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Exhibit 10.18
MEMBERSHIP INTEREST SALE AGREEMENT

THIS MEMBERSHIP INTEREST SALE AGREEMENT (the "Agreement") is entered into this
23 day of December, 2010, by and between China America Holdings, Inc., a Florida
corporation ("CAAH") and Shanghai AoHong Chemical Co., Ltd., a Chinese limited
liability company ("AoHong"), Glodenstone Development Limited, a British Virgin
Islands company ("Glodenstone"), Aihua Hu ("Hu") and Ying Ye (“Ye”).

RECITALS

WHEREAS, pursuant to the terms of the Membership Interest Purchase Agreement
dated June 27, 2007 (the “Purchase Agreement”) entered into among CAAH, AoHong,
Hu and Ye, as amended on August 3, 2007, CAAH acquired a 56.08% membership
interest in AoHong (the “CAAH Membership Interest”).

 WHEREAS, Glodenstone has lent CAAH $1,780,000 under the terms of the Secured
Promissory Note (the “Glodenstone Note”), a copy of which is attached hereto as
Exhibit A and incorporated herein by such reference, the proceeds of which have
been used to pay CAAH’s obligation to contribute $1,780,000 to AoHong’s
registered capital required under the Purchase Agreement and as required by
Chinese regulatory authorities (the “Remaining Contribution”).

WHEREAS, CAAH has been unable to raise the additional capital necessary to fund
the Remaining Contribution or locate a buyer for the CAAH Membership Interest
and the parties hereto have agreed that it is in the best interests of CAAH to
sell the CAAH Membership Interest to Glodenstone upon the terms and conditions
hereinafter set forth.

NOW, THEREFORE, in consideration of the premises and of the mutual agreements
and covenants herein contained, the parties hereto agree as follows:

1.           Recitals. The above recitals are true, correct and are herein
incorporated by reference.

2.           Sale of CAAH Membership Interest.  At the Closing (as hereinafter
defined) CAAH agrees to transfer to Glodenstone the CAAH Membership Interest in
exchange for total consideration of U.S. three million five hundred and eight
thousand three hundred and forth dollars ($3,508,340) (the “Purchase Price”)
payable as follows:

(a)           the forgiveness of the Glodenstone Note in the principal amount of
$1,780,000; and

(b)           the delivery of a Secured Promissory Note in the principal amount
of $1,728,340 and a Share Pledge Agreement , (the “Purchase Note and Security
Agreement”) a copy of the form of which is attached hereto as Exhibit B and
incorporated herein by such reference.

3.           Closing Date.  The closing ("Closing") shall be held on the date
and time as may be agreed upon by the parties ("Closing Date") following the
satisfaction of all conditions to Closing as hereinafter set forth.

4.           Actions of the Parties Prior to the Closing Date.

(a)           Obligations of CAAH.  As soon as practicable following the filing
with the United States Securities and Exchange Commission (the “SEC”) of its
Annual Report on Form 10-K for the year ended September 30, 2010 (the “2010
10-K”), CAAH will cause a preliminary information statement on Schedule 14C (the
“Preliminary Information Statement”) to be filed with the SEC describing the
sale of the CAAH Membership Interest.  The officers and Board of Directors of
CAAH will use their best efforts to promptly respond to any comments from the
SEC on the Preliminary Information Statement and at such time as the SEC advises
it has no further comments to timely prepare and file a definitive Information
Statement on Schedule 14C (the “Definitive Information Statement”) which
reflects the consent of a majority of CAAH’s shareholders to the sale of the
CAAH Membership Interests.

(b)           Obligations of Hu and Ye.  Hu will use their best efforts to
facilitate the prompt filing of the Preliminary Information Statement, the
response to any comments from the SEC and the prompt filing of the Definitive
Information Statement.  Hu and Ye shall both execute such consents or take such
other actions as are necessary to approve the sale of the CAAH Membership
Interests to Glodenstone.

 
 

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(c)           Obligations of AoHong.  AoHong shall continue to conduct its
operations as they are presently conducted and shall provide CAAH with all such
information and data as are deemed necessary to enable CAAH to file the 2010
10-K, the Preliminary Information Statement, the Definitive Information
Statement, such other Reports as CAAH may be required to file with the SEC and
to take such additional actions as are necessary to consummate the sale of the
CAAH Membership Interest to Glodenstone.

(d)           Extension of Obligations Under Purchase Agreement.  The Parties
hereby acknowledge that the payment of the Remaining Contribution by CAAH is
intended to fulfill CAAH’s obligation to contribute capital to Aohong.

4.           Representations and Warranties.

(a)           CAAH hereby makes the following representations and warranties to
Glodenstone, each of which is true as of the date hereof and will be true as of
the Closing Date with the same effect as though such representations and
warranties had been made on the Closing Date:

(i)           CAAH is validly organized, existing and in good standing under the
laws of the State of Florida; that this Agreement and the transactions
contemplated hereunder have been duly and validly authorized by all requisite
corporate action; that CAAH has the full right, power and capacity to execute
and deliver this Agreement and perform its obligations hereunder; that the
execution and delivery of this Agreement and the performance by CAAH of its
obligations pursuant to this Agreement do not constitute a breach of or a
default under any agreement or instrument to which CAAH is a party or by which
it or any of its assets are bound; and that this Agreement, upon execution and
delivery of the same by CAAH, will represent the valid and binding obligation of
CAAH in accordance with its terms except: (i) as limited by general equitable
principles and applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of creditors’ rights
generally, (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies and (iii) insofar as
indemnification and contribution provisions may be limited by applicable law.

(ii)           Except for the consent of CAAH’s shareholders and its Board of
Directors, the sale of the CAAH Membership Interest does not require any third
party consent, waiver, authorization or approval of any governmental or
regulatory authority, domestic or foreign, or of any other person, firm or
corporation.

(iii)           CAAH is the owner of record of the CAAH Membership Interest,
which ownership interest is free and clear of all rights, claims, liens and
encumbrances except as set forth in the Purchase Agreement, and has not been
sold, pledged, assigned or otherwise transferred except pursuant to this
Agreement.

(b)           AoHong hereby makes the following representations and warranties
to each of CAAH and Glodenstone, each of which is true as of the date hereof and
will be true as of the Closing Date with the same effect as though such
representations and warranties had been made on the Closing Date:

(i)           AoHong is validly organized, existing and in good standing under
the laws of the People’s Republic of China; that this Agreement and the
transactions contemplated hereunder have been duly and validly authorized by all
requisite corporate action; that AoHong has the full right, power and capacity
to execute and deliver this Agreement and perform its obligations hereunder;
that the execution and delivery of this Agreement and the performance by AoHong
of its obligations pursuant to this Agreement do not constitute a breach of or a
default under any agreement or instrument to which AoHong is a party or by which
it or any of its assets are bound; and that this Agreement, upon execution and
delivery of the same by AoHong, will represent the valid and binding obligation
of AoHong in accordance with its terms except: (i) as limited by general
equitable principles and applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of
creditors’ rights generally, (ii) as limited by laws relating to the
availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may be
limited by applicable law.

 
 

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(ii)           The sale of the CAAH Membership Interest does not require any
third party consent, waiver, authorization or approval of any governmental or
regulatory authority, domestic or foreign, or of any other person, firm or
corporation.

(c)           Hu and Ye jointly and severally hereby make the following
representations and warranties to each of CAAH and AoHong, each of which is true
as of the date hereof and will be true as of the Closing Date with the same
effect as though such representations and warranties had been made on the
Closing Date:

(i)           Such individual has the full right, power and capacity to execute
and deliver this Agreement and perform his or her obligations hereunder; that
the execution and delivery of this Agreement and the performance by such
individual of his or her obligations pursuant to this Agreement does not
constitute a breach of or a default under any agreement or instrument to which
such individual is a party or by which he or she or any of his or her assets are
bound; and that this Agreement, upon execution and delivery of the same by the
individual, will represent the valid and binding obligation of such individual
in accordance with its terms except: (i) as limited by general equitable
principles and applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of creditors’ rights
generally, (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies and (iii) insofar as
indemnification and contribution provisions may be limited by applicable law.

(ii)           Except for the consent of the CAAH shareholders and Board of
Directors, the sale of the CAAH Membership Interest does not require any third
party consent, waiver, authorization or approval of any governmental or
regulatory authority, domestic or foreign, or of any other person, firm or
corporation.

(d)           Glodenstone hereby makes the following representations and
warranties to CAAH, each of which is true as of the date hereof and will be true
as of the Closing Date with the same effect as though such representations and
warranties had been made on the Closing Date:

(i)           Glodenstone is validly organized, existing and in good standing
under the laws of the British Virgin Islands; that this Agreement and the
transactions contemplated hereunder have been duly and validly authorized by all
requisite corporate action; that Glodenstone has the full right, power and
capacity to execute and deliver this Agreement and perform its obligations
hereunder; that the execution and delivery of this Agreement and the performance
by Glodenstone of its obligations pursuant to this Agreement do not constitute a
breach of or a default under any agreement or instrument to which Glodenstone is
a party or by which it or any of its assets are bound; and that this Agreement,
upon execution and delivery of the same by Glodenstone, will represent the valid
and binding obligation of Glodenstone in accordance with its terms except: (i)
as limited by general equitable principles and applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally, (ii) as limited by laws
relating to the availability of specific performance, injunctive relief or other
equitable remedies and (iii) insofar as indemnification and contribution
provisions may be limited by applicable law.

(ii)           The purchase by it of the CAAH Membership Interest does not
require any third party consent, waiver, authorization or approval of any
governmental or regulatory authority, domestic or foreign, or of any other
person, firm or corporation.

5.           Conditions of Closing. All of the obligations of the parties hereto
under this Agreement are subject to the fulfillment, prior to or on the Closing
Date, of each of the following conditions:

(a)           CAAH shall have received the consent of a majority of its Board of
Directors, by resolutions duly adopted by unanimous vote of those voting at a
meeting duly called and held and not subsequently rescinded or modified in any
way (the “Company Board Approval”) has duly (i) determined that this Agreement
and the transactions contemplated hereby are fair to and in the best interests
of CAAH and its stockholders and declared this Agreement advisable, (ii)
approved this Agreement and the Loan Documents and (iii) recommended that CAAH’s
stockholders adopt this Agreement and directed that such matter be submitted for
consideration of CAAH’s stockholders.

 
 

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(b)           CAAH shall have received the consent of a majority of its
shareholders to the sale of the CAAH Membership Interest and shall have filed
with the SEC a Definitive Information Statement which reflects such consent of a
majority of its shareholders to the sale of the CAAH Membership Interest.  In
the event the SEC should determine that CAAH is not eligible to use an
information statement and requires CAAH to hold a special meeting of its
shareholders, CAAH shall have filed all definitive proxy statements and other
information as are necessary with the SEC, shall have held such special meeting
and shall have obtained the consent of a majority its shareholders entitled to
vote at the special meeting as required by Florida law.

6.           Closing.  At Closing:

(a)           Glodenstone shall forgive the Glodenstone Note.

(b)           Glodenstone shall deliver to CAAH the Purchase Note and Security
Agreement.

(c)           CAAH shall execute such documents as are deemed reasonably
necessary to transfer the CAAH Membership Interest to Glodenstone.

(d)           Hu shall resign from all positions with CAAH.

7.           Post-Closing Access.  Following the Closing, Hu and AoHong shall
immediately provide such access to its books and records, including such
information as may be necessary for the preparation of financial statements, as
CAAH shall request, and it shall further take such acts or actions as reasonably
required by CAAH to facilitate all post-Closing reporting requirements of CAAH
under United States federal securities laws.

8.           Termination of the Agreement.  In the event CAAH does not receive
the consent of its shareholders to the sale of the CAAH Membership Interest no
later than May 31, 2011, this Agreement will terminate.  The Parties acknowledge
that in the event of termination of this Agreement, the amounts due under the
Glodenstone Note will remain due and payable in accordance with its terms, and
CAAH shall transfer its 56.08% equity of AoHong to Glodenstone in accordance
with the Share Pledge Agreement for Glodenstone Note.
.

9.           Representations to Survive Closing. All the terms, conditions,
warranties, representations and guarantees contained in this Agreement shall
survive delivery of the Closing and any investigations made by or on behalf of
any party at any time.

10.           Notices.                      All notices, demands or other
communications given hereunder shall be in writing and shall be deemed to have
been duly given on the day when delivered in person or transmitted by confirmed
facsimile transmission or on the third calendar day after being mailed by United
States registered or certified mail, return receipt requested, postage prepaid,
to the addresses set forth below or to such other address as any party hereto
shall designate to the other for such purpose in the manner herein set forth.

If to CAAH                                333 E. Huhua Road
Huating Economic & Development Area
Jiading District, Shanghai, China 201811
Attention:  Mr. Shaoyin Wang, President
facsimile: __________________________

with a copy to:                                           James M. Schneider,
Esq.
Schneider Weinberger & Beilly LLP
2200 Corporate Boulevard, N.W., Suite 210
Boca Raton, Florida  33431
facsimile: (561) 362-9612

 
 

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If to AoHong,
Hu, Ye and
Glodenstone:                                333 E. Huhua Road
Huating Economic & Development Area
Jiading District, Shanghai, China 201811
facsimile: __________________________

11.           Amendment or Assignment. No modification, waiver, amendment,
discharge or change of this Agreement shall be valid unless the same is
evidenced by a written instrument, executed by the party against which such
modification, waiver, amendment, discharge, or change is sought.

12.   Entire Agreement. This Agreement contains all of the understandings and
agreements of the parties with respect to the subject matter discussed herein.
All prior agreements, whether written or oral, are merged herein and shall be of
no force or effect.

13.           Fees and Expenses.  Each party shall pay the fees and expenses of
its advisers, counsel, accountants and other experts, if any, and all other
expenses incurred by such party incident to the negotiation, preparation,
execution, delivery and performance of this Agreement.

14.           Severability. The invalidity, illegality or unenforceability of
any provision or provisions of this Agreement will not affect any other
provision of this Agreement, which will remain in full force and effect, nor
will the invalidity, illegality or unenforceability of a portion of any
provision of this Agreement affect the balance of such provision. In the event
that any one or more of the provisions contained in this Agreement or any
portion thereof shall for any reason be held to be invalid, illegal or
unenforceable in any respect, this Agreement shall be reformed, construed and
enforced as if such invalid, illegal or unenforceable provision had never been
contained herein.

15.           Construction and Enforcement. This Agreement shall be construed in
accordance with the laws of the State of Florida, without and application of the
principles of conflicts of laws. If it becomes necessary for any party to
institute legal action to enforce the terms and conditions of this Agreement,
and such legal action results in a final judgment in favor of such  party
("Prevailing Party"), then the party or parties against whom said final judgment
is obtained shall reimburse the Prevailing Party for all direct expenses
incurred, including, but not limited to, all attorney's fees, court costs and
other expenses incurred throughout all negotiations, trials or appeals
undertaken in order to enforce the Prevailing Party's rights hereunder. Any
suit, action or proceeding with respect to this Agreement shall be brought in
the state or federal courts located in Broward County in the State of
Florida.  The parties hereto hereby accept the exclusive jurisdiction and venue
of those courts for the purpose of any such suit, action or proceeding. The
parties hereto hereby irrevocably waive, to the fullest extent permitted by law,
any objection that any of them may now or hereafter have to the laying of venue
of any suit, action or proceeding arising out of or relating to this Agreement
or any judgment entered by any court in respect thereof brought in Broward
County, Florida, and hereby further irrevocably waive any claim that any suit,
action or proceeding brought in Broward County, Florida, has been brought in an
inconvenient forum.

16.           Binding Nature, No Third Party Beneficiary. The terms and
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties, and their respective successors and assigns, and is made solely and
specifically for their benefit.  No other person shall have any rights, interest
or claims hereunder or be entitled to any benefits under or on account of this
Agreement as a third-party beneficiary or otherwise.

17.           Counterparts. This Agreement may be executed in any number of
counterparts, including facsimile signatures which shall be deemed as original
signatures. All executed counterparts shall constitute one Agreement,
notwithstanding that all signatories are not signatories to the original or the
same counterpart.

18.           Language. This Agreement shall be in the Chinese and English
languages. Both versions shall have the same legal effect.

 
 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.

China America Holdings, Inc.

By:  /s/ Shaoyin Wang
Shaoyin Wang, President

Shanghai AoHong Chemical Co., Ltd.

By: /s/ Aihua Hu
Aihua Hu, Chief Executive Officer

Glodenstone Development Limited

By: /s/ Renqi Song
       Renqi Song, President

/s/ Aihua Hu
Aihua Hu, shareholder

/s/ Ying Ye
Ying Ye, shareholder

 
 

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Exhibits to the Agreement

Exhibit A:                                Executed Glodenstone Note
Exhibit B:                                Form of Purchase Note and Security
Agreement

 
 

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Exhibit A:
SECURED PROMISSORY NOTE

$1,728,340.00                                                                                                           Dated:
_______

FOR VALUE RECEIVED, Glodenstone Development Limited, a British Virgin Island
company (the “Glodenstone”), hereby unconditionally promises to pay to the order
of CHINA AMERICA HOLDINGS, INC., a Florida corporation (the “CAAH”) at the
location designated by CAAH, in lawful money of the United States of America the
principal sum of $1,728,340.00, together with interest on the unpaid principal
amount outstanding at a rate of 5% per annum.  All outstanding principal and
interest accrued and unpaid on this Secured Promissory Note shall be payable in
full no later than December 31, 2011 (the “Maturity Date”).

Section 1: Interest. Simple interest shall accrue during the term of this loan
and shall be payable in full on the Maturity Date.

Section 2: Principal. The $1,728,340.00 principal amount of this Secured
Promissory Note is due on the Maturity Date.

Section 3: Maturity.  Subject to the terms and conditions hereof, the principal
amount of this Secured Promissory Note plus the accrued interest shall be due
and payable as stipulated in Sections 1 and 2 of this Secured Promissory Note on
the Maturity Date, and shall be paid by the Glodenstone in cash, check, money
order or by wire transfer.

Section 4: Security.  As collateral security for the payment of this Secured
Promissory Note, Glodenstone hereby collaterally assigns to CAAH the 56.08%
ownership interest in Shanghai Aohong Chemical Co., Ltd. (the
?癈ollateral”).  Glodenstone shall deliver to CAAH a share Pledge Agreement for
the Collateral signed by an authorized officer of Glodenstone and such other
documentation as may be reasonably requested by CAAH in order to secure its
interest in the Collateral.

Section 5: Default.  In the event Glodenstone does not satisfy payment due as
stipulated in Sections 1 and 2 and fully, faithfully, and punctually perform all
of its obligations hereunder, Glodenstone will be in default of this Secured
Promissory Note.  In the event of default by the Glodenstone, CAAH may, at its
option, (i) declare the entire unpaid principal balance of this Secured
Promissory Note together with accrued and unpaid interest immediately due and
payable; (ii) sell the Collateral in a private or public sale with written
notice to Glodenstone and apply the proceeds of the sale of the Collateral
towards repayment of the Glodenstone’ obligations under this Secured Promissory
Note; and (iii) pursue any other remedy available to CAAH at law or in equity.

The Glodenstone and all endorsers, sureties and guarantors now or hereafter
becoming parties hereto or obligated in any manner for the debt represented
hereby, jointly and severally waive demand, notice of non-payment and protest
and agree that if this Secured Promissory Note goes into default and is placed
in the hands of an attorney for collection or enforcement of the undersigned's
obligations hereunder, to pay attorney's fees and all other costs and expenses
incurred in making such collection, including but not limited to attorney's fees
and costs on appeal of any judg­ment or order.

This Secured Promissory Note shall be governed by and construed in accordance
with the laws of the State of Florida and shall be binding upon the successors,
assigns, heirs, administrators and executors of the Glodenstone and inure to the
benefit of CAAH, its successors, endorsees, assigns, heirs, administrators and
executors.

 
   
Glodenstone Development Limited
 
By: ______________
Name: Renqi Song   
Title: President

 

 
 

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Exhibit B:

 
Share Pledge Agreement
 
This Share Pledge Agreement (this “Agreement”) is entered into by and between
the following parties on _____________, 2010:

Party A: China America Holdings, Inc., a Florida corporation (“Party A”)
Legal Representative: Shaoyin Wang, Chief Executive Officer
Principal Office: 333 E. Huhua Road, Huating Economic & Development Area,
Jiading District, Shanghai, People’s Republic of China 201811

Party B: Glodenstone Development Limited, a British Virgin Island company
(“Party B”)

WHEREAS:

 
(1)
Party A and Party B entered into a Membership Interest Sale Agreement (the
“Membership Interest Sale Agreement”) for the sale of Party A’s 56.08% ownership
interest in Shanghai Aohong Chemical Co., Ltd., a Chinese company (the “CAAH
Membership Interest”) to Party B;

 
(2)
Party B agreed to pay Party A $1,728,340 of the purchase price for the CAAH
Membership Interest by way of a Secured Promissory Note dated as of the date of
this Agreement (“ Secured Promissory Note”);

 
(3)
Party B agreed to pledge its CAAH Membership Interest to Party A as a security
for the Secured Promissory Note.

To ensure the execution of the Membership Interest Sale Agreement entered by
Party A and Party B, Party B hereby pledges the invested 56.08% equity of
Shanghai Aohong Chemical Co., Ltd. as the security. The Parties agree as follows
after friendly consultations:

 
1.
Debt secured by this Agreement: The payment obligation of Party B to Party A in
the amount of $1,728,340 under the terms of Membership Interest Sale Agreement.

 
 
2.
Pledged Equity

 
(1) “Pledged Equity” means the equity of Shanghai Aohong Chemical Co., Ltd.
invested by Party B and all rights relating to such equity.
 
(2) The value of the Pledged Equity is $1,728,340.
 
(3) The derived interests of the Pledged Equity means the eligible dividends and
other interests relating to the Pledged Equity that shall be included into the
escrow account as the security for the debt payment under this Pledge.
 
 
3.
After the parties have entered into this agreement, Party B shall obtain the
approval of the Board of the Company on the Pledge.

 
 
4.
When the Membership Interest Sale Agreement under this Pledge is amended and/or
supplemented and the changes have impacted this Agreement, the parties agree to
negotiate to amend and/or supplement this Agreement to be consistent with the
amendments of the Membership Interest Sale Agreement.　

 
 
5.
When this Agreement is subject to delete, amend, and supplement certain clauses
due to force majeure, the obligations of Party B in this Agreement shall not
exempt or lessen and the interests of Party A under this Agreement shall not be
impacted or impaired.

 

 
 

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6.
Upon the occurrence of one of the following circumstances, Party A shall have
the right to exercise the Pledge and all rights relating to such equity. The
proceeds and interests generated from the exercise shall be used to pay the
purchase price and related interests for the membership interest sale prior to
other obligations:

 
 
(1)
Party B has not paid the purchase price, interests, and related expenses on time
in accordance with this Agreement.

 
 
(2)
Party B is announced to dissolve or go bankrupt.

 
 
7.
During the term of this Agreement, if Party B elects to transfer the Pledged
Equity, it shall obtain the written consent from Party A and pay the full amount
of the purchase price with interests prior to the maturity date.

 
 
8.
After this agreement takes effect, either Party A or Party B shall not
unilaterally amend or terminate the Agreement unless both parties have agreed to
make changes and entered into written amendments.

 
 
9.
If Party B fails to obtain the approval from the Board of the Company on the
Equity Pledge during the term or Party B has pledged the equity to any other
third party before this Agreement is entered, Party A shall have the right to
request the payment of the purchase price with interest before the maturity date
and request Party B to pay for the loss.

 
 
10.
This Agreement is a component of the secured Membership Interest Sale Agreement.
The Agreement shall be signed off by both parties and take effect on the date
when the equity pledge is registered.

 
 
11.
Dispute Resolution

 
 
(1)
If any dispute arises between the Parties in connection with the interpretation
and performance of the provisions hereunder, the Parties shall resolve such
dispute in good faith through discussions. If no agreement can be reached within
sixty (60) days after one Party receives the notice of the other Party
requesting the beginning of discussions or as otherwise agreed, either Party
shall have the right to submit such dispute to the China International Economic
and Trade Arbitration Commission for arbitration in accordance with its then
effective rules. The arbitration shall be held in Beijing. The award of the
arbitration shall be final and binding upon the Parties.

 
(2)
If any dispute arises in connection with the interpretation and performance of
this Agreement, or such dispute is under arbitration, either Party shall
continue to have the rights hereunder other than those in dispute and perform
the obligations hereunder other than those in dispute.

 
(3)
The conclusion, effectiveness, enforcement and interpretation of this Agreement
shall be governed by the Chinese laws.

   
Party A: China America Holdings, Inc. (Seal)
     
Signature:
 
 Date:
          Party B:  Glodenstone Development Limited (Seal)    
Signature:
 
 Date:
 

 
Place: ____________________