Document:

[Exhibit 10.2 - Contract, dated January 13, 2004,
                 between China Cardinal Limited and the Company]

                                    Contract

Party A:  Minghua Group International Holdings Ltd.
Address:  Guangdong Bian Fang Building, 10th Floor
          Fujing Road, Futian District, Shenzhen, 518033,
          People's Republic of China
Chairman: Li Chuquan

Party B:  China Cardinal Limited
Address:  Flat/Rm 708, 7/F, Dannies House, 20 Luard Rd, Wanchai, Hong Kong
Chairman: Yang Maolin

After friendly discussion and on the basis of equality and mutual benefit,  both
parties have reached the following agreement on the cooperation items:

I.    Brief Introduction to Minghua Group International Holdings Ltd.

                        Minghua  Group  International  Holdings Ltd. is a public
                  reporting   company  whose   securities   are  quoted  on  the
                  Over-the-Counter Bulletin Board (OTCBB: MGHA.OB).

II. Investment Amount

Party B hereby  agrees  that it shall  invest  in Party A cash in the  amount of
HKD18 million or  USD$2,307,692  (calculated  at exchange rate of  1USD=HKD7.8).
Party A hereby agrees that it shall issue to Party B, 16,483,514 shares of Party
A's common stock;  provided,  however,  that none of such shares shall be issued
until after  payment has actually  been  received for all of such shares.  These
shares are therefore being issued at a purchase price per share of USD$0.14.

III. Investment Time

Party B shall pay the funds  referred to in Article II above into the account of
"Shenzhen Minghua Environmental Protection Vehicle Co., Ltd." as set forth below
for the benefit of, and as requested by, Party A.

Party  B  shall  pay  HKD13  million  (or   equivalent  RMB  or  USD)  into  the
aforementioned  account in installments as requested by Party A. The full HKD 13
million shall be paid into such account on or before January 18, 2004.

The remaining  HKD5 million (or  equivalent  RMB or USD) will be paid by Party B
into the aforementioned account on or before March 31, 2004.

The name and number of the account as designated by Party A are as follows:
Name: Shenzhen Minghua Environmental Protection Vehicle Co., Ltd.
Account number: 9584055910001
Account opening bank: China Merchants Bank Shenzhen Shenfang Business Dept.

<PAGE>

IV.      Stock Issuance

Party A shall  issue to Party B the full  number of  shares of Party A's  common
stock as  described  above  within 30 days  following  the date that Party B has
fully  met  all of its  obligations  hereunder  and  fully  funded  all  amounts
described in Article III above.

V.       Miscellaneous

This contract is in quadruplicate,  with two copies for each party respectively,
and it will become effective from the date of signature. Facsimile execution and
delivery of this  contract is legal,  valid and binding for all  purposes.  This
contract will be governed and construed in accordance with the laws of the State
of New York, without giving effect to the conflicts of laws principles  thereof.
Each party hereto hereby  consents to the  jurisdiction of the federal and state
courts sitting within the State of New York. Party B shall,  upon the request of
Party  A,  from  time to  time,  execute  and  deliver  promptly  to Party A all
instruments and documents of further assurances or otherwise and will do any and
all  such  acts and  things  as may be  reasonably  required  to  carry  out the
obligations of Party B hereunder and to consummate the transactions contemplated
hereby.

VI.      Liquidated Damages

If either party of the contract  parties is unable to fulfill the contract,  the
defaulting party will be obligated to pay the non-defaulting party HKD500,000.

VII.     Supplemental Agreements

For any unresolved issues of this contract,  both parties will sign the separate
supplementary agreement, having the same legal force as this contract.

VIII. Representations and Warranties of Party B

Party B hereby represents and warrants to Party A as follows:

      a.    Access to  Information.  Party B, in making the decision to purchase
            the Shares, has relied upon its independent  investigations  made by
            it and/or its  representatives,  if any. Except as set forth in this
            contract,  no  representations,  assurances or warranties  have been
            made  to  Party  B or  its  advisers,  by  Party  A or by any of its
            respective officers,  directors,  agents,  employees, or affiliates,
            nor anyone else on their behalf, concerning, among other things, the
            future profitability of Party A or Party B's investment in it. Party
            B and/or its representatives  during the course of this transaction,
            and prior to the purchase of any Shares,  has had the opportunity to
            ask questions of and receive  answers from the management of Party A
            concerning  the  business of Party A and to receive  any  additional
            information,  documents, records and books relative to the business,
            assets,  financial condition,  results of operations and liabilities
            (contingent or otherwise) of Party A. Party B has obtained copies of
            the  reports  filed  by  Party A with the  Securities  and  Exchange
            Commission  (the  "SEC")  since the filing of Party A's last  annual
            report on Form 10-KSB (the "SEC Filings"),  including Party A's most
            recently filed  quarterly and current reports filed with the SEC and
            has carefully  reviewed all of the information  contained in the SEC
            Filings,  including  the risk factors  contained in such reports and
            fully understands all of the disclosure  contained therein.  Party B
            recognizes that Party A has limited  financial or operating  history
            and that the Shares as an investment involve significant risks.

      b.    Sophistication and Knowledge. Party B and/or its representatives has
            such knowledge and experience in financial and business matters that
            it can represent  itself and is capable of evaluating the merits and
            risks of the purchase of the Shares. Party B is not relying on Party
            A with respect to the tax and other  economic  considerations  of an
            investment  in the Shares,  and Party B has relied on the advice of,
            or has  consulted  with,  only  Party  B's own  advisor(s).  Party B
            represents  that it has  not  been  organized  for  the  purpose  of
            acquiring the Shares.

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<PAGE>

      c.    Lack of  Liquidity.  Party B  acknowledges  that the purchase of the
            Shares involves a high degree of risk and further  acknowledges that
            it can  bear  the  economic  risk  of the  purchase  of the  Shares,
            including the total loss of its investment. Party B acknowledges and
            understands  that the  Shares  may not be sold to a U.S.  Person (as
            hereinafter  defined) or into the United  States for a period of one
            (1) year from the date of  purchase  and that Party B has no present
            need for liquidity in connection with its purchase of the Shares.

      d.    No Public Solicitation. Party B is not subscribing for the Shares as
            a result of or subsequent to any advertisement,  article,  notice or
            other communication published in any newspaper,  magazine or similar
            media or broadcast  over  television  or radio,  or presented at any
            seminar or  meeting,  or any  solicitation  of a  subscription  by a
            person  not  previously   known  to  Party  B  in  connection   with
            investments in securities generally. Neither Party A nor Party B has
            engaged in any `Directed  Selling Efforts in the U.S.' as defined in
            Regulation S promulgated  by the SEC pursuant to The  Securities Act
            of 1933 (the "Securities Act").

      e.    Authority.  Party B has full  right  and  power  to  enter  into and
            perform pursuant to this contract and make an investment in Party A,
            and this contract  constitutes  Party B's valid and legally  binding
            obligation,  enforceable  in accordance  with its terms.  Party B is
            authorized  and  otherwise  duly  qualified to purchase and hold the
            Shares and to enter into this contract.

      f.    Brokers or Finders.  No person has or will have,  as a result of the
            transactions  contemplated by this contract,  any right, interest or
            valid claim against or upon Party A for any commission, fee or other
            compensation as a finder or broker because of any act or omission by
            such Party B or its respective agents.

      g.    Compliance  with Local  Laws.  Any  resale of the Shares  during the
            `distribution  compliance  period'  as  defined  in Rule  902(f)  to
            Regulation S shall only be made in compliance  with  exemptions from
            registration afforded by Regulation S. Further, any such sale of the
            Shares in any jurisdiction outside of the United States will be made
            in compliance with the securities laws of such jurisdiction. Party B
            will not offer to sell or sell the Shares in any jurisdiction unless
            Party B obtains all required consents, if any.

      h.    Regulation S Exemption. Party B understands, acknowledges and agrees
            that the  offering  and sale of the  Shares  to Party B has not been
            registered  under the Securities  Act or under any state  securities
            laws or  regulations  and that the Shares are being offered and sold
            to it in reliance on an exemption from the registration requirements
            of United States federal and state  securities laws under Regulation
            S promulgated  under the  Securities Act and that Party A is relying
            upon the  truth and  accuracy  of the  representations,  warranties,
            agreements,  acknowledgments and understandings of Party B set forth
            herein in order to determine the  applicability  of such  exemptions
            and the  suitability  of  Party B to  acquire  the  Shares.  In this
            regard, Party B represents, warrants and agrees that:

            i.    Party B is not a U.S.  Person (as defined below) and is not an
                  affiliate (as defined in Rule 501(b) under the Securities Act)
                  of Party A. A U.S. Person means any one of the following:

                  (1)   any  natural  person  resident  in the United  States of
                        America;

                  (2)   any partnership or corporation organized or incorporated
                        under the laws of the United States of America;

                  (3)   any estate of which any executor or  administrator  is a
                        U.S. person;

                  (4)   any trust of which any trustee is a U.S. person;

                                       3
<PAGE>

                  (5)   any agency or branch of a foreign  entity located in the
                        United States of America;

                  (6)   any non-discretionary  account or similar account (other
                        than an  estate  or  trust)  held by a  dealer  or other
                        fiduciary for the benefit or account of a U.S. person;

                  (7)   any discretionary account or similar account (other than
                        an estate or trust) held by a dealer or other  fiduciary
                        organized,  incorporated or (if an individual)  resident
                        in the United States of America; and

                  (8)   any partnership or corporation if:

                        (a)   organized  or  incorporated  under the laws of any
                              foreign jurisdiction; and

                        (b)   formed  by  a  U.S.  person  principally  for  the
                              purpose of investing in securities  not registered
                              under the Securities  Act,  unless it is organized
                              or   incorporated,   and  owned,   by   accredited
                              investors  (as  defined in Rule  501(a)  under the
                              Securities  Act)  who  are  not  natural  persons,
                              estates or trusts.

            ii.   At the time of the  origination  of  contact  concerning  this
                  contract  and the date of the  execution  and delivery of this
                  contract, Party B was outside of the United States.

            iii.  Party B will not, during the period  commencing on the date of
                  issuance of the Shares and ending on the first  anniversary of
                  such  date,  or such  shorter  period as may be  permitted  by
                  Regulation  S  or  other   applicable   securities   law  (the
                  "Restricted   Period"),   offer,  sell,  pledge  or  otherwise
                  transfer the Shares in the United States,  or to a U.S. Person
                  for  the  account  or for the  benefit  of a U.S.  Person,  or
                  otherwise  in  a  manner  that  is  not  in  compliance   with
                  Regulation  S. At no time  shall  Party  B offer  or sell  the
                  Shares unless they are registered  under the Securities Act or
                  are  exempt  from  the   registration   requirements   of  the
                  Securities Act and any applicable state or foreign  securities
                  laws or regulations.

            iv.   Party B  will,  after  expiration  of the  Restricted  Period,
                  offer,  sell,  pledge or  otherwise  transfer  the Shares only
                  pursuant  to  registration  under  the  Securities  Act  or an
                  available  exemption  therein  and,  in  accordance  with  all
                  applicable state and foreign securities laws.

            v.    Party B has not in the United States, engaged in, and prior to
                  the expiration of the  Restricted  Period will not directly or
                  indirectly  engage in, any short  selling of or any hedging or
                  similar  transaction  with  respect to the  Shares,  including
                  without limitation, any put, call or other option transaction,
                  option writing or equity swap.

                                       4
<PAGE>

            vi.   Neither  Party B nor or any  person  acting on its  behalf has
                  engaged, nor will engage, in any directed selling efforts to a
                  U.S.  Person  with  respect  to the Shares and Party B and any
                  person acting on its behalf have complied and will comply with
                  the "offering restrictions" requirements of Regulation S under
                  the Securities Act.

            vii.  The  transactions  contemplated by this contract have not been
                  pre-arranged with a buyer located in the United States or with
                  a U.S.  Person,  and are not part of a plan or scheme to evade
                  the registration requirements of the Securities Act.

            viii. Neither  Party B nor  any  person  acting  on its  behalf  has
                  undertaken  or carried out any activity for the purpose of, or
                  that  could  reasonably  be  expected  to have the  effect of,
                  conditioning the market in the United States,  its territories
                  or possessions,  for any of the Shares.  Party B agrees not to
                  cause any  advertisement  of the Shares to be published in any
                  newspaper or  periodical or posted in any public place and not
                  to issue any  circular  relating  to the  Shares,  except such
                  advertisements   that  include  the  statements   required  by
                  Regulation S under the  Securities  Act, and only offshore and
                  not in the U.S.  or its  territories,  and only in  compliance
                  with any local applicable securities laws.

      i.    Legends.  Each  certificate  representing the shares of common stock
            included in the Shares and each warrant certificate representing the
            warrants  included in the Unit shall be endorsed  with the following
            legends,  in  addition  to any other  legend  required  to be placed
            thereon by applicable federal or state securities laws:

            i.    "THESE  SECURITIES  ARE BEING OFFERED TO INVESTORS WHO ARE NOT
                  U.S.  PERSONS (AS DEFINED IN REGULATION S UNDER THE SECURITIES
                  ACT OF 1933,  AS AMENDED ("THE  SECURITIES  ACT")) AND WITHOUT
                  REGISTRATION  WITH THE UNITED STATES  SECURITIES  AND EXCHANGE
                  COMMISSION   UNDER  THE   SECURITIES   ACT  IN  RELIANCE  UPON
                  REGULATION S PROMULGATED UNDER THE SECURITIES ACT."

            ii.   "TRANSFER  OF  THESE  SECURITIES  IS  PROHIBITED,   EXCEPT  IN
                  ACCORDANCE  WITH THE  PROVISIONS  OF REGULATION S, PURSUANT TO
                  REGISTRATION   UNDER  THE  SECURITIES   ACT,  OR  PURSUANT  TO
                  AVAILABLE  EXEMPTION FROM REGISTRATION.  HEDGING  TRANSACTIONS
                  MAY NOT BE

                                       5
<PAGE>

            CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT."

      j.    Stop Transfer Orders.  Party B consents to Party A making a notation
            on its records or giving instructions to any transfer agent of Party
            A in order to implement the  restrictions  on transfer of the Shares
            set forth in this agreement and as required by Regulation S.

      k.    PATRIOT  Act.  Party  B is  not,  nor  is it  acting  as  an  agent,
            representative,  intermediary or nominee for, a person identified on
            the list of  blocked  persons  maintained  by the  Office of Foreign
            Assets Control,  U.S. Department of Treasury.  In addition,  Party B
            has complied with all applicable U.S. laws, regulations, directives,
            and executive  orders relating to anti-money  laundering , including
            but  not  limited  to  the  following  laws:  (1)  the  Uniting  and
            Strengthening  America by Providing  Appropriate  Tools  Required to
            Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56; and
            (2)  Executive  Order  13224  (Blocking   Property  and  Prohibiting
            Transactions with Persons Who Commit, Threaten to Commit, or Support
            Terrorism)  of  September  23,  2001.  Party B shall  ensure that it
            obtains  a   representation   similar  to  the  foregoing  from  any
            transferee  of the Shares of Party A's  Common  Stock  purchased  by
            Party B pursuant to this contract. Further, this transaction and any
            resale of Shares by Party B to  transferees  shall not  violate  the
            statutes mentioned in this representation.

      l.    Transfers Must Comply with  Regulation S.  Notwithstanding  anything
            contained herein to the contrary, Party A may refuse to register any
            transfer of the Shares of common  stock of Party A that are not made
            in accordance with Regulation S, pursuant to the registration  under
            the  Securities  Act or  pursuant  to an  available  exemption  from
            registration.

IX.   Indemnity

Party  B  understands  and   acknowledges   that  Party  A  is  relying  on  the
representations  made by Party B herein,  and, thus,  hereby agrees to indemnify
Party A, and its  respective  officers and  directors,  agents,  attorneys,  and
employees,  and agrees to hold them  harmless from and against any and all loss,
damage, liability, or expense,  including reasonable attorney's fees, that it or
any of them may suffer, sustain, or incur by reason of or in connection with any
misrepresentation  or breach of warranty or agreement made by Party A under this
contract.

Party A: Minghua Group International Holdings Ltd.

Undersigned (Li Chuquan):

/s/ Li, Chuquan

Party B: China Cardinal Limited

Undersigned (Yang Maolin):

/s/ Yang Maolin

Signed on January 13, 2004 in Hong Kong

                                       6[Exhibit 10.3 - Stock Purchase Agreement, dated January 19, 2004,
                          among the Company, Minghua Group International Holding
                                  (Hong Kong) Limited, and Li Jinmou relating to
                                      the acquisition of Asia Key Group Limited]

                            STOCK PURCHASE AGREEMENT

      STOCK PURCHASE AGREEMENT, dated as of January 19, 2003 (this "Agreement"),
between LI JINMOU (the "Seller"),  MINGHUA GROUP INTERNATIONAL HOLDINGS LIMITED,
a corporation  organized  under the laws of the State of New York (the "Parent")
and MINGHUA  GROUP  INTERNATIONAL  HOLDING  (HONG KONG)  LIMITED,  a corporation
organized under the laws of the Hong Kong Special  Administrative  Region of the
People' Republic of China (the "Purchaser").

                                   BACKGROUND

      The Purchaser is a  wholly-owned  subsidiary of the Parent.  The Seller is
the owner of 100% of the  outstanding  equity (the  "Equity")  of ASIA KEY GROUP
LIMITED,  a  corporation  organized  under  the  laws of the Hong  Kong  Special
Administrative  Region of the People's  Republic of China (the  "Company").  The
Company  is the  owner of 15% of the  outstanding  equity  of  Shenzhen  Minghua
Environmental  Protection Vehicle Co., Ltd. ("SZ Minghua") and the remaining 85%
is  indirectly  held by the Parent.  The  Parent's  main  business is to develop
technology  relating to hybrid  vehicles and  eventually  to  manufacture  these
vehicles  for sale.  The Parent  engages in this  business  through its indirect
subsidiary SZ Minghua.  The Parent,  through the Purchaser,  desires to purchase
the Equity from the Seller and thereby  become the indirect owner of 100% of the
outstanding  equity of SZ Minghua,  and the Seller desires to sell the Equity to
the Purchaser, on the terms and conditions set forth below.

      NOW,  THEREFORE,  in  consideration  of the  premises  and  of the  mutual
promises set forth herein, the Purchaser and the Seller hereby agree as follows:

      1. Sale of Equity; Purchase Price. (a) Subject to the terms and conditions
set forth herein,  the Purchaser  hereby agrees (and the Parent hereby agrees to
cause the  Purchaser)  to purchase  the Equity  from the Seller,  and the Seller
agrees to sell the  Equity to the  Purchaser,  for the  following  consideration
(collectively, the "Purchase Price"): .

            (i) At the Closing (as defined below) the Purchaser shall pay to the
      Seller RMB 8,200,000 (approximately US$ 990,709.08); and

            (ii) The Parent, as a capital contribution to the Purchaser,  shall,
      within ninety (90) days following the Closing or as soon  thereafter as is
      practicable,  issue to the Seller 28,210,000 shares of the Parent's common
      stock.

      (b) The parties  agree upon a valuation of SZ Minghua of RMB  273,000,000,
(approximately,  US$32,983,363.34),  which was  calculated  based  upon  paid-up
capital,  accumulated  funds and the value of the  production  project and stock
value.   The  parties   further  agree  that  RMB   40,980,000   (approximately,
US$4,951,121) constitutes the value of the Equity constituting 15% of the entire
outstanding SZ Minghua equity. The parties further agree that in calculating the
value  of the  Parent  shares  that  are  being  issued  to  Seller  in  partial
consideration of the acquisition of the Equity, a price of $0.14 per share shall
be used.

2. Closing.

      (a) The  closing  (the  "Closing")  shall  take  place  on the date of the
execution of this Agreement at such time or place as the parties may agree upon.

      (b)  At  the  Closing,  the  Seller  shall  deliver  to  the  Purchaser  a
certificate or  certificates  representing  the Equity or such other evidence of
the  transfer  of the Equity into the name of the  Purchaser  as may be suitable
under  applicable law and such other documents as may be necessary to effect the
transfer  of the Equity to the  Purchaser  free and clear of all liens,  claims,
charges,  security  interests,  and encumbrances of any kind whatsoever  against
delivery by the Purchaser of the cash portion of the Purchase Price.

<PAGE>

      3.  Representations  and Warranties of Seller.  The Seller  represents and
warrants that:

            (a) The Seller owns the Equity, of record and beneficially, free and
      clear of all liens, claims, charges,  security interests, and encumbrances
      of any kind  whatsoever.  The Seller has sole  control  over the Equity or
      sole discretionary authority over any account in which the Equity is held.
      The Equity  constitutes  all of the issued and  outstanding  equity of the
      Company  and  neither  the  Company  nor  the  Seller  is  subject  to any
      agreement,  constituent  instrument,  document,  other instrument or other
      arrangement  pursuant to which any third party has the right to acquire or
      otherwise purchase or take over all or any part of the Equity. The Company
      is the record and beneficial  owner of a 15% interest in SZ Minghua,  free
      and  clear  of  all  liens,  claims,  charges,   security  interests,  and
      encumbrances  of any kind whatsoever and the Company is not subject to any
      agreement,  constituent  instrument,  document,  other instrument or other
      arrangement  pursuant to which any third party has the right to acquire or
      otherwise purchase or take over all or any part of such 15% interest in SZ
      Minghua.  By virtue of the acquisition of the Equity pursuant hereto,  the
      Purchaser  will be able to control  and  otherwise  direct the affairs and
      business  of the  Company  and have  complete  authority  over the Equity,
      including  complete voting and  dispositive  power over the equity held by
      the Company in SZ Minghua.

            (b) The Seller has not, since acquiring the Equity,  ever granted to
      any person an option or right to purchase or otherwise acquire the Equity,
      by contract of sale or  otherwise,  nor had any "short  position in" as to
      the Equity.  The Seller has never  effected  nor  attempted  to effect any
      distribution or public offering of the Equity.

            (c) The Seller  has full  right,  power and  authority  to  execute,
      deliver  and  perform  this  Agreement  and to carry out the  transactions
      contemplated hereby. This Agreement has been duly and validly executed and
      delivered by the Seller and constitutes a valid, binding obligation of the
      Seller,  enforceable  against  the  Seller  in  accordance  with its terms
      (except as such enforceability may be limited by laws affecting creditor's
      rights generally).

            (d) The Seller has in connection with the transactions  contemplated
      hereby and all aspects thereof,  dealt directly with the Purchaser and has
      no arrangement or  understanding  with or obligation to any broker (except
      with respect to ministerial functions, if any) or other intermediary.

            (e)  Except  as  set  forth  on  Schedule  A,  the  Company  has  no
      liabilities  whatsoever  (whether  known or unknown,  whether  asserted or
      unasserted,  whether absolute or contingent, whether accrued or unaccrued,
      whether liquidated or unliquidated, and whether due or to become due). The
      Company has complied in all respects with all applicable  laws  (including
      rules, regulations, codes, plans, injunctions, judgments, orders, decrees,
      rulings, and charges thereunder) of all governmental  authorities,  and no
      action,  suit,  proceeding,  hearing,  investigation,  charge,  complaint,
      claim,  demand, or notice has been filed or commenced against the Company.
      The Company does not have any equity interests in any entity other than SZ
      Minghua.  The Company does not have any  employees  and the Company is not
      subject to any employment related liabilities.

            (f) The representations  and warranties  contained in this Section 3
      do not contain any untrue  statement  of a material  fact or omit to state
      any  material  fact   necessary  in  order  to  make  the  statements  and
      information contained in this Section 3 not misleading.

      4.  Representations  and  Warranties  of  the  Purchaser.   The  Purchaser
represents  and warrants that the Purchaser has full right,  power and authority
to execute, deliver and perform this Agreement and to carry out the transactions
contemplated  hereby.  This Agreement has been duly and validly  executed by the
Purchaser,  constitutes a valid obligation of the Purchaser,  is legally binding
on the Purchaser  and is  enforceable  against it in  accordance  with its terms
(except  as such  enforceability  may be limited  by laws  affecting  creditors'
rights generally).

      5. Survival;  Indemnification.  (a) The Seller and the Purchaser  covenant
that their respective  representations and warranties  contained herein shall be
true in all respects as of the Closing  date of the sale of the Equity  pursuant
to this Agreement.  All representations and warranties and other agreements made
by the Seller and the  Purchaser  in this  Agreement  or pursuant  hereto  shall
survive the Closing.

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<PAGE>

      (b) The Seller  shall  indemnify  the  Purchaser  and the Parent and their
respective  successors and assigns,  and their respective  directors,  officers,
employees,   agents,  stockholders  and  counsel  (collectively,   the  "Minghua
Indemnitees"),  pay on demand and  protect,  defend,  save and hold each Minghua
Indemnitee  harmless from and against any and all liabilities  (whether known or
unknown, whether asserted or unasserted, whether absolute or contingent, whether
accrued or unaccrued, whether liquidated or unliquidated,  and whether due or to
become due), damages,  losses,  settlements,  claims, actions, suits, penalties,
fines, costs or expenses (including,  without limitation,  reasonable attorneys'
and accountants' fees) (any of the foregoing, a "Claim") incurred by or asserted
by a third  party  against  any Minghua  Indemnitee  of whatever  kind or nature
arising  from or occurring as a result of (a) any  liability  (whether  known or
unknown, whether asserted or unasserted, whether absolute or contingent, whether
accrued or unaccrued, whether liquidated or unliquidated,  and whether due or to
become due) of the Company existing as of or prior to the Closing or any fact or
circumstance  relating to the Company  existing on or prior to the Closing,  and
(b) a breach of this  Agreement by the Seller or a breach of any  representation
or warranty made by the Seller in this  Agreement.  The Purchaser shall promptly
notify the Seller of any Claim,  upon  becoming  aware  thereof,  and permit the
Seller  at the  Seller's  sole  cost to  defend  such  Claim or suit  and  shall
cooperate in the defense thereof.  Neither  Purchaser nor any Seller shall enter
into, or permit,  any  settlement  of any such suit without the express  written
consent of the other party.  The Purchaser may, at its option and expense,  have
its own counsel participate in any proceeding that is under the direction of any
Seller and will cooperate with the Seller and its insurers in the disposition of
any such matter.

      6.  Additional  Action.  Each party shall,  upon the request of the other,
from  time to time,  execute  and  deliver  promptly  to such  other  party  all
instruments and documents of further assurances or otherwise and will do any and
all  such  acts and  things  as may be  reasonably  required  to  carry  out the
obligations  of  such  party  hereunder  and  to  consummate  the   transactions
contemplated hereby.

      7.  Successors and Assigns.  This Agreement  shall inure to the benefit of
and be binding  upon the  parties  hereto and their  respective  successors  and
assigns.

      8. Governing Law. This Agreement  shall in all respects be governed by the
laws of the  State  of New York  without  giving  effect  to the  principles  of
conflicts of law thereof. Any dispute with respect to the interpretation of this
Agreement  or the  rights and  obligations  of the  parties  may be brought in a
proceeding in the United States District Court for the Southern  District of New
York,  or if such court does not have subject  matter  jurisdiction  then in the
Supreme Court of the State of New York,  County of New York. Each of the parties
accepts and consents for itself and its property,  generally and unconditionally
to the exclusive  jurisdiction  of such courts and waives the right to object to
the jurisdiction or venue of either of such courts and waives the right to claim
that such  courts are  inconvenient  forums.  Each of the  parties  specifically
states that this  Agreement  and any disputes as to their  meaning or the rights
and obligations of the parties shall not be subject to arbitration.

      9. Entire  Agreement.  This Agreement  constitutes the entire  arrangement
between the parties with respect to the Equity and cannot be changed,  modified,
discharged  or terminated  except by a writing  signed by the party against whom
enforcement of any change, modification, discharge or termination is sought.

      10.  Waiver.  No waiver  shall be deemed to be made by any party of any of
its rights  hereunder unless the same shall be in writing,  and each waiver,  if
any, shall be a waiver only with respect to the specific  instance  involved and
shall in no way impair the rights of the waiving party or the obligations of the
other party in any other respect at any other time.

      11.  Assignment.  The  Purchaser  may at any time  assign  his  rights and
obligations  under this  Agreement  to persons or entities  affiliated  with the
Purchaser.  The Seller shall be required to honor any such assignment only after
receiving notice thereof from the Purchaser.

      12.  Notices.  Any  notice,  demand  or  other  communication  to be given
hereunder  by either  party to the other shall be in writing and shall be mailed
by certified mail, return receipt requested, or delivered against receipt to the
party to whom it is to be given to the  address  of such  party set forth on the
signature  page  hereto  (or to such  other  address  as the  party  shall  have
furnished in accordance  with the  provisions of this Section 12). Any notice or
other communication given by certified mail shall be deemed given at the time of
certification  thereof,  except for a notice  changing a party's  address  which
shall be deemed given at the time of receipt thereof.

                                       3
<PAGE>

      13. Captions. The captions used in this Agreement are for convenience only
and shall not be deemed as, or construed as, a part of this Agreement.

      14. Counterparts;  Facsimile Execution.  This Agreement may be executed in
two or more counterparts,  each of which shall be deemed an original, and all of
which shall  constitute  one and the same  instrument.  Facsimile  execution and
delivery of this Agreement is legal, valid and binding for all purposes.

      15. Waiver of Jury Trial.  Each party hereby waives, to the fullest extent
permitted  by law,  any right it may have to a trial by jury in  respect  to any
proceeding  directly or indirectly  arising out of, under or in connection  with
this Agreement.

      16.  Severability.  If any term or other  provision  of this  Agreement is
invalid,  illegal or  incapable  of being  enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect.  Upon such determination that any term or other
provision is invalid,  illegal or incapable of being enforced, the parties shall
negotiate  in good faith to modify this  Agreement  so as to effect the original
intent of the parties as closely as possible to the fullest extent  permitted by
applicable  law  in an  acceptable  manner  to the  end  that  the  transactions
contemplated hereby are fulfilled to the extent possible.

                            [signature page follows]

                                       4
<PAGE>

      IN WITNESS WHEREOF,  the parties hereto have executed this Agreement as of
the date first above written.

                                        SELLER:

                                        LI JINMOU

                                        /s/ Li Jinmou
                                        ----------------------------------------

                                        Address:
                                                --------------------------------

                                        ----------------------------------------

                                        ----------------------------------------

                                        PURCHASER:

                                        MINGHUA GROUP INTERNATIONAL
                                        HOLDINGS (HONG KONG) LIMITED

                                        By: /s/ Chuquan Li
                                           -------------------------------------
                                           Name:
                                                --------------------------------
                                           Title:
                                                 -------------------------------

                                        Address:
                                                --------------------------------

                                        ----------------------------------------

                                        ----------------------------------------

                                        PARENT:

                                        MINGHUA GROUP INTERNATIONAL
                                        HOLDINGS LIMITED

                                        By: /s/ Chuquan Li
                                           -------------------------------------
                                           Name:
                                                --------------------------------
                                           Title:
                                                 -------------------------------

                                        Address:
                                                --------------------------------

                                        ----------------------------------------

                                        ----------------------------------------

                                       5
<PAGE>

                                                                       Exhibit A

                           Liabilities of the Company

NONE

                                       6

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