Exhibit 10.33

Contract No. YHZL (09) 02ZL024
 

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Financing Leasing Contract
         
Of
       
2 × 14M M Gas Turbine Generator Set and Auxiliary
     
Equipment
 

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Between

HENAN SHUNCHENG GROUP COAL COKE CO., LTD.
     
(“Lessee”)

And

AVIC I INTERNATIONAL LEASING CO., LTD. (“Lessor”)

Date: November 3, 2009
        
Place: Shanghai, China

 
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This Financing Leasing Contract is entered into on November 3, 2009 in Shanghai
by and between the following two parties:
 
HENAN SHUNCHENG GROUP COAL COKE CO., LTD. (“Lessee”)
 
Registered Address: North of Tongye Town, Anyang County, Henan Province, China
 
Domicile: North of Tongye Town, Anyang County, Henan Province, China
 
Legal Representative: Xinshun Wang (王新顺)
 
Tel and Fax: 0372-3206736
 
                     0372-3206721
 
And
 
AVIC I INTERNATIONAL LEASING CO., LTD. (“Lessor”)
 
Registered Address: 23/F, C Tower, No.212 Jiang Ning Road, Jing An District,
Shanghai
 
Legal Representative: Yu An Zhang (张予安)
 
Tel and Fax: 021-52895388
 
                     021-52895389
 
(The Lessor and Lessee shall be individually referred to as a “Party” and
collectively as “Parties”)
 
Whereas:
 
(1)
Based on the Lessee’s selection of the Supplier and the Lease Item, the Lessor
agrees to purchase the Lease Item and lease it to the Lessee for its use. And

 
(2)
The Lessor agrees to provide the Lessee the Lease Item by leasing and the Lessee
agrees to lease the Lease Item under the terms and conditions of this Contract.

 
Now therefore, through friendly negotiations, the two Parties agree as follows:
 
 
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1.
Definition and Interpretation

1.1
Unless otherwise specifically prescribed in this Contract or otherwise
separately agreed by the Parties in writing, the terminologies used in this
Contract shall be defined and interpreted as below.  Any terminology from this
Contract shall be interpreted according to this Article.

 
Terminology
 
Definition
Contract/this Contract
 
Shall refer to this Financing Leasing Contract and all the Annexes thereof, as
well as any supplementary agreements and amendments in writing thereto entered
into by the Parties from time to time.
Schedule
 
Shall refer to the Schedule of Leasing signed by the Lessor and Lessee in the
format of Annex 1 of this Contract from time to time.
Lease Item
 
Shall refer to the equipment, spare parts, accessories, auxiliary software, and
service described in the Schedule of this Contract, as well as any substitute,
update and replacement to the said equipment.
Leasing Transaction
 
Shall have the meaning as defined in Article 3 herein.
Acceptance Certificate
 
Shall refer to the acceptance certificate signed by the Lessee in the format of
Annex 2 of this Contract.
Business Day
 
Shall refer to a day, on which the bank inside China is open for general
business (other than the legal rest days and legal public holidays).
Acceptance Date
 
Shall refer to the date indicated in the Acceptance Certificate.
Delivery Place
 
Shall refer to the place for delivery as provided in the Schedule.
Supplier
 
Shall refer to the equipment suppliers as listed in the Schedule.
Purchase Contract
 
Shall refer to the orders, the sales contract or other purchase documents signed
by and between the Lessee and the Supplier in relation to the product purchase
based on the Entrust Purchase Contract
Entrust Purchase Contract
 
Shall refer to the Entrust Purchase Contract (No. YHZL(09) 02ZL024-WM001) signed
by and between the Lessor (Principal) and the Lessee (Consignee).
RMB
 
Shall refer to Chinese legal currency.
Leasing Term
 
Shall have the meaning as defined in Article 8.1 herein.
Rental
 
Shall refer to the amount as provided in the column of “Rental” in the Schedule
herein.
Rate for Late Payment
 
Shall refer to the rate when calculating the surcharge for delay of performance,
which is, 0.1% per day.
Rental Adjustment Notice
 
Shall refer to the notice of rental adjustment in the format of Annex 3 signed
and issued by the Lessor.

 
 
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Rental Payment Date
 
Shall refer to the date as provided in the column of “Rental Payment Date” in
the Schedule herein.
China or PRC
 
Shall refer to the People’s Republic of China (excluding Hong Kong, Macao and
Taiwan).
Security Interest
 
Shall refer to any mortgage, pledge, lien, or other security interests set up or
arises by whatever means.
Breach of Contract
 
Shall refer to any breach of contract of the Lessee as provided in Article 25
herein.
Authorization
 
Shall include any and all approvals, consents, licenses, admission, concession,
permissions, registration, announcement, reduction or exemption.
Month/Year
 
Shall refer to the calendar month/year.
Tax
 
Shall include the applicable taxes of any nature, or the taxes of any nature
which will be applied, imposed, collected and withheld after this Contract comes
into effect, including but not limited to income tax, business tax, duty,
deductions or withholding tax, etc.
Institute
 
Shall include any department, institute, council, bureau, committee, authority,
or other enforcement departments.

 
1.2
Any Article or Annex mentioned in this Contract shall refer to the Article or
Annex of this Contract; “This Contract” or any other document mentioned in this
Contract shall be interpreted to include its revised or supplemented or updated
versions. The headings of the Articles in this Contract are only for the purpose
of convenience and shall not affect the interpretation of such
Article.  “Including” mentioned in this Contract shall be interpreted as
“including but not limited to”.

 
2.
Main Contract

 
This Contract shall be the main contract between the Lessor and Lessee in regard
to the leasing matters.  This Contract stipulates the general terms and
conditions which are applicable to all the Leasing Transactions under this
Contract.
 
3.
Schedule and Leasing Transactions

 
The Schedule stipulates the Lease Item breakdown, Rent, Rental Payment Date and
other special terms and conditions applicable to the Leasing Transactions of the
Lease Item listed in the Schedule.
 
Each Schedule constitutes one Leasing Transaction in regard to the Lease Item
listed in the Schedule between the Parties upon being signed and agreed by the
Parties.
 
 
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4.
Independent Leasing Contract

 
The Lessor and Lessee hereby agree that the Schedule signed by the Parties shall
become part of terms and conditions of this Contract by mentioning “this
Contract”.
 
5.
Discretional Selection and Purchase

 
5.1
The Lessee has the right, at its full discretion, to select the name, type,
specification, quality, maintenance, price, delivery, inspection and acceptance
and other purchase issues of the Lease Item, as well as the Supplier of the
Lease Item.

 
5.2
The Lessor shall sign a Entrust Purchase Agreement with the Lessee, according to
which, the Lessee shall itself directly negotiates and concludes the Purchase
Contract (or other contracts with the name nature, such as sales and purchase
contract, project turnkey contract, etc., hereinafter as “Purchase Contract”)
with the Suppler in regard to the purchase of the Lease Item.

 
The Lessor is only obliged to pay the purchase price of the Lease Item under the
Purchase Contract.  Other obligations, liabilities and risks shall all be borne
by the Lessee, like the Lessee is the purchaser of the Lease Item.
 
5.3
The abovementioned Lessee’s selection and decision does not rely on the Lessor’s
skills or are not affected by the Lessor at all.

 
6.
Delivery and Inspection and Acceptance

 
6.1
The Lessee shall reach an agreement with the Supplier that the Supplier shall be
responsible for directly delivering the Lease Item to the Delivery Place
according to the Purchase Contract.  Unless otherwise specifically agreed
herein, to the Lessor, the Lessee shall bear any risks and expenses arising out
from the delivery of the Lease Item to the Delivery Place.  The delivery date
shall be the date as agreed in the Purchase Contract.

 
6.2
The Lessee shall transfer an original copy of the Acceptance Certificate to the
Lessor within 10 working days after the delivery date.  The Acceptance
Certificate signed and issued by the Lessee constitutes a solid evidence
certifying that:

 
 
(1)
The Lessee has already inspected and accepted the Lease Item;

 
 
(2)
The Lease Item fully satisfies the Lessee’s requirements and the requirements of
the Purchase Contract;

 
 
(3)
The Lease Item and relevant documents thereof are intact and being in good
working conditions; and

 
 
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(4)
The Lessee is willing to pay the Rental and other payables under the leasing
contract.

 
7.
Supplier’s Breach of Contract

 

 
7.1
If the Supplier has any default in the Purchase Contract, including but not
limited to:

 
 
(1)
The Supplier delays or fails to deliver all or part of the Lease Item;

 
 
(2)
The Lease Item does not conform to the stipulations of the Purchase Contract;

 
 
(3)
The Lease Item has any quality defect;

 
 
(4)
The Lease Item has any title of defect (such as infringing third party’s IP
rights);

 
 
(5)
The Supplier fails to perform its repair or maintenance obligations for the
Lease Item; and

 
 
(6)
The Supplier breaches any, express or implied, representations or warranties it
shall follows.

 

 
7.2
The Lessor shall not be liable for any damages of the Lessee caused by the said
breaches of the Supplier.

 
7.3
The Lessee agrees that where it suffers any losses due to the aforesaid reasons,
it shall directly claim against the Supplier.  The Lessor’s obligation to
provide assistances to the lessee is only limited to provide any and all
necessary certifications.  Where the Lessee enters into any indemnity agreement
with the Supplier, the Lessor shall be notified; where such agreement relates to
the return, replacement, price increase/deduction of the Lease Item and other
issues which will affect the Lessor’s rights under this Contract, a prior
written consent from the Lessor shall be obtained.

 
7.4
The Lessee further agrees that, no matter whether the Lessee’s claim against the
Supplier due to the aforesaid reasons is realized or not, or whether such claim
is still in process or not, the validities of relevant leasing contract and this
Contract as well as the Lessor’s right to collect the Rental and other payables
from the Lessee under this Contract shall not be affected.  Under the said
situation, the Lessee shall pay the Rental and other payables to the Lessor
pursuant to this Contract.

 
 
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8.
Leasing Term and Lease Commencement Date

 
8.1
Unless otherwise specifically agreed in this Contract, the Leasing Term of the
Leasing Item rent out by the Lessor and leased by the Lessee shall be 5 years
(60 months).

 
8.2
The Lease Commencement Date herein shall be the date when the Lessor makes the
first installment payment according to the Entrust Purchase Contract.

 
8.3
The Leasing Term herein shall commence from the Lease Commencement Date and
expire on one day before the corresponding date in the 5th year to the Lease
Commencement Date.  If there is no corresponding date of expiry month to the
Lease Commencement Date, the Leasing Term shall be expired on the last day of
that month.  Except agreed by the Lessor in writing, the Leasing Term shall not
be canceled or early terminated.

 
9.
Rental and Payment

 
9.1
Upon the Parties’ confirmation, the Lessor shall provide the financing to the
Lessee in respect to the leasing services for the Lease Item under this
Contract; as a principal under the Entrust Purchase Contract (the Lessor under
this Contract), the Lessor shall pay the sum of the product price minus the
Rental for 0 Period, which is approximately RMB 49,883,000.

 
9.2
The Lessor and Lessee agree and confirm that: the Rental shall be determined
according to the Lease Rate which is equal to the bank’s RMB benchmark loan rate
of 3 to 5-year term published and implemented by the People’s Bank of China plus
1.5%  as lease rate (i.e. Lease Rate = Applicable loan rate + 1.5%); the Lessee
agrees and confirms that if the People’s Bank of China adjusts the RMB benchmark
loan rate of 3 to 5-year term, the Lessor has the right to adjust the annual
Lease Rate at the same time; on the first Rental Payment Day following the
adjustment date of the interest rate, the Rental and other payables shall remain
unchanged, while, the Rental and other payables after the said Rental Payment
Date shall be recalculated according to the adjusted interest rate (i.e. the
adjusted interest rate is the new RMB benchmark loan rate of the same term
published and implemented by the People’s Bank of China plus 1.5%).

 
9.3
During the Leasing Term, the Lessee shall pay 60 installments of the Rental
which are calculated based on the equal annual payment method.  During the
Leasing Term, the Rental shall be paid monthly at the end of each period, among
which, the first 3 months are grace period during which the Lessee shall pay
interest to the Lessor monthly at the end of each period.

 
 
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The formula for calculating the Rental for the first 3 months (grace
period)during the Leasing Term is as follows:
 
The Rental for each Period = A × I
 
A = RMB 49,883,000; I = Lease Rate/12 × 365/360
 

 
9.4
The formula for calculating the Rental for the remaining 57 months is as
follows:

 
The Rental for each Period = A × {(1+I) n× I} / {(1+I)n -1}
 
A = RMB 49,883,000; n=57; I = Lease Rate/12 × 365/360
 
9.5
The Lessee shall fully pay the Rental and other payables on time according to
the Schedule. The aforesaid payment shall not be deducted and shall be paid
unconditionally.

 
9.6
The due date of rental amount etc. in the Schedule means the crediting date of
the amount of payment, which also means the lessor can receive the amount in its
account in that date for the latest. If the payment date is the public holiday
of the country, that date will automatically shift to one working day earlier.

 
9.7
If the payment received by the Lessor is not adequate to cover all the due and
payable payments payable by the Lessee under this Contract, the Lessor may use
such payment to pay off the payment obligations of the Lessee under this
Contract according to a proper repayment order decided by the Lessor, the said
usage decided by the Lessor is prior to any usage method raised by the Lessee.

 
9.8
The Lessee shall fully pay all the payables under this Contract to the Lessor
and shall not make any deduction or withholding to the aforesaid payables by
excuse of tax or any other reasons.  If any deduction or withholding of the
aforesaid payables is required according to any applicable PRC laws or
regulations, the Lessee shall correspondingly compensate the Lessor the
aforesaid amount deducted or withheld from the aforesaid payables, to ensure
that the amount received actually by the Lessor is equal to the amount of all
the payables under this Contract.

 
10.
Rental for 0 Period, Guarantee Amount and Rental Management Fee

 

 
10.1
The Lessee shall pay the Rental for 0 Period and cash deposit to the Lessor
according to the following methods:

 
 
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(1)
Rental for 0 Period: The Lessee shall pay it to the Lessor within 1 working day
after the Lessor makes the first installment payment according to the Entrust
Purchase Contract (Contract No. YHZL (09) 02ZL024-WM001), which is equal to RMB
10,221,430.22;

 
(2)
Cash Deposit: The Lessee shall pay it to the Lessor within 1 working day after
the Lessor makes the first installment payment according to the Entrust Purchase
Contract (Contract No. YHZL (09) 02ZL024-WM001), which is equal to RMB
7,813,000; during the Leasing Term, the Lessor will not pay interest for
Lessee’s cash deposit, however, the cash deposit shall be the calculating base
for the Rental, and the cash deposit can be used to offset the Rental for the
last several periods.

       
10.2
The Lessee agrees to pay the leasing Management Fee to the Lessor for the
financial leasing services provided by the Lessor under this Contract.  The
Lessor and the Lessee agree and confirm that, the Lessee shall pay the
Management Fee to the Lessor according to the following methods:

 
 
(1)
The first installment of the Management Fee: shall be paid by the Lessee to the
Lessor within 5 working days after this Contract comes into effect and shall be
equal to 1.5% of the financing amount; and

 
(2)
The second to fifth installment of the Management Fee: shall be paid by the
Lessee to the Lessor on the respective date corresponding to the Lease
Commencement Date of each year after the Lease Term commences and shall be equal
to 1.5% of the outstanding principal on the date corresponding to the Lease
Commencement Date of each year.

        
10.3
The Management Fee shall not be returned to the Lessee under any circumstances.

 
11.
Adjustment of Rental

 
11.1
The Lessee agrees and confirms that, if the People’s Bank of China adjusts the
RMB benchmark loan rate of 3 to 5-year term, the Lessor is entitled to adjust
the annual Lease Rate synchronously and to re-calculate the Rental and other
payables accordingly.

11.2
Where the RMB benchmark loan rate of 3 to 5-year term published and implemented
by the People’s Bank of China is adjusted, on the first Rental Payment Day
following the adjustment date of the loan rate, the Rental and other payables
shall remain unchanged, while, the Rental and other payables after the said
Rental Payment Date shall be recalculated according to the newly adjusted loan
rate.

11.3
The Lessor is entitled to adjust the Rental and other payables by way of issuing
the Lessee a Rental Adjustment Notice, the Lessee shall sign on such Rental
Adjustment Notice to confirm the adjustment, and the Lessee’s failure to sign
shall not affect the Lessor’s adjustment to the Rental and other payables.

 
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12.
Surcharge for Delay of Performance

 
The Lessee shall pay to the Lessor a surcharge for delay of performance for its
failure to pay the due Rental or other payables as agreed in this Contract to
the Lessor on time.  The surcharge for delay of performance shall be calculated
based on the amount in arrears and the Rate for Late Payment (0.1% per day) for
the period from the due date to the actually payment date.  After the Lessee
paid the surcharge for delay of performance, the Lessee is still obliged to pay
the delayed payment to the Lessor.  If the Lessee fails to pay the surcharge for
delay of performance on time or in full, such payable surcharge shall be firstly
deducted from the Rental or other payables paid by the Lessee, until it is fully
paid off.
 
13.
Ownership

 
13.1
The Lessee confirms that the Lessor shall be the sole owner of the Lease Item,
who has the sole ownership to the Lease Item.  Unless the Lessee exercises its
purchase right upon the expiration of the Lease Term initially empowered by this
Contract, the Lessee shall not have the ownership to the Lease Item.  The Lessee
hereby expressly waives its any potential claims against the ownership to Lease
Item.  The Lessee shall not allege it is the owner of the Lease Item or permit
the occurrence of any other incidents that will make a third party reasonable
believes that the Lessee is the owner of the Lease Item.

 

 
13.2
Without the prior consent from the Lessor in writing, the Lessee shall not take
up the following activities:

 

 
(1)
Sell, assign or dispose the Lease Item by other means;

 

 
(2)
Re-lease the Lease Item or permit any one other than the Lessee to use the Lease
Item;

 

 
(3)
Establish any Security Interest on the Lease Item;

 

 
(4)
Waive the Lease Item;

 

 
(5)
Accrete the Lease Item to any land, building or house which may cause the Lease
Item be regarded as part of the land, building or house;

 

 
(6)
Make any modification to the Lease Item; and

 

 
(7)
Other activities which may impair the Lessor’s ownership to the Lease Item.

 
In terms of (5) aforementioned, if the Lessee provides a confirmation letter
issued by the owner of the land, building or house to the Lessor, in which the
owner waives its possible rights to the Lease Item and empowers the Lessor to
conduct any inspection or removal of the Lease Item during the Leasing Term, the
Lessee shall not refuse such requirement of the Lessor without any reasonable
reasons.
 
 
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13.3
The Lessor has the right to require the Lessee to fix the ownership mark on the
Lease Item.  Such ownership mark shall: (1) indicate the Lessor is the owner of
Lease Item; (2) be fixed in a remarkable position on the Lease Item; and (2) not
be removed or concealed during the Leasing Term.

 
13.4
The Lessor has the right to inspect the Lease Item.  The Lessee confirms it will
provide necessary assistances, including but not limited to: (1) provide or make
the Lessor an access to the site where the Lease Item is located; (2) provide
the maintenance records of the Lease Item; and (3) allow the Lessor to check
whether the Lessee conforms to any provisions under this Contract it shall
observe.  Any time required for the inspection, check or maintenance shall
constitute part of the Leasing Term.

 
14.
Right to Use

 
Subject to the Lessee’s compliance with this Contract, the Lessor shall ensure
that the Lessee can possess and use the Lease Item without the Lessor’s
interruption during the Leasing Term.
 
15.
Representations and Warranties

 

 
15.1
The Lessee hereby represents and warrants to the Lessor as follows:

 

 
(1)
The Lessee is a legal entity duly formed and validly existing under the PRC
laws;

 

 
(2)
The conclusion and performance of this Contract and the Leasing Transaction
thereunder do not violate this Contract, any applicable laws, or the Lessee’s
articles of association, or any other documents binding on the Lessee or its
assets;

 

 
(3)
This Contract constitutes the legally effective and binding obligations of the
Lessee and is enforceable against the Lessee in accordance with its respective
provisions;

 

 
(4)
The Lessee has power and authority to enter into and perform this Contract and
any Leasing Transaction thereunder.  The Lessee has obtained all the
authorizations from any governmental institute or other institutes in regard to
the conclusion and performance of this Contract and any Leasing Transaction
thereunder.

 

 
(5)
There hasn’t been any litigation, arbitration or ongoing or suspending
administrative proceeding held by any court, arbitration tribunal or
administrative department against the Lessee or its any asset, or its revenue
which may have severely and materially adverse impact on the Lessee’s business,
asset or financial status; nor is there any major litigation, arbitration or
administrative proceeding which will have potential threat on the Lessee or its
any asset, or its revenue according to the knowledge of the Lessee’s senior
management;

 
 
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(6)
Currently, the Lessee legally possesses all its assets and takes up its
operations

 

 
(7)
The Lessee does not have any breach of contract, nor its any potential breach of
contract occurs and exists.

 

 
15.2
The Lessee further represents, warrants and covenants to the Lessor that, the
abovementioned representations and warranties are true and accurate on each =
Acceptance Date and Rental Payment Date in terms of the existing facts and
situations whereupon.

 

 
15.3
The Lessee confirms that:

 

 
(1)
The Lessor is not the manufacturer or Supplier or their agents of the Lease
Item, and the Lessor shall not be held liable for any representation or warranty
made by them to every aspect of the Lease Item.

 

 
(2)
Unless otherwise specifically agreed herein, the Lessor does not make or provide
any condition, warranty or representation in regard to the conditions, design,
marketability or applicability, or the operation of the Lease Item.  Any
condition, warranty or representation in relation to the aforesaid matters
(obligation or liabilities arising from the contract or the infringment),
express or implied, legal or in any other forms, is expressly eliminated herein.

 
16.
General Covenants

 

 
16.1
The Lessee covenants to the Lessor that, commencing from the signing date of
this Contract until any and all liabilities of the Lessee under this Contract
are completely terminated:

 
(1)
The Lessee shall obtain all required registrations and authorizations to possess
and use the Lease Item at its own cost, which shall conform to all applicable
laws, regulations, rules or policies in relation to the possession, usage,
keeping and maintenance of the Lease Item;

 
(2)
Upon the reasonable requirements of the Lessor from time to time, the Lessee
shall provide the Lessor its financial status, business and operational
financial statements, financial reports and other materials which the Lessee can
provide to the financial institute, administration for industry and commerce,
administration for tax, industry regulatory department, etc.

 
 
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(3)
The Lessee shall keep all the authorizations (governmental or other
authorizations ) in full effect, and will promptly obtain any other possible
authorizations which enable the Lessee to perform any transactions under this
Contract;

 
(4)
If any breach of contract or any incident which may result in the breach of
contract occurs, the Lessee shall immediately notify the Lessor after it is
aware of such breaches or incident, and the Lessee shall take remedial measures
to reduce the impact on this Contract and the Leasing Transaction thereunder
brought forward by such breach of contract or incident.  The Lessee shall notify
the Lessor in writing of the remedial measures it adopted.

 
16.2
Any loss, theft or damage of the Lease Item or part thereof, or other incidents
of any other nature, the legal change or environmental change shall not impair
the Lessee’s any obligations under this Contract, so that all the said
obligations (including but not limited to paying the Rental or other payables)
shall remain fully effective.

 
17.
Operation and Usage of the Lease Item

 
17.1
The Lessee covenants to the Lessor that, commencing from the delivery date until
any and all liabilities of the Lessee under this Contract are completely
terminated, the Lessee shall manipulate or use the Lease Item exactly according
to the following methods:

 
 
(1)
By the way pursuant to any applicable laws, regulations and safety guidelines of
the Supplier which are applicable to the Lease Item;

 
 
(2)
It shall have professionals with special skills to manipulate or use it
carefully, safely and properly;

 
 
(3)
It shall be manipulated or used in a way conforming to the design purpose of the
Lease Item and for the lawful purpose;

 
 
(4)
By means which will not impair the Supplier’s warranty or the insurance on the
Lease Item; and

 
 
(5)
By means which will not endanger any one’s health.

 

 
17.2
The Lease Item shall be manipulated or used in the Delivery Place, if the Lease
Item is movable, the Lessee can only manipulate or use the Lease Item within the
area or scope agreed by the Lessor in writing.

 
 
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17.3
The Lessee is obliged to provide the conditions of the Lease Item, usage
purpose, place and status, upon the request of the Lessor from time to time.

 
17.4
The Lessee shall prepare and ensure to prepare accurate, complete and timely
records on its any and all manipulation on the Lease Item; the said records
shall be owned by the owner of the Lease Item, whose ownership will be
transferred free of charge along with ownership transfer of the Lease Item.  The
said records shall be possessed and used by the Lessee.  Without any consent
from the Lessor, the Lessee shall not allow any third party to possess and
control such records.

 
17.5
All the records prepared by the Lessee for the Lease Item shall be in compliance
with the rules enacted by the governmental institute from time to time, and the
Lessee shall disclose to the Lessor the details and locations of any other spare
parts purchased by the Lessor but not installed on the Lease Item according to
the actual situations.

 
17.6
The Lessee will obtain or maintain any necessary certificate, license, permit,
or approval for using or manipulating the Lease Item as required by the
applicable laws or regulations and shall procure the Lease Item conforming to
any and all orders or requirements of the governmental institute which are
applicable to the Lease Item.  Relevant fees shall be borne by the Lessee.

 
17.7
During the period when the Lessee possesses and uses the Lease Item, the Lessee
shall promptly pay or procure others to pay any and all the rent, expenses,
license taxes, registration fees, taxes and other expenditure in relation to any
place or site which accommodates the Lease Item or part thereof, or shall make
sure the Lease Item will not be withheld or sealed up by any means due to the
rent and other taxes and fees.

 
18.
Maintenance and Repair

 
18.1
Commencing from the delivery date until any and all liabilities of the Lessee
under this Contract are completely terminated, the Lessee shall maintain, repair
and examine the Lease Item at its own cost and shall make the Lease Item in good
working and maintenance conditions as it being delivered.

 
 
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18.2
At the delivery, if any accessories or spare parts fixed on or incorporated in
the Lease Item or any replacement parts thereof are lost or destroyed to the
extent that they can not be repaired or not suitable to use any more, the Lessee
shall ensure to promptly replace such parts and procure the Lease Item maintain
in the good working and maintenance conditions.  The time required for the
maintenance, repair and examination shall be part of the Leasing Term.  The
Lessee shall have the obligations to pay the Rental and other payables under
this Contract as well in the said situation, and shall not refuse to pay by the
excuse that the Lease Item is being in a maintenance, repair or examination
status.

 
18.3
The Lessee agrees and covenants that, the Lease Item shall be maintained and
repaired by a qualified person conforming to the Supplier’s requirement.  For
the maintenance and repair purpose, any components to supersede, replace or
renew any accessories, spare parts, components of the Lease Item shall be the
properties of the Lessor, which do not bear any Security Interest.  Any
accessories or spare parts removed from the Lease Item shall be the properties
of the Lessor, which shall be well kept and maintained by the Lessee.

 
18.4
Upon the request of the Lessor at any time, the Lessee shall provide evidences
(including providing the Lessor one or more legal opinions) to the Lessor’s
satisfaction, to prove that any replacement part of the Lease Item shall belong
to the Lessor which do not bear any Security Interest.

 
18.5
The Lessor need not to pay any expenses for maintaining and repairing any part
of the Lease Item, and need not to provide any or part of the equipment to
replace the Lease Item or part thereof in the situation that the Lease Item or
part thereof is lost, forfeited, destroyed or unsuitable to use any more due to
other reasons.  In the aforesaid situations, the Lessee shall have the
obligations to pay the Rental and other payables under this Contract as well,
and shall not refuse to pay by the excuse that the Lease Item can not be used
anymore.

 

 
18.6
The Lessee shall not use the Lessor’s credit as a guarantee to secure any
maintenance, examination, replacement, repair or change of the Lease Item.

 
19.
Registration

 
For any required equipment registration or alteration registration with the
governmental institute in relation to the execution or performance of this
Contract and any transactions thereunder (including but not limited to ownership
of the Lease Item, right of possession or other rights), the Lessee shall be
responsible for relevant expenses and for all adverse consequences resulted from
the failure to perform the said registration or alteration registration.  If the
Lessor requires, the Lessee shall provide the copy of the registration
certificate; and the Lessor shall keep the original registration certificate if
it does not affect the Lessee’s usage of the Lease Item.
 
 
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20.
Insurance

 
20.1
From the delivery date until any and all the liability under this Contract is
terminated, the Lessor shall buy property all risks insurance with the Lessor be
the insured, and the insurance premium shall be borne by the Lessee.  The
insurance premium for each leasing year shall be 0.1% of the outstanding payable
leasing payments of the Lease Item at the beginning of the year.  The Lessee
shall pay the insurance premium of the Lease Item of the year in full to the
Lessor at the beginning of each leasing year; after receiving the premium, the
Lessor shall buy the insurance based on the insured amount which is equal to the
outstanding principal of the Lease Item at the beginning of the year.

 
The property insurance of the Lease Item shall cover all the risks of the Lease
Item, the insured amount shall not be lower than the outstanding receivable
leasing payments by then; and the first beneficiary (or the insured) shall be
the Lessor.
 

 
20.2
The insurance policy of the said insurance shall:

 

 
(1) 
indicate the Lessor shall be the owner of the Lease Item;

 

 
(2) 
indicate the Lessor shall be the co-insured and the insurance beneficiary;

 
 
(3)
indicate it shall not canceled or terminated by the Lessee, unless the Lessor
approves it in writing; and

 
 
(4)
indicate the policy shall not be amended, unless the Lessor approves it in
writing.

 

 
20.3
The Lessee confirms it will not buy any other insurance if the claims of such
insurance may impair or has other adverse impact on the claims under the
abovementioned insurance policy.

 
20.4
If the Lessee fails to pay the insurance premium to the Lessor on time according
to the foregoing provisions, the Lessor has the right to (but not obliged to)
buy insurance for the Lease Item or any abovementioned other risks, provided
without prejudice to its rights arising from any of aforementioned breach of
contract, and such insurance purchase shall be maitained during the period
provided in this Article.  Upon request, the Lessee shall immediately pay to the
Lessor all the expenditures spent for the above purposes and the interests
thereof calculated based on the Rate for Late Payment commencing from the due
date until the actual payment date.

 
 
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20.5
Without derogating any other provisions of this Contract, the Lessee agrees, it
shall indemnify the Lessor for any loss, liabilities taking, damages, claims,
request, or expenditures suffered by or incurred to the Lessor due to or in
relation to the Lessee’s failure to perform its obligations under Article 20.

 
21.
Loss and Damage

 
21.1
From the delivery date until any and all the obligations of the Lessee under
this Contract are fulfilled, any risk of damage and loss of the Lease Item shall
be borne by the Lessee, no matter whether such risk is covered or not by the
insurance under this Contract.

 
21.2
During the Leasing Term, if any loss, destroy or irreparable damage or forfeit
or confiscation occurs due to any reasons (“Total Loss”), the Lessee shall
immediately notify the Lessor and pay to the Lessor on the next Rental Payment
Date: (1) all the due and payable Rental and other payables on the said date;
and (2) the predetermined damages corresponding to the said Rental Payment Date,
and the predetermined damages is equal to the total amount of all the
outstanding Rental and other payables.  The leasing contract shall be terminated
after the Lessor received all the aforesaid payments and the Lessee need not
continue to pay any Rental under this Contract any more.

 
21.3
The Lessor and the Lessee shall endeavor to fully cooperate with each other to
pursue any and all insurance proceeds or other compensations.  Any and all
proceeds from the insurance or other methods (“Proceeds for the Total Loss”)
shall be fully paid to the Lessor.  If the Lessee receives any Proceeds for the
Total Loss, it shall be deemed that the Lessee holds such payments on behalf of
the Lessor, and the Lessee shall transfer such payments to the Lessor in
reasonably shortest time.  After the Lessor received all the payments provided
in Article 21.2 from the Lessee, Proceeds for the Total Loss will be transferred
to the Lessee up to the amount of the said payment.

 
 
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21.4
If any repairable damage or detriment occurs to the Lease Item, the Lessee shall
immediately repair it.  If the Lessor receives any insurance proceeds for the
said damage or detriment, such insurance proceeds shall be used to pay the
Lessee’s expenses for repairing the said damage or detriment, however, any
delinquent amount owed by the Lessee to the Lessor shall be deducted from the
said payment.

 
22.
Indemnification

 

  
22.1
If the Lessor suffers any loss due to the following issues:

 
 
(1)
The Lessee has any breach of contract under this Contract;

 
 
(2)
During the period when the Lessee possesses and uses the Lease Item, the Lease
Item causes personal injury or property damage to a third party;

 
 
(3)
The manufacture, selection, delivery, possession, debugging, installation,
usage, manipulation, maintenance, return, site, registration or other issues
related to the Lease Item;

 
 
(4)
The Lessee’s possession and usage of the Lease Item which cause the Lessor is
claimed against by a third party;

 
The Lessee shall fully indemnify the Lessor for all the said losses suffered by
Lessor.
 
22.2
The Lessee shall adopt any necessary and active measures to protect the Lessor
from any enforcement by any third party on the Lease Item which is in the
Lessee’s possession while owned by the Lessor or from any actual activity
infringing the Lessor’s ownership to the Lease Item.  In the said infringement
on the Lessor’s ownership, the Lessee shall immediately notify the Lessor and
shall be responsible to eliminate such infringement at its own cost.  If the
Lessor adopts measures on such infringement by itself, the Lessee shall pay all
the reasonable expenses arising therefrom according to the requirement of the
Lessor.

 
23.
Security

 
23.1
Upon the Lessor’s request, the Lessee shall provide reasonable securities with
joint and several liabilities and / or other securities to the satisfaction of
the Lessor for the its payment obligations of the Rental and other payables as
well as other obligations under this Contract, according to the document format
provided by the Lessor.  The said security contracts shall be signed on the same
signing date of this Contract.

 
 
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23.2
If the credit of the Lessee or the guarantor goes down, or the value of the
collateral is reduced, or there is any incident occurs which result in the
Lessor’s need to reasonably protect its rights, the Lessor may require the
Lessee to provide other security to supplement or replace the aforesaid
guarantee and the Lessee shall meet the said requirements to the greatest
extent.

 
24.
Taxes and Expenses

 
24.1
The Lessor and Lessee agree to separately pay and assume the taxes it shall be
subject to according to the PRC laws and regulations.

 
24.2
Unless otherwise specifically agreed herein, in terms of any and all expenses
arising from the negotiation, preparation or completion of this Contract and
other documents or contracts related to this Contract, and any and all expenses
arising from the amendment, consent, or approval of this Contract or any other
aforesaid documents or the said expenses in relation to this Contract, the
Lessee and the Lessor shall separately bear their own expenses.

 
25.
Breach of Contract

 
The following situations shall be deemed as the Lessee’s breach of contract:
 
(1)
The Lessee refuses or delays to receive the Lease Item;

 
(2)
The Lessee fails to pay or delays any due Rental or other payables;

 
(3)
The Lessee refuses or delays to issue the Acceptance certificate;

 
(4)
The Lessee fails to buy or renew or maintain any type of insurance according to
this Contract, or the insurance company abolishes the insurance policy or
releases or discharges any and all liabilities under such insurance policy by
whatever means due to the Lessee’s action or omission;

 
(5)
The Lessee fails to perform the registration formalities of the Lease Item
according to this Contract;

 
(6)
Any representation, warranty or covenant made by the Lessee under this Contract
or any representation, warranty or covenant made by the guarantor is inaccurate
in its any material aspects, and such default has not been cured within 7 days
after receiving the Lessor’s notice to cure such default;

 
(7)
The Lessee fails to provide its financial statements or other financial
documents or reports, as well as other documents in relation to the Lease Item
or the financial status of the Lessee on time upon receiving the request from
the Lessor;

 
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(8)
The Lessee fails to use, manipulate and maintain the Lease Item according to
this Contract and fails to make any correction within 7 days after receiving the
Lessor’s written notice;

 
(9)
The Lessee or the guarantors shuts down, suspends its business, suspends its
production, goes into reorganization or transfers its all or material assets;

 
(10)
After receiving the reasonable notice from the Lessor, without any reasonable
excuses, the Lessee disallows the Lessor to inspect the Lease Item according to
this Contract;

 
(11)
The Lessee admits its insolvency, or is deemed it fails to pay according to any
laws or the Lessee fails to pay any due and payable amount over RMB 600,000 owed
to any one;

 
(12)
Any petition in bankruptcy by or against the Lessee is filed or a administrative
receiver or liquidator or trustee is appointed to the Lessee, or the Lessee goes
into the procedures of liquidation, conciliation, reorganization or other
similar proceeding;

 
(13)
The major assets of the Lessee or the guarantor are preserved by the court, or
implemented or other enforceable measures are taken to such major assets, and
which are not released within 15 days;

 
(14)
The Lessee waives the Lease Item;

 
(15)
Any litigation, arbitration or administrative proceeding is filed against the
Lessee, and if the judgment/award may cause significantly adverse impact on the
Lessee’s financial status;

 
(16)
The equity interest or business of the Lessee has any material change;

 
(17)
The Lessee has any breach of contract under the agreement signed with the Lessor
and the Lessor’s affiliates; and

 
(18)
The Lessee fails to observe other obligations under this Contract.

 
26.
Remedies

 
26.1
Any of the Lessee’s breach of contract under any leasing contract of this
Contract shall be deemed as a breach of contract under any other leasing
contract, therefore, if any situation provided in Article 25 occurs, in terms of
any leasing contract under this Contract, the Lessor has its own discretion to
implement the remedies prescribed in this Article.

 
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26.2
If any Lessee’s breach of contract occurs, in terms of the leasing contract
whose Leasing Term commenced, the Lessor has the right to choose to :

 
 
(1)
Claim against the Lessee for: (a) all due and unpaid Rental, all undue Rental,
the purchase price at the expiration, and other payables under the leasing
contract; (b) the surcharge for delay of performance; or

 
 
(2)
Claim against the Lessee for all the due and unpaid Rental and immediately draw
back or dispose the Lease Item by any other means;

 
In addition to the forgoing stipulations, the Lessor still has the right to
continue take any following remedies:
 
 
(3)
Claim against the Lessee for any reasonable expenses arising from the Lessor’s
exercise or protection of the Lessor’s rights under this Contract or under
relevant leasing contract (including but not limited to the lawyer’s fee,
appraisal fee, auction fee, etc.);

 
 
(4)
Claim against the Lessee for 10% of the Lessor’s receivable Rental under this
Contract as a compensation;

 
 
(5)
Make the Lease item out of run without the judgment or notice; and

 
 
(6)
Other remedies permitted by this Contract and law.

 
26.3
If any Lessee’s breach of contract occurs, in terms of the leasing contract
whose Leasing Term doe not commence yet, the Lessor has the right to terminate
the leasing contract.  In the said situation, the Lessor is not obliged to
purchase the Lease Item for the Lessee, and has the right to claim for any
compensations for all the losses arising therefrom against the Lessee, including
but not limited to:

 
 
(1)
All the paid prices and other fees (if any) by the Lessor for purchasing the
Lease Item, as well as the interests thereof calculated based on the Rate for
Late Payment commencing from the payment date until the date when the Lessee
paid off the said payment;

 
 
(2)
All costs and expenses paid by the Lessor for signing and performing the leasing
contract; and

 
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(3)
The compensation claim made by the Supplier to the Lessor. In case and after the
Lessor terminates the leasing contract, the Lessee itself shall be responsible
to settle the issues related to purchase of the Lease Item (including but not
limited to any dues arising from the purchase process) in order to hold the
Lessor harmless from the claim made by the Supplier.

 
After the Lessor terminates the leasing contract, the Lessee shall negotiate
with the Supplier on its own account to settle all the maters (including but not
limited to the payment obligations of the unsettled payment during the purchase
course of the Lease Item) related to the purchase of the Lease Item, to protect
the Lessor from being claimed against by the Supplier.
 
26.4
If the Lessor draws back the Lease Item according to this Article, all the
expenses arising from the removal, transportation, preservation, restitution of
original state, and disposal of the Lease Item shall be borne by the
Lessee.  The Lessor has the discretion to sell or lease the Lease Item.  If the
Lessor chooses not to dispose the Lease Item, the Lessee agrees that the auction
price of the Lease Item decided by the auction institute designated by the
Lessor shall be the market price of the Lease Item, the market price minus the
forgoing expenses shall be used to compensate all the Lessor’s losses, if
inadequate, the Lessor has the right to requires the Lessee to make up for the
shortfall; if the Lessor chooses to dispose the Lease Item, then the proceeds
from the disposal minus the forgoing expenses shall be used to compensate all
the Lessor’s losses, if inadequate, the Lessor has the right to requires the
Lessee to make up for the shortfall.

 
27.
Purchase after the Expiration

 
After the Leasing Term expires, if the Lessee does not have any breach of
contract and has paid off all the payables, the Lessee can purchase the Lease
Item at the price of RMB 60,100.00 at the expiration.  After the Lessee paid the
purchase price at the expiration of  the purchase term, the Lessor shall
transfer the ownership of the Lease Item to the Lessee.  The Lessor commits to
sign and deliver the ownership transfer documents as required by the Lessee
timely.  The Lessee shall be responsible for handling the ownership transfer
formalities of the Lease Item as required by the laws and regulations and bear
relevant expenses.  The Lease Item shall be transferred “as it will be” by then
without attaching any guarantee provided by the Lessor.  After the ownership of
the Lease Item is transferred, if the Lease Item or its usage causes any
personal injury or property damage to the Lessee or its designated third party
or any others, the Lessor shall not be held for any liability, and the Lessee
shall make relevant indemnifications and protect the Lessor from being claimed
against by the designated third party of the Lessee or any others.
 
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28.
Indirect Loss

 
Under any circumstances, the Lessor shall not be liable for any maintenance,
suspension of the usage, or losses, or business suspension, or profit loss, or
data loss, and any other indirect losses of the Lease Item, no matter whether
such losses arising from the contract or infringement or strict liability, or no
matter whether such losses are special, sudden, or may result in consequential
losses or damages, even if the Lessor is informed of the occurrence of such
losses.
 
29.
Importance of Time

 
In terms of any Leasing Transaction of or under this Contract, the time and
strict performance on time are of vital importance to the Parties.
 
30.
Irrevocable

 
The lease of all the Leasing Transactions under this Contract is
irrevocable.  The Lessee agrees to pay all due Rental and other payables
unconditionally.  Under no circumstance, shall the payables borne by the Lessee
under this Contract be deducted or offset, especially under the circumstance
that the Lease Item has any defect in its performance.
 
31.
Financial Information

 
31.1
During the Leasing Term, if the Lessor requires, the Lessee agrees to provide
its financial information to the Lessor by the following methods:

 
 
(1)
Within 30 days after each quarter ends, the Lessee shall provide the financial
report of such quarter to the Lessor;

 
 
(2)
Within 90 days after each year ends, the Lessee shall provide the audited annual
financial report to the Lessor.

 
The said financial reports shall include balance sheet, the income statement and
shall include a confirmation letter that the Lessee confirms the Lessee has no
breach of contract until the issuance date of the said financial reports.  All
the aforesaid documents shall bear the Lessee’s company stamp.
 
31.2
The Lessee shall immediately notice the Lessor: (1) any material adverse impact
on to its operation or financial status; (2) any incident which may bring
material adverse impact on its operation or financial status.

 
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32.
Re-export

 
Where the Lessor draws back the Lease Item according to this Contract, the Lease
Item may be exported abroad from China by the Lessor.  The Lessee agrees to
provide necessary assistances as reasonably required by the Lessor, including
but not limited to preparing the certification and documents required for the
export and submitting relevant documents to the competent department for
recording (if required).
 
33.
Applicable Law and Jurisdiction

 
33.1
This Contract and the rights and obligations of the Parties under this Contract
shall be exclusively governed and interpreted by laws of People’s Republic of
China.

 
33.2
In terms of any dispute, disagreement or controversy arising out from this
Contract or in relation to this Contract (including the execution,
effectiveness, or performance of this Contract), if the Parties fail to settle
it by friendly negotiations, either Party has the right to file a lawsuit to the
competent court where the Lessor is located, to solve it.

 
34.
Assignment

 
34.1
Unless otherwise explicitly agreed herein, or the Lessee obtains the Lessor’s
prior written consent, the Lessee shall not assign to a third party any right
and obligation of any Leasing Transaction under this Contract or under the
Leasing Transaction.

 
34.2
Provided without any prejudice to the obtainable rights and interests of the
Lessee under this Contract, the Lessor may assign any of its rights of any
Leasing Transaction under this Contract or under the Leasing Transaction or of
the Leasing Item to a third party at any time without any consent from the
Lessee made by then, however, the Lessor shall provide relevant assignment
notice to the Lessee.

 
34.3
This Contract shall be binding on the Lessee, the Lessor and the successors and
assignees thereof.

 
35.
Further Guarantee

 
In order to complete any Leasing Transaction under this Contract and enhance the
interests of the Lessor (including its assignee) under any Leasing Transaction,
the Lessee agrees to take corresponding activities and/or provide relevant
confirmation, certification or other documents as reasonably required by the
Lessor.
 
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36.
Accumulative Rights and Waiver

 
36.1
The Lessor has its full discretion to exercise any of its rights under this
Contract.  Any right or remedy of the Lessor under this Contract shall be
accumulative and shall not rule out any right or remedy under the applicable
laws.

 
36.2
The Lessor’s failure to exercise or delay in exercising any right or
remedy  under this Contract shall not be regarded as a waiver of such right or
remedy; nor shall any defective or single exercise of any right or remedy
preclude any further or future exercise thereof by the Lessor.  Any waiver made
by the Lessor shall be in writing.  The Lessor’s waiver to a specific breach of
contract shall not constitute the Lessor’s waiver to any other breach of
contract, including the breach of any other provisions or the re-breach of the
same provision.

 
37.
Notice

 
37.1
Unless otherwise specifically agreed herein, any notice, requirement or
communication under this Contract shall be in Chinese and in written form, which
shall be delivered to the Parties to the following addresses (or other addresses
notified by the Party to the counterparty upon a prior written notice):

 
To the Lessor: AVIC I INTERNATIONAL LEASING CO., LTD.
 
Address: 23/F, C Tower, Catic Mansion, No.212 Jiang Ning Road, Shanghai
 
Zip code: 200041
 
Contact Person: Zhongwei Chen (陈中玮)
 
Tel: 13564227728
 
Fax: 021-52895389
 
To the Lessee: HENAN SHUNCHENG GROUP COAL COKE CO., LTD.
 
Address: Industrial Road, South of Tongye Town, Anyang County, Henan Province
 
Zip code: 455000
 
Contact Person: Feng Wang (王峰)
 
Tel: 13937226262
 
Fax: 0372-3206721
 
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37.2
Any notice, requirement or communication under this Contract shall be deemed as
having been actually received by the counter party in the following situations:

 
 
(1)
If by mail, two days after the letter (with correct delivery address) is mailed
by prepaid postage; and

 
 
(2)
If by fax, upon the counter party’s confirmation that it received the
identifiable document;

 
 
(3)
If by courier, upon the actual delivery.

 
If the above correspondence is received on non Business Day, then it shall be
deemed being received on the next Business Day.
 
38.
Invalidity and Severability

 
If any provision of any Leasing Transaction under this Contract or any right or
remedy or benefit obtained by the Lessor under any Leasing Transaction, becomes
invalid or unenforceable according to the applicable laws of a specific
jurisdiction, then, the legality and validity of such provision in other
jurisdictions shall not be affected and impaired, and the validity, legality and
enforceability of other remaining provisions shall not be affected or impaired
in any situations.  In terms of such invalid or unenforceable provision, the
Parties shall make a valid and enforceable provision mostly close to such
provision instead to the greatest extent.
 
39.
Entire Agreement

 
The Annexes of this Contract shall constitute an integral part of this Contract
bearing the same legal effect with this Contract.  This Contract constitutes an
entire agreement of the matters stated herein between the Parties, which shall
supersede any and all previous, oral or written, agreements, contracts, MOU and
communications in relation to the matters stated herein reached by the Parties.
 
40.
Amendment

 
Unless otherwise specifically agreed herein, this Contract shall not be revised,
amended or terminated except by a written agreement signed by the duly
authorized representatives of the Parties.  The amendment of this Contract shall
be applied only to the leasing contract concluded by the Parties after such
amendment, which shall not affect the leasing contract concluded by the Parties
before such amendment.
 
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41.
Information Provision

 
41.1
The Lessee irrevocably agrees that the Lessor may collect, save and use
any  information related to the Lessee or the Leasing Transactions under this
Contract, authorizes the Lessor to disclose the aforementioned information to
the Lessor’s lawyer, accountant and other consultants, as well as the Lessor’s
investor or any branches, subsidiaries, affiliates, existing or potential
assignees, and authorizes the Lessor to make the disclosure according to the
requirements of the regulatory institute of China.

 
41.2
If the Lessee or any guarantor fails to perform any obligations under this
Contract or the Leasing Transactions, the Lessor may provide the said
information directly to the credit agency or the credit assessment institution
without the Lessee’s consent or notifying the Lessee in any form.

 
42.
Miscellaneous

 
42.1
The Lessee warrants that its execution of this Contract or its performance of
the obligations under this Contract or its usage of the Lease Item is not an act
without authorization or is not an act going against its company articles of
association by whatever means.

 
42.2
Any amendment, supplement or revision to this Contract shall be in writing and
shall become effective after it is being signed and stamped by the legal
representatives or the duly authorized representatives of the Parties. Any
amendment, supplement or revision to this Contract shall be deemed to constitute
an integral part of this Contract and bearing the same legal effect with this
Contract.

 
42.3
Due to this Contract is irrevocable, in principle, the Lessee is not allowed to
prepay within 1 year from the Lease Commencement Date to terminate the leasing
contract; however, if the Lessee has no record of breach of contract, from the
second year of the lease, the Lessee may apply to pay the break-up fees on the
designated repayment date to terminate this Contract.  After the Lessor received
the Lessee’s written early termination application and approved the said
application, and after the Lessee paid off the break-up fees on the designated
repayment date to the Lessor, the Lessee will not be deemed to have any breach
of contract.

 
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The written early termination application of the Lessee shall appoint one date
15 days after the application date to be the repayment date.  After the Lessee
repays the break-up fees in one lump sum on the designated repayment date to the
Lessor, the Lessee will immediately get the ownership of the Lease Item.  The
break-up fees shall be calculated as follows:
 
 
(1)
List all the remaining outstanding leasing payments, including but not limited
to the due and unpaid Rental, undue Rental, surcharge for delay of performance
and the purchase price at the expiration.

 
 
(2)
Use the cash deposit to offset the leasing payments from the purchase price at
the expiration, the last installment of the Rental, to the former installments
of the Rental, till the cash deposit is completed offset.

 
 
(3)
Based on each installment of the leasing payment which is not offset and the
period between the due date and the designated repayment date, take the
benchmark loan rate of 1-year term published by the People’s Bank of China as
the discount rate to calculate the discount value, the break-up fees shall be
equal to the sum up of the discount values calculated therefrom.

 
42.4
Unless the Lessee has performed the obligations according to Article 42.3, the
following events shall be deemed as the Lessee’s breach of contract:

 
 
(1)
The major assets of the Lessee or the guarantor are preserved by the court, or
implemented or other enforceable measures are taken to such major assets, and
which are not released within 15 days;

 
 
(2)
Any litigation, arbitration or administrative proceeding is filed against the
Lessee, and if the judgment/award may cause significantly adverse impact on the
Lessee’s financial status; and

 
 
(3)
The equity interest or business of the Lessee has any material change.

 
42.5
Under the following situations, the Lessor is entitled to terminate this
Contract without the consent of the Lessee, and the Lessee shall compensate all
the losses suffered by the Lessor arising from such termination:

 
(4)
The Lessee or the guarantor shuts down, suspends its business, suspends its
production, goes into reorganization, merged, or transfers its all or material
assets; and

 
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(5)
Any petition in bankruptcy by or against the Lessee is filed or a administrative
receiver or liquidator or trustee is appointed to the Lessee, or the Lessee goes
into the procedures of liquidation, conciliation, reorganization or other
similar proceeding.

 
42.6
The Lessee agrees that this Contract, its accessory Entrust Purchase Contract as
well as the guarantee contracts shall go through the formalities of notarization
with a nature of enforceability.  After the Lessor and the Lessee completed the
formalities of the enforceable notarization on this Contract, its accessory
Entrust Purchase Contract, the guarantee contracts and the equity pledge
agreement, if the Lessee fails to or not fully perform the obligations under
this Contract, the Lessor has the right to apply for an enforcement certificate
with the notary office, and apply for the enforcement with the competent
People’s Court by the original notarial certificate and the enforcement
certificate.  The Lessee is willing accept to the enforcement according to the
law.  The notary fees arising from the notarization of this Contract, its
accessory Entrust Purchase Contract and the guarantee contracts shall be borne
by the Lessee.

 
43.
Effectiveness

 
This Contract shall come into effect after the following conditions are fully
satisfied:
 
(1)
The legal representatives or authorized representatives of the Parties affix
signatures and stamps to this Contract and relevant notarial formalities are
completely done.

 
(2)
The guarantors of the Lessee, the Lessee and the Lessor have signed relevant
guarantee contracts (Contract No. YHZL (09)02ZL024-BZ001) and Contract No. YHZL
(09)02ZL024-BZ002).

 
(3)
The pledgor of the Lessee (HENAN SHUNCHENG GROUP COAL COKE CO., LTD), and the
Lessor have signed relevant pledge agreement which has come into effect
(Contract No. YHZL (09)02ZL024-ZY001).

 
(4)
The Lessor received the original copy of the shareholder’s resolution of the
Lessee approving the financial leasing.

 
44.
Counterpart

 
This Contract and each Leasing Transaction can be signed by the Parties in 6
original copies, all the said documents shall constitute an integrated set of
document.

 
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In witness thereof, this Contract is signed on the date written in the first
page hereof.

Lessor: AVIC I INTERNATIONAL LEASING CO., LTD.
Authorized Representative: [illegible]
Name:

Lessee: HENAN SHUNCHENG GROUP COAL COKE CO., LTD.
Authorized Representative: Xinshun Wang (王新顺) /s/ Wang Xinshun
Name:

 
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Annex 1- Schedule of Leasing
No. YHZL (09)02ZL024

This Schedule is signed based on the Financing Leasing Contract (“Contract”)
with the abovementioned serial number.  All the provisions of the Contract shall
be incorporated into this Schedule and shall constitute an independent leasing
contract of the Lease Item listed in this Schedule.  Unless otherwise
specifically defined herein, the terminologies defined in the Leasing Contract
shall be applied to this Schedule.

1.
Details of the Leasing Items

 
No.
 
Equipment
 
Number
 
Type
 
Contract Price
 
Manufacturer
1
 
Direct-fired Generator Set
    1         32,606,000.00  
U.S. Solar Company
                    9,220,000.00                         378,430.22    
2
 
Waste Heat Boiler
    1         2,700,000.00  
Nanjing Nan Guo Power Equipment Co., Ltd. (Phase II)
3
 
Waste Heat Boiler
    1         2,980,000.00  
Nanjing Nan Guo Power Equipment Co., Ltd.
4
 
Gas Compressor
    2         5,960,000.00  
Shenyang Tou Ping Machinery Shareholdings Co. Ltd.
5
 
Nitrogen Generator
    2         1,000,000.00  
Sichuan Tian Yi Science Technology Shareholdings Co. Ltd.
6
 
Nitrogen Compressor
    2         500,000.00  
Sichuan Kong Fen Jian Yang Compressor Branch Company
7
 
Air Compressor
    2         470,000.00  
Henan Province Guo Xin Electromechanical Complete Equipment Co., Ltd.
8
 
Demineralized Water Preparation System
    1         1,150,000.00  
Jiangsu Xin Lin Environmental Protection Equipment Co., Ltd.
9
 
High/Low Voltage Switch Cabinet
    38         1,460,000.00  
Henan Suo Ling Electric Co., Ltd.
10
 
Desulfurizing Tower and Ammonia Still
    7         1,680,000.00  
Anyang Municipality Heng Wei Petrochemical Equipment Co., Ltd.
11
 
Total
              60,104,430.22    

The detailed configurations of the equipment shall be based on the equipment
list under the Purchase Contract.

 
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2.
Leasing Term

Leasing Term: 5 years, total to 60 months.
Lease Commencement Date: the Lease Commencement Date shall be the date when the
Lessor makes the first installment payment according to the Entrust Purchase
Contract.

3.
Delivery Place

The Delivery Place of the Leasing Items is the place where HENAN SHUNCHENG GROUP
COAL COKE CO., LTD. is located (North of Tongye Town, Anyang County, Henan
Province).

4.
Rental

The total price of the equipment is RMB 60,104,430.22.
Lease Rate: The bank’s benchmark loan rate of 3 to 5-year term plus 1.5% (i.e.
Lease Rate = Bank’s benchmark loan rate of the same term + 1.5%), which shall be
adjusted simultaneously with the adjustment of the bank’s benchmark loan rate.

Payment Method of the Rental: Each month shall be one period for each payment
installment of the Rental and the Rental shall be paid at each end of the
period; the Rental shall be determined by the equal annual payment method.  The
first three months after the Lease Commencement Date shall be grace period,
during which, the Lessee shall pay interest to the Lessor monthly at each end of
the period.

Rental for the First Period to the Third Period: the rental shall be RMB
305,983.71 for each period.

Rental for the Fourth Period to the Sixtieth Period: the rental shall be RMB
1,039,683.69 for each period.

The total Rental shall be RMB 60,179,921.59.

Payment Schedule of the Rental: shall be paid once a month.

Liquidated Damages: it shall be calculated based on the total unpaid Rental plus
other expenses.

The Lessee shall pay the Lessor the Rental and other payables on or before the
due date to the following account:
Company Name: AVIC I INTERNATIONAL LEASING CO., LTD.
Bank: Shanghai Jing An Branch of Bank of China
Account No.:

   
5.
Rental for 0 Period and Cash Deposit

Rental for 0 Period: RMB 10,221,430.22

 
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Cash Deposit: RMB 7,813,000; during the Leasing Term, the Lessor will not pay
interest for Lessee’s cash deposit, however, the cash deposit shall be the
calculating base for the Rental, and the cash deposit can be used to offset the
Rental for the last several periods.

6.
Management Fee and Insurance Fee for the Lease

The Management Fee shall be paid in 5 installments by the Lessee to the Lessor
according to the following schedule:

(1)
The first installment of the Management Fee: shall be paid within 5 working days
after this Contract comes into effect and shall be 1.5% of the financing.

(2)
The second to the fifth Management Fee: shall be paid on the day corresponding
to the Lease Commencement Date of each leasing year and shall be 1.5% of the
outstanding principal.

(3)
The Management Fee shall not be returned under any circumstances.

Management Fee Breakdown
First Installment of the Management Fee
  ¥ 748,245.00  
Second Installment of the Management Fee
  ¥ 646,730.11  
Third Installment of the Management Fee
  ¥ 502,386.54  
Fourth Installment of the Management Fee
  ¥ 347,052.21  
Fifth Installment of the Management Fee
  ¥ 179,890.22  
Total
  ¥ 2,424,304.08  

Insurance Premium: It shall be paid by the Lessee to the Lessor in installments
respectively on the day corresponding to the Lease Commencement Date of each
leasing year, which is 0.1% of the outstanding payable Rental at the beginning
of each leasing year.

Insurance Premium Breakdown (RMB)
First Installment of the Insurance Premium
    61,916.08  
Second Installment of the Insurance Premium
    50,994.25  
Third Installment of the Insurance Premium
    38,015.66  
Fourth Installment of the Insurance Premium
    25,192.40  
Fifth Installment of the Insurance Premium
    12,536.30  
Total
    188,654.69  

 
7.
Purchase Price at the Expiration

Purchase Price at the Expiration: RMB 60,100.00
 
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8.
Security

Security Methods:
Xinshun Wang and its spouse, Xinming Wang and its spouse, and Junsheng Cheng and
its spouse shall provide a guarantee with joint and several liabilities
(Contract No. YHZL (09)02ZL024-BZ001);
Anyang County Bailianpo Coal Co., Ltd. Huotuo Coal Mine shall provide a credit
guarantee (Contract No. YHZL (09)02ZL024-BZ002);

The Lessee pledges its 9.27% equity interest in Anyang Commercial Bank (Contract
No. YHZL (09)02ZL024-ZY001).

9.
Preconditions for the Payment

The Lessor’s payment is in 2 installments:
The Lessor shall make the first installment payment after the Lessee provides
the following documents or makes the following payments:

1.
The Lessor received the business license of the Lessee, the shareholders’
resolution on approving the financial leasing of HENAN SHUNCHENG GROUP COAL COKE
CO., LTD.

2. 
The Lessor received the signed Payment Notice of the equipment from the Lessee.

3.
The Lessor received the Acceptance certificate of the leasing equipment signed
by the Lessee.

4.
The Lessor received the copies of the Purchase Contract of the Leasing Items
(the copies shall be identical to the originals evidenced by affixing the
Lessee’s company stamp thereon).

5.
The Lessor received the first installment of the Management Fee, the first
installment of Insurance Premium and the contract notarial fees paid by the
Lessee.

6.
The equity pledge registration formalities of the “Equity Pledge Contract”
(Contract No. YHZL (09)02ZL024-ZY001) has been completed.

After the Lessor received the Rental for 0 Period and the cash deposit paid by
the Lessee, the Lessor shall make the second installment payment.

In witness thereof, this Schedule shall come into effect after being signed and
stamped on the date written in the first page hereof.
Lessor: AVIC I INTERNATIONAL LEASING CO., LTD.
Authorized Representative: [illegible]
Name:
Position:
Lessee: HENAN SHUNCHENG GROUP COAL COKE CO., LTD.
 
Authorized Representative: Xinshun Wang (王新顺) /s/ Wang Xinshun
Name:
Position:

 
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Annex 2- Acceptance Certificate

No. YHZL(09)02ZL024-YS001

This Acceptance Certificate is signed and issued based on the Schedule (No. YHZL
(09)02ZL024) of the Financing Leasing Contract.

Unless otherwise specifically defined herein, the terminologies in this
Acceptance Certificate shall have the same meaning as those in the Financing
Leasing Contract.
No.
 
Equipment
 
Number
 
Type
 
Contract Price
 
Manufacturer
1
 
Direct-fired Generator Set
    1         32,606,000.00  
U.S. Solar Company
                    9,220,000.00                         378,430.22    
2
 
Waste Heat Boiler
    1         2,700,000.00  
Nanjing Nan Guo Power Equipment Co., Ltd. (Phase II)
3
 
Waste Heat Boiler
    1         2,980,000.00  
Nanjing Nan Guo Power Equipment Co., Ltd.
4
 
Gas Compressor
    2         5,960,000.00  
Shenyang Tou Ping Machinery Shareholdings Co. Ltd.
5
 
Nitrogen Generator
    2         1,000,000.00  
Sichuan Tian Yi Science Technology Shareholdings Co. Ltd.
6
 
Nitrogen Compressor
    2         500,000.00  
Sichuan Kong Fen Jian Yang Compressor Branch Company
7
 
Air Compressor
    2         470,000.00  
Henan Province Guo Xin Electromechanical Complete Equipment Co., Ltd.
8
 
Demineralized Water Preparation System
    1         1,150,000.00  
Jiangsu Xin Lin Environmental Protection Equipment Co., Ltd.
9
 
High/Low Voltage Switch Cabinet
    38         1,460,000.00  
Henan Suo Ling Electric Co., Ltd.
10
 
Desulfurizing Tower and Ammonia Still
    7         1,680,000.00  
Anyang Municipality Heng Wei Petrochemical Equipment Co., Ltd.
11
 
Total
              60,104,430.22    

 
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Acceptance Date: _____________.

The Lessee hereby confirms that all the Lease Item listed above:

1.
have already completely been inspected and accepted by the Lessee on the
Acceptance Date;

2. 
meet all the Lessee’s requirements on the function, usage and other aspects; and

3. 
is delivered “as is”.

Lessee: HENAN SHUNCHENG GROUP COAL COKE CO., LTD.
 
Authorized Signatory: Xinshun Wang (王新顺) /s/ Wang Xinshun
 
Date:

 
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