1.1 Borrower and lender of the stocks shall execute a "Securities Lending Agreement" in duplicate.

1.2 Stock borrower shall sign and deliver in duplicate a "Stock Borrowing and Lending Agreement Registration Form" to us for submission to the Hong Kong Inland Revenue Department, and pay HK$500 as the registration fee of the Hong Kong Inland Revenue Department and our handling fee. The account opening process and registration at the Hong Kong Inland Revenue Department take about 20 working days.

1.3 Stock lender shall sign and deliver in duplicate to us a Notification of Execution of Stock Borrowing and Lending Agreement by Lender; for submission to the Hong Kong Inland Revenue Department. The settlement system will record all executed securities lending agreement and submit report to the Hong Kong Inland Revenue Department regularly.

2.1. All transactions of stock borrowing and lending can only be executed through designated custodian account for stock borrowing and lending (stock borrowing and lending business and general stock trading business are handled separately by two different accounts).

2.2 After the Hong Kong Inland Revenue Department completed the handling process and the stock borrowing and lending account has been successfully opened, our operation department will send confirmation letter to client by email or by post.

3.1. Clients can make orders through Relationship Manager and request for stock borrowing. The borrower must state precisely the stock name and the quantity of the stock to be borrowed, otherwise the request from client on stock borrowing will not be accepted. In addition, the stock ordered by the borrower must be among the stocks on the latest updated HKEX's list of "Designated Securities Eligible for Short Selling", otherwise the client cannot borrow and short sell the stock.

3.2. When the stock borrowing application of the client has been accepted, officer of the stock borrowing and lending team will check whether we have enough quantity of shares for lending. If the quantity of the stock in our holding is not sufficient to meet the demand of client, the officer will liaise with other business partners for seeking enough quantity of shares to satisfy the demand of the client. After confirming that there are sufficient quantity of shares, our Relationship Manager will inform the client that the borrowing of shares has been completed.

3.3 Client, shall at the time of stock borrowing application, maintain cash in the stock borrowing and lending account which is not bellow 120% of the market value of the stocks to be borrowed as collateral. During the tenor of the stock borrowing, client shall maintain cash collateral equal or above the aforesaid level subject to the daily rise or fall in the market value of the stocks borrowed.

3.4 After successfully borrowing the stock from the stock borrowing and lending team, client may place short sell order by connecting to our Relationship Manager or dialing the HK Dealing Hotline: (852) 2250 0898 or (852) 2250 0899.

4.1. On the last trading day of each month, we will deduct the handling fee for the securities borrowing of the month from the account of the borrower. The daily handling fee is charged according to: (the closing price of the borrowed shares) x (quantity of the borrowed shares) x (handling fee rate per annum) / 365 days.

4.2. The minimum period for borrowing securities is 7 days (based on calendar day) from the day immediately after the date of settlement. The client must borrow the shares at least 7 days prior to request for return of shares, but we reserve the rights to request the return of shares at any time.

5.1. The amount of the required collateral on each day is determined according to the changes in market value of the borrowed shares, we will compute the daily changes in market value of the shares after the close of market and based on the closing price of the shares.

5.2. If the price of the borrowed shares rises, the required collateral amount will be increased accordingly. If additional collateral deposit is required due to the increase in the price of the shares, we will issue a "Collateral Call" by e-mail, phone call and message, requesting the client to make up the required difference no later than the next working day; if the price of the borrowed shares falls, the required collateral amount will be reduced accordingly, settlement department will deposit the excess balance to the client's SBL account, and the client has the right to withdraw such balance. If the market situation fluctuates and the price of the shares rises or falls sharply, we shall have the rights to compute the changes in required collateral amount based on the current market price of the shares during trading session and deduct/deposit the relevant amount difference in the securities borrowing and lending account.

Guotai Junan reserves the rights to request clients to return the borrowed shares at any time. After receiving notice from our officer of stock borrowing and lending service, the client is responsible to return the shares within T+2 trading days. Otherwise, we will buy back the unreturned shares from the market on behalf of the client, and the cost and fee involved will be payable by the client.

The client can return the shares by purchasing the shorted shares by connecting our Relationship Manager or dialing the HK Shares Dealing Hotline: (852) 2250 0898 or (852) 2250 0899, or deposit shares from other brokers, and then give instruction to Relationship Manager for return of shares. Once settlement of the stock is completed and deposited to the client's securities borrowing and lending account, we will deposit the required collateral into the client's securities borrowing and lending account, and at the same time withdraw the shares returned from such account, and the entire process of securities borrowing and lending will be completed.

8.1. Short selling is a bearish investment strategy, the stock price may drop to zero (valueless), and the rise in stock price is theoretically unlimited. The risk of loss of the required collateral deposited for short-selling transactions may be significant, and the client's losses may exceed the amount of cash deposited with Guotai Junan Securities and any other assets deposited with its affiliate companies.

8.2. Clients must borrow the designated shares that are eligible for short selling and have a clear understanding of the rules of the Hong Kong Stock Exchange before they conduct short-selling transactions or otherwise the customers may breach the law. Under the 《Hong Kong Securities and Futures Ordinance》 and the《Rules of the Exchange》of the HKEX, investors are not allowed to short sell any stock unless they have or reasonably believe that they can successfully borrowed the shares at the time of short selling. In addition, short selling transactions can only be conducted through automatic matching and trading system of Stock Exchange, and short selling transactions cannot be carried out at a price lower than the existing best selling price.

8.3. The amount of shares to be borrowed and the interest rate of borrowing will be based on the prevailing market conditions and the supply and demand of the shares in the market. According to the market conditions, clients may not be able to borrow the number of shares they applied for, or may bear a higher interest rate on the shares borrowed.

8.4. Market conditions may cause the buy and sell orders issued by the clients, such as "short sell" or "buy back" instructions to be unenforceable.

8.5. If the share price of the borrowed shares rises, the client may be required to deposit additional collateral (to settle collateral call) in a short period of time to maintain the minimum collateral level required by us.

8.6. If the client fails to deposit additional collateral at the specified period of time to maintain the required miniumum collateral ratio required by us, the client may be required to pay additional interest for the balance overdue (the interest rate will be at Prime rate plus 8 percent or a rate to be determined by Guotai Junan Securities), the short selling position of the client may also be liquidated without consent of the client, i.e. we have the rights to buy back the corresponding shares at pre-alert market price and settle the transaction immediately and the client will be liable for any outstanding balances and accrued interest of the account.

8.7. The corporate actions that may be involved in the issuers of shares borrowed, for example, distribution of dividends, bonus shares, placement of new shares etc., are receivable to the lender of the shares. Even though the client has already sold the borrowed shares and failed to collect the amount receivable from the corporate actions, the client is still required to pay the dividends and bonus shares to the lender within the specified time required by the lender to fulfill the obligation of the borrower.

8.8. If the shares borrowed by the client are suspended, the required collateral deposited for the stock borrowing will be frozen and not be allowed to withdraw nor use until trading of the shares resumes.

8.9. The lender of the shares has the absolute rights to terminate the trade at any time and request the client to return the shares. The client may suffer a loss at buying back and returning the relevant shares to the lender.

8.10. Clients should duly consider the suitability of stock borrowing and lending and short selling for themselves based on their financial situations and investment objectives.