Exhibit 10.4
 
Contract No.: 04060003-2012 Nian Ye Ban (Di) Zi, No. 0038
 
Maximum Mortgage Contract
 
Important Notes: This Contract is entered into by and between the parties on the
basis of equal footing and willingness in accordance with applicable laws and
regulations. All terms hereof reflect true intents of the parties hereto. In
order to secure legal rights of the Mortgagor, the Mortgagee hereby reminds the
Mortgagor of reading the terms in boldface in a careful manner, and of paying
close attention to the meanings of such terms.
 
This Maximum Mortgage Contract (“Contract”) is entered into by and between:
 
Mortgagee: Industrial and Commercial Bank of China, (Xingtai Yejin Branch)
(“Party A”)
Responsible Officer: QI, Ruixia
Business Address: No. 128, Yejin Nanlu, Xingtai City
Tel and Fax: 2209100
 
And
 
Mortgagor: Hebei Zhongding Real Estate Development Co., Ltd. (“Party B”)
Legal Representative: GUO, Jianfei
Business Address or Residence: south-east corner of the cross of Gangtie Beilu
and Yongjun Jiekou, Xingtai City
Tel and Fax: 5908806
 
For ensuring Party A's claims, Party B is willing to provide Party A with
mortgage guarantee (counter guarantee).
 
This Contract is entered into by and between Party A and Party B in order to
define their respective rights and obligations, through negotiation based on
equal footing, in accordance with the Contract Law, the Guarantee Law, the
Property Law and other applicable laws and regulations.
 
Article 1 Guaranteed Principal Claims
 
1.1
Principal claims guaranteed by Party B shall be the claims against the Debtor
under borrowing contract, bank acceptance agreement, L/C opening contract,
guarantee agreement and other financing documents (“Principal Contracts”)
between Party A and Xingtai Zhongding Jiye Real Estate Development Co., Ltd.
(“Debtor”), for the maximum balance to the extent of RMB 217,800,000 (RMB Two
Hundreds and Seventeen Million and Eight Hundreds Thousands, in words) (the
amount in words shall prevail in the event of any difference between the amount
in words and number), from September 19, 2012 to September 18, 2015 (including
commencement date and expiry date) (“Effective Term”), irrespective of whether
such claims become due during the above period, or of whether such claims have
occurred before the maximum mortgage is created.

 
 
 

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1.2
The above “Maximum Balance” shall mean the total balances of the claims in RMB
converted from different foreign exchanges at the middle price of foreign
exchange published by Party A on the date when the Principal Claims under Party
A's guarantee liability are determined.

 
Article 2 Guaranteed Scope
 
Party B's Maximum Mortgage covers principals of Principal Claims, interest
accruals thereon, penalties, compound interests, liquidated damages, damages and
fees used for realization of the mortgages (including but not limited to court
fees, attorney's fees, and appraisal fees). However, the fees used for
realization of the mortgages shall be firstly taken out from revenues of sale of
the collaterals, not included in the Maximum Balance under Article 1.1 hereof.
 
Article 3 Collaterals
 
3.1
Please refer to the Collaterals List for details of the Collaterals. Such list
attached to this Contract shall have the same force and effect with this
Contract.

 
3.2
Party A's mortgages shall be extended to accessory things, accessory rights,
attachments, additions, natural and legal fruits, substitutes of and arising
from the Collaterals, and insurance proceeds, damages and compensations arising
from loss, destruction or forfeiture of the Collaterals.

 
3.3
If the Collaterals are seized by the People's Court according to laws due to any
failure to perform its due obligations by the Debtor or realization of mortgages
hereunder, Party A shall be entitled to collect natural and legal fruits from
the Collaterals from the date of such seizure. And such fruits shall be firstly
used for paying for collection of the same.

 
3.4
The agreed values of Collaterals on the Collaterals List shall not be deemed as
the appraisal grounds for disposal of such Collaterals by Party A, nor limit
Party A's rights to exercise the mortgages.

 
3.5
Unless otherwise as provided in the laws, title certificates and relevant
information of Collaterals shall be kept by Party A after jointly confirmed by
Party A and Party B.

 
3.6
During the mortgage, Party B shall keep the Collaterals in good conditions
without reducing their values by using such Collaterals in an unreasonable
manner. Meanwhile, Party A shall be entitled to have access to the use of
Collaterals from time to time.

 
3.7
Party B shall promptly inform Party A of any destruction, loss or forfeiture of
the Collaterals, as well as submit to Party A the certifications specifying any
such destruction, loss or forfeiture issued by relevant competent authorities or
department in a timely manner.

 
3.8
If the Collaterals are destroyed, lost or forfeited, the insurance proceeds,
damages or compensations obtained by Party B shall be applied to clear the
Debtor's obligations under the Principal Contracts in advance, or to recover
values of Collaterals upon consents of Party A, or shall be deposited into an
account as designated by Party A, so as to guarantee performance of obligations
under the Principal Contracts. The values of Collaterals that have not been
reduced shall be applied to guarantee the Principal Claims.

 
3.9
Party B shall cease any of its activities that is enough to reduce values of the
Collaterals; if values of the Collaterals are reduced due to any such
activities, it shall be obligated to recover values of the Collaterals, or
provide other collaterals whose values equal to the reduced values.

 
 
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Article 4 Registration of Mortgage
 
The parties shall complete the mortgage registration with relevant mortgage
registrar within ten days after the execution of this Contract. Party A and
Party B shall complete the changes in registration in a timely manner if the
registered particulars are changed and it is required to complete the changes in
registration according to law.
 
Article 5 Insurance
 
5.1
Party B shall insure the Collaterals at the request of Party A within fifteen
days after the execution of this Contract. If the insurance for Collaterals
cannot be completed once off due to reasons attributable to the insurer, Party B
shall promptly complete insurance formalities to ensure continuous property
insurance for the Collaterals during the Effective Term.

 
5.2
It is required to name Party A as the preferred beneficiary (the first
beneficiary) in the policies at the time of occurrence of insured accidents. The
insurer shall directly pay insurance proceeds to Party A. No provisions limiting
Party A's benefits shall be contained in such policies.

 
5.3
Party B shall not cease or cancel the insurance during the Effective Term. If
Party B ceases the insurance, Party A shall be entitled to insure the
Collaterals at sole costs of Party B.

 
5.4
If the Collaterals meet any insured accidents during the Effective Term, the
insurance proceeds shall be disposed subject to Article 3.8 hereof.

Article 6 Determination of Principal Claims
 
The claims under the Maximum Mortgage shall be determined under any of the
following circumstances:
 
A.
Effective Term under Article 1.1 expires;

 
B.
It is impossible for new claims to occur;

 
C.
Mortgaged properties have been sealed and/or seized;

 
D.
The Debtor and/or Party B has been declared as bankrupt or has been cancelled;

 
E.
Other circumstances as provided for determination of claims by the laws.

 
Article 7 Floating Mortgage
 
7.1
Party B shall create the mortgages on its existing and future production
equipment, raw materials, semi-finished products and products. The mortgaged
properties shall be determined under any of the following circumstances:

 
A.
Party A's claims are not satisfied when the period for performance of
obligations becomes expiry;

 
B.
Party B has been declared as bankrupt or has been cancelled;

 
C.
Circumstances under Article 8.1 hereof, causing Party A to exercise its mortgage
rights, have occurred;

 
 
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D.
Other circumstances, materially impacting Party A's claims, have occurred.

 
7.2
If Party B creates the Maximum Mortgage on the above properties, other
provisions hereof shall be applied as well, unless otherwise provided in this
Article.

 
Article 8 Realization of Mortgage
 
8.1
Party A has the right to realize the mortgages under any of the following
circumstances:

 
A.
The Debtor fails to discharge its obligations when Party A's Principal Claims
become due (including becoming due earlier);

 
B.
Party B fails to recover values of the Collaterals or provide other collaterals
whose values equal to reduced values in the event of  occurrence of
circumstances as specified in Article 3.9 hereof;

 
C.
Party B or the Debtor is petitioned for bankruptcy or out-of-business,
dissolution, liquidation, or suspended for reorganization, or its  business
license is cancelled or withdrawn;

 
D.
Party B disposes the Collaterals under the floating mortgages by going beyond
the arm's length transaction in its production and  operation;

 
E.
Other circumstances as provided by the laws and regulations, according to which
Party A may realize the mortgages.

 
8.2
When realizing the mortgages, Party A may be indemnified with priority from the
proceeds arising out of auction of the Collaterals, or offset obligations owed
by the Debtor by appraised prices of the Collaterals, based on its negotiation
with Party B. If the parties fail to agree on realization of mortgages, Party A
may directly apply to the People's Court for disposing the Collaterals by
auction or sales.

 
8.3
If currency of the proceeds from disposal of the Collaterals is different from
such currency as set forth in the Principal Contracts, it is required to satisfy
Party A's claims after such proceeds are converted into the money in currency of
the Principal Contracts at applicable exchange rate published by Party A.

 
Article 9 Representations and Warranties by Party B
 
Party B hereby represents and warrants to Party A as follows:
 
9.1
Party B is the owner, or the manager authorized by the State, of the Collaterals
hereunder, and it has full rights to dispose the Collaterals. No dispute in
respect of ownership, right to use, or right to operate and manage on the
Collaterals exists. Party B has obtained authorization or approvals necessary to
the mortgages pursuant to procedures and authority as set forth in its articles
of association, without any violation of laws, regulations and other provisions.

 
9.2
If it is a listed company or a subsidiary controlled by a listed company, it
shall disclose the guarantees in a timely manner as required by the Securities
Law, the Listing Rules of Stock Exchange, and other applicable laws, regulations
and rules.

 
9.3
It is willing to create the mortgages in favor of the Debtor, and all of its
intents hereunder is its true intends. For international/domestic trade
financing, Party B acknowledged that the financing is based on true transaction
without fraud.

 
 
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9.4
The Collaterals can be created with mortgages according to law without any
limitations.

 
9.5
If there are defects on the Collaterals, such defects have been reasonably
stated in any respect.

 
9.6
The Collaterals have not been sealed, seized or monitored.

 
9.7
If the Collaterals have been leased in part or whole, the mortgages have been
well notified to the Lessee, and such lease has been  notified to Party A in
writing.

 
9.8
No mortgage has been created on the Collaterals in favor of other creditors; or
such mortgage has been well notified to Party A in  writing if any such mortgage
was created.

 
9.9
The Collaterals are not co-owned, or the mortgages have been agreed on in
writing by other co-owners if such Collaterals are co-owned.

 
9.10
If the claim under this Contract is an international financing provided by Party
A to Debtor, Party B accepts and agrees relevant international custom in
connection with such business.

 
Article 10 Undertakings by Party B
 
Party B hereby undertakes to Party A as follows:
 
10.1
Party B shall continue to perform its guarantee liability hereunder without its
further consents under any of the following circumstances:

 
A.
Party B's guarantee liability has not been increased if Party A and the
principal Debtor change the Principal Contracts through negotiation;

 
B.
In the event of international/domestic trade financing, Party A and the Debtor
modify the letter of credit related to the Principal Contracts without
increasing the Debtor’s payment obligations or extending the payment term under
the letter of credit.

 
C.
Party A transfers the Principal Claims and the Maximum Mortgage.

 
10.2
Without prior written consents of Party A, it shall not re-create any mortgage
or charge on the Collaterals in any way, nor lease, transfer or present the
Collaterals to any third party; however, the Collaterals shall be prevented from
any damage.

 
10.3
Party B shall bear all fees, including but not limited to insurance fees,
appraisal fees, estimation fees, registration charges and other relevant fees,
arising out of conclusion and performance of this Contract.

 
10.4
If the mortgages granted to Party A are being or may be damaged by any third
party, Party B shall send a timely notice to Party A and assist to hold Party A
harmless.

 
10.5
When Party A realizes the mortgages, Party B shall cooperate in an active manner
without giving any limitations against such realization.

 
10.6
Party B shall inform Party A in a timely manner under any of the following
circumstances:

 
A.
It changes or replaces its articles of association, scope of business, legal
representative or equity;

 
B.
It is out of business, or it is dissolved or comes into liquidation, or it is
suspended for reorganization, or its business license is  canceled or withdrawn,
or it is petitioned for bankruptcy;

 
C.
It is being or may be involved in material economic disputes, suits and
arbitrations, or its properties have been sealed, seized or  monitored;

 
D.
If Party B is a natural person, its address, employer and contact methods are
changed.

 
10.7
Party B shall accept and sign written notices from Party A in a timely manner.

 
10.8
If other guarantees are created in favor of Party A's Principal Claims,
irrespective of whether such other guarantees are granted by the  Debtor or a
third party, Party A shall be entitled to determine the orders for realizing the
guarantees at its own discretions, and Party B hereby undertakes not to bring
any defense against any such determination. If Party A waives, changes or loses
its benefits in other guarantees, Party B's guarantee liability shall not become
null and void, nor reduced, but remain effective.

 
 
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10.9
If any of the following events occurred under the business of domestic letter of
credit, purchaser financing of domestic letter of credit, import letter of
credit, import bill advance and import re-financing, Party B bears an
incontestable obligation of collateral mortgage, and Party B will not raise an
exemption or defense as a result of issuing stop-payment order or retaining
order, or seizing, possessing or freezing any assets or other similar measures
in connection with the letter of credit by any judicial authority or
administrative authority:

 
A.
The nominee or authorized person of Party A has made the payment under the
instruction of Party A in a bona fide manner;

 
B.
Party A, the nominee or authorized person of Party A has issued a confirmation
letter of due payment in a bona fide manner regarding the payment of domestic
letter of credit, or has made an acceptance in a bona fide manner regarding the
documents of import letter of credit;

 
C.
The confirming bank of the letter of credit has performed the payment obligation
in a bona fide manner;

 
D.
The negotiating bank of the letter of credit has negotiated the payment in a
bona fide manner.

 
10.10
Party B will not raise an exemption or defense as a result of refusing payment
for the letter of credit by the Debtor under the business of delivery against
bank guarantee, endorsement of the bill of lading and authorized collection.

 
Article 11 Undertakings by Party A
 
Party A hereby undertakes to Party B as follows:
 
11.1
Unless otherwise as provided in laws, regulations and rules, Party A shall keep
confidential relevant documents, financial information, and other undisclosed
information in relevant materials, submitted by Party B in performance of its
obligations hereunder.

 
11.2
The balance shall be returned to Party B in a timely manner if there is any such
balance after all obligations under the Maximum Mortgage are paid from the
proceeds generated from disposal of the Collaterals.

 
Article 12 Breach of Contract
 
12.1
Any party shall be deemed to breach this Contract if it fails to perform any of
its obligations hereunder or breaches any of its representations, warranties and
undertakings hereunder after this Contract comes into effect. In such case, it
shall indemnify the losses caused to the other party.

 
12.2
Unless otherwise as provided in this Contract, the other party shall be entitled
to take any other measures as specified in laws, regulations and rules of the
PRC if any party breaches this Contract.

 
 
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Article 13 Effectiveness, Modification and Termination
 
13.1
This Contract comes into effect from the date of execution, and will be
terminated on the date when all of Party A's Principal Claims has been
satisfied.

 
13.2
Any modification to this Contract shall be negotiated, made in writing, and
agreed on by the parties. Any such modification terms or agreements shall be
integral to this Contract, and shall have the same force and effect with this
Contract. Except for those terms as modified, the remaining provisions hereof
shall remain effective. However, original terms hereof shall remain effective
before those modified terms come into effect.

 
13.3
If any provision of this Contract becomes void or unenforceable, the validity or
enforcement of the remaining provisions hereof, or the validity of the whole
Contract shall not be affected in any way.

 
13.4
Any modification to and/or any termination of this Contract shall not affect
either party's rights to claim indemnification. And the termination of this
Contract shall not affect the validity of the terms in relation to the dispute
resolutions.

Article 14 Dispute Resolutions
 
Conclusion, validity, interpretation, performance of, and dispute resolutions
arising out of, this contract shall be governed by the laws of the PRC. Any
controversy or dispute arising out of or in relation to this Contract shall be
resolved through negotiation by the parties hereto; if not reached, any such
dispute shall be resolved according to the method as set forth in B below:
 
A.
To be arbitrated by arbitration commission; and the arbitration will be
conducted in ­ (place of arbitration) in accordance with the arbitration rules
in force and effect at the time of applying for such arbitration. The awards
shall be final and binding upon the parties.

 
B.
To be judged and resolved by the court at the location of Party A.

 
Article 15 Miscellaneous
 
15.1
Without prior written consents of Party A, Party B shall not transfer the whole
or part of its rights or obligations hereunder.

 
15.2
Any failure to exercise in whole or part, or any delay to exercise any of its
rights hereunder by Party A, shall not constitute a waiver or change of such
rights or any other rights, nor affect further exercise of such rights or any
other rights by it.

 
15.3
Party A shall be entitled, in accordance with relevant laws, regulations or
other regulatory documents or requirements of finance regulatory institutes, to
provide information in relation to this Contract and other relevant information
to the basic credit information database of People's Bank of China or other
credit database established according to law for search and use by eligible
institutes or individuals. Meanwhile, Party A shall be entitled to search
relevant information of Party B through basic credit information database of
People's Bank of China or other credit database established according to law for
purpose of conclusion and performance of this Contract.

 
15.4
This Contract is made in four originals with Party A, Party B and the
registration department holding one original respectively, and each original
shall have the same force and effect with the other originals.

 
 
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Article 16 Other Provisions
 
16.1
The total investment of such project is RMB 329,320,000, and RMB 305,120,000 is
invested (including RMB 97,530,000 has been paid as land transferring fee),
representing 92.66% of the total investment. The construction fees for 2# - 4#,
7# - 10#, 13# - 16#, 19# - 22#, 24# - 27# and underground garage are RMB
189,980,000, and RMB 189,820,000 is invested, representing 99% of the total
construction fees. 133,449 square meters of the construction are completed.
Construction Land Planning Permit (Di Zi No. 130501201101002), Construction
Working Planning Permit (Jian Zi No. 130501201101057), Work Commencement Permits
(No. 130501S110700001), Pre-sale Permits (Xing Fang Yu Shou Zheng No.2011028)
are obtained.

 
16.2
N/A

 
Appendix: Collaterals List
Party A: Industrial and Commercial Bank of China, (Xingtai Yejin Branch) (seal)
Authorized Signatory: QI, Ruixia (sign or seal)
 
Party B: Hebei Zhongding Real Estate Development Co., Ltd. (seal)
Legal Representative (Authorized Agent): GUO, Jianfei (sign or seal)
 
Co-owners of Collaterals: Hebei Shahe Huada Mining Industry Co., Ltd. (sign or
seal)
Date: September 17, 2012.
 
 
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Appendix:
 
Collateral List
 
Name
Title Certificates
Location
Appraised Values
Completion Date
Others
Land
Xing Shi Guo Yong (2010) No. 687, Xing Shi Guo Yong (2010) No. 688
No. 74 Bayi Rd., Xingtai
RMB 235,040,000
 
RMB 16,450,000 of claim is secured by land use right
House properties (construction work in progress)2#, 3#, 4#, 7#, 10#, 14#, 19#,
22#, 24#, 25# and underground garage (see collateral list of CWIP for details)
 
No. 74 Bayi Rd., Xingtai
RMB 76,120,000
2013.8.12
RMB 53,300,000 of claim is secured by CWIP

 
Mortgagor：Hebei Zhongding Real Estate Development Co., Ltd. (seal)
 
Co-owners of Collaterals (if applicable): Hebei Shahe Huada Mining Industry Co.,
Ltd. (sign or seal)
 
Mortgagee: Industrial and Commercial Bank of China, (Xingtai Yejin Branch)
(seal)
 
 
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