Exhibit 10.38

 

Gold Lease Agreement

 

(Translation)

 

The Leasor: Wuhan Huangpu Branch of Industrial and Commercial Bank of China Co.,
Ltd.

 

The Principal: Zou Guohua Contact Person: _____/____

 

Residence (Addres): No. 260, Huangpu Street, Jiang’an District Postcode: 430000

 

Telephone: 027-82219748 Fax: _____/____E-mail: _____/____

 

Shanghai Gold Exchange Code: _____/____

 

The Leasee: Wuhan Kingold Jewelry Co., Ltd.

 

Legal Representative: Jia Zhihong Contact Person: Hu Qiao

 

Residence (Addres): Special No. 15 of Huangpu Science and Technology Park,
Jiang’an District

 

Postcode: 430000

 

Telephone: 02785749123       Fax: _____/____E-mail: _____/____

 

Shanghai Gold Exchange Code: _____/____

 

Considering that the Leasor has the ability and qualification to provide gold
leasing business service under this Contract as one finanical institution, the
Leasee has known that the service provided by the Leasor is the compensable,
legal and independent bbusiness that is not attached to other services or
products of the Leasor, and acknowledged its charging standard is rational, the
Leasee chooses to apply for this business voluntarily.

 

Through consulation on the basis of equity, the Leasee and the Leasor hereby
conclude this Contract on that the Leasor leases the gold to the Leasee. In this
Contract, anywhere marked with “□”, please mark “ √” at your chosed item, mark
“×” at the item you don’t choose, and blank will be deemed as you don’t choose
that item.

 

Part I Basic Agreements

 

Article I Purpose for Gold Lease

 

Under this Contract, the gold lease is used for following purpose. Without
written agreement of the Leasor, the Leasee is not allowed to use the gold lease
for other purpose, and the Leasor is entitled to supervise the usage of the
principal of the gold lease.

 

Purpose: To lease gold to be used in the jewelry production

 

Article II Variety, Limit and Term of the Gold Lease

 

2.1 Under this Contract, the variety of the gold lease is the standard gold bar
or gold ingot that may be transacted and delivered at Shanghai Gold Exchange.
The gold specification is shown as _/__(not applicable to cyclic lease):

 

(1) Au99.99, fineness 99.99%, 1 kilogram gold ingot.

 

(2) Au99.95, fineness 99. 95%, 3 kilograms gold ingot.

 

(3) Other variety that is allowed to be transacted and delivered: _______/___

 

2.2 The Leasee agrees the Leasor to deliver replaced by _/__ gold specification
(not applicable to cyclic lease) :

 

 

 

 

(1) Au99.99, fineness 99.99%, 1 kilogram gold ingot.

 

(2) Au99.95, fineness 99. 95%, 3 kilograms gold ingot.

 

(3) Other variety that is allowed to be transacted and delivered:
_______/_________

 

(4) To disagree the alternative delivery.

 

2.3 Under this Contract, the principal weight of the gold lease is (in capitals)
Five Hundred and Twenty Seven kilograms (in letters: 527 kilograms) (the capital
amount shall prevail when there is difference between capitals and letters).

 

2.4 Under this Contract, the term of the gold lease starts from March 7, 2016 to
September 2, 2016. The actual delivery day of gold lease principal is subject to
the record of delivery certificate of material gold lease.

 

Article III Lease Rate, Lease Fee, Weight Difference and Liquidity Damages

 

3.1 Under this Contract, the annual interest rate of gold lease fee is: 2.75%

 

3.2 Under this Contract, the lease fee is paid according to (1) agreement:

 

(1)     To pay in one-time gold lease when delivering the principal of the gold
lease;

 

(2)     After delivering the principal of the gold lease, charging by the day
(daily rate of gold lease =annual gold lease rate/360), to pay
__/__(monthly/quarterly).

 

3.3 The Leasee appoint the funds paid account listed in the delivery list as the
clearing account with the Leasor, to be used to pay lease fee, liquidity
damages, compensatory damages and other payables of the Lessee.

 

3.4 When paying according to the appointed method in Article 3.2 (1), the Leasor
shall deduct the lease fee when it is paid, and if the principal of gold lease
was returned in advance, the lease fee may not be returned; when paying
according to the appointed method in Article 3.2 (2), the Leasee shall deposit
the payable lease fee into clearing account before the due day, and the Leasor
may deduct the lease fee directly from the account. Under this Contract, when
the lease is due, unpaid lease fee shall be paid off once.

 

3.5 Under this Contract, the gold lease fee shall be calculated in RMB, and the
amount of the lease fee is:

 

Termly payable lease fee = weight of gold lease (gram) * daily gold lease rate *
actual charging days in this term * fixing price(RMB Yuan/gram)

 

Thereinto, the fixing price is determined by the Leasor according to the closing
price of corresponding trading variety in Shanghai Gold Exchange on transaction
day before delivering principal of the gold lease.

 

3.6 If the Leasee fails to return the gold according to the Contract when the
gold lease is due (including declared acceleration of maturity), as for the
overdue principal of the gold lease, the Leasor is entitled to charge additional
liquidated damages equal to 5% lease fee agreed in this Contract; as for the
lease fee that the Leasee failed to pay on time, 0.05% lease fee may be charged
by the Leasor as the liquidity damages. From the day when the principal of the
gold lease is embezzled, the Leasor is entitled to use the highest price of
corresponding trading variety in Shanghai Gold Exchange on breach day as the
fixing price to calculate above-mentioned liquidity damages.

 

3.7 If the Leasee fails to use the princiap of the gold lease according to the
agreed purpose of this Contract, the Leasor is entitled to charge additional
liquidated damages equal to 5% lease fee rate agreed in this Contract; as for
the lease fee that the Leasee failed to pay on time during breach period, 0.05%
lease fee may be charged by the Leasor as the daily liquidity damages; from the
day when the principal of the gold lease is embezzled, the Leasor is entitled to
use the highest price of corresponding trading variety in Shanghai Gold Exchange
on breach day as the fixing price to calculate above-mentioned liquidity
damages.

 

 

 

 

Article IV Delivery of Principal of the Gold Lease (Not Applicable to Cyclic
Lease)

 

4.1 The Leasor may deliver the principal of the gold lease under this Contract
to the Leasee according to the (1) arrangement below:

 

(1) The Leasor completes the delivery of all the principal of the gold lease
once;

 

(2) The Leasor completes the delivery of all the principal of the gold lease in
batches according to days and weights listed in Annex 1, the principal of the
gold lease delivered by the Leasor is the integral multiple of unit weight of
delivery variety every time.

 

Article V Special Agreements for Gold Cyclic Lease (Alternative Article, ¨
Applicable   þ Not Applicable )

 

5.1 Under this Contract, the gold lease is recycling, aforesaid weight and lease
term of the gold lease in Article II are the cyclic lease limit and service life
of cyclic lease limit.

 

5.2 Every time the Leasee applies to deliver the principal of the gold lease,
the Leasee shall inquire the variety and price in advance, and submit Delivery
Notice for Leased Gold (Annex 3) and delivery certificate for material gold
lease at least __/__working days in advance. Once the Delivery Notice for Leased
Gold is submitted, it is not allowed to be revoked without written permission of
the Leasor.

 

5.3 The variety of every batch of gold lease shall be subject to the agreement
in the Delivery Notice for Leased Gold.

 

Article VI Return Principal of the Gold Lease

 

6.1 The Leasee shall pay full amount of the lease fee according to the
agreements in this Contract, and return the principal of the gold lease under
this Contract according following (1) way:

 

(1) To pay all the principal of the gold lease once on contract expiry day;

 

(2) To pay according to days and weights recorded in delivery certificate for
material gold lease;

 

(3) To pay in batches according to days and weights listed in Annex 2.

 

6.2 Under this Contract, in case of the gold lease is in following condition,
the Leasee shall return it back immediately once the corresponding material is
in place. If the payment is advanced due to this, there is no need for the
Leasee to pay compensatory damages:

 

/ /

 

 

 

6.3 Except for agreed condition in Article 6.2, if the Lessee returned the
principal of the gold lease in advance, the Lessee shall submit written
application to the Leasor 3 business days earlier than the day that principal of
the gold is planned to be returned, the Leasor is entitled to determine whether
to agree the Leasee to return principal of the gold lease in advance according
to the situation, the Leasor is also entitled to charge the Leasor compensatory
damages, and the compensatory damages is calculated according to following
standard: _/__% of unpaid lease fee calculated according to Article 6.1.

 

6.4 If the Leasor agrees that the Leasee returns principal of the gold lease in
advance, the Leasee shall pay principal of the gold lease in inverted order of
returning plan. The partial gold weight that is returned in advance is the
integral multiples of _/__kilograms, and the principal of gold lease that is
returned in advance completely shall be the balance of unpaid principal of the
gold lease. When returning the principal of the gold lease in advance, the
Leasor shall pay off all payable due principal of the gold lease and other fees
according to agreement of this Contract on advanced paying day. Under non-cyclic
contract, principal of the gold lease that is returned in advance is not allowed
to withdraw again.

 

 

 

 

Article VII Guarantee

 

7.1 Under this Contract, if the gold lease is guaranteed, the guarantee way is
____/______.

 

7.2 Under this Contract, if the gold lease is guaranteed with maximum amount,
the corresponding maximum amount guarantee contract is as follows:

 

Name of maximum amount guarantee contract: ________/______ (No. :____/_____)

 

Guarantee: ________/_______

 

Article VIII Financial Covenants (Alternative Article, ¨ Applicable   ¨ Not
Applicable)

 

Within valid term of this Contract, the Leasee shall abide by following
financial index covenants:

 

   

 

Article IX Dispute Resolution

 

Under this Contract, the dispute resolution method is: (2)

 

(1) To submit the dispute to the __/_ arbitration committee, according to the
valid arbitration rule of this committee when applying, to arbitrate in __/__(
arbitration place). The arbitral award is final and binding upon both parties.

 

(2) To solve this dispute in local court of the Leasor by the form of suit.

 

Article X Others

 

10.1 This Contract is in duplicate, and both the Leasee and the Leasor holds one
copy with the same legal effect.

 

10. 2 The following annexes and other annexes confirmed by both parties are the
inseparable component of this Contract, and own the same legal effect with this
Contract:

 

Annex 1: The Delivery Schedule of Principal of the Gold Lease

 

Annex 2: The Return Schedule of Principal of the Gold Lease

 

Annex 3: The Delivery Notice of the Gold Lease

 

Annex 4: The Ownership Transferring Application for Material Leasing of the
Shanghai Gold Exchange

 

Annex 5: The Oriented Purchasing Funds Agreement

 

Article XI Other Issues Agreed by Both Parties

 

/ /

 

 

 

 

Part II Specific Conditions

 

Article I Definitions

 

In this Contract, the following terms are defined as follows:

 

(1) Payment Day for Lease Fee: The day when the Leasee pays the Leasor for the
lease fee.

 

As for the one-time payment, the payment day is the delivery day of the
principal of the gold lease; as for the monthly payment, the payment day is the
21st of every month; as for the quarterly payment, the payment day is the 21st
of end month of every season (namely March, June, September and December); once
the lease is due, the lease fee shall be paid off correspondingly.

 

(2) Payment Term: The first payment term starts from the delivery day of the
principal of the gold lease ends on previous day of the first payment day; the
last payment term starts from previous payment day ends on previous day of
returning day for the principal of the gold lease; other payment term starts
from previous payment day ends on previous day of next payment day.

 

(3)  Working Day: Legal working day and working day of the Shanghai Gold
Exchange.

 

(4) Delivery Day of the Principal of the Gold Lease: The day when the Exchange
transfers gold ownership of the Leasor to the Leasee after both parties complete
lease declaration via membership service system of the Shanghai Gold Exchange.
Actual delivery day of the principal of the gold lease is subject to the record
of the Delivery Certificate of Material Gold Lease, the certificate is the
component of this Contract with the same legal effect with this Contract.

 

(5) Returning Day of the Principal of the Gold Lease: The time when the
principal of the gold lease is returned according to agreements in this
Contract. Namely the day when the Exchange transfers gold ownership of the
Leasee to the Leasor after both parties complete lease declaration via
membership service system of the Shanghai Gold Exchange. Actual returning day of
the principal of the gold lease is subject to the record of the Returning
Certificate of Material Gold Lease, the certificate is the component of this
Contract with the same legal effect with this Contract.

 

(6)   Due Date: The date when the Leasee shall return the principal of the gold
lease.

 

Article II Deliver the Principal of the Gold Lease

 

2.1 Before delivering the principal of the gold lease, the Leasee must meet
following preconditions, otherwise the Leasor is not obligated to deliver any
principal of the gold lease to the Leasee, unless the Leasor agrees to deliver
in advance:

 

(1) Except for unsecured lease, the Leasee has provided corresponding guarantee
and completed related guarantee procedures according to the requirements of the
Leasor;

 

(2) No breach condition stipulated in this Contract or other contracts signed by
the Leasee and the Leasor;

 

(3)Provide certificate and materials for lease conform to agreed purpose.

 

(4) Has submitted other data required by the Leasor.

 

2.2 All the written documents provided to the Leasor by the Leasee shall be
original ones, if the originals are not available, the copies with official seal
of the Leasee are acceptable after agreed by the Leasor.

 

2.3 Both parties shall deal with lease declaration in membership service system
of the Shanghai Gold Exchange via membership unit, and submit The Ownership
Transferring Application for Material Leasing of the Shanghai Gold Exchange
(Annex 4) to Delivery Storage and Transportation Department of the Shanghai Gold
Exchange via fax. If the Leasee is the client of the Shanghai Gold Exchange
agented by the Leasor, then the Leasee entrusts the Leasor to deal with lease
delivery and ownership transferring procedures via membership service system of
the Shanghai Gold Exchange.

 

2.4 Under this Contract, after the principal of the gold lease is delivered, if
the Leasee needs to deliver the cargo from storage, the stock removal procedures
shall be completed according to the related rules of the Shanghai Gold Exchange,
after ex-warehousing, the Leasee is responsible for the transportation.

 

 

 

 

Article III Return the Principal of the Gold Lease

 

3.1 The Leasee shall pay full amount of the principal of the gold lease, lease
fee and other payables according to the agreements of this Contract. On every
banking day of payment day, delivery day and returning day, the Leasee shall
deposit the full amount of lease fee, compensatory damages other payables in the
clearing account on that term, the Leasor is entitled to actively transfer and
receiver on this payment day, delivery day or returning day, and require the
Leasee to cooperate to handle with related transferring procedures. If the funds
in the clearing account is insufficient to pay all due payables of the Leasee,
the Leasor is entitled to decide the liquidation order.

 

3.2. The Leasee may return the gold via one or several ways as follows:

 

(1) To return by gold that is deposited in the delivery storage of the Shanghai
Gold Exchange and completes warehousing formalities;

 

(2) To return by purchasing gold from the Shanghai Gold Exchange;

 

(3) To return by purchasing gold from the Leasor at price agreed by both
parties;

 

(4) Other gold source acknowledged by the Shanghai Gold Exchange or the Leasor.

 

3.3 The gold returned by the Leasee must the gold that can be traded and
delivered in the Shanghai Gold Exchange, and has the same speciation and variety
with the gold agreed in Article 2.1 or Article 5.3 in Part I of this Contract,
unless agreed by the Leasor.

 

3.4 If the Leasee chooses to return the gold according to Article 3.2 (3), after
the Leasee enquires and submits irrepealably The Oriented Purchasing Funds
Agreement (Annex 5) to the Leasor, the Lease may seal and sign in the
application to confirm it if the Leasor agrees. The Leasee shall deposit full
amount of funds in the appointed clearing account before delivery liquidation,
and the Leasor shall prepare required material gold before delivery liquidation.

 

3.5 If the Leasee is the client of the Shanghai Gold Exchange agented by the
Leasor, then the Leasee entrusts the Leasor to deal with related gold purchasing
procedures in the Shanghai Gold Exchange. Both parties separately pay
transaction handling charges according to standard of the Shanghai Gold Exchange
and membership agency commission.

 

3.6 When the Leasee pay on time or in advance, the gold corresponded to
principal of the gold lease shall be prepared before 16:00 on payment day. Both
parties shall complete lease gold returning declaration in membership service
system of the Shanghai Gold Exchange via membership unit, in order to transfer
ownership of the principal of gold lease from the Leasee to the Leasor and
return the principal of gold lease. If the Leasee is the client of the Shanghai
Gold Exchange agented by the Leasor, then the Leasee entrusts the Leasor to deal
with related lease returning and ownership transferring procedures in membership
service system of the Shanghai Gold Exchange.

 

Article IV Cyclic Lease

 

4.1 Under this Contract, the gold lease is recycled, within service life of
cyclic lease limit, the Leasee can cyclically use cyclic lease limit agreed in
Item 5.1 of Article V of Part I in this Contract, and the a single sum is not
more than one year, and the balance of gold lease is not allowed to exceed the
cyclic lease limit at any time.

 

4. 2 Under this Contract, the gold lease is recycled, the term of every sum of
gold lease starts from the delivery day of principal of the gold lease ends on
agreed returning day of the principal of the gold lease, but the returning day
of any sum of the principal of the gold lease is not allowed to be later than
due day of cyclic lease limit service life agreed in Item 5.1 of Article V of
Part I in this Contract.

 

4.3 Under this Contract, the gold lease is recycled, from the Contract is
signed, if the Leasee doesn’t conduct any gold lease for continuous three
months, then the Leasor is entitled to cancel the limit of the cyclic lease.

 

 

 

 

Article V Guarantee

 

5.1 Except for the unsecured gold lease, the Leasee shall provide legal and
effective guarantee acknowledged by the Leasor for performing its obligations
under this Contract. The guarantee contract shall be signed separately.

 

5.2 If the guaranty under this Contract is damaged, devalued, in property right
dispute, closed down ot detained, or the pledger dieposed the guarantee
arbitrarily, or the financial condition of guanantor for the surety bond changes
to be disadvantageous or other condition that is disadvantageous to the
creditor’s right of the Leasor, the Leasee shall notify the Leasor in time, and
offer other guarantee acknowledged by the Leasor.

 

5.3 If the gold lease under this Contract is in pledge guarantee by receivables,
within effective term of this Contract, in any one of following cases, the
Leasor is entitled to declare that the lease is due in advance, and require the
Leasee to pay partial or all the principal of the gold lease and lease fee
immediately or offer additional legal, effective and sufficient guarantee
acknowledged by the Leasor:

 

(1) The bad debt rate of receivable of the pledgor rises for 2 months
continuously;

 

(2) The unclaimed receivables of the pledgor is more than 5% of balance of
receivables of the payer;

 

(3) There is trade dispute (includes but not limited to quality, technique and
service dispute) or debt dispute between the pledgor of the receivable and the
payer or other third-party, which results in that the receivable may not be paid
on time.

 

5.4 Under this Contract, the gold lease is recycled, the guarantee takes
warranty liability for all delivered gold lease under this Gold Lease Contract.

 

Article VI Statements and Guarantees

 

The Leasee gives following statements and guarantees to the Leasor, and these
statements and guarantees are valid within valid term of this Contract:

 

6.1 To be qualified to be the subject of the gold lease, have the qualification
and ability to sign and perform this Contract.

 

6.2 To have obtained necessary authorization or approval when signing this
Contract, signing and performing this Contract do not breach the provisions of
the Articles of Association and related laws and regulations, nor collide with
any obligation that it shall undertake under other contract.

 

6.3 Other paybale debts have already been paid on schedule, on malicious default
principal and interest of bank loan, no other poor credit record.

 

6.4 To own sound institutional framework and financial management system, no
serious illegal behavior in production and operation process in recent one year,
no serious bad record of current senior managers.

 

6.5 All the documents and data provided to the Leasor are true, accurate,
complete and valid, no false record, serious omission or misleading statement.

 

6.6 The financial and accounting books provided to the Leasor are compiled
according to Chinese accounting standard, which truly, fairly and completely
reflect the operation and liability state of the Leasee. And since the closing
date of latest financial and accounting book, no great disadvantageous change
happens to the financial status of the Lease.

 

6.7 Never to hide any lawsuit, arbitration or claim event related to it to the
Leasor.

 

6.8 The gold price may occur strong fluctuation due to influence of all kinds of
domestic and international political and economical factors and emergencies. The
Leasee has sufficiently understood above-mentioned risks and potential
influences.

 

 

 

 

Article VII Promise of the Leasee

 

7.1 To withdraw and use the principal of the gold lease according to the term
and usage agreed in this Contract, the gold lease is not allowed to flow into
securities market or futures market in any form, or be used in equity
investment, or other purpose forbidden or limited by relater laws and
regulations.

 

7.2 To pay off the principal of the gold lease, lease fee and other payables
according to the agreements in this Contract. The specification and fineness of
returned gold shall be the same with the gold delivered by the Leasor. If there
is any quality problem, the Leasee shall undertake all the responsibilities.

 

7.3 To accept and actively cooperate with the Leasor to check and supervise the
service condition of the gold lease, including purpose, in account analysis,
certificate check, on-site investigation and other ways. And to regularly
summarize and report service condition of the gold according to the requirement
of the Leasor.

 

7.4 To accept the inspection of the Leasor, provide balance sheet, income
statement, other financial accounting data and other data that reflecting debt
paying ability of the Leasee according to the requirement of the Leasor,
actively assist and cooperate with the Leasor to investigate, understand and
supervise the production & operation and financial condition.

 

7.5 To obtain the written permission of the Leasor or arrange to realize the
creditor’s right of the Leasor satisified by the Leasor in advance, when
merging, dividing, reducing capital, transferring stock right, transferring
serious asset and creditor’s right, conducting serious foreign investment,
adding materiality debt financing and having other action that may harm the
equity of the Leasor

 

7.6 To notify the Lease if it is in any one of following cases:

 

Alter Articles of Association, Business Scope, Registered Capital and Legal
Representative;

 

To be out of business, dismissed, cleared, suspended, cancelled business
license, cancelled or applying (applied) bankruptcy;

 

To be involved or possibly involved in serious economic dispute, lawsuit and
arbitration, or the property is legally sealed, detained or supervised;

 

Any shareholder, director or current senior manager is suspected to be involved
in serious case or economic dispute.

 

7.7 To disclose related relationship and related transaction to the Leasor
timely, comprehensively and accurately.

 

7.8 To timely sign in various notices sent by the Leasor in mail or other way.

 

7.9 Never dispose its own asset in the method reducing its debt paying ability;
the warranty provided to the third-party shall not damage the interest of the
Leasor.

 

7.10 If the gold lease under this Contract is delivered in unsecured method, to
report and submit the external security condition to the Leasor completely,
truly and accurately, and sign account supervision agreement according to the
requirement of the Leasor. If the external security possibly affect it to
perform its obligations under this Contract, it may obtain written permission of
the Leasor.

 

7.11 To pay for the fees generated from the Leasor for realizing the creditor’s
rights under this Contract, include but not limited to counsel fee, evaluation
fee and auction fee.

 

7.12 The clearing order of debts under this Contract is prior to the Leasee’s
debt to its shareholder, and is at least at equal status compared with its
similar debt to other creditors.

 

7. 13 To strengthen the environmental and social risk management, and accept the
inspection and check of the Leasor hereof. If it is required by the Leasor, to
submit the environmental and social risk report to the Leasor.

 

 

 

 

Article VIII Promise of the Leasor

 

8.1 To deliver the principal of the gold lease to the Leasee according to the
agreement of this Contract.

 

8.2 Keep private data and information provided by the Leasee as secret, unless
otherwise agreed in this Contract, or required by the laws and regulation
supervision, or otherwise stated by the Shanghai Gold Exchange.

 

Article IX Breach

 

9.1 If any one of following conditions happen, it will result in breach of the
Leasee:

 

(1) If the Leasee doesn’t pay the principal of the gold lease, lease fee and
other payables under this Contract according to the agreements, or doesn’t use
the principal of the gold lease according to agreed purpose, or doesn’t perform
any other obligation under this Contract, or breaches its statement, warranty or
promise under this Contract;

 

(2) If the guarantee under this Contract changes to be against the creditor’s
rights of the Leasor, and the Leasee doesn’t provide additional guarantee
acknowledged by the Lease;

 

(3) If any other debt of the Leasee is due (including it is decleared to be due
in advance), but the Leasee fails to pay off, or doesn’t perform or breach its
obligation under other agreement, that already affected or possibly affect it to
perform its obligation under this Contract;

 

(4) If the profitability, debt paying ability, operation ability, cash flow and
other financial index of the Leasee break through the agreed standard or worsen,
that already affected or possibly affect it to perform its obligation under this
Contract;

 

(5) If the ownership structure, production & management and external investment
of the Leasee have serious unfavorable change, that already affected or possibly
affect it to perform its obligation under this Contract;

 

(6) If the Leasee is involved or possibly be involved in serious economic
dispute, lawsuit and arbitration, or its asset is closed down and detained, or
it suffered compulsory execution, or legal institution or administrative
organization legally place it on file and investigate it or adopt punitive
measures to it, or it is disclosed by the media due to breach of related
national provisions or policies, that already affected or possibly affect it to
perform its obligation under this Contract;

 

(7) If the main invidual investor or key manager of the Leasee is changed
abnormally, missing, or investigated by judicial office according to the law or
limited personal freedom, that already affected or possibly affect it to perform
its obligation under this Contract;

 

(8) If the Leasee takes advantage of its false contract with the related party
and the transaction without actual transaction condition, in order to extract
gold, funds or loan right of the Leasor, or evade creditor’s rights of the
Leasor via related transaction;

 

(9) If the Leasee was already or possibly be out of business, dismissed,
cleared, suspended, cancelled business license, revoked or applying (applied)
bankruptcy;

 

(10) If any liability accident, serious enviromental and social risk accident is
due to the Leasee breaches laws and regulations, supervision regulation or
industrial standard of food safety, safety production, environmental protection
and other related environmental and social risks management, that already
affected or possibly affect it to perform its obligation under this Contract;

 

(11) If the gold lease under this Contract is delivered without security, the
credit rating, profitability, asset-liability ratio, net cash flow of operation
activity and other index of the Leasee doesn’t meet the condition of unsecured
gold lease of the Leasor; or the Leasee provide mortgage /pledge guarantee to
other person or provide external surety bond based on its effective operating
asset without written permission of the Leasor, that already affected or
possibly affect it to perform its obligation under this Contract;

 

(12) If the accumulative fluctuation range of gold price is over 10% for
continuous three days, that seriously affect the Leasee to return the principal
of the gold lease termly, after the Leasor requires, the Leasee still fails to
adopt additional effective warranty or return the principal of the gold lease to
eliminate the serious adverse effect;

 

 

 

 

(13) If in Article 3.2, the Leasee chooses the way stipulated in (3) to return
the gold, but fails to perform transaction or delivery clearing obligation;

 

14) Other condition that may result in adverse effect on realizing the
creditor’s rights of the Lease under this Contract.

 

9.2 If the Leasee breaches, the Leasor is entitled to adopt one or several of
following measures:

 

(1) To require the Leasee to correct its breach behavior in limited time;

 

(2) To stop delivering the principal of the gold lease to the Leasee according
to this Contract and other contract between the Leasor and the Leasee, partly or
wholly cancel lease limit that is not used by the Leasee;

 

(3) To declare that the unpaid gold lease of this Contract and other contract
between the Leasor and the Leasee is due immediately, and take back unpaid
principal of the gold lease immediately;

 

(4) To require the losses of the Leasor due to the breach of the Leasee;

 

(5) Other measures that are stipulated in laws and regulations, agreed in this
Contract or regarded as necessary by the Leasor.

 

9.3 If the gold lease is due (including that is declared to be due immediately),
the Leasee fails to pay according to the agreements, the Leasor is entitled to
calculate and collect liquidity damages according to the agreement in Item 3.6
of Article III of Part I under this Contract.

 

9.4 If the Leasee doesn’t use gold lease according to agreed purpose of this
contract, the Leasor is entitled to calculate and collect appropriation
liquidity damages according to the agreement in Item 3.7 Article III of Part I
under this Contract.

 

9.5 If the Leasee is in the condition of Item 9.3 and 9.4 at the same time, the
liquidity damages shall be calculated subject to the serious one, they may not
be collected simultaneously.

 

9.7 If the Leasee fails to pay the principal of gold lease, lease fee(including
liquidity damages) and other payables, the Leasor is entitled to announce via
the media to collect.

 

9.8 If the control relationship between the related party of the Leasee and the
Leasee, or the related party of the Leasee is in any other condition except for
Item (1) and (2) of above-mentioned Article 9.1 that already affected or
possibly affect it to perform its obligation under this Contract, the Leasor is
entitled to adopt every measure agreed in this Contract.

 

Article X Deduct

 

10.1 If the Leasee doesn’t pay due (or is declared to be due immediately)
principal of the gold lease, lease fee and other payables under this Contract
according to the agreements, the Leasor is entitled to deduct corresponding
amount from the RMB and foreign currency account(s) set up by the Leasee in the
Leasor or other branch of ICBC to purchase gold for clearing, untile all debts
of the Leasee under this Contract have been paid off.

 

10.2 If the currency of the deducting amount is different with the currency in
this Contract, the amount shall be converted into RMB according to applicable
exchange rate of the Leasor on deducting day. The lease fee and other fees
generated during deducting day to clearing day (the date when the Lease actually
pays off the gold lease under this Contract, after the deducting amount is
converted into the currency of this Contract under national foreign exchange
management policies) and differential section due to wave of exchange rate in
this period are undertook by the Leasee.

 

10.3 If the amount deducted by the Leasor is not sufficient to pay off all the
debts of the Leasee, the Leasor is entitled to decide the liquidation order.

 

 

 

 

Article XI Transfer Right and Obligation

 

11.1 The Leasor is entitled to transfer its partial or whole of rights under
this Contract to the third-party, the transferring behavior of the Leasor shall
notify the Leasee, but permission of the Leasee is not required. Without written
permission of the Leasor, the Leasee is not allowed to transfer its any rights
and obligations under this Contract.

 

11.2 The Leasor or Industrial and Commercial Bank of China Co., Ltd.(“ICBC”) may
authorize or entrust other branch of ICBC to perform its rights and obligations
under this Contract according to its operation requirement, or allocate the
creditor’s rights of loan under this Contract to other branch of ICBC to
undertake and manage, the Leasee accepts it, no permission of the Leasee is
needed for the above-mentioned behaviors of the Leasor. Other branch of ICBC
that undertaking the rights and obligations of the Leasor is entitled to perform
all the rights under this Contract, such as to submit a case, recourse to
arbitration or apply for compulsory reecution to the court, in the name of this
institution, for the dispute under this Contract.

 

Article XII Effect, Alternation and Dissolution

 

12.1 This Contract is effective from the signing day, and terminates when the
Leasee completes all the obligations under this Contract.

 

12.2 The Delivery Certificate of Material Gold Lease is effective from the day
that is sealed by signature and stamp seal of the Leasee and sealed by official
business seal of the Leasor, if there is any difference with this Contract,
subject to the Delivery Certificate of Material Gold Lease.

 

12.3 Any alternation to this Contract shall be negotiated by all the parties and
formulated in written form. The variation term or agreement is the component of
this Contract, and owns the same legal effect with this Contract, other parts of
this this Contract is still effective, and before the modified part is
effective, the original term is still effective.

 

12.4 The alternation and dissolution of this Contract may not affect the right
of either party to claim for compensating the losses. The dissolution of this
Contract may not affect the validity of articles related to Dispute Resolution.

 

Article XIII Law Application and Dispute Resolution

 

The conclusion, efficacy, explanation, performance and dispute resolution of
this Contract are applicable to the laws of the People’s Republic of China, any
controversy and dispute resulted from or related to this Contract will be
negotiated by both the Leasee and the Leasor, if they fail to conclude the
agreement, the controversy and dispute shall be solved in way agreed in this
Contract.

 

Article XIV Complete Contract

 

The Part I Basic Agreements and Part II Specific Conditions of this Contract
form this complete Gold Lease Contract together. The same words in two parts
have the same meaning. The Leasee is bond by above-mentioned parts together to
rent the gold from the Leasor.

 

Article XV Notice

 

15.1 All the notices related to this Contract shall be sent in written form.
Unless otherwise agreed, both parties appoint the residence recorded in this
Contract as communication and contact address. Either party who changes the
communication address or other contact way, the party shall notify the other
party in written form.

 

15.2 Either party of this Contract refuses to sign in the notice, or the notice
fails to be sent, the informing party may send the notice by notarization or
announcement. 

 

 

 

 

Article XVI Others

 

16.1 If the Leasor doesn’t or partially or laggingly perform any right of this
Contract, it shall not constitute to waive or alter this right or other rights,
nor affect it to perform this right or other rights further.

 

16.2 The invalidity or unenforceability of any item of this Contract shall not
affect the validity and enforceability of other items, nor affect the effect of
the whole Contract.

 

16.3 The Leasor is entitled to provide information related to this Contract and
other information related to the Leasee to the credit reference system of
People’s Bank of China and other legal credit information database, in order to
be enquired and used by proper qualified institution or person, according to
provisions of related laws and regulation and the requirement of the financial
regulators. The Leasor is also entitled to enquire the related information of
the Leasee via the credit reference system of People’s Bank of China and other
legal credit information database, in order to conclude and perform this
Contract. The Leasee agrees that Leasor provide the information related to the
Leasee, obtained by the Leasor through performing this Contract, to the
Industrial and Commercial Bank of China for internal use.

 

16.4 The “related party”, “related relationship”, “related transaction”, “main
individual investor” and “key manager” said in this Contract have the same
meanings with the same words in No. 36 Accounting Standards for Business
Enterprise – Related Party Disclosure (Financial Accounting [2006] No.3) and its
Amendment issued by Ministry of Finance.

 

16.5 The environmental and social risks said in this Contract refer to the
damages and related risks that possibly be brought to the environmental and
society by construction, production and operation activities of the Leasee and
its serious related parties, include energy consumption, pollution, earth,
health, safety, resettlement of inhabitant, ecological protection, climatic
variation and other environmental and social problems.

 

16.6 The receipts and certificates related to the gold lease and formulated and
reserved by the Leasor, according to its business rules, constitute to be the
effective evidence to prove debtor-creditor relationship .

 

16.7 In this Contract (1) the word “this Contract” include modification or
supplementary of this Contract; (2) the titles of articles are just for
reference, which will not constitute any explanation of this Contract not limit
contents and scope under the titles; (3) if the delivery day and returning day
of the principal of the gold lease is non-working days, it shall be advanced to
the previous working day.

 

Both parties acknowledge that: both the Leasee and Leasor fully negotiate all
articles of this Contract. The Leasor has proposed the Leasee to pay special
attention to all articles related to rights and obligations of both parties, and
understand these articles comprehensively and accurately, and made explanations
and demonstrations on related articles according to the requirements of the
Leasee. The Leasee has carefully read and fully understood all contract articles
(including Part I Basic Agreements and Part II Specific Conditions), both
parties have the same understanding to articles of this Contract without any
objection.

 

The Leasor (Seal): _________________

 

The Principal/Authorized Agent: __________________

 

The Leasee (Seal): ___________________

 

Legal Representative/Authorized Agent: ___________________

 

Signing Day: March 3, 2016