Exhibit 10.2
 
- Unofficial Translation -

(Title Page)

Equity Transfer Agreement

China

October 18, 2010

(2nd Page)

Table of Contents

 
Article 1
Definition

 
Article 2
Equity Transfer

 
Article 3
Price and Payment of the Equity Transfer

 
Article 4
Equity Handover

 
Article 5
Transforming Period Arrangement

 
Article 6
Assumption of Taxes and Fees

 
Article 7
Transferor’s Proclamation, Promise and Warranty

 
Article 8
Transferee’s Proclamation, Promise and Warranty

 
Article 9
Joint Proclamation, Promise and Warranty

 
Article 10
Confidentiality and Non-Competition

 
Article 11
Changes, Rescission or Termination of the Agreement

 
Article 12
Complete Agreement

 
Article 13
Liability for Breach

 
Article 14
Force Majeure

 
Article 15
Resolution of Dispute

 
Article 16
Notification and Delivery

 
Article 17
Other Provisions

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This agreement was signed by the following parties on October 22, 2010 in Xi’An:

 
(1)
Chongqing Hua Neng Recycling for Old and Waste Materials Ltd. (“Transferor”)

 
Address: Shitawu She, Longqiao Town, Fuling District, Chongqing City

 
Legal Representative: LI Chao

 
(2)
Xi’An Bao Run Industrial Development Limited (“Transferee”)

 
Address: Rm. 10720, Dong Xing Century Plaza, No. 7 Huoju Road, Beilin District,
Xi’An City

 
Legal Representative: GAO Xincheng

 
(3)
LIAO Xiaozhong

 
ID No.: 510225196510115234

 
Address: No. 30 Heng Street, Entrance 2, Apt. 9-2, Yangjiaping, Jiulongpo
District, Chongqing City

 
(4)
XIE Hui

 
ID No.: 510225196510115245

 
Address: No. 30 Heng Street, Entrance 2, Apt. 9-2, Yangjiaping, Jiulongpo
District, Chongqing City

 
(5)
WANG Xiaoyong

 
ID No.: 210302196112111537
  Address: No.116 Keyuansan Street, Jiulongpo District, Chongqing City

 
 
(6)
Chongqing Tian Run Energy Exploitation Inc. (“Target Company”)
    Address: CSPGP, Fuling District, Chongqing

 
Whereas,

1.           The Transferor holds 100% equity stake in the Target Company; the
Transferee intends to acquire the 100% equity held by the Transferor in the
Target Company.

2.           The Transferor, as the owner of the Target Company, agrees to
transfer its equity to the Transferee in accordance with the stipulations of
this agreement;  the Transferee agrees to become the 100% equity controlled
shareholder of the Target Company by accepting the all-equity transfer from the
Transferor.
 
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Therefore, the parties hereto, in pursuant to related laws and statutes such as
the Company Law of the People’s Republic of China and the Contract Law of the
People’s Republic of China and through friendly negotiation, have reached
agreement on this equity transfer as follows:

Article 1.  
Definition

 
1.1
Unless it is stipulated elsewhere herein, the terms listed below are defined as
follows:
 

 
“Target Equity”, pursuant to provisions herein, means 100% of the equity as well
as its subsidiary rights the Transferor holds in the Target Company and
obligations, which the Transferor intends to transfer to the Transferee.

“Equity Transfer”   means the act that the Transferor transfers its Target
Equity to the Transferee.

“Equity Transfer Price” means all amounts to be paid by the Transferee with
regard to the transfer of the Target Equity.

“Handover Preconditions” means the pre-conditions to the Handover of the Equity
Transfer prescribed in Provision 4.1 hereunder.

“The Handover Date”  means the date of completion of this equity transfer, which
is the date stipulated in Provision 4.2.1 herein.

“Date of Business Registration Change ” means the completion date of the change
in business registration of this equity transfer.

“Industrial and Commercial Bureau” means  Fuling District Administration Bureau
for Industry and Commerce in Chongqing City.

“Transforming Period” means the time period of transition prescribed in
Provision 5.1 hereunder.

“Charter of Company” means the current effective charter of the Target Company.

“Business Day” means any day that Chinese domestic banks are in service for the
public, but not including statutory holidays.

“Equity Handover” means that the Transferor shall complete the procedure of
change in business registration in connection with this Equity Transfer on the
Handover Date.

“Day(s)” means business day(s).

“Base Date” is October 31, 2010.

“yuan” means Renminbi (RMB) yuan.

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“Intellectual Property” means all patents, trademarks, service marks, registered
designs, domain names, utility models, copyrights, inventions, classified
information, brand names, rights to database, business names, as well as any
similar right or aforesaid interest (subject to restrictions)  in any country
(in any event, regardless of registration status, including applications for any
aforesaid rights as well as the rights to applying for any aforesaid rights in
any part of the world).

“Business Secrets” means any proprietary technology information or commercial
information owned by the Target Company but unknown to the public. Such
information is of economic value and practicality for the Target Company which
has adopted appropriate measures to protect the information. Such information
includes but is not limited to the following information or materials owned by
the Target Company (regardless of whether or not the information is tangible,
and regardless of the media used to store or record such information): (i) all
files, documents and electronic media owned by the Target Company, such as
agreements, contracts, letters of intent, personal files, and administrative
documents in any format as well as other information in connection with the
investors, material sellers, clients and suppliers of the Target Company; (ii)
information in connection with the Target Company’s business activities,
business development and anticipated business, such as costs, business plans,
business strategies (including pricing strategies), marketing strategies and
plans, distributors, distribution channels, sale models, sales, price quotes,
client lists and other relevant information. (iii) information about the Target
Company’s finances, such as revenues, expenses, profit ratios, assets, debts,
taxes, accounts receivable, business operation and investments; (iv) information
about the Target Company’s management strategies, such as descriptive materials
of the systems, methods, plans or programs adopted in the Company’s business
development or anticipated business operation; (v) information or data about
production methods, compositions and structures of any product or planned
product by the Target Company as well as other related information or data about
efficiency, negative effects, or popularity in connection to such products,
regardless of whether such products are produced by a third party for the Target
Company, or produced by the Company for a third party; and (vi) information
about proprietary techniques, including technical methods, technical measures,
statistics, blueprints, production methods, technical specifications, quality
control and management, and other relevant information unknown to the public.

“Anti-Bribery Law” means any related law, statute, rule, regulation, ordinance,
code, protocol, standard, command, announcement and legally-binding judicial
interpretation with regard to corruption and bribery (including but not limited
to commercial bribery).

“Prohibited Act” means any prohibited act as prescribed in Provision 7.1.2.15
hereunder.

“Original Shareholders” are LIAO Xiaozhong, XIE Hui and WANG Xiaoyong.

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1.2
Any law or standardized document mentioned herein means the current effective
laws or standardized documents.

1.3           The headings in this agreement are merely intended for the search
convenience, and all the Provisions hereof shall be governed by the terms and
details prescribed under each article, rather than interpreted in reference to
the headings.

1.4           When any action or step is to be taken within or after a certain
period of time, and if the ending date falls on a non-business day, the time
period shall instead end on the next business day.
 
Article 2
Equity Transfer

 
2.1
Target Equity

2.2
The Target Equity to be transferred by the Transferor is 100% equity stake the
Transferor holds in the Target Company.

2.2
The Transferor is to transfer the Target Equity and all of its subsidiary rights
and obligations.

 
2.3           All rights and interests derived from the Target Equity shall be
owned by the Transferee upon the signing of this agreement, including but not
limited to all the tangible and intangible assets, intellectual properties,
lands, real estates, production equipment and facilities, employees, interests
and profits (except ones that have been already distributed); and the Transferee
shall bear its corresponding obligations as a shareholder.
 
Article 3
Price and Payment of the Equity Transfer

3.1
Transfer Price

It has been decided through negotiation that the Transfer Price for the Target
Equity is 110,000,000 yuan (amount in words: RMB One Hundred and Ten million
yuan).

3.2
The Payment for the Transfer Price.

3.2.1
The Transferor shall provide legal, valid account receivable for the Transferee
to pay the price amount of the Equity Transfer.

3.2.2        This agreement shall become effective on the date of signing.
Within 10 business days upon the fulfillment of all the pre-conditions
stipulated in Provision 4.1, the Transferee shall pay 60% of the Transfer Price,
a sum of 66,000,000 yuan (amount in words: Sixty-Six million yuan), which
includes the security deposit of 10,000,000 yuan that the Transferee has
injected to the co-monitored account of both parties.
 
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3.2.3        Upon the completion of the matters stipulated in Provision 4.2 and
the completion of the Equity Handover, the Transferee shall pay 30% of the
Transfer Price, a sum of 33,000,000 yuan (amount in words: Thirty-Three million
yuan).

3.2.4        Within 30 days after the completion date of  the Equity Transfer,
the Transferee shall pay the remaining Transfer Price, namely 10% of the
Transfer Price,  a sum of 11,000,000 yuan (amount in words: Eleven million
yuan).
 
 
Article 4
Equity Handover

4.1
Handover Preconditions
  The handover can only be proceeded when the following conditions are
fulfilled:

 
4.1.1        An investigation report on “Zero Defect up to the Base Date” with
regard to the Target Company to be issued by the law firm and accounting firm
appointed by the Transferee.

4.1.2        The Transferor and the Original Shareholders have not violated any
of the obligations, promises and warranties stipulated in Articles 5 and 7
hereof.

4.2
The Handover Date and Each Party’s Rights and Obligations Thereafter.

4.2.1        Within 10 business days of the execution of this agreement, the
Transferor shall complete the procedure of change in business registration, for
which the Transferee shall actively cooperate with the Transferor. The date on
which the Transferor has completed all the following procedures of change in
business registration (provided that this change of business registration has
neither made nor demanded major changes to the provisions hereof)  for this
Equity Transfer shall be the date of Equity Handover.

4.2.1.1     The finalized the Company Charter shall be submitted to the
Industrial and Commercial Bureau for record.

4.2.1.2     The Transferee shall obtain a business license issued by the
Industrial and Commercial Bureau after the change of business registration,
indicating that the Transferee is the sole holder of the Target Equity, who
however shall not reduce or restrict the current scope of business (to avoid
interpretation otherwise, the scope of business carried by the new license after
the change of business registration includes, but not limited to: “production,
sales: bio-diesel; sales: lubricant oil, chemical products (not including
hazardous chemicals); importation and exportation of goods: trees and plants”).

4.2.1.3     The Contribution Certificate of the Target Equity ownership that the
Target Company issued to the Transferor shall be cancelled, and the Target
Company shall issue a new Contribution Certificate to the Transferee; and
 
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4.2.1.4     The incumbent board directors and legal representatives at the
Target Company shall submit legal, valid letters of resignations, definitely
effective on the Handover Date.

4.2.2
The Transferor and the Original Shareholders promise and warrant the following
to their best within 12 months from the Handover Date:

4.2.2.1     With regard to the transfer of rights of technology use stipulated
in the provisions of the Technology Contract signed on January 18, 2006 between
the Target Company and Chongqing De-Meng-Te Science and Technology Development
Ltd (CQ-DMT), the Transferor and Original Shareholders have urged CQ-DMT to
obtain written consents or permissions from the patentees.

4.2.2.2     With regard to the Technical Cooperation Agreement signed on June
11, 2008 between the Target Company and Chongqing City Engineering Technology
Research Center for Oil Products and Application Technology (CQ-ETRC), the
Transferor and the Original Shareholders have urged CQ-ETRC to sign an extended
agreement valid for at least three (3) years.

4.2.2.3     The ownership of the automobiles listed under the Fixed Assets of
the Target Company has been transferred to the Target Company; and

4.2.2.4      The Target Company has obtained the current, valid Qualification
Certificate of Chongqing City Environmental Pollution Control and Certificate of
Chongqing City Key New Product.

4.2.3        Unless it is stipulated elsewhere herein, starting from the
Handover Date, the Transferor will be no longer entitled with any shareholder
rights, nor shareholder obligations.

4.2.4        The Transferee has the right to determine the name list of the
Target Company’s legal representatives, board members and executive
officers.  The Transferor, while handling the change of business registration,
shall register the newly appointed legal representatives, board of directors and
executive officers for record based on the name list provided by the Transferee.

Article 5
Transforming Period Arrangement

5.1
Transforming Period

The Transforming Period provided herein means the period between the Signing
Date of this agreement and the Handover Date.

5.2
Joint Management

 
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5.2.1        On the Signing Date of this agreement, both the Transferor and the
Transferee appoint a personnel to form a Target Company Management Committee,
managing all the business of the Target Company.

5.2.2        Any consent, resolution or policy issued by the Management
Committee can be valid only when a joint written permission is acquired from the
Management Committee members.  Without such written permission, the shareholder
assembly, board of directors, or operation authorities shall not take the
liberty of making any decision; without such written permission in advance, the
Target Company shall not sign any legal documents with an outside party.

5.2.3        During the Joint Management period, all the official stamps of
contract, financial order, personal signature, internal administration, as well
as other seals that may represent the entity of the Target Company (hereafter
“Stamps”) shall be properly and safely kept as agreed below:

5.2.3.1     In terms of the safe-keeping method, the Transferor and the
Transferee shall jointly decide a safe-keeping location and a safe box. The safe
box shall have a dual-lock setting, with each lock designed by each party. Each
party has a key to its own lock, but shall not open the safe without the
presence of the other party.

5.2.3.2     If the Transferor needs to use the Stamps during the Joint
Management period, a written permission shall be obtained in advance from the
Management Committee, and the Transferee shall assist in opening the safe in
time. The course of using the Stamps shall be monitored and documented, and the
Transferee has the right of keeping photocopies of the documents on which the
Stamps are used.

5.2.4        During the Joint Management Period, the legal representative of the
Target Company shall not exercise its rights if without written permission in
advance from the Management Committee.

5.3
During the Transforming Period, both parties shall comply with the following
terms:

5.3.1        The Transferor shall exercise its shareholder rights in the Target
Company  pursuant to laws, statutes and the Company Charter and shall not
conduct any act that may cause damage to the Transferee or the Target Company,
while urging the Target Company to operate the business in honesty and
integrity, and in accordance with laws.

5.3.2        The Transferor shall urge the Transferee to operate the business in
accordance with the conventional manners employed before the signing of this
agreement, including, but not limited to: the aspects of safe production,
environmental protection, employee management of the Target Company, so as to
not cause significant adverse affects on the operation of the Target Company.
The Transferee shall not conduct any “Prohibited Acts”.
 
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5.3.3        The Transferor is under the obligation to urge its nominated or
appointed board directors, supervisors and executive officers of the Target
Company to continue being loyal and arduous in performance of duty for the
Target Company.

5.3.4        
The Transferor shall ensure that the following shareholder decisions will be
made prior to the Handover Date:

5.3.4.1     Giving the approval to the Target Company for canceling the
Contribution Certificate issued by the Target Company to the Transferor
(effective on the Handover Date); and giving approval to the Target Company for
issuing a new Contribution Certificate to the Transferee (effective on the
Handover Date).

5.3.4.2     Allowing the Transferor-appointed legal representative and board
directors of the Target Company to resign from their positions, while appointing
the Transferee-appointed legal representative and board directors for the Target
Company (effective on the Handover Date); and

5.3.4.3     Authorizing (effective on the Handover Date) the legal
representative to notify  concerned banks of new management officers’ signature
patterns in connection with all the current bank accounts of the Target Company.

5.3.4.4     The Transferor shall hand over a photocopy of the aforesaid
approvals after verification to the Transferee prior to the Handover Date.

5.3.5        The Transferee shall not use the act of this Equity Transfer to
damage the legal rights and interests of the Target Company and its shareholders
that include the Transferor.

5.3.6        Each party shall promptly perform and actively assist with the
other in the concerning procedures of this Equity Transfer, including but not
limited to: internal decisions, authorizations, policies, and changes of
business registration.

5.3.7        The Transferor shall not sell, transfer, pledge, or dispose in
other methods, the Target Equity.

5.3.8        The Transferor shall not make decisions on or payments from the
Target Company’s distributable profits; the Transferor shall not support or
offer opinions, suggestions or proposals with regard to either drawing dividends
or other forms of shareholders profit distribution.

5.3.9        The Transferor ensures that, beyond the scope of daily business,
the Target Company shall not purchase, dispose, or permit the purchase or
disposal of, any asset; nor bear or generate, or permit the bearing or
generation of, any debt, obligation or expense (that it actually has or may
have).
 
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5.3.10      The Transferor ensures the Target Company shall not revise or
terminate significant agreements, arrangements or obligations of the Target
Company as a party herein.

5.3.11      The Transferor ensures that the Target Company shall not change the
employment terms and conditions (including salaries and benefits)  regarding any
board director, other officer or employee, unless a written permission  is given
by the Transferee; the Transferor shall not offer, or permit the offer of,
gratuitous payments or benefits for any board directors, managers or employees
(or any of their relatives); also the Transferor shall not employ, hire, or
prematurely terminate the employment or hiring of, any personnel.

5.3.11      The Transferor ensures that the Target Company shall not revise any
loan provision or debt provision of loan attributes; nor provide any loan to,
borrow from, have any obligation of loan attributes with, or agree to engage in
any of the aforesaid acts with a third party.

5.3.12      The Transferor and the Original Shareholders ensure that the Target
Company shall not reach any agreement, arrangement or obligation (regardless of
whether it can be proceeded in accordance with law or not) that may concern the
interests of the following parties: the Transferor or any of its related
parties, the Original Shareholders, or the Target Company, the Transferor or any
of its shareholders, board directors or managers, or any related personnel of
all the aforesaid parties (including immediate family members and people from
marital or adoptive relationships).

5.3.13      The transferor ensures that the Target Company’s shareholder
assembly or board of directors will not make resolutions with regard to
corporate merger, spin-off, increase or decrease of registered capital,
dissolution or bankruptcy, change in business registration, foreign investment,
and provision of security to foreign parties; ensures that the Target Company
will not sign any agreement, contract or warrant; not conduct any asset
disposal; not take any loan nor other acts that may lead to debts; and not
engage in personnel employment or arrangement.

5.3.14      In the event the Target Company undergoes changes in the aspects of
assets, personnel, business, and business registration, or in the event the
Target Company undergoes any matter that concerns administrative penalty,
controversy, dispute, lawsuit or arbitration, the Transferor shall notify the
Transferee immediately.

5.3.15      On the Handover Date, the Transferor shall turn over to the
Transferee all the credentials (licenses), stamps (including but not limited to
stamps of company, finance, business and contract), originals of documents, as
well as all the registries, minute books, financial and account books, and other
journals concerning the Target Company, all ensured to be authentic, accurate
and complete.

5.3.16      The Transferor ensures to, upon the Transferee’s written request,
sign and deliver, or promptly urge the signing and delivery of, necessary
follow-up documents required by any law or reasonably requested by the
Transferee, documents that not only help put this agreement in full force and
effect and fully realize the goal of this Equity Transfer, but also help the
Transferor gain all the benefits hereunder.
 
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5.3.17      The Transferor guarantees and ensures that, starting from the
signing date of this agreement, there are no existing events, transactions,
conditions or changes that have been or may be reasonably foreseen to cause
material adverse effects on the following matters: business, production, assets,
responsibility, cash flow, operation, situation (financial or other), operating
result, state of production order, revenue, relationship between client and
supplier, relationship between employee and sales agent, and applicable statutes
or business prospect. For the purpose of this provision, “material adverse
effects” include, but are not limited to, any event, effect or situation that
either respectively or jointly leads to: (i)  a decrease of more than 50,000
yuan in the Target Company’s  net asset between the signing date of this
agreement and the Handover Date; (ii) a suspension of business operation for
more than five days between the signing date of this agreement and the Handover
Date.

5.3.18      [both parties] shall perform, pursuant to the aim of this Equity
Transfer, all other obligations and duties that both the Transferor and the
Transferee shall fulfill during the Transforming Period.

Article 6
Assumption of Taxes and Fees

6.1           The associated taxes payable with the Equity Transfer hereunder
shall be handled by both the Transferor and Transferee in accordance with
related laws and statutes.

6.2
The Transferor shall be responsible for the fees of changing business
registration associated in the Equity Transfer hereof.

Article 7
The Transferor and Original Shareholders’ Proclamation, Promise and Warranty

7.1
Proclamation, Promise and Warranty regarding legal capacity

7.1.1        The Target Company is an enterprise legal person established in
accordance with the law and statutes of the People’s Republic of China. Since
its establishment, the Target Company has been operating in compliance with the
law and there is neither risk nor potential risk of its ceasing or dissolving
operation pursuant to the Company Law of People’s Republic of China.

7.1.2        The Transferor and Original Shareholders have right, authority and
authorization necessary to sign, deliver this agreement, to sign each document
upon or prior to the completion of the transaction, and to perform all rights
and obligations stipulated in the provisions hereof.
 
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7.1.3        The Transferor legally owns the Target Equity. When being
transferred, the Transferor’s ownership of the Target Equity is free of defects
(including but not limited to security interests such as warrant and pledge).

7.1.4        The Transferor, Original Shareholders and Target Company’s signing,
delivering and performing this Agreement as well as completing the transaction
determined herein will not violate the current, valid laws, statutes and
effective documents that are legally binding on the Transferor and Target
Company.

7.1.5        Provided that the Handover Pre-conditions are fulfilled,  the
Transferor and Original Shareholders’ signing and delivery of this Agreement, as
well as their completing the transaction contemplated herein, will not need
permission from any other parties.

7.1.6        The Transferor and Original Shareholders warrant that they will
comply and fulfill all other related obligations and duties stipulated herein,
while conforming to the principle of good faith.

7.2
Proclamation, Promise and Warranty regarding the Target Company’s General State.

7.2.1
Financial Reports

Financial reports, in all significant aspects, have truly and impartially
reflected the Target Company’s business result and cash-flow situation
concerning the financial state on the Base Date and during the related financial
periods.  The Target Company does not own declared-yet-unpaid dividends or other
distributions.

7.2.2
Taxes

The Target Company has promptly and accurately paid all taxes payable, and has
no unlawful acts in connection with taxation.  The Target Company does not have
and never had disputes with any government agencies regarding tax issues.  No
government agency has investigated or indicated to investigate the Target
Company’s tax issue, and no event or situation may lead to taxation disputes.

7.2.3
Debts

7.2.3.1
Aside from what is disclosed in its financial reports, the Target Company has
neither outstanding debts nor potential debts of any other form.

 
7.2.3.2    Aside from what is disclosed in its financial reports, the Target
Company has never had defaults in connection with the Target Company’s debts,
nor had events that may cause the warrants, promises, or other obligations
associated with the Target Company’s debts to become legally enforceable.
 
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7.2.3.3
The Target Company does not have actual or potential debts of tort (intellectual
property rights, personal rights, etc).

7.2.4
Lawsuit and Law-abidingness

7.2.4.1     The Target Company has not been involved in any unresolved or
threatened lawsuit, arbitration or administrative procedure reasonably
anticipated to have material adverse effects on its overall financial state.

7.2.4.2     No courts, arbitration courts or government agencies have issued any
judgment, ruling or decision of arbitration against the Target Company, which,
under reasonable anticipation, may have material adverse effects on Target
Company’s overall financial state.

7.2.4.3
The Target Company does not have actual or potential items of administrative
penalty.

7.2.5
Free of Pledge

The Target Equity is free of any right encumbrance, pledge and third-party
right, nor restricted by any agreement, arrangement (including but not limited
to such rights as option, first refusal, and convertible equity) or obligation
(regardless of attached conditions).

7.2.6
Assets

The Target Company legally owns its assets as transferable equity, free of
defects. The Assets include all capital, properties, rights, authorities, and
interests that are subject to the Target Company’s ownership, lease, operation
or any other use of such attributes.  Such assets are necessary for the complete
operation of all of the Target Company’s current and future business, as well as
its engaged business within 12 months prior to the Handover Date. Such assets
will enable the Transferee to operate the Target Company in the same operation
manner employed by the Transferor prior to or on the Handover Date.

7.2.7
Intellectual Property Rights

The Amendment 1 to this agreement includes complete, accurate and latest details
with regard to the intellectual property rights owned by the Target Company as
the holder of the right to use, the registered owner, the beneficial owner or
the registered applicant. The Target Company legally and beneficially owns all
the intellectual property rights and business secrets that are necessary for all
of its present operation or planned operation. All these intellectual property
rights, legally and beneficially owned by the Target Company, or subjected to
its use pursuant to the valid permit, are free of obligations of license,
encumbrance, use restriction or disclosure. Such intellectual property rights
are all valid and executable. There is no and has never been any event in which
a third party is engaged in the tort, stealing, inappropriately use, violation
or unauthorized use of the Target Company’s intellectual property.  The Target
Company is not nor has ever been engaged in any tort, stealing, inappropriate
use, violation or unauthorized use of a third party’s intellectual
property.  Unless done otherwise pursuant to a written confidentiality
agreement, the Target Company has never disclosed any of its business secrets to
a third party.
 
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7.2.8
Environmental Protection, Quality Standards

 
The Target Company comply with all the applicable laws and statutes with regard
to the significant aspects of environmental protection and quality standards.

7.2.9
Major Contracts and Commitments

7.2.9.1     Other than what has been disclosed, the Target Company does not have
contracts that have already been executed but have not been performed or
completely performed nor does it have any contracts that, though they have been
fulfilled, still have major impact on the company.

7.2.9.2     The contracts which the Target Company is currently in the course of
fulfilling contains no instances that constitute, or potentially constitute, any
breach; and there are no outstanding claims from any third party against the
Target Company demanding compensation for any breach.

7.2.10
Certificates

 
The certificates, technological permits and licenses are all legitimate and
valid.  There are no current or potential situations (including but not limited
to this Equity Transfer) that may cause the aforementioned certificates,
technological permits and licenses to be revoked, suspended, withdrawn, modified
or ineligible for renewal.

7.2.11
No Liability Not Disclosed

 
None of the transactions conducted by Target Company, its actions or lack of
thereof prior to or at the handover date or the factual situations, including
taxes arising from or in connection with any transaction or event prior to or at
the handover date, have caused the Target Company to have any liabilities
(including all debts, obligations, loss, taxes, administrative penalty, fines,
claims, or loss, expenses, cost and expenditures in any other form or of any
nature).

7.2.12
Employment and Labor

 
The Target Company has no material illegal practices in the area of employment
and labor.

7.2.13
Qualification and Administrative Permits

 
All the operation qualification, certificates and administrative permits
received by the Target Company are authentic, legitimate and remain valid and
there are no potential instances that will have material adverse effect on their
annual inspection, extension and continuous effectiveness.
 
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7.2.14
Disclosure

There is no information not already disclosed by the Transferor, its original
shareholders and the Target Company to the Transferee that will, based on the
reasonable expectation, have substantial effect on the transaction that the
Transferee desires.

7.2.15
Anti-Corruption and Anti-Bribery

None of the Transferor, the Target Company, the original shareholders or the
representatives acting on behalf of the Transferor and the Target Company or
their affiliates, directors, officers, members, employees, agents, or any third
party that bears any responsibility on behalf of the Transferor or the Target
Company because of their actions or breach, have been directly or indirectly:
(1) used any funds for illegal contributions, gifts, entertainments or payments
for expenses related to political activities; (2) proposed or made or agreed to
make to any State personnel any payment, contribution, gift or other inducement
in an act in violation of, or in an attempt to violate, the anti-bribery law in
China or any such laws in other jurisdictions; or (3) paid or provided any
bribery, expenses, commission, refund, settlement, influence payment, rebate or
money in any amount or assets in any other form to any agent, customer, State
personnel in China or in other jurisdictions (or receive such from them) in an
act in violation of, or in an attempt to violate, the anti-bribery law in China
or any such laws in other jurisdictions, regardless in what name (acts listed in
this provision, “Forbidden Acts”).

 
7.2.16
[sic] No Forbidden Acts

The Transferor and its original shareholders promise and agree to ensure that,
in the course of fulfilling the obligations herein, conducting the transaction
hereunder and completing all the necessary registration and filings with the AIC
in connection with this equity transfer, the Transferor, the Target Company, the
original shareholders, or their affiliates and their respective directors,
officers, employees and agents will not engage in any forbidden acts.

7.2.16
Accounting Books and Records

The accounting books, records and accounts maintained by the Target Company have
reasonable details that accurately and reasonably reflect all the transactions
and dispositions of assets, and internal accounting system established by the
Target Company can reasonably ensure that only on conditions that are within the
scope of the authorization by the management can the transactions be conducted,
payments be made and other assets be accessed.
 
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7.2.17
Information

The Transferor, the Target Company and the original shareholders or their
authorized representatives have, in the course of the due diligence
investigation conducted by the Transferee, already provided all the information
in writing or in other electronic format at the request of the Transferee and
its advisors or agents and warrant that such information provided in writing or
in other electronic format is true and complete and is not misleading judging by
the international industry practices and standards.

Article 8
The Transferee’s Representations, Warranties and Promises

The Transferee makes the following representations, warranties and promises and
confirms that this Agreement is executed on the basis of these representations,
warranties and promises.

8.1           The Transferee is a Chinese existing enterprise legal person
established in accordance with the Chinese law and has all the necessary
certificates and permits for the business activities it currently conducts.

8.2           The Transferee all the necessary power and authorization for the
execution and delivery of this Agreement, the purchase of the Target Equity, the
completion of the transaction completed herein and the performance of all the
obligations hereunder.

8.3           This Agreement is immediately legally binding to the Transferee
after it takes effect upon its due execution and delivery by both parties and is
enforceable pursuant to the provisions herein.

8.4           The due execution and delivery of this Agreement and the
performance by the Transferee does not require obtaining consent from any other
entities.

8.5           The Transferee warrants that all the information contained in the
documents and material provided to the Transferor and its original shareholders
in connection with this equity transfer is true, accurate and complete.

8.6           The Transferee warrants that the source of funds for receiving the
equity transfer is legitimate.

8.7           The execution and performance of this Agreement by the Transferee
will not violate any law, statutes and standard documents from regulatory
authorities to which it is bound, nor will they violate the Transferee’s
Articles of Incorporation, any agreement with any other third party to which it
is a party and any of the representations, warranties and promises it has made
to the Transferor.
 
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8.8           The Transferee’s execution and performance is based on its review
of the relevant documents regarding the Target Equity and the Target Company and
is at its sole judgment.

8.9           The Transferee promises abide by and fulfill other relevant
obligations and responsibilities provided herein with honesty and integrity.

Article 9
Joint Representations, Warranties and Promises

9.1           The representation, warranties and promises were made by each
party based on the facts in existence as of the date of execution of this
Agreement and the interpretation of each representation, warranty and promise
should be made solely on its own and should not be restricted by any other
representation, warranty and promise and by provisions herein.

9.2           Each party hereto promises that, when it becomes aware, prior to
the Handover Date, of any event or situation that constitutes or may potentially
constitute a substantial violation of, or is inconsistent with, any
representation, warranty and promise it already made, it will promptly notify
the other parties.

Article 10
Confidentiality and Non-Competition

10.1         Each party hereto shall keep strictly confidential any other
party's commercial secrets and operation secrets obtained in connection with and
in the course of the performance of this Agreement, including but not limited to
all the provisions herein and the negotiations about this Agreement, and shall
not reveal them to any third party without prior consent from other parties
hereto.  It shall not make them known to any person within the company of each
who has no need to have any knowledge thereof, nor shall it use such information
for any purpose other than this Agreement.

"Confidential Information" refers to any and all information regarding the
negotiation and execution of this Agreement and the provisions herein, and all
the oral and written information regarding the business operation, business
strategy, business plan, investment plan and financial situation of any party
hereto or the company under its control, including but not limited to all the
reports, notes, copies (including electronic copies) and facsimiles that contain
such information.

10.2
Any of the parties hereto may disclose confidential information under the
following circumstances:

10.2.1
The disclosure of such information is required by law and administrative
statutes;

10.2.2
The disclosure of such information is required by relevant judicial
organizations and government organizations;

 
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10.2.3      Prior to its receiving or accessing the confidential information,
such information has already been made known to the public or the recipient has
obtained such information legally from a third party;

10.2.4
The other party has issued written consent in advance regarding such disclosure.

10.3         Notwithstanding the provisions in the above paragraph, the
recipient of such confidential information may still disclose it to its
shareholders, employees, directors and professional advisors, provided that such
disclosure is made for the reasonable need to achieve the objective of this
Agreement.  The recipient must ensure that its shareholders, employees,
directors and professional advisors are aware of and adhere to the
confidentiality obligation set forth herein.  If any law or competent court or
regulatory agency requires the disclosure of such information, the recipient may
disclose it but must take all necessary measures permitted by law to so that the
relevant secret information receive confidentiality protection allowed under the
applicable law and statutes.

10.4         Within 3 years after the Handover Date, the Transferor and its
original shareholders shall not, directly or indirectly (in its own name or
through its affiliates or agents), engage in any business that competes with the
Target Company's current business, or provide assistance to any entity that
already competes, or plans to compete, directly or indirectly, with the Target
Company, and shall not attempt, directly or indirectly, recruit any employee or
agent of the Target Company for service (whether or not the person is an
employee, advisor, agent, independent contractor or other service provider).

10.5         The Transferee and its original shareholders shall not conduct any
activities that are reasonably expected to interfere or harm the business
relationship between the Target Company and its employees, customers, suppliers,
sales agents and brokers or other major business relationship.

Article 11
Amendment, Dissolution and Termination of this Agreement

11.1
General Provisions

The parties hereto shall not amend and dissolve this Agreement unless there is
prior unanimous consent or as required by the circumstances specified by law and
statutes and by the provisions herein.  All amendments to and the dissolution of
this Agreement must be made in writing by all parties hereto and they shall
become effective only after they are signed or imprinted with seals by the both
parties or their respective representatives.

11.2
If the objective of this Agreement becomes impossible to be realized due to
Force Majeure, either party hereto can dissolve this Agreement.

 
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11.3         If bankruptcy, disbandment, revocation by law or loss of capacity
for civil activities on the part of one party make it lose the ability to
perform the Agreement, such that the objective of this Agreement can not be
realized, the other party has the right to unilaterally dissolve this Agreement.

11.4
Transferor's Right to Dissolve This Agreement

If the Transferee fails to make payments for the equity transfer consideration
pursuant to the provisions herein and the payments are more than one month past
due, and the Transferee is at fault, it shall be considered a material breach by
the Transferee, and the Transferor may unilaterally dissolve this Agreement and
demand the Transferee to bear all liabilities for the breach.

11.5
Transferee's Right to Dissolve This Agreement

11.5.1      If the legal counsel engaged by the Transferee issues an
investigation report stating major defects about the Target Company, or if the
conditions for handover stipulated in Article 4.1 herein are not completed
satisfied within one month after the execution of this Agreement, it shall be
considered a material breach by the Transferor and its original shareholders,
and the Transferee may unilaterally dissolve this Agreement and demand the
Transferor and/or its original shareholders to bear all liabilities for the
breach.

11.5.2      If the Target Company or the Transferor seriously violates the
provisions of Article 5.3 herein, such that such violation affects the
realization of the objective desired by the Transferee, it shall be considered a
material breach by the Transferor and its original shareholders, and the
Transferee may unilaterally dissolve this Agreement and demand the Transferor
and/or its original shareholders to bear all liabilities for the breach.

11.5.3      If the Transferor fails to complete all the AIC change registration
procedures for the equity transfer according to the schedule stipulated herein
and such delay is over one month, it shall be considered a material breach by
the Transferor and its original shareholders, and the Transferee may
unilaterally dissolve this Agreement and demand the Transferor and/or its
original shareholders to bear all liabilities for the breach.

11.6
This Agreement will be terminated upon any of the following:

11.6.1
All the obligations hereunder have been fulfilled pursuant to the provisions
herein;

11.6.2
This Agreement is dissolved.

11.7
Legal Consequences of the Termination of This Agreement

11.7.1      If due to dissolution or termination of this Agreement, the
provisions herein are not completely performed, the performance will be
terminated; if they have been performed, the abiding party may demand the
defaulting party to bear liabilities for the breach and responsibility for
compensation.  The Transferor must return to the Transferee all the
consideration already paid by the Transferee within 10 days upon the dissolution
of this Agreement.
 
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11.7.2      On the pre-condition of not affecting the other provisions herein,
if any or some of the provisions herein are determined to be invalid, illegal or
unenforceable, or in violation of public interests, the validity, legality and
enforceability of other provisions shall not be affected or harmed.  Each party
must negotiate in good faith to determine provisions satisfactory to both
parties as substitutes for the invalid ones.

Article 12
Complete Agreement

This Agreement constitutes the complete agreement between the two parties hereto
with regard to the transaction contemplated herein and shall supersede all
previous written or oral agreements or understanding between the two parties.

Article 13
Liability for Breach

13.1         The violation by any party of the provisions or the
representations, warranties and promises herein constitutes a breach.  The
defaulting party shall have the obligation to compensate the abiding party in
full for all the actual loss sustained as a result of the breach.

13.2         If the Transferee fails to make payments for the equity transfer
consideration pursuant to the provisions herein and is at fault, the Transferee
must pay a penalty in the amount equal to 0.03% of the total that must be paid
for each day that the payment is past due and compensate the Transferor for all
the resulting loss.

13.3         If Transferor fails to complete all the equity transfer AIC change
registration procedures and is at fault, the Transferor must pay a penalty in
the amount equal to 0.03% of the total that must be paid for each day that the
completion of such procedure is delayed and compensate the Transferee for all
the resulting loss.

13.4         If the breach by the Transferor and/or its original shareholders
causes the transferee to dissolve this Agreement, the Transferor and/or its
original shareholders must return to the Transferee an amount equal to two times
of the deposit; if the breach by the Transferor causes the transferor to
dissolve this Agreement, the Transferor is not required to return the deposit.

13.5         The two parties specifically stipulate that the Transferor and/or
its original shareholders shall bear joint and several responsibility for
compensation to the Target Company and the Transferee for any loss, liability or
expenses suffered (directly or indirectly) or incurred (including but not
limited to direct, indirect and derived loss) caused by, directly or indirectly,
or as the result of, the failure to fulfill the following:
 
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13.5.1
The Transferor and/or its original shareholders violate any of the
representations or warranties hereunder;

 
13.5.2
The Transferor and/or its original shareholders violate any of the warranties,
promises herein or provisions hereof;

 
13.5.3      The Transferor and/or its original shareholders fail to perform any
or several rights and obligations after the handover date as specified by
provision 4.2 herein;

13.5.4      The failure of the Target Company to make payments, before the
handover date, for pension insurance, unemployment insurance, medical insurance,
work injury insurance, family planning insurance and the housing fund for the
Target Company’s employees causes any liability, litigation, arbitration,
administrative penalty, compensation and loss suffered by the Target Company
and/or the Transferee at any time after the handover date; and

13.5.5      Any activity conducted by the Transferor or the Target Company
before the handover date causes or results in any litigation or arbitration
against the Transferor, its original shareholders, the Transferee or the Target
Company.

If any of the events mentioned above causes any reduction of value to the Target
Equity or causes any material loss to the Transferee, the Transferee shall have
the right to demand the Transferor and/or its original shareholders to bear
joint and several responsibility for compensation; the Transferee shall also
have the right to demand the Transferor and/or its original shareholders buy
back the Target Equity as the Equity Transfer Price specified herein and pay a
penalty for breach in the amount equal to two times of the deposit stipulated
herein.

Article 14
Force Majeure

14.1
General Provisions

Force Majeure means the occurrence of any events, after the execution of this
Agreement, that impede any party hereto in performing completely or in part the
provisions herein and that is not foreseeable, preventable or
surmountable.   Such events include earthquake, typhoon, flood, fire, war and
other foreseeable, preventable or surmountable events.

14.2
Obligation of Notice

 
The party impacted by Force Majeure must immediately (if communication is
broken, then at the time that communication is resumed) notify in writing the
other party and the witness, and provide proof evidencing such event within 15
days of its occurrence and statement of the detailed information regarding the
duration of its occurrence and the inability due to its impact to perform this
Agreement or to perform it completely or the reasons that such performance need
to be postponed.  Such document of evidence must be provided by the
certification organization at the location of the occurrence of Force Majeure.
 
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14.3
Remedies and Waiver from Responsibility

14.3.1      In the event of Force Majeure, the party receiving written notice
from the other party must immediately begin consultation with the other party to
find fair solutions;

14.3.2
Both parties must make all reasonable efforts to alleviate the impact of any
Force Majeure event mentioned above;

14.3.3      If one party is not able, due to the impact of Force Majeure, to
fulfill, either completely or partially, its obligations hereunder, the
fulfillment of the obligations hereunder by the impacted party may be suspended
during the delay caused by Force Majeure, the term for fulfilling such
obligation may be extended, with the extension period being equal to suspension
period, and the impacted party will not bear the corresponding responsibility
for breach.
 
 
Article 15
Resolution of Disputes

 
15.1
Resolution through Consultation

All disputes or conflicts arising from the execution and performance of this
Agreement must first be settled through friendly consultation, which must be
started immediately after any of the two parties delivers written request for
consultation to the other party.

15.2
Resolution through Litigation

If the parties hereto fail to reach written consensus within 30 days after the
receipt of the written notice described in Article 16.1 below, both parties have
the right to submit the dispute to the people’s court at the location where this
Agreement is executed for litigation.

15.3         During the period when the dispute is being resolved, the parties
hereto must continue to perform, with the exception of the item in dispute, all
other provisions hereunder and fulfill their corresponding obligations.

Article 16
Notification and Delivery

16.1
Notification

 
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16.1.1
All notifications may be delivered by courier, express delivery or by facsimile
to the following method:

 
To:
Chongqing Hua Neng Recycling for Old and Waste Materials Ltd.

 
Address:
Shitawu She, Longqiao Town, Fuling District, Chongqing City
  Postal Code: 408121  
Telephone:
023 72137888

 
Fax:
023 72137888
  Recipient: LI Chao

 
To:
Xi’an Baorun Enterprise Development Co., Ltd.

 
Address:
Room 10720, East New Century Plaza, 7 Huoju Road

 
Beilin District Xi’an

  Telephone: 029 82683920
 
Fax:
029 82683629
  Recipient: GAO Xincheng

16.1.2
If one party changes the delivery method listed in 16.1.1 above, it must notify
the other party in writing within 3 days upon any such change.

16.2
Receipt

Without affecting the above provision, any notification delivered in accordance
with the method listed in 16.1.1 shall be considered received upon the
following: if by courier, at the actual time when the delivery is made at the
corresponding address and is signed and accepted by the recipient or any other
person acknowledged by the recipient; if by express delivery, within 3 business
days after the mail is posted; if by facsimile, when the recipient or any other
person acknowledged by the recipient confirms its receipt.

Article 17
Other Provisions

17.1
Execution of This Agreement and Its Effectiveness

This Agreement becomes effective on the date first stated above when it is
signed or imprinted with seals by both parties or their respective
representatives.

17.2
Original Agreement

This Agreement is made in four originals with one to the Transferor, one to the
Transferee and the rest to be used in the AIC change registration.  All of them
have the same legal effect.
 
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17.3
Severability

If any of the provisions herein is determined by competent authorities to be
invalid or unenforceable, other provisions herein shall not be affect and must
continue to be fully and effectively performed.

17.4
Waiver of Rights

The non-exercise, or partial exercise, or the delay to exercise, of any of the
rights hereunder by any party shall not be considered a waiver of such right or
any other rights hereunder, unless one party expressly indicate in writing its
waiver of such right.

17.5
Transfer of Rights and Obligations

17.5.1      Before the handover date, the Transferee has the right to, upon
receiving consent from the Transferor, transfer its rights and obligations
specified herein to a third party, and make the main entity of the Transferee
become the third party; and the Transferee guarantees that the third party will
perform this Agreement and the Transferee’s obligations provided in the
attachment hereto.

17.5.2
With the exception stated above, neither party can transfer its rights and
obligations provided herein.

17.6
Continuation of Effectiveness

The confidentiality provisions, notification provisions and resolution of
dispute provisions shall continue to remain in effect alter this Agreement is
dissolved or terminated.

17.7
Others

Other matters not covered herein must be handled in accordance with the relevant
provisions of the laws and statutes, if any, or settled, if not, through signing
a supplemental agreement by the parties hereto.  All supplemental agreements
shall have the same legal effect of this Agreement.

(There is no text below)
 
 
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In witness hereof, the authorized representatives of the respective parties
hereto hereby sign this Agreement on the date first indicated above.
 
Transferor:
/seal/ Chongqing Hua Neng Recycling for Old and Waste Materials Ltd.

Legal Representative:
/s/ LI Chao

Transferee:
/seal/ Xi’An Baorun Industrial Development Limited
Legal Representative: /s/ GAO Xincheng

/s/ LIAO Xiaozhong
 
/s/ XIE Hui

/s/ WANG Xiaoyong
 
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