Exhibit 10.39 

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Maximum Amount Mortgage Agreement

Agricultural Bank of China

 
 

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Maximum Amount Mortgage Agreement

NO. 41906200900000502

Mortgagee (Full Name): Anyang Branch, Agricultural Bank of China
Mortgagor (Full Name): One: Henan Shuncheng Group Coal Coke Co., Ltd
                                        Two:
                                        Three:

Whereas the Mortgagor, of his own will, provides a mortgage of maximum amount
for the creditor’s rights arising from a series of business Agreements
(hereinafter referred to as the Principal Agreement) by and between the
Mortgagee and Henan Shuncheng Group Coal Coke Co., Ltd which are signed in
accordance with Article 1 under this Agreement. Each party of this Agreement
enacts this Agreement by reaching consent through consultation in accordance
with the law and provision of China.
 
Article 1  the Guaranteed Principal Creditor’s Rights and the Maximum Amount
 
1.1
The Mortgagor, of his own will, provide security to the following creditor’s
rights between the Mortgagee and the Mortgagor, and the maximum amount of the
guaranteed creditor’s rights is seventy five millions only RMB (￥75,000,000).
The foreign currency transaction is converted in accordance with the selling
price of the date of transaction under the Item (1) below.

(1)
The Mortgagee deals with the creditor’s rights from each agreed business from
25th June, 2009 to 24th June, 2010. This period is the determination period of
guaranteed creditor’s rights of maximum amount. The aforesaid business includes:
(subject to the item marking “√”)

√□Loan in RMB/Foreign Currency □Establishment of L/C derating the security
deposit
□Packing loan   □Discount on commercial bill □Import documentary credit
 
□Letter of guarantee □Acceptance of commercial bill □Export documentary credit
□other business:___/___

(2)
The following outstanding principal and its relevant interest, default interest,
compound interest, expenses and etc are formed between the Mortgagee and debtor,
and the interest, default interest, compound interest expenses and etc thereof
are calculated in accordance with the relevant Principal Agreement till the date
of actual liquidation.

 
 

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Agreement Name
 
Agreement Number
 
Outstanding Principal
 
Currency
                                                       

(The additional table added for the lack of table hereof is the component of
this Agreement.)
1.2
The kind, amount, rate and time limit of each business transaction guaranteed
hereof subject to the relevant legal documents or certificates.

1.3
Within the period and maximum amount of the mortgage agreed hereof, the
Mortgagee does not need to deal with procedures of guarantee case by case when
issuing the agreed loan or providing other bank credit

1.4
The currency of the business transaction occurs in the period and within the
maximum amount of the mortgage is not limited, and the Mortgagor shall take the
responsibility of guarantee by use of the same currency with the original one.

Article 2  Scope of the Guarantee
 
The scope of the guarantee includes the principal of creditor’s right, interest,
default interest, compound interest, penalty, compensation for damage,
litigation (arbitration) fee, lawyer fee, deposition fee, title transfer fee and
all the expenses arising from the realization of the creditor’s rights and
mortgage rights by the Mortgagee.
Regarding part exceeding the maximum amount due to change of currency rate, the
Mortgagor shall bear the responsibility of guarantee of its own will.
 
Article 3  the Mortgage Property
 
3.1
The Mortgagor agrees to set the machinery equipment as the mortgage property.
The aforesaid mortgage property refers to (list name and number): List of
Chattel Mortgage, NO.41906200900000502-1. This list is an integral part hereof
and has the equal legal effect of this Agreement.

3.2
The aforesaid mortgage property is priced provisionally in RMB of two hundred
and seventy-five million three hundred and eighty-one thousand and sixty-six
only (￥275,381,066), and the final value thereof is subject to the proceeds
obtained from the actual disposition of mortgage property when realizing the
mortgage rights.

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Article 4  Warrants of the Mortgagor
 
4.1
The Mortgagor has got the authority as required by the mortgage hereof in
accordance with the relevant regulations and procedures.

4.2
The Mortgagor has a complete and undisputed right of ownership or right of
disposition on the mortgage property.

4.3
The mortgage property may be circulated or transferred legally.

4.4
The mortgage property is not sealed up, distained or placed under surveillance。

4.5
The Mortgagor shall honestly inform of the delinquent tax, the construction
works proceeds of mortgage property and the conditions of the mortgage property
which has already been pledged or rented.

4.6
The Mortgagor has got the consent of co-owners of the mortgage property in
respect of the mortgage matters hereof.

4.7
In the period of mortgage, the Mortgagor shall inform the Mortgagee in written
form promptly when one of the following conditions occurs:

(1)
The mortgage property is sealed up, distained, placed under surveillance or
taken other coercive measures;

(2)
The Mortgagor changes its capital structure or the management system, including
but not limited to contracting, leasing, remoulding of shareholding system,
joint operation, consolidation, separation, joint venture, assets transfer and
etc.

(3)
The Mortgagor is rescinded, the business license is revoked, ordered to close or
other dismissal reasons occur.

(4)
The mortgager applies for bankruptcy, reformation and compromise or be applied
for bankruptcy and reformation.

4.8
As of the mortgage property, there does not exist other conditions impacting the
Mortgagee to realize the mortgage right.

Article 5  Effectiveness of the Mortgage Right
 
The effectiveness of the mortgage right is governed by the mortgage property’s
accession things, accession rights, substitution objects, isolates, annexed
things, mixtures, processed things and other properties and rights provided by
laws and regulations.

Article 6  Possession and Management of the Mortgage Property
 
6.1
The mortgage property hereof is possessed and managed by the Mortgagor who has
the obligation of appropriate management and reasonable using. The Mortgagee is
entitled to supervise and check the management and using conditions of the
mortgage property.

 
 

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6.2
In the period of mortgage, the Mortgagor shall not bestow, transfer, rent,
remortgage or take other dispositions in any manners to the mortgage property
without the written consent of the Mortgagee. If the mortgager transfer, rent or
dispose the mortgage property in any other manners with the written consent of
the Mortgagee, the obtained proceeds shall be used to liquidate the guaranteed
claims in advance or to be deposited.

6.3
In the period of mortgage, if the mortgage property is damaged, lost,
expropriated, requisitioned, or owned by the third person due to annexation,
mixture and processing, the Mortgagor shall take effective measures promptly to
avoid the enlargement of damage and simultaneously inform the Mortgagee promptly
in writing. The Mortgagee is entitled to enjoy the priority of having his claim
satisfied with the obtained insurance proceeds or compensations; and the
Mortgagee is entitled to request to liquidate the debt in advance or deposit if
the performance period of the guaranteed claim does not expire.

6.4
In the period of mortgage, if the value of mortgage property reduces, the
Mortgagee has the right to request the Mortgagor to restore the original value
or provide security recognized by the Mortgagee corresponding to the amount of
the lost value.

Article 7  Insurance of the Mortgage Property
 
7.1
The Mortgagor shall deal with the relevant insurance in accordance with the
demand of the Mortgagee, and appoint the Mortgagee as the primary beneficiary of
this insurance and deliver the policy originals to the Mortgagee.

7.2
The insurance premium is paid by the Mortgagor, who shall pay for the full
insurance premium on time and perform other obligations under the insurance
Agreement (including the insurance policy or other insurance certificates,
hereinafter inclusive). In the period of the mortgage, the Mortgagor does not
pay for the insurance premium or deal with the insurance (renewal of insurance)
procedures, the Mortgagee is entitled to pay for it or deal with the procedure
while the relevant expenses shall be borne by the Mortgagor. The mortgager
agrees the Mortgagee to directly collect the aforesaid expenses from its account
openedwith the Mortgagee.

7.3
In the period of the mortgage, the Mortgagor shall not modify, dismiss or
terminate the insurance Agreement unilaterally or negotiating with the insurer
without the written consent of the Mortgagee; and shall not waive claim right of
the insurance benefit or right of claim against any third person.

7.4
In the period of the mortgage, if the insurance accident happens to the mortgage
property, the Mortgagor shall inform the insurer and the Mortgagee promptly, and
deals with the matters of claim for compensation. The Mortgagor who does not
inform promptly or claim for compensation resulting in the loss of the
Mortgagee, shall take the responsibility of compensation.

 
 

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Article 8  Registration of the Mortgage
 
8.1
The Mortgagor shall deal with the registration procedures of the mortgage in
relevant registration institution within five (5) days after this Agreement
takes effect; the mortgage property’s certificate of other rights, registration
documents of the mortgage or other certificates of other rights are possessed
and managed by the Mortgagee.

8.2
In the period of the mortgage, if it is needed to deal with the registration
procedure of modification with registration institution, the Mortgagor shall
deal with the relevant procedures promptly.

8.3
In the period of the mortgage, if the Mortgagee intends to transfer the right of
mortgage of maximum amount in accordance with this Agreement, the Mortgagor
shall assist the Mortgagee and the transferee to deal with the relevant
procedures of modification registration.

Article 9  Transfer of the Right of Mortgage
 
9.1
Before the claim of the guaranteed mortgage of maximum amount hereof is
confirmed, the Mortgagee, who transfers partial rights of creditor, is entitled
to transfer the relevant rights of mortgage.

9.2
After the creditor’s right guaranteed by mortgage of maximum amount hereof is
confirmed, the Mortgagee, who transfers partial creditor’ rights, may not
transfer the relevant rights of mortgage.

Article 10    Confirmation of the Guaranteed Creditor’s Right
 
The creditor’s right guaranteed by mortgage of maximum amount hereof is
confirmed when one of the following conditions occurs:
10.1
The Expiration of determination term of the creditor’s right. Expiration
includes the determination term expiration of the creditor’s right provided in
Article 1 hereof, and the determination term expiration of the creditor’s right
declared by the Mortgagee in advance in accordance with national laws and
regulations or this Agreement. If the debtor breaks the obligations of the
Principal Agreement or the Mortgagor breaks the obligation hereof, the Mortgagee
is entitled to declare that the determination term of the creditor’s right is
expired in advance.

 
 

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10.2
New creditor’s right is impossible to happen.

10.3
The mortgage property is sealed up or distained.

10.4
The debtor or the Mortgagor is declared bankruptcy or dismissed.

10.5
Other conditions regarding determination of creditor’s right provided by laws
and regulations.

Article 11    Realization of the Right of Mortgage
 
11.1
When one of the following conditions occurs, the Mortgagee is entitled to
perform the right of mortgage, and consult with the Mortgagor to convert the
mortgage property into money or take priority to get paid out of the proceeds
from auction or sale of the mortgage property. If the obtained proceed is not
enough to satisfy the guaranteed creditor’s right hereof, the Mortgagee may
choose to use the proceeds to restore the capital, interest, default interest,
compounding interest or expensed and etc.

(1)
In case the performance period of any debt under any Principal Agreement
expires, but the Mortgagee has not been paid off. Expiration includes the
expiration of debt performance period as stipulated under Principal Agreement,
and the declared expiration ahead of time by the Mortgagee in accordance with
national laws and regulations or this Agreement.

(2)
The debtor or the Mortgagor is dismissed, business license is revoked, ordered
to be close down or taken upon other measures.

(3)
The debtor or the Mortgagor is accepted to apply for bankruptcy by the people’s
court or to be ordered to reconciliation.

(4)
The debtor or the Mortgagor is dead, declared of disappearance or declared of
death.

(5)
The mortgage property is sealed up, distained, placed under surveillance or
taken other enforcement measures.

(6)
The mortgage property is damaged, lost, expropriated or requisitioned.

(7)
The Mortgagor does not restore the value of the mortgage property or provide for
the relevant guarantee in accordance with the Mortgagee’s demand.

(8)
The Mortgagor breaks the obligations hereof.

(9)
Other conditions affects severely the realization of right of mortgage hereof.

11.2
If there exist two or more Mortgagors with a real right (including the mortgage
property provided by the debtor) simultaneously, the Mortgagee is entitled to
perform the real right for mortgage in respect of any or each real right.

 
 

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11.3
If the Mortgagor is a third person beyond the debtor and the debtor provides the
guarantee of property for the guaranteed creditor’ right, and the Mortgagee
waives this real right for mortgage, mortgage priority or modifies the real
right for guarantee, the Mortgagor agrees to continue providing guaranteed
mortgage for the claim under the Principal Agreement in accordance with this
Agreement. This Real Right for Mortgage is formed in the guarantee of property
provided by the debtor for the creditor’s right under the Principal Agreement.

Article 12    Liability for Breach of Agreement
 
12.1
After this Agreement comes into effect, the Mortgagee who does not perform the
Agreement obligation resulting in the loss of the Mortgagor shall take the
relevant liability of compensation.

12.2
The Mortgagor who has one of the following circumstances shall pay for penalty
to the Mortgagee at_____ percentage (____ %) of the maximum balance of the
guaranteed creditor’s right hereof; in addition, the Mortgagor shall pay for the
full compensation simultaneously if resulting in loss of the Mortgagee.

(1)
Does not get the legal and effective authority as required by the mortgage
hereof;

(2)
Does not accurately inform of the delinquent tax, the construction works
proceeds of mortgage property, and the conditions of existing the
intercommunity, disputes, demurrals, mortgage property being mortgaged or rented
or being sealed up, distained or place under surveillance;

(3)
Does not deal with the registration procedures in accordance with this
Agreement;

(4)
Does any unauthorized disposition of the mortgage property without the written
consent of the Mortgagee;

(5)
Does not restore the value of the mortgage property or provide for the relevant
guarantee in accordance with the Mortgagee’s demand;

(6)
Other behaviors which breach this Agreement or impact the achievement of the
right of mortgage.

Article 13    Bearing of the Expenses
 
The expenses of registration, evaluation, insurance, identification,
notarization, deposition of the mortgage property are borne by the Mortgagor.

Article 14    Solutions to Conflicts
 
Any conflicts arising from the performance of this Agreement shall be settled
through the negotiation by both parties, or resolved through method _____ of the
following ways:

 
 

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14.1
Litigation. Any litigation shall be subject to the jurisdiction of the people’s
court in the Creditor’s location.

 
14.2
Arbitration. The conflicts shall be submitted to ____/____ (name of the arbitral
institution) and resolved in accordance with its applicable rules.

 
During the period of litigation or arbitration, the other clauses not in dispute
shall be performed continuously.
 
Article 15    Other Issues
 
No.1: The Mortgagor shall actively check the debtor’s operation condition and
occurrence and performance conditions of each business hereunder. The Principal
Agreement, related legal documents or notes will not be served to the Mortgagor.
 
No.2: /.
 
Article 16    Execution of the Agreement
 
The agreement will come into effectiveness upon the signature or stamp by both
sides.
 
Article 17
 
This agreement is executed in four originals, and one for each party, one for
the debtor and one for registration authority, each with the same legal
effectiveness.
 
Article 18    Note
 
The Mortgagee has required the Mortgagor to understand every single clause fully
and accurately; and the creditor has explained relevant articles upon the
Mortgagor’s request; thus, both parties have achieved common understanding as of
this agreement.

 
 

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Mortgagee:
 
             (Seal)
 
Legal Representative
 
/Authorized Representative:     the signature   [illegible]
 
Mortgagor: Henan Shuncheng Group Coal Coke Co., Ltd
 
(Seal)
 
Legal Representative
/Authorized Representative:   the signature     /s/ Wang Xinshun
 
Execution Date: 25th June, 2009
 
Execution Place: Anyang Branch, Agricultural Bank of China

 
 

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