair value, plus directly attributable transaction costs.

 
 
 
 
Plastec International Holdings Limited
12 
Financial statements for the year ended 30 April 2010
 
 
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
2.10
Financial assets (Continued)
Derecognition of financial assets occurs when the rights to receive cash flows from the investments expire or are transferred and substantially all of the risks and rewards of ownership have been transferred.
 
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. These are subsequently measured at amortised cost using the effective interest method, less any impairment losses. Amortised cost is calculated taking into account any discount or premium on acquisition and includes fees that are an integral part of the effective interest rate and transaction cost.
 
Impairment of financial assets
At each reporting date, financial assets are reviewed to determine whether there is any objective evidence of impairment.
 
Objective evidence of impairment of individual financial assets includes observable data that comes to the attention of the Group about one or more of the following loss events:
 
-
Significant financial difficulty of the debtor;
 
-
A breach of contract, such as a default or delinquency in interest or principal payments;
 
-
It becoming probable that the debtor will enter bankruptcy or other financial reorganisation;
 
-
Significant changes in the technological, market, economic or legal environment that have an adverse effect on the debtor; and
 
-
A significant or prolonged decline in the fair value of an investment in an equity instrument below its cost.
 
Loss events in respect of a group of financial assets include observable data indicating that there is a measurable decrease in the estimated future cash flows from the group of financial assets. Such observable data includes but not limited to adverse changes in the payment status of debtors in the group and, national or local economic conditions that correlate with defaults on the assets in the group.

 
 
 
 
Plastec International Holdings Limited
13 
Financial statements for the year ended 30 April 2010
 
 
2. 
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
2.10
Financial assets (Continued)
Impairment of financial assets (Continued)
If any such evidence exists, the impairment loss is measured and recognised as follows:
 
If there is objective evidence that an impairment loss on loans and receivables carried at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset's original effective interest rate (i.e. the effective interest rate computed at initial recognition). The amount of the loss is recognised in profit or loss of the period in which the impairment occurs.
 
If, in subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that it does not result in a carrying amount of the financial asset exceeding what the amortised cost would have been had the impairment not been recognised at the date the impairment is reversed. The amount of the reversal is recognised in profit or loss of the period in which the reversal occurs.
 
2.11
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials computed using the first-in first-out method, and in the case of work in progress and finished goods, comprise direct materials, direct labour and an appropriate proportion of overheads. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and applicable selling expenses.
 
2.12
Cash and cash equivalents
Cash and cash equivalents include cash at bank and in hand and demand deposits with banks with original maturities of three months or less that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.
 
2.13
Accounting for income taxes
Income tax comprises current tax and deferred tax.
 
Current income tax assets and/or liabilities comprise those obligations to, or claims from, fiscal authorities relating to the current or prior reporting period, that are unpaid at the reporting date. They are calculated according to the tax rates and tax laws applicable to the fiscal periods to which they relate, based on the taxable profit for the year. All changes to current tax assets or liabilities are recognised as a component of tax expense in the profit or loss.

 
 
 
 
Plastec International Holdings Limited
14 
Financial statements for the year ended 30 April 2010
 
 
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
2.13
Accounting for income taxes (Continued)
Deferred tax is calculated using the liability method on temporary differences at the reporting date between the carrying amounts of assets and liabilities in the financial statements and their respective tax bases. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are recognised for all deductible temporary differences, tax losses available to be carried forward as well as other unused tax credits, to the extent that it is probable that taxable profit, including existing taxable temporary differences, will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised.
 
Deferred tax assets and liabilities are not recognised if the temporary difference arises from goodwill or from initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither taxable nor accounting profit or loss.
 
Deferred tax liabilities are recognised for taxable temporary differences arising on interests in subsidiaries, except where the Group is able to control the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future.
 
Deferred tax is calculated, without discounting, at tax rates that are expected to apply in the period the liability is settled or the asset realised, provided they are enacted or substantively enacted at the reporting date.
 
Changes in deferred tax assets or liabilities are recognised in profit or loss, or in other comprehensive income or directly in equity if they relate to items that are charged or credited to other comprehensive income or directly to equity.
 
Current tax assets and current tax liabilities are presented in net if, and only if,
 
 
(a)
the Group has the legally enforceable right to set off the recognised amounts; and
 
 
(b)
intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

 
 
 
 
Plastec International Holdings Limited
15 
Financial statements for the year ended 30 April 2010
 
 
2. 
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
2.13
Accounting for income taxes (Continued)
The Group presents deferred tax assets and deferred tax liabilities in net if, and only if,
 
 
(a)
the entity has a legally enforceable right to set off current tax assets against current tax liabilities; and
 
 
(b)
the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on either:
 
(i) 
the same taxable entity; or
 
 
(ii)
different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.
 
2.14
Share capital
Ordinary shares are classified as equity. Share capital is determined using the nominal value of shares that have been issued.
 
2.15
Employee benefits
Retirement benefits
Retirement benefits to employees are provided through defined contribution plans.
 
The Group operates a defined contribution retirement benefit plan under the Mandatory Provident Fund Schemes Ordinance, for all of its employees who are eligible to participate in the MPF Scheme. Contributions are made based on a percentage of the employees' basic salaries.
 
The employees of the Company's subsidiaries which operate in the People's Republic of China (the "PRC") are required to participate in a central pension scheme operated by the local municipal government. The subsidiary is required to contribute certain percentage of its payroll costs to the central pension scheme.
 
Contributions are recognised as an expense in profit or loss as employees render services during the year. The Group's obligations under these plans is limited to the fixed percentage contributions payable.
 
Short-term employee benefits
Employee entitlements to annual leave are recognised when they accrue to employees. A provision is made for the estimated liability for annual leave as a result of services rendered by employees up to the reporting date.
 
Non-accumulating compensated absences such as sick leave and maternity leave are not recognised until the time of leave.

 
 
 
 
Plastec International Holdings Limited
16 
Financial statements for the year ended 30 April 2010
 
 
2. 
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
2.16
Borrowing costs
All borrowing costs are expensed as incurred.
 
2.17
Financial liabilities
The Group's financial liabilities include trade and other payables and accruals, borrowings and dividend payable.
 
Financial liabilities are recognised when the Group becomes a party to the contractual provisions of the instrument. All interest related charges are recognised as an expense in finance costs in the profit or loss.
 
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.
 
Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amount is recognised in the profit or loss.
 
Trade and other payables and accruals and dividend payable are recognised initially at their fair value and subsequently measured at amortised cost, using the effective interest method.
 
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest method.
 
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.
 
Obligation under finance leases are measured at initial value less the capital element of lease repayments. (Note 2.9)
 
2.18
Financial guarantees issued
A financial guarantee contract is a contract that requires the issuer (or guarantor) to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the terms of a debt instrument.
 
 
 
 
 
Plastec International Holdings Limited
17 
Financial statements for the year ended 30 April 2010
 
 
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
2.18
Financial guarantees issued (Continued)
Where the Group issues a financial guarantee, the fair value of the guarantee is initially recognised as deferred income within other payables. Where consideration is received or receivable for the issuance of the guarantee, the consideration is recognised in accordance with the Group's policies applicable to that category of asset. Where no such consideration is received or receivable, an immediate expense is recognised in profit or loss on initial recognition of any deferred income.
 
2.19
Provisions and contingent liabilities
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made. Where the time value of money is material, provisions are stated at the present value of the expenditure expected to settle the obligation.
 
All provisions are reviewed at each reporting date and adjusted to reflect the current best estimate.
 
Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or nonoccurrence of one or more future uncertain events not wholly within the control of the Group are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote.
 
Contingent liabilities are recognised in the course of the allocation of purchase price to the assets and liabilities acquired in a business combination. They are initially measured at fair value at the date of acquisition and subsequently measured at the higher of the amount that would be recognised in a comparable provision as described above and the amount initially recognised less any accumulated amortisaton, if appropriate.
 
2.20
Related parties
For the purposes of these financial statements, a party is considered to be related to the Group if:
 
(i)
the party has the ability, direcdy or indirectly through one or more intermediaries, to control the group or exercise significant influence over the group in making financial and operating policy decisions, or has joint control over the group;
 
(ii)
the group and the party are subject to common control;
 
(iii)
the party is an associate of the group or a joint venture in which the group is a venturer;
 
 
 
 
 
Plastec International Holdings Limited
18 
Financial statements for the year ended 30 April 2010
 
 
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
2.20
Related parties (Continued)
(iv)
the party is a member of key management personnel of the group or the group's parent, or a close family member of such an individual, or is an entity under the control, joint control or significant influence of such individuals;
 
(v)
the party is a close family member of a party referred to in (i) or is an entity   under the control, joint control or significant influence of such individuals; or
 
(vi)
the party is a post-employment benefit plan which is for the benefit of employees of the group or of any entity that is a related party of the group.
 
Close family members of an individual are those family members who may be expected to influence, or be influenced by, that individual in their dealings with the entity.
 
3.
ADOPTION OF NEW OR AMENDED IFRSs
In the current year, the Group has applied for the first time the following new standards, amendments and interpretations (the "new IFRSs") issued by the IASB, which are relevant to and effective for the Group's financial statements for the annual period beginning on 1 May 2009.

IAS 1 (Revised)
Presentation of Financial Statements
IFRS 7 (Amended)
Improving Disclosures about Financial Instruments
Various
Annual Improvements to IFRS 2008 (May 2008)
 
Other than as noted below, the adoption of the new IFRSs had no material impact on how the results and financial position for the current and prior periods have been prepared and presented.
 
IAS 1 (Revised 2007) Presentation of financial statements
The adoption of IAS 1 (Revised 2007) makes certain changes to the format and titles of the primary financial statements and to the presentation of some items within these statements. It also gives rise to additional disclosures. The measurement and recognition of the Group's assets, liabilities, income and expenses is unchanged. However, some items that were recognised directly in equity are now recognised in other comprehensive income. IFRS 1 affects the presentation of owner changes in equity and introduces a 'Statement of comprehensive income'. Comparatives have been restated to conform with the revised standard.
 
 
 
 

Plastec International Holdings Limited
19
Financial statements for the year ended 30 April 2010
 
 
3.
ADOPTION OF NEW OR AMENDED IFRSs (Continued)
IAS 1 Presentation of Financial Statements - Current/non-current classification of a callable term loan
Following the decision concluded by the IFRSs Interpretation Committee (the “Committee”) in November 2010 regarding the classification of a liability as current or non-current when the liability is not scheduled for repayment within twelve months after the reporting period, but may be callable by the lender at any time without cause, the Group reclassified its long term loans from non-current liabilities into current liabilities with immediate effect, as at the reporting dates of 30 April 2010 and 2009.
 
The Committee concluded that the amounts repayable under a loan agreement, which includes a clause that gives the lender the unconditional right to call the loan at any time, shall be classified by the borrower as current liabilities in its statement of financial position. The reason is the borrower under such an agreement does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting date. The effect of the Group's financial statements is reclassification of long term loans of approximately HK$32,736,000 and HK$2,500,000 from non-current liabilities to current liabilities as at 30 April 2010 and 30 April 2009 respectively.
 
As a result of the above reclassification, an additional consolidated statement of financial position as at 1 May 2008 is presented in accordance with the requirement of the IAS 1 (Revised 2007).
 
At the date of authorisation of these financial statements, certain new and amended IFRSs have been published but are not yet effective, and have not been adopted early by the Group.
 
The directors anticipate that all of the pronouncements will be adopted in the Group's accounting policy for the first period beginning after the effective date of the pronouncement. The directors are of the opinion that the new and amended IFRSs have been issued are not expected to have material impact of the Group's financial statements.
 
4.
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
 
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:
 
 
(i)
Depreciation and amortisation
The Group depreciates its property, plant and equipment and amortises its prepaid lease payments in accordance with the accounting policies stated in Notes 2.6 and 2.7 respectively. The estimated useful lives reflect the management's estimate of the periods that the Group intends to derive future economic benefits from the use of these assets.

 
 
 

Plastec International Holdings Limited
20
Financial statements for the year ended 30 April 2010
 
 
4.
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (Continued)
 
(ii)
Net realisable value of inventories
These estimates are based on the current market condition and the historical experience of selling products of similar nature. It could change significantly as a result of competitor actions in response to severe industry cycles. Management will reassess the estimations at the reporting date.
 
 
(iii)
Impairment of receivables
The Group's management determines impairment of receivables on a regular basis. This estimate is based on the credit history of the Group's receivables and the current market condition. When the Group's management determines that there are indicators of significant financial difficulties of the receivables such as default or delinquency in payments, allowance for impairment are estimated. The Group's management reassesses the impairment of receivables at the reporting date.
 
 
(iv)
Provision for taxes
There are certain transactions in the ordinary course of business for which the ultimate tax determination is uncertain. Significant judgement is required in determining the amount of the provision for taxes and the timing of payment of related taxes. Should the final tax outcome be different from the amounts that were initially recorded, such differences will impact the income tax provision in the period in which such determination is made.
 
In the opinion of the directors, the current tax position is a fair reflection of the judgement exercised by them with respect to such transactions.
 
 
(v)
Impairment of assets (other than financial assets)
The Group assesses whether there are any indicators of impairment of assets at each reporting date. They are tested for impairment when there are indicators that the carrying amounts may not be recoverable. When value in use calculations are undertaken, management estimates the expected future cash flows from the asset or cash-generating unit and determines a suitable discount rate in order to calculate the present value of those cash flows.
 
5.
REVENUE
Revenue, which is also the Group's turnover, represents the total invoiced sales net of returns and discounts.

 
 
 

Plastec International Holdings Limited
21
Financial statements for the year ended 30 April 2010
 
 
6.
OTHER REVENUE AND NET INCOME
 
     
2010
   
2009
 
     
HK$'000
   
HK$'000
 
               
 
Other revenue
           
 
Bank interest income
    60       240  
 
Net exchange gain
    997       -  
 
Sales of scrapped materials
    1,141       161  
 
Sundry income
    2,226       1,941  
        4,424       2,342  
 
Net income
               
 
Net gain on disposal of property, plant and equipment
    1,077       -  
        5,501       2,342  

7.
FINANCE COSTS

     
2010
   
2009
 
     
HK$'000
   
HK$'000
 
               
 
Interest charges on:
           
 
Bank loans repayable within 5 years
    1,102       2,539  
 
Finance lease charges
    1,631       2,816  
        2,733       5,355  

8.
PROFIT BEFORE INCOME TAX

     
2010
   
2009
 
     
HK$'000
   
HK$'000
 
               
 
Profit before income tax is arrived at after charging:
           
 
Amortisation of prepaid lease payments
    25       25  
 
Bad debt written off
    -       324  
 
Cost of inventories recognised as an expense
    810,187       749,649  
 
Depreciation
               
 
- Owned assets
    111,599       92,978  
 
- Leased assets
    9,251       10,184  
 
Net exchange loss
    -       2,108  
 
Operating lease charges on premises
    17,661       19,142  
 
Provision for impairment loss of inventories
    5,571       -  
 
Loss on disposal of property, plant and equipment
    -       29,031  
 
Staff costs (including directors' remuneration and retirement benefit scheme contributions)
    186,938       175,024  
 
Written-off of property, plant and equipment (Note)
    40,348       -  
 
Note:
 
Property plant and equipment amounting to approximately HK$40,348,000 was written off for the year ended 30 April 2010 (2009: HK$ Nil) due to closing down of the related factories in the PRC. The amount was charged to administrative expenses during the year.
 

Plastec International Holdings Limited
22
Financial statements for the year ended 30 April 2010
 
 
9.
INCOME TAX EXPENSE
Hong Kong Profits Tax has been provided at the rate of 16.5% (2009: 16.5%) on the estimated assessable profits for the year. The Group's certain subsidiaries established and operating in the PRC are exempted from enterprise income tax for the first two profitable years of operations, and thereafter, are eligible for a 50% relief from enterprise income tax for the following three years. Remaining subsidiaries operating in the PRC are subject to PRC enterprise income tax rate of 25%. No PRC enterprise income tax provided as the Group's subsidiaries established in the PRC have no assessable profits during the year (2009: Nil).
 
     
2010
   
2009
 
     
HK$'000
   
HK$'000
 
               
 
Hong Kong Profits Tax
           
 
Current year
    10,499       3,285  
 
Over provision in prior years
    -       (6,064 )
        10,499       (2,779 )
                   
 
Overseas Profits Tax Current year
    -       24  
                   
 
Deferred tax (Note 21) Current year
    358       3,527  
 
Income tax expense
    10,857       772  

Reconciliation between income tax expense and accounting profit at applicable tax rates :

     
2010
   
2009
 
     
HK$'000
   
HK$'000
 
               
 
Profit before income tax
    55,164       62,510  
                   
 
Tax on profit before taxation, calculated at the rates applicable to profits in the tax jurisdictions concerned
    10,205       10,444  
 
Tax effect of non-deductible expenses
    1,010       4,052  
 
Tax effect of non-taxable income
    (7,242 )     (5,680 )
 
Unrecognised temporary difference
    3,730       (4,082 )
 
Tax effect of unused tax losses not recognised
    3,154       2,570  
 
Tax effect of prior year's unrecognised tax losses utilised during the year
 
-
      (468 )
 
Under/(over) provision in respect of prior years
    -       (6,064 )
 
Income tax expense
    10,857       772  
 
 
 
 

Plastec International Holdings Limited
23
Financial statements for the year ended 30 April 2010
 
 
10.
EMPLOYEE BENEFIT EXPENSE (including directors' emoluments)

     
2010
   
2009
 
     
HK$'000
   
HK$'000
 
               
 
Wages and salaries and other allowances
    174,895       162,886  
 
Pension costs – defined contribution plans
    12,043       12,138  
        186,938       175,024  

 
11.
DIVIDEND
Dividend attributable to the year

     
2010
   
2009
 
     
HK$'000
   
HK$'000
 
               
 
Interim dividend of HK$2,400 per ordinary share (2009: HK$4,000)
    30,000       50,000  

 
 
 

Plastec International Holdings Limited
24
Financial statements for the year ended 30 April 2010
 
 
12.
PROPERTY, PLANT AND EQUIPMENT
 
                     
Furniture,
                               
   
Construction
         
Plant and
   
fixtures and
   
Leasehold
   
Computer
   
Motor
             
   
in progress
   
Buildings
   
machineries
   
equipment
   
improvements
   
equipment
   
vehicles
   
Moulds
   
Total
 
   
HK$'000
   
HK$'000
   
HK$'000
   
HK$'000
   
HK$'000
   
HK$'000
   
HK$'000
   
HK$'000
   
HK$'000
 
                                                       
At 1 May 2008
                                                     
Cost
    21,163       18,855       493,844       35,797       7,856       5,075       8,355       38,992       629,937  
Accumulated depreciation
    -       (1,447 )     (195,857 )     (17,313 )     (5,136 )     (3,377 )     (5,428 )     (14,126 )     (242,684 )
Net book amount
    21,163       17,408       297,987       18,484       2,720       1,698       2,927       24,866       387,253  
                                                                         
Year ended 30 April 2009
                                                                       
Opening net book amount
    21,163       17,408       297,987       18,484       2,720       1,698       2,927       24,866       387,253  
Additions
    4,731       702       168,390       19,858       127       1,695       1,354       1,950       198,807  
Disposals
    -       -       (33,443 )     (897 )     -       (7 )     (84 )     (15,956 )     (50,387 )
Depreciation
    -       (982 )     (78,205 )     (13,104 )     (755 )     (1,176 )     (1,302 )     (7,638 )     (103,162 )
Write-back on disposals
    -       -       10,579       672       -       2       84       6,169       17,506  
Transfer
    (21,207 )     409       321       20,470       -       7       -       -       -  
Closing net book amount
    4,687       17,537       365,629       45,483       2,092       2,219       2,979       9,391       450,017  
                                                                         
At 30 April 2009 and at 1 May 2009
                                                                       
Cost
    4,687       19,966       629,112       75,228       7,983       6,770       9,625       24,986       778,357  
Accumulated depreciation
    -       (2,429 )     (263,483 )     (29,745 )     (5,891 )     (4,551 )     (6,646 )     (15,595 )     (328,340 )
Net book amount
    4,687       17,537       365,629       45,483       2,092       2,219       2,979       9,391       450,017  
                                                                         
Year ended 30 April 2010
                                                                       
Opening net book amount
    4,687       17,537       365,629       45,483       2,092       2,219       2,979       9,391       450,017  
Additions
    10,488       508       119,533       31,968       161       2,274       1,130       8,260       174,322  
Disposals
    -       -       (25,092 )     (169 )     -       (39 )     (1,077 )     -       (26,377 )
Written off
    -       -       (30,372 )     (9,875 )     (68 )     (33 )     -       -       (40,348 )
Depreciation
    -       (1,040 )     (91,843 )     (17,504 )     (455 )     (1,279 )     (1,349 )     (7,380 )     (120,850 )
Write-back on disposals
    -       -       20,281       118       -       39       560       -       20,998  
Transfer
    (10,482 )     420       5,913       1,110       2,656       87       296       -       -  
Exchange realignment
    10       (7 )     759       104       60       5       32       -       963  
Closing net book amount
    4,703       17,418       364,808       51,235       4,446       3,273       2,571       10,271       458,725  
                                                                         
At 30 April 2010
                                                                       
Cost
    4,703       20,940       683,607       93,558       10,724       9,025       10,018       33,246       865,821  
Accumulated depreciation
    -       (3,522 )     (318,799 )     (42.323 )     (6,278 )     (5,752 )     (7,447 )     (22,975 )     (407,096 )
Net book amount
    4,703       17,418       364,808       51,235       4,446       3,273       2,571       10,271       458,725  

 
 
 

Plastec International Holdings Limited
25
Financial statements for the year ended 30 April 2010
 
 
12.
PROPERTY, PLANT AND EQUIPMENT (Continued)
Plant and machineries of net book value of HK$50,901,000 (2009: HK$63,661,000) were held under finance lease.
 
The buildings which were located outside Hong Kong were held under medium lease terms.
 
13.
PREPAID LEASE PAYMENTS
 
     
2010
   
2009
 
     
HK$'000
   
HK$'000
 
               
 
Opening net carrying amount
    1,116       1,141  
 
Amortisation
    (25 )     (25 )
 
Exchange difference
    25       -  
 
Closing net carrying amount
    1,116       1,116  
 
Less: current portion
    (25 )     (25 )
 
Non-current portion
    1,091       1,091  

The analysis of the net carrying amounts of prepaid lease payments according to lease periods is as follows:

     
2010
   
2009
 
     
HK$'000
   
HK$'000
 
               
 
Outside Hong Kong, held on:
           
 
Leases of between 10 and 50 years
    1,116       1,116  

 
 
 

Plastec International Holdings Limited
26
Financial statements for the year ended 30 April 2010
 
 
14.
SUBSIDIARIES
Particulars of the subsidiaries at 30 April 2010 are as follows :-
 
 
Name
 
Place  of
incorporation/
registration and
operations
 
Type of legal
entity
 
Nominal value  of
issued ordinary/
registered share
capital
 
Percentage of 
equity attributable
to the Company
 
Principal activities
                 
Direct
 
Indirect
   
                           
 
Fast Achieve Enterprises Limited
 
BVI
 
Limited liability
company
 
1 ordinary share of
US$1
 
100%
 
-
 
Dormant
                           
 
Broadway Industrial Holdings Limited
 
BVI
 
Limited liability
company
 
3,850,000 ordinary
shares of US$1
each
 
100%
 
-
 
Manufacturing of plastic parts of electronic appliances
                           
 
Broadway Industrial Holdings Limited
 
Hong Kong
 
Limited liability
company
 
1 ordinary share of
HK$1
 
-
 
100%
 
Investment holding
                           
 
Broadway Precision Industrial (Kunshan) Ltd.
 
The People's
Republic of China
 
Wholly owned
foreign enterprise
 
Registered capital
of US$6,000,000
 
 -
 
100%
 
Manufacturing of plastic parts of electronic appliances
                           
 
Broadway Manufacturing Company Limited
 
BVI
 
Limited liability
company
 
1 ordinary share of
US$1
 
100%
 
-
 
Property investment
                           
 
Sun Ngai Spraying and Silk Print Co. Ltd.
 
BVI
 
Limited liability
company
 
100 ordinary
shares of  US$1
each
 
100%
 
-
 
Provision of spraying and silk printing services
                           
 
Sun Ngai Spraying and Silk Print (HK) Co., Ltd.
 
Hong Kong
 
Limited liability
company
 
1 ordinary share of
HK$1
 
-
 
100%
 
Dormant
                           
 
Sun Line Industrial Limited
 
Hong Kong
 
Limited liability
company
 
100,000 ordinary
shares of HK$1
each
 
100%
 
-
 
Manufacturing of plastic products and provision of silk printing service
                           
 
Heyuan Sun Line Industrial Ltd.
 
The People's
Republic of China
 
Wholly owned
foreign enterprise
 
Registered capital
of US$5,000,000
 
-
 
100%
 
Manufacturing of plastic parts of electronic appliances
                           
 
New Skill Holdings Limited
 
Samoa
 
Limited liability
company
 
1 ordinary share of
US$1
 
100%
 
-
 
Investment holding
                           
 
Dongguan Sun Chuen Plastic Products Co., Ltd.
 
The People's
Republic of China
 
Wholly owned
foreign enterprise
 
Registered capital of HK$17,000,000
 
-
 
100%
 
Manufacturing of plastic parts of electronic appliances
                           
 
Sun Line (Macao Commercial Offshore) Company Limited
 
Macau
 
Limited liability
company
 
100,000 ordinary
share of MOP 1
each
 
100%
 
-
 
Trading of plastic products
                           
 
Sun Terrace Industries Limited
 
BVI
 
Limited liability
company
 
1 ordinary share of
US$1
 
100%
 
-
 
Investment holding
                           
 
Allied Sun Corporation Limited
 
Hong Kong
 
Limited liability
company
 
1 ordinary share of
HK$1
 
-
 
100%
 
Investment holding
                           
 
Sun Line Precision Industrial (Zhuhai) Ltd.
  
The People's
Republic of China
  
Wholly owned
foreign enterprise
  
Registered capital
of US$5,600,000
 
-
  
100%
  
Manufacturing of plastic parts of electronic appliances

 
 
 

Plastec International Holdings Limited
27
Financial statements for the year ended 30 April 2010
 
 
15.
INVENTORIES
 
     
2010
   
2009
 
     
HK$'000
   
HK$'000
 
               
 
Raw materials
    38,751       36,930  
 
Work in progress
    22,722       27,271  
 
Finished goods
    18,396       18,962  
        79,869       83,163  
 
Less: Provision for impairment loss of inventories
    (5,571 )     -  
        74,298       83,163  

The movement in the provision for impairment loss of inventories is as follows:

     
2010
   
2009
 
     
HK$'000
   
HK$'000
 
               
 
Balance at the beginning of the year
 
-
   
-
 
 
Provision for the year
    5,571       -  
 
Balance at the end of the year
    5,571       -  

16.
TRADE RECEIVABLES

     
2010
   
2009
 
     
HK$'000
   
HK$'000
 
               
 
Trade receivables
    242,097       174,209  
 
Less: bad debt written off
    -       (324 )
 
Trade receivables - net
    242,097       173,885  
 
The directors of the Group consider that the fair values of trade receivables which are expected to be recovered within one year are not materially different from their carrying amounts because these balances have short maturity periods on their inception.

 
 
 

Plastec International Holdings Limited
28
Financial statements for the year ended 30 April 2010
 
 
16.
TRADE RECEIVABLES (Continued)
The credit terms of the Group's trade receivables range from 30 to 180 days. The Group normally applies credit terms to its customers according to industry practice together with consideration of their creditability, repayment history and years of establishment. The Group seeks to maintain strict control over its outstanding receivables. Overdue balances are regularly reviewed by the management.
 
The aging analysis of the Group's trade receivables as at the reporting date, based on due date and net of provision, is as follows :
 
     
2010
   
2009
 
     
HK$'000
   
HK$'000
 
               
 
Neither past due nor impaired
    240,353       168,098  
 
0 - 180 days past due
    1,744       5,781  
 
181 - 365 days past due
    -       6  
        242,097       173,885  
 
Trade receivables that were neither past due nor impaired relate to customers for whom there was no recent history of default.
 
Trade receivables past due but not impaired were related to customers that had a good track record with the Group. Based on past experience, the management believe that no impairment allowance is necessary in respect of these balances as there has not been a significant change in credit quality and the balances are still considered fully recoverable. The Group did not hold any collateral in respect of trade receivables.
 
17.
DEPOSITS, PREPAYMENTS AND OTHER RECEIVABLES
 
     
2010
   
2009
 
     
HK$'000
   
HK$'000
 
               
 
Non-current assets
           
 
Deposits paid for acquisition of property, plant and e quipment
    11,420       1,009  
 
Prepaid rental
    26,818       28,345  
        38,238       29,354  
 
Current assets
               
 
Other receivables
    704       1,525  
 
Deposits and prepayments
    11,010       9,998  
        11,714       11,523  

 
 
 
 
Plastec International Holdings Limited
29
Financial statements for the year ended 30 April 2010
  
18. 
CASH AND CASH EQUIVALENTS
 
   
2010
   
2009
 
   
HK$'000
   
HK$'000
 
                 
Cash at bank and in hand
    116,719       63,799  
Short-term bank deposits
    34,585       31,240  
      151,304       95,039  
 
The short-term bank deposits earn 0.01% to 0.04% (2009: 0.01%) interest per annum. They have a maturity less than 3 months and are eligible for immediate cancellation without receiving any interest for the last deposit period.
 
The directors of the Group considered that the fair value of the short-term bank deposits is not materially different from their carrying amount because of the short maturity period on their inception.
 
Included in bank and cash balances of the Group of approximately HK$7,315,000 (2009: HK$16,029,000) was denominated in Renminbi ( “ RMB ” ) placed with banks in the PRC. RMB is not a freely convertible currency. Under the PRC's Foreign Exchange Control Regulations and Administration of Settlement and Sales and Payment of Foreign Exchange Regulations, the Group is permitted to exchange RMB for foreign currencies through banks that are authorised to conduct foreign exchange business.
 
19. 
TRADE AND OTHER PAYABLES AND ACCRUALS
 
   
2010
   
2009
 
   
HK$'000
   
HK$'000
 
                 
Trade payables
    136,014       86,481  
Other payables and accruals
    52,244       46,685  
      188,258       133,166  
 
20. 
BORROWINGS

   
2010
   
2009
   
1 May 2008
 
   
HK$'000
   
HK$'000
   
HK$'000
 
         
(Restated)
   
(Restated)
 
                   
Non-current
                 
Finance lease liabilities (b)
    5,570       15,563       22,418  
                         
Current
                       
Bank loans (a)
    113,976       46,641       88,065  
Finance lease liabilities (b)
    9,762       18,443       18,701  
      123,738       65,084       106,766  
Total borrowings
    129,308       80,647       129,184  
 
(a)   Bank loans
Bank loans were supported by corporate and personal guarantees given jointly by the Company and a director of the Company.
 
 
Plastec International Holdings Limited
30
Financial statements for the year ended 30 April 2010
  
20. 
BORROWINGS (Continued)
  
(a) 
Bank loans (Continued)
Bank loans were dominated in Hong Kong dollars with interest rates ranging from 1.33% to 2.73% per annum (2009: from 1.40% to 5.70% per annum).
 
Of the balance, HK$32,736,000 (2009: HK$2,500,000 (Restated), 1 May 2008: HK$5,000,000 (Restated)) were term loans payable over one year that contain repayment on demand clauses. The remaining balance of HK$81,240,000 (2009: HK$44,141,000, 1 May 2008: HK$83,065,000) was payable within one year.
 
(b) 
Finance lease liabilities
The analysis of the Group's obligations under finance leases are as follows:
 
   
2010
   
2009
   
2008
 
   
HK$'000
   
HK$'000
   
HK$'000
 
                   
Total minimum lease payments:
                       
Due within one year
    10,404       20,032       21,056  
Due in the second to fifth years
    5,725       16,402       23,750  
 
    16,129       36,434       44,806  
Future finance charges on finance leases
    (797 )     (2,428 )     (3,687 )
Present value of finance lease liabilities
    15,332       34,006       41,119  

   
2010
   
2009
   
2008
 
   
HK$'000
   
HK$'000
   
HK$'000
 
                   
Present value of minimum lease payments:
                 
Due within one year
    9,762       18,443       18,701  
Due in the second to fifth years
    5,570       15,563       22,418  
      15,332       34,006       41,119  
Less: portion due within one year included under current liabilities
    (9,762 )     (18,443 )     (18,701 )
Portion due after one year included under non-current liabilities
    5,570       15,563       22,418  
 
The Group entered into finance leases for items of plant and machinery. The lease periods are for 4 to 5 years. The Group has the option to purchase the leased equipments at prices that are expected to be sufficiently lower than the fair values of the leased assets at the end of the lease. None of the leases include contingent rentals.
 
Finance lease liabilities are effectively secured by the underlying assets as the rights to the leased asset would be reverted to the lessor in the event of default by repayment by the Group.
 
The carrying values of the Group's borrowings are considered to be reasonable approximation of fair values.
 
 
Plastec International Holdings Limited
31
Financial statements for the year ended 30 April 2010
 
21. 
DEFERRED TAX
The movement in the deferred tax liabilities during the year is as follows:
 
   
HK$'000
 
Accelerated tax depreciation
     
At 1 May 2008
    11,271  
Recognised in profit or loss
    3,527  
At 30 April 2009 and 1 May 2009
    14,798  
Recognised in profit or loss
    358  
At 30 April 2010
    15,156  
 
The Group has unrecognised tax losses of approximately of HK$39,173,000 (2009: HK$16,264,000) to carry forward against future taxable income. Deferred tax assets have not been recognised in respect of these losses which arose in subsidiaries with unpredictability future profit streams. These tax losses do not expire under relevant legislations.
 
Deferred tax liabilities in respect of the temporary differences associated with the undistributed earnings of subsidiaries in the PRC have not been provided as the Group is in a position to control the timing of reversal of these differences and it is probable that such differences will not reverse in the foreseeable future.
 
22. 
SHARE CAPITAL
 
   
2010
   
2009
 
   
HK$'000
   
HK$'000
 
Authorised :
           
50,000 ordinary shares of US$1 (equivalent to HK$7.8) each
    390       390  
                 
Issued and fully paid :
               
12,500 ordinary shares of US$1 (equivalent to HK$7.8) each
    98       98  

23. 
RESERVES
Movements of the Group's reserves are disclosed in the consolidated statement of changes in equity on page 5.
 
24. 
OPERATING LEASE COMMITMENTS
At the reporting date, the total future minimum lease payments under non-cancellable operating leases are payable by the Group as follows:
 
   
2010
   
2009
 
   
HK$'000
   
HK$'000
 
                 
Within one year
    15,151       13,280  
In the second to fifth years, inclusive
    36,108       46,756  
Over five years
    788       2,197  
      52,047       62,233  
 
 
Plastec International Holdings Limited
32
Financial statements for the year ended 30 April 2010
 
24. 
OPERATING LEASE COMMITMENTS (Continued)
The Group leases a number of properties under operating leases. The leases run for an initial period of 2 to 10 years, with an option to renew the lease and renegotiate the terms at the expiry date or at dates as mutually agreed between the Group and respective lessors. None of the leases include contingent rentals.
 
25. 
CAPITAL COMMITMENTS
 
   
2010
   
2009
 
   
HK$'000
   
HK$'000
 
                 
Contracted but not provided for Property, plant and equipment
    35,612       827  
 
26. 
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group does not have written risk management policies and guidelines. However, the board of directors of the Company meets periodically to analyse and formulate measures to manage the Group's exposure to market risk (including principally changes in interest rates and currency exchange rates), credit risk and liquidity risk. Generally, the Group employs conservative strategies regarding its risk management. As the Group's exposure to market risk is kept at a minimum level, the Group has not used any derivative or other instruments for hedging purposes. The Group does not hold or issue derivative financial instruments for trading purposes.
 
As at 30 April 2010, the Group's financial instruments mainly consisted of cash and cash equivalents, trade receivables, other receivables, trade and other payables and accruals, borrowings and dividend payable.
 
(a) 
Interest rate risk
Interest rate risk relates to the risk that the fair value or cash flows of a financial instrument will fluctuate because of the changes in market interest rates. Financial instruments bearing variable rates and fixed rates expose the Group to cash flow interest rate risk and fair value interest rate risk respectively.
 
The interest rates and terms of repayment of the Group's borrowings are disclosed in Note 20. The directors of the Company consider the Group does not have significant exposure to interest rate risk in respect of the Group's borrowings as they are mainly at fixed rates and stated at amortised cost. The Group's exposure to interest rate risk arises on bank deposits is not significant. The Group has not used any derivative contracts to hedge its exposure to interest rate risk. The Group has not formulated a policy to manage the interest rate risk.
 
The directors of the Company consider the Group's exposures to cash flow interest rate risk on bank balances as follows:
 
 
Plastec International Holdings Limited
33
Financial statements for the year ended 30 April 2010
 
26. 
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued)
   
(a)
Interest rate risk (Continued)
Sensitive analysis
At 30 April 2010, it is estimated that a general increase/decrease of 25 basis points in interest rates, with all other variables held constant, would increase/decrease the Group's profit after tax and retained profits by approximately HK$93,000 (2009: HK$121,000). There would be no impact on other components of consolidated equity in response to the general increase/decrease in interest rates.
 
The assumed changes in interest rates are considered to be reasonably possible based on observation of current market conditions and represents management's assessment of a reasonably possible change in interest rate over the next twelve month period.
 
The policies to manage interest rate risk have been followed by the Group since prior years and are considered to be effective.
 
(b) 
Credit risk
Credit risk refers to the risk that the counterparty to a financial instrument would fail to discharge its obligation under the terms of the financial instrument and cause a financial loss to the Group. The Group's exposure to credit risk mainly arises from granting credit to customers in the ordinary course of its operating activities.
 
The Group's cash and bank balances as at 30 April 2010 are mainly maintained with authorised banks in Hong Kong and the PRC. The Group's management considers the credit risk associated with these bank balances is insignificant.
 
The carrying amounts of the trade and other receivables included in the consolidated statement of financial position represent the Group's maximum exposure to credit risk in relation to the Group's financial assets. No other financial assets carry a significant exposure to credit risk. The Group has no significant concentration of credit risk due to its large customer base. Further details about the trade receivables are disclosed in Note 16 to the financial statements.
 
The credit policies have been followed by the Group since prior years and are considered to be effective in limiting the Group's exposure to credit risk to a desirable level.
 
 
Plastec International Holdings Limited
34
Financial statements for the year ended 30 April 2010
 
26. 
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued)
   
(c) 
Liquidity risk
Liquidity risk relates to the risk that the Group will not be able to meet its obligations associated with its financial liabilities. The Group is exposed to liquidity risk in respect of settlement of trade payables and its financing obligations, and also in respect of its cash flow management. The Group's objective is to maintain an appropriate level of liquid assets and committed lines of funding to meet its liquidity requirements in the short and longer term.
 
The contractual maturity analysis below is based on the undiscounted cash flows of the financial liabilities:
 
         
As at 30 April 2010
       
         
Total
         
More than
 
         
contractual
   
Within
   
1 year but
 
   
Carrying
   
undiscounted
   
1 year or
   
less than
 
   
amount
   
cash flow
   
on demand
   
5 years
 
   
HK$'000
   
HK$'000
   
HK$'000
   
HK$'000
 
                               
Trade and other payables and accruals
    188,258       188,258       188,258      -  
Borrowings
    129,308       131,853       126,128       5,725  
Dividend payable
    60,000       60,000       60,000       -  
      377,566       380,111       374,386       5,725  

         
As at 30 April 2009
       
         
Total
         
More than
 
         
contractual
   
Within
   
1 year but
 
   
Carrying
   
undiscounted
   
1 year or
   
less than
 
   
amount
   
cash flow
   
on demand
   
5 years
 
   
HK$'000
   
HK$'000
   
HK$'000
   
HK$'000
 
                               
Trade and other payables and accruals
    133,166       133,166       133,166     -  
Borrowings
    80,647       83,409       67,007       16,402  
Dividend payable
    50,000       50,000       50,000       -  
      263,813       266,575       250,173       16,402  
 
The liquidity policies have been followed by the Group since prior years and are considered to be effective in managing liquidity risks.
 
 
Plastec International Holdings Limited
35
Financial statements for the year ended 30 April 2010
 
26. 
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued)
 
(d) 
Foreign currency risk
Currency risk refers to the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.
 
The Group does not have significant exposure to foreign currency risk, as the Group ’ s transactions are mainly dominated in HK$ and US$. As HK$ is pegged to US$ at a fixed exchange rate, the Group does not use derivative financial instruments to hedge its foreign currency risk. The Group reviews its foreign currency exposures regularly and does not consider its foreign exchange risk to be significant.
 
(e) 
Summary of financial assets and liabilities by category
The carrying amounts of the Group ’ s financial assets and liabilities as recognised at the reporting dates are catergorised as follows. See Notes 2.10 and 2.17 for explanations about how the classification of financial instruments affects their subsequent measurements.
 
   
2010
   
2009
 
   
HK$'000
   
HK$'000
 
Financial assets
           
Loans and receivables :
           
- Trade receivables
    242,097       173,885  
- Other receivables (Note 17)
    704       1,525  
Cash and cash equivalents
    151,304       95,039  
      394,105       270,449  
 
   
2010
   
2009
 
   
HK$'000
   
HK$'000
 
Financial liabilities
           
Financial liabilities measured at amortised cost:
           
- Trade and other payables and accruals
    (188,258 )     (133,166 )
- Borrowings
    (129,308 )     (80,647 )
- Dividend payable
    (60,000 )     (50,000 )
      (377,566 )     (263,813 )
 
  
Plastec International Holdings Limited
36
Financial statements for the year ended 30 April 2010
 
27. 
CAPITAL MANAGEMENT POLICIES AND PROCEDURES
The Group's capital management objectives are to ensure the Group's ability to continue as a going concern and to provide an adequate return to shareholders by pricing goods commensurately with the level of risk.
 
The Group actively and regularly reviews and manages its capital structure to ensure optimal capital structure and shareholder returns, taking into consideration the future capital requirements of the Group, prevailing and projected capital expenditures and projected strategic investment opportunities.
 
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
 
The Group regards total equity presented on the face of the consolidated statement of financial position as capital, for capital management purpose, which the management considers as optimal having considered the projected capital expenditures and the forecast strategic investment opportunities.
 
The Group is not subject to externally imposed capital requirements.
 
 
INDEMNITY ESCROW AGREEMENT
 
ESCROW AGREEMENT (“Agreement”) dated December 16, 2010 by and among GSME ACQUISITION PARTNERS I, a Cayman Islands exempted company (“GSME”), Kin Sun SZE-TO and Ho Leung NING as the representatives (collectively the “Representative”) of all the former shareholders (the “Shareholders”) of Plastec International Holdings Limited (“Plastec”), JING DONG GAO and ELI D. SCHER, acting as the committee (the “Committee”) representing the interests of GSME, and CONTINENTAL STOCK TRANSFER & TRUST COMPANY, as escrow agent (the “Escrow Agent”).  Capitalized terms used herein that are not otherwise defined herein shall have the meanings ascribed to them in the Merger Agreement (as defined below).
 
GSME, GSME Acquisition Partners I Sub (“GSME Sub”), Plastec and the Shareholders are parties to an Amended and Restated Agreement and Plan of Reorganization, dated as of September 13, 2010, as amended on December 9, 2010 (the “Merger Agreement”), pursuant to which GSME Sub has merged with and into Plastec with Plastec surviving the merger and becoming a wholly owned subsidiary of GSME.  Pursuant to the Merger Agreement, GSME is to be indemnified in certain respects by the Insiders and the Investors.  The parties desire to establish an escrow fund as collateral security for the foregoing indemnification obligations.  The Representative has been designated pursuant to the Merger Agreement to represent the Insiders and the Investors and each Permitted Transferee (as hereinafter defined) of the Insiders and the Investors (the Insiders, the Investors and all such Permitted Transferees are hereinafter referred to collectively as the “Owners”), and to act on their behalf for purposes of this Agreement.
 
The parties agree as follows:
 
1.            (a)           Concurrently with the execution hereof, an aggregate of 472,796 GSME Shares issued to the Insiders and the Investors and delivered to them at the Closing pursuant to the Merger Agreement, which shall be allocated among the Insiders and the Investors in accordance with the allocation set forth on Schedule 1(a) attached hereto,   together with ten (10) share transfer forms from each Insider and each Investor separate from the share certificates executed in blank by each such Insider and Investor to be held in escrow pursuant to the terms of this Agreement and Section 1.9   of the Merger Agreement.  The GSME Shares represented by the share certificates so delivered to the Escrow Agent are herein referred to in the aggregate as the “Escrow Fund.”  The Escrow Agent shall maintain a separate account for each Shareholder’s, and, subsequent to any transfer permitted pursuant to Paragraph 1(e) hereof, each Owner’s, portion of the Escrow Fund.
 
(b)           The Escrow Agent hereby agrees to act as escrow agent and to hold, safeguard and disburse the Escrow Fund solely pursuant to the terms and conditions hereof.  The Escrow Agent shall treat the Escrow Fund as a trust fund in accordance with the terms of this Agreement and not as the property of GSME. The Escrow Agent’s duties hereunder shall terminate upon its distribution of the entire Escrow Fund in accordance with this Agreement.
 
(c)           Except as herein provided, the Owners shall retain all of their rights as shareholders of GSME with respect to GSME Shares constituting the Escrow Fund during the period the Escrow Fund is held by the Escrow Agent (the “Escrow Period”), including, without limitation, the right to vote their GSME Shares included in the Escrow Fund.
 
 
(d)           During the Escrow Period, all dividends payable in cash with respect to the GSME Shares then contained in the Escrow Fund shall be paid to the Owners, but all dividends payable in shares or other non-cash property (“Non-Cash Dividends”) shall be delivered to the Escrow Agent to hold in accordance with the terms hereof.  As used herein, the term “Escrow Fund” shall be deemed to include the Non-Cash Dividends distributed thereon, if any.
 
(e)           During the Escrow Period, no sale, transfer or other disposition may be made of any or all of the GSME Shares in the Escrow Fund except (i) to a “Permitted Transferee” (as hereinafter defined), (ii) by virtue of the laws of descent and distribution upon death of any Owner, or (iii) pursuant to a qualified domestic relations order; provided, however, that such permitted transfers may be implemented only upon the respective transferee’s written agreement to be bound by the terms and conditions of this Agreement.  As used in this Agreement, the term “Permitted Transferee” shall include (A) an Insider’s or Investor’s beneficial owners (“Beneficial Owners”); (B) an entity in which an Insider or an Investor and/or members of a Beneficial Owner’s Immediate Family beneficially own 100% of such entity’s voting and non-voting equity securities; (C) an entity in which an Insider or Investor and/or a member of a Beneficial Owner’s Immediate Family is a general partner and in which such Insider or Investor and/or Beneficial Owner’s Immediate Family beneficially own 100% of all capital accounts of such entity; (D) members of a Beneficial Owner’s “Immediate Family” (as hereinafter defined); and (E) a revocable trust established by a Beneficial Owner during his lifetime for the benefit of such Beneficial Owner or for the exclusive benefit of all or any of such Beneficial Owner’s Immediate Family.  As used in this Agreement, the term “Immediate Family” means, with respect to any Beneficial Owner, a spouse, lineal descendants, the spouse of any lineal descendant, and brothers and sisters (or a trust, all of whose current beneficiaries are members of an Immediate Family of the Beneficial Owner).  In connection with and as a condition to each permitted transfer, the Permitted Transferee shall deliver to the Escrow Agent an share transfer form separate from the share certificate executed by the transferring Shareholder or where applicable, an order of a court of competent jurisdiction, evidencing the transfer of shares to the Permitted Transferee, together with ten (10) share transfer forms separate from the share certificate executed in blank by the Permitted Transferee with respect to the shares transferred to the Permitted Transferee.  Upon receipt of such documents, the Escrow Agent shall deliver to GSME’s transfer agent the original share certificate out of which the assigned shares are to be transferred, together with the executed share transfer form separate from the share certificate executed by the transferring shareholder, or a copy of the applicable court order, and shall request that GSME issue new certificates representing (m) the number of shares, if any, that continue to be owned by the transferring shareholder, and (n) the number of shares owned by the Permitted Transferee as the result of such transfer.  GSME, the transferring shareholder and the Permitted Transferee shall cooperate in all respects with the Escrow Agent in documenting each such transfer and in effectuating the result intended to be accomplished thereby.  During the Escrow Period, no Owner shall pledge or grant a security interest in such Owner’s GSME Shares included in the Escrow Fund or grant a security interest in such Owner’s rights under this Agreement.

 
-2-
 
 
2.            (a)           GSME, acting through the Committee, which has been appointed by GSME to take all necessary actions and make all decisions on behalf of GSME with respect to its rights to indemnification under Article VIII of the Merger Agreement, may make a claim for indemnification pursuant to the Merger Agreement (“Indemnification Claim”) against the Escrow Fund by giving notice (a “Notice”) to the Representative (with a copy to the Escrow Agent) specifying (i) the covenant, representation, warranty, agreement, undertaking or obligation contained in the Merger Agreement which it asserts has been breached or otherwise entitles GSME to indemnification, (ii) in reasonable detail, the nature and dollar amount of any Indemnification Claim and (iii) whether the Indemnification Claim results from a Third Party Claim against GSME or Plastec.  The Committee also shall deliver to the Escrow Agent (with a copy to the Representative), concurrently with its delivery to the Escrow Agent of the Notice, a certification as to the date on which the Notice was delivered to the Representative.
 
(b)           If the Representative shall give a notice to the Committee (with a copy to the Escrow Agent) (a “Counter Notice”), within 30 days following the date of receipt (as specified in the Committee’s certification) by the Representative of a copy of the Notice, disputing whether the Indemnification Claim is indemnifiable under the Merger Agreement, the Committee and the Representative shall attempt to resolve such dispute by voluntary settlement as provided in paragraph 2(c) below. If no Counter Notice with respect to an Indemnification Claim is received by the Escrow Agent from the Representative within such 30-day period, the Indemnification Claim shall be deemed to be an Established Claim (as hereinafter defined) for purposes of this Agreement.
 
(c)           If the Representative delivers a Counter Notice to the Escrow Agent, the Committee and the Representative shall, during the period of 60 days following the delivery of such Counter Notice or such greater period of time as the parties may agree to in writing (with a copy to the Escrow Agent), attempt to resolve the dispute with respect to which the Counter Notice was given.  If the Committee and the Representative shall reach a settlement with respect to any such dispute, they shall jointly deliver written notice of such settlement to the Escrow Agent specifying the terms thereof.  If the Committee and the Representative shall be unable to reach a settlement with respect to a dispute, such dispute shall be resolved by arbitration pursuant to paragraph 2(d) below.
 
(d)           If the Committee and the Representative cannot resolve a dispute prior to expiration of the 60-day period referred to in paragraph 2(c) above (or such longer period as the parties may have agreed to in writing), then such dispute shall be submitted (and either party may submit such dispute) to a single arbitrator for arbitration before the AAA International Center for Dispute Resolution’s offices in New York City, New York, in accordance with the commercial arbitration rules of the American Arbitration Association (“AAA”) then in effect. The Committee and the Representative shall attempt to agree upon an arbitrator; if they shall be unable to agree upon an arbitrator within 10 days after the dispute is submitted for arbitration, then either the Committee or the Representative, upon written notice to the other, may apply for appointment of such single arbitrator by the AAA in accordance with its rules.  GSME shall pay the fees and expenses of counsel for the parties and the fees and expenses of the arbitrator and of other expenses of the arbitration.  The arbitrator shall render his decision within 90 days after his appointment.  Such decision and award shall be in writing and shall be final and conclusive on the parties, and counterpart copies thereof shall be delivered to each of the parties.  Judgment may be obtained on the decision of the arbitrator so rendered in any court having jurisdiction, and may be enforced in any such court .  If the arbitrator shall fail to render his decision or award within such 90-day period, either the Committee or the Representative may apply to any New York state court sitting in New York County , New York , or any federal court sitting in such county then having jurisdiction, by action, proceeding or otherwise, as may be proper to determine the matter in dispute consistently with the provisions of this Agreement.  The parties consent to the exclusive jurisdiction of the New York state courts sitting in New York County or any federal court having jurisdiction and sitting in such county for this purpose. The prevailing party (or either party, in the case of a decision or award rendered in part for each party) shall send a copy of the arbitration decision or of any judgment of the court to the Escrow Agent.

 
-3-
 
 
(e)           As used in this Agreement, “Established Claim” means any (i) Indemnification Claim deemed established pursuant to the last sentence of paragraph 2(b) above, (ii) Indemnification Claim resolved in favor of GSME by settlement pursuant to paragraph 2(c) above, resulting in a dollar award to GSME, (iii) Indemnification Claim established by the decision of an arbitrator pursuant to paragraph 2(d) above, resulting in a dollar award to GSME or Plastec, (iv) Third Party Claim that has been sustained by a final determination (after exhaustion of any appeals) of a court of competent jurisdiction, or (v) Third Party Claim that the Committee and the Representative have jointly notified the Escrow Agent has been settled in accordance with the provisions of the Merger Agreement; provided that, subject to the terms of the Merger Agreement, notwithstanding anything herein, no Indemnification Claim shall become an Established Claim unless and until the aggregate amount of indemnification Losses, as set forth in Section 8.4(c) of the Merger Agreement, exceeds $500,000, in which event the entire amount of such Established Claim, together with the entire amounts of all other Established Claims, shall be payable.
 
(f)           (i)           Promptly after an Indemnification Claim becomes an Established Claim, the Committee and the Representative shall jointly deliver a notice to the Escrow Agent (a “Joint Notice”) directing the Escrow Agent to pay to GSME, and the Escrow Agent promptly shall pay to GSME, an amount of Escrow Shares, subject to the provisions of Sections 2(f)(ii) and (iii), equal to (subject to the basket described in Section 2(e) above and Section 8.4(c) of the Merger Agreement) the aggregate dollar amount of the Established Claim (or, if at such time there remains in the Escrow Fund less than the full amount so payable, the full amount remaining in the Escrow Fund).

 
-4-
 

(ii)         Payment of an Established Claim shall be made from Escrow Shares pro rata from the account maintained on behalf of each Owner.  For purposes of each payment, such shares shall be valued at the “Fair Market Value” (as defined below).  However, in no event shall the Escrow Agent be required to calculate Fair Market Value or make a determination of the number of shares to be delivered to GSME in satisfaction of any Established Claim; rather, such calculation shall be included in and made part of the Joint Notice.  GSME shall repurchase from the relevant Owners at a repurchase price of US $0.00001 per share, and the Escrow Agent shall thereby transfer to GSME out of the Escrow Fund that number of GSME Shares necessary to satisfy each Established Claim, as set out in the Joint Notice.  Any dispute between the Committee and the Representative concerning the calculation of Fair Market Value or the number of shares necessary to satisfy any Established Claim, or any other dispute regarding a Joint Notice, shall be resolved between the Committee and the Representative in accordance with the procedures specified in paragraph 2(d) above, and shall not involve the Escrow Agent.   Each repurchase of shares in satisfaction of an Established Claim shall be made by the Escrow Agent delivering to GSME one or more share certificates held in each Owner’s account evidencing not less than such Owner’s pro rata portion of the aggregate number of shares specified in the Joint Notice, together with share transfer forms separate from the share certificate executed in blank by such Owner and completed by the Escrow Agent in accordance with instructions included in the Joint Notice.  Upon receipt of the share certificates and share transfer forms, GSME shall deliver to the Escrow Agent new certificates representing the number of shares owned by each Owner after such payment.  The parties hereto (other than the Escrow Agent) agree that the foregoing right to make payments of Established Claims in GSME Shares may be made notwithstanding any other agreements restricting or limiting the ability of any Owner to sell any GSME Shares or otherwise.  The Committee and the Representative shall be required to exercise utmost good faith in all matters relating to the preparation and delivery of each Joint Notice.  As used in this Section 2, “Fair Market Value” means the average reported closing price for the GSME Shares for the ten trading days ending on the last trading day prior to (x) the day the Established Claim is paid with respect to Indemnification Claims paid on or before the thirtieth day after GSME files its Annual Report on Form 20-F for the fiscal year ending April 30, 2011 (the “Escrow Termination Date”), and (y) the Escrow Termination Date with respect to shares constituting the Pending Claims Reserve (as hereinafter defined) on the Escrow Termination Date.
 
(iii)        Notwithstanding anything herein to the contrary, at such time as an Indemnification Claim has become an Established Claim, each Owner shall have the right to substitute for his, her or its Escrow Shares that otherwise would be paid in satisfaction of such claim (the “Claim Shares”) with cash in an amount equal to the Fair Market Value of the Claim Shares (“Substituted Cash”).  In such event (i) the Joint Notice shall include a statement describing the substitution of Substituted Cash for the Claim Shares, and (ii) substantially contemporaneously with the delivery of such Joint Notice, the Representative shall cause currently available funds to be delivered to the Escrow Agent in an amount equal to the Substituted Cash.  Upon receipt of such Joint Notice and Substituted Cash, the Escrow Agent shall (y) in payment of the Established Claim described in the Joint Notice, deliver the Substituted Cash to GSME in lieu of the Claim Shares, and (z) cause the Claim Shares to be returned to the Representative on behalf of the applicable Owner.

 
-5-
 
 
3.            On the first Business Day after the expiration of the Escrow Period, upon receipt of a Joint Notice, the Escrow Agent shall distribute and deliver to each Owner share certificates representing the GSME Shares then in such Owner’s account in the Escrow Fund, unless at such time there are any Indemnification Claims with respect to which Notices have been received but which have not been resolved pursuant to Section 2 hereof or in respect of which the Escrow Agent has not been notified of, and received a copy of, a final determination (after exhaustion of any appeals) by a court of competent jurisdiction, as the case may be (in either case, “Pending Claims”), and which, if resolved or finally determined in favor of GSME, would result in a payment to GSME, in which case the Escrow Agent shall retain, and the total amount of such distributions to such Owner shall be reduced by, the “ Pending Claims Reserve” (as hereafter defined).  The Committee shall certify to the Escrow Agent the number of GSME Shares to be retained therefor.  Thereafter, if any Pending Claim becomes an Established Claim, the Committee and the Representative shall deliver to the Escrow Agent a Joint Notice directing the Escrow Agent to pay to GSME an amount in respect thereof determined in accordance with Section 2(f) above, and to deliver to each Owner GSME Shares then in such owner’s account in the Escrow Fund having a value (based on $10.00 per share as adjusted for any share splits or similar events) equal to the amount by which the remaining portion of his account in the Escrow Fund exceeds the then Pending Claims Reserve (determined as set forth below), all as specified in a Joint Notice. If any Pending Claim is resolved against GSME, the Committee and the Representative shall deliver to the Escrow Agent a Joint Notice directing the Escrow Agent to pay to each Owner the amount by which the remaining portion of his account in the Escrow Fund exceeds the then Pending Claims Reserve.  Upon resolution of all Pending Claims, the Committee and the Representative shall deliver to the Escrow Agent a Joint Notice directing the Escrow Agent to pay to such Owner the remaining portion of his or her account in the Escrow Fund.  As used in this Section 3, the “Pending Claims Reserve” shall mean, at the time any such determination is made, that number of GSME Shares in the Escrow Fund having a Fair Market Value equal to the sum of the aggregate dollar amounts claimed to be due with respect to all Pending Claims (as shown in the Notices of such Claims) and “Fair Market Value” means the average reported closing price for the GSME Shares for the ten trading days ending on the last trading day prior to the day of such determination.
 
4.            The Escrow Agent, the Committee and the Representative shall cooperate in all respects with one another in the calculation of any amounts determined to be payable to GSME and the Owners in accordance with this Agreement and in implementing the procedures necessary to effect such payments.
 
5.            (a)           The Escrow Agent undertakes to perform only such duties as are expressly set forth herein.  It is understood that the Escrow Agent is not a trustee or fiduciary and is acting hereunder merely in a ministerial capacity.
 
(b)           The Escrow Agent shall not be liable for any action taken or omitted by it in good faith and in the exercise of its own best judgment, and may rely conclusively and shall be protected in acting upon any order, notice, demand, certificate, opinion or advice of counsel (including counsel chosen by the Escrow Agent), statement, instrument, report or other paper or document (not only as to its due execution and the validity and effectiveness of its provisions, but also as to the truth and acceptability of any information therein contained) which is believed by the Escrow Agent to be genuine and to be signed or presented by the proper person or persons.  The Escrow Agent shall not be bound by any notice or demand, or any waiver, modification, termination or rescission of this Agreement unless evidenced by a writing delivered to the Escrow Agent signed by the proper party or parties and, if the duties or rights of the Escrow Agent are affected, unless it shall have given its prior written consent thereto.
 
(c)           The Escrow Agent’s sole responsibility upon receipt of any notice requiring any payment to GSME pursuant to the terms of this Agreement or, if such notice is disputed by the Committee or the Representative, the settlement with respect to any such dispute, whether by virtue of joint resolution, arbitration or determination of a court of competent jurisdiction, is to pay to GSME the amount specified in such notice, if any, and the Escrow Agent shall have no duty to determine the validity, authenticity or enforceability of any specification or certification made in such notice.

 
-6-
 
 
(d)           The Escrow Agent shall not be liable for any action taken by it in good faith, and may consult with counsel of its own choice and shall have full and complete authorization and indemnification under Section 5(f), below, for any action taken or suffered by it hereunder in good faith and in accordance with the opinion of such counsel.
 
(e)           The Escrow Agent may resign at any time and be discharged from its duties as escrow agent hereunder by giving the other parties hereto written notice of such resignation.  Such resignation shall become effective at such time that the Escrow Agent shall turn over the Escrow Fund to a successor escrow agent appointed jointly by the Committee and the Representative.  If no new escrow agent is so appointed within the sixty (60) day period following the giving of such notice of resignation, the Escrow Agent may deposit the Escrow Fund with any court it reasonably deems appropriate.
 
(f)            Indemnification of Escrow Agent .
 
(i)          From and at all times after the date of this Agreement, GSME shall, to the fullest extent permitted by law and to the extent provided herein, indemnify and hold harmless the Escrow Agent and each director, officer, employee, attorney, agent and affiliate of the Escrow Agent (collectively, the “Indemnified Parties”) against any and all actions, claims (whether or not valid), losses, damages, liabilities, costs and expenses of any kind or nature whatsoever (including without limitation reasonable fees, costs and expenses of one outside counsel (but not internal counsel)) (collectively, “Losses”) actually incurred by any of the Indemnified Parties from and after the date hereof, whether direct, indirect or consequential, as a result of or arising from or in any way relating to any claim, demand, suit, action or proceeding (including any inquiry or investigation) by any person, including, without limitation, GSME, Plastec or the Shareholders, asserting a claim for any legal or equitable remedy against any person under any statute or regulation, including, but not limited to, any federal or state securities laws, or under any common law or equitable cause or otherwise, arising from or in connection with the negotiation, preparation, execution, performance or failure of performance of this Agreement or any transactions contemplated herein, whether or not any such Indemnified Party is a party to any such action, proceeding, suit or the target of any such inquiry or investigation; provided , however , that no Indemnified Party shall have the right to be indemnified hereunder for any Losses to the extent they are finally determined by a court of competent jurisdiction, subject to no further appeal, to be attributable to the gross negligence or willful misconduct of such Indemnified Party.

 
-7-
 
 
(ii)         If any such action or claim shall be brought or asserted against any Indemnified Party, such Indemnified Party shall promptly notify the Representative, the GSME and the Committee in writing, and GSME shall assume the defense thereof, including the employment of counsel and the payment of all reasonable expenses.  Such Indemnified Party shall, in its sole discretion, have the right to employ separate counsel (who may be selected by such Indemnified Party in its sole discretion) in any such action and to participate in the defense thereof, and the reasonable fees and expenses of such counsel shall be paid by such Indemnified Party, except that GSME shall be required to pay such reasonable fees and expenses if (i) GSME agrees to pay such reasonable fees and expenses, (ii) GSME shall fail to assume the defense of such action or proceeding or shall fail, in the reasonable determination of such Indemnified Party, to employ counsel satisfactory to the Indemnified Party in any such action or proceeding, (iii) GSME, Plastec, the Insiders or the Investors are the plaintiff in any such action or proceeding or (iv) the named or potential parties to any such action or proceeding (including any potentially impleaded parties) include both the Indemnified Party and any of Plastec, GSME, the Insiders and/or the Investors, and the Indemnified Party shall have been advised by counsel that there may be one or more legal defenses available to it which are different from or additional to those available to Plastec, the Insiders, the Investors or GSME.  All such reasonable fees and expenses payable by GSME pursuant to the immediately preceding sentence shall be paid from time to time as incurred, both in advance of and after the final disposition of such action or claim.  The Losses of the Indemnified Parties shall be payable by GSME.  The obligations of GSME under this Section 5(f) shall survive any termination of this Agreement and the resignation or removal of the Escrow Agent and shall be independent of any obligation of the Escrow Agent.
 
(iii)        The parties agree that the payment by GSME of any claim by the Escrow Agent for indemnification hereunder shall not impair, limit, modify, or affect, as between GSME and the Insiders and Investors, the respective rights and obligations of GSME, on the one hand, and the Insiders and Investors, on the other hand, under the Merger Agreement.
 
(g)           The Escrow Agent shall be entitled to reasonable compensation from GSME for all services rendered by it hereunder as set forth on Schedule 5(g) hereto.  The Escrow Agent shall also be entitled to reimbursement from GSME for all reasonable expenses paid or incurred by it in the administration of its duties hereunder including, but not limited to, all reasonable counsel, advisors’ and agents’ fees and disbursements and all taxes or other governmental charges.
 
(h)           From time to time on and after the date hereof, the Committee and the Representative shall deliver or cause to be delivered to the Escrow Agent such further documents and instruments and shall do or cause to be done such further acts as the Escrow Agent shall reasonably request to carry out more effectively the provisions and purposes of this Agreement, to evidence compliance herewith or to assure itself that it is protected in acting hereunder.
 
6.            This Agreement expressly sets forth all the duties of the Escrow Agent with respect to any and all matters pertinent hereto. No implied duties or obligations shall be read into this Agreement against the Escrow Agent. The Escrow Agent shall not be bound by the provisions of any agreement among the parties hereto except this Agreement and shall have no duty to inquire into the terms and conditions of any agreement made or entered into in connection with this Agreement, including, without limitation, the Merger Agreement.
 
7.            This Agreement shall inure to the benefit of and be binding upon the parties and their respective heirs, successors, assigns and legal representatives and shall be governed by and construed in accordance with the law of New York applicable to contracts made and to be performed therein.  This Agreement cannot be changed or terminated except by a writing signed by the Committee, the Representative and the Escrow Agent.

 
-8-
 

All disputes arising under this Agreement between the Committee and the Shareholders, including a dispute arising from a party’s failure or refusal to sign a Joint Notice or to deliver any notice or other document required hereunder, shall be submitted to arbitration in the same manner as disputes under the Merger Agreement are to be arbitrated pursuant to Section 11.13 thereof. The Committee and the Shareholders each hereby consent to the exclusive jurisdiction of the federal and state courts sitting in New York County, New York, with respect to any claim or controversy arising out of this Agreement. Service of process in any action or proceeding brought against the Committee or the Shareholders in respect of any such claim or controversy may be made upon it by registered mail, postage prepaid, return receipt requested, at the address specified in Section 9, with copies delivered by nationally recognized overnight carrier to Graubard Miller, The Chrysler Building, 405 Lexington Avenue, New York, N.Y. 10174-1901, Attention:  David Alan Miller, Esq., and to Reed Smith LLP, 355 South Grand Avenue, Suite 2900, Los Angeles, California 90071, Attention: Allen Z. Sussman, Esq.
 
8.            All notices and other communications under this Agreement shall be in writing and shall be deemed given if given by hand or delivered by nationally recognized overnight carrier, or if given by telecopier and confirmed by mail (registered or certified mail, postage prepaid, return receipt requested), to the respective parties as follows:
 
A.           If to the Committee, to it at:

Jing Dong Gao
Eli D. Scher
762 West Beijing Road
Shanghai, China 200041
Telecopier No.:
 
with a copy to:
 
Graubard Miller
The Chrysler Building
405 Lexington Avenue
New York, New York  10174-1901
Attention:  David Alan Miller, Esq.
Telecopier No.: 212-818-8881
 
B.           If to the Representative, to it at:

Mr. Kin Sun Sze-To and Mr. Ho Leung NING
Unit 01, 21/F, Aitken Vanson Centre
61 Hoi Yuen Road, Kwun Tong
Kowloon, HK
Telephone: 852-21917144
Telecopier: 852-27796001

 
-9-
 

with a copy to:

Allen Z. Sussman, Esq.
Reed Smith LLP
355 South Grand Avenue
Suite 2900
Los Angeles, CA  90071
Telecopier:  213-457-8080

And

Mr. Anthony Suen
Unit 01, 21/F, Aitken Vanson Centre
61 Hoi Yuen Road, Kwun Tong
Kowloon, HK
Telephone: 852-21917144
Telecopier: 852-27796001
 
C.           If to the Escrow Agent, to it at:
 
Continental Stock Transfer & Trust Company
17 Battery Place
New York, New York 10004
Attention: Mark Zimkind
Telecopier No.: 212-509-5150
 
D.            If to GSME, to it at:

GSME Acquisition Partners I
762 West Beijing Road
Shanghai, China 200041
Attn: Chief Executive Officer
Telecopier:

with a copy to:

Maples Corporate Services Limited
P.O. Box 309
Ugland House
South Church Street
Grand Cayman KY1-1104
Cayman Islands
Telecopier No.: 345-949-8080

 
-10-
 
 
or to such other person or address as any of the parties hereto shall specify by notice in writing to all the other parties hereto.
 
9.            (a)           All notices delivered to the Escrow Agent shall refer to the provision of this Agreement under which such notice is being delivered and, if applicable, shall clearly specify the aggregate dollar amount due and payable to GSME.
 
(b)           This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original instrument and all of which together shall constitute a single agreement.
 
(c)           When reference is made in this Agreement to Sections, such reference shall be to a Section of this Agreement unless otherwise specified.
 
[Signatures are on following page]

 
-11-
 
 
IN WITNESS WHEREOF, each of the parties hereto has duly executed this Agreement on the date first above written.

GSME ACQUISITION PARTNERS I
   
By:
 
Name: 
 
Title:
 
   
THE REPRESENTATIVE:
   
 
Kin Sun SZE-TO
   
 
Ho Leung NING

COMMITTEE:
 
 
Jing Dong Gao
 
 
Eli D. Scher

ESCROW AGENT:
 
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
   
By:
 
Name: 
 
Title:
 

 
-12-
 
 
Schedule 1(a)

ESCROW SHARES ALLOCATION

Name
 
Address
 
Escrow
 
Sun Yip Industrial Company Limited (BVI)
 
Unit 01, 21/F, Aitken Vanson Centre, 61 Hung To Road, Kwun Tong, Kowloon, Hong Kong
    317,435  
Tiger Power Industries Limited (BVI)
 
Unit 01, 21/F, Aitken Vanson Centre, 61 Hung To Road, Kwun Tong, Kowloon, Hong Kong
    55,081  
Expert Rank Limited (BVI)
 
Unit 01, 21/F, Aitken Vanson Centre, 61 Hung To Road, Kwun Tong, Kowloon, Hong Kong
    9,834  
Fine Colour Limited (BVI)
 
Unit 01, 21/F, Aitken Vanson Centre, 61 Hung To Road, Kwun Tong, Kowloon, Hong Kong
    20,236  
Greatest Sino Holdings Limited (BVI)
 
Unit 01, 21/F, Aitken Vanson Centre, 61 Hung To Road, Kwun Tong, Kowloon, Hong Kong
    7,186  
Colourful Asia International Limited (BVI)
 
Unit 3408 China Merchant Tower, Shun Tak Centre, Sheung Wan, Hong Kong
    25,200  
Top Universe Management Limited (BVI)
 
Unit 3408 China Merchant Tower, Shun Tak Centre, Sheung Wan, Hong Kong
    37,824  
Total
        472,796  

 
-13-
 
 
Schedule 5(g)
               
Amount
 
Description
     
$___ per month
  
From the date hereof until the termination of the Escrow Agent’s duties pursuant to Section 1(b).

 
-14-
 
 
FIRST AMENDMENT
TO
EMPLOYMENT CONTRACT
 
WHEREAS, SUN LINE INDUSTRIAL LIMITED (the “Company”) has entered into an employment agreement (the “Agreement”) with KIN SUN SZE-TO (the “Executive”), dated April 30, 2005;
 
WHEREAS, the Company is a wholly-owned subsidiary of Plastec International Holdings Limited (“Plastec”);
 
WHEREAS, the Executive also currently serves in officer positions with other subsidiaries of Plastec;
 
WHEREAS, GSME ACQUISITION PARTNERS I (“GSME”) and Plastec have entered into an Amended and Restated Agreement and Plan of Reorganization, dated September 13, 2010, as amended on December 9, 2010 (“Merger Agreement”), pursuant to which Plastec will become a wholly-owned subsidiary of GSME (the “Merger”) and as a result of the Merger, the Company will become an indirect wholly-owned subsidiary of GSME;
 
WHEREAS, the Company and the Executive desire to amend the Agreement in connection with the Merger;
 
NOW, THEREFORE, in consideration of the mutual promises, terms, covenants and conditions set forth herein and the performance of each, the parties hereby agree to amend the Agreement as follows:
 
1.
Section 1, “Position,” is hereby deleted in its entirety and replaced with the following:

1. Position :
 
Executive shall serve as Director of the Company. The Executive will also serve as Chairman of the Board and Chief Executive Officer of GSME and such other positions as now or hereafter held with other subsidiaries of Plastec. Executive hereby agrees to devote his full business time, attention and efforts to promote and further the business of Plastec and its subsidiaries, including the Company (collectively, the “Plastec Group”) and not to be engaged in any other business activity pursued for gain, profit or other pecuniary advantage without the prior written consent of the Board of Directors of GSME (the “Board”).
 
 
1
 

2.
Section 5, “Termination,” is hereby deleted in its entirety and replaced with the following:

5. Termination :
 
This Agreement shall terminate on the third anniversary of the closing of the Merger, subject to earlier termination as provided herein:
     
   
(a)  Death. The death of Executive shall immediately terminate this Agreement.
     
   
(b)  Disability. If, as a result of Executive’s incapacity due to physical or mental illness, Executive shall not have performed his duties hereunder on a full-time basis for ninety (90) days or more in any one hundred twenty (120) day period, Executive’s employment under this Agreement may be terminated by the Company upon thirty (30) days written notice if Executive is unable to resume his full time duties at the conclusion of such notice period.
     
   
(c)   Termination by the Company.
     
   
(i)       For Cause . The Company may terminate this Agreement immediately upon written notice to Executive for cause, which shall be: (1) Executive’s conviction of, or plea of nolo contendere to, a felony or other crime involving moral turpitude; (2) Executive’s breach of any fiduciary duty owed to the Company or Plastec or their affiliates, or breach of the provisions of Section 14 or Section 18 hereof, (3) any other material breach by Executive of this Agreement that is not cured within ten (10) days of written notice to Executive, or (4) Executive’s commission of (A) any act of willful dishonesty or fraud, (B) any act of embezzlement or other misappropriation of Company assets, or (C) gross negligence or intentional nonperformance of duties, so long as such breach or matter is not corrected or cured to the Company’s reasonable satisfaction within ten (10) days of notice to Executive thereof.
 
 
2
 

 
(ii)            Without Cause . In addition to the provisions of Section 5(c)(i), the Company may, at any time, terminate this Agreement upon giving ninety (90) days’ written notice to Executive, if such termination is approved by a majority of the Board.
   
 
(d)  Termination by Executive. Executive may terminate this Agreement (A) for cause immediately upon giving written notice to the Company for cause in the event of (1) a material breach by the Company of the terms of this Agreement, (2) the duties with which the Board has assigned Executive no longer commensurate with his position as the Director of the Company or Chief Executive Officer of GSME in tandem with other positions/offices incidental thereto, or (3) a material change in the aggregate benefits provided to Executive (other than reductions in benefits which apply to all employees of the Company, generally); or (B) without cause, at any time, upon giving ninety (90) days’ written notice to the Company.
   
 
(e)    Payment Through Termination. Upon termination of this Agreement (A) for reasons specified in Section 5(a) or (b) or by the Company for cause pursuant to Section 5(c)(i) or by Executive without cause pursuant to Section 5(d)(B), Executive (or Executive’s estate, as applicable) shall be entitled to receive all benefits and reimbursements accrued right up to and due through the effective date of termination and all other rights and obligations under this Agreement shall cease as of the effective date of termination; (B) by the Company without cause pursuant to Section 5(c)(ii) or by Executive for cause pursuant to Section 5(d)(A), aside from entitling to receive all benefits and reimbursements accrued right up to and due through the effective date of termination, Executive shall nevertheless be entitled to receive all applicable compensation and benefits (including bonuses and such other executive perquisites) which would have been accrued to him with respect to the unexpired term of this Agreement as if his employment had never been terminated prematurely. In any event, Executive’s obligations under Sections 14, 18 and 19 shall survive termination in accordance with their terms.

 
3
 
 
3.        The Agreement is hereby amended to add the following new Section 18:
 
18. Non-Competition :
 
(a) Executive shall not during the period of his employment by the Company and for a continuous period of 1 year after cessation of his employment with the Company for whatever reason, for himself or on behalf of, or in conjunction with, any other person, persons, company, partnership, limited liability company, corporation or business of whatever nature:
     
   
(i)     engage (as an officer, director, manager, member, shareholder, owner, partner, joint venturer, trustee, or in a managerial capacity, whether as an employee, independent contractor, agent, consultant or advisor, or as a sales representative) in any entity that designs, researches, develops, markets, sells or licenses products or services that are substantially similar to or competitive with the business of the Plastec Group from time to time or as at the date of cessation of Executive’s employment with the Company;
   
(ii)         call upon any person who is at that time, or within the preceding twelve (12) months has been, an employee of the Plastec Group, for the purpose, or with the intent, of enticing such employee away from, or out of, the employ of the Plastec Group or for the purpose of hiring such person for Executive or any other person or entity, unless any such person’s employment with respect to the Plastec Group was terminated more than six (6) months prior thereto;

 
4
 
 
 
(iii)          call upon any person/entity who is then or has been within one year prior to that time, a customer of the Plastec Group, for the purpose of soliciting or selling products or services in competition with the Plastec Group; or
 
(iv)         call upon any prospective acquisition or investment candidate, on Executive’s own behalf or on behalf of any other person or entity, which candidate was known by Executive to have, within the previous twelve (12) months, been called upon by the Plastec Group or for which the Plastec Group made an acquisition or investment analysis or contemplated a joint marketing or joint venture arrangement with, for the purpose of acquiring or investing or enticing such entity into a joint marketing or joint venture arrangement.
   
 
(b)  Because of the difficulty of measuring economic losses to the Company and the Plastec Group as a whole as a result of a breach of the foregoing covenant, and because of the immediate and irreparable damage that could be caused to the Company and the Plastec Group as a whole for which it would have no other adequate remedy, Executive agrees that the foregoing covenant may be enforced by the Company on its own behalf and on behalf of the Plastec Group in the event of breach by him, by injunctions and restraining orders.
   
 
(c)  It is agreed by the parties that the foregoing covenants in this Section 18 impose a reasonable restraint on Executive in light of the activities, business and plans of the Company and the Plastec Group as a whole; it is also the intent of the Company and Executive that such covenants be construed and enforced in accordance with any change in the activities, business or plans of the Company and the Plastec Group as a whole throughout the Term.
 
 
5
 

 
(d)  The covenants in this Section 18 are severable and separate, and the unenforceability of any specific covenant shall not affect the provisions of any other covenant.
   
 
(e)  All of the covenants in this Section 18 shall be construed as an agreement independent of any other provision in this Agreement, and the existence of any claim or cause of action of Executive against the Company, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement of such covenants; provided, however, that the failure to make payments or benefits to Executive under Section 9 of this Agreement shall constitute such a defense.
   
 
(f)  Notwithstanding any of the foregoing, if any applicable law shall reduce the time period during which Executive shall be prohibited from engaging in any competitive activity described in Section 18(a) hereof, the period of time for which Executive shall be prohibited pursuant to Section 18(a) hereof shall be the maximum time permitted by law.
 
4.        The Agreement is hereby amended to add the following new Section 19:

19. Return of Property:
At such time, if ever, as Executive’s employment with the Company is terminated, he shall be required to participate in an exit interview for the purpose of assuring a proper termination of his employment and his obligations hereunder. On or before the actual date of such termination, Executive shall return to the Company all records, materials and other physical objects relating to his employment with the Company, including, without limitation, all Company credit cards and access keys and all materials relating to, containing confidential information.
 
 
6
 

5.
This First Amendment to the Agreement shall become effective only upon consummation of the Merger. This First Amendment to the Agreement shall become null and void on the termination of the Merger Agreement prior to the consummation of the transactions contemplated thereby.
 
[Signature Page Follows]

 
7
 

IN WITNESS WHEREOF, the parties hereto have executed this First Amendment to the Agreement as of December 16 , 2010.

SUN LINE INDUSTRIAL LIMITED
 
By:
 
Name:
 
Title:
 
EXECUTIVE
 
/s/ SZE TO KIN SUN
SZE TO KIN SUN
 
 
8
 

 
FIRST AMENDMENT
TO
EMPLOYMENT CONTRACT
 
WHEREAS, SUN LINE INDUSTRIAL LIMITED (the “Company”) has entered into an employment agreement (the “Agreement”) with CHIN HIEN TAN (the “Executive”), dated February 4, 2010;
 
WHEREAS, the Company is a wholly-owned subsidiary of Plastec International Holdings Limited (“Plastec”);
 
WHEREAS, GSME ACQUISITION PARTNERS I (“GSME”) and Plastec have entered into an Amended and Restated Agreement and Plan of Reorganization, dated September 13, 2010, as amended on December 9, 2010 (“Merger Agreement”), pursuant to which Plastec will become a wholly-owned subsidiary of GSME (the “Merger”) and as a result of the Merger, the Company will become an indirect wholly-owned subsidiary of GSME;
 
WHEREAS, the Company and the Executive desire to amend the Agreement in connection with the Merger;
 
NOW, THEREFORE, in consideration of the mutual promises, terms, covenants and conditions set forth herein and the performance of each, the parties hereby agree to amend the Agreement as follows:
 
1.
Section I, “Position,” is hereby deleted in its entirety and replaced with the following:

1. Position :
 
Executive shall serve as General Manager of the Company. The Executive will also serve as Chief Operating Officer of GSME and such other positions as now or hereafter held with other subsidiaries of Plastec. Executive hereby agrees to devote his full business time, attention and efforts to promote and further the business of Plastec and its subsidiaries, including the Company (collectively, the “Plastec Group”) and not to be engaged in any other business activity pursued for gain, profit or other pecuniary advantage without the prior written consent of the Board of Directors of GSME (the “Board”).
 
2.
Section 5, “Termination,” is hereby deleted in its entirety and replaced with the following:
 
 
1
 

5. Termination :
This Agreement shall terminate on the third anniversary of the closing of the Merger, subject to earlier termination as provided herein:
   
 
(a)   Death. The death of Executive shall immediately terminate this Agreement.
   
 
(b) Disability. If, as a result of Executive’s incapacity due to physical or mental illness, Executive shall not have performed his duties hereunder on a full-time basis for ninety (90) days or more in any one hundred twenty (120) day period, Executive’s employment under this Agreement may be terminated by the Company upon thirty (30) days written notice if Executive is unable to resume his full time duties at the conclusion of such notice period.
   
 
(c) Termination by the Company.
   
 
(i)      For Cause . The Company may terminate this Agreement immediately upon written notice to Executive for cause, which shall be: (1) Executive’s conviction of, or plea of nolo contendere to, a felony or other crime involving moral turpitude; (2) Executive’s breach of any fiduciary duty owed to the Company or Plastec or their affiliates, or breach of the provisions of Section 14 or Section 18 hereof, (3) any other material breach by Executive of this Agreement that is not cured within ten (10) days of written notice to Executive, or (4) Executive’s commission of (A) any act of willful dishonesty or fraud, (B) any act of embezzlement or other misappropriation of Company assets, or (C) gross negligence or intentional nonperformance of duties, so long as such breach or matter is not corrected or cured to the Company’s reasonable satisfaction within ten (10) days of notice to Executive thereof.
 
 
2
 

 
(ii)     Without Cause . In addition to the provisions of Section 5(c)(i), the Company may, at any time, terminate this Agreement upon giving ninety (90) days’ written notice to Executive, if such termination is approved by a majority of the Board.
   
 
(d)   Termination by Executive. Executive may terminate this Agreement (A) for cause immediately upon giving written notice to the Company for cause in the event of (1) a material breach by the Company of the terms of this Agreement, (2) the duties with which the Board has assigned Executive are no longer commensurate with his position as the General Manager of the Company or Chief Operating Officer of GSME in tandem with other positions/offices incidental thereto, or (3) a material change in the aggregate benefits provided to Executive (other than reductions in benefits which apply to all employees of the Company, generally); or (B) without cause, at any time, upon giving ninety (90) days’ written notice to the Company.
   
 
(e)   Payment Through Termination. Upon termination of this Agreement (A) for reasons specified in Section 5(a) or (b) or by the Company for cause pursuant to Section 5(c)(i) or by Executive without cause pursuant to Section 5(d)(B), Executive (or Executive’s estate, as applicable) shall be entitled to receive all benefits and reimbursements accrued right up to and due through the effective date of termination and all other rights and obligations under this Agreement shall cease as of the effective date of termination; (B) by the Company without cause pursuant to Section 5(c)(ii) or by Executive for cause pursuant to Section 5(d)(A), aside from entitling to receive all benefits and reimbursements accrued right up to and due through the effective date of termination, Executive shall nevertheless be entitled to receive all applicable compensation and benefits (including bonuses and such other executive perquisites) which would have been accrued to him with respect to the unexpired term of this Agreement as if his employment had never been terminated prematurely. In any event, Executive’s obligations under Sections 14, 18 and 19 shall survive termination in accordance with their terms.
 

 
3
 
 
3. 
The Agreement is hereby amended to add the following new Section 18:

18. Non-Competition :
(a)  Executive shall not during the period of his employment by the Company and for a continuous period of 1 year after cessation of his employment with the Company for whatever reason, for himself or on behalf of, or in conjunction with, any other person, persons, company, partnership, limited liability company, corporation or business of whatever nature:
   
 
(i)     engage (as an officer, director, manager, member, shareholder, owner, partner, joint venturer, trustee, or in a managerial capacity, whether as an employee, independent contractor, agent, consultant or advisor, or as a sales representative) in any entity that designs, researches, develops, markets, sells or licenses products or services that are substantially similar to or competitive with the business of the Plastec Group from time to time or as at the date of cessation of Executive’s employment with the Company,
 
(ii)         call upon any person who is at that time, or within the preceding twelve (12) months has been, an employee of the Plastec Group, for the purpose, or with the intent, of enticing such employee away from, or out of, the employ of the Plastec Group or for the purpose of hiring such person for Executive or any other person or entity, unless any such person’s employment with respect to the Plastec Group was terminated more than six (6) months prior thereto;
 
 
4
 

 
(iii)        call upon any person/entity who is then or has been within one year prior to that time, a customer of the Plastec Group, for the purpose of soliciting or selling products or services in competition with the Plastec Group; or
 
(iv)         call upon any prospective acquisition or investment candidate, on Executive’s own behalf or on behalf of any other person or entity, which candidate was known by Executive to have, within the previous twelve (12) months, been called upon by the Plastec Group or for which the Plastec Group made an acquisition or investment analysis or contemplated a joint marketing or joint venture arrangement with, for the purpose of acquiring or investing or enticing such entity into a joint marketing or joint venture arrangement.
   
 
(b)  Because of the difficulty of measuring economic losses to the Company and the Plastec Group as a whole as a result of a breach of the foregoing covenant, and because of the immediate and irreparable damage that could be caused to the Company and the Plastec Group as a whole for which it would have no other adequate remedy, Executive agrees that the foregoing covenant may be enforced by the Company on its own behalf and on behalf of the Plastec Group in the event of breach by him, by injunctions and restraining orders.
   
 
(c)  It is agreed by the parties that the foregoing covenants in this Section 18 impose a reasonable restraint on Executive in light of the activities, business and plans of the Company and the Plastec Group as a whole; it is also the intent of the Company and Executive that such covenants be construed and enforced in accordance with any change in the activities, business or plans of the Company and the Plastec Group as a whole throughout the Term.

 
5
 

 
(d)  The covenants in this Section 18 are severable and separate, and the unenforceability of any specific covenant shall not affect the provisions of any other covenant.
   
 
(e)  All of the covenants in this Section 18 shall be construed as an agreement independent of any other provision in this Agreement, and the existence of any claim or cause of action of Executive against the Company, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement of such covenants; provided, however, that the failure to make payments or benefits to Executive under Section 9 of this Agreement shall constitute such a defense.
   
 
(f)  Notwithstanding any of the foregoing, if any applicable law shall reduce the time period during which Executive shall be prohibited from engaging in any competitive activity described in Section 18(a) hereof, the period of time for which Executive shall be prohibited pursuant to Section 18(a) hereof shall be the maximum time permitted by law.
 
4. 
The Agreement is hereby amended to add the following new Section 19:

19. Return of Property:
At such time, if ever, as Executive’s employment with the Company is terminated, he shall be required to participate in an exit interview for the purpose of assuring a proper termination of his employment and his obligations hereunder. On or before the actual date of such termination, Executive shall return to the Company all records, materials and other physical objects relating to his employment with the Company, including, without limitation, all Company credit cards and access keys and all materials relating to, containing confidential information.
 
6
 
5.
This First Amendment to the Agreement shall become effective only upon consummation of the Merger. This First Amendment to the Agreement shall become null and void on the termination of the Merger Agreement prior to the consummation of the transactions contemplated thereby.
 
[Signature Page Follows]

 
7
 
 
IN WITNESS WHEREOF, the parties hereto have executed this First Amendment to the Agreement as of December 16,   2010.
 
SUN LINE INDUSTRIAL LIMITED
   
By:
 
Name:
 
Title:
   
EXECUTIVE
   
/s/ TAN, CHIN HIEN
TAN, CHIN HIEN
 
 
8
 
 

FIRST AMENDMENT
TO
EMPLOYMENT CONTRACT
 
WHEREAS, SUN LINE INDUSTRIAL LIMITED (the “Company”) has entered into an employment agreement (the “Agreement”) with HO LEUNG NING (the “Executive”), dated April 30, 2005;
 
WHEREAS, the Company is a wholly-owned subsidiary of Plastec International Holdings Limited (“Plastec”);
 
WHEREAS, GSME ACQUISITION PARTNERS I (“GSME”) and Plastec have entered into an Amended and Restated Agreement and Plan of Reorganization, dated September 13, 2010, as amended on December 9, 2010 (“Merger Agreement”), pursuant to which Plastec will become a wholly-owned subsidiary of GSME (the “Merger”) and as a result of the Merger, the Company will become an indirect wholly-owned subsidiary of GSME;
 
WHEREAS, the Company and the Executive desire to amend the Agreement in connection with the Merger;
 
NOW, THEREFORE, in consideration of the mutual promises, terms, covenants and conditions set forth herein and the performance of each, the parties hereby agree to amend the Agreement as follows:
 
1.
Section 1, “Position,” is hereby deleted in its entirety and replaced with the following:
 
 
1. Position :
Executive shall serve as Deputy General Manager of the Company. The Executive will also serve as Chief Financial Officer of GSME and such other positions as now or hereafter held with other subsidiaries of Plastec. Executive hereby agrees to devote his full business time, attention and efforts to promote and further the business of Plastec and its subsidiaries, including the Company (collectively, the “Plastec Group”) and not to be engaged in any other business activity pursued for gain, profit or other pecuniary advantage without the prior written consent of the Board of Directors of GSME (the “Board”).
 
2.
Section 5, “Termination,” is hereby deleted in its entirety and replaced with the following:

 
1
 
 
    
5. Termination :
This Agreement shall terminate on the third anniversary of the closing of the Merger, subject to earlier termination as provided herein:
     
   
(a) Death. The death of Executive shall immediately terminate this Agreement.
     
   
(b) Disability. If, as a result of Executive’s incapacity due to physical or mental illness, Executive shall not have performed his duties hereunder on a full-time basis for ninety (90) days or more in any one hundred twenty (120) day period, Executive’s employment under this Agreement may be terminated by the Company upon thirty (30) days written notice if Executive is unable to resume his full time duties at the conclusion of such notice period.
     
   
(c) Termination by the Company.
     
   
     (i)      For Cause . The Company may terminate this Agreement immediately upon written notice to Executive for cause, which shall be: (1) Executive’s conviction of, or plea of nolo contendere to, a felony or other crime involving moral turpitude; (2) Executive’s breach of any fiduciary duty owed to the Company or Plastec or their affiliates, or breach of the provisions of Section 14 or Section 18 hereof, (3) any other material breach by Executive of this Agreement that is not cured within ten (10) days of written notice to Executive, or (4) Executive’s commission of (A) any act of willful dishonesty or fraud, (B) any act of embezzlement or other misappropriation of Company assets, or (C) gross negligence or intentional nonperformance of duties, so long as such breach or matter is not corrected or cured to the Company’s reasonable satisfaction within ten (10) days of notice to Executive thereof.
 
2
 
   
(ii)      Without Cause . In addition to the provisions of Section 5(c)(i), the Company may, at any time, terminate this Agreement upon giving ninety (90) days’ written notice to Executive, if such termination is approved by a majority of the Board.
     
   
(d) Termination by Executive. Executive may terminate this Agreement (A) for cause immediately upon giving written notice to the Company for cause in the event of (1) a material breach by the Company of the terms of this Agreement, (2) the duties with which the Board has assigned Executive are no longer commensurate with his position as the Deputy General Manager of the Company or Chief Financial Officer of GSME in tandem with other positions/offices incidental thereto, or (3) a material change in the aggregate benefits provided to Executive (other than reductions in benefits which apply to all employees of the Company, generally); or (B) without cause, at any time, upon giving ninety (90) days’ written notice to the Company.
     
   
(e) Payment Through Termination. Upon termination of this Agreement (A) for reasons specified in Section 5(a) or (b) or by the Company for cause pursuant to Section 5(c)(i) or by Executive without cause pursuant to Section 5(d)(B), Executive (or Executive’s estate, as applicable) shall be entitled to receive all benefits and reimbursements accrued right up to and due through the effective date of termination and all other rights and obligations under this Agreement shall cease as of the effective date of termination; (B) by the Company without cause pursuant to Section 5(c)(ii) or by Executive for cause pursuant to Section 5(d)(A), aside from entitling to receive all benefits and reimbursements accrued right up to and due through the effective date of termination, Executive shall nevertheless be entitled to receive all applicable compensation and benefits (including bonuses and such other executive perquisites) which would have been accrued to him with respect to the unexpired term of this Agreement as if his employment had never been terminated prematurely. In any event, Executive’s obligations under Sections 14, 18 and 19 shall survive termination in accordance with their terms.
 
3
 
3.
The Agreement is hereby amended to add the following new Section 18:
 
 
18. Non-Competition :
(a) Executive shall not during the period of his employment by the Company and for a continuous period of 1 year after cessation of his employment with the Company for whatever reason, for himself or on behalf of, or in conjunction with, any other person, persons, company, partnership, limited liability company, corporation or business of whatever nature:
     
   
(i)      engage (as an officer, director, manager, member, shareholder, owner, partner, joint venturer, trustee, or in a managerial capacity, whether as an employee, independent contractor, agent, consultant or advisor, or as a sales representative) in any entity that designs, researches, develops, markets, sells or licenses products or services that are substantially similar to or competitive with the business of the Plastec Group from time to time or as at the date of cessation of Executive’s employment with the Company;
   
(ii)      call upon any person who is at that time, or within the preceding twelve (12) months has been, an employee of the Plastec Group, for the purpose, or with the intent, of enticing such employee away from, or out of, the employ of the Plastec Group or for the purpose of hiring such person for Executive or any other person or entity, unless any such person’s employment with respect to the Plastec Group was terminated more than six (6) months prior thereto;
 
4
 
   
(iii)     call upon any person/entity who is then or has been within one year prior to that time, a customer of the Plastec Group, for the purpose of soliciting or selling products or services in competition with the Plastec Group; or
   
(iv)     call upon any prospective acquisition or investment candidate, on Executive’s own behalf or on behalf of any other person or entity, which candidate was known by Executive to have, within the previous twelve (12) months, been called upon by the Plastec Group or for which the Plastec Group made an acquisition or investment analysis or contemplated a joint marketing or joint venture arrangement with, for the purpose of acquiring or investing or enticing such entity into a joint marketing or joint venture arrangement.
     
   
(b) Because of the difficulty of measuring economic losses to the Company and the Plastec Group as a whole as a result of a breach of the foregoing covenant, and because of the immediate and irreparable damage that could be caused to the Company and the Plastec Group as a whole for which it would have no other adequate remedy, Executive agrees that the foregoing covenant may be enforced by the Company on its own behalf and on behalf of the Plastec Group in the event of breach by him, by injunctions and restraining orders.
     
   
(c) It is agreed by the parties that the foregoing covenants in this Section 18 impose a reasonable restraint on Executive in light of the activities, business and plans of the Company and the Plastec Group as a whole; it is also the intent of the Company and Executive that such covenants be construed and enforced in accordance with any change in the activities, business or plans of the Company and the Plastec Group as a whole throughout the Term.
 
5
 
   
(d) The covenants in this Section 18 are severable and separate, and the unenforceability of any specific covenant shall not affect the provisions of any other covenant.
     
         
(e) All of the covenants in this Section 18 shall be construed as an agreement independent of any other provision in this Agreement, and the existence of any claim or cause of action of Executive against the Company, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement of such covenants; provided, however, that the failure to make payments or benefits to Executive under Section 9 of this Agreement shall constitute such a defense.
     
   
(f) Notwithstanding any of the foregoing, if any applicable law shall reduce the time period during which Executive shall be prohibited from engaging in any competitive activity described in Section 18(a) hereof, the period of time for which Executive shall be prohibited pursuant to Section 18(a) hereof shall be the maximum time permitted by law.
 
4.
The Agreement is hereby amended to add the following new Section 19:
 
     
19. Return of Property:
At such time, if ever, as Executive’s employment with the Company is terminated, he shall be required to participate in an exit interview for the purpose of assuring a proper termination of his employment and his obligations hereunder. On or before the actual date of such termination, Executive shall return to the Company all records, materials and other physical objects relating to his employment with the Company, including, without limitation, all Company credit cards and access keys and all materials relating to, containing confidential information.
 
 
6
 

5.
This First Amendment to the Agreement shall become effective only upon consummation of the Merger. This First Amendment to the Agreement shall become null and void on the termination of the Merger Agreement prior to the consummation of the transactions contemplated thereby.
 
[Signature Page Follows]
 
7
 
IN WITNESS WHEREOF, the parties hereto have executed this First Amendment to the Agreement as of December 16,   2010.

 
SUN LINE INDUSTRIAL LIMITED
   
 
By: 
   
Name:
   
Title:
   
 
EXECUTIVE
   
  /s/ NING, HO LEUNG
 
NING, HO LEUNG
 
8
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 






 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dated the                               day of                               2010
 
AITKEN, VANSON & COMPANY LIMITED
 
And
 
SUN LINE INDUSTRIAL LIMITED
 
 
TENANCY AGREEMENT
 
OF

UNIT 2103, 21/F
 
AITKEN VANSON CENTRE
 

 
 

THIS AGREEMENT
is made the 10   day of March Two Thousand And Ten
   
Parties
BETWEEN the parties more particularly described and set out in the First Schedule hereto.
   
 
WHEREBY IT IS AGREED as follows:
   
Description of
premises, term and
rent
1.    The Landlord shall let and the Tenant shall take on an “as is” basis ALL THAT the premises more particularly described and set out in the Second Schedule hereto (hereinafter referred to as “the said premises”) forming part of the messuage erections and building known as AITKEN VANSON CENTRE (hereinafter referred to as “the said Building”) erected on ALL THAT piece or parcel of ground situate lying and being at No. 61 Hoi Yuen Road, Kwun Tong, Kowloon, Hong Kong and registered in the Land Registry as KWUN TONG INLAND LOT No. 354 (hereinafter referred to as “the said Land”) TOGETHER with the right in common with the Landlord and all others having the like right to use and enjoy all entrances, lift hall, staircases, landings, passages and lavatories in the said Building in so far as the same are necessary for the proper use and enjoyment of the said premises AND ALSO TOGETHER with the right in common as aforesaid to use and enjoy all lifts and central air-conditioning and heating services (if any) intended for common use and provided and installed in the said Building whenever the same shall be operating for the term and at the rent more particularly described and set out in the Third Schedule hereto.
 
 
1
 
 
Deposit
2.    The Tenant shall on the signing of this Agreement deposit to the Landlord the sum more particularly described and set out in the Third Schedule hereto (hereinafter referred to as “the said deposit”) to secure the due performance and observance of the agreements stipulations and conditions herein contained and on the part of the Tenant to be observed and performed. At the expiration or sooner determination of this Agreement if the Tenant shall have paid all rent and air-conditioning and management charges and other sums payable hereunder and if there shall be no breach non-observance or non-performance of any of the agreements stipulations or conditions herein contained on the Tenant’s part to be observed and performed the Landlord shall refund to the Tenant the said deposit within twenty-one (21) days after delivery of vacant possession of the said premises to the Landlord but without any interest thereon but if there shall be any rent or air-conditioning and management charges or other sums payable hereunder in arrears the Landlord shall be entitled to apply the said deposit towards payment of such arrears and if there shall be breach non-observance or non-performance of any of the agreements stipulations or conditions herein contained on the Tenant’s part to be observed and performed the Landlord shall be entitled to apply the said deposit or such part or parts thereof towards remedying such breach (in so far as this may be possible) in which event the Tenant shall within seven (7) days of a written demand by the Landlord as a condition precedent to the continuation of the tenancy hereby created deposit with the Landlord the amount by which the said deposit may have been reduced (a certificate issued by the Landlord in this connection shall be conclusive and binding upon the Tenant save for manifest errors) and if the Tenant shall fail so to do the Landlord shall forthwith be entitled to forfeit the tenancy hereby created and to re-enter on the said premises or any part of parts thereof and to recover possession of the said premises and to determine this Agreement in which event the Landlord shall be entitled to deduct sums sufficient to compensate the Landlord for all losses costs and expenses suffered as a result thereof from the said deposit without prejudice to any other right or remedy of the Landlord hereunder. In no event however shall the Tenant be entitled to treat payment of the said deposit as payment of the rent or the air-conditioning and management charges or other charges or fees or sums payable hereunder.
   
Tenant’s obligations
3.    The Tenant to the intent that the obligations hereunder shall continue throughout the term hereby agrees with the Landlord as follows:-
       
To pay rent
 
(a)
To pay the rent on the days and in the manner herein provided for payment thereof.
       
To pay government
rent, rates, tax etc
 
(b)
To pay and discharge punctually all government rent, rates, taxes, assessments, duties, charges, impositions and outgoings of an annual or recurring nature now or hereafter to be assessed, imposed charged or levied by the Government of the Hong Kong Special Administrative Region (hereinafter referred to as “Government of HKSAR”) or other lawful authority upon the said premises or upon the owner or occupier thereof (Property Tax and expenses of a capital or non-recurring nature alone excepted). The Tenant shall unless the Landlord otherwise directs pay all rates imposed on the said premises in the first place to the Landlord or to the manager charged with the management of the said Building during the term of the tenancy (hereinafter referred to as “the Manager”) as the Landlord may so direct in writing and the Landlord or the Manager (as the case may be) shall settle the same with the Government of HKSAR and in the event of the said premises not yet having been assessed to rates the Tenant shall pay to the Landlord (or to the Manager as the Landlord may so direct in writing) a sum equal to 3% on the basis of a notional rateable value of the said premises calculated as the aggregate of twelve months’ rent payable by the Tenant on account of the Tenant’s liability under this Clause which sum shall be payable on a monthly basis in advance and any overpayment or underpayment by the Tenant shall be adjusted when the said premises have been assessed to rates. Likewise, the Tenant shall unless the Landlord otherwise directs pay all government rent in the first place to the Landlord or the Manager as the Landlord may so direct in writing and the Landlord or the Manager (as the case may be) shall settle the same with Government of HKSAR and in the event of such Government rent not yet having been assessed the Tenant shall pay to the Landlord or the Manager as the Landlord may so direct in writing, a sum equivalent to 3% of the notional rateable value of the said premises calculated as the aggregate of twelve months’ rent payable by the Tenant which sum shall be payable on a monthly basis in advance and any overpayment or underpayment by the Tenant shall be adjusted when such Government rent has been assessed.
 
 
2
 
 
To pay service
charges and
deposits
(c)
To pay and discharge punctually during the term all deposits and charges for gas, water, electricity, telephone and other services whatsoever now or at any time hereafter consumed by the Tenant and chargeable in respect of the said premises and to pay and discharge all necessary deposits for the supply of gas, water, electricity, telephone and other services for the common area and the common service facilities of the said Building when required and to comply with all requirements of the gas, water, electricity, telephone and other services authorities or suppliers relating to the use of such services or the fitting out of the said premises by the Tenant Provided That if there shall be more than one tenant to share the use of one gas, water or electricity meter (as the case may be) then the charges for the supply of gas, water or electricity (as the case may be) to such tenants shall be shared and paid by the said tenants in proportion.

 
3
 
 
To pay air-
conditioning and
management
charges
(d)
(i)
To pay to the Landlord punctually during the term such monthly contribution towards the costs, charges and expenses for the maintenance and supply of air- conditioning and management services or otherwise as shall be required by the Landlord.
       
Adjustment of air-
conditioning the
and management
charges
 
(ii)
If at any time during the term the operating cost relative to the supply of the air-conditioning and services or otherwise shall have risen the Landlord shall have right from time to time to increase the air-conditioning and management charges in proportion to the said increase whose assessment shall be conclusive.
     
Normal business
hours and operating
hours of air-
conditioning
 
(iii)
To follow the normal business hours of the said Building. The normal business hours of the said Building means the hours other than on Sundays and public holiday between 8:00 a.m. and 8:00 p.m. on each Monday to Friday which is not a public holiday and between 8:00a.m. and 3:00p.m. on each Saturday which is not a public holiday. The Landlord reserves the right to alter or amend the said business hours from time to time and to such extent as the Landlord shall in its discretion deem appropriate or necessary. The Landlord also reserves the right to change the operating hours of the central air-conditioning system of and in the said Building. Unless and until otherwise changed the operating hours of such air-conditioning shall be the same as the said business hours.
     
Extra air-
conditioning
charges for
extended hours of
air-conditioning
 
(iv)
Should the Tenant require the operating hours of the air-conditioning be extended, the Tenant shall give written notice reasonably in advance to the Manager for the necessary arrangement and shall pay to the Landlord such extra and additional charges at such hourly rate or monthly contribution as shall be determined by the Landlord from time to time for the supply of extended hours of air-conditioning. For the avoidance of doubt, neither the Landlord nor the Manager gives any representation and/or warranty that any extended hours of air-conditioning can be arranged upon a request by the Tenant.
     
To submit fit out
plans for approval
(e)
(i)
The Tenant shall within fourteen (14) days upon receipt of the Fit Out Guide in respect of the said Building at its own cost and expense prepare and submit fit out plans and specifications to the Landlord and the Manager for their approval. Failure of the Tenant to submit the fit out plans and specifications within the prescribed time for approval shall not entitle the Tenant to any extension of the commencement date of the tenancy hereby created nor to any extension of the payment of the rent or air-conditioning and management charges payable by the Tenant hereunder.
 
 
4
 
 
To fit out in
accordance with
approved fit out
plans
 
(ii)
To fit out the said premises at the Tenant’s expense in accordance with such fit out plans and specifications as shall have been first submitted to and approved in writing by the Landlord and the Manager in a good and proper workmanlike fashion and in all respects in a style and manner appropriate to a first class industrial/office building and so to maintain the same throughout the term in good repair and condition to the satisfaction of the Landlord and the Manager. In the event of such approval being requested, it shall be a condition precedent to the granting thereof that the Tenant shall pay to the Landlord and the Manager all fees and costs incurred by the Landlord and the Manager in employing architects, engineers, professionals, specialist and/or consultants to vet examine and scrutinise such fit out plans and specifications. Such approval from the Landlord and the Manager shall in no event relieve the Tenant from the responsibility to obtain all necessary permits and licences pertaining to the fitting out works and the Tenant shall give all notices required and shall comply with all Ordinances, rules, regulations and all regulations and by-laws of any public utility company or authority. The Tenant shall not cause or permit to be made any variations to the approved fit out plans and specifications or to the interior design or layout of the said premises without the prior approval in writing of the Landlord and the Manager.
       
To comply with the
terms and
conditions of fitting
out
 
(iii)
To comply with the terms and conditions as set out in the Fourth Schedule hereto which may be revoked or amended by the Landlord or Manager at any time and from time to time.
       
Floor-loading
(f)
(i)
Not to place on or in any part of the said premises any machinery, goods, materials, or merchandise which may cause the maximum floor loading-bearing capacity therefor to be exceeded or do anything on the said premises or any part or parts thereof whereby excessive noise, vibration or resonance or other form of excessive disturbance or annoyance is created so as to give reasonable cause for complaint to the Landlord or any other persons in or outside the said Building.
 
 
5
 
 
Installation of
machinery
 
(ii)
Not to install any machinery in the said premises or any part or parts thereof before submitting for the approval of the Landlord and the Manager full particulars and information regarding such machinery (particularly as to the type and weight thereof) intended to be installed in the said premises together with a general layout plan of the said premises showing the actual position at which such machinery is intended to be installed, and obtaining approval of the Landlord and the Manager therefor. In granting any such approval (which may be granted with such condition or conditions as the Landlord and/or the Manager may in its/their reasonable opinion deem fit), it shall be a condition precedent to the granting thereof that the Tenant shall pay to the Landlord and the Manager all fees and costs incurred by the Landlord and the Manager in employing professional(s) to examine and give such approval.
       
Absorbers
 
(iii)
Not to mount and equip any machinery (particularly machinery with horizontal reciprocating action) in the said premises or any part or parts thereof without anti-vibration absorbers and anti-dumping absorbers of such types and design as shall be approved in writing by the Landlord and the Manager. In granting any such approval (which may be granted with such condition or conditions as the Landlord and/or the Manager may in its/their reasonable opinion deem fit), it shall be a condition precedent to the granting thereof that the Tenant shall pay to the Landlord and Manager all fees and costs incurred by the Landlord and the Manager in employing professional(s) to examine and give such approval.
     
Covenants for repair
(g)
At the expense of the Tenant to keep the interior of the said premises including but not limited to the flooring or interior plaster or other finishes or rendering to walls, floors and ceilings and the Landlord’s fixtures and fittings therein and all additions thereto including all doors, windows, air-conditioning fancoils, electrical installations and wirings, toilet equipments, ventilators, fire-fighting equipments, flush system apparatus and water apparatus in good repair and condition to the satisfaction of the Landlord and sufficiently preserve repair and maintain the same and to deliver up the same to the Landlord at the expiration or sooner determination of the term in like condition. In particular, but without in any way limiting the foregoing:

 
6
 
 
To pay cost of
replacing broken
windows etc.
 
(i)
To pay or reimburse the Landlord the cost of replacing all broken or damaged windows or glass of the said premises (or elsewhere if used exclusively by the Tenant) whether the same be broken or damaged by the negligence of the Tenant or owing to circumstances beyond the control of the Tenant.
       
To install repair or
replace electrical
wirings
 
(ii)
To repair or replace if so required by the appropriate company or authority under the terms of the Electricity Ordinance or any statutory modification or re-enactment thereof or any Regulations made thereunder all the electricity wiring installations and fittings within the said premises and the wiring from the Tenant’s meter or meters to and within the same.
       
To keep sanitary
apparatus in good
repair and condition
 
(iii)
At the expense of the Tenant to keep the water tanks, drains, pipes, toilets, lavatories, sanitary or plumbing apparatus and other water apparatus (hereinafter collectively referred to as “the Sanitary Apparatus”) used exclusively by the Tenant and its servants, employees, agents, invitees, licensees and customers in good, clean and tenantable repair and condition to the satisfaction of the Landlord and in accordance with the regulations or by-laws of all Public Health and other Government authorities concerned and to pay to the Landlord on demand clearing repairing or replacing any of the Sanitary Apparatus choked impeded blocked or stopped owing to the careless or improper use or neglect by the Tenant or any of its servants, employees, agents, invitees, licensees or customers.
       
To pay cost of
replacing light
bulbs
 
(iv)
To reimburse to the Landlord the cost of replacing any damaged, broken, defective or burned out electric light bulbs, tubes and globes in the said premises which are provided by the Landlord.
       
To be responsible
for any loss or
damage caused to
any property or any
person
 
(v)
To be wholly responsible for any damage or injury caused to any person whomsoever directly or indirectly through the defective or damaged condition of any part of the interior of the said premises or any fixtures or fittings therein for the repair of which the Tenant is responsible hereunder or in any way owing to the spread of fire or smoke or the overflow of water from the said premises or any part thereof or through the act default or neglect of the Tenant its servants agents licensees or customers and to make good the same by payment or otherwise and to indemnify the Landlord against all costs claims demands actions and legal proceedings whatsoever made upon the Landlord by any person in respect of any such loss damage or injury and all costs and expenses incidental thereto, and to effect adequate insurance cover in respect of such risks.
 
 
7
 
 
To protect interior
form storm or
typhoon
 
(vi)
To take all reasonable precautions to protect the interior of the said premises from storm or typhoon damage and in the event of such damage being incurred to repair the damage or restore the said premises to a proper state and condition in accordance with the covenants for repair contained in this Clause 3(g).
       
Employ cleaning
contractor
(h)
(i)
The Tenant shall employ their own staff or a cleaning contractor nominated by the Landlord or the Manager at its own expense for the cleaning of the said premises.
       
To be responsible
for removal of
garbage and refuse
 
(ii)
The cleaning contractor shall be responsible for the removal and disposal of all garbage or refuse each day from the said premises to such location as shall be specified by the Landlord and/or the Manager in the manner and subject to such reasonable rules and regulations prescribed by the Landlord and/or the Manager from time to time and until such time as such garbage or refuse is removed from the said Building to keep within the said premises the same securely sealed in containers of a design as specified by the Landlord and/or the Manager from time to time.
       
To co-operate with
cleaning contractor
and other
 
(iii)
To render full co-operation to the cleaning contractor and tenants or occupiers of the other parts of the said Building with a view to keep the said premises and the said Building at all times in a neat and tidy condition.
       
To pay the cost of
affixing or
replacing tenant’s
name on the
directory board
 
(i)
To pay or reimburse to the Landlord or its agents immediately upon demand the cost of affixing, repairing, altering or replacing as may be necessary the Tenant’s name on the Directory Board (if any) provided by the Landlord and/or the Manager. The Tenant’s name so appearing on the Directory Board in English and Chinese in uniform lettering and characters designed by the Landlord and/or the Manager shall strictly be in accordance with that appearing in this Agreement or its trading name(s) with or without its registered trade mark or logo subject to the Tenant’s request unless prior written consent to name otherwise has first been obtained from the Landlord. The Tenant shall in the event of the Tenant changing its name, notify the Landlord at least seven (7) days prior to such change of name.

 
8
 
 
To ensure security
equipment in good
order
 
(j)
To ensure at all times that all fire alarms, fire fighting equipments and other equipments for security purpose provided by the Landlord shall not be disrupted, interrupted, damaged or caused to be defective through the act, default or neglect of the Tenant or any of its servants, employees, agents, invitees, licensees or customers.
       
To permit Landlord
to enter and view
(k)
(i)
To permit the Landlord its agents and all persons authorised by it with or without workmen or others and with or without appliances at all reasonable times to enter upon the said premises to view the condition thereof and upon prior notice to the Tenant to take inventories of the fixtures and fittings of the Landlord therein and to carry out any work or repair required to be done provided that in the event of an emergency the Landlord its servants or agents may enter without notice and forcibly if the Landlord deems necessary.
       
To permit Landlord
to take prospective
tenants or
purchasers to view
 
(ii)
During the three months immediately preceding the expiration of the term hereby granted the Landlord or its authorized agents shall be at liberty to take prospective tenants new purchasers to view the interior of the said premises and to display an advertisement outside the said premises offering the said premises for letting or sale.
       
To execute repairs
on receipt of notices
(1)
(i)
On receipt of any notice from the Landlord or its authorized agents specifying any works or repairs to be done and the time in which they are to be done and which are the responsibility of the Tenant hereunder, forthwith to comply with such notice.

 
9
 
 
To permit Landlord
to repair and make
good the premises
 
(ii)
If the Tenant shall fail within fourteen (14) days of such notice, of such shorter period as shall be appropriate in case of emergency, to proceed to commence and then to continue diligently and expeditiously to comply with such notice in all respects or if the Tenant shall at any time make default in the performance of any of the agreements stipulations and conditions herein contained for or in relating to the repair decoration preservation protection or maintenance of the said premises or any part or parts thereof it shall be lawful for the Landlord and all persons authorized by the Landlord including but not limited to its agents, servants and workmen to enter upon the said premises and to carry’ out all or any of the works referred to in such notice and the cost of so doing and all expenses incurred thereby shall be paid by the Tenant to the Landlord on demand and shall forthwith be recoverable by the Landlord as debt by action Provided That if the Tenant shall fail to pay such debt within fifteen (15)   days, the Landlord shall in addition be entitled to charge interest thereon but no such entry’ repair decoration preservation protection or maintenance shall prejudice the Landlord’s right of re-entry’ and forfeiture hereinafter contained.
       
To inform Landlord
of damage or
accident
(m)
To give notice in writing to the Landlord or its authorized agents as soon as practicable after the Tenant shall have become aware of any accident or of any damage caused or that may be caused to the said premises, the fixtures or fittings provided therein by the Landlord, the water pipes, the said Building or any persons thereon and of any defects or want of repair thereof.
       
To comply with the
Fit Out Guide,
DMC and House
Rule
(n)
(i)
To obey and comply strictly with the provisions of the Fit Out Guide, Deed of Mutual Covenant (if any) and House Rules and to pay the Fit Out Deposit as the Manager may from time to time determine and to conduct the business of the Tenant in such manner as to prejudice the goodwill and reputation of the said Building as a first class industrial/office building
       
To obey and comply
with all notices and
announcement
made by Landlord
or Manager
 
(ii)
To obey and comply with such rules, regulations or requirements stated in notices or announcements as may from time to time be made imposed adopted introduced or amended by the Landlord and/or the Manager and/or its agents in respect of the said Building.

 
10
 
 
To comply with all
ordinances etc.
(o)
To obey and comply with and to keep the Landlord indemnified against the breach of all Ordinances, regulations, by-laws, rules, requirements, directions and orders of any government or other competent authority relating to the use of and the conduct and carrying on of the Tenant’s business in the said premises as specified in the Fifth Schedule hereto or to any other act, deed, matter or thing done, permitted, suffered or omitted therein or thereon by the Tenant or any servant, employee, agent, invitee, licensee or customer of the Tenant and to notify the Landlord forthwith in writing of any notice received from the Manager or any statutory or public authority concerning or in respect of a possible breach of this Clause 3(o).
     
To be responsible
for contractors
servants, agents and
licensees
(p)
(i)
To be responsible to the Landlord for the acts, neglects, defaults and omissions of all contractors, servants, employees, agents, invitees, licensees or customers of the Tenant as if they were the acts, neglects defaults and omissions of the Tenant and for the purposes of this Agreement “licensee” shall include any person present in, using or visiting the said premises with the consent of the Tenant expressed or implied.
       
To indemnify the
Landlord against all
actions etc.
 
(ii)
To indemnify and keep the Landlord indemnified from and against all actions, proceedings, claims and demands whatsoever brought or made by the tenants and occupiers of the other parts of the said Building and any third party and all costs and expenses (including legal costs on a full indemnity basis) incurred by the Landlord thereby arising in respect of any act or liability caused by or arising from the act, breach of duty, neglect or default (irrespective of whether wilful or not)of the Tenant or any of its contractors, servants, employees, agents, invitees, licensees or customers including but not limited to any breach or non-observance or nonperformance of any of the agreements stipulations and conditions herein contained and on the Tenant’s part to be observed and performed or by reason of any water or smoke or offensive smell or odour originating form the said premises.
       
To yield up at the
end of term
(q)
To quietly yield up the said premises together with all the Landlord’s fixtures, fittings and additions therein and thereto without compensation for any alterations or improvements made to the said premises at the expiration or sooner determination of term and/or this Agreement in good clean and tenantable repair and condition notwithstanding any rule of law or equity to the contrary Provided That the Tenant shall at the Tenant’s expense remove all personal property, fixtures and fittings and additions therein and thereto of the Tenant and make good all damage caused by such removal and reinstate the said premises to the condition they were in at the commencement of the term and thereupon to surrender to the Landlord all keys giving access to all parts of the said premises, the said Building or any part or parts thereof and to make good any damage caused by such removal at the Tenant’s expense.

 
11
 
 
To operate the
business under
specified business
name
 
(r)
The Tenant shall operate business at the said premises under the business name of SUN LINE INDUSTRIAL LIMITED and shall produce to the Landlord a copy of Business Registration Certificate of each of the above business names together with its application form in the said business names and in the sole proprietorship/partnership (as the case may be at the date of signing hereof) of the Tenant at the address of the said premises within 1 month from the commencement of this tenancy.
   
Tenant’s restrictive
covenants
(4)  The Tenant hereby agrees with the Landlord that unless it has obtained the prior written consent of the Landlord on such terms and conditions as the Landlord may impose together with such consent:-
   
User of the
Premises
 
(a)
(i)     Not to use or permit or suffer the said premises or any part or parts thereof to be used for any purpose other than as specified in the Fifth Schedule hereto and at the expense of the Tenant to obtain all necessary and appropriate licences and/or permits and/or approvals necessary for the carrying on of the Tenant’s business and to comply with any local legislation, regulations and Government requirements and any subsequent amendments (if any) relating to such user on the said premises and at all times to keep current valid and subsisting all such licences and/or permits and/or approvals. For the avoidance of doubt the Landlord does not represent and/or warrant that the said premises are fit to be used for the aforesaid purposes or any part or parts thereof and/or for any particular purpose.
 
 
12
 
  
Not to use for
illegal immoral
purposes etc.
 
(ii)
Not to use or cause permit or suffer to be used any part of the said premises for gambling or for any illegal immoral or improper purposes or in any way so as to cause nuisance annoyance inconvenience or damage or danger to the Landlord or tenants or occupiers of any other neighbouring premises of the Building.
       
Not to use premises
as sleeping quarters
or domestic
premises
 
(iii)
Not to use the said premises or any part thereof as sleeping quarters or as domestic premises within the meaning of any Ordinance for the time being in force or to allow any person to remain in the said premises overnight unless with the Landlord’s prior permission in writing. Such permission shall only be given to enable the Tenant to post watchmen to look after the contents of the said premises and the names of the watchmen shall first be registered with the Landlord prior to its giving such permission.
       
Not to prepare food
(b)
Not to allow any cooking of food on the said premises and not to cause or permit any offensive or unusual odours to be produced upon emanated from the said premises.
     
Not to produce
music or noise
audible outside
(c)
Not to produce or permit or suffer to be produced any music or noise (including sound produced by broadcasting or any apparatus or any equipment capable of producing, reproducing, receiving or recording sound) so as to constitute nuisance or give reasonable cause for complaint from the Landlord or tenants or occupiers of the other parts of the said Building or in any adjoining or neighbouring building.
     
Not to cause any
nuisance or
annoyance
(d)
Not to do or permit or suffer to be done any act or thing in or upon the said premises or any part or parts thereof which in the opinion of the Landlord may constitute a nuisance or annoyance or give cause for complaint from the Landlord or tenants or occupiers of the other parts of the said Building or in any adjoining or neighbouring building.

 
13
 
 
Not to breach
Government Lease
or cause insurance to
be voided or
premium increased
(e)
Not to do or permit or suffer to be done any act, deed, matter or thing whatsoever which will amount to a breach or non-observance of any of the terms and conditions under which the said Land is held from the Government or of the Deed of Mutual Covenant (if any) under which the Landlord holds the said premises or the building plans or the occupation permit of the said Building as approved or issued by the Government of HKSAR or whereby any insurance on the said premises or the said Building against loss or damage by fire, storm, typhoon, other insurable perils and/or claims by third parties for the time being in force may be rendered void or voidable or whereby the premium thereof may be increased Provided That if as the result of any act, deed, matter or thing done permitted or suffered by the Tenant, the premium on any such policy of insurance shall be increased, the Landlord shall be entitled without prejudice to any other remedy hereunder to recover from the Tenant the amount of any such increase and further the Tenant shall keep the Landlord fully indemnified against all losses damages claims and demands sustained by or made against the Landlord by any person as a result of any breach by the Tenant of this Clause 4 (e) Provided That notwithstanding anything herein contained the Landlord does not warrant that any or adequate insurance against fire or any other risks exists in respect of the said premises and/or the said Building and/or all or any of the goods or property stored therein by the Tenant And the Tenant shall be responsible in any event for insurance of its property in the said premises.
     
Not to keep arms or
combustible goods
in the Premises
(f)
Not to keep or store or permit or suffer to be kept or stored in the said premises any arms, ammunitions, gun-powder, saltpetre, kerosene or other explosive inflammable combustible or hazardous substance.
     
Not to make or
permit any
alterations or
additions
(g)
Not without the prior written consent of the Landlord to make or permit any alterations or additions or partitions to be made in or to the said premises or any part or parts thereof nor to pull down alter or remove any doors windows additions partitions or fixtures and fittings thereof nor to make any alterations to the fire prevention system or to the electrical wirings and installations therein nor to install any air-conditioning plant machinery or equipment therein nor to cut maim or injure nor to suffer to be cut maimed or injured any doors, windows, walls, beams, structural members or fabric thereof. The Tenant shall be responsible for obtaining the Building Authority or any other government authorities consent for such alterations additions or partitions in or to the said premises at its own expense and the Tenant further undertakes to comply with all government’s requirements and regulations relating thereto. At the expiration or sooner determination of the term the Tenant shall at its own expense remove all such alterations or additions or partitions so erected or installed by the Tenant and restore the said premises to its original tenantable state as at the commencement of the term to the satisfaction of the Landlord.

 
14
 
 
Not to install
electrical wrings in
premises without
Landlord’s approval
(h)
Not to lay affix attach or install any electrical wirings or cables in the said premises without the prior written consent of the Landlord and the Tenant shall only carry out such electrical installation in accordance with the fit-out plan which has been duly approved by the Landlord.
     
Not to damage toilet
facilities
(i)
Not to use or permit or suffer the toilet facilities provided by the Landlord to be used for any purpose other than that for which they are intended and not to throw or permit or suffer or be thrown therein any foreign substance of any kind and the Tenant shall pay to the Landlord on demand all costs and expenses incurred by the Landlord in making good any breakage, blockage or damage resulting from a violation of this Clause 4(i).
     
Not to damage main
structure, walls,
ceilings and other
common service
facilities
(j)
(i)
Not to damage mark or deface or permit or suffer to be damaged marked or defaced any main structure, fixtures and fittings, decorations, installations, lifts or other common service facilities including air-conditioning units, cloakrooms, service pantries, halls, passageways, staircases, drainage wells, walls and ceilings of the said Building outside the said premises, and to pay on demand to the Landlord all costs and expenses incurred by the Landlord in repairing, making good the damage or cleaning the same.
       
Not to drive nails
etc. into ceilings
walls or floors
 
(ii)
 Not without the prior written consent of the Landlord to drive or insert or permit or suffer to be driven or inserted any nails, screws, hooks, brackets or similar articles into the ceilings, walls or floors of the said premises and any other parts of the said Building outside the said premises.
       
Display name plate
or signboard etc.
(k)
Not without the prior written consent of the Landlord or the Manager to exhibit or display within outside or at the exterior of the said premises any name-plate, poster, flag, notice, advertisement, signboard, decoration, sign or other device, whether illuminated or not, which may be visible from outside of the said premises except in such space and in such form style and manner with lettering and characters approved by the Landlord or the Manager.
 
 
15
 
 
Not to encumber or
obstruct passage and
common areas
(l)
Not to encumber or obstruct or permit or suffer to be encumbered or obstructed with any boxes, cartons, packages, rubbish, refuse, dustbins, garbage cans, furniture, chattels, or store of any goods, or other obstruction of any kind or nature any of the entrances, exits, staircases, landings, passageways, lifts, corridors, lavatories, lobbies or other parts of the said Building in common use so that the same are at all times kept clear and free of any obstructions of any nature and the Landlord shall in addition to any other remedies which the Landlord may have hereunder been entitled without notice and at the Tenant’s expenses to remove and dispose of as it sees fit any such obstructions aforesaid without incurring any liability therefor whatsoever whether tortious or otherwise to the Tenant or any other person whomsoever and the Tenant shall on demand pay or reimburse to the Landlord all costs and expenses incurred in such removal.
       
Not to lay wirings or
cables etc in
common areas
(m)
Not to lay install affix or attach any wirings, cables, pipes or other articles or things in or upon any of the entrances, exits, staircases, landings, passageways, corridors, lavatories, lobbies or any other common areas of the said Building outside the said premises.
       
Prohibition of
subletting or transfer
(n)
Not to assign underlet or otherwise part with the possession of or transfer the said premises or any part or parts thereof or any interest therein or permit or suffer any arrangement or transaction whereby any person or persons who is/are not a party to this Agreement obtains or obtain the use possession enjoyment or occupation of the said premises or any part or parts thereof irrespective or whether any rental or other consideration is given therefor. The tenancy created pursuant to this Agreement shall be personal to the Tenant named in this Agreement and without in any way limiting the generality or the foregoing the following acts and events shall, unless previously approved in writing by the Landlord, be deemed to be breaches of this Clause 4(n):-
       
   
(i)
In the case of a tenant which is a partnership any change in the constitution of the partners including the taking in of one or more new partners whether on the death or retirement of an existing partner or otherwise;
         
   
(ii)
In the case of a tenant who is an individual (including a sole surviving partner of a partnership tenant) the death, insanity or other disability of that individual, to the intent that no right to use possess, occupy or enjoy the said premises or any part or parts thereof shall vest in the executor, administrator, personal representative, next of kin, trustee, receiver or committee of any such individual;

 
16
 
 
   
(iii)
In the case of a tenant which is a limited company incorporated in accordance with the laws of Hong Kong or elsewhere any take-over, reconstruction, amalgamation merger, voluntary liquidation or change in the person or persons who owns or own a majority of its voting shares or who otherwise has or have effective control thereof;
       
   
(iv)
The giving by the Tenant of a Power of Attorney or similar authority whereby the donee of the Power obtains the right to use, possess, occupy or enjoy the said premises or any part or parts thereof or does in fact use, possess, occupy or enjoy the same;
       
   
(v)
The change of the Tenant’s business name without the prior written consent of the Landlord.
       
Not to keep animals
or pets and to
prevent infestation
(o)
Not to keep or permit or suffer to be kept any animals, birds or pets inside the said premises and to take all such steps and precautions at such intervals as shall be   required by the Landlord and to the satisfaction of the Landlord to prevent the said premises or any part or parts thereof from becoming infested by termites, rats, mice, cockroaches or any other pests or vermins and in the event of any such infestation to permit the same to be remedied by contractor appointed by the Landlord at the Tenant’s own cost and expense.
     
Not to permit touting
or soliciting of
business
(p)
Not to permit any canvassing, pedding, touting or soliciting for business or distributing of any booklets, literatures, promotional items, pamphlets, notices or advertising matters to be conducted outside or near the said premises or in any part or parts of the said Building.
     
Not to hang blinds or
aerial, etc
(q)
 Not to hang, fix   or erect any Venetian   blinds or sun blinds of any description, shelters or coverings wire or aerial wirings or other things whatsoever on any exterior part of the said Building including the roof and the exterior wall of the said premises nor to do or permit to be done any act or thing which may or will alter the external appearance of the said Building.

 
17
 
 
Not to hang laundry
(r)
Not to use or cause or permit the use of the entrances, exits, halls, lobbies, corridors, staircases, landings, passageways, lavatories and other common areas of the said Building for the purpose of drying laundry or hanging or storing any articles or things thereon or therein and not to permit the Tenant’s servants, employees, agent, invitees, licensees and customers to use the same for toitering or eating.
     
Not to use lifts for
carriage of cargoes
(s)
Not to permit or suffer the lifts to be used for the carriage of cargoes, goods and other articles or things exceeding the maximum loading limit specified therefor by a notice affixed therein.
     
Exclusion of
Landlord’s liability
(t)
Not to hold the Landlord liable or responsible in any way to the Tenant or to any other person whomsoever in respect of any injury damage or loss of business or other liability whatsoever which may be suffered by the Tenant or by any other person or any property howsoever caused and in particular but without limitation caused by or through or in any way owing to:-
     
   
(i)
any defect in or failure or need for repair or overhaul of the supply of electricity, gas, water, telephone, air-conditioning, lifts or other service whatsoever or any surge reduction variation interruption or termination in the supply of such services or any of the same;
       
   
(ii)
any typhoon, landslide, subsidence of the ground, escape of fire, smoke fumes or other substance or thing from anywhere within the said Building, any seepage, overflow or leakage of water from any pipes, drains or fire services system or , anywhere within the said Building or the influx of rain water or sea water into the said premises or the said Building or any escape of electric current from electric wiring cables or ducts situate upon or in any way connected with the said Building or any part or parts thereof or dropping or falling of any article object or material whatsoever including cigarette ends, glass or tiles from anywhere within the said Building, or vibrations from any floor office or premises in the said Building or in the adjoining or neighbouring building;
       
   
(iii)
any defective or damaged condition of the said premises or any part or parts thereof or the Landlord’s fixtures and fittings therein;

 
18
 
 
     
(iv)
any misconduct negligence or breach of duties on the part of the Manager;
         
     
(v)
any act, neglect or default of the Tenant or other tenants and occupiers or any of their servants, employees, agents, invitees, licensees or customers of the other parts of the said Building or the adjoining or neighbouring building; and/or
         
     
(vi)
any failure or breakage of glass or plate glass of or in the said premises or the said Building.
         
Landlord’s
covenants
5.
THE LANDLORD HEREBY AGREES WITH THE TENANT as follows:-
     
To pay Government
Rent and Property
Tax
 
(a)
To pay the Property Tax and all expenses of a capital or non-recurring nature attributable to or payable in respect of the said Building.
       
Tenant shall have
quiet enjoyment
 
(b)
That the Tenant paying the rent, rates and government rent, air-conditioning and management charges and all other outgoings hereby agreed to be paid on the days and in the manner herein provided for payment of the same and observing and performing the agreements, stipulations and conditions herein contained and on the Tenant’s part to be observed and performed shall peacefully hold and enjoy the said premises during the term without any interruption by the Landlord or any person lawfully claiming under or in trust for the Landlord.
       
 
6.
IT IS HEREBY FURTHER EXPRESSLY AGREED AND DECLARED as follows:-
     
Interest on late
payment
 
(a)
 If the Tenant shall have failed to pay the rent, rates, government rent, air-conditioning and management charges and all outgoings payable hereunder in respect of the said premises on the day due for payment thererof, the Landlord shall without prejudice to its other rights and remedies hereunder to other rights and remedies hereunder to otherwise, be entitled to charge and the Tenant shall be liable to pay to the Landlord interest on the arrears of rent or outstanding amount of rates, government rent, air-conditioning and management charges and all outgoings hereof at such rate (as well before as after any judgment) as shall be equivalent to three percent (3%) per month from the date the same is due until the actual date of payment together with all legal costs and expenses incurred by the Landlord on a full indemnity basis for the purpose of recovering the arrears or outstanding sums in Court or otherwise from the Tenant and shall be a debt due from the Tenant to the Landlord and be forthwith recoverable by action. The Landlord shall also be entitled to disconnect or discontinue the supply of services, including but not limited to air-conditioning, water, electricity, gas to the said premises and/or to the Tenant without prior notice to the Tenant.

 
19
 
 
Landlord’s right of
re-entry etc.
 
(b)
If the rent, rates, government rent, air-conditioning and management charges or all outgoings payable hereunder or any part thereof shall be unpaid for fifteen (15) days after the same shall become payable (in the case of the rent whether legally or formally demanded or not) or if the Tenant shall fail or neglect to observe or perform any of the agreement stipulations or conditions herein contained and on the Tenant’s part to be observed and performed or if the Tenant shall become bankrupt, or being a corporation shall go into liquidation by whatsoever reasons or for whatsoever purposes, or if any petition shall be filed for the winding up of the Tenant, or if the Tenant shall otherwise become insolvent or make any composition or arrangement with creditors, or shall suffer any execution to be levied on the said premises or otherwise on the Tenant’s goods, or if the Tenant shall persistently fail in paying rent and/or air-conditioning and management charges and/or rates and government rent as when they fall due, then and in any such case it shall be lawful for the Landlord at any time thereafter to forfeit the tenancy hereby created and to re-enter on the said premises or any part of parts thereof and to recover possession of the said premises in the name of the whole whereupon this Agreement shall absolutely cease and determine and the said deposit paid pursuant to Clause 2 hereof shall be absolutely forfeited to the Landlord but without prejudice to any right of action by the Landlord in respect of any outstanding breach or non-observance or non-performance of any of the agreements, stipulations and conditions herein contained.

 
20
 
 
Written notice shall
be sufficient exercise
of right
 
(c)
A written notice served by the Landlord on the Tenant in manner hereinafter mentioned to the effect that the Landlord thereby exercises the power of forfeiture and/or re-entry herein contained shall be a full and sufficient exercise of such power without physical entry on the part of the Landlord.
       
Acceptance of rent
not waiver of breach
of convenant
 
(d)
The acceptance of any rent by the Landlord hereunder shall not operate or be regarded by the Tenant as a waiver by the Landlord of any right to proceed against the Tenant in respect of any breach non-observance or non-performance by the Tenant of any of the agreements stipulations terms and conditions herein contained and on the part of the Tenant to be observed and performed.
       
Force Majeure
 
(e)
If the said premises or any part of parts thereof shall be rendered inaccessible or destroyed or so damaged by fire, typhoon, Act of God, force majeure or at any time during the term the said premises or the said Building or any part of parts thereof shall be condemned as a dangerous structure or a demolition order or closure order of the relevant government authorities shall become operative in respect of the said premises or the said Building or any part of parts thereof or other cause beyond the control of the Landlord and not attributable to any act or default of the Tenant as to be rendered unfit for use and occupation or inaccessible and subject to the insurance policy or policies for such risks effected by the Landlord (if any) shall not have been rendered void or voidable or payment of policy moneys refused in whole or in part in consequence of any act or neglect or default of the Tenant, the rent, rates, government rent, air-conditioning and management charges or a part thereof proportionate to the damage sustained shall cease to be payable until the said premises shall have been restored or reinstated or rendered accessible Provided Always That the Landlord shall be under no obligation to repair or reinstate the said premises And Provided Further That without prejudice to the foregoing if the whole or substantially the whole of the said premises shall have been destroyed or rendered unfit for use and occupation or inaccessible and shall not have been repaired or reinstated within three (3) consecutive months of the occurrence of the destruction or damage then either party shall be entitled at any time before the same are so repaired and reinstated to terminate this Agreement by notice in writing to the other and thereupon this Agreement and the term shall determine as from the date on which they were rendered unfit for use and occupation or inaccessible but without prejudice to the rights and remedies of either party against the other in respect of any antecedent claim or liability hereunder. In the event of any disagreement between the parties hereto on the application of this Clause 6(e) then the subject of disagreement shall be referred to a single arbitrator for settlement in accordance with provisions of the Arbitration Ordinance for the time being in force.

 
21
 
 
Landlord not liable
for breakdown in air-
conditioning system,
etc
 
(f)
The Landlord shall not in any circumstances be liable to the Tenant for any defect in or mechanical breakdown or failure or need for repair or overhaul of the air-conditioning system, lifts, water supply system, telephone system, power supply system and/or other building facilities or services nor shall the rent or rates and government rent or air-conditioning and management charges abate or cease to be payable on account thereof or any part of parts thereof Provided Also That if the air-conditioning system shall wholly breakdown or cease to operate for any period of seven (7) or more consecutive days, the due proportion of the air-conditioning and management charges attributable to the maintenance of the air-conditioning system but not the rent shall cease to be payable from the first day after the end of such period of seven (7) consecutive days until the air-conditioning system again commences operating.
       
Tenant responsible
for acts of servants
visitors etc
 
(g)
For the purpose of these presents any act, default, neglect or omission of any servants, employees, agents, invitees, licensees or customers (as hereinbefore defined) of the Tenant shall be deemed to be the act, default, neglect or omission of the Tenant.
       
Distress for rent
 
(h)
For the purpose of Part III of the Landlord and Tenant (Consolidation) Ordinance, Chapter 7 of the Laws of Hong Kong, and for the purpose of this Agreement, the rent payable in respect of the said premises shall be and be deemed to be in arrear if not paid in advance at the time and in the manner stipulated in Clause 3 (a) hereof.
       
Waiver
 
(i)
To the extent that the Tenant can lawfully do so, the Tenant hereby expressly agrees to deprive itself of and to waive all rights (if any) to protection against eviction or ejection afforded by any existing or future legislation from time to time in force and applicable to the said premises or to the tenancy hereby created and the Tenant agrees to deliver up vacant possession of the said premises to the Landlord on the expiration or sooner termination of the tenancy hereby created notwithstanding any rule of law or equity to the contrary.

 
22
 
 
Non-waiver
 
(j)
No condoning, excusing or overlooking by the Landlord of any default breach or non-observance, or non-performance by the Tenant at any time or times of any of the Tenant’s obligations herein contained shall operate as a waiver of the Landlord’s rights hereunder in respect of any continuing or subsequent default, breach or non-observance or nonperformance or so as defeat or breach and no waiver by the Landlord shall be inferred from or implied by anything done or omitted by the Landlord unless expressed in writing, and singed by the Landlord. Any consent given by the Landlord shall operate as a consent only for the particular matter which it relates and in no way shall be considered as a waiver of release of any of the provisions hereof nor shall it be construed as dispensing with the necessity of obtaining the specific written consent of the Landlord in the future unless expressly so provided.
       
Landlord’s right to
exhibit selling or
letting notice
 
(k)
During the three months immediately preceding the expiration of the term hereby created, the Landlord shall be at liberty to affix and maintain without interference upon any external part of the said premises notice or advertisement stating that the premises are to be let or to be sold and such other information in connection therewith as the Landlord shall deem fit.
       
Service of notices
 
(1)
Any notice required to be served hereunder shall, if to be served on the Tenant, be sufficiently served if addressed to the Tenant and sent by prepaid ordinary post to or delivered at the said premises or the Tenant’s last known place of business or registered office or residence in Hong Kong and, if to be served on the Landlord, shall be sufficiently served if addressed to the Landlord or such other person as may be notified in writing to the Tenant and sent by prepaid ordinary post to or delivered at the registered office of the Landlord or any other address which the Landlord may notify the Tenant from time to time. In the case of a notice sent by prepaid ordinary post as aforesaid service shall be deemed to have been effected two (2) days after the date of posting.
 
 
23
 
 
Legal costs and
expenses
 
(m)
The legal costs and disbursements (including stamp duty and registration fees) of and incidental to the preparation, approval and completion of this Agreement shall be borne and paid by the parties hereto in equal shares.
       
Assignment
7.
In the event that the said premises or any part or parts under this Agreement is/are assigned to other person(s) (“the new Landlord”) by the Landlord, the following provisions shall apply:
     
   
(a)
the Tenant, subject to and at the direction of the Landlord, shall accept and acknowledge the new Landlord as the new Landlord in respect of the said premises or any part of parts thereof assigned as aforesaid to whom the Tenant thereafter shall become liable according to the terms and conditions of the Agreement and shall enter into a Deed of Novation and/or Transfer to other agreement(s) or documents(s) with the new Landlord and the Landlord at the cost of the new Landlord and/or the Landlord in such reasonable form the content as satisfactory to the Landlord and the new Landlord for the purposes of confirming the release discharge and cessation of all liabilities and obligations of the Landlord hereunder including but not limited to the Landlord’s obligation in respect of the refund of the said deposit hereunder (so far as they relate to the said premises or any part or parts hereof assigned as aforesaid) and the continuation of the liabilities and obligations of the Tenant hereunder to give effect to or (as the case may be) to confirm the assumption and taking up by the new Landlord in lieu of the Landlord of all the Landlord’s liabilities and obligations hereunder including but not limited to the Landlord’s obligation in respect of the refund of the said deposit hereunder (so far as they relate to the said premises or any part or parts hereof assigned as aforesaid);
       
   
(b)
upon the assignment of this Agreement or the said premises or any part of parts thereof and the new Landlord thereof agreeing to assume take up all the Landlord’s liabilities and obligations hereunder including without limitation its obligations to refund the said deposit to the Tenant hereunder (so far as they relate to the said premises or any part or parts thereof as aforesaid) whether contractual or otherwise shall absolutely cease and be taken up by the new Landlord and the Tenant shall only seek refund of the said deposit (subject always to the terms and conditions contained in this Agreement) from the new Landlord.

 
24
 
 
Management regulations
8.
(a)
The Landlord reserves the right from time to time and by notice in writing to the Tenant to make impose adopt and introduce and subsequently supplement amend or abolish if necessary such reasonable regulations as it may consider necessary for the management operation and maintenance of the said Building including without limitation those regulations relating to the use of the common service facilities, the lifts and the use of the loading and unloading areas in the said Building.
       
   
(b)
Such regulations shall be supplementary to the terms and conditions of this Agreement and shall bind the Tenant and any breach of the regulations shall be deemed to be a breach of this Agreement for which the Landlord may exercise all or any of its rights or remedies hereunder.
       
   
(c)
Such regulations shall not in any way derogate from the terms and conditions of this Agreement. In the event of conflict between such regulations and the terms and conditions of this Agreement the terms and conditions of this Agreement shall prevail.
   
Joint and several
liability
9.    Where more than one person is named as the Tenant in the First Schedule hereto all such persons shall sign this Agreement and shall be jointly and severally liable for the performance and observance of the terms, conditions and agreements contained herein and on the part of the Tenant to be performed and observed.
   
No premium
10.  The Tenant acknowledges that no fine premium key money or other consideration has been paid by the Tenant to the Landlord for the grant of this tenancy.
   
No warranty
11.  The Landlord has provided the standard fit-out including air-conditioning ducting, suspended ceiling, lighting and wiring system and fire sprinkler heads (“Standard Fit-out”) in the said premises. However, the Landlord does not warrant that the said premises together with the Standard Fit-out and/or the fixture and fittings thereto are fit for the purposes for which they are let or for any other purposes whatsoever intended to be used by the Tenant and shall not be liable or responsible to the Tenant for any damages or loss in respect thereof.
 
 
25
 
  
Full Agreement
12.   This Agreement supercedes the offer letter duly signed by the parties hereto on 10 February, 2010 and set out the full agreement reached between the parties hereto and no other representations have been made or warranties given relating to the Landlord or the Tenant or the said Building or the said premises and if any such representation or warranty has been made given or implied same is hereby waived.
   
Law
13.   This Agreement shall be governed and construed in all respects in accordance with the laws of Hong Kong.
   
Marginal Notes
14.   The Marginal notes are intended only for guidance and reference and do not form part of this Agreement nor shall any of the provision in this Agreement be construed or interpreted by reference thereto or in any way affected or limited thereby.
   
Miscellaneous
15.   Unless the context otherwise requires, words herein importing the masculine gender shall include the feminine and neuter and words herein in the singular shall include the plural and vice versa and the expression “person” or “persons” shall include firms and/or corporations.
   
Tenant responsible
for all legal costs
and expenses
incurred by Landlord
in Tenant’s default
16.   All legal costs and expenses incurred by the Landlord (on a solicitor and own client basis) in demanding payment of rent and/or any other legal proceedings (including but not limited to levying distraint for rent) taken by the Landlord against the Tenants as a result of default of payment of rent or any other amount payable by the Tenant or the breach by the Tenant of any terms, covenants and conditions herein contained shall be recoverable from the Tenants as a debt or be deductible by the Landlord from the deposit held by the Landlord hereunder but without prejudice to the Landlord’s right of action against the Tenant for damages in excess thereof.
   
Name of Building
17.   The Landlord reserves the right subject to any relevant provisions of the Deed or Mutual Covenant and/or the Sub-Deed of Mutual Covenant (if any) and the House Rules in respect of the said Building to name and rename the said Building with any such name or style as it in its sole descretion may determine and at any time and from time to time by giving 3 months’ written notice to the Tenant to change, alter, substitute or abandon any such name without the same constituting an actual or constructive eviction or the Tenant and without incurring any liability to the Tenant therefore whatsoever and howsoever.
   
Landlord’s right
regarding alterations,
etc
18.   The Landlord shall have the right :
   
 
 
(a)           to change, amend, vary, add to alter the approved general building plans of the said Building;
 
 
26
 

   
(b)
to remove, cancel, relocate or otherwise change or carry out any alteration or addition or other works, whether of a structural nature or not, to the common areas (including but not limited to entrances, passages, corridors and staircases) and common facilities (including but not limited to lifts and public toilets) of the said Building and such other part or parts of the said Building (other than the said premises) from time to time and in such manner as the Landlord may in its absolute discretion deem fit without the same constituting an actual or constructive eviction of the Tenant and without incurring any liability whatsoever and howsoever to the Tenant therefor;
       
   
(c)
to execute or perform any works of alteration, amendment, modification, improvement, demolition or construction of the said Building and to enter into all parts of the said Building with all necessary equipment, plant and materials for the purpose of carrying out any such works; and
       
   
(d)
to erect scaffolding, hoarding or structures of like nature for the purpose of carrying out any works referred to in this Clause, including the right to enter upon the said premises for erecting such scaffolding or other structures, notwithstanding that the same any temporarily interfere with the access to any part of the said Building.
 
 
27
 

THE FIRST SCHEDULE ABOVE REFERRED TO

LANDLORD
:
AITKEN, VANSON & COMPANY LIMITED whose registered office is situate at 33/F, AITKEN VANSON CENTRE, 61 HOI YUEN ROAD, KWUN TONG, KOWLOON.
     
TENANT
:
SUN LINE INDUSTRIAL LIMITED whose office is situate at UNIT 2101, 21/F, AITKEN VANSON CENTRE, 61 HOI YUEN ROAD, KWUN TONG, KOWLOON
 
THE SECOND SCHEDULE ABOVE REFERRED TO
 
UNIT 03 ON THE 21ST FLOOR OF AITKEN VANSON CENTRE, 61 HOI YUEN ROAD, KWUN TONG, KOWLOON (as shown coloured Pink on the Floor Plan attached hereto)
 
THE THIRD SCHEDULE ABOVE REFERRED TO

TERM OF TENANCY
:
TWO (2) year commencing on 1 st March, 2010 and expiring on 29 th February, 2012.
     
RENT
:
HK$ 17,340.00 per calendar month (exclusive of rates, government rent, air- conditioning and management charges and all outgoings of every description) payable in advance without any deduction whatsoever on the 1 st day of each and every calendar month and the first of such payment is to be paid on the signing of this Agreement.
 
 
28
 
 
MANAGEMENT FEE AND AIR-CONDITIONING CHARGES (Subject to Revision)
:
HK$4,855.20 per calendar month payable in advance without any deductions whatsoever on the 1 st day of each and every calendar month and the first of such payment is to be paid on the signing of this Agreement.
     
RENTAL MANAGEMENT FEE AIR-CONDITIONING CHARGES DEPOSIT
:
HK$66,585.60 (which has been paid by the Tenant to the Landlord on signing the Tenancy Agreement dated 1 st March, 2007.)
 
 
29
 
 
THE FOURTH SCHEDULE ABOVE REFERRED TO
 
Terms and conditions referred to in Clause 3(e)(iii) of this Agreement: -
 
1.
Within fourteen (14) days upon receipt of the Fit Out Guide in respect of the said Building or such shorter period as the Manager may allow, the Tenant shall submit to the Manager full fit out plans (each in triplicate) and written supporting information of all proposals concerning the fitting-out of the said premises. The Tenant’s plans shall comply with all relevant Ordinances, Regulations and By-Laws, and without limitation to the generality of the foregoing, shall include:-
 
(i)
all fitting-out details, alterations and/or additions to all non-load bearing walls, doors, door openings, lift lobbies and the common areas or any part thereof as forming part of the said premises;
 
(ii)
detailed drawings, plans and specifications of all air-conditioning (if any) and electrical installations which shall be connected by the Tenant to utility systems provided by the Landlord or the Manager;
 
(iii)
details of all lighting circuits, fixtures and fittings;
     
(iv)
any proposed fascia sign, including its decorative and electrical components;
     
(v)
details of installation of any security/alarm system; and
     
(vi)
details of installation of any machinery.
 
2.
The Manager will consider the Tenant’s plans and details and may, in its absolute discretion, accept or reject the plans or details or any part of them. Upon receipt of fit out plans (both detailed plans and written supporting information) the same will be passed to the Landlord for approval. If such plans and/or details are rejected, amendments shall be re-submitted within fourteen (14) days, or as directed by the Manager, as the case may be.
 
3.
All works specified and approved in writing by the Manager shall be completed within three (3) months of the Tenant being notified of such approval or such longer period as the Manager may agree.
 
4.
When the fit out plans are approved and before any work commences full information concerning the Tenant’s contractors shall immediately be made available together with a work programme/chart to the Manager by the Tenant.
 
5.
For all works specified in paragraphs (i) – (iv) below the Tenant is required to use the services of the Landlord’s nominated contractors or the Manager’s nominated contractors or its own contractor as may be approved in writing by the Manager subject to such terms and conditions as may be specified by the Manager:-
 
(i)
Any work involving the construction or installation of any brickwork, concrete or other items of a structural nature.
 
(ii)
Any plumbing or drainage work.
 
(iii)
Any alternation or addition to any mechanical or electrical services.
 
(iv)
Any specialist work.

 
30
 
 
The contractor appointed by the Tenant and approved in writing by the Manager shall at all times work under the supervision and comply with the directions of the Landlord’s nominated contractors or the Manager’s nominated contractors.
 
6.
The contractor appointed by the Tenant shall not carry out any work in the common areas or any part thereof and all debris created by the carrying out of such work and incidental to moving into the said premises is to be cleared at the expense of the Tenant creating the same.
 
7.
The Tenant, his servants, agents and workmen shall co-operate fully with the Landlord or its authorized representative, the Manager and its nominated contractors and project consultants in carrying out any work on the said Building, and shall cause the work done on the said premises to be co-ordinated and carried out in such a manner as to avoid any delay or interference with the work (if any) of the Landlord on the said Building. The Tenant, his servants, agents and workmen shall obey and comply with all instructions and directions which may be given by the Manager or its authorized representatives in connection with the carrying out of such work.
 
8.
The Tenant is solely responsible for the safety of all the said works carried out on the said premises and for the payment of all costs charges and expenses involved therein together with of the cost of providing a temporary electricity supply, if any, the reasonable proportion of such cost of which shall be borne by the Tenant requiring such supply, and to be calculated on a daily basis at a rate as determined by the Manager.
 
9.
The Tenant shall indemnify the Landlord and/or the Manager against all claims arising out of the actions of his appointed contractors and others similarly employed in the said premises and other areas of the said Building in connection with the carrying out of the works.
 
10.
Without in any way limiting the generality of the foregoing, the Tenant shall not:-
 
(i)
submit any plan to the Buildings Department or other competent authority for approval without first obtaining the Manager’s written consent which the Manager may in its unfettered discretion withhold if it considers that the submission of such plan or the work proposed to be carried out could or might interfere with work being carried out on any part of the said Building;
 
(ii)
carry out or attempt to carry out any work which requires the consent of the Buildings Department or any other competent authority without previously obtaining such consent;
 
(iii)
do or permit any act or thing to be done which is likely to cause any fire risk or other hazard in any part of the said Building.
 
(iv)
carrying out any alteration and/or removal of the fire services equipments as provided therein including hose reels and sprinkler heads, except with the written permission and approval of the Manager and all other competent authorities (wherever necessary); and
 
(v)
permit or suffer to be erected, affixed, installed or attached in or on or at the partition walls between the said premises and other parts of the said Building any shelves, paintings and decorations except with the written permission and approval of the Manager and all other competent authorities (wherever necessary).

 
31
 
 
THE FIFTH SCHEDULE ABOVE REFERRED TO
 
The said premises shall only be used or operated for the following purpose and for no other purpose whatsoever:-
 
(a)
offices ancillary and directly related to an industrial operation BUT ALWAYS excluding any trade that is now or may hereafter be declared to be an offensive trade under the Public Health and Municipal Services Ordinance, or any enactment amending the same or substituted therefore.

 
32
 
 
AS WITNESS the hands of the parties hereto the day and year first above written.

SIGNED by TSANG SHIH CHANG
)
AITKEN, VANSON & CO., LTD,
 
)
/s/ Tsang Shih Chang
for and on behalf of the Landlord whose
)
For and on behalf of  
 
)
 
signature(s) is/are verified by:
)
 
 
YAU TO TUNG
 
/s/ Yau To Tung
 
SIGNED by LING HO LEUNG
)
 
 
)
For and on behalf of
for and on behalf of the Tenant in the
)
SUN LINE INDUSTRIAL LIMITED
   
/s/ Ling Ho Leung
 
)
Authorized Signature(s)
presence of: JENNY POON HAU CHUN
)
 
 
RECEIVED on or before the day and year first above written
)
 
of and from the Tenant the sum of HONG KONG DOLLARS
)
AITKEN, VANSON & CO., LTD.
SIXTY SIX THOUSAND FIVE HUNDRED AND EIGHTY
)  /s/ Tsang Shih Chang
FIVE AND CENTS SIXTY (which has been paid by the Tenant
)
For and on behalf of
to the Landlord on signing the Tenancy Agreement dated
)  
1st March 2007) being the total deposit money above expressed
)    
to be paid by the Tenant to the Landlord.
) HK$66,585.60
 
WITNESS as to signature only: -
 
/s/ Yau To Tung

 
33
 
 
RECEIVED on or before the day and year first above written
)
AITKEN, VANSON & CO., LTD.
of and from the Tenant the sum of HONG KONG DOLLARS
)
/s/ Tsang Shih Chang
TWENTY TWO THOUSAND ONE HUNDRED AND NINETY
)
For and on behalf of
FIVE AND CENTS TWENTY being the rent and management
)
 
fee and air-conditioning charges for the first month.
) HKS22,195.20
 
WITNESS as to signature only: -
 
/s/ Yau To Tung

 
34
 
 

 
 
 
 

 
 
 
 
 

THIS AGREEMENT made the 4th day of March Two thousand and ten

BETWEEN

(1)
ADCOCK INVESTMENT COMPANY LIMITED whose registered office is situate at 3rd Floor, Crystal Industrial Building, No.71 How Ming Street, Kwun Tong, Kowloon, Hong Kong (hereinafter called “the Landlord”) of the one part and

(2)
SUN LINE INDUSTRIAL LIMITED whose registered office is situate at Unit 2101, 21st Floor, Aitken Vanson Centre, No.61 Hoi Yuen Road, Kwun Tong, Kowloon, Hong Kong (hereinafter called “the Tenant”) of the other part

WHEREBY IT IS MUTUALLY AGREED between the parties hereto as follows:

1.        The Landlord lets and the Tenant takes ALL THOSE the premises known as WORKSHOP UNIT 1A on the 4TH FLOOR of HOI LUEN INDUSTRIAL CENTRE, N0.55 HOI YUEN ROAD, KOWLOON, HONG KONG (hereinafter called “the said premises”) situate on the piece or parcel of ground registered in the Land Registry as KUN TONG INLAND LOT N0.69 TOGETHER with the rights easements and appurtenances thereto belonging or usually held and enjoyed therewith and together with the use in common with the Landlord and other tenants of the said Hoi Luen Industrial Centre (hereinafter called “the said building”) and all other persons entitled thereto of the lifts entrances staircases and passages of the said building for a term of TWO YEARS commencing on the 1st day of March 2010 and expiring on the 28th day of February 2012 paying therefor during the said term the rent of HONG KONG DOLLARS EIGHTEEN THOUSAND TWO HUNDRED AND TWENTY TWO ONLY (HK$ 8,222.00) per calendar month exclusive of rates, government rent and management fee payable in advance on the 1st day of each and every calendar month without any deduction or set off.

 
1
 

2.        To secure the due performance and observance of the terms and conditions herein contained the Tenant shall on the signing of this Agreement pay to the Landlord by way of deposit a sum of HONG KONG DOLLARS FORTY THOUSAND TWO HUNDRED AND TEN ONLY (HK$40,210.00) (as to HK$36,444.00 being rental deposit and as to HK$3,766.00 being management fee deposit) (“the said deposit money”). After the determination of this Agreement or sooner determination thereof and provided that all the terms and conditions herein contained shall have been duly performed and observed by the Tenant then the Landlord shall within 30 days thereafter return to the Tenant the said deposit money but without interest and subject as herein mentioned.
 
3.        The Tenant to the intent that the obligations may continue throughout the term hereby created DOTH hereby agree with the Landlord in the following manner that is to say:
 
 
(a)
To pay unto the Landlord during the said term the said rent in advance on the 1 st day of each and every calendar month without any deduction or set off.
 
 
(b)
To pay the monthly management fee (currently at the rate of HK$l,883.00 per month but subject to review from time to time) and all periodic charges and expenses (other than those of a capital nature) for the maintenance upkeep lighting cleaning operating and servicing of the said premises and the installations therein payable under the Deed of Mutual Covenant (if any) in respect of the said building and attributable to the said premises.
 
 
2
 

 
(c)
To keep the interior of the said premises including the drains, pipes, electrical installations and wirings, sanitary and water apparatus and the windows (but not the outer walls) together with all fixtures and additions thereto in complete tenantable repair and conditions throughout the term hereby created and without any alterations additions or partitions except such as shall be sanctioned in writing by the Landlord and to replace at the Tenant’s expense all broken or damaged windows doors and fixtures whether the same shall have been broken or damaged by the negligence of the Tenant or owing to circumstances beyond the control of the Tenant. Provided That the Landlord and not the Tenant shall be responsible for replacing all windows doors and fixtures broken or damaged through the negligence of the Landlord or the landlord’s servants or agents.
 
 
(d)
Not to do or to permit or suffer to be done on the said premises anything whereby the insurance of the said premises may be rendered void or voidable or the premium increased.
 
 
(e)
Not to assign or sublet or part with the possession of the said premises or any part thereof.
 
 
(f)
To use the said premises for INDUSTRIAL purpose only.
 
 
(g)
Not to do or permit to be done in upon the said premises or any part thereof; anything which may be or become a nuisance annoyance damage or disturbance to the Landlord or to other tenants or occupiers of the other floors of the said building of which the said premises form part or of the adjacent premises or of other property in the neighbourhood or in anywise against the law or regulations of Hong Kong.
 
 
(h)
To carry out and comply with ail ordinances regulations by-laws and rules and all notices and requirements of the appropriate Government authorities in respect of or affecting or likely to affect the said premises so far as the same require anything to be done or not done by the Tenant or the occupier of the said premises.
 
 
3
 

 
(i)
Not to allow or permit any person to use the said premises overnight as sleeping quarters or as domestic premises within the meaning of any ordinance for the time being in force relating to the protection of tenants nor to allow any person to remain in the said premises overnight Provided that with the previous written consent of the Landlord but not otherwise the Tenant shall be entitled to permit not more than one watchman to remain in the said premises during the night to guard the contents thereof.
 
 
(j)
Not to permit or suffer the cooking of food within the said premises or to cause or permit any offensive or unusual odour to be produced upon, permeate through or emanate from the said premises.
 
 
(k)
To restrict the number of workers working or staying in the said premises in accordance with Government Regulations.
 
 
(l)
To obey observe and comply with and perform all the covenants terms and provisions in the Deed of Mutual Covenant relating to the said premises and to indemnify the Landlord against the breach non-observance or non-performance thereof.
 
 
(m)
Not to load into any cargo lift nor suffer or permit to be loaded into any cargo lift in the said building a greater weight than such lift is permitted to carry and not to use the passenger lifts for the carriage of goods and to be wholly responsible for any damage caused by any breach of this sub-clause.
 
 
(n)
Not to store or place any goods or install any machinery equipment apparatus or other things on or in any part of the said premises which imposes a loading or weight on any part of the flooring in excess of that for which it is designed or which requires any additional electricity not metered through the Tenant’s separate meter.
 
 
4
 

 
(o)
To observe and perform all regulations imposed by the Landlord or the person or corporation responsible for the management of the said building regarding traffic circulation loading and unloading car parking and general use of the common parts of the said building and the surrounding areas.
 
 
(p)
In installing any machinery equipment or fitting at the said premises not to dig any hole or holes more than 3 inches deep in the concrete floor slab thereof and not to do any damage to the said concrete floor slab.
 
 
(q)
To mount and equip its machinery with anti-vibration absorbers and anti-dumping absorbers and to comply with all directions of the Landlord for eliminating and reducing vibrations and dumping produced by the operating and running of the machinery installed at the said premises.
 
 
(r)
Not to install any furnace, boiler or other plants or equipment in the said premises or use any fuel that might in any circumstance produce smoke without first obtaining permission in writing from the relevant government authorities and the Landlord.
 
 
(s)
Not to put place or otherwise encumber with any dust bins, garbage cans, furniture chattels or refuse or store any goods or any other things on the loading and unloading spaces on the ground floor or in the common entrances, halls, staircases, landings, passages, corridors, lifts and other common parts of and in the said building or in the smoke landings and passage in or outside the said premises.
 
 
5
 

 
(t)
Not to use or cause or permit the use of the corridors, staircases or other common passages of the said building for the purpose of drying laundry or hanging or placing or storing any article or thing thereon or therein and not to permit the Tenant’s employees to use the same for loitering or eating,
     
  (u)  Not to keep or store or cause or permit or suffer to be kept or stored any arms ammunitions gunpowder saltpetre kerosene or other explosive or combustible substance or hazardous goods in the said premises or do or cause to be done or suffer or permit any act deed matter or thing whatsoever which shall amount to a breach or non-observance of the term covenants and conditions under which the said premises are held from the Government or contained in any Deed of Mutual Covenant (if any).
 
 
(v)
Not to use the said premises or allow the same to be used for any illegal or immoral purpose.
 
 
(w)
Not to exhibit or put up any signboard other than the Tenant’s business name and the business name(s) of any of its subsidiaries only at such space as shall have been previously approved by the Landlord.
 
 
(x)
To take all reasonable precautions to protect the interior of the said premises against damage by storm or typhoon or heavy downpour of rain. To pay the Landlord on demand the cost to be incurred by the Landlord in cleaning and clearing any of the drains choked or stopped up owing to the careless use by the Tenant.
 
 
(y)
To pay and discharge punctually during the said term all water electricity charges rates, government rent and management fee and other outgoings (other than those of a capital nature) now or at any time hereafter chargeable in respect of the said premises save and except the property tax.
 
 
6
 

 
(z)
To pay to the Landlord all reasonable expenses (including legal expenses on an indemnity basis) incurred by the Landlord in suing for or recovering any sum due from the Tenant to the Landlord hereunder or in connection with the protection or enforcement of this Tenancy Agreement.
 
 
(aa)
To permit the Landlord during 3 months immediately preceding the determination of the tenancy to affix and retain without interference upon any part of the said premises a notice of reletting the same and during the said 3 months to permit person with authority from the Landlord and the Landlord’s agent at reasonable times of the day upon appointment made to view the said premises.
 
 
(ab)
To permit the Landlord and his agent at all reasonable times to enter and view the state of repair of the said premises and forthwith to repair and amend any defects of which written notice shall have been given to the Tenant or left on the said premises.
 
 
(ac)
Should the Landlord or his agent find that the repairs for which the Tenant is responsible have not been carried out the landlord or his agent shall compile a list of such disrepairs and serve written notice on the Tenant to carry out works on the said premises as specified in the notice and the legal and surveying costs together with all the expenses incidental thereto shall be paid by the Tenant PROVIDED THAT should the Tenant refuse to carry out the works in the notice so served on him the Landlord or his agent may enter the said premises to carry out the said works and the costs thereof shall be borne by the Tenant.
 
 
(ad)
At the expiration or sooner determination of the term hereby created to yield up to the Landlord vacant possession of the said premises in good and tenantable repair and in their original state and condition, fair wear and tear excepted.
 
 
7
 

4.
The Landlord hereby agrees with the Tenant as follows:
 
 
(a)
That the Tenant paying the rent hereby reserved and performing the terms, conditions and stipulations herein contained and on his part to be observed and performed shall peacefully hold and enjoy the said premises during the said term without any interruption by the landlord or any person lawfully claiming under or in trust for him.
 
 
(b)
To pay the property tax in respect of the said premises during the said term.
 
5.
Provided Always and it is hereby expressly agreed as follows:
 
 
(a)
If the rent hereby reserved or any part thereof shall remain unpaid for fifteen days after becoming payable (whether legally or formally demanded or not) or if the Tenant shall fail or neglect to perform or observe any of the terms conditions and stipulations on his part to be performed or observed herein contained or if the Tenant shall be wound up either voluntarily (save for the purpose of amalgamation or reconstruction) or compulsorily or in the case of the Tenant not being a corporation shall become bankrupt or make any assignment for the benefit of or enter into any arrangement with his creditors either by composition or otherwise or the Tenant shall suffer any distress or process of execution to be levied on his goods then and in any of the said cases it shall be lawful for the Landlord at any time thereafter to re-enter upon the said premises or any part thereof in the name of the whole and thereupon this Tenancy Agreement shall absolutely determine AND the said sum of HK$40,210.00 so deposited as aforesaid shall be forfeited to the Landlord (not as penalty) but without prejudice to the Landlord’s right to claim against the Tenant for any rental in arrears in respect of the unexpired term of the tenancy hereby created and any right of action of the Landlord in respect of any breach of the Tenant’s terms, conditions and stipulations herein contained and a written notice served by the Landlord on the Tenant or left at the said premises or left at his last known address to the effect that the Landlord thereby exercises the power of re-entry hereinbefore contained shall be a full and sufficient exercise of such power. Without prejudice to other rights or remedies available to the Landlord hereunder, if the Tenant shall default in paying any of the said rent or other moneys payable by the Tenant hereunder; the Landlord shall be entitled to charge, and the Tenant shall pay to the Landlord, in addition to the amount due from the Tenant, interest on the amount due from the Tenant at the rate of one per cent (1%) per month calculated from the due date for payment of the said amount to the date of payment thereof together with all legal costs and expenses incurred by the Landlord for recovering or attempting to recover the same from the Tenant on a full indemnity basis.
 
 
8
 

(b)
The Tenant hereby further agrees that if any damage is caused to the Landlord or to any person whomsoever directly or indirectly through any defective or damaged condition of any part of the interior of the said premises the Tenant shall be wholly responsible therefor and shall make good the same by payment or otherwise and shall fully indemnify the Landlord against all claims demands actions and legal proceedings whatsoever made upon the Landlord by any person in respect thereof and for the purpose of these presents any act default or omission of the agents or servants of the Tenant or the Tenant’s vistors shall be deemed to be the act default or omission of the Tenant.
 
 
9
 

 
(c)
In case the said premises or any part thereof shall at any time during the said term be destroyed or damaged by fire, typhoon, earthquake or white ants, Acts of God, force majeure or any other cause whatsoever beyond the control of the Landlord or if the said premises should be declared as a dangerous building by the Building Authority and not attributable to any act or default of the Tenant so as to be rendered unfit for use or occupation the Landlord shall with all convenient speed repair and reinstate the same and in any of the events and so often as the same shall happen the rent hereby reserved or a fair proportion thereof according to the nature and extent of the damage sustained shall be suspended until the said premises shall be again rendered fit for use Provided Always that the Landlord shall not be required to reinstate the said premises if by reason of the condition of the said premises or any local regulations or other circumstances beyond the control of the Landlord it is not practicable or reasonable so to do.
 
 
(d)
Any notice required to be served hereunder shall be sufficiently served on the Landlord if delivered to him by registered post at his last known address in Hong Kong and on the Tenant if delivered to him by registered post or left addressed to the Tenant at the said premises. A notice sent by post shall be deemed to be given at the time when in due course of post it would be delivered at the address to which it is sent.
 
 
(e)
For the purpose of these presents any act default or omission of the agents and servants of the Tenant shall be deemed to be the act default or omission of the Tenant.
 
 
(f)
For the purpose of Part III of the Landlord and Tenant (Consolidation) Ordinance, Chapter 7 and for the purpose of these presents the rent in respect of the said premises shall be deemed to be in arrear if not paid in advance at the time stipulated by paragraph 1 hereof.
 
 
10
 

 
(g)
The Tenant shall under any circumstances deliver up vacant possession of the said premises to the Landlord at the expiration or sooner determination of the term hereby created.
 
 
(h)
The Tenant hereby expressly agrees that the said building is an entirely new building within the meaning of Section 3(l)(a) of the Landlord and Tenant (Consolidation) Ordinance.
 
 
(i)
The. Tenant hereby expressly declares that he has paid no premium, construction fee, key money or other sum of money of a similar nature to the Landlord or other person or persons authorised by the Landlord for the possession of the said premises or for the granting of this Agreement.
 
 
(j)
It is hereby expressly agreed that acceptance of rent by the Landlord shall not be deemed to operate as waiver by the Landlord of any right to proceed against the Tenant in respect of any breach non-observance or non-performance of the said covenants, agreement, stipulations terms and conditions herein contained and on the Tenant’s part to be observed and performed.
 
 
(k)
The said premises are let on an “as-is” basis and no warranty is made in respect of the physical state and condition of the said premises and the building of which the said premises form part.
 
 
(l)
All costs of and incidental to the preparation completion and stamping of this Agreement shall be borne and paid by the parties hereto in equal share.
 
 
(m)
It is declared that Messrs. Lau, Wong & Chan are the solicitors for the Landlord in the preparation of the this Agreement and the Tenant shall seek independent legal advice on the terms of the this Agreement for its own protection.
 
 
11
 

6.           Notwithstanding anything hereinbefore contained to the contrary, the Tenant is aware of the fact that the name of consumer for water and electricity supplied to the said premises is that of the Landlord. Despite the aforesaid, the Tenant hereby agrees with the Landlord that the Tenant will not at any time during the continuance of this Tenancy Agreement apply to the Water Authority and Electricity Company for the change of name of consumer for water and electricity supplied to the said premises.  For the avoidance of doubt the Tenant shall be solely liable to pay to the said Water Authority and Electricity Company all fees and charges for such supply of water and electricity to the said premises and utilized by the Tenant during the term created by this Tenant Agreement.

IT IS HEREBY DECLARED that for the purpose of interpretation of this Agreement if the context permits or requires words denoting persons shall include corporations and firms; words denoting the masculine gender shall include the feminine gender and the neuter gender; and words denoting the singular number shall include the plural number and vice versa.

AS WITNESS the hands of the parties hereto the day and year first above written.

 
12
 

SIGNED by Kenneth Lo Lok
)
For and on behalf of
 
 
)
ADCOCK INVESTMENT CO., LTD.  
Fung, one of its directors,
)
   
 
)
/s/ Kenneth Lo Lok Fung
  
for and on behalf of the Landlord
)
Authorised Signature
 
  )    
whose signature is verified by:
)    

Dr Chan Kam Ho
     
Solicitor, Hong Kong SAR
     
Lau, Wong & Chan
     
       
SIGNED by Ning Ho Leung,
)
For and on behalf of
 
 
)
 
one of its directors, for and on behalf
)
SUN LINE INDUSTRIAL LIMITED
 
 
)
   
of the Tenant in the presence of:
)
/s/ Ning Ho Leung
 
 
 
Authorized Signature(s)
 
 

 
13
 

RECEIVED on the day and year first
)
 
)  
above written of and from the Tenant the sum of
)
 
)  
HONG KONG DOLLARS FORTY THOUSAND            
)
 
)  
TWO HUNDRED AND TEN ONLY
)
 
)  
(the same being transferred from the deposit of
)
 
)  
HK$40,210.00 paid under the previous Tenancy
)
 
)  
Agreement dated 18th March 2008 in respect of
)
 
)  
the said premises made between the same parties
)
 
)  
hereto) being the deposit money above expressed
)
 
)  
to be paid by the Tenant to the Landlord.
)HK$40,210.00
 
 
For and on behalf of
 
ADCOCK INVESTMENT CO., LTD.
   
 
/s/ Kenneth Lo Lok Fung
 
Authorized Signature
 
 
14
 
 
 
Dated the 4 th day of March   2010
   
 
ADCOCK INVESTMENT COMPANY LIMITED
   
 
and
   
 
SUN LINE INDUSTRIAL LIMITED
   
 
*****************************************
   
 
TENANCY AGREEMENT
   
 
of
   
 
Workshop Unit 1A on the 4th Floor of Hoi Luen
 
Industrial Centre, No.55 Hoi Yuen Road, Kwun
 
Tong, Kowloon.
   
 
Term
:
2 years commencing on 1/3/2010
     
and expiring on 28/2/2012
       
 
Rent
:
HK$18,222.00 per month
     
exclusive of rates, government rent
     
and management fee
       
 
Deposit
:
HK$40,210.00
       
 
*****************************************
       
 
MESSRS. LAU, WONG & CHAN
 
SOLICITORS & NOTARIES
 
18TH FLOOR
 
WORLD TRUST TOWER
 
50 STANLEY STREET, CENTRAL
 
HONGKONG
   
 
Ref: GC/50763/2010/DER/ll
 
Dis: f:\users\lybIok\ta\ta-ind.doc47425 50763HOI
 
 
 
 
 
Dated the                               day of                               2010
 
AITKEN, VANSON & COMPANY LIMITED
 
And
 
SUN LINE INDUSTRIAL LIMITED
 
 
TENANCY AGREEMENT
 
OF

UNIT 2101, 21/F
 
AITKEN VANSON CENTRE
 

 
 

THIS AGREEMENT
is made the 10   day of March Two Thousand And Ten
   
Parties
BETWEEN the parties more particularly described and set out in the First Schedule hereto.
   
 
WHEREBY IT IS AGREED as follows:
   
Description of
premises, term and
rent
1.    The Landlord shall let and the Tenant shall take on an “as is” basis ALL THAT the premises more particularly described and set out in the Second Schedule hereto (hereinafter referred to as “the said premises”) forming part of the messuage erections and building known as AITKEN VANSON CENTRE (hereinafter referred to as “the said Building”) erected on ALL THAT piece or parcel of ground situate lying and being at No. 61 Hoi Yuen Road, Kwun Tong, Kowloon, Hong Kong and registered in the Land Registry as KWUN TONG INLAND LOT No. 354 (hereinafter referred to as “the said Land”) TOGETHER with the right in common with the Landlord and all others having the like right to use and enjoy all entrances, lift hall, staircases, landings, passages and lavatories in the said Building in so far as the same are necessary for the proper use and enjoyment of the said premises AND ALSO TOGETHER with the right in common as aforesaid to use and enjoy all lifts and central air-conditioning and heating services (if any) intended for common use and provided and installed in the said Building whenever the same shall be operating for the term and at the rent more particularly described and set out in the Third Schedule hereto.
 
 
1
 
 
Deposit
2.    The Tenant shall on the signing of this Agreement deposit to the Landlord the sum more particularly described and set out in the Third Schedule hereto (hereinafter referred to as “the said deposit”) to secure the due performance and observance of the agreements stipulations and conditions herein contained and on the part of the Tenant to be observed and performed. At the expiration or sooner determination of this Agreement if the Tenant shall have paid all rent and air-conditioning and management charges and other sums payable hereunder and if there shall be no breach non-observance or non-performance of any of the agreements stipulations or conditions herein contained on the Tenant’s part to be observed and performed the Landlord shall refund to the Tenant the said deposit within twenty-one (21) days after delivery of vacant possession of the said premises to the Landlord but without any interest thereon but if there shall be any rent or air-conditioning and management charges or other sums payable hereunder in arrears the Landlord shall be entitled to apply the said deposit towards payment of such arrears and if there shall be breach non-observance or non-performance of any of the agreements stipulations or conditions herein contained on the Tenant’s part to be observed and performed the Landlord shall be entitled to apply the said deposit or such part or parts thereof towards remedying such breach (in so far as this may be possible) in which event the Tenant shall within seven (7) days of a written demand by the Landlord as a condition precedent to the continuation of the tenancy hereby created deposit with the Landlord the amount by which the said deposit may have been reduced (a certificate issued by the Landlord in this connection shall be conclusive and binding upon the Tenant save for manifest errors) and if the Tenant shall fail so to do the Landlord shall forthwith be entitled to forfeit the tenancy hereby created and to re-enter on the said premises or any part of parts thereof and to recover possession of the said premises and to determine this Agreement in which event the Landlord shall be entitled to deduct sums sufficient to compensate the Landlord for all losses costs and expenses suffered as a result thereof from the said deposit without prejudice to any other right or remedy of the Landlord hereunder. In no event however shall the Tenant be entitled to treat payment of the said deposit as payment of the rent or the air-conditioning and management charges or other charges or fees or sums payable hereunder.
   
Tenant’s obligations
3.    The Tenant to the intent that the obligations hereunder shall continue throughout the term hereby agrees with the Landlord as follows:-
       
To pay rent
 
(a)
To pay the rent on the days and in the manner herein provided for payment thereof.
       
To pay government
rent, rates, tax etc
 
(b)
To pay and discharge punctually all government rent, rates, taxes, assessments, duties, charges, impositions and outgoings of an annual or recurring nature now or hereafter to be assessed, imposed charged or levied by the Government of the Hong Kong Special Administrative Region (hereinafter referred to as “Government of HKSAR”) or other lawful authority upon the said premises or upon the owner or occupier thereof (Property Tax and expenses of a capital or non-recurring nature alone excepted). The Tenant shall unless the Landlord otherwise directs pay all rates imposed on the said premises in the first place to the Landlord or to the manager charged with the management of the said Building during the term of the tenancy (hereinafter referred to as “the Manager”) as the Landlord may so direct in writing and the Landlord or the Manager (as the case may be) shall settle the same with the Government of HKSAR and in the event of the said premises not yet having been assessed to rates the Tenant shall pay to the Landlord (or to the Manager as the Landlord may so direct in writing) a sum equal to 3% on the basis of a notional rateable value of the said premises calculated as the aggregate of twelve months’ rent payable by the Tenant on account of the Tenant’s liability under this Clause which sum shall be payable on a monthly basis in advance and any overpayment or underpayment by the Tenant shall be adjusted when the said premises have been assessed to rates. Likewise, the Tenant shall unless the Landlord otherwise directs pay all government rent in the first place to the Landlord or the Manager as the Landlord may so direct in writing and the Landlord or the Manager (as the case may be) shall settle the same with Government of HKSAR and in the event of such Government rent not yet having been assessed the Tenant shall pay to the Landlord or the Manager as the Landlord may so direct in writing, a sum equivalent to 3% of the notional rateable value of the said premises calculated as the aggregate of twelve months’ rent payable by the Tenant which sum shall be payable on a monthly basis in advance and any overpayment or underpayment by the Tenant shall be adjusted when such Government rent has been assessed.
 
 
2
 
 
To pay service
charges and
deposits
(c)
To pay and discharge punctually during the term all deposits and charges for gas, water, electricity, telephone and other services whatsoever now or at any time hereafter consumed by the Tenant and chargeable in respect of the said premises and to pay and discharge all necessary deposits for the supply of gas, water, electricity, telephone and other services for the common area and the common service facilities of the said Building when required and to comply with all requirements of the gas, water, electricity, telephone and other services authorities or suppliers relating to the use of such services or the fitting out of the said premises by the Tenant Provided That if there shall be more than one tenant to share the use of one gas, water or electricity meter (as the case may be) then the charges for the supply of gas, water or electricity (as the case may be) to such tenants shall be shared and paid by the said tenants in proportion.

 
3
 
 
To pay air-
conditioning and
management
charges
(d)
(i)
To pay to the Landlord punctually during the term such monthly contribution towards the costs, charges and expenses for the maintenance and supply of air-conditioning and management services or otherwise as shall be required by the Landlord.
       
Adjustment of air-
conditioning the
and management
charges
 
(ii)
If at any time during the term the operating cost relative to the supply of the air-conditioning and services or otherwise shall have risen the Landlord shall have right from time to time to increase the air-conditioning and management charges in proportion to the said increase whose assessment shall be conclusive.
     
Normal business
hours and operating
hours of air-
conditioning
 
(iii)
To follow the normal business hours of the said Building. The normal business hours of the said Building means the hours other than on Sundays and public holiday between 8:00 a.m. and 8:00 p.m. on each Monday to Friday which is not a public holiday and between 8:00a.m. and 3:00p.m. on each Saturday which is not a public holiday. The Landlord reserves the right to alter or amend the said business hours from time to time and to such extent as the Landlord shall in its discretion deem appropriate or necessary. The Landlord also reserves the right to change the operating hours of the central air-conditioning system of and in the said Building. Unless and until otherwise changed the operating hours of such air-conditioning shall be the same as the said business hours.
     
Extra air-
conditioning
charges for
extended hours of
air-conditioning
 
(iv)
Should the Tenant require the operating hours of the air-conditioning be extended, the Tenant shall give written notice reasonably in advance to the Manager for the necessary arrangement and shall pay to the Landlord such extra and additional charges at such hourly rate or monthly contribution as shall be determined by the Landlord from time to time for the supply of extended hours of air-conditioning. For the avoidance of doubt, neither the Landlord nor the Manager gives any representation and/or warranty that any extended hours of air-conditioning can be arranged upon a request by the Tenant.
     
To submit fit out
plans for approval
(e)
(i)
The Tenant shall within fourteen (14) days upon receipt of the Fit Out Guide in respect of the said Building at its own cost and expense prepare and submit fit out plans and specifications to the Landlord and the Manager for their approval. Failure of the Tenant to submit the fit out plans and specifications within the prescribed time for approval shall not entitle the Tenant to any extension of the commencement date of the tenancy hereby created nor to any extension of the payment of the rent or air-conditioning and management charges payable by the Tenant hereunder.
 
 
4
 
 
To fit out in
accordance with
approved fit out
plans
 
(ii)
To fit out the said premises at the Tenant’s expense in accordance with such fit out plans and specifications as shall have been first submitted to and approved in writing by the Landlord and the Manager in a good and proper workmanlike fashion and in all respects in a style and manner appropriate to a first class industrial/office building and so to maintain the same throughout the term in good repair and condition to the satisfaction of the Landlord and the Manager. In the event of such approval being requested, it shall be a condition precedent to the granting thereof that the Tenant shall pay to the Landlord and the Manager all fees and costs incurred by the Landlord and the Manager in employing architects, engineers, professionals, specialist and/or consultants to vet examine and scrutinise such fit out plans and specifications. Such approval from the Landlord and the Manager shall in no event relieve the Tenant from the responsibility to obtain all necessary permits and licences pertaining to the fitting out works and the Tenant shall give all notices required and shall comply with all Ordinances, rules, regulations and all regulations and by-laws of any public utility company or authority. The Tenant shall not cause or permit to be made any variations to the approved fit out plans and specifications or to the interior design or layout of the said premises without the prior approval in writing of the Landlord and the Manager.
       
To comply with the
terms and
conditions of fitting
out
 
(iii)
To comply with the terms and conditions as set out in the Fourth Schedule hereto which may be revoked or amended by the Landlord or Manager at any time and from time to time.
       
Floor-loading
(f)
(i)
Not to place on or in any part of the said premises any machinery, goods, materials, or merchandise which may cause the maximum floor loading-bearing capacity therefor to be exceeded or do anything on the said premises or any part or parts thereof whereby excessive noise, vibration or resonance or other form of excessive disturbance or annoyance is created so as to give reasonable cause for complaint to the Landlord or any other persons in or outside the said Building.
 
 
5
 
 
Installation of
machinery
 
(ii)
Not to install any machinery in the said premises or any part or parts thereof before submitting for the approval of the Landlord and the Manager full particulars and information regarding such machinery (particularly as to the type and weight thereof) intended to be installed in the said premises together with a general layout plan of the said premises showing the actual position at which such machinery is intended to be installed, and obtaining approval of the Landlord and the Manager therefor. In granting any such approval (which may be granted with such condition or conditions as the Landlord and/or the Manager may in its/their reasonable opinion deem fit), it shall be a condition precedent to the granting thereof that the Tenant shall pay to the Landlord and the Manager all fees and costs incurred by the Landlord and the Manager in employing professional(s) to examine and give such approval.
       
Absorbers
 
(iii)
Not to mount and equip any machinery (particularly machinery with horizontal reciprocating action) in the said premises or any part or parts thereof without anti-vibration absorbers and anti-dumping absorbers of such types and design as shall be approved in writing by the Landlord and the Manager. In granting any such approval (which may be granted with such condition or conditions as the Landlord and/or the Manager may in its/their reasonable opinion deem fit), it shall be a condition precedent to the granting thereof that the Tenant shall pay to the Landlord and Manager all fees and costs incurred by the Landlord and the Manager in employing professional(s) to examine and give such approval.
     
Covenants for repair
(g)
At the expense of the Tenant to keep the interior of the said premises including but not limited to the flooring or interior plaster or other finishes or rendering to walls, floors and ceilings and the Landlord’s fixtures and fittings therein and all additions thereto including all doors, windows, air-conditioning fancoils, electrical installations and wirings, toilet equipments, ventilators, fire-fighting equipments, flush system apparatus and water apparatus in good repair and condition to the satisfaction of the Landlord and sufficiently preserve repair and maintain the same and to deliver up the same to the Landlord at the expiration or sooner determination of the term in like condition. In particular, but without in any way limiting the foregoing:

 
6
 
 
To pay cost of
replacing broken
windows etc.
 
(i)
To pay or reimburse the Landlord the cost of replacing all broken or damaged windows or glass of the said premises (or elsewhere if used exclusively by the Tenant) whether the same be broken or damaged by the negligence of the Tenant or owing to circumstances beyond the control of the Tenant.
       
To install repair or
replace electrical
wirings
 
(ii)
To repair or replace if so required by the appropriate company or authority under the terms of the Electricity Ordinance or any statutory modification or re-enactment thereof or any Regulations made thereunder all the electricity wiring installations and fittings within the said premises and the wiring from the Tenant’s meter or meters to and within the same.
       
To keep sanitary
apparatus in good
repair and condition
 
(iii)
At the expense of the Tenant to keep the water tanks, drains, pipes, toilets, lavatories, sanitary or plumbing apparatus and other water apparatus (hereinafter collectively referred to as “the Sanitary Apparatus”) used exclusively by the Tenant and its servants, employees, agents, invitees, licensees and customers in good, clean and tenantable repair and condition to the satisfaction of the Landlord and in accordance with the regulations or by-laws of all Public Health and other Government authorities concerned and to pay to the Landlord on demand clearing repairing or replacing any of the Sanitary Apparatus choked impeded blocked or stopped owing to the careless or improper use or neglect by the Tenant or any of its servants, employees, agents, invitees, licensees or customers.
       
To pay cost of
replacing light
bulbs
 
(iv)
To reimburse to the Landlord the cost of replacing any damaged, broken, defective or burned out electric light bulbs, tubes and globes in the said premises which are provided by the Landlord.
       
To be responsible
for any loss or
damage caused to
any property or any
person
 
(v)
To be wholly responsible for any damage or injury caused to any person whomsoever directly or indirectly through the defective or damaged condition of any part of the interior of the said premises or any fixtures or fittings therein for the repair of which the Tenant is responsible hereunder or in any way owing to the spread of fire or smoke or the overflow of water from the said premises or any part thereof or through the act default or neglect of the Tenant its servants agents licensees or customers and to make good the same by payment or otherwise and to indemnify the Landlord against all costs claims demands actions and legal proceedings whatsoever made upon the Landlord by any person in respect of any such loss damage or injury and all costs and expenses incidental thereto, and to effect adequate insurance cover in respect of such risks.
 
 
7
 
 
To protect interior
form storm or
typhoon
 
(vi)
To take all reasonable precautions to protect the interior of the said premises from storm or typhoon damage and in the event of such damage being incurred to repair the damage or restore the said premises to a proper state and condition in accordance with the covenants for repair contained in this Clause 3(g).
       
Employ cleaning
contractor
(h)
(i)
The Tenant shall employ their own staff or a cleaning contractor nominated by the Landlord or the Manager at its own expense for the cleaning of the said premises.
       
To be responsible
for removal of
garbage and refuse
 
(ii)
The cleaning contractor shall be responsible for the removal and disposal of all garbage or refuse each day from the said premises to such location as shall be specified by the Landlord and/or the Manager in the manner and subject to such reasonable rules and regulations prescribed by the Landlord and/or the Manager from time to time and until such time as such garbage or refuse is removed from the said Building to keep within the said premises the same securely sealed in containers of a design as specified by the Landlord and/or the Manager from time to time.
       
To co-operate with
cleaning contractor
and other
 
(iii)
To render full co-operation to the cleaning contractor and tenants or occupiers of the other parts of the said Building with a view to keep the said premises and the said Building at all times in a neat and tidy condition.
       
To pay the cost of
affixing or
replacing tenant’s
name on the
directory board
 
(i)
To pay or reimburse to the Landlord or its agents immediately upon demand the cost of affixing, repairing, altering or replacing as may be necessary the Tenant’s name on the Directory Board (if any) provided by the Landlord and/or the Manager. The Tenant’s name so appearing on the Directory Board in English and Chinese in uniform lettering and characters designed by the Landlord and/or the Manager shall strictly be in accordance with that appearing in this Agreement or its trading name(s) with or without its registered trade mark or logo subject to the Tenant’s request unless prior written consent to name otherwise has first been obtained from the Landlord. The Tenant shall in the event of the Tenant changing its name, notify the Landlord at least seven (7) days prior to such change of name.

 
8
 
 
To ensure security
equipment in good
order
 
(j)
To ensure at all times that all fire alarms, fire fighting equipments and other equipments for security purpose provided by the Landlord shall not be disrupted, interrupted, damaged or caused to be defective through the act, default or neglect of the Tenant or any of its servants, employees, agents, invitees, licensees or customers.
       
To permit Landlord
to enter and view
(k)
(i)
To permit the Landlord its agents and all persons authorised by it with or without workmen or others and with or without appliances at all reasonable times to enter upon the said premises to view the condition thereof and upon prior notice to the Tenant to take inventories of the fixtures and fittings of the Landlord therein and to carry out any work or repair required to be done provided that in the event of an emergency the Landlord its servants or agents may enter without notice and forcibly if the Landlord deems necessary.
       
To permit Landlord
to take prospective
tenants or
purchasers to view
 
(ii)
During the three months immediately preceding the expiration of the term hereby granted the Landlord or its authorized agents shall be at liberty to take prospective tenants new purchasers to view the interior of the said premises and to display an advertisement outside the said premises offering the said premises for letting or sale.
       
To execute repairs
on receipt of notices
(1)
(i)
On receipt of any notice from the Landlord or its authorized agents specifying any works or repairs to be done and the time in which they are to be done and which are the responsibility of the Tenant hereunder, forthwith to comply with such notice.

 
9
 
 
To permit Landlord
to repair and make
good the premises
 
(ii)
If the Tenant shall fail within fourteen (14) days of such notice, of such shorter period as shall be appropriate in case of emergency, to proceed to commence and then to continue diligently and expeditiously to comply with such notice in all respects or if the Tenant shall at any time make default in the performance of any of the agreements stipulations and conditions herein contained for or in relating to the repair decoration preservation protection or maintenance of the said premises or any part or parts thereof it shall be lawful for the Landlord and all persons authorized by the Landlord including but not limited to its agents, servants and workmen to enter upon the said premises and to carry’ out all or any of the works referred to in such notice and the cost of so doing and all expenses incurred thereby shall be paid by the Tenant to the Landlord on demand and shall forthwith be recoverable by the Landlord as debt by action Provided That if the Tenant shall fail to pay such debt within fifteen (15)   days, the Landlord shall in addition be entitled to charge interest thereon but no such entry’ repair decoration preservation protection or maintenance shall prejudice the Landlord’s right of re-entry’ and forfeiture hereinafter contained.
       
To inform Landlord
of damage or
accident
(m)
To give notice in writing to the Landlord or its authorized agents as soon as practicable after the Tenant shall have become aware of any accident or of any damage caused or that may be caused to the said premises, the fixtures or fittings provided therein by the Landlord, the water pipes, the said Building or any persons thereon and of any defects or want of repair thereof.
       
To comply with the
Fit Out Guide,
DMC and House
Rule
(n)
(i)
To obey and comply strictly with the provisions of the Fit Out Guide, Deed of Mutual Covenant (if any) and House Rules and to pay the Fit Out Deposit as the Manager may from time to time determine and to conduct the business of the Tenant in such manner as to prejudice the goodwill and reputation of the said Building as a first class industrial/office building
       
To obey and comply
with all notices and
announcement
made by Landlord
or Manager
 
(ii)
To obey and comply with such rules, regulations or requirements stated in notices or announcements as may from time to time be made imposed adopted introduced or amended by the Landlord and/or the Manager and/or its agents in respect of the said Building.

 
10
 
 
To comply with all
ordinances etc.
(o)
To obey and comply with and to keep the Landlord indemnified against the breach of all Ordinances, regulations, by-laws, rules, requirements, directions and orders of any government or other competent authority relating to the use of and the conduct and carrying on of the Tenant’s business in the said premises as specified in the Fifth Schedule hereto or to any other act, deed, matter or thing done, permitted, suffered or omitted therein or thereon by the Tenant or any servant, employee, agent, invitee, licensee or customer of the Tenant and to notify the Landlord forthwith in writing of any notice received from the Manager or any statutory or public authority concerning or in respect of a possible breach of this Clause 3(o).
     
To be responsible
for contractors
servants, agents and
licensees
(p)
(i)
To be responsible to the Landlord for the acts, neglects, defaults and omissions of all contractors, servants, employees, agents, invitees, licensees or customers of the Tenant as if they were the acts, neglects defaults and omissions of the Tenant and for the purposes of this Agreement “licensee” shall include any person present in, using or visiting the said premises with the consent of the Tenant expressed or implied.
       
To indemnify the
Landlord against all
actions etc.
 
(ii)
To indemnify and keep the Landlord indemnified from and against all actions, proceedings, claims and demands whatsoever brought or made by the tenants and occupiers of the other parts of the said Building and any third party and all costs and expenses (including legal costs on a full indemnity basis) incurred by the Landlord thereby arising in respect of any act or liability caused by or arising from the act, breach of duty, neglect or default (irrespective of whether wilful or not)of the Tenant or any of its contractors, servants, employees, agents, invitees, licensees or customers including but not limited to any breach or non-observance or non-performance of any of the agreements stipulations and conditions herein contained and on the Tenant’s part to be observed and performed or by reason of any water or smoke or offensive smell or odour originating form the said premises.
       

 
11
 
 
To yield up at the
end of term
(q)
To quietly yield up the said premises together with all the Landlord’s fixtures, fittings and additions therein and thereto without compensation for any alterations or improvements made to the said premises at the expiration or sooner determination of term and/or this Agreement in good clean and tenantable repair and condition notwithstanding any rule of law or equity to the contrary Provided That the Tenant shall at the Tenant’s expense remove all personal property, fixtures and fittings and additions therein and thereto of the Tenant and make good all damage caused by such removal and reinstate the said premises to the condition they were in at the commencement of the term and thereupon to surrender to the Landlord all keys giving access to all parts of the said premises, the said Building or any part or parts thereof and to make good any damage caused by such removal at the Tenant’s expense.
       
To operate the
business under
specified business
name
 
(r)
The Tenant shall operate business at the said premises under the business name of SUN LINE INDUSTRIAL LIMITED and shall produce to the Landlord a copy of Business Registration Certificate of each of the above business names together with its application form in the said business names and in the sole proprietorship/partnership (as the case may be at the date of signing hereof) of the Tenant at the address of the said premises within I month from the commencement of this tenancy.
   
Tenant’s restrictive
covenants
(4)  The Tenant hereby agrees with the Landlord that unless it has obtained the prior written consent of the Landlord on such terms and conditions as the Landlord may impose together with such consent:-
   
User of the
Premises
 
(a)
(i)     Not to use or permit or suffer the said premises or any part or parts thereof to be used for any purpose other than as specified in the Fifth Schedule hereto and at the expense of the Tenant to obtain all necessary and appropriate licences and/or permits and/or approvals necessary for the carrying on of the Tenant’s business and to comply with any local legislation, regulations and Government requirements and any subsequent amendments (if any) relating to such user on the said premises and at all times to keep current valid and subsisting all such licences and/or permits and/or approvals. For the avoidance of doubt the Landlord does not represent and/or warrant that the said premises are fit to be used for the aforesaid purposes or any part or parts thereof and/or for any particular purpose.
 
 
12
 
 
Not to use for
illegal immoral
purposes etc.
 
(ii)
Not to use or cause permit or suffer to be used any part of the said premises for gambling or for any illegal immoral or improper purposes or in any way so as to cause nuisance annoyance inconvenience or damage or danger to the Landlord or tenants or occupiers of any other neighbouring premises of the Building.
       
Not to use premises
as sleeping quarters
or domestic
premises
 
(iii)
Not to use the said premises or any part thereof as sleeping quarters or as domestic premises within the meaning of any Ordinance for the time being in force or to allow any person to remain in the said premises overnight unless with the Landlord’s prior permission in writing. Such permission shall only be given to enable the Tenant to post watchmen to look after the contents of the said premises and the names of the watchmen shall first be registered with the Landlord prior to its giving such permission.
       
Not to prepare food
(b)
Not to allow any cooking of food on the said premises and not to cause or permit any offensive or unusual odours to be produced upon emanated from the said premises.
     
Not to produce
music or noise
audible outside
(c)
Not to produce or permit or suffer to be produced any music or noise (including sound produced by broadcasting or any apparatus or any equipment capable of producing, reproducing, receiving or recording sound) so as to constitute nuisance or give reasonable cause for complaint from the Landlord or tenants or occupiers of the other parts of the said Building or in any adjoining or neighbouring building.
     
Not to cause any
nuisance or
annoyance
(d)
Not to do or permit or suffer to be done any act or thing in or upon the said premises or any part or parts thereof which in the opinion of the Landlord may constitute a nuisance or annoyance or give cause for complaint from the Landlord or tenants or occupiers of the other parts of the said Building or in any adjoining or neighbouring building.

 
13
 
 
Not to breach
Government Lease
or cause insurance to
be voided or
premium increased
(e)
Not to do or permit or suffer to be done any act, deed, matter or thing whatsoever which will amount to a breach or non-observance of any of the terms and conditions under which the said Land is held from the Government or of the Deed of Mutual Covenant (if any) under which the Landlord holds the said premises or the building plans or the occupation permit of the said Building as approved or issued by the Government of HKSAR or whereby any insurance on the said premises or the said Building against loss or damage by fire, storm, typhoon, other insurable perils and/or claims by third parties for the time being in force may be rendered void or voidable or whereby the premium thereof may be increased Provided That if as the result of any act, deed, matter or thing done permitted or suffered by the Tenant, the premium on any such policy of insurance shall be increased, the Landlord shall be entitled without prejudice to any other remedy hereunder to recover from the Tenant the amount of any such increase and further the Tenant shall keep the Landlord fully indemnified against all losses damages claims and demands sustained by or made against the Landlord by any person as a result of any breach by the Tenant of this Clause 4 (e) Provided That notwithstanding anything herein contained the Landlord does not warrant that any or adequate insurance against fire or any other risks exists in respect of the said premises and/or the said Building and/or all or any of the goods or property stored therein by the Tenant And the Tenant shall be responsible in any event for insurance of its property in the said premises.
     
Not to keep arms or
combustible goods
in the Premises
(f)
Not to keep or store or permit or suffer to be kept or stored in the said premises any arms, ammunitions, gun-powder, saltpetre, kerosene or other explosive inflammable combustible or hazardous substance.
     
Not to make or
permit any
alterations or
additions
(g)
Not without the prior written consent of the Landlord to make or permit any alterations or additions or partitions to be made in or to the said premises or any part or parts thereof nor to pull down alter or remove any doors windows additions partitions or fixtures and fittings thereof nor to make any alterations to the fire prevention system or to the electrical wirings and installations therein nor to install any air-conditioning plant machinery or equipment therein nor to cut maim or injure nor to suffer to be cut maimed or injured any doors, windows, walls, beams, structural members or fabric thereof. The Tenant shall be responsible for obtaining the Building Authority or any other government authorities consent for such alterations additions or partitions in or to the said premises at its own expense and the Tenant further undertakes to comply with all government’s requirements and regulations relating thereto. At the expiration or sooner determination of the term the Tenant shall at its own expense remove all such alterations or additions or partitions so erected or installed by the Tenant and restore the said premises to its original tenantable state as at the commencement of the term to the satisfaction of the Landlord.

 
14
 
 
Not to install
electrical wrings in
premises without
Landlord’s approval
(h)
Not to lay affix attach or install any electrical wirings or cables in the said premises without the prior written consent of the Landlord and the Tenant shall only carry out such electrical installation in accordance with the fit-out plan which has been duly approved by the Landlord.
     
Not to damage toilet
facilities
(i)
Not to use or permit or suffer the toilet facilities provided by the Landlord to be used for any purpose other than that for which they are intended and not to throw or permit or suffer or be thrown therein any foreign substance of any kind and the Tenant shall pay to the Landlord on demand all costs and expenses incurred by the Landlord in making good any breakage, blockage or damage resulting from a violation of this Clause 4(i).
     
Not to damage main
structure, walls,
ceilings and other
common service
facilities
(j)
 (i)
Not to damage mark or deface or permit or suffer to be damaged marked or defaced any main structure, fixtures and fittings, decorations, installations, lifts or other common service facilities including air-conditioning units, cloakrooms, service pantries, halls, passageways, staircases, drainage wells, walls and ceilings of the said Building outside the said premises, and to pay on demand to the Landlord all costs and expenses incurred by the Landlord in repairing, making good the damage or cleaning the same.
       
Not to drive nails
etc. into ceilings
walls or floors
 
(ii)
 Not without the prior written consent of the Landlord to drive or insert or permit or suffer to be driven or inserted any nails, screws, hooks, brackets or similar articles into the ceilings, walls or floors of the said premises and any other parts of the said Building outside the said premises.
       
Display name plate
or signboard etc.
(k)
 Not without the prior written consent of the Landlord or the Manager to exhibit or display within outside or at the exterior of the said premises any name-plate, poster, flag, notice, advertisement, signboard, decoration, sign or other device, whether illuminated or not, which may be visible from outside of the said premises except in such space and in such form style and manner with lettering and characters approved by the Landlord or the Manager.
 
 
15
 
 
Not to encumber or
obstruct passage and
common areas
(l)
Not to encumber or obstruct or permit or suffer to be encumbered or obstructed with any boxes, cartons, packages, rubbish, refuse, dustbins, garbage cans, furniture, chattels, or store of any goods, or other obstruction of any kind or nature any of the entrances, exits, staircases, landings, passageways, lifts, corridors, lavatories, lobbies or other parts of the said Building in common use so that the same are at all times kept clear and free of any obstructions of any nature and the Landlord shall in addition to any other remedies which the Landlord may have hereunder been entitled without notice and at the Tenant’s expenses to remove and dispose of as it sees fit any such obstructions aforesaid without incurring any liability therefor whatsoever whether tortious or otherwise to the Tenant or any other person whomsoever and the Tenant shall on demand pay or reimburse to the Landlord all costs and expenses incurred in such removal.
     
Not to lay wirings or
cables etc in
common areas
(m)
Not to lay install affix or attach any wirings, cables, pipes or other articles or things in or upon any of the entrances, exits, staircases, landings, passageways, corridors, lavatories, lobbies or any other common areas of the said Building outside the said premises.
     
Prohibition of
subletting or transfer
(n)
Not to assign underlet or otherwise part with the possession of or transfer the said premises or any part or parts thereof or any interest therein or permit or suffer any arrangement or transaction whereby any person or persons who is/are not a party to this Agreement obtains or obtain the use possession enjoyment or occupation of the said premises or any part or parts thereof irrespective or whether any rental or other consideration is given therefor. The tenancy created pursuant to this Agreement shall be personal to the Tenant named in this Agreement and without in any way limiting the generality or the foregoing the following acts and events shall, unless previously approved in writing by the Landlord, be deemed to be breaches of this Clause 4 (n):-
     
   
(i)
In the case of a tenant which is a partnership any change in the constitution of the partners including the taking in of one or more new partners whether on the death or retirement of an existing partner or otherwise;
       
   
(ii)
In the case of a tenant who is an individual (including a sole surviving partner of a partnership tenant) the death, insanity or other disability of that individual, to the intent that no right to use possess, occupy or enjoy the said premises or any part or parts thereof shall vest in the executor, administrator, personal representative, next of kin, trustee, receiver or committee of any such individual;

 
16
 
 
   
(iii)
In the case of a tenant which is a limited company incorporated in accordance with the laws of Hong Kong or elsewhere any take-over, reconstruction, amalgamation merger, voluntary liquidation or change in the person or persons who owns or own a majority of its voting shares or who otherwise has or have effective control thereof;
       
   
(iv)
The giving by the Tenant of a Power of Attorney or similar authority whereby the donee of the Power obtains the right to use, possess, occupy or enjoy the said premises or any part or parts thereof or does in fact use, possess, occupy or enjoy the same;
       
   
(v)
The change of the Tenant’s business name without the prior written consent of the Landlord.
       
Not to keep animals
or pets and to
prevent infestation
(o)
Not to keep or permit or suffer to be kept any animals, birds or pets inside the said premises and to take all such steps and precautions at such intervals as shall be   required by the Landlord and to the satisfaction of the Landlord to prevent the said premises or any part or parts thereof from becoming infested by termites, rats, mice, cockroaches or any other pests or vermins and in the event of any such infestation to permit the same to be remedied by contractor appointed by the Landlord at the Tenant’s own cost and expense.
     
Not to permit touting
or soliciting of
business
(p)
Not to permit any canvassing, pedding, touting or soliciting for business or distributing of any booklets, literatures, promotional items, pamphlets, notices or advertising matters to be conducted outside or near the said premises or in any part or parts of the said Building.
     
Not to hang blinds or
aerial, etc
(q)
 Not to hang, fix   or erect any venetian   blinds or sun blinds of any description, shelters or coverings wire or aerial wirings or other things whatsoever on any exterior part of the said Building including the roof and the exterior wall of the said premises nor to do or permit to be done any act or thing which may or will alter the external appearance of the said Building.

 
17
 
 
Not to hang laundry
(r)
Not to use or cause or permit the use of the entrances, exits, halls, lobbies, corridors, staircases, landings, passageways, lavatories and other common areas of the said Building for the purpose of drying laundry or hanging or storing any articles or things thereon or therein and not to permit the Tenant’s servants, employees, agent, invitees, licensees and customers to use the same for toitering or eating.
     
Not to use lifts for
carriage of cargoes
(s)
Not to permit or suffer the lifts to be used for the carriage of cargoes, goods and other articles or things exceeding the maximum loading limit specified therefor by a notice affixed therein.
     
Exclusion of
Landlord’s liability
(t)
Not to hold the Landlord liable or responsible in any way to the Tenant or to any other person whomsoever in respect of any injury damage or loss of business or other liability whatsoever which may be suffered by the Tenant or by any other person or any property howsoever caused and in particular but without limitation caused by or through or in any way owing to:-
     
   
(i)
any defect in or failure or need for repair or overhaul of the supply of electricity, gas, water, telephone, air-conditioning, lifts or other service whatsoever or any surge reduction variation interruption or termination in the supply of such services or any of the same;
       
   
(ii)
any typhoon, landslide, subsidence of the ground, escape of fire, smoke fumes or other substance or thing from anywhere within the said Building, any seepage, overflow or leakage of water from any pipes, drains or fire services system or , anywhere within the said Building or the influx of rain water or sea water into the said premises or the said Building or any escape of electric current from electric wiring cables or ducts situate upon or in any way connected with the said Building or any part or parts thereof or dropping or falling of any article object or material whatsoever including cigarette ends, glass or tiles from anywhere within the said Building, or vibrations from any floor office or premises in the said Building or in the adjoining or neighbouring building;
       
   
(iii)
any defective or damaged condition of the said premises or any part or parts thereof or the Landlord’s fixtures and fittings therein;

 
18
 
 
     
(iv)
any misconduct negligence or breach of duties on the part of the Manager;
         
     
(v)
any act, neglect or default of the Tenant or other tenants and occupiers or any of their servants, employees, agents, invitees, licensees or customers of the other parts of the said Building or the adjoining or neighbouring building; and/or
         
     
(vi)
any failure or breakage of glass or plate glass of or in the said premises or the said Building.
         
Landlord’s
covenants
5.
THE LANDLORD HEREBY AGREES WITH THE TENANT as follows:-
     
To pay Government
Rent and Property
Tax
 
(a)
To pay the Property Tax and all expenses of a capital or non-recurring nature attributable to or payable in respect of the said Building.
       
Tenant shall have
quiet enjoyment
 
(b)
That the Tenant paying the rent, rates and government rent, air-conditioning and management charges and all other outgoings hereby agreed to be paid on the days and in the manner herein provided for payment of the same and observing and performing the agreements, stipulations and conditions herein contained and on the Tenant’s part to be observed and performed shall peacefully hold and enjoy the said premises during the term without any interruption by the Landlord or any person lawfully claiming under or in trust for the Landlord.
       
 
6.
IT IS HEREBY FURTHER EXPRESSLY AGREED AND DECLARED as follows:-
     
Interest on late
payment
 
(a)
 If the Tenant shall have failed to pay the rent, rates, government rent, air-conditioning and management charges and all outgoings payable hereunder in respect of the said premises on the day due for payment thererof, the Landlord shall without prejudice to its other rights and remedies hereunder to other rights and remedies hereunder to otherwise, be entitled to charge and the Tenant shall be liable to pay to the Landlord interest on the arrears of rent or outstanding amount of rates, government rent, air-conditioning and management charges and all outgoings hereof at such rate (as well before as after any judgment) as shall be equivalent to three percent (3%) per month from the date the same is due until the actual date of payment together with all legal costs and expenses incurred by the Landlord on a full indemnity basis for the purpose of recovering the arrears or outstanding sums in Court or otherwise from the Tenant and shall be a debt due from the Tenant to the Landlord and be forthwith recoverable by action. The Landlord shall also be entitled to disconnect or discontinue the supply of services, including but not limited to air-conditioning, water, electricity, gas to the said premises and/or to the Tenant without prior notice to the Tenant.

 
19
 
 
Landlord’s right of
re-entry etc.
 
(b)
If the rent, rates, government rent, air-conditioning and management charges or all outgoings payable hereunder or any part thereof shall be unpaid for fifteen (15) days after the same shall become payable (in the case of the rent whether legally or formally demanded or not) or if the Tenant shall fail or neglect to observe or perform any of the agreement stipulations or conditions herein contained and on the Tenant’s part to be observed and performed or if the Tenant shall become bankrupt, or being a corporation shall go into liquidation by whatsoever reasons or for whatsoever purposes, or if any petition shall be filed for the winding up of the Tenant, or if the Tenant shall otherwise become insolvent or make any composition or arrangement with creditors, or shall suffer any execution to be levied on the said premises or otherwise on the Tenant’s goods, or if the Tenant shall persistently fail in paying rent and/or air-conditioning and management charges and/or rates and government rent as when they fall due, then and in any such case it shall be lawful for the Landlord at any time thereafter to forfeit the tenancy hereby created and to re-enter on the said premises or any part of parts thereof and to recover possession of the said premises in the name of the whole whereupon this Agreement shall absolutely cease and determine and the said deposit paid pursuant to Clause 2 hereof shall be absolutely forfeited to the Landlord but without prejudice to any right of action by the Landlord in respect of any outstanding breach or non-observance or non-performance of any of the agreements, stipulations and conditions herein contained.

 
20
 
 
Written notice shall
be sufficient exercise
of right
 
(c)
 A written notice served by the Landlord on the Tenant in manner hereinafter mentioned to the effect that the Landlord thereby exercises the power of forfeiture and/or re-entry herein contained shall be a full and sufficient exercise of such power without physical entry on the part of the Landlord.
       
Acceptance of rent
not waiver of breach
of convenant
 
(d)
The acceptance of any rent by the Landlord hereunder shall not operate or be regarded by the Tenant as a waiver by the Landlord of any right to proceed against the Tenant in respect of any breach non-observance or non-performance by the Tenant of any of the agreements stipulations terms and conditions herein contained and on the part of the Tenant to be observed and performed.
       
Force Majeure
 
(e)
If the said premises or any part of parts thereof shall be rendered inaccessible or destroyed or so damaged by fire, typhoon, Act of God, force majeure or at any time during the term the said premises or the said Building or any part of parts thereof shall be condemned as a dangerous structure or a demolition order or closure order of the relevant government authorities shall become operative in respect of the said premises or the said Building or any part of parts thereof or other cause beyond the control of the Landlord and not attributable to any act or default of the Tenant as to be rendered unfit for use and occupation or inaccessible and subject to the insurance policy or policies for such risks effected by the Landlord (if any) shall not have been rendered void or voidable or payment of policy moneys refused in whole or in part in consequence of any act or neglect or default of the Tenant, the rent, rates, government rent, air-conditioning and management charges or a part thereof proportionate to the damage sustained shall cease to be payable until the said premises shall have been restored or reinstated or rendered accessible Provided Always That the Landlord shall be under no obligation to repair or reinstate the said premises And Provided Further That without prejudice to the foregoing if the whole or substantially the whole of the said premises shall have been destroyed or rendered unfit for use and occupation or inaccessible and shall not have been repaired or reinstated within three (3) consecutive months of the occurrence of the destruction or damage then either party shall be entitled at any time before the same are so repaired and reinstated to terminate this Agreement by notice in writing to the other and thereupon this Agreement and the term shall determine as from the date on which they were rendered unfit for use and occupation or inaccessible but without prejudice to the rights and remedies of either party against the other in respect of any antecedent claim or liability hereunder. In the event of any disagreement between the parties hereto on the application of this Clause 6(e) then the subject of disagreement shall be referred to a single arbitrator for settlement in accordance with provisions of the Arbitration Ordinance for the time being in force.

 
21
 
 
Landlord not liable
for breakdown in air-
conditioning system,
etc
 
(f)
The Landlord shall not in any circumstances be liable to the Tenant for any defect in or mechanical breakdown or failure or need for repair or overhaul of the air-conditioning system, lifts, water supply system, telephone system, power supply system and/or other building facilities or services nor shall the rent or rates and government rent or air-conditioning and management charges abate or cease to be payable on account thereof or any part of parts thereof Provided Also That if the air-conditioning system shall wholly breakdown or cease to operate for any period of seven (7) or more consecutive days, the due proportion of the air-conditioning and management charges attributable to the maintenance of the air-conditioning system but not the rent shall cease to be payable from the first day after the end of such period of seven (7) consecutive days until the air-conditioning system again commences operating.
       
Tenant responsible
for acts of servants
visitors etc
 
(g)
For the purpose of these presents any act, default, neglect or omission of any servants, employees, agents, invitees, licensees or customers (as hereinbefore defined) of the Tenant shall be deemed to be the act, default, neglect or omission of the Tenant.
       
Distress for rent
 
(h)
For the purpose of Part III of the Landlord and Tenant (Consolidation) Ordinance, Chapter 7 of the Laws of Hong Kong, and for the purpose of this Agreement, the rent payable in respect of the said premises shall be and be deemed to be in arrear if not paid in advance at the time and in the manner stipulated in Clause 3 (a) hereof.
       
Waiver
 
(i)
To the extent that the Tenant can lawfully do so, the Tenant hereby expressly agrees to deprive itself of and to waive all rights (if any) to protection against eviction or ejection afforded by any existing or future legislation from time to time in force and applicable to the said premises or to the tenancy hereby created and the Tenant agrees to deliver up vacant possession of the said premises to the Landlord on the expiration or sooner termination of the tenancy hereby created notwithstanding any rule of law or equity to the contrary.

 
22
 
 
Non-waiver
 
(j)
No condoning, excusing or overlooking by the Landlord of any default breach or non-observance, or non-performance by the Tenant at any time or times of any of the Tenant’s obligations herein contained shall operate as a waiver of the Landlord’s rights hereunder in respect of any continuing or subsequent default, breach or non-observance or nonperformance or so as defeat or breach and no waiver by the Landlord shall be inferred from or implied by anything done or omitted by the Landlord unless expressed in writing, and singed by the Landlord. Any consent given by the Landlord shall operate as a consent only for the particular matter which it relates and in no way shall be considered as a waiver of release of any of the provisions hereof nor shall it be construed as dispensing with the necessity of obtaining the specific written consent of the Landlord in the future unless expressly so provided.
       
Landlord’s right to
exhibit selling or
letting notice
 
(k)
During the three months immediately preceding the expiration of the term hereby created, the Landlord shall be at liberty to affix and maintain without interference upon any external part of the said premises notice or advertisement stating that the premises are to be let or to be sold and such other information in connection therewith as the Landlord shall deem fit.
       
Service of notices
 
(1)
Any notice required to be served hereunder shall, if to be served on the Tenant, be sufficiently served if addressed to the Tenant and sent by prepaid ordinary post to or delivered at the said premises or the Tenant’s last known place of business or registered office or residence in Hong Kong and, if to be served on the Landlord, shall be sufficiently served if addressed to the Landlord or such other person as may be notified in writing to the Tenant and sent by prepaid ordinary post to or delivered at the registered office of the Landlord or any other address which the Landlord may notify the Tenant from time to time. In the case of a notice sent by prepaid ordinary post as aforesaid service shall be deemed to have been effected two (2) days after the date of posting.
 
 
23
 
 
Legal costs and
expenses
 
(m)
The legal costs and disbursements (including stamp duty and registration fees) of and incidental to the preparation, approval and completion of this Agreement shall be borne and paid by the parties hereto in equal shares.
       
Assignment
7.
In the event that the said premises or any part or parts under this Agreement is/are assigned to other person(s) (“the new Landlord”) by the Landlord, the following provisions shall apply:
     
   
(a)
the Tenant, subject to and at the direction of the Landlord, shall accept and acknowledge the new Landlord as the new Landlord in respect of the said premises or any part of parts thereof assigned as aforesaid to whom the Tenant thereafter shall become liable according to the terms and conditions of the Agreement and shall enter into a Deed of Novation and/or Transfer to other agreement(s) or documents(s) with the new Landlord and the Landlord at the cost of the new Landlord and/or the Landlord in such reasonable form the content as satisfactory to the Landlord and the new Landlord for the purposes of confirming the release discharge and cessation of all liabilities and obligations of the Landlord hereunder including but not limited to the Landlord’s obligation in respect of the refund of the said deposit hereunder (so far as they relate to the said premises or any part or parts hereof assigned as aforesaid) and the continuation of the liabilities and obligations of the Tenant hereunder to give effect to or (as the case may be) to confirm the assumption and taking up by the new Landlord in lieu of the Landlord of all the Landlord’s liabilities and obligations hereunder including but not limited to the Landlord’s obligation in respect of the refund of the said deposit hereunder (so far as they relate to the said premises or any part or parts hereof assigned as aforesaid);
       
   
(b)
upon the assignment of this Agreement or the said premises or any part of parts thereof and the new Landlord thereof agreeing to assume take up all the Landlord’s liabilities and obligations hereunder including without limitation its obligations to refund the said deposit to the Tenant hereunder (so far as they relate to the said premises or any part or parts thereof as aforesaid) whether contractual or otherwise shall absolutely cease and be taken up by the new Landlord and the Tenant shall only seek refund of the said deposit (subject always to the terms and conditions contained in this Agreement) from the new Landlord,

 
24
 
 
Management regulations 8.
 
(a)
The Landlord reserves the right from time to time and by notice in writing to the Tenant to make impose adopt and introduce and subsequently supplement amend or abolish if necessary such reasonable regulations as it may consider necessary for the management operation and maintenance of the said Building including without limitation those regulations relating to the use of the common service facilities, the lifts and the use of the loading and unloading areas in the said Building.
       
   
(b)
Such regulations shall be supplementary to the terms and conditions of this Agreement and shall bind the Tenant and any breach of the regulations shall be deemed to be a breach of this Agreement for which the Landlord may exercise all or any of its rights or remedies hereunder.
       
   
(c)
Such regulations shall not in any way derogate from the terms and conditions of this Agreement. In the event of conflict between such regulations and the terms and conditions of this Agreement the terms and conditions of this Agreement shall prevail.
   
Joint and several
liability
9.    Where more than one person is named as the Tenant in the First Schedule hereto all such persons shall sign this Agreement and shall be jointly and severally liable for the performance and observance of the terms, conditions and agreements contained herein and on the part of the Tenant to be performed and observed.
   
No premium
10.  The Tenant acknowledges that no fine premium key money or other consideration has been paid by the Tenant to the Landlord for the grant of this tenancy.
   
No warranty
11.  The Landlord has provided the standard fit-out including air-conditioning ducting, suspended ceiling, lighting and wiring system and fire sprinkler heads (“Standard Fit-out”) in the said premises. However, the Landlord does not warrant that the said premises together with the Standard Fit-out and/or the fixture and fittings thereto are fit for the purposes for which they are let or for any other purposes whatsoever intended to be used by the Tenant and shall not be liable or responsible to the Tenant for any damages or loss in respect thereof.
 
 
25
 
 
Full Agreement
 
12.   This Agreement supercedes the offer letter duly signed by the parties hereto on 10 February, 2010 and set out the full agreement reached between the parties hereto and no other representations have been made or warranties given relating to the Landlord or the Tenant or the said Building or the said premises and if any such representation or warranty has been made given or implied same is hereby waived.
     
Law
 
13.   This Agreement shall be governed and construed in all respects in accordance with the laws of Hong Kong.
     
Marginal Notes
 
14.   The Marginal notes are intended only for guidance and reference and do not form part of this Agreement nor shall any of the provision in this Agreement be construed or interpreted by reference thereto or in any way affected or limited thereby.
     
Miscellaneous
 
15.   Unless the context otherwise requires, words herein importing the masculine gender shall include the feminine and neuter and words herein in the singular shall include the plural and vice versa and the expression “person” or “persons” shall include firms and/or corporations.
     
Tenant responsible
for all legal costs
and expenses
incurred by Landlord
in Tenant’s default
 
16.   All legal costs and expenses incurred by the Landlord (on a solicitor and own client basis) in demanding payment of rent and/or any other legal proceedings (including but not limited to levying distraint for rent) taken by the Landlord against the Tenants as a result of default of payment of rent or any other amount payable by the Tenant or the breach by the Tenant of any terms, covenants and conditions herein contained shall be recoverable from the Tenants as a debt or be deductible by the Landlord from the deposit held by the Landlord hereunder but without prejudice to the Landlord’s right of action against the Tenant for damages in excess thereof.
     
Name of Building
 
17.   The Landlord reserves the right subject to any relevant provisions of the Deed or Mutual Covenant and/or the Sub-Deed of Mutual Covenant (if any) and the House Rules in respect of the said Building to name and rename the said Building with any such name or style as it in its sole descretion may determine and at any time and from time to time by giving 3 months’ written notice to the Tenant to change, alter, substitute or abandon any such name without the same constituting an actual or constructive eviction or the Tenant and without incurring any liability to the Tenant therefore whatsoever and howsoever,
     
Landlord’s right
regarding alterations,
etc
 
18.   The Landlord shall have the right :
     
   
 
(a)           to change, amend, vary, add to alter the approved general building plans of the said Building;
 
 
26
 

   
(b)
to remove, cancel, relocate or otherwise change or carry out any alteration or addition or other works, whether of a structural nature or not, to the common areas (including but not limited to entrances, passages, corridors and staircases) and common facilities (including but not limited to lifts and public toilets) of the said Building and such other part or parts of the said Building (other than the said premises) from time to time and in such manner as the Landlord may in its absolute discretion deem fit without the same constituting an actual or constructive eviction of the Tenant and without incurring any liability whatsoever and howsoever to the Tenant therefor;
       
   
(c)
to execute or perform any works of alteration, amendment, modification, improvement, demolition or construction of the said Building and to enter into all parts of the said Building with all necessary equipment, plant and materials for the purpose of carrying out any such works; and
       
   
(d)
to erect scaffolding, hoarding or structures of like nature for the purpose of carrying out any works referred to in this Clause, including the right to enter upon the said premises for erecting such scaffolding or other structures, notwithstanding that the same any temporarily interfere with the access to any part of the said Building.
 
 
27
 

THE FIRST SCHEDULE ABOVE REFERRED TO

LANDLORD
:
AITKEN, VANSON & COMPANY LIMITED whose registered office is situate at 33/F, AITKEN VANSON CENTRE, 61 HOI YUEN ROAD, KWUN TONG, KOWLOON.
     
TENANT
:
SUN LINE INDUSTRIAL LIMITED whose office is situate at UNIT 2101, 21/F, AITKEN VANSON CENTRE, 61 HOI YUEN ROAD, KWUN TONG, KOWLOON
 
THE SECOND SCHEDULE ABOVE REFERRED TO
 
UNIT 03 ON THE 21 ST FLOOR OF AITKEN VANSON CENTRE, 61 HOI YUEN ROAD, KWUN TONG, KOWLOON (as shown coloured Pink on the Floor Plan attached hereto)
 
THE THIRD SCHEDULE ABOVE REFERRED TO

TERM OF TENANCY
:
TWO (2) year commencing on 1 st March, 2010 and expiring on 29 th February, 2012.
     
RENT
:
HK$20,220.00 per calendar month (exclusive of rates, government rent, air- conditioning and management charges and all outgoings of every description) payable in advance without any deduction whatsoever on the 1 st day of each and every calendar month and the first of such payment is to be paid on the signing of this Agreement.
 
 
28
 
 
MANAGEMENT FEE AND AIR-CONDITIONING CHARGES (Subject to Revision)
:
HK$5,661.60 per calendar month payable in advance without any deductions whatsoever on the 1 st day of each and every calendar month and the first of such payment is to be paid on the signing of this Agreement.
     
RENTAL MANAGEMENT FEE AIR-CONDITIONING CHARGES DEPOSIT
:
HK$77,644.80 (which has been paid by the Tenant to the Landlord on signing the Tenancy Agreement dated 1 st March, 2007.)
 
 
29
 
 
THE FOURTH SCHEDULE ABOVE REFERRED TO
 
Terms and conditions referred to in Clause 3(e)(iii) of this Agreement:-
 
1.
Within fourteen (14) days upon receipt of the Fit Out Guide in respect of the said Building or such shorter period as the Manager may allow, the Tenant shall submit to the Manager full fit out plans (each in triplicate) and written supporting information of all proposals concerning the fitting-out of the said premises. The Tenant’s plans shall comply with all relevant Ordinances, Regulations and By-Laws, and without limitation to the generality of the foregoing, shall include:-
 
(i)
all fitting-out details, alterations and/or additions to all non-load bearing walls, doors, door openings, lift lobbies and the common areas or any part thereof as forming part of the said premises;
 
(ii)
detailed drawings, plans and specifications of all air-conditioning (if any) and electrical installations which shall be connected by the Tenant to utility systems provided by the Landlord or the Manager;
 
(iii)
details of all lighting circuits, fixtures and fittings;
     
(iv)
any proposed fascia sign, including its decorative and electrical components;
     
(v)
details of installation of any security/alarm system; and
     
(vi)
details of installation of any machinery.
 
2.
The Manager will consider the Tenant’s plans and details and may, in its absolute discretion, accept or reject the plans or details or any part of them. Upon receipt of fit out plans (both detailed plans and written supporting information) the same will be passed to the Landlord for approval. If such plans and/or details are rejected, amendments shall be re-submitted within fourteen (14) days, or as directed by the Manager, as the case may be.
 
3.
All works specified and approved in writing by the Manager shall be completed within three (3) months of the Tenant being notified of such approval or such longer period as the Manager may agree.
 
4.
When the fit out plans are approved and before any work commences full information concerning the Tenant’s contractors shall immediately be made available together with a work programme/chart to the Manager by the Tenant.
 
5.
For all works specified in paragraphs (i) – (iv) below the Tenant is required to use the services of the Landlord’s nominated contractors or the Manager’s nominated contractors or its own contractor as may be approved in writing by the Manager subject to such terms and conditions as may be specified by the Manager:-
 
(i)
Any work involving the construction or installation of any brickwork, concrete or other items of a structural nature.
 
(ii)
Any plumbing or drainage work.
 
(iii)
Any alternation or addition to any mechanical or electrical services.
 
(iv)
Any specialist work.

 
30
 
 
The contractor appointed by the Tenant and approved in writing by the Manager shall at all times work under the supervision and comply with the directions of the Landlord’s nominated contractors or the Manager’s nominated contractors.
 
6.
The contractor appointed by the Tenant shall not carry out any work in the common areas or any part thereof and all debris created by the carrying out of such work and incidental to moving into the said premises is to be cleared at the expense of the Tenant creating the same.
 
7.
The Tenant, his servants, agents and workmen shall co-operate fully with the Landlord or its authorized representative, the Manager and its nominated contractors and project consultants in carrying out any work on the said Building, and shall cause the work done on the said premises to be co-ordinated and carried out in such a manner as to avoid any delay or interference with the work (if any) of the Landlord on the said Building. The Tenant, his servants, agents and workmen shall obey and comply with all instructions and directions which may be given by the Manager or its authorized representatives in connection with the carrying out of such work.
 
8.
The Tenant is solely responsible for the safety of all the said works carried out on the said premises and for the payment of all costs charges and expenses involved therein together with of the cost of providing a temporary electricity supply, if any, the reasonable proportion of such cost of which shall be borne by the Tenant requiring such supply, and to be calculated on a daily basis at a rate as determined by the Manager.
 
9.
The Tenant shall indemnify the Landlord and/or the Manager against all claims arising out of the actions of his appointed contractors and others similarly employed in the said premises and other areas of the said Building in connection with the carrying out of the works.
 
10.
Without in any way limiting the generality of the foregoing, the Tenant shall not:-
 
(i)
submit any plan to the Buildings Department or other competent authority for approval without first obtaining the Manager’s written consent which the Manager may in its unfettered discretion withhold if it considers that the submission of such plan or the work proposed to be carried out could or might interfere with work being carried out on any part of the said Building;
 
(ii)
carry out or attempt to carry out any work which requires the consent of the Buildings Department or any other competent authority without previously obtaining such consent;
 
(iii)
do or permit any act or thing to be done which is likely to cause any fire risk or other hazard in any part of the said Building.
 
(iv)
carrying out any alteration and/or removal of the fire services equipments as provided therein including hose reels and sprinkler heads, except with the written permission and approval of the Manager and all other competent authorities (wherever necessary); and
 
(v)
permit or suffer to be erected, affixed, installed or attached in or on or at the partition walls between the said premises and other parts of the said Building any shelves, paintings and decorations except with the written permission and approval of the Manager and all other competent authorities (wherever necessary).

 
31
 
 
THE FIFTH SCHEDULE ABOVE REFERRED TO
 
The said premises shall only be used or operated for the following purpose and for no other purpose whatsoever:-
 
(a)
offices ancillary and directly related to an industrial operation BUT ALWAYS excluding any trade that is now or may hereafter be declared to be an offensive trade under the Public Health and Municipal Services Ordinance, or any enactment amending the same or substituted therefore.

 
32
 
 
AS WITNESS the hands of the parties hereto the day and year first above written.

SIGNED by TSANG SHIH CHANG
)
AITKEN, VANSON & CO., LTD.
 
)
/s/ Tsang Shih Chang
for and on behalf of the Landlord whose
)
For and on behalf of
 
)
 
signature(s) is/are verified by:
)
 
 
YAU TO TUNG
 
/s/ Yau To Tung
 
SIGNED by LING HO LEUNG
)
 
 
)
For and on behalf of
for and on behalf of the Tenant in the
)
SUN LINE INDUSTRIAL LIMITED
   
/s/ Ling Ho Leung
 
)
Authorized Signature(s)
presence of: JENNY POON HAU CHUN
)
 
 
RECEIVED on or before the day and year first above written
)
 
of and from the Tenant the sum of HONG KONG DOLLARS
)
AITKEN, VANSON & CO., LTD.
SIXTY SIX THOUSAND FIVE HUNDRED AND EIGHTY
)  /s/ Tsang Shih Chang
FIVE AND CENTS SIXTY (which has been paid by the Tenant
)
For and on behalf of
to the Landlord on signing the Tenancy Agreement dated
)  
1st March 2007) being the total deposit money above expressed
)    
to be paid by the Tenant to the Landlord.
) HK$77,644.80
 
WITNESS as to signature only: -
 
/s/ Yau To Tung

 
33
 
 
RECEIVED on or before the day and year first above written
)
AITKEN, VANSON & CO., LTD.
of and from the Tenant the sum of HONG KONG DOLLARS
)
/s/ Tsang Shih Chang
TWENTY TWO THOUSAND ONE HUNDRED AND NINETY
)
For and on behalf of
FIVE AND CENTS TWENTY being the rent and management
)
 
fee and air-conditioning charges for the first month.
)
HK$25,881.60
 
WITNESS as to signature only: -
 
/s/ Yau To Tung

 
34
 
 

 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
REGISTRATION RIGHTS AGREEMENT
 
THIS REGISTRATION RIGHTS AGREEMENT (this “ Agreement ”) is entered into as of the 16 th day of December, 2010, by and among, GSME Acquisition Partners I, a company organized under the laws of the Cayman Islands (the “ Company ”), and the undersigned parties listed under Investors on the signature page hereto (each, an “ Investor ” and collectively, the “ Investors ”).
 
WHEREAS, the Investors have been and may be issued Ordinary Shares (as defined below) in the Company pursuant to an Amended and Restated Agreement and Plan of Reorganization, dated as of September 13, 2010, as amended on December 9, 2010, among the Company, GSME Acquisition Partners I Sub Limited, the Investors and Plastec International Holdings Limited (as amended, restated, supplemented, or otherwise modified from time to time, the “ Merger Agreement ”); and
 
WHEREAS, the Investors and the Company desire to enter into this Agreement to provide the Investors with certain rights relating to the registration of Ordinary Shares owned by them.
 
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
 
1.           DEFINITIONS.  The following capitalized terms used herein have the following meanings:
 
“ Agreement ” means this Agreement, as amended, restated, supplemented, or otherwise modified from time to time.
 
“ Cathay ” means Cathay Plastic Limited (BVI), a company incorporated under the laws of the British Virgin Islands, and an Investor.
 
“ Commission ” means the Securities and Exchange Commission, or any other federal agency then administering the Securities Act or the Exchange Act.
 
“ Company ” is defined in the preamble to this Agreement.
 
“ Demand Registration ” is defined in Section 2.1.1.
 
“ Demanding Holder ” is defined in Section 2.1.1.
 
“ Exchange Act ” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder, as in effect at the time.
 
“ Existing Registrable Securities ” means the securities covered by the Existing Registration Rights Agreement.
 
“ Existing Registration Rights Agreement ” means that certain Registration Rights Agreement dated as of November 19, 2009, as amended, by and among the Company and the investors identified therein.
 
“ Form F-3 ” is defined in Section 2.3.
 
“ Indemnified Party ” is defined in Section 4.3.

 
 
 
 
“ Indemnifying Party ” is defined in Section 4.3.
 
“ Investor ” is defined in the preamble to this Agreement.
 
“ Investor Indemnified Party ” is defined in Section 4.1.
 
“ Maximum Number of Shares ” is defined in Section 2.1.4.
 
“ Merger Agreement ” is defined in the preamble to this Agreement.
 
“ Non-Cathay Demanding Holders ” is defined in Section 2.1.1.
 
“ Non-Cathay Investors ” is defined in Section 2.1.1.
 
“ Notices ” is defined in Section 6.3.
 
“ Option Securities ” is defined in Section 2.1.4.
 
“ Ordinary Shares ” shall mean shares of common stock of the Company, par value $0.001 per share.
 
“ Piggy-Back Registration ” is defined in Section 2.2.1.
 
“ Pro Rata ” is defined in Section 2.1.4.
 
“ Register ,” “ registered ” and “ registration ” mean a registration with respect to the Registrable Securities effected by preparing and filing a registration statement or similar document in compliance with the requirements of the Securities Act, and the applicable rules and regulations promulgated thereunder, and such registration statement becoming effective.
 
“ Registrable Securities ” means all of the Ordinary Shares issued, or issuable, to the Investors pursuant to the Merger Agreement (including the Earnout Shares (as defined therein)).  Registrable Securities includes any warrants, Ordinary Shares or other securities of the Company issued as a dividend or other distribution with respect to or in exchange for or in replacement of such Ordinary Shares.  As to any particular Registrable Securities, such securities shall cease to be Registrable Securities when: (a) a Registration Statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been sold, transferred, disposed of or exchanged in accordance with such Registration Statement; (b) such securities shall have been otherwise transferred, new certificates for them not bearing a legend restricting further transfer shall have been delivered by the Company and subsequent public distribution of them shall not require registration under the Securities Act; (c) such securities shall have ceased to be outstanding, or (d) the Company shall have received an opinion of its counsel that such Registrable Securities are salable under Rule 144 without volume restrictions.
 
“ Registration Statement ” means a registration statement filed by the Company with the Commission in compliance with the Securities Act and the rules and regulations promulgated thereunder for a public offering and sale of equity securities, or securities or other obligations exercisable or exchangeable for, or convertible into, equity securities of the Company (other than a registration statement on Form S-4 or Form S-8, or their successors, or any registration statement covering only securities proposed to be issued in exchange for securities or assets of another entity).

 
2
 
 
“ Securities Act ” means the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder, all as the same shall be in effect at the time.
 
“ Underwriter ” means a securities dealer who purchases any Registrable Securities as principal in an underwritten offering and not as part of such dealer's market-making activities.
 
“ Unit Purchase Option ” is defined in Section 2.1.4.
 
2.           REGISTRATION RIGHTS.
 
2.1          Demand Registration .
 
2.1.1      Request for Registration .  At any time and from time to time on or after the date hereof, (i) one or more Investors other than Cathay (the “ Non-Cathay Investors ”) holding at least 1,000,000 Registrable Securities in the aggregate (subject to adjustment in the event of a stock split, consolidation or recapitalization) and (ii) Cathay may each make a separate written demand for registration under the Securities Act of all or part (but not less than 500,000, subject to adjustment in the event of a stock split, consolidation or recapitalization) of their respective Registrable Securities (a “ Demand Registration ”).  Any such demand for a Demand Registration shall specify the type and number of shares of Registrable Securities proposed to be sold and the intended method(s) of distribution thereof.  In the event of a demand by one or more Non-Cathay Investors, the Company will notify all other Non-Cathay Investors of the demand within ten (10) days from the receipt of the demand, and each Non-Cathay Investor that holds Registrable Securities and wishes to include all or a portion of its Registrable Securities in the Demand Registration of the Non-Cathay Investors (together with the Non-Cathay Investors demanding the Demand Registration, the “ Non-Cathay Demanding Holders ”) shall so notify the Company within fifteen (15) days after the receipt by the holder of the notice from the Company.  In the case of a demand by one or more Non-Cathay Investors, each Non-Cathay Demanding Holder shall be referred to as a “ Demanding Holder ”, and in the case of a demand by Cathay, Cathay shall be referred to as the “ Demanding Holder ”.  Upon such a demand for a Demand Registration, the Demanding Holder(s) shall be entitled to have their Registrable Securities included in a Demand Registration, subject to Section 2.1.4 and the provisos set forth in Section 3.1.1.  The Company shall not be obligated to effect more than two (2) Demand Registrations pursuant to clause (i) of the first sentence of this Section 2.1.1 and two (2) additional Demand Registrations pursuant to clause (ii) of the first sentence of this Section 2.1.1 in respect of Registrable Securities.  Registrable Securities registered under this Section shall remain subject to the transfer restrictions set forth in Section 5.3 of the Merger Agreement.
 
2.1.2      Effective Registration .  A registration will not count as a Demand Registration until the Registration Statement filed with the Commission with respect to such Demand Registration has been declared effective and the Company has complied with all of its obligations under this Agreement with respect thereto; provided , however , that if, after such Registration Statement has been declared effective, the offering of Registrable Securities pursuant to a Demand Registration is interfered with by any stop order or injunction of the Commission or any other governmental agency or court, the Registration Statement with respect to such Demand Registration will be deemed not to have been declared effective, unless and until, (i) such stop order or injunction is removed, rescinded or otherwise terminated, and (ii) a majority in interest of the Demanding Holders (or, if there is only one, the Demanding Holder) thereafter elect(s) to continue the offering; provided , further , that the Company shall not be obligated to file a second Registration Statement until a Registration Statement that has been filed is counted as a Demand Registration or is terminated or withdrawn.
 
 
3
 
 
2.1.3      Underwritten Offering .  If not less than a majority in interest of the Demanding Holders (or, if there is only one, the Demanding Holder) so elects and such holder(s) so advise the Company as part of a written demand for a Demand Registration, the offering of such Registrable Securities pursuant to such Demand Registration shall be in the form of an underwritten offering.  In such event, the right of any holder to include its Registrable Securities in such registration shall be conditioned upon such holder's participation in such underwriting and the inclusion of such holder's Registrable Securities in the underwriting to the extent provided herein.  Any Demanding Holder proposing to distribute its Registrable Securities through such underwriting shall enter into an underwriting agreement in customary form with the Underwriter or Underwriters selected for such underwriting by a majority-in-interest of the holders (or, if there is only one, the holder) initiating the Demand Registration.
 
2.1.4      Reduction of Offering .  If (x) the managing Underwriter or Underwriters for a Demand Registration that is to be an underwritten offering advises the Company and the Demanding Holder(s) in writing that the dollar amount or number of shares of Registrable Securities which the Demanding Holder(s) desire(s) to sell, taken together with all other Ordinary Shares or other securities which the Company desires to sell and the Ordinary Shares, if any, as to which registration has been requested pursuant to written contractual piggy-back registration rights held by other shareholders of the Company who desire to sell, exceeds the maximum dollar amount or maximum number of shares that can be sold in such offering without adversely affecting the proposed offering price, the timing, the distribution method, or the probability of success of such offering or (y) the Staff of the Commission does not permit all of the Registrable Securities requested by the Demanding Holder(s), taken together with all other Ordinary Shares or other securities which the Company desires to sell and the Ordinary Shares, if any, as to which registration has been requested pursuant to written contractual piggy-back registration rights held by other shareholders of the Company who desire to sell, to be included in the Registration Statement filed for a Demand Registration (the maximum dollar amount or maximum number of shares, as applicable, that can be sold or registered in the Demand Registration are referred to herein as the “ Maximum Number of Shares ”), then the Company shall include in such registration:
 
 
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(i)           If the Demand Registration was demanded by Cathay, (A) first, the Registrable Securities as to which Demand Registration has been requested by Cathay and the Ordinary Shares or other securities, if any, comprised of Existing Registrable Securities, as to which registration has been requested pursuant to the applicable piggy-back rights contained in the Existing Registration Rights Agreement (pro rata in accordance with the number of shares which each such person has requested be included in such registration, regardless of the number of shares held by each such person (such proportion, “ Pro Rata ”)) that can be sold without exceeding the Maximum Number of Shares; (B) second, to the extent that the Maximum Number of Shares has not been reached under the foregoing clause (A), the Ordinary Shares or other securities that the Company desires to sell that can be sold without exceeding the Maximum Number of Shares; (C) third, to the extent that the Maximum Number of Shares has not been reached under the foregoing clauses (A) and (B), the Ordinary Shares or other securities registrable pursuant to the terms of the Unit Purchase Option to be issued to Cohen & Company Securities, LLC (“ Cohen & Company ”) or its designees in connection with the Company’s initial public offering on November 25, 2009 (the “ Unit Purchase Option ” and such registrable securities, the “ Option Securities ”) as to which “piggy-back” registration has been requested by the holders thereof, Pro Rata, that can be sold without exceeding the Maximum Number of Shares; (D) fourth, to the extent that the Maximum Number of Shares has not been reached under the foregoing clauses (A), (B) and (C), the Ordinary Shares or other securities for the account of other persons that the Company is obligated to register pursuant to written contractual arrangements with such persons and that can be sold without exceeding the Maximum Number of Shares; and (E) fifth, to the extent that the Maximum Number of Shares has not been reached under the foregoing clauses (A), (B), (C) and (D), the Ordinary Shares or other securities that other security holders desire to sell that can be sold without exceeding the Maximum Number of Shares; or
 
(ii)           If the Demand Registration was demanded by one or more Non-Cathay Investors, (A) first, the Registrable Securities as to which Demand Registration has been requested by the Non-Cathay Demanding Holders and the Ordinary Shares or other securities, if any, comprised of Existing Registrable Securities, as to which registration has been requested pursuant to the applicable piggy-back rights contained in the Existing Registration Rights Agreement, Pro Rata, that can be sold without exceeding the Maximum Number of Shares; (B) second, to the extent that the Maximum Number of Shares has not been reached under the foregoing clause (A), the Ordinary Shares or other securities that the Company desires to sell that can be sold without exceeding the Maximum Number of Shares; (C) third, to the extent that the Maximum Number of Shares has not been reached under the foregoing clauses (A) and (B), the Option Securities as to which “piggy-back” registration has been requested by the holders thereof, Pro Rata, that can be sold without exceeding the Maximum Number of Shares; (D) fourth, to the extent that the Maximum Number of Shares has not been reached under the foregoing clauses (A),  (B) and (C), the Ordinary Shares or other securities for the account of other persons that the Company is obligated to register pursuant to written contractual arrangements with such persons and that can be sold without exceeding the Maximum Number of Shares; and (E) fifth, to the extent that the Maximum Number of Shares have not been reached under the foregoing clauses (A), (B), (C) and (D), the Ordinary Shares or other securities that other security holders desire to sell that can be sold without exceeding the Maximum Number of Shares.
 
2.1.5         Withdrawal .  If a majority in interest of the Demanding Holders (or, if there is only one, the Demanding Holder) disapproves of the terms of any underwriting or would not be entitled to include all of its or their Registrable Securities in any offering, such majority in interest of the Demanding Holders (or, if there is only one, the Demanding Holder) may elect to withdraw from such offering by giving written notice to the Company and the Underwriter or Underwriters of the request to withdraw prior to the effectiveness of the Registration Statement filed with the Commission with respect to such Demand Registration.  If the majority in interest of the Demanding Holders (or, if there is only one, the Demanding Holder) withdraws from a proposed offering relating to a Demand Registration, then such registration shall not count as a Demand Registration provided for in this Section 2.1.
 
 
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2.2          Piggy-Back Registration .
 
2.2.1         Piggy-Back Rights .  If at any time on or after the date of this Agreement the Company proposes to file a Registration Statement under the Securities Act with respect to an offering of equity securities, or securities or other obligations exercisable or exchangeable for, or convertible into, equity securities, by the Company for its own account or for shareholders of the Company for their account (or by the Company and by shareholders of the Company including, without limitation, pursuant to Section 2.1), other than a Registration Statement (i) filed in connection with any employee stock option or other benefit plan, (ii) for an exchange offer or offering of securities solely to the Company's existing shareholders, (iii) for an offering of debt that is convertible into equity securities of the Company or (iv) for a dividend reinvestment plan, then the Company shall (x) give written notice of such proposed filing to the holders of Registrable Securities as soon as practicable but in no event less than ten (10) days before the anticipated filing date, which notice shall describe the amount and type of securities to be included in such offering, the intended method(s) of distribution, and the name of the proposed managing Underwriter or Underwriters, if any, of the offering, and (y) offer to the holders of Registrable Securities in such notice the opportunity to register the sale of such number of shares of Registrable Securities as such holders may request in writing within five (5) days following receipt of such notice (a “ Piggy-Back Registration ”).  The Company shall cause such Registrable Securities to be included in such registration and shall use its best efforts to cause the managing Underwriter or Underwriters of a proposed underwritten offering to permit the Registrable Securities requested to be included in a Piggy-Back Registration to be included on the same terms and conditions as any similar securities of the Company and to permit the sale or other disposition of such Registrable Securities in accordance with the intended method(s) of distribution thereof.  All holders of Registrable Securities proposing to distribute their securities through a Piggy-Back Registration that involves an Underwriter or Underwriters shall enter into an underwriting agreement in customary form with the Underwriter or Underwriters selected for such Piggy-Back Registration.
 
2.2.2         Reduction of Offering .  If (x) the managing Underwriter or Underwriters for a Piggy-Back Registration that is to be an underwritten offering advises the Company and the holders of Registrable Securities in writing that the dollar amount or number of Ordinary Shares which the Company desires to sell, taken together with Ordinary Shares, if any, as to which registration has been demanded pursuant to written contractual arrangements with persons other than the holders of Registrable Securities hereunder, the Registrable Securities as to which registration has been requested under this Section 2.2, and the Ordinary Shares, if any, as to which registration has been requested pursuant to the written contractual piggy-back registration rights of other shareholders of the Company, exceeds the Maximum Number of Shares, or (y) the Staff of the Commission does not permit all of the Registrable Securities requested by the Holders, taken together with all other Ordinary Shares or other securities which the Company desires to sell and the Ordinary Shares, if any, as to which registration has been requested pursuant to written contractual piggy-back registration rights held by other shareholders of the Company who desire to sell, to be included in the Registration Statement filed for the Piggy-Back Registration, then the Company shall include in any such registration:
 
 
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(i)           If the registration is undertaken for the Company's account: (A) first, the Ordinary Shares or other securities that the Company desires to sell that can be sold without exceeding the Maximum Number of Shares; (B) second, to the extent that the Maximum Number of Shares has not been reached under the foregoing clause (A), the Ordinary Shares or other securities, if any, comprised of Registrable Securities, Existing Registrable Securities or Option Securities, as to which registration has been requested pursuant to written contractual piggy-back registration rights of such security holders, Pro Rata, that can be sold without exceeding the Maximum Number of Shares; and (C) third, to the extent that the Maximum Number of Shares has not been reached under the foregoing clauses (A) and (B), the Ordinary Shares or other securities for the account of other persons that the Company is obligated to register pursuant to written contractual piggy-back registration rights with such persons and that can be sold without exceeding the Maximum Number of Shares;
 
(ii)          If the registration is a “demand” registration pursuant to the Existing Registration Rights Agreement, securities as provided therein; and
 
(iii)         If the registration is a “demand” registration undertaken at the demand of persons other than the holders of Registrable Securities or Existing Registrable Securities or pursuant to written contractual arrangements with such persons, (A) first, the Ordinary Shares or other securities for the account of the demanding persons that can be sold without exceeding the Maximum Number of Shares, Pro Rata; (B) second, to the extent that the Maximum Number of Shares has not been reached under the foregoing clause (A), the Ordinary Shares or other securities that the Company desires to sell that can be sold without exceeding the Maximum Number of Shares; (C) third, to the extent that the Maximum Number of Shares has not been reached under the foregoing clauses (A) and (B), collectively the Ordinary Shares or other securities comprised of Registrable Securities, Existing Registrable Securities or Option Securities, as to which registration has been requested pursuant to the terms of this Section 2.2 or of the Existing Registration Rights Agreement, as applicable, Pro Rata, that can be sold without exceeding the Maximum Number of Shares; and (D) fourth, to the extent that the Maximum Number of Shares has not been reached under the foregoing clauses (A), (B) and (C), the Ordinary Shares or other securities for the account of other persons that the Company is obligated to register pursuant to written contractual arrangements with such persons that can be sold without exceeding the Maximum Number of Shares.
 
2.2.3         Withdrawal .  Any holder of Registrable Securities may elect to withdraw such holder's request for inclusion of Registrable Securities in any Piggy-Back Registration by giving written notice to the Company of such request to withdraw prior to the effectiveness of the Registration Statement.  The Company (whether on its own determination or as the result of a withdrawal by persons making a demand pursuant to written contractual obligations) may also elect to withdraw a Registration Statement at any time prior to the effectiveness of such Registration Statement.  Notwithstanding any such withdrawal, the Company shall pay all expenses incurred by the holders of Registrable Securities in connection with such Piggy-Back Registration as provided in Section 3.3.
 
 
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2.3          Registrations on Form F-3 .  The holders of Registrable Securities may at any time and from time to time, request in writing that the Company register the resale of any or all of such Registrable Securities on Form F-3 or any similar short-form registration which may be available at such time (“ Form F-3 ”); provided , however , that the Company shall not be obligated to effect such request through an underwritten offering.  Upon receipt of such written request, the Company will promptly give written notice of the proposed registration to all other holders of Registrable Securities, and, as soon as practicable thereafter, effect the registration of all or such portion of such holder's or holders' Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities or other securities of the Company, if any, of any other holder or holders joining in such request as are specified in a written request given within fifteen (15) days after receipt of such written notice from the Company; provided , however , that the Company shall not be obligated to effect any such registration pursuant to this Section 2.3: (i) if Form F-3 is not available for such offering; or (ii) if the holders of the Registrable Securities, together with the holders of any other securities of the Company entitled to inclusion in such registration, propose to sell Registrable Securities and such other securities (if any) at any aggregate price to the public of less than $500,000. Registrations effected pursuant to this Section 2.3 shall not be counted as Demand Registrations effected pursuant to Section 2.1.  Registrable Securities registered under this Section shall remain subject to the transfer restrictions set forth in Section 5.3 of the Merger Agreement.
 
3.           REGISTRATION PROCEDURES.
 
3.1.           Filings; Information .  Whenever the Company is required to effect the registration of any Registrable Securities pursuant to Section 2, the Company shall use its best efforts to effect the registration and sale of such Registrable Securities in accordance with the intended method(s) of distribution thereof as expeditiously as practicable, and in connection with any such request:
 
3.1.1          Filing Registration Statement .  The Company shall, as expeditiously as possible and in any event within sixty (60) days after receipt of a request for a Demand Registration pursuant to Section 2.1, prepare and file with the Commission a Registration Statement on any form for which the Company then qualifies or which counsel for the Company shall deem appropriate and which form shall be available for the sale of all Registrable Securities to be registered thereunder in accordance with the intended method(s) of distribution thereof, and shall use its best efforts to cause such Registration Statement to become and remain effective for the period required by Section 3.1.3; provided , however , that the Company shall have the right to defer any Demand Registration for up to thirty (30) days, and any Piggy-Back Registration for such period as may be applicable to deferment of any demand registration to which such Piggy-Back Registration relates, in each case if the Company shall furnish to the holders a certificate signed by the Chief Executive Officer of the Company stating that, in the good faith judgment of the Board of Directors of the Company, it would be materially detrimental to the Company and its shareholders for such Registration Statement to be effected at such time; provided , further , that the Company shall not have the right to exercise the right set forth in the immediately preceding proviso more than once in any 365-day period in respect of a Demand Registration hereunder.
 
 
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3.1.2          Copies .  The Company shall, prior to filing a Registration Statement or prospectus, or any amendment or supplement thereto, furnish without charge to the holders of Registrable Securities included in such registration, and such holders' legal counsel, copies of such Registration Statement as proposed to be filed, each amendment and supplement to such Registration Statement (in each case including all exhibits thereto and documents incorporated by reference therein), the prospectus included in such Registration Statement (including each preliminary prospectus), and such other documents as the holders of Registrable Securities included in such registration or legal counsel for any such holders may request in order to facilitate the disposition of the Registrable Securities owned by such holders.
 
3.1.3          Amendments and Supplements .  The Company shall prepare and file with the Commission such amendments, including post-effective amendments, and supplements to such Registration Statement and the prospectus used in connection therewith as may be necessary to keep such Registration Statement effective and in compliance with the provisions of the Securities Act until all Registrable Securities and other securities covered by such Registration Statement have been disposed of in accordance with the intended method(s) of distribution set forth in such Registration Statement or such securities have been withdrawn.
 
3.1.4          Notification .  After the filing of a Registration Statement, the Company shall promptly, and in no event more than two (2) business days after such filing, notify the holders of Registrable Securities included in such Registration Statement of such filing, and shall further notify such holders promptly and confirm such advice in writing in all events within two (2) business days of the occurrence of any of the following: (i) when such Registration Statement becomes effective; (ii) when any post-effective amendment to such Registration Statement becomes effective; (iii) the issuance or threatened issuance by the Commission of any stop order (and the Company shall take all actions required to prevent the entry of such stop order or to remove it if entered); and (iv) any request by the Commission for any amendment or supplement to such Registration Statement or any prospectus relating thereto or for additional information or of the occurrence of an event requiring the preparation of a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of the securities covered by such Registration Statement, such prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and promptly make available to the holders of Registrable Securities included in such Registration Statement any such supplement or amendment; except that before filing with the Commission a Registration Statement or prospectus or any amendment or supplement thereto, including documents incorporated by reference, the Company shall furnish to each holder of Registrable Securities included in such Registration Statement, and to the legal counsel for each such holder, copies of all such documents proposed to be filed sufficiently in advance of filing to provide such holders and legal counsel with a reasonable opportunity to review such documents and comment thereon, and the Company shall not file any Registration Statement or prospectus or amendment or supplement thereto, including documents incorporated by reference, to which such holders or their legal counsel shall object.
 
3.1.5          State Securities Laws Compliance .  The Company shall use its best efforts to (i) register or qualify the Registrable Securities covered by the Registration Statement under such securities or “blue sky” laws of such jurisdictions in the United States as the holders of Registrable Securities included in such Registration Statement (in light of their intended plan of distribution) may request and (ii) take such action necessary to cause such Registrable Securities covered by the Registration Statement to be registered with or approved by such other governmental authorities as may be necessary by virtue of the business and operations of the Company and do any and all other acts and things that may be necessary or advisable to enable the holders of Registrable Securities included in such Registration Statement to consummate the disposition of such Registrable Securities in such jurisdictions; provided , however , that the Company shall not be required to qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 3.1.5 or subject itself to taxation in any such jurisdiction.
 
 
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3.1.6          Agreements for Disposition .  The Company shall enter into customary agreements (including, if applicable, an underwriting agreement in customary form) and take such other actions as are reasonably required in order to expedite or facilitate the disposition of such Registrable Securities.  The representations, warranties and covenants of the Company in any underwriting agreement which are made to or for the benefit of any Underwriters, to the extent applicable, shall also be made to and for the benefit of the holders of Registrable Securities included in such registration statement.  No holder of Registrable Securities included in such registration statement shall be required to make any representations or warranties in the underwriting agreement except, if applicable, with respect to such holder's organization, good standing, authority, title to Registrable Securities, lack of conflict of such sale with such holder's material agreements and organizational documents, and with respect to written information relating to such holder that such holder has furnished in writing expressly for inclusion in such Registration Statement.
 
3.1.7          Cooperation .  The principal executive officer of the Company, the principal financial officer of the Company, the principal accounting officer of the Company and all other officers and members of the management of the Company shall cooperate fully in any offering of Registrable Securities hereunder, which cooperation shall include, without limitation, the preparation of the Registration Statement with respect to such offering and all other offering materials and related documents, and participation in meetings with Underwriters, attorneys, accountants and potential investors.
 
3.1.8          Records .  The Company shall make available for inspection by the holders of Registrable Securities included in such Registration Statement, any Underwriter participating in any disposition pursuant to such Registration Statement and any attorney, accountant or other professional retained by any holder of Registrable Securities included in such Registration Statement or any Underwriter, all financial and other records, pertinent corporate documents and properties of the Company, as shall be necessary to enable them to exercise their due diligence responsibility, and cause the Company's officers, directors and employees to supply all information requested by any of them in connection with such Registration Statement.
 
3.1.9          Opinions and Comfort Letters .  The Company shall furnish to each holder of Registrable Securities included in any Registration Statement a signed counterpart, addressed to such holder, of (i) any opinion of counsel to the Company delivered to any Underwriter and (ii) any comfort letter from the Company's independent public accountants delivered to any Underwriter.  In the event no legal opinion is delivered to any Underwriter, the Company shall furnish to each holder of Registrable Securities included in such Registration Statement, at any time that such holder elects to use a prospectus, an opinion of counsel to the Company to the effect that the Registration Statement containing such prospectus has been declared effective and that no stop order is in effect.
 
 
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3.1.10        Earnings Statement .  The Company shall comply with all applicable rules and regulations of the Commission and the Securities Act, and make available to its shareholders, as soon as practicable, an earnings statement covering a period of twelve (12) months, beginning within three (3) months after the effective date of the registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder.
 
3.1.11        Listing .  The Company shall use its best efforts to cause all Registrable Securities included in any registration to be listed on such exchanges or otherwise designated for trading in the same manner as similar securities issued by the Company are then listed or designated or, if no such similar securities are then listed or designated, in a manner satisfactory to the holders of a majority of the Registrable Securities included in such registration.
 
3.2.           Obligation to Suspend Distribution .  Upon receipt of any notice from the Company of the happening of any event of the kind described in Section 3.1.4(iv), or, in the case of a resale registration on Form F-3 pursuant to Section 2.3, upon any suspension by the Company, pursuant to a written insider trading compliance program adopted by the Company's Board of Directors, of the ability of all “insiders” covered by such program to transact in the Company's securities because of the existence of material non-public information, each holder of Registrable Securities included in any registration shall immediately discontinue disposition of such Registrable Securities pursuant to the Registration Statement covering such Registrable Securities until such holder receives the supplemented or amended prospectus contemplated by Section 3.1.4(iv) or the restriction on the ability of “insiders” to transact in the Company's securities is removed, as applicable, and, if so directed by the Company, each such holder will deliver to the Company all copies, other than permanent file copies then in such holder's possession, of the most recent prospectus covering such Registrable Securities at the time of receipt of such notice.
 
3.3.           Registration Expenses .  The Company shall bear all costs and expenses incurred in connection with any Demand Registration pursuant to Section 2.1, any Piggy-Back Registration pursuant to Section 2.2, and any registration on Form F-3 effected pursuant to Section 2.3, and all expenses incurred in performing or complying with its other obligations under this Agreement, whether or not the Registration Statement becomes effective, including, without limitation: (i) all registration and filing fees; (ii) fees and expenses of compliance with securities or “blue sky” laws (including fees and disbursements of counsel in connection with blue sky qualifications of the Registrable Securities); (iii) printing expenses; (iv) the Company's internal expenses (including, without limitation, all salaries and expenses of its officers and employees); (v) the fees and expenses incurred in connection with the listing of the Registrable Securities as required by Section 3.1.11; (vi) Financial Industry Regulatory Authority fees; (vii) fees and disbursements of counsel for the Company and fees and expenses for independent certified public accountants retained by the Company (including the expenses or costs associated with the delivery of any opinions or comfort letters requested pursuant to Section 3.1.9); (viii) the fees and expenses of any special experts retained by the Company in connection with such registration and (ix) the fees and expenses of one legal counsel selected by the holders of a majority-in-interest of the Registrable Securities included in such registration.  The Company shall have no obligation to pay any underwriting discounts or selling commissions attributable to the Registrable Securities being sold by the holders thereof, which underwriting discounts or selling commissions shall be borne by such holders.  Additionally, in an underwritten offering, all selling shareholders and the Company shall bear the expenses of the Underwriter pro rata in proportion to the respective amount of shares each is selling in such offering.
 
 
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3.4.           Information .  The holders of Registrable Securities shall provide such information as may reasonably be requested by the Company, or the managing Underwriter, if any, in connection with the preparation of any Registration Statement, including amendments and supplements thereto, in order to effect the registration of any Registrable Securities under the Securities Act pursuant to Section 2 and in connection with the Company's obligation to comply with Federal and applicable state securities laws.
 
4.           INDEMNIFICATION AND CONTRIBUTION.
 
4.1           Indemnification by the Company .  The Company agrees to indemnify and hold harmless each Investor and each other holder of Registrable Securities, and each of their respective officers, employees, affiliates, directors, partners, members, attorneys and agents, and each person, if any, who controls an Investor and each other holder of Registrable Securities (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) (each, an “ Investor Indemnified Party ”), from and against any expenses, losses, judgments, claims, damages or liabilities, whether joint or several, arising out of or based upon any untrue statement (or allegedly untrue statement) of a material fact contained in any Registration Statement under which the sale of such Registrable Securities was registered under the Securities Act, any preliminary prospectus, final prospectus or summary prospectus contained in the Registration Statement, or any amendment or supplement to such Registration Statement, or arising out of or based upon any omission (or alleged omission) to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or any violation by the Company of the Securities Act or any rule or regulation promulgated thereunder applicable to the Company and relating to action or inaction required of the Company in connection with any such registration; and the Company shall promptly reimburse the Investor Indemnified Party for any legal and any other expenses reasonably incurred by such Investor Indemnified Party in connection with investigating and defending any such expense, loss, judgment, claim, damage, liability or action; provided , however , that the Company will not be liable in any such case to the extent that any such expense, loss, claim, damage or liability arises out of or is based upon any untrue statement or allegedly untrue statement or omission or alleged omission made in such Registration Statement, preliminary prospectus, final prospectus, or summary prospectus, or any such amendment or supplement, in reliance upon and in conformity with information furnished to the Company, in writing, by such selling holder expressly for use therein.  The Company also shall indemnify any Underwriter of the Registrable Securities, their officers, affiliates, directors, partners, members and agents and each person who controls such Underwriter on substantially the same basis as that of the indemnification provided above in this Section 4.1.
 
 
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4.2          Indemnification by Holders of Registrable Securities .  Each selling holder of Registrable Securities will, in the event that any registration is being effected under the Securities Act pursuant to this Agreement of any Registrable Securities held by such selling holder, indemnify and hold harmless the Company, each of its directors and officers and each Underwriter (if any), and each other selling holder and each other person, if any, who controls another selling holder or such Underwriter within the meaning of the Securities Act, against any losses, claims, judgments, damages or liabilities, whether joint or several, insofar as such losses, claims, judgments, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or allegedly untrue statement of a material fact contained in any Registration Statement under which the sale of such Registrable Securities was registered under the Securities Act, any preliminary prospectus, final prospectus or summary prospectus contained in the Registration Statement, or any amendment or supplement to the Registration Statement, or arise out of or are based upon any omission or alleged omission to state a material fact required to be stated therein or necessary to make the statement therein not misleading, if the statement or omission was made in reliance upon and in conformity with information furnished in writing to the Company by such selling holder expressly for use therein, and shall reimburse the Company, its directors and officers, and each other selling holder or controlling person for any legal or other expenses reasonably incurred by any of them in connection with investigation or defending any such loss, claim, damage, liability or action.  Each selling holder's indemnification obligations hereunder shall be several and not joint and shall be limited to the amount of any net proceeds actually received by such selling holder in connection with the sale of the Registrable Securities by such selling holder pursuant to the Registration Statement containing such untrue statement.
 
4.3          Conduct of Indemnification Proceedings .  Promptly after receipt by any person of any notice of any loss, claim, damage or liability or any action in respect of which indemnity may be sought pursuant to Section 4.1 or 4.2, such person (the “ Indemnified Party ”) shall, if a claim in respect thereof is to be made against any other person for indemnification hereunder, notify such other person (the “ Indemnifying Party ”) in writing of the loss, claim, judgment, damage, liability or action; provided , however , that the failure by the Indemnified Party to notify the Indemnifying Party shall not relieve the Indemnifying Party from any liability which the Indemnifying Party may have to such Indemnified Party hereunder, except and solely to the extent the Indemnifying Party is actually prejudiced by such failure.  If the Indemnified Party is seeking indemnification with respect to any claim or action brought against the Indemnified Party, then the Indemnifying Party shall be entitled to participate in such claim or action, and, to the extent that it wishes, jointly with all other Indemnifying Parties, to assume control of the defense thereof with counsel satisfactory to the Indemnified Party.  After notice from the Indemnifying Party to the Indemnified Party of its election to assume control of the defense of such claim or action, the Indemnifying Party shall not be liable to the Indemnified Party for any legal or other expenses subsequently incurred by the Indemnified Party in connection with the defense thereof other than reasonable costs of investigation; provided , however , that in any action in which both the Indemnified Party and the Indemnifying Party are named as defendants, the Indemnified Party shall have the right to employ separate counsel (but no more than one such separate counsel) to represent the Indemnified Party and its controlling persons who may be subject to liability arising out of any claim in respect of which indemnity may be sought by the Indemnified Party against the Indemnifying Party, with the fees and expenses of such counsel to be paid by such Indemnifying Party if, based upon the written opinion of counsel of such Indemnified Party, representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them.  No Indemnifying Party shall, without the prior written consent of the Indemnified Party, consent to entry of judgment or effect any settlement of any claim or pending or threatened proceeding in respect of which the Indemnified Party is or could have been a party and indemnity could have been sought hereunder by such Indemnified Party, unless such judgment or settlement includes an unconditional release of such Indemnified Party from all liability arising out of such claim or proceeding.
 
 
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4.4          Contribution .
 
4.4.1        If the indemnification provided for in the foregoing Sections 4.1, 4.2 and 4.3 is unavailable to any Indemnified Party in respect of any loss, claim, damage, liability or action referred to herein, then each such Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such loss, claim, damage, liability or action in such proportion as is appropriate to reflect the relative fault of the Indemnified Parties and the Indemnifying Parties in connection with the actions or omissions which resulted in such loss, claim, damage, liability or action, as well as any other relevant equitable considerations.  The relative fault of any Indemnified Party and any Indemnifying Party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by such Indemnified Party or such Indemnifying Party and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.
 
4.4.2        The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 4.4 were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding Section 4.4.1.
 
The amount paid or payable by an Indemnified Party as a result of any loss, claim, damage, liability or action referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses incurred by such Indemnified Party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 4.4, no holder of Registrable Securities shall be required to contribute any amount in excess of the dollar amount of the net proceeds (after payment of any underwriting fees, discounts, commissions or taxes) actually received by such holder from the sale of Registrable Securities which gave rise to such contribution obligation.  No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of any fraudulent misrepresentation.
 
5.           UNDERWRITING AND DISTRIBUTION.
 
5.1          Demanding Holder Underwritten Offering . In the case of any registration effected pursuant to Section 2.1, the Demanding Holders shall have the right to designate a managing underwriter reasonably acceptable to the Company in any such offering which is to be an underwritten offering and, to the extent required by the underwriters, the Company and any other person including securities in such registration shall be parties to any underwriting agreement relating thereto and shall make appropriate representations and warranties and other agreements for the benefit of the underwriters and the Company.
 
5.2          Company Underwritten Offering . In the case of any registration effected pursuant to Section 2.2, the Company or another group of security holders shall have the right to designate the managing underwriter in any underwritten offering and, to the extent required by the underwriters, the holders of the Registrable Securities shall be a party to any underwriting agreement relating thereto and shall make appropriate representations and warranties and other agreements for the benefit of the underwriters and the Company.
 
 
14
 

5.3           Rule 144 .  The Company covenants that it shall file all reports required to be filed by it under the Securities Act and the Exchange Act and shall take such further action as the holders of Registrable Securities may reasonably request, all to the extent required from time to time to enable such holders to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by Rule 144 under the Securities Act, as such rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission.
 
6.           MISCELLANEOUS.
 
6.1.            Other Registration Rights .  The Company represents and warrants that, except for (i) Jing Dong Gao, Eli D. Scher and Lawrence S. Wizel under the registration rights agreement  with the Company dated November 19, 2009, and (ii) Cohen & Company with respect to the unit purchase offering issued in connection with the Company’s initial public offering, no person, other than a holder of the Registrable Securities, has any right to require the Company to register any shares of the Company's capital stock for sale or to include shares of the Company's capital stock in any registration filed by the Company for the sale of shares of capital stock for its own account or for the account of any other person.
 
6.2.            Assignment; No Third Party Beneficiaries .  This Agreement and the rights, duties and obligations of the Company hereunder may not be assigned or delegated by the Company in whole or in part.  This Agreement and the rights, duties and obligations of the holders of Registrable Securities hereunder may be freely assigned or delegated by such holder of Registrable Securities in conjunction with and to the extent of any transfer of Registrable Securities by any such holder.  This Agreement and the provisions hereof shall be binding upon and shall inure to the benefit of each of the parties hereto and their respective successors and permitted assigns.  This Agreement is not intended to confer any rights or benefits on any persons that are not party hereto other than as expressly set forth in Article 4 and this Section 6.2
 
6.3.            Notices .  All notices, demands, requests, consents, approvals or other communications (collectively, “ Notices ”) required or permitted to be given hereunder or which are given with respect to this Agreement shall be in writing and shall be personally served, delivered by reputable air courier service with charges prepaid, or transmitted by hand delivery, telegram, telex or facsimile, addressed as set forth below, or to such other address as such party shall have specified most recently by written notice.  Notice shall be deemed given on the date of service or transmission if personally served or transmitted by telegram, telex or facsimile; provided , that if such service or transmission is not on a business day or is after normal business hours, then such notice shall be deemed given on the next business day.  Notice otherwise sent as provided herein shall be deemed given on the next business day following timely delivery of such notice to a reputable air courier service with an order for next-day delivery.
 
If to the Company:
 
GSME Acquisition Partners I
762 West Beijing Road
Shanghai, PRC 200041
Attn: Chief Executive Officer
 
with a copy to:
 
Graubard Miller
The Chrysler Building
405 Lexington Avenue

 
15
 

New York, NY 10174
Attn: David Alan Miller, Esq.

If to Cathay Plastic Limited (BVI):

Cathay Plastic Limited (BVI)
c/o New Capital Management, Ltd.
14/F, St. John’s Bldg.
33 Garden Road
Central, Hong Kong
Attn:  Hermann Leung
Telephone: 852-25302212
Telecopier: 852-2147-5050

with a copy to:

Boies, Schiller & Flexner LLP
575 Lexington Avenue – 7 th Floor
New York, New York 10022
Attn: George Y. Liu, Esq.
Telephone:  212-446-2300
Telecopier:  212-446-2350
 
If to Sun Yip Industrial Company Limited (BVI):
 
Sun Yip Industrial Company Limited (BVI)
c/o Unit 01, 21/F, Aitken Vanson Centre
61 Hoi Yuen Road, Kwun Tong
Kowloon, Hong Kong.
Attn: Kin Sun Sze-To
Telephone: 852-21917155
Telecopier: 852-27796001

If to Tiger Power Industries Limited (BVI):
 
Tiger Power Industries Limited (BVI)
c/o Unit 01, 21/F, Aitken Vanson Centre
61 Hoi Yuen Road, Kwun Tong
Kowloon, Hong Kong.
Attn: Kin Sun Sze-To
Telephone: 852-21917155
Telecopier: 852-27796001

 
16
 

If to Expert Rank Limited (BVI):
 
Expert Rank Limited
c/o Unit 01, 21/F, Aitken Vanson Centre
61 Hoi Yuen Road, Kwun Tong
Kowloon, Hong Kong.
Attn: Ho Leung NING
Telephone: 852-21917155
Telecopier: 852-27796001

If to Fine Colour Limited (BVI):

Fine Colour Limited
c/o Unit 01, 21/F, Aitken Vanson Centre
61 Hoi Yuen Road, Kwun Tong
Kowloon, Hong Kong.
Attn: Chin Hien TAN
Telephone: 852-21917155
Telecopier: 852-27796001

If to Greatest Sino Holdings Limited (BVI):

Greatest Sino Holdings Limited
c/o Unit 01, 21/F, Aitken Vanson Centre
61 Hoi Yuen Road, Kwun Tong
Kowloon, Hong Kong.
Attn: Mei Ling WONG
Telephone: 852-21917155
Telecopier: 852-27796001

If to Colourful Asia International Limited (BVI):

Colourful Asia International Limited
c/o Unit 3408, China Merchant Tower
Shun Tak Centre, Sheung Wan
Hong Kong.
Attn: Yuk Sang TAM
Telephone: 852-25878683
Telecopier: 852-25877272

If to Top Universe Management Limited (BVI):

Top Universe Management Limited
c/o Unit 3408, China Merchant Tower
Shun Tak Centre, Sheung Wan
Hong Kong.
Attn: Kwok Wa HUNG

 
17
 

Telephone: 852-25878683
Telecopier: 852-25877272

And also, if to any of Sun Yip Industrial Company Limited (BVI), Tiger Power Industries Limited (BVI), Expert Rank Limited (BVI), Fine Colour Limited (BVI), Greatest Sino Holdings Limited(BVI), Colourful Asia International Limited (BVI) or Top Universe Management Limited (BVI), with a copy to:

Plastec International Holdings Limited
Unit 01, 21/F, Aitken Vanson Centre
61 Hoi Yuen Road, Kwun Tong
Kowloon, HK
Attn: Anthony Suen
Telephone: 852-21917155
Telecopier: 852-27796001

Reed Smith LLP
355 South Grand Ave., Suite 2900
Los Angeles, CA 90071
Attn: Allen Sussman, Esq.
Telephone: (213) 457-8000
Telecopier: (213) 457-8080

6.4.            Severability .  This Agreement shall be deemed severable, and the invalidity or unenforceability of any term or provision hereof shall not affect the validity or enforceability of this Agreement or of any other term or provision hereof.  Furthermore, in lieu of any such invalid or unenforceable term or provision, the parties hereto intend that there shall be added as a part of this Agreement a provision as similar in terms to such invalid or unenforceable provision as may be possible and be valid and enforceable.
 
6.5.            Counterparts; Facsimile Signatures .  This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, and all of which taken together shall constitute one and the same instrument.  Facsimile signatures shall be deemed to be original signatures for all purposes of this Agreement.
 
6.6.            Entire Agreement .  This Agreement (including all agreements entered into pursuant hereto and all certificates and instruments delivered pursuant hereto and thereto) constitutes the entire agreement of the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, representations, understandings, negotiations and discussions between the parties, whether oral or written.
 
6.7.            Modifications and Amendments .  No amendment, modification or termination of this Agreement shall be binding upon any party unless executed in writing by such party.
 
6.8.            Titles and Headings .  Titles and headings of sections of this Agreement are for convenience only and shall not affect the construction of any provision of this Agreement.

 
18
 
 
6.9.            Waivers and Extensions .  Any party to this Agreement may waive any right, breach or default which such party has the right to waive; provided , however , that such waiver will not be effective against the waiving party unless it is in writing, is signed by such party, and specifically refers to this Agreement.  Waivers may be made in advance or after the right waived has arisen or the breach or default waived has occurred.  Any waiver may be conditional.  No waiver of any breach of any agreement or provision herein contained shall be deemed a waiver of any preceding or succeeding breach thereof nor of any breach of any other agreement or provision herein contained.  No waiver or extension of time for performance of any obligations or acts shall be deemed a waiver or extension of the time for performance of any other obligations or acts.
 
6.10.         Specific Performance .  Each of the parties acknowledges and agrees that the other parties would be damaged irreparably in the event any of the provisions of this Agreement are not performed in accordance with their specific terms or otherwise are breached.  Accordingly, each of the parties agrees that the other parties shall be entitled to an injunction or injunctions (without the necessity of posting a bond or other security) to prevent breaches of the provisions of this Agreement and to enforce specifically this Agreement and the terms and provisions hereof in any action instituted in any court of the United States or any state or other foreign court or governmental body having jurisdiction over the parties and the matter, in addition to any other remedy to which they may be entitled, at law or in equity.
 
6.11.          Remedies Cumulative .  In the event that the Company fails to observe or perform any covenant or agreement to be observed or performed under this Agreement, any Investor or any other holder of Registrable Securities may proceed to protect and enforce its rights by suit in equity or action at law, whether for specific performance of any term contained in this Agreement or for an injunction against the breach of any such term or in aid of the exercise of any power granted in this Agreement or to enforce any other legal or equitable right, or to take any one or more of such actions, without being required to post a bond.  None of the rights, powers or remedies conferred under this Agreement shall be mutually exclusive, and each such right, power or remedy shall be cumulative and in addition to any other right, power or remedy, whether conferred by this Agreement or now or hereafter available at law, in equity, by statute or otherwise.
 
6.12.          Governing Law .  This Agreement shall be governed by, interpreted under, and construed in accordance with the internal laws of the State of New York applicable to agreements made and to be performed within the State of New York, without giving effect to any choice-of-law provisions thereof that would compel the application of the substantive laws of any other jurisdiction.  Each of the parties hereby agrees that any action, proceeding or claim against it arising out of or relating in any way to this Agreement shall be brought and enforced in the courts of the State of New York or the United States District Court for the Southern District of New York, and irrevocably submits to such jurisdiction, which jurisdiction shall be exclusive. Each of the parties hereby waives any objection to such exclusive jurisdiction and that such courts represent an inconvenient forum.
 
6.13.          Waiver of Trial by Jury .  Each party hereby irrevocably and unconditionally waives the right to a trial by jury in any action, suit, counterclaim or other proceeding (whether based on contract, tort or otherwise) arising out of, connected with or relating to this Agreement, the transactions contemplated hereby, or the actions of the Investor in the negotiation, administration, performance or enforcement hereof.
 
 
19
 
 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 
20
 

IN WITNESS WHEREOF, the parties have caused this Registration Rights Agreement to be executed and delivered by their duly authorized representatives as of the date first written above.
 
 
The Company:
   
 
GSME ACQUISITION PARTNERS I
   
 
By:
 
   
Name:
   
Title:
     
 
The Investors:
   
 
SUN YIP INDUSTRIAL COMPANY LIMITED (BVI)
     
 
By:
 
   
Name:
   
Title:
     
 
TIGER POWER INDUSTRIES LIMITED (BVI)
     
 
By:
 
   
Name:
   
Title:
     
 
EXPERT RANK LIMITED (BVI)
     
 
By:
 
   
Name:
   
Title:
     
 
FINE COLOUR LIMITED (BVI)
     
 
By:
 
   
Name:
   
Title:
 
 
 
 

 
CATHAY PLASTIC LIMITED (BVI)
     
 
By:
 
   
Name:
   
Title:
     
 
GREATEST SINO HOLDINGS LIMITED (BVI)
     
 
By:
 
   
Name:
   
Title:
     
 
COLOURFUL ASIA INTERNATIONAL LIMITED (BVI)
     
 
By:
 
   
Name:
   
Title:
     
 
TOP UNIVERSE MANAGEMENT LIMITED (BVI)
     
 
By:
 
   
Name:
   
Title:
 
 
 
 
 
AMENDMENT NO. 1
TO
REGISTRATION RIGHTS AGREEMENT
 
This Amendment No.1 to the Registration Rights Agreement (this “Amendment”) is made and entered into as of December 16, 2010, by and among GSME Acquisition Partners I., a Cayman Islands company (“GSME”), and the undersigned parties listed under Investor on the signature page to this Amendment (the “Investors” and, together with GSME, the “Parties”).
 
RECITALS
 
WHEREAS, the Parties entered into a Registration Rights Agreement dated as of November 19, 2009 (the “ Registration Rights Agreement ”);
 
WHEREAS , the Parties wish to clarify that certain rights granted to the Investors under the Registration Rights Agreement do not conflict with rights subsequently granted by GSME to certain of its shareholders (“ New Investors ”) in connection with the consummation of that certain Amended and Restated Agreement and Plan of Reorganization, dated as of September 13, 2010, as amended on December 9, 2010, among GSME, GSME Acquisition Partners I Sub Limited, Plastec International Holdings Limited and the New Investors;
 
WHEREAS , pursuant to Section 6.7 of the Registration Rights Agreement, no amendment of the Registration Rights Agreement will be effective unless in writing signed by Parent and the Investors; and
 
WHEREAS , the Parties wish to amend the Registration Rights Agreement as set forth herein.
 
NOW, THEREFORE, in consideration of the foregoing premises and the mutual representations, warranties and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, agree as follows:
 
1.            Section 1 of the Registration Rights Agreement is hereby amended by adding the following definitions:
 
“ New Registrable Securities ” means the Registrable Securities covered by the New Registration Rights Agreement.
 
“ New Registration Rights Agreement ” means that certain Registration Rights Agreement dated December 16, 2010 by and among the Company and the investors identified therein.
 
2.            Section 2.1.4 of the Registration Rights Agreement is hereby amended by replacing it in its entirety with following:
 
 
Reduction of Offering . If (x) the managing Underwriter or Underwriters for a Demand Registration that is to be an underwritten offering advises the Company and the Demanding Holders in writing that the dollar amount or number of shares of Registrable Securities which the Demanding Holders desire to sell, taken together with all other Ordinary Shares or other securities which the Company desires to sell and the Ordinary Shares, if any, as to which registration has been requested pursuant to written contractual piggy-back registration rights held by other shareholders of the Company who desire to sell, exceeds the maximum dollar amount or maximum number of shares that can be sold in such offering without adversely affecting the proposed offering price, the timing, the distribution method, or the probability of success of such offering or (y) the Staff of the Commission does not permit all of the Registrable Securities requested by the Demanding Holders, taken together with all other Ordinary Shares or other securities which the Company desires to sell and the Ordinary Shares, if any, as to which registration has been requested pursuant to written contractual piggy-back registration rights held by other shareholders of the Company who desire to sell, to be included in the Registration Statement filed for a Demand Registration (the maximum dollar amount or maximum number of shares, as applicable, that can be sold or registered in the Demand Registration are referred to herein as the “ Maximum Number of Shares ”), then the Company shall include in such registration: (i) first, the Registrable Securities as to which Demand Registration has been requested by the Demanding Holders and the Ordinary Shares or other securities, if any, comprised of New Registrable Securities as to which registration has been requested pursuant to the applicable piggy-back rights contained in the New Registration Rights Agreement (pro rata in accordance with the number of shares which each such person has requested be included in such registration, regardless of the number of shares held by each such person (such proportion, “ Pro Rata ”)) that can be sold without exceeding the Maximum Number of Shares; (ii) second, to the extent that the Maximum Number of Shares has not been reached under the foregoing clause (i), the Ordinary Shares or other securities that the Company desires to sell that can be sold without exceeding the Maximum Number of Shares; (iii) third, to the extent that the Maximum Number of Shares has not been reached under the foregoing clauses (i) and (ii), the Ordinary Shares or other securities registrable pursuant to the terms of the Unit Purchase Option to be issued to Cohen & Company Securities, LLC (“ Cohen & Company ”) or its designees in connection with the Company’s initial public offering on November 25, 2009 (the “ Unit Purchase Option ” and such registrable securities, the “ Option Securities ”) as to which "piggy-back" registration has been requested by the holders thereof, Pro Rata, that can be sold without exceeding the Maximum Number of Shares; (iv) fourth, to the extent that the Maximum Number of Shares has not been reached under the foregoing clauses (i),  (ii) and (iii), the Ordinary Shares or other securities for the account of other persons that the Company is obligated to register pursuant to written contractual arrangements with such persons and that can be sold without exceeding the Maximum Number of Shares; and (iv) fifth, to the extent that the Maximum Number of Shares have not been reached under the foregoing clauses (i), (ii), (iii) and (iv), the Ordinary Shares or other securities that other security holders desire to sell that can be sold without exceeding the Maximum Number of Shares.
 
3.            Section 2.2.2 of the Registration Rights Agreement is hereby amended by replacing it in its entirety with the following:
 
 
Reduction of Offering . If (x) the managing Underwriter or Underwriters for a Piggy-Back Registration that is to be an underwritten offering advises the Company and the holders of Registrable Securities in writing that the dollar amount or number of Ordinary Shares which the Company desires to sell, taken together with Ordinary Shares, if any, as to which registration has been demanded pursuant to written contractual arrangements with persons other than the holders of Registrable Securities hereunder, the Registrable Securities as to which registration has been requested under this Section 2.2, and the Ordinary Shares, if any, as to which registration has been requested pursuant to the written contractual piggy-back registration rights of other shareholders of the Company, exceeds the Maximum Number of Shares, or (y) the Staff of the Commission does not permit all of the Registrable Securities requested by the Holders, taken together with all other Ordinary Shares or other securities which the Company desires to sell and the Ordinary Shares, if any, as to which registration has been requested pursuant to written contractual piggy-back registration rights held by other shareholders of the Company who desire to sell,   to be included in the Registration Statement filed for the Piggy-Back Registration, then the Company shall include in any such registration:
 
a)           If the registration is undertaken for the Company’s account: (A) first, the Ordinary Shares or other securities that the Company desires to sell that can be sold without exceeding the Maximum Number of Shares; (B) second, to the extent that the Maximum Number of Shares has not been reached under the foregoing clause (A), the Ordinary Shares or other securities, if any, comprised of Registrable Securities, New Registrable Securities and Option Securities, as to which registration has been requested pursuant to the applicable written contractual piggy-back registration rights of such security holders, Pro Rata, that can be sold without exceeding the Maximum Number of Shares; and (C) third, to the extent that the Maximum Number of shares has not been reached under the foregoing clauses (A) and (B), the Ordinary Shares or other securities for the account of other persons that the Company is obligated to register pursuant to written contractual piggy-back registration rights with such persons and that can be sold without exceeding the Maximum Number of Shares;
 
b)           If the registration is a “demand” registration undertaken at the demand of holders of Option Securities, (A) first, the Ordinary Shares or other securities for the account of the demanding persons, Pro Rata, that can be sold without exceeding the Maximum Number of Shares; (B) second, to the extent that the Maximum Number of Shares has not been reached under the foregoing clause (A), the Ordinary Shares or other securities that the Company desires to sell that can be sold without exceeding the Maximum Number of Shares; (C) third, to the extent that the Maximum Number of Shares has not been reached under the foregoing clauses (A) and (B), the shares of Registrable Securities and New Registrable Securities, Pro Rata, as to which registration has been requested pursuant to the terms hereof or the New Registration Rights Agreement, as applicable, and that can be sold without exceeding the Maximum Number of Shares; and (D) fourth, to the extent that the Maximum Number of Shares has not been reached under the foregoing clauses (A), (B) and (C), the Ordinary Shares or other securities for the account of other persons that the Company is obligated to register pursuant to written contractual arrangements with such persons, that can be sold without exceeding the Maximum Number of Shares;
 
c)           If the registration is a “demand” registration pursuant to the New Registration Rights Agreement, securities as provided therein; and
 
 
d)           If the registration is a “demand” registration undertaken at the demand of persons other than the holders of Registrable Securities, New Registrable Securities or Option Securities, then (A) first, the Ordinary Shares or other securities for the account of the demanding persons, Pro Rata, that can be sold without exceeding the Maximum Number of Shares; (B) second, to the extent that the Maximum Number of Shares has not been reached under the foregoing clause (A), the Ordinary Shares or other securities that the Company desires to sell that can be sold without exceeding the Maximum Number of Shares; (C) third, to the extent that the Maximum Number of Shares has not been reached under the foregoing clauses (A) and (B), collectively the Ordinary Shares or other securities comprised of Registrable Securities, Option Securities and New Registrable Securities, Pro Rata, as to which registration has been requested pursuant to the terms hereof, of the Unit Purchase Option or of the New Registration Rights Agreement, as applicable, that can be sold without exceeding the Maximum Number of Shares; and (D) fourth, to the extent that the Maximum Number of Shares has not been reached under the foregoing clauses (A), (B) and (C), the Ordinary Shares or other securities for the account of other persons that the Company is obligated to register pursuant to written contractual arrangements with such persons, that can be sold without exceeding the Maximum Number of Shares.
 
[ Signature page follows ]
 
 
IN WITNESS WHEREOF , the parties have caused this Amendment No. 1 to the Registration Rights Agreement to be executed and delivered by their duly authorized representatives as of the date first written above.
 
 
GSME ACQUISITION PARTNERS I
   
By:
 
 
Name:
 
Title:
   
 
INVESTORS:
   
 
MCK CAPITAL CO., LIMITED
   
By:
 
 
Jing Dong Gao
   
   
 
Eli D. Scher
   
   
 
Lawrence S. Wizel
 

AMENDMENT NO. 1 TO UNIT PURCHASE OPTIONS
 
WHEREAS, GSME Acquisition Partners I (the “Company”) wishes to clarify that certain rights granted under those certain Unit Purchase Options (“Unit Purchase Options”) issued to Cohen & Company Securities, LLC (“Cohen”) and its designees do not conflict with rights subsequently granted by the Company to certain of its shareholders (“New Investors”) in connection with the consummation of that certain Amended and Restated Agreement and Plan of Reorganization, dated as of September 13, 2010, as amended on December 9, 2010, among GSME, GSME Acquisition Partners I Sub Limited, Plastec International Holdings Limited and the New Investors;
 
WHEREAS, pursuant to Section 9.1 of the Unit Purchase Options, the Company and Cohen may from time to time supplement or amend the Unit Purchase Options without the approval of any of the holders in order to cure any ambiguity or to make any other provisions in regard to matters or questions arising thereunder that the Company and Cohen may deem necessary or desirable and that the Company and Cohen deem shall not adversely affect the interest of the holders of such Unit Purchase Options; and
 
WHEREAS, the Company and Cohen wish to amend the Unit Purchase Options as follows.
 
NOW, THEREFORE, in consideration of the foregoing premises and the mutual representations, warranties and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:
 
1.            Section 5.2.1 is hereby amended by replacing it in its entirety with the following:
 
5.2.1 Grant of Right.
 
In addition to the demand right of registration, the Holders of the Purchase Options shall have the right for a period of seven (7) years commencing on the Effective Date, to include the Registrable Securities as part of any other registration of securities filed by the Company (other than in connection with a transaction contemplated by Rule 145(a) promulgated under the Act or pursuant to Form S-4 or Form S-8); provided, however, that if, (x) the managing underwriter or underwriters, if any, for such offering advises the Company and the holder in writing that the dollar amount or number of shares of Registrable Securities which the holder desire(s) to sell, taken together with all other Ordinary Shares or other securities which the Company desires to sell and the Ordinary Shares, if any, as to which registration has been requested pursuant to written contractual piggy-back registration rights held by other shareholders of the Company who desire to sell, exceeds the maximum dollar amount or maximum number of shares that can be sold in such offering without adversely affecting the proposed offering price, the timing, the distribution method, or the probability of success of such offering or (y) the Staff of the Securities and Exchange Commission does not permit all of the Registrable Securities requested by the holders, taken together with all other Ordinary Shares or other securities which the Company desires to sell and the Ordinary Shares, if any, as to which registration has been requested pursuant to written contractual piggy-back registration rights held by other shareholders of the Company who desire to sell, to be included in the Registration Statement (the maximum dollar amount or maximum number of shares, as applicable, that can be sold or registered are referred to herein as the “Maximum Amount”), then the securities to be sold by the Company to all shareholders (including the holders of Registrable Securities) in such public offering shall be included as follows:
 
 
 
 
 
(A)      If the registration is a “demand” registration pursuant to the New Registration Rights Agreement or the Existing Registration Rights Agreement (each as defined below), securities as provided therein.
 
(B)      If the registration is a “demand” registration undertaken at the demand of persons other than the holders of Registrable Securities, Existing Registrable Securities (as defined in the New Registration Rights Agreement) or New Registrable Securities (as defined in the Existing Registration Rights Agreement) then:
 
(w)           first, the number of securities for the account of persons exercising a written contractual arrangement to demand registration that can be sold without exceeding the Maximum Amount and any other persons entitled to pro rata registration alongside such persons pursuant to the terms of such contractual arrangement;
 
(x)            second, to the extent that the Maximum Amount has not been reached under the foregoing clause (w), the number of securities that the Company desires to sell that can be sold without exceeding the Maximum Amount; and
 
(y)            third, to the extent that the Maximum Amount has not been reached under the foregoing clauses (w) and (x) the number of securities (including the Registrable Securities) as to which registration has been requested pursuant to written contractual “piggy-back” registration rights of holders pursuant to this Agreement and the holders of registrable securities pursuant to that certain Registration Rights Agreement dated as of the 16 day of 2010 (“New Registration Rights Agreement”) and that certain Registration Rights Agreement, dated as of November 19, 2009, as amended as of the 16 day of 2010 (the “Existing Registration Rights Agreement”) (pro rata between such holders in accordance with the number of Ordinary Shares which each such selling shareholder has actually requested to be included in such registration, regardless of the number of Ordinary Shares with respect to which such holders have the right to request such inclusion) that can be sold without exceeding the Maximum Amount; and

 
 
 
 
(z)            fourth, to the extent that the Maximum Amount has not been reached under the foregoing clauses (w), (x) and (y) the number of securities as to which registration has been requested pursuant to written contractual “piggy-back” registration rights of other selling shareholders, (pro rata between such selling shareholders in accordance with the number of Ordinary Shares which each such selling shareholder has actually requested to be included in such registration, regardless of the number of Ordinary Shares with respect to such selling shareholders have the right to request such inclusion) that can be sold without exceeding the Maximum Amount.
 
(C)      In the event that the Company proposes to register its securities (in circumstances other than by persons exercising a written contractual arrangement to demand registration) in an underwritten offering subject to a Maximum Amount, then the securities to be sold in such public offering shall be included as follows:
 
(x)            first, the number of securities that the Company desires to sell that can be sold without exceeding the Maximum Amount; and
 
(y)            second, to the extent that the Maximum Amount has not been reached under the foregoing clause (x) the number of securities (including the Registrable Securities) as to which registration has been requested pursuant to written contractual “piggy-back” registration rights of holders pursuant to this Agreement and the holders of registrable securities pursuant to the New Registration Rights Agreement and the Existing Registration Rights Agreement (pro rata between such holders in accordance with the number of Ordinary Shares which each such selling shareholder has actually requested to be included in such registration, regardless of the number of Ordinary Shares with respect to which such holders have the right to request such inclusion) that can be sold without exceeding the Maximum Amount; and
 
(z)             third, to the extent that the Maximum Amount has not been reached under the foregoing clauses (x) and (y) the number of securities as to which registration has been requested pursuant to written contractual “piggy-back” registration rights of other selling shareholders, (pro rata between such selling shareholders in accordance with the number of Ordinary Shares which each such selling shareholder has actually requested to be included in such registration, regardless of the number of Ordinary Shares with respect to which such selling shareholders have the right to request such inclusion) that can be sold without exceeding the Maximum Amount.
 
[Signature pages follows]

 
 
 

IN WITNESS WHEREOF, the Company has caused this Amendment No. 1 to the Unit Purchase Options to be signed by its duly authorized officer as of December 16 , 2010.

 
GSME ACQUISITION PARTNERS I
   
By:
 
Name:
 
Title:

Agreed and accepted:
 
COHEN & COMPANY SECURITIES, LLC
 
By:
 
Name:
 
Title:
 
 
 
 
 
 
GSME Acquisition Parnters I
762 West Beijing Road
Shanghai, Peoples Republic of China
200041
 
Ladies and Gentlemen:
 
Reference is hereby made to the Underwriting Agreement, dated as of November 19, 2009 by and between GSME Acquisition Partners I, a Cayman Islands company (" GSME "), and Cohen & Company Securities LLC, as representative of each of the undersigned (the " Underwriting Agreement "). Defined terms shall have the meaning ascribed to such terms in the Underwriting Agreement.
 
The undersigned hereby agree to waive their respective rights to receive any portion of the Deferred Discount pursuant to the Underwriting Agreement.
 
IN WITNESS WHEREOF, the undersigned have executed this Letter Agreement as of December 3, 2010.
 
COHEN & COMPANY SECURITIES, LLC, as representative of the several Underwriters
 
By:
/s/ Christopher Ricciardi
Name:   Christopher Ricciardi
Title:
 
RODMAN & RENSHAW, LLC, co - manager
 
By:
/s/ John Borer
Name:
John Borer
Title:
Sr. Managing Director
 
I-BANKERS SECURITIES INC., co-manager
 
By:
/s/ Mike McCrory
Name:
Mike McCrory

 

JBPB & Co
 
Private & Confidential
 
Securities and Exchange Commission
100 F Street N.E.
Washington, D.C. 20549

 
JBPB & Co
 
(formerly known as Grant Thornton)
 
6th Floor, Nexxus Building
41 Connaught Road Central
Hong Kong
 
T +852 2218 3000
December 16, 2010
F   +852 3748 2000
 
Dear Sirs,
 
We have been furnished with a copy of the response to Item 1c of the Form 20-F of Plastec Technologies, Ltd. for the event that occurred on November 29 ,   2010 in relation to resignation of independent auditor of Plastec International Holdings Limited. We agree with the statements made in response to that Item insofar as they relate to our Firm.
  
Very truly yours,
 
 
JBPB & Co.
(formerly known as Grant Thornton)
 
Certified Public Accountants

 
 
 
 
 
 
December 16, 2010
 
Securities and Exchange Commission
100 F Street N.E.
Washington, D.C. 20549
 
We have been furnished with a copy of the response to Item 1c of the Form 20-F of Plastec Technologies, Ltd for the event that occurred on October 8, 2010, in relation to resignation of independent auditor of Plastec International Holdings Limited. We agree with the statements made in response to that Item insofar as they relate to our Firm.

Very truly yours,
 
 
Dominic K.F. Chan & Co.
 
 
 
 
EXHIBIT 8

Subsidiaries of Registrant

Name
 
Percentage   Ownership
 
Jurisdiction   of   Organization
         
Plastec International Holdings Limited
  
100
  
BVI