“To
      Establish the Distributional Power Integration Project Center” Agreement


    Between
      

    China
      Academic Sciences Guangzhou Resource Institute 

    And
      

    Liaoning
      Gaoke Group
      Co., Ltd

    


    Part
      A:
      Liaoning
Gaoke
      Group Co., Ltd

    


    Part
      B:
      China
      Academic Sciences Guangzhou Energy Institute

    


    
      
        1.
          Background

         

      

    

    As
      the
      result of the energy crisis, peoples has been aware to re-understanding the
      energy resource mining and using. Peoples have to think about the global
      environment issue and sustainable development. The only answer for the issues
      is
“finding new source” and “saving traditional source”. “Finding new source” means
      look for new energy resource and renewable energy resource to alter the shortage
      of oils and coals, increase the efficiency of energy, and extend the period
      of
      energy resource using. [The PRC Renewable Energy Act] has already been voted
      by
      the Chinese People’s Congress. In this act, the development and use of solar
      energy, wind energy, biomass energy, geothermal energy, and sea energy have
      been
      mentioned. China Academic Sciences Guangzhou Energy Institute has prowess in
      the
      area of solar energy, biomass energy, geothermal energy, and sea energy, is
      the
      first national research institute of researching the solar energy use, and
      is
      famous for “the Chinese No.1” of the solar energy use. The institute also has
      the strong research ability and the project experience in the solar energy
      photovoltaic system and Wind & Light system. It has the leadership of the
      biomass energy use, and had been taking on several nation-class and state-class
      research project. It also had built MW-class generation site for model and
      business. The research about geothermal energy and sea energy is the most
      improved in China. The institute lead the energy-saving building project which
      is the third create platform of China Academic Sciences.

    


    Distributed
      energy system is the second revolution of energy use technology. The
      international theoretical research and the application of projects shows:
      compared with the traditional central energy system, the distributed energy
      system is closer to burthen and do not need construct large-scale grid to make
      remote high voltage or extra-high voltage transmission, which can substantially
      reduce the line loss, save transmission and distribution investment and running
      expenses. Due to providing several energy services, such as electricity and
      heat, distributed energy system can effectively realize the step use of energy
      to achieve a more comprehensive use efficiency of energy (higher than 80%-90%),
      and it is more environmental protection. Distributed energy system has been
      extended in developed countries. For example, Denmark’s electricity provision
      was reliable to some large power stations before 1980s. At present, 40% of
      Denmark’s electricity has been provided by wind power station and small-scale
      thermoelectricity cogeneration station, and the energy use efficiency achieved
      more than 80%. Currently, the main energy of distributed energy system is LNG.
      Under the support of related state industry policies, the renewable energy
      (mainly such as solar, wind energy, biomass energy and ocean energy) will be
      likely to enter into electricity market by the manner of alternative energy
      and
      become the material component of distributed energy system. For example, the
      solar station on the roof, the wind power generator, biomass power generation
      and generating on the island, and we can realize the dispatch and distribution
      through remote monitoring and intelligent controlling. The current developed
      countries, such as Japan and USA are best examples for us.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    LNGK
      Energy Group Co., Ltd. is one of the general contractor of design and
      construction of microgrid in domestic, with solid technical strength and
      developing market ability. It cooperated with CAS Guangzhou Energy Institute
      to
      form a technical, design and construction strength, then to develop the
      international market to be the most influential general contractor with respect
      to the distributed renewable energy use.

    


    2.
      The
      name of project center: distributed electricity technology integration project
      center

    


    3.
      The
      nature of project center: LNGK Energy Group Co., Ltd. mainly invests funds,
      relying on the technology strength of CAS Guangzhou Energy Institute on the
      renewable energy to establish an application technology project research and
      development center.

    


    4.
      The
      forming principle of project center:

    


    (1).
      The
      center will be formed by the principle of clear property right, clear right
      and
      responsibility, separating institution from enterprise and scientific
      management.

    


    (2).
      Optimizing the allocation of resources and increasing the use efficiency of
      energy. The project center combine the design, construction technology, talents
      and facilities with respect to regular energy of LNGK and design, construction,
      running, maintenance and economical evaluation of solar, wind power, biomass
      energy and ocean energy project application, and the acknowledges, talents
      and
      experience with respect to project consulting and prospective basis research
      of
      CAS Guangzhou Energy Institute to achieve a effect with 1 plus 1 is more than
      2.

    


    (3).
      Emphasizing the innovation of technology. Project center will satisfy the demand
      of state and society by the means of technology innovation and progress. The
      center will provide the project technology services of electricity and heat
      provision to the relatively developed cities (mainly the community owners),
      public facilities in ecological areas, remote villages and holiday villages.
      The
      center will make the integration of photo electricity and solar thermo, research
      application technology of the wind power, biomass energy, geothermal energy,
      and
      ocean energy and construction energy-saving project and tackle the issues of
      key
      technology of the distributed energy system. Also, it will research and extend
      the energy-saving construction application technology characterized by
      distributed renewable energy to support the project application. Then, it will
      independently create innovation of intellectual property and enhance the
      technology strength and competitive ability to promote the development of the
      company.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    (4).
      Keeping the win-win cooperation to establish the center to be the province
      even
      national center with strong development ability and having independent
      intellectual property.

    


    5.
      Forming method of the center:

    


    (1).the
      location of center: CAS Guangzhou Energy Institute in Guangzhou.

    


    (2).
      Financing method of working capital: all the funds which center needs will
      be
      invested by LNGK Energy Group Co., Ltd. The first period: LNGK will input RMB
      10
      million Yuan within 3 years: inputting 4 million in the first year, inputting
      3
      million in the second year and third year, respectively. (Annual funds will
      be
      paid in 2 installments and paid semiannually).

    


    (3).
      The
      obligation: Party A has the obligation to finance all needed funds and propose
      the research issue. Party B has the obligation to provide the technical scheme
      and technical implementation documents, organize the research and development
      talents and coordinate the technology breakthrough. And the new project center
      has the obligation to organize the construction of project ad extend the
      industry.

    


    6.
      The
      continuous funds resources of the center:

     

    The
      continuous funds resources of the center will be set forth in the complementary
      agreement.

    


    7.
      The
      business range of the center: 

    


    (1).
      In
      accordance with the economy construction and the demand of market, based on
      the
      technology transferring and independently researching, the center will
      continually transfer the results of research into the industrial application
      to
      provide the company with mature supporting technical scheme and settle the
      problems in the project application for company, and then present new technology
      and new products.

     

    Notwithstanding
      the distributed energy system has a broad prospect, there is many specific
      key
      technology waiting for being settled in the early developing period in domestic.
      Distributed renewable energy electricity system is a new issue in domestic.
      The
      center will have independent technology and products by independent research
      and
      development and absorbing the introduced technology within 2-3 years (Such
      as
      distributed photo voltage, solar thermo and constructions integration
      technology, photo voltage construction materials technology, network technology
      combining wind and solar, biomass gasification generating station, using
      geothermal energy, energy-saving construction and related remote monitoring
      technology, dispatch and distribution of electricity, distributed energy system
      short distance transmission technology, reliability, maintenance technology
      and
      investment analysis of distributed energy system etc.) to enhance the core
      competitive ability of company.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (2)
      To
      carrying out open style service ,accepting the consignation of technology
      research &development, testing project and science & technology service
      project from related national and local departments, enterprises ,universities
      and science research organization ; To providing technology consultation
      services. 

     

    (3)
      To
      participate the digestion, absorbing, creation of introduced technology to
      provide technology support for the sake of improving product quality absorbed
      from overseas advanced technology for the enterprises. 

    


    (4)
      To
      foster, collect and deliver high level and high quality technology and
      management talents. To provide better training for enterprise’s technicians
      (including fostering master and doctor in the field of renewable power for
      Liaoning Gaoke.) 

    


    (5)
      To
      participate enaction of the enterprise advancement and development deployment
      and provide technology support for the advance technology of
      enterprise.

    


    8.
      Property right distribution portion of project center:

     

    After
      the
      establishment of the project center, it will start to distribute the
      intellectual property formed by development and research by the following
      portion. While before the foundation of the center, all the formed intellectual
      property belongs to Guangzhou Energy Institute. 

     

    
      	
              (1)

            	
              Liaoning
                Gaoke Energy Group Co., Ltd: 70%

            


    

     

    
      	
              (2)

            	
              China
                Academic Science ,Guangzhou Energy
                Institute:30%

            


    

    


    9.
      Management mode of the project center:

     

    The
      center sets up Council and the project center director responsibility system
      leaded by the Council.

    


    (1)
      Council: to constitute the developing deployment, working tasks of the center
      and all the management rules and regulations of the center; be responsible
      for
      the management and supervising of the center.

    


    Its
      members are come from enterprise representatives, science association or the
      related governmental departments. The director of council was occupied by the
      representative of Party A, vice director and financial director by the
      representative of Party B.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (2)
      The
      director of center: adopting contract hiring system and in charge of whole
      operation of the center.

    


    The
      center should comply with the principle of ‘Science, Democracy and High
      efficiency’; introduce excellent management method and experience for the
      enterprise; set up active inner management system. In accordance with the
      establishment mode, the center adopts director responsibility system leaded
      by
      council. The director is appointed by contract hiring system; his /her
      responsibilities are decided by the council to preside the daily work of the
      center. 

     

    11.
      The
      operating system of the project center:

    


    
      	(1)	
              Subjection
                relationship: relying on the 2nd
                level Company founded by Party B and carrying out mutual independent
                business and finance with exclusive spending in special
                funds

            


    

    


    
      	(2)	
              Organization
                structure :( Omission )

            


    

    


    
      	
              (3)

            	
              Inside
                operation system: the newly founded center sets up a active and high
                efficient inside operation system appropriate to socialism market
                economy
                through new concept and new notion. Firstly, to implement council
                supervising and director responsibility system; secondly, to carry
                out all
                staff contract hiring system; thirdly institutionalization
                and standardization
                ;
                fourthly, to set up and improve inspiration system of the achievement
                evaluation; fifthly, to establish the system of benefit (social and
                economy ) and staff income link together ,etc. Main objective of
                the
                center: to obtain core technological breakthrough in distributed
                power
                system mainly upon renewable energy; to gradually form good cycle
                of the
                useful integration between social and economy benefits through
                technological breakthrough. 

            


    

    


    12.
      Tasks
      and developing objectives:

     

    (1)
      Short-term objectives: setting up modern enterprise system by market
      orientation; strengthening enterprise management; realizing most
      optimum distribution
      of
      resources, human, technology, funds to improve investment and economy benefits
      maximally. Proposing industry technological standard and participating the
      construction of national industry standard. In addition, becoming national
      general contractor gradually in design, consultation, service, construction
      of
      the renewable power system project. The short-term objective mainly relies
      on
      Party A. 

     

    (2)
      Long-term objective: developing funds operation and international cooperation
      by
      sustainable market, technology and management creation; optimizing distribution
      of resources; improving core competitive power and providing all-wave service
      and advanced technological support for the enterprise. Try to make the
      enterprise to be a well-known project contractor in the world in the field
      of
      new energy and renewable power design and project construction.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    

    

      
        	
                Party
                  A: Liaoning Gaoke Group Co., Ltd 

              	
                Party
                  B:  China Academic Sciences

              
	 	
                Guangzhou
                  Energy Institute

              
	 	 
	
                Legal
                  representative: (stamp)

              	
                Legal
                  representative: (stamp)

              
	 	 
	
                Signing
                  date: June 25, 2005

              	
                Signing
                  date: June 25, 2005