Project No.
SA09-002
       
Contract No.
SA09ZL-001

Land Lease Contract

Party A (Lessor):
No. 3 Company of Shenyang Lumber General Corporation
   
Party B (Lessee):
Shaanxi Suo’ang New Energy Enterprise Co., Ltd.

Place of Execution:
Shenyang City
   
Date of Execution:
July 21, 2009

 
 
 

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Land Lease Contract

Party A (Lessor):
No. 3 Company of Shenyang Lumber General Corporation
   
Legal Representative:
LIANG Jianhua
   
Address:
Wenguantun, Qianjin Town, Dongling District, Shenyang City

Postal Code:

Telephone:

Fax Number:

Porject Contact:
YU Jie
           
Party B (Lessee):
Shaanxi Suo’ang New Energy Enterprise Co., Ltd.
   
Legal Representative:
ZHOU Peng
   
Address:
Dongjiahe Town, Yaozhou District, Tongchuan City
 
Shaanxi Province, China
   
Postal Code:
727100
   
Telephone (Switch Board):
0919-6985809
   
Fax Number:
0919-6985811
   
Porject Contact:
LI Fu

 
 

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In accordance with Contract Law and other related laws and regulations, with
regard to the matter that Party A leases the land of 7,400 square meters in
Wenguantun, Qianjin Town, Dongling District, Shenyang City to Party B for the
project of constructing a coal-water slurry fuel plant, Party A and Party B,
based on the principles of self volition, equality and mutual benefit, through
negotiation, agree as follows:

I.            Location, Coverage and Function and Use of Land

1.           The Lessor will lease to the lessee the land of 7400 square meters
located in Wenguantun, Qianjin Town, Dongling District, Shenyang City.

2.           The use of the land must be within the approved business scope set
forth in the “Business License” of Party B.

3.           The land is leased in the manner of rent-only, Party B shall
undertake the construction and management and bear all the associated costs,
expenses and fees.

II.           Term of Lease

1.           The term of the lease is 10 years starting from August 1, 2009 and
ending on August 1, 2019.

2.           Within 6 months prior to the expiration of the lease, Party A and
Party B may negotiate for Party B to renew the lease but a new lease contract
shall be executed.  Party B is entitled to the first refusal right to lease the
land under the same terms.

III.         Rent and the Form of Payment

1.           Rent: Renminbi (“RMB”) Two Hundred Forty Thousand (¥240,000.00) per
year.

2.           The form of the payment of the rent is payment in advance.  Upon
the execution of this contract, the rent must be paid in one lump sum to Party A
by August 31, 2009.  The rent for each succeeding year must be paid in one lump
sum to Party A by July 31st of each succeeding year.

3.           During the term of the lease, if the rent needs to be adjusted,
Party A must have justifiable reason and must notify Party B three months before
the contemplated adjustment.  The adjustment can only take effect upon execution
of a supplementary agreement after negotiation between the parties of this
contract.

 
 

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IV.         Party A’s Rights and Obligations

1.           During the term of the lease, Party A must assist Party B in
managing the relationship with the neighbors, perform relevant services, and
assist Party B with procedures of corporation registrations and with other
procedures related to the construction so as to ensure the stable production of
the business operation.

2.           Party A must ensure the provision of industrial electricity and
water for the leased land and must ensure that the roads and facilities are
clear and unblocked before Party B’s construction contractors enter the land.

3.           During the term of the lease, the leased land cannot be recovered
without a consent of Party B.  In the event that the leased land is to be
recovered by the government for social public construction, Party A must notify
Party B in written form, and make a public announcement of such recovery, with
regard to the location of the property to be recovered, the confines thereof,
the grounds for recovery and the date of recovery 6 months before the
contemplated recovery.  Party A must compensate Party B for economic loss due to
the earlier recovery of the leased land and the compensation amount shall be
determined through negotiation by considering the actual factors such as the
market value of the buildings, structures and fixtures on the leased land and
the remaining period of the term of the lease.

4.           In the event that Party A terminates this contract for no
justifiable reason, Party A shall pay to Party B a penalty equal to 30% of all
the rent that has already been paid in addition to the compensation for economic
loss stipulated in provision 3 of Article IV above.

5.           During the term of the lease, the personnel changes on the part of
Party A shall not affect the performance of this contract.

6.           Party A has the right to collect rent in the amount and at the time
in accordance with the provisions of this contract.

V.           Party B’s Rights and Obligations

1.           The business contemplated and operated by Party B must be in
compliance with the State industrial policies and with the State Safety
Operation Regulations.

2.           During the term of the lease, Party B has the right to run joint
operation on the leased land, sublease and pledge the leased land; Party A shall
not interfere with such actions.

 
 

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3.           Upon expiration of the term of the lease, if Party A desires to
continue to lease out the leased land, Party B shall have the first right of
refusal under the same terms; if Party B wants to end the lease, Party B must
notify Party A 3 months prior to the expiration of the lease.

4.           In the event that Party B terminates the lease in the middle of the
term for no justifiable reason, Party B cannot demand the refund of the rent
that has already been paid, shall forfeit the right to the lease and cannot
continue the use of the buildings and fixtures on the leased land.

5.           Party B must pay to Party A the rent in the amount and at the time
in accordance with the provisions of this contract.

6.           Party B shall bear all the costs, expenses and fees in connection
with the construction of the liquefied coal pulp factory.

VI.         Breach of Contract

1.           During the term of the lease, Party B must pay the rent for the
leased land on time; if the rent payment is past due for less than 6 months,
Party A shall have the right to assess a 5% penalty; if the rent payment is past
due for more than 6 months but less than a year, Party B shall have the right to
terminate the lease in addition to the right to assess a 5% penalty.

2.           During the term of the lease, Party A shall bear full
responsibility for all the problems resulting from issues regarding property
right certificate that affect Party B’s normal operation and shall compensate
Party B for any resulting loss.

VII.        Miscellaneous Stipulations and Matters

1.           During the term of the lease, both Party A and Party B shall follow
the State laws and regulations and shall not use the leased land to engage in
any illegal activities.

2.           During the term of the lease, Party A has the right to supervise
and assist Party B with any work in connection with construction in the
civilized manner and with operation safety and other related work.

3.           During the term of the lease, neither party shall bear any
responsibility for inability to perform the contract due to Force Majeure or to
relocation ordered by the city government.

 
 

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4.           Upon the expiration of the lease, if Party A desires to continue to
lease out the leased land, Party B shall have the first right of refusal; if
Party A does not desire to continue to lease out the leased land, Party B must
move out on schedule; otherwise Party B must bear the responsibility for all the
loss and consequences resulting from such failure to move out on schedule.

5.           In the event of a change of enterprise name after the execution of
this contract, such change shall be verified by both parties and acknowledged by
the seals and signatures of both parties; the terms of the original lease
contract shall remain and continue to be performed until the end of the term of
the lease.

VIII.       Any matters not covered herein shall be settled by consensus and
negotiation between the parties hereto according to law.

IX.          This contract has one original and four copies, with two copies to
each party and all of them carry the same legal power.  This contract becomes
effective on the day of execution by both parties by affixing each respective
party’s signature and seal hereto.

Party A (seal):
 
(seal of No. 3 Company of Shenyang Lumber General Corporation)

Authorized Agent:

Date: July 21, 2009

Party B (seal):
 
(seal of Shaanxi Suo’ang New Energy Enterprise Co., Ltd.)

Authorized Agent: (signature of LI Fu)

Date: July 21, 2009
 
 
 

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