Loan Contract
 
Agricultural Bank of China
 

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Loan Contract
 
(410508101)NYJZ (2005) No.02002
 
The borrower (Full name): The Pingdingshan Pinglin Toll Road Company Ltd.
 
The loaner (Full name): Agricultural Bank of China, Xinhua District Branch,
Pingdingshan City

In accordance with relevant Chinese laws and regulations, Party A and Party B
have entered into this contract upon consensus through consultation.
 
Article 1 Loan
 
1. The loan type: long term fixed asset loans
 
2. The loan usage: Construction project of Pingdingshan-Linru Expressway
 
3. The currency and amount of loan (Capitalized): RMB 200,000,000Yuan (TWO
HUNDRED MILLION YUAN)
 
4. Life of the loan
 
(1) The life of the loan is shown in the following table.

Issuing
 
Expiration
 
Year
 
Month
 
Day
 
Amount
 
Year
 
Month
 
Day
 
Amount
 
2005
  2   28   20,000,000   2009   11   20   20,000,000  
2005
  2   28   20,000,000   2010   11   20   20,000,000  
2005
  2   28   20,000,000   2011   11   20   20,000,000  
2005
  2   28   20,000,000   2012   11   20   20,000,000  

(The additional attached list, due to the table columns are not enough to fill
out, is the component element of this contract)

(2) If the loan amount, issuing date and expiration date recorded in this
contract are not consistent with the record of loan note, the record of loan
note shall prevail. The loan note is the component element of this contract and
has the equal lawful force with this contract.

(3) If the foreign exchange is used for this loan contract, the borrower should
return its interest of loan by original currency on time.

5. Lending rate

The lending rate of RMB can be decided by type (1) as follows:

(1) Floating interest rate

The lending rate floats upward 2.9412% based on the setting rate, implements the
annual interest rate of 6.30%, the lending setting rate of less than 5
(including 5 years) years is calculated by RMB benchmark lending rate of
corresponding period published by the People’s Bank of China; the lending
setting rate of more than 5 years is calculated by lending ruling rate of
interest of RMB plus zero (Capitalized) percentage point published by the
People’s Bank of China.

 Six (Capitalized) months is one period of interest rate adjustment. If the
People’s Bank of China adjusts its RMB benchmark lending rate, from the lending
corresponding day of the first month in the next period of interest rate
adjustment, the loaner should decide new lending rate with implementation
according to benchmark interest rate of corresponding time and level after
adjusting and the above formula mode, the borrower will not be informed further.

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The adjustment day of lending rate and lending issuing date, or the lending
corresponding day of the first month of the period are the same day, the new
implemented lending rate should be decided since the adjusting day of the
setting rate. If have no lending corresponding day, the last day of the month is
regarded as lending corresponding day.

(2) Fixed interest rate

The lending rate          floats (upward/downward)                  % based on
the setting rate, implements the annual interest rate          % until the
lending due date. The lending setting rate of less than 5 (including 5 years)
years is calculated by RMB benchmark lending rate of corresponding period
published by the People’s Bank of China; the lending setting rate of more than 5
years is calculated by RMB benchmark lending rate plus          (Capitalized)
percentage point published by the People’s Bank of China.

The lending rate of foreign exchange can be decided by type         as follows:

(1)          month/months (Capitalized)          (LIBOR/HIBOR) +          % of
margin consists of the floating lending rate by                  months
(Capitalized). LIBOR/HIBOR is an inter-bank offered rate of London or Hong Kong
during the corresponding time limit of the first two working days published by
Reuters.

(2) Implement the annual interest rate          % until the lending due date.

(3) Other modes                                                               .

6. Interest settlement

The interest of loan under this contract can be settled by quarter (month or
quarter); the interest settlement date is the 20th of the last month of each
quarter. The borrower shall pay the interest on each settlement day. If the
repayment date for the last time of lending principal is not the interest
settlement day, the unpaid interest should be settled with the principal
repayment (day interest rate = monthly interest rate/30).

Article 2 If the borrower fails to meet the requirements of the following
conditions, the loaner has the right to not provide the loan.

1. The borrower opens a general deposit account at the loaner’s office.

2. The borrower provides related documents, materials and handles the relevant
procedures according to requirements of the loaner.

3. If the foreign exchange is used for loan under this contract, the borrower
has already handled the authorization, registration and other prescribed
procedures in term of pertinent regulations.

4. If the loan has mortgage and guarantee of pledge under this contract,
relevant legal procedures for registration and/or insurance etc. have already
been handled by the requirements of the loaner, and this guarantee and insurance
are constantly valid. If the loan has guarantee under this contract, it can
ensure that the contract has already been signed and coming into force.

Article 3 The Rights and Obligations of the Loaner

1. The loaner has the right to know the production operation, financing
activities, goods storage and loan usage of the borrower, and require the
borrower to present the documents such as financial reports, materials and
information on schedule.

2. The loaner has the unfavorable actions or situations which includes but not
limit to the seventh, eighth and tenth items of Article 4 in this contract, the
loaner may withhold funding and withdraw the loan in advance.

3. If the principal, interest, default interest, compound interest and other
expenses payable of the borrower are withdrew or withdrew in advance stipulated
in this contract, the loaner can directly transfer fund from any account of the
borrower.

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4. The repaid funds of the loaner is not enough to pay off funds payable under
this contract, the loaner can use the fund to return principal, interest,
default interest, compound interest or other expenses.

5. If the loaner hasn’t fulfilled its repayment, the loaner can disclose the
default actions of borrower to the public.

6. The loaner must timely pay the loan in full to the borrower stipulated in
this contract.

Article 4 The rights and obligations of the borrower

1. The borrower has the right to obtain and use the loan according to provisions
of this contract.

2. Handle the current settlements and deposit related to the loan under this
contract through the account agreed in article 2.

3. If the foreign exchange is used for loan under this contract, the borrower
shall handle the authorization, registration and other prescribed procedures
related to this loan according to relevant regulations.

4. The principal and interest of the loan shall be repaid on time. If the
borrower needs to extend the period of repayment, the borrower shall present an
application in written form to the loaner within the 15 days before the due date
of the loan and sign the extending contract of the loan through the agreement of
the loan.

5. The borrower shall use the loan as agreed in the contract, shall not
unwarrantedly use or divert the loan.

6. The loaner should provide authentic, integrate and valid financial reports or
other related materials and information to the loaner by month, and positively
cooperate with the loaner, checking the production operation, financing
activities and usage of loan.

7. If the borrower implements a series of actions such as contract, lease,
transformation in line with stock system, affiliation, combination, merger,
split, joint investment, assets assignment, application for stop doing business
for internal rectification, application for dissolution and bankruptcy, and
other actions which will cause the changes to the relationship between the
obligatory right and debt or affect the realization of the creditor's rights of
loaner, it should present a written notice to the loaner and gain the agreement
of the loaner, and also implement the responsibility of settlement or paying off
debts in advance, otherwise it cannot implement the above actions.

8. Except the above stated actions, if the borrower has a series of other
serious unfavorable situations on repayment under this contract such as suspend
production, go out of business, cancel the registration, its business license is
revoked, whose legal representative or chief executive officer engage illegal
activities, has actions of big lawsuits or arbitration, its production operation
faces the serious difficulties and financial position deteriorates etc., the
borrower shall present a written notice to the loaner, and implement the
preservation measures of creditor’s rights recognized by the loaner.

9. The borrower shall announce in written form in advance and get approval of
the loaner if the borrower guarantees loans to other debt or provides mortgage
and pledge to the third person by his main property which may affect his
borrowing ability under the contract.

10. The borrower and its investor can not withdraw fund, transfer assets or
transfer stock randomly to avoid the debt to the loaner.

11. The borrower shall inform the loaner timely in written form if there are any
changes of the name, legal representative, residence, business scope, etc.
 

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12. If there are situations of the guarantor such as: suspending production,
going out of business, canceling the registration, business license is revoked,
going bankrupt and appearing loss of business etc, or losing corresponding
ability of warrantee of this loan partly or completely, or the value of the
object of pledge, pledge and the pledge right as loan guarantee under the
contract are lost or reduced. The borrower shall provide other guarantee
measures timely approved by the loaner.

13. The borrower shall undertake the series fees related to the contract or the
guarantee under the contract such as: the service of the lawyer, insurance,
transportation, evaluation, registration, conservation, identification,
notarization and so on.

Article 5 Advance Repayment

If the borrower wants to repay the loan in advance, he shall be approved by the
loaner; if the loaner agrees, the interest of the part of the prepayment is
calculated and charged by the following two ways:

1. Calculate and charge by the life of the loan and implement interest rate
agreed in the contract.

2. Calculate and charge by the rate floating upward by zero percent
(capitalized) on the base of the agreed implement interest rate agreed in the
contract according to the actual loan life.

Article 6 Liability for Breach of Contract

1. If the loaner didn't offer loans to the borrower on schedule according to the
agreement of the contract and cause loss to the borrower, the loaner shall pay
breach of contract to the borrower according to amount of the breaches and the
days delayed. The calculating mode of the interest of the breach of contract is
same as the mode of interest calculation of overdue loan in the same period.

2. The loaner shall charge the penalty interest floating upward 30% (in capital)
on the base of the loan implement interest rate agreed in this contract to the
overdue loan from the beginning of the overdue days until the principal and
interest are liquidated. During the overdue period, for the loan with Reminbi,
if the Renminbi-denominated loan rate of the People's Bank of China rises during
the same period, the fine rate will be raised correspondingly from the date when
the ruling rate of interest adjusts.

3. If the borrower didn't follow the prescribed purpose to use the loan
stipulated by the contract, the loaner can charge penalty interest of 50% (in
capital)exceeding to the exercise interest rate prescribed in the contract to
the partial breach from date of expiration till the principal and interest are
liquidated. During the delaying, Renminbi-denominated loan penalty interest will
rise corresponding to the base rate rise of the People's Bank of China of the
same period from the date of base interest adjustment.

4. The loaner shall charge compound interest to the unpaid interest payable
according to the regulations of the People's Bank of China.

5. The loaner has right to demand the borrower to correct breach, stop to issue
loans, reclaim issued loan in advance, announce that the loan of other loan
agreements signed between the loaner and the borrower are expired instantly or
take other capital security measures if the borrower breaches obligations of the
contract.

6. The loaner has right to stop the issue of loan, reclaim loan issued in
advance or take other capital security measures to the borrower if any guarantor
breaches the prescribed obligations of the contract.

7. If the borrower breaches the contract, which rise financial claim fees from
legal action and arbitration, the borrower shall pay the corresponding attorney
fees, travel charge and other fees for financial claim. 
 

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Article 7 Loan Guarantee

The guarantee way of the loan under the contract is Pledge of Toll Collection
Right, the guaranty contract shall be signed separately. If adopting the
guarantee way of maximum amount, the guaranty contract NO. is
__________________.

Article 8 Dispute Resolution

The disputes during the performance of this contract can be settled by the two
parties through consultation, and may also be solved by the first way as
follows:

1.
Lawsuit. Under the jurisdiction of the people’s court in the location of the
loaner.

2.
Arbitration. Submit to_______________________ (full name of arbitral authority)
for arbitration according to its arbitration rules.

 
During the lawsuit or arbitration, the terms unrelated to the dispute shall
still be executed.

Article 9 Other issues

1. During the operation of the project, the proportion of the loaner in the toll
revenue shall not be less than its loan proportion in the project, and it shall
be deposited to the account of the borrower opened at the loaner.

2. After finishing the construction of the project, the borrower shall manage
the pledge guaranty procedures of toll collection right division approved by the
loaner according to loan share of the loaner as for the loan under the
contract. 

Article 10 Effectiveness of Contract

The contract shall become effective since being signed or sealed by both
parties.

Article 11 Number of Contract Copies

There are four original copies of the contract, one for each party, one for the
guarantor and one for the pledge registration authority, with the same effect.

Article 12 Notice

The loaner has asked the borrower to get a complete and accurate understanding
about all pre-printed articles and made corresponding explanation to the
articles according to the demand of the borrower. Both parties have the
consistent understanding of the contract.
 
The borrower: The Pingdingshan Pinglin Toll Road Company Ltd. (seal)
 
Legal representative or authorized agent: /s/ Li Xipeng 
 
The loaner: Agricultural Bank of China, Xinhua District Branch of Pingdingshan
City (seal)
 
Principal or authorized agent: /s/ Authorized Person
 
Date of contract: Feb. 28, 2005 
 
Signed at: Agricultural Bank of China, Pingdingshan branch     
 

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Supplementary Agreement
 
The borrower and the loaner reach an agreement for Article 5 “Advance Repayment”
item of the loan contract signed on Feb. 28, 2005, whose number is (410508101)
NYJZ (2005) No.02002.

1. If needing to repay in advance, the borrower shall inform the loaner in
written form 30 days before the scheduled repayment date; when getting
repayment, the loaner shall collect the interest to the part of advance
repayment as agreed in the contract.

2. This agreement is a supplement for loan contract; other matters shall be
executed as agreed in the loan contract except the contents specified in the
agreement.

3. This agreement shall be valid from the date when the two parties sign and
seal.

4. This agreement shall have four originals and each party will have two of them
with equal legal force.
 
The borrower: The Pingdingshan Pinglin Toll Road Company Ltd. (seal)
/s/ Li Xipeng

The loaner: Agricultural Bank of China, Xinhua District Branch of Pingdingshan
City (seal)
   /s/ Authorized Person
 
June 7, 2005

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Attached List

Issuing
 
Expiration
 
Year
 
Month
 
Day
 
Amount
 
Year
 
Month
 
Day
 
Amount
 
2005
  2   28   20,000,000   2013   11   20   20,000,000  
2005
  2   28   20,000,000   2014   11   20   20,000,000  
2005
  2   28   20,000,000   2015   11   20   20,000,000  
2005
  2   28   20,000,000   2016   11   20   20,000,000  
2005
  2   28   20,000,000   2017   11   20   20,000,000  
2005
  2   28   20,000,000   2018   11   20   20,000,000  

 
Notice: This attached list is a supplement for life of loan in the first item of
Article 4 in the loan contract, whose number is (410508101) NYJZ (2005)
No.02002, and it is the component part of the loan contract.
 
The borrower: The Pingdingshan Pinglin Toll Road Company Ltd. (seal)
 
Legal representative or authorized agent: /s/ Li Xipeng
 
The loaner: Agricultural Bank of China, Xinhua District Branch of Pingdingshan
City

Principal or authorized agent: /s/ Authorized Person

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