Exhibit 10.40
 
Agriculture bank of China
 
Agriculture bank of China co.ltd
Right pledge contract

No 82100420120002023

 
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Dear customer: pls carefully read every clause in the contract before signing
it. To pay attention to your right and obligation , pls contact our bank if you
have any enquires
Pledge: Agriculture bank of China co.ltd beilun economic zone branch
Pledgor: KEYUAN plastic Co.ltd

In consideration of:
In order to ensure that the debtor Ningbo Keyuan plastic co.ltd, completely and
timely performs every obligation in the principal contract( no  82010120120046)
for liquid cash  loan contract and the pledgee’s rights are achieved, the
pledgor volunteers to undertake liability of all the debt in the principal
contact to the pledgee and draw up this contact specially.

Article 1 The type of main creditor right guaranteed and amount
 
The guaranteed creditor’s right is liquid cash loan and the amount(currency and
spell out) is $ 1.42 million.

Article 2 The scope of pledge
 
The debts of the contract, the scope should include the loan principal , penalty
interest and compound interest, liquidated damage,proceed fee, and other related
fees, and also the fees arising from the pledgor to achieve its rights ( include
but not limited to litigation fee, lawyer fee and travel fee etc)

Article 3 The pledge right
 
1. The pledgor agree to take the ‘ fix time deposit slip” as the pledge, the
details of the pledge right can be found in the pledge list which share  the
same right with the contract.
 
2. The amount of the pledge will be prices as 10 million RMB, the final value
will be determined by the execution of the pledge right as actual.

Article 4 The pledgor’s commitment
 
1. The pledgor has been authorized per the regulation and procedure.
 
2. The pledgor has the complete ownership or deposition right for the pledge
right.
 
3. The pledge right can be transferred by law.
 
4. The pledge right will not be cancelled, dissented, objected, sealed, frozen,
monitored, sued, arbitrated, lost, stoped and so on.
 
5. The pledge right has been agreed by co owners under the contract.
 
6. All the related expenses for pledge right has been paid, and the legal
obligation has been performed, if the period of the pledge right need be
extended, then the pledge right in the extended period still remain valid.
 
7. The pledgor should immediately inform the pledge if one of the following
things happen
 
 
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7.1 The pledge right has been cancelled, dissented, objected, sealed, frozen,
monitored, sued, arbitrated, lost, stoped, or other events affect the pledge
right.
7.2 The pledgor has been bankrupted, cancelled, the registration has been
withdraw, order to close.
7.3 Pledgor apply for bankruptcy or dismiss
 
8. There is no other situation will affect the pledgee to execute the pledge
right.
 
Article 5 The effectiveness of the pledge right
 
The effectiveness of the pledge right is from the sub right of pledge, compound
interest, yield and the right by law.

Article 6 The pledge property’s handover and retention
 
1. The pledge’s property’s handover  and retention To fulfill the contract and
complete the pledge process, the pledgor should per pledgee’s request after
signed the contract to complete the hand over procedure at the local authority
in  days, the pledge should carefully keep the certificates .
 
2. the document right is in the form of draft, promissory note, check, warehouse
bill, bill of loading, and the other securities, the document should be endorsed
with pledgee.
 
3. To fulfill the contract and complete the pledge process, the pledgor should
per pledgee’s request after signed the contract to give the ownership
certification with stamp to pledgee or to complete the registration procedure at
the local authority in days, any related pledge certifications also should kept
by pledgee during the period of contract. The pledgor should assist the pledgee
for registration.
 
4. During the period of contract, without the written permission of the pledgee,
the pledge right can not be transferred, bestowed, and if the pledgee give the
permission, the payment for the pledge should be used to pay off for the debt
first.
 
5. If the value of pledge is reduced, pledgee has the right to ask pledgor to
make up the insufficient part.

Article 7 The transfer of the pledge
 
The pledgor transfer some the pledge right, also has the right not to transfer
some pledge right.
 
 
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Article 8 The achieve of the pledege
 
1. If one of the following situation happens, the pledgee has the right to cash
the pledge, or to discuss with the pledgor to make a price for pledge, or to bid
or sale the pledge to get compensated, if the payment is not enough for the
debt, the pledgee can choose the pledge to pay for the principal, compound
interest, penalty, interest, or other expense.
 
(1). The debt due date expired, but the pledgee does not get paid, the expiry
means the date is due under the contract or pledgor claim the pledge is due in
advance.
(2). For the pledgee or debtor, there are separation, dismiss, going to
bankruptcy, or cancelled the registration, the certification,
(3). For the pledgee or debtor, apply for the bankruptcy or arbitration.
(4). The pledgor is the natural person, death and has no successor
(5). The pledge right is applied to be cancelled, damaged, lost, frozen or
sealed, objected, monitored or being applied in other compulsory methods
(6). Pledgor does not provide the pledge pledgee required.
(7). Pledgor violate the obligation in the contract.
(8). Other events may affect the contract
 
2. If the vesting date or delivery date of bills (include but not limited to
bill, warrant, promissory bills, saving bill, storage receipt etc) for pledge is
earlier than the due date of debt, party B has right to claim the pay off of
collection before the due date of debt, the cash or property should be saved
into the account or the place party B appointed, B has the right to handle the
pledge based on the following procedure and party A should provide the
assistance.
 
3. If the pledgor is the third person beside the debtor, and the debtor to
provide the material guarantee under the main contract, the pledgee to give up
the pledge right, the sequence of pledge or to change the pledge right, the
pledgor agree to continue to provide the pledge under the contract,
 
4. The pledgor to provide pledge right is not limited to the contract but
include several debts, and if the payment is not enough for the all debts, then
the pledgee to decide the sequence of the pledge.

Article 9 The return of pledge
 
1. The certificate of pledge will be returned after pledgor performed all the
obligation of contract or paid off all debts.
 
2. The pledgee should receive the certification in a timely manner, if not ,the
pledgee has the right to save the certification at pledgor’s cost.

Article 10 The breach liability
 
1. The pledgor to pay 20% of the liquated damage if there are one of the
following actions , if it cause the loss of pledgee, should give the full amount
of compensation
 
1). The contract does not get the authorized for the guarantee under the
contract.
2). If the ownership of the pledge is remained debatable, controversial, or it
is being applied cancelled, invalid, fronzen, monitored, sealed, or stopped
payment,
3). fail to delivery document of right, endorse or register on the provision of
covenants under this contract.
4). Pledgor handles the pledge right without asking the permission of pledge.
5). The other events to affect the pledgee’s right.

 
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2 .The pledgee to take the responsibility for the following actions
 
1). Pledgee does not keep the certification properly to cause lost of
certificates.
2). Pledgor does not execute the pledge right in a timely manner.

Article 11 The expense
 
1. Both parties to negotiate the payment to thrid party, otherwise,  both
parties to equally  undertake the fee by the regulation of law
 
2. This contact applies to the Chinese (not including Hongkong, Macau Special
Administrative, and Taiwan) laws.

Article 12 The period of dispute settlement
 
The pledgor to settle the pledge by law, the duration for dissent is 7 day

Article 13 The method of settling the dispute
 
The disputes when performing the contract can be solved through negotiation. If
it fails, refer to the first method to settle it.
 
1.Prosecute to the people’s court where Party B locates.
 
2.Arbitration. Arbitrate as the current and valid rules. The final arbitration
is over, it restrains the two parties. During the period of litigation or
arbitration, the terms unrelated to disputes are still Performed.

Article 14 Miscellaneous

Article 15 The effectiveness of contract
 
The contract will have prompt legal effectiveness after has been signed and
stamped.

Article 16 The contract has two copies, each party has one copy
 
The contact is signed by the following pledgor and pledgee .The pledgor ensures
that when signing this contact, both sides have been explained and discussed all
the items in detail and have no questions for all the items, and have an
accurate understanding the limitation or exempted items of the legal
implications of the interested parties’ related obligations and liabilities.
 
The pledgee (official seal)
The pledgor (official seal) The legal representative The persons responsible or
the authorized or the authorized attorney notary (signature or stamp of official
seal)
(signature or stamp of official seal)
  [img01.jpg] 2012.11.29 2012.11.29 Signing Location : beilun branch Tao chun
feng

 
 
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