Document:

Unassociated Document

    
      Exhibit
10.1

       

    

    Employment
Agreement

    

    This
EMPLOYMENT AGREEMENT (“Agreement”) is dated on December 20, 2010
between Shaocheng Xu
(the “Executive”), a citizen of People’s Republic of
China, ID number 320503197406292510, and China Natural Gas, Inc. (the
“Company”), a Delaware Corporation, with primary business address of No.
35 Tangyan Road, High-Tech Zone, Xi’an 710065, Shaanxi Province, China. The
Executive will be employed as the Chief Financial Officer ("CFO").

    

    WHEREAS,
the Company believes that Executive provides unique management services for the
Company and wishes to retain the Executive as its Chief Financial Officer;
and

    

    WHEREAS,
the Company and Executive have reached the following understanding with respect
to the Executive's employment by the Company for a period of 3 years
commencing December 20, 2010;
and

    

    WHEREAS,
the Company and Executive desire to evidence their agreement in writing and to
retain the Executive by the Company on terms set forth herein.

    

    1.
Employment, Duties and Acceptance.

    

    
      
        	
                1.1.

              	
                Effective
      December 20, 2010, the Company hereby agrees to the employment of
      Executive as the Chief Financial Officer ("CFO") and both parties hereby
      accept such employment on the terms and conditions contained in this
      Agreement. During the term of this Agreement, the Executive shall make him
      / her available to the Company to pursue the business of the Company
      subject to the supervision and direction of the Board of Directors of the
      Company ("Board" or "Board of
Directors").

              

      

    

    

    
      	
              1.2.

            	
              The
      Company shall retain the Executive to serve as the Company’s full time
      CFO. The Executive shall not take any other work, either full-time or
      part-time, which is not relevant to these responsibilities. The scope and
      responsibilities of the CFO position include the
  following:

            

    

     

    
      	
            	
              (a)

            	
              To
      proactively contact and market the company to the investment community;
      set up good relationship and communicate effectively with current and
      potential investors

            

    

    

    
      	
            	
              (b)

            	
              To
      provide accurate information on the financial resources, obligations and
      current activities of the Company to the relevant external parties,
      including banks, funds, and
investors;

            

    

     

    
      	
            	
              (c)

            	
              To
      formulate and implement relevant policies, procedures and strategies to
      ensure the realization of the Company’s financial
  strategy;

            

    

    

    
      	
            	
              (d)

            	
              To
      establish a strong financial system and strict internal control
      procedure;

            

    

    

    
      
        	
              	
                (e)

              	
                To
      supervise all financial activities to ensure their compliance with law and
      the Company’s policy;

              

      

    

     

    
      	
            	
              (f)

            	
              To
      be responsible for quality and timely filing of accurate US GAAP financial
      reports;

            

    

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    
      	
            	
              (g)

            	
              To
      establish and direct a mechanism to timely solve financial
      problems;

            

    

    

    
      	
            	
              (h)

            	
              To
      establish and direct a mechanism for reducing costs and increasing
      efficiency;

            

    

     

    
      	
            	
              (i)

            	
              To
      be responsible for the Company’s financial
  planning;

            

    

    

    
      
        	
              	
                (j)

              	
                To
      participate in business development and strategic
  planning;

              

      

    

    

    
      
        	
              	
                (k)

              	
                To
      recommend investment policies, implement investment strategies based on
      approved investment guidelines, and to manage investment
      transactions;

              

      

    

     

    
      	
            	
              (l)

            	
              To
      carry out strategic acquisition, capital management, financing etc.
      pursuant to the requirements of the Board of
  Directors;

            

    

    

    
      
        	
              	
                (m)

              	
                To
      provide comments to the Executive Management Team and the Board of
      Directors on financial issues of the
Company;

              

      

    

    

    
      
        	
              	
                (n)

              	
                To
      actively aware of the changing rules and regulations in the US and
      China;

              

      

    

    

    
      
        	
              	
                (o)

              	
                Other
      responsibilities stipulated by the Board of
  Directors.

              

      

    

    

    Meanwhile,
the CFO is the primary resource of the Chief Executive Officer (“CEO”) and
department directors with respect to strategies and operations, and will be
responsible for the Company’s financial management and planning, including the
following: (1) Company strategy; (2) financial strategy; (3) budget and control;
and (4) financial management.

    

    Company
strategy

    The CFO
shall play a major role in coordinating a comprehensive strategy to maximize
Company value:

    

    (1)  Ensure
the existing plans are well based on the Company’s current business to maximize
the value to the Company;

    

    1. Continuously assess the plan’s value
creation potential;

    

    2. Ensure the plans are targeted
towards major problems faced by the Company. In doing so, the Executive should
repeatedly research reasons and possibilities related to changes in the
Company’s operations and provide external references for value creation (such as
some business of value to other possible owner);

    

    3. Advise the CEO and department
directors regarding major proposals;

    

    4. Formulate criteria for financial
control and establish mechanism for progress assessment

    

    (2)
Assist in developing the Company’s expansion strategy and creating shareholder
value.

    

    1.
Comment on the current market opportunities closely related to the Company’s
business;

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    2.
Evaluate the Company’s capacity and assets to capitalize the market opportunity;
propose proper remedies for capacities lacking;

    

    3.
Provide business and financial evaluations regarding specific
proposals.

    

    Financial
Strategy

    

    The CFO
shall be responsible for the formulation and implementation of comprehensive
financial plans and strategies to provide support for the Company's business and
create greatest value for shareholders.

    

    (1)
Propose capital and dividend policies for value creation;

    

    (2)
Design and manage Company presentation of the Company’s operations and plan to
the financial community;

    

    (3)
Negotiate major financial transactions, including loans, stock offerings and
buybacks.

    

    Budget
and Control

    

    The CFO
shall formulate and implement a program to ensure the management obtain correct
information for goal setting, decision making and operation
supervising:

    

    (1)          Coordinates
short-term budget compilation.

    

    (2)          Evaluate
main performance standards of each business unit.

    

    (3)          Ensure
business units are properly authorized;

    

    (4)          Assess
performance of business units with CEO and department directors.

    

    The CFO
shall ensure effective management of the Company’s financial
issues:

    

    (1)          Ensure
timely reporting and performance of obligations;

    

    (2)          Establish
internal control system to ensure the safety of the company's
assets;

    

    (3)          Ensure
effective and efficient management of cash / accounts receivables / accounts
payable;

    

    (4)          Perform
all tax reporting and tax obligations;

    

    (5)          Seek
opportunities to reduce the tax burden;

    

    (6)          Maintaining
close relationship with the Company’s banks;

    

    (7)          
Risk management and plan of the Company.

    

    The CFO
shall be responsible for maintaining and management of important external
relations, including:

    

    1.Financial
institutions (banks and investment banks)

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    2.External
auditors.

    

    3.Supervising
authorities and tax authorities.

     

    1.3. The
Executive shall perform his duties diligently and competently pursuant to the
requirements for the position.

     

    1.4 The
Board may assign the Executive such general management and supervisory
responsibilities and executive duties for the Company as are appropriate and
commensurate with Executive's position as CFO of the Company

    

    2.
Compensation and Benefits

    

    

    2.1. The
Company shall pay to Executive a salary of RMB600,000 (six
hundred thousand Chinese Renminbi) after-tax annually and receive 12 pays each
year, equal to a monthly salary of RMB50,000 (fifty thousand
Chinese Renminbi).

    

    In the
probation period, which is the first six months of employment, only 80% of the
abovementioned monthly salary, which is equal to RMB40,000, will be paid to the
Executive each month, while the remaining 20% will be paid in one installment at
the end of the first year of employment. During the employment term if not
informed by written notice, monthly salary is paid on the 20th of next month. If
the payment date coincides with a holiday, the salary will be paid on the first
business day after the holiday.

    

    Upon the
completion of the first year of employment of the Executive, the Company should
grant the Executive stock options for purchasing the Company’s stocks according
to the ratio entitled by the CFO, as provided in the employee stock option plan
of the Company. The Executive may only exercise such stock options according to
the employee stock option plan once he or she has served the Company for one
year on a yearly basis and in cash.

    

    2.2. The
Executive shall pay personal income taxes pursuant to regulations of the
government tax agency, and the Company shall deduct a corresponding amount from
the monthly salary of the Executive and pay that amount on behalf of the
Executive to the relevant tax agency.

     

    2.3. In
addition to what is provided for under the foregoing Article 2.2, the Company
shall have the right to deduct from the Executives’ salaries for other purposes
in accordance with applicable laws and regulations.

    

     3.
Term and Termination

    

    3.1. The
term of this Agreement is for a period of   3 years beginning
on  December 20, 2010   and
terminating on  December 19,
2013.  Each Party may by sixty days prior written notice terminate this
Agreement before expiration of this Agreement. The Executive shall complete
handover duties before he resigns from office.

    

    3.2. The
Company, by notice to the Executive, may terminate this Agreement in writing for
a “cause”. As used herein, "cause" shall include (a) the refusal in bad faith by
Executive to carry out
specific written directions of the Board, (b) intentional fraud or dishonest
action by Executive in his/her relations with the Company ("dishonest" for these
purposes shall mean Executive's knowingly making of a material misstatement to
the Board for the purpose of obtaining direct personal benefit); or (c) the
conviction of Executive of any crime involving an act of significant moral
turpitude after appeal or the period for appeal has elapsed without an appeal
being filed by Executive.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    Notwithstanding
the foregoing, no "cause" for termination shall be deemed to exist with respect
to the Executive's acts described in clause (a) or (b) above, unless the Board
shall have given written notice to Executive (after five (5) days advance
written notice to the Executive and a reasonable opportunity to Executive to
present his/her views with respect to the existence of "cause"), specifying the
"cause" with particularity and , within twenty (20) business days after such
notice, Executive shall not have disputed the Board's determination or in
reasonably good faith taken action to cure or eliminate prospectively the
problem or thing giving rise to such "cause," provided, however, that a repeated
breach after notice and cure, of any provision of clause (a), (b) or (c) above,
involving the same or substantially similar actions or conduct, shall be grounds
for termination for cause upon not less than five (5) days additional notice
from the Company.

    

    3.3. The
Executive, by notice to the Company, may terminate this Agreement in writing if
a "Good Reason" exists . For purposes of this Agreement, "Good Reason" shall
mean the occurrence of any of the following circumstances without the
Executive's prior express written consent:

    

    
      	
            	
              (a) 

            	
               a
      material adverse change in the nature of the Executive's title, duties or
      responsibilities with the Company that represents a demotion from his/her
      title, duties or responsibilities as in effect immediately prior to such
      change;

            

    

     

    
      	
            	
              (b)

            	
              a
      material breach of this Agreement by the
  Company;

            

    

    

    
      
        	
              	
                (c)

              	
                a
      failure by the Company to make any payment to Executive when due, unless
      the payment is not material and is being contested by the Company, in good
      faith, and approved by the Executive in
advance;

              

      

    

     

    
      	
            	
              (d)

            	
              a
      liquidation, bankruptcy or receivership of the Company;
  or

            

    

    

    
      
        	
              	
                (e)

              	
                any
      person or entity other than the Company and/or any officers or directors
      of the Company as of the date of this Agreement acquires securities of the
      Company other than from Executive or his/her affiliates (in one or more
      transactions) having 51% or more of the total voting power of all the
      Company's securities then
outstanding.

              

      

    

     

    Notwithstanding
the foregoing, no Good Reason shall be deemed to exist with respect to the
Company's acts described in clauses (a), (b) or (c) above, unless the Executive
shall have given written notice to the Company specifying the Good Reason with
reasonable particularity and, within twenty (20) business days after such
notice, the Company shall not have cured or eliminated the problem or thing
giving rise to such Good Reason; provided, however, that a repeated breach after
notice and cure of any provision of clauses (a), (b) or (c) above involving the
same or substantially similar actions or conduct, shall be grounds for
termination for Good Reason without any additional notice from
Executive.

    

    4.
Protection of Confidential Information; Non-Competition.

    4.1. The
Executive acknowledges that:

     

    
      	
            	
              (a)

            	
              As
      a result of his/her current employment with the Company, the Executive
      will obtain secret and confidential information concerning the business of
      the Company and its subsidiaries and affiliates, including, without
      limitations, financial information, designs and other proprietary rights,
      trade secrets and "know-how," customers and sources ("Confidential
      Information").

            

    

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    
      
        	
              	
                (b)

              	
                The
      Company will suffer substantial damage which will be difficult to compute
      if, during the period of his/her employment with the Company or
      thereafter, Executive should enter a business competitive with the Company
      or divulge Confidential
Information.

              

      

    

    
      
        	
              	
                (c)

              	
                The
      provisions of this Agreement are reasonable and necessary for the
      protection of the business of the
Company.

              

      

    

    

    4.2. The
Executive agrees that he will not at any time, either during the term of this
Agreement
or thereafter, divulge to any person or entity any Confidential Information
obtained
or learned by him/her as a result of his/her employment with the Company, except
(i) in the course of performing his/her duties hereunder, (ii) to the extent
that any such information is in the public domain other than as a result of
Executive's breach of any of his/her obligations hereunder, (iii) where required
to be disclosed by court order, subpoena or other government process or (iv) if
such disclosure is made without Executive's knowing intent to cause material
harm to the Company. If Executive shall be required to make disclosure pursuant
to the laws and regulations, or pursuant to the provisions of clause (iii) of
the preceding sentence, Executive promptly, but in no event more than 72 hours
after learning of such subpoena, court order, or other government process, shall
notify, by personal delivery or by electronic means, confirmed by mail, the
Company and Executive shall permit the Company to intervene and participate with
counsel of its choice in any proceeding relating to the enforcement
thereof.

    

    4.3. Upon
termination of his/her employment with the Company, Executive will promptly
deliver to the Company all memoranda, notes, records, reports, manuals,
drawings, blue-prints and other documents (and all copies thereof) relating to
the business of the Company and all property associated therewith, which he may
then possess or have under his/her control;

    

    4.4.
During the period of employment: (A) the Executive, without the prior written
permission of the Company, shall not, anywhere in the People’s Republic of
China, (i) enter into the employ of or render any services to any person, firm
or corporation engaged in any business which is directly in competition with the
Company's principal existing business at the time of termination ("Competitive
Business"); (ii) engage in any Competitive Business as an individual, partner,
shareholder, creditor, director, officer, principal, agent, employee, trustee
consultant, advisor or in any other relationship or capacity; (iii) employ, or
have or cause any other person or entity to employ, any person who was employed
by the Company at the time of termination of the Executive's employment by the
Company (other than Executive's personal secretary and assistant); or (iv)
solicit, interfere with, or endeavor to entice away from the Company, for the
benefit of a Competitive Business, any of its customers. Notwithstanding the
foregoing, in the event the Company terminates this Agreement without "cause" or
if Executive terminates this Agreement for Good Reason under Article 3.5 hereof,
the Executive's obligations under this Article 4.4 shall terminate one month
following termination.

    

    4.5. If
the Executive commits a breach of any of the provisions of Articles 4.2 or 4.4,
the Company shall have the right to have the provisions of this Agreement
specifically enforced by any court having equity jurisdiction, it being
acknowledged and agreed by the Executive that the services being rendered
hereunder to the Company are of a special character and that  he or
she should bear a corresponding and reasonable responsibility to compensate the
Company for any damage caused by his or her purposeful conduct .

    

    5.
Rewards and Penalties

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    5.1 The
Executive should abide by the provisions of the company law includes attendance
management system, various rules and regulations. The mobile phone should remain
open 24 hours, to ensure unblocked communication at any time and maintain
effective communication with overseas investors. Meanwhile, the chief financial
officer reports to  the Chairman directly.

    

    5.2.
Without written consent of the Company, the Executive shall not accept money,
gift or any other kinds of benefits from any customer, collaborating company or
other related company, except normal business reception and entertainment with
associated parties.

    

    5.3.
Executive shall serve the Company faithfully and competently during the term of
employment.

    

    

    5.4. The
Company shall impose penalties on the Executive pursuant to regulations of the
Company, if the Executive violates the Company’s rules or regulations. The
Company’s regulations are attached hereby.

    

    6.
Liability for Breach

    6.1 If
either Party to this Agreement is under any of the following circumstances, the
Party shall be liable for breach of the Agreement:

    

    
      	
               
      

            	
              (a)

            	
              The
      Company violates the provisions of this Agreement and unilaterally
      rescinds this Agreement, unless otherwise provided by this
      Agreement;

            

    

    
      	
               
      

            	
              (b)

            	
              The
      Executive resigns from the Company in a manner that violates the
      provisions of this Agreement.

            

    

    

    6.2.
Either Party in breach of this Agreement shall pay the other Party liquidated
damages.  The standard liquidated damages shall be equal to twice of
the salary the Executive has actually received in the month prior to the date of
the breach.

    

    6.3. If
the liquidated damages provided for under the foregoing Article 6.2 is not
enough to cover the losses of the other Party, then the breaching Party shall
compensate the other Party for the actual losses caused by the
breach.

    

    6.4. The
Executive warrants (1) that all the relevant information he provides to the
Company, including without limitations his/her identification, address, academic
credentials, work experiences and professional skills are true; (2) that, by
working for the Company and by entering into this Agreement with the Company,
the Executive does not violate any agreement on confidentiality or
non-competition entered into with his/her previous employer or any other company
or individual.  If the Executive breaches this warranty, the Company
has the right to rescind this Agreement and demand that Executive compensate the
Company for any losses due to the breach.

    

    7.
Miscellaneous Provisions.

    7.1. All
notices provided for in this Agreement shall be in writing, and shall be deemed
to have been duly given when delivered personally to the party to receive the
same, when transmitted by electronic means, or when mailed first class postage
prepared, by certified mail, return receipt requested, addressed to the party to
receive the same at his/her or its address set forth below, or such other
address as the party to receive the same shall have specified by written notice
given in the manner provided for in this Article 7.1. All notices shall be
deemed to have been given as of the date of personal delivery, transmittal or
mailing thereof.

    

    If to the
Executive: Room 601, No. 34, 999 Lane, Hong Mei Road, Shanghai

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    If to the
Company: 19th
Building B Van Metropolis, Tang Yan Road, Hi-tech Zone, Xi'an

    

    7.2. In
the event of any claims, litigation or other proceedings arising under
this
Agreement, the Executive shall be reimbursed by the Company within thirty (30)
days after delivery to the Company of statements for the costs incurred by the
Executive in connection with the analysis, defense and prosecution thereof,
including reasonable attorneys' fees and expenses; provided, however, that
Executive shall reimburse the Company for all such costs if it is determined by
a non-appealable final decision of a court of law that the Executive shall have
acted in bad faith with the intent to cause material damage to the Company in
connection with any such claim, litigation or proceeding.

    

    7.3. The
Company, shall to the fullest extent permitted by law, indemnify the
Executive
for any liability, damages, losses, costs and expenses arising out of alleged or
actual claims (collectively, "Claims") made against the Executive for any
actions or omissions as an officer and/or director of the Company or its
subsidiary. To the extent that the Company obtains director and officers
insurance coverage for any period in which Executive was an officer, director or
consultant to the Company, Executive shall be a name insured and shall be
entitled to coverage thereunder.

    

    7.4. All
questions with respect to the construction of this Agreement, and the rights and
obligations of the parties hereunder, shall be determined in accordance with the
law of China applicable to agreements made and to be performed entirely in
Xi'an, China.

    

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

     

    
      
        
          
            	 	By:
      	/s/
      Qinan Ji	 
	
                     

                  	
                     

                  	
                     

                    CEO of China Natural Gas
      Inc.

                  	 
	 	 	
                  	 
	 	By: 	/s/
      Shaocheng Xu	 
	 	 	 	 

          

        

      

    

     

                                                                           

    

    
      
        
        

      

      
        8Liquid
Capital Loan Contract

      

      
        
          	
                  Borrower:

                	
                  Xi'an
      Baorun Enterprise Development Co., Ltd.

                
	
                  Legal
      Representative:

                	
                  GAO
      Xinnian

                
	
                  Legal
      Address:

                	
                  Suite
      10720, Dongxin Century Plaza, 7 Huoju Road, Xi'an

                
	
                  Contact
      Address:

                	
                  ____________________________________________________

                
	 
      	 
      
	
                  Lender:

                	
                  Communications
      Bank Holdings Co., Ltd. Sha'anxi Branch

                
	
                  Legal
      Representative:

                	
                  LAN
      Fumin

                
	
                  Contact
      Address:

                	
                  88
      Xixin Street, Xi'an

                

        

      

      

      
        	
                Article
      1

              	
                Loan

              

      

       

      1.1       Currency:
Renminbi (RMB)

      1.2       Amount:
40,000,000.00

      1.3       The
proceeds of the Loan under this Contract shall be used for revolving liquid
capital.

      1.4       The
term of the loan does not exceed 12 months, starting from the date of the first
release of the loan amount and ending on October 28, 2011.

      

      Article
2        Interest Rate and Computation
of Interest

      2.1          The
applicable interest hereunder is specified in (2)  below:

      
        	
                 
      

              	
                (1)

              	
                RMB
      fixed rate; the rate is determined on the
day

              

      

      
         [   ]     when this
Contract becomes effective

      

      
         [    ]    when the
loan is first release

      

      
         [    ]   when the
loan is actually issued (if release in installments, the rate is then determined
separately on the day when each amount of the loan is issued)

      

      for
___________ (term) on the basis of [    ] the base rate
[    ] the base rate floating upward by
____  [    ] the base rate floating downward by
____ and the rate will not be adjusted during the term of the
loan.

      
        
           

        

        
          1

          
            

          

        

        
           

        

      

      

      
        	
                 
      

              	
                (2)

              	
                RMB
      floating rate; the rate is determined as
  follows:

              

      

      
        	
              	
                (2.1)

              	
                The
      rate is determined on the day

              

      

      
        	
                 
      

              	
                x

              	
                when
      this Contract becomes effective

              

      

      
        	
                 
      

              	
                 ̈

              	
                when
      the loan is first release

              

      

      
        	
                 
      

              	
                x

              	
                when
      the loan is actually issued (if release in installments, the rate is then
      determined separately on the day when each amount of the loan is
      issued)

              

      

      for One Year (term) on
the basis of [    ] the base rate [ X ] the base rate
floating upward by 10%  [    ]
the base rate floating downward by ____.

      

      
        (2.2)  
If,
during the term of the loan, People's Bank adjusts the base rate, the interest
rate hereunder will be adjusted on the Adjustment Day specified by method (a)
below.  Starting on interest rate adjustment day of this Contract, the
Lender has the right to assess the interest rate adjusted by the corresponding
rate level on the adjustment day, with the upward/downward floating range
unchanged.

      

      
        	
                 
      

              	
                (a)

              	
                The
      People's Bank's interest rate adjustment day is Adjustment Day for this
      Contract;

              

      

      
        	
                 
      

              	
                (b)

              	
                Starting
      on the day when the loan is issued (if release in installments, the
      adjustment day is based on the day when each installment of the loan is
      issued),  the day after each [   ] month
      [    ] quarter [    ] every six
      months [    ] year is the Adjustment Day for this
      Contract;

              

      

      
        	
                 
      

              	
                (c)

              	
                _________________________________________

              

      

      

      
        	
                 
      

              	
                 (2.3)

              	
                If
      the base rate after the People's Bank adjustment is floating rate or the
      base rate is cancelled, the two parties will engage in separate
      consultation for the adjustment of the interest rate hereunder; however,
      the rate after the adjustment shall not be lower than the applicable rate
      at that time; if, one month after the People's Bank's adjustment day, the
      two parties are still unable to reach agreement on the new adjusted rate,
      the Lender has the right to declare all the loan hereunder due ahead of
      schedule.

              

      

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

      2.2       
Daily rate = monthly rate/30, and monthly rate = annual rate/12.

      2.3       
Computation of interest rate

      2.3.1    
Normal interest  = Interest Rate Specified Herein <times> Amount
of Loan Released <times> Number of Days Used.  The number of
days used is calculated starting on the loan release date and ending on the
maturity date of the loan.

      2.3.2    
The penalty interest on the amount of loan that is past due or misappropriated
will be calculated on the basis of the amount of loan past due or
misappropriated and the actual number of days (starting from the day when the
amount of loan is past due or misappropriated until all the loan principal and
interests are paid off).  If the loan is made in RMB, the penalty
interest rate on the amount of loan that is past due is the rate floated upward
by 50% from the rate specified herein and the penalty interest rate on the
amount of loan that is misappropriated is the rate floated upward by 100% from
the rate specified herein; for loans with floating interest rate, if the
People's Bank adjusts the base rate after the loan is past due or
misappropriated, the Lender has the right to adjust the penalty interest rate
for this Contract, and the new penalty interest rate will apply after the
People's Bank interest rate adjustment day.  If the loan is made in a
foreign currency, the penalty interest rate is the rate floated upward by
_______ from the rate specified herein.

      2.4       
The settlement of interest is by (1) of the following
methods:

      (1)         On
the 20th of the last month of each quarter;

      (1)         On
the 20th of each month;

      (3)         ______________________________________

      2.5         If
Borrower repays the loan or the Lender declares the loan due ahead of schedule
pursuant to the provisions herein, the level of the corresponding interest rate
will not be adjusted and the rate specified will still apply.

      2.6         Other
provision on the interest rate

      ______________________________________________________________

      ______________________________________________________________

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

      

      Article
3        Release and Payment of the
Loan

      3.1       The
Borrower may withdraw the loan in installments, but the sum of all the amounts
withdrawn separately shall not exceed the amount specified in Article
1.  The withdrawal must follow the loan release schedule
below:

       

      
        
          
            
              
                	
                        Date
      of Withdrawal

                      	 
      	
                        Amount
      Withdrawn

                      
	
                        29th day of
      October,  2010;

                      	 
      	
                        Forty
      Million (amount in Capital
      Letters)

                      
	
                        ___
      day ___ month ___ Year;

                      	 
      	
                        _______________
      (amount in Capital
      Letters)

                      
	
                        ___
      day ___ month ___ Year;

                      	 
      	
                        _______________
      (amount in Capital
      Letters)

                      
	
                        ___
      day ___ month ___ Year;

                      	
                          

                      	
                        _______________
      (amount in Capital
      Letters)

                      

              

            

          

        

      

      

      3.2       Unless
all of the following conditions are satisfied, Lender has the right to refuse to
release the Loan:

       

      
        (1)    
Borrower
has already completed the statutory procedures including obtaining related
permit, approval and registration from the government and other procedures as
requested by the Lender, and such permit, approval and registration remain in
full force and effect;

      

      
        (2)    
The
guarantee contract (if any) hereunder has come into effect and remains in full
force and effect;

      

      
        (3)    
There
have been no adverse changes in the financial condition of the
Borrower;

      

      
        (4)    
Borrower
has not violated any provisions herein;

      

      
        (5)    
The
loan payment method is in compliance with the provisions herein; if the Lender
is entrusted with the making of the payment, the Lender agrees to such
arrangement;

      

      
        (6)    
If
the loan is to be withdrawn in a foreign currency, the Borrower has set up
relevant account in accordance with the requirements of the foreign currency
management and provided documents of proof showing that the loan is in
compliance with the relevant foreign currency management policies, including but
not limited to valid certificates of foreign currency use, registration and
approval documents;

      

      
        (7)    
The
Borrower has designated a capital return account as requested by the Lender and
executed account management agreement.

      

      3.3       The
Borrower designates the following account as loan deposit account; the said
account is not an account set up by the Borrower with the Lender specifically
for loan deposit.

      
        
           

        

        
          4

          
            

          

        

        
           

        

      

      Account Title: Xi'an Baorun
Enterprise Development Co., Ltd.

      Account
No.   611301011018170037875

      Bank holding the
account:     Business department of Communications
Bank, Sha'anxi Province Branch.

      If an account is set up specifically
for loan deposit, the release and the payment of the loan must be done through
that account.  Such account can only be used for the release and
external payment of the proceeds of the loan; it can only issue "Settlement
Service Application" certificate but cannot be used for check, bank draft, and
bank draft acceptance services or for other settlement.  When the
Borrower processes, in its sole discretion, loan proceeds transfer, such
transfer must be done over the counter of the bank that holds the
account.  The interest on the deposit in such account is included in
the Borrower's repayment account.

      3.4        Before
each withdrawal, the Borrower process the relevant withdrawal procedures at
least ____ bank business days in advance and specify the payment method
(entrusting the Lender with the payment or the Borrower itself making the
payment); only one of the payment methods can be used for each
withdrawal.

      3.5        Entrusting
the Lender with making the payment means that the Lender, pursuant to the
payment entrustment engagement letter from the Borrower and after the release of
the loan pursuant to the provisions herein, makes the payment from the loan
proceeds through the Borrower's account directly to the Borrower's trading
partner that meets the requirement of the loan purpose stipulated
herein.

      Upon
satisfying one of the following conditions, the method of entrusting the Lender
with the payment can be adopted:

      (1)           The
amount of single payment exceeds ____________ (this amount is the limit that the
Borrower can pay if the payment is made by the Borrower)

      ________________________________________________________________

      ________________________________________________________________

      
        
           

        

        
          5

          
            

          

        

        
           

        

      

      If the method of entrusting the Lender
with the payment is adopted, the Borrower must submit to the Lender withdrawal
application, payment engagement letter in the format specified by the Lender,
loan certificate, relevant payment certificate and other documents requested by
the Lender (including but not limited to commercial contract, invoices and goods
acceptance documents and other trading documents), specify the amount to be
withdrawn and the recipient and amount of the payment; the amount to be
withdrawn must be equal to the amount of the payment.

      If the payment proposed by the Borrower
does not comply with the provisions herein or those in the relevant commercial
contracts or has other defects, the Lender has the right to refuse the payment
and return the payment engagement letter submitted by the Borrower.

      When the Lender agrees to make such
payment,  if the external payment cannot be made or the payment made
is returned due to the error in the information provided by the Borrower, the
Borrower must re-submit relevant certificate and documents with the correct
information within the time specified by the Lender.  The Lender will
not be responsible for any loss from unsuccessful payment.

      3.6           The
Borrower making the payment in its sole discretion means that, after the Lender
releases the loan proceeds into the Borrower's account pursuant to the
provisions herein, the Borrower makes the payment from the loan proceeds to the
Borrower's trading partner that meets the requirement of the loan purpose
stipulated herein.

      If the method of the Borrower making
the payment is adopted, the Borrower must submit to the Lender withdrawal
application, loan certificate, explanation of the use of the proceeds and other
documents requested by the Lender.  The Lender has right to analyze
through the Borrower's account, verify the certificate and conduct on-site
investigation to verify if the payment of the loan proceeds complies with the
specified purpose of use, and the Borrower must assist with the Lender's
verification.

      3.7           The
actual loan release date and the amount released must be based on the records in
the "Loan Certificate."

      

      Article
4        Repayment of the
Loan

      4.1           The
Borrower must repay the loan at the maturity date specified in 1.4 herein and
according to the following schedule; if the maturity date in the "Loan
Certificate" is inconsistent with that specified herein, the record in the "Loan
Certificate" shall prevail:

      
        
           

        

        
          6

          
            

          

        

        
           

        

      

      

      
        
          
            	
                    Date
      of Repayment

                  	 
      	
                    Amount
      Withdrawn

                  
	
                    28th day of
      October,  2011;

                  	 
      	
                    Forty
      Million (amount in Capital
      Letters)

                  
	
                    ___
      day ___ month ___ Year;

                  	 
      	
                    _______________
      (amount in Capital
      Letters)

                  
	
                    ___
      day ___ month ___ Year;

                  	 
      	
                    _______________
      (amount in Capital
      Letters)

                  
	
                    ___
      day ___ month ___ Year;

                  	
                      

                  	
                    _______________
      (amount in Capital
      Letters)

                  

          

        

      

      

      4.2    
    The Borrower shall not repay the Loan prior to the
scheduled date without obtaining written consent from the Lender.

      4.3         The
Borrower designates:

      (1)           Loan
repayment account:

      Account Title: Xi'an Baorun
Enterprise Development Co., Ltd.

      Account
No.    611301011018170037875

      Bank holding the
account:     Business department of Communications
Bank,

      Sha'anxi
Province Branch.

      (2)           Capital
return account:

      Account Title:  Xi'an Baorun
Enterprise Development Co., Ltd.

      Account
No.    611301011018170037875

      Bank holding the
account:     Business department of Communications
Bank,

      Sha'anxi
Province Branch.

      

      Article
5        Representations and Warranties
of the Borrower

      5.1         The
Borrower is a duly incorporated and an existing entity, has the required power
and capacity to fulfill the obligations hereunder in its own name and will
assume civil liabilities.

      5.2         The
execution and performance of this Contract is the true intention of the
Borrower, and the Borrower has all necessary consents, approvals and
authorizations, and there are no existing legal defects.

      5.3         The
Borrower's production operation is legal and in compliance, and the Borrower has
the ability to continue its operation, the legal source of funds for repayment
and the Borrower has not material unfavorable credit record.  The
Borrower's senior management officers have no unfavorable
records

      
        
           

        

        
          7

          
            

          

        

        
           

        

      

      5.4         All
the documents, reports, data and information provided by the Borrower to the
Lender during the execution and performance of this Contract are true, accurate,
complete and valid; the Borrower has not withheld any information which may
affect the evaluation of its financial status and repayment ability and there
has been no adverse change in the Borrower's financial situation since the date
of the most recent financial report.

      5.5         At
the time of executing this Contract, the Borrower is not a shareholder of the
guarantor or its actual control person within the meaning of the "Corporate
Law," nor does the Borrower have any plan to become a shareholder or the actual
control person of the guarantor.

      

      Article
6       Rights and Obligations of the
Lender

      6.1         The
Lender has the right to receive repayment of the principal, interest (including
compound interest, and penalty interest for past-due and misappropriated loan)
and the relevant fees payable by the Borrower from the Borrower in accordance
with provisions herein. The Lender has the right, on the basis of the Borrower's
capital return, to decide in its sole discretion to declare the loan due ahead
of the schedule and exercise any other rights under the relevant laws and
regulations or stipulated herein.

      6.2         During
the course of performing this Contract, the Lender will only conduct customary
verification on the documents provided by the Borrower.  If the
untruthfulness, inaccuracy or incompleteness of such documents provided by the
Borrower cause the Lender to be unable to complete the entrustment payment on
time or cause the Borrower to make any payment in violation of the provisions
herein, the Lender shall bear no responsibility.

      6.3         If
the release of the loan or payment is unsuccessful because the loan release
account designated by the Borrower or the account of the payment recipient is
frozen or for any other reason, the Lender shall bear no
responsibility.

      

      Article
7        Obligations of the
Borrower

      7.1         The
Borrower must repay the Loan hereunder and pay the interest hereunder in
accordance with the date, amount and currency set forth herein.

      
        
           

        

        
          8

          
            

          

        

        
           

        

      
 

      If the capital return account
designated by the Borrower is used for receiving sales receivable or the
proposed repayment of the loan and the sales receivable is settled in non-cash
method, the Borrower must ensure that the amount received is transferred to the
capital return account promptly.  The Borrower must provide
information on the inflow/outflow of the funds in the capital return account as
requested by the Lender.

      7.2         Borrower
must use the proceeds of the loan hereunder for the purpose stipulated
herein.  The Borrower cannot appropriate the loan hereunder for any
other use, and cannot use the loan for fixed asset investment, equity investment
or in any production or operation area or for any purpose prohibited by the
State.

      7.3         The
Borrower must be responsible for the fees and expenses under this Contract,
including but not limited to for notary service fees, appraisal fees, assessment
fees and registration fees.

      The Borrower must be responsible for
the settlement fees incurred from the payments of loan proceeds (including both
those made by the Lender under the entrustment method and those by the Borrower)
and pay the corresponding fees on time and in full according to the charge item,
fee rate and schedule specified by the Lender.

      If the loan account is set up
specifically for the release of the loan, when making payment of the loan
proceeds, if the receiving account is not set up with Communications Bank, the
payment of the loan proceeds can be made through the payment system of the
People’s Bank or through the interchange system in the same city.

      If the loan account is not set up
specifically for the release of the loan, when making payment of the loan
proceeds, if the receiving account is set up with a bank in other locations, all
payments of the loan proceeds must be made through the payment system of the
People’s Bank.

      7.4         The
Borrower must adhere to the Lender’s business system and operation practices
related to providing loan services, including but not limited to assisting the
Lender with loan payment management, supervision over and review of the use of
the loan and the Borrower’s operation and providing promptly all the financial
reports, records and documents on the use of the loan, information about the
related parties and related party transactions and other documents and
information requested by the Lender, and ensure that the documents, material and
information provided are true, complete and accurate.

      
        
           

        

        
          9

          
            

          

        

        
           

        

      

      7.5         If
any one of the following events occurs, the Borrower must notify the Lender at
least thirty (30) days in advance and must not take any of the following actions
before the principal and interest hereunder are repaid completely or a repayment
schedule and guarantee approved by the Lender are provided:

      (1)           Selling,
donating, leasing, lending, assigning, mortgaging, pledging or disposing of all
or substantial part of its assets;

      (2)           Any
substantial change, or likely substantial change, in operation or equity
structure, including but not limited to subcontracting, lease, joint operation,
company restructuring, joint-stock, sale of businesses, merger (acquisition),
joint capital (partnership), spin-off, incorporation of subsidiary, equity
transfer, ownership transfer and reduction of registered capital.

      (3)           External
investment exceeding RMB ________ or increase of debt financing exceeding RMB
________.

      7.6         The
Borrower must notify the Lender in writing within seven (7) days upon the
occurrence, or likely occurrence, of any of the following events:

      (1)           The
Borrower’s or any of its affiliates amends its the Articles of Association,
changes its name, legal representative, domicile, address and the scope of its
business and other AIC registration events, and makes any decision that will
have major impact on the Borrower’s financial and personnel
situation;

      (2)           The
Borrower, any of its affiliates or its guarantor intends, or is likely, to file
for bankruptcy.

      (3)           The
Borrower is involved in any major litigation or arbitration or administrative
sanctions, or any lien or encumbrance is imposed on its assets or its
collaterals hereunder, or the sound condition of its assets or its collaterals
hereunder is, or is likely to be, impacted or their value is, or is likely to
be, reduced;

      (4)           The
Borrower or any of its affiliates provides guarantee to any other third party,
which will have material adverse effect on its economic or financial situation
and its ability to perform its obligations hereunder;

      (5)           The
Borrower or any of its affiliates enters into a contract which will have a
material adverse effect on its operation and financial
situation;

      
        
           

        

        
          10

          
            

          

        

        
           

        

      

      (6)           The
Borrower or any of its affiliates or its guarantor ceases its operation, goes
out of business, is dissolved, is shut-down for rectification, is cancelled or
has its business license revoked;

      (7)           The
Borrower’s or any of its affiliates’ major individual investor, or the
Borrower’s or any of its affiliates’ legal representative (responsible person),
director or major management officer, has disappeared, is in violation of the
law and statutes or of the rules of the applicable exchanges or has abnormal
changes;

      (8)           The
Borrower or any of its affiliates faces severe hardship in its operation,
experiences deterioration of its financial situation or any other event which
will have an adverse effect on the financial situation of the Borrower or any of
its affiliates or its ability to repay the Loan;

      (9)           The
completion of related party transaction and the amount of such transaction
reaches or exceeds 10% of its recently audited net assets;

      (10)         The
Borrower becomes, or is likely to become, a shareholder of its guarantor or its
“actual control person” within the meaning of the “Corporate Law” before the
repayment in full of all the debts hereunder.

      (11)         The
Borrower or any of its affiliates is involved in a liable accident because of
its violation of the law and statutes, regulatory provisions, state policies or
industry standards or is exposed by the media;

      (12)         The
relationship of having control or being controlled between the Borrower and its
affiliates experiences changes;

      (13)         Other
events occur, which will have material adverse effect on the ability of the
Borrower or any of its affiliates to repay debts.

      7.7         Upon
the occurrence of any change to the guarantee hereunder that is adverse to the
Lender’s claims, the Borrower must promptly provide other guarantee approved by
the Lender as requested.

      
        
           

        

        
          11

          
            

          

        

        
           

        

      

      The “change” referenced in this
provision includes but is not limited to: the guarantor’s merger, spin-off,
ceasing operation, going out of business, dissolution, shut-down for
rectification, being cancelled, having its business license revoked, filing for
or being forced into bankruptcy; material change in the guarantor’s operation or
financial situation; the guarantor’s involvement in major litigation or
arbitration or administrative sanctions, or imposition of a lien or other
enforcement measures on its major assets; the decrease, or likely decrease, of
the value of its collateral or the imposition of a lien or other enforcement
measures thereupon; impact, or likely impact, on the sound condition of its
collaterals; the guarantor or its legal representative (responsible person) or
major management officer’s violation of the law and statutes or the rules of the
applicable exchanges; if the guarantor is an individual, the guarantor’s
disappearance or death (being declared dead); the guarantor’s act of breach as
defined in the guarantee contract; disputes between the guarantor and the
Borrower; demand by the guarantor to dissolve the guarantee contract; the
guarantee contract not coming into effect or becoming invalid or being
cancelled; security interest not being established or invalid; or other events
that will affect the security of the Lender’s claims.

      7.8         The
Borrower promises that, before the full repayment of all loan principal and
interest hereunder and the related fees, the Borrower’s financial indicators
must always meet the following criteria:

      (1)       ___________________________________________________

      (2)       ___________________________________________________

      (3)       ___________________________________________________

      

      Article
8        Other Matters

      The loan can be only used to purchase
oil; _______[handwritten part, illegible] provide purchase
contract.  The reception and payment of the funds can only be done
through Communications Bank; otherwise Communications Bank has the right to
declare the loan due ahead of schedule.

      

      Article
9        Advance Maturity of the
Loan

      9.1       The
occurrence of any of the following will be considered an “advance maturity
event” for this Contract:

      (1)       The
Borrower’s representations and warranties in Section 5 are not
true;

      (2)       The
Borrower is in breach of this Contract;

      (3)       Any
of the events listed in Section 7.6 has occurred and the Lender believes that
such event will have a material adverse effect on its claims;

      (4)       The
Lender believes, based on the Borrower’s situation of capital return, that the
Borrower should repay the loan principal and interest ahead of
schedule;

      
        
           

        

        
          12

          
            

          

        

        
           

        

      

      (5)       The
changes of the regulatory policies cause the release of the loan by the Lender
pursuant to the provisions hereunder to be non-compliant;

      (6)       The
Borrower has committed an act of breach during the performance of other
contracts with the Lender or with a third party or the debts thereunder are
likely to be, or have already been, declared due in advance.

      9.2           Upon
the occurrence of any of the “advance maturity events,” the Lender has the right
to take one or more or all of the following measures:

      
        (1)       Suspend
the release of the loan that has not been used by the
Borrower;

      

      
        (2)       Suspend
the payment of the loan that has already been released but has not been
used;

      

      
        (3)       Demand
the Borrower to negotiate supplemental conditions on release and payment of the
loan with the Lender within a specific time;

      

      
        (4)       Demand
the Borrower to change payment method according to the Lender’s
requirements;

      

      
        (5)       Unilaterally
declare all the loan principals released under this Contract due in advance and
demand the Borrower to repay all the loan principal and settle the
interest.

      

      

      Article
10      Breach of
Contract

      10.1         In
the event that the Borrower fails to repay the principal or interest in full in
a timely fashion or to use the proceeds of the Loan for the purpose specified
herein, the Lender has the right to assess interest at overdue penalty rate and
misappropriation penalty rate and to assess compound rate on the interest due
but yet unpaid.

      10.2         In
the event that the Borrower fails to repay the principal or interest in full in
a timely fashion, the Borrower shall be responsible for the Lender’s fees and
expenses in exercising its creditor’s rights, including litigation cost
(arbitration fee), costs of preservation of asset, public announcement fees,
enforcement fee, legal fees, travel and other expenses.

      10.3         In
the event that the Borrower evades the Lender’s supervision, fails to repay the
principal or the interest of the Loan or avoids the repayment intentionally,
Lender has the right to report such acts to the relevant government authority
and make public announcements in the news media.

      
        
           

        

        
          13

          
            

          

        

        
           

        

      

      

      Article
11     Deduction Provision

      11.1         If
there is any loan principal, interest, penalty interest, compound interest or
other fees due and payable, the Borrower authorizes the Lender to deduct the
corresponding amount from funds in any of the Borrower’s accounts set up with
Communications Bank.

      11.2         After
such deduction, the Lender must notify the Borrower of the account being
deducted, the loan contract number, “Loan Certificate” serial number, amount
deducted and the balance of the debt obligations.

      11.3         If
the amount deducted is insufficient to pay off all of the Borrower’s debt, such
amount must first be used to offset the fees due and payable.  If the
principal and interest are past due for less than ninety (90) days, the balance
of the deducted amount after offsetting the fees must be first used to repay the
past due interest, penalty interest and compound interest and then be used to
repay the past due principal; if the principal and interest are past due payment
for more than ninety (90) days, the balance of the deducted amount after
offsetting the fees must be first used to repay the past due principal and then
be used to repay the past due interest, penalty interest or compound
interest.

      11.4         If
the currency of the deducted amount is different from the currency used to repay
the loan, the deducted amount will be converted at the foreign exchange rate
published by Communication Bank on the date of deduction and then be used to
repay the debt.

      

      Article
12     Notifications

      12.1        The
information on contact methods (including communication address, contact
telephone number and fax number) provided by the Borrower herein is true and
effective.  If there is any change, the Borrower must immediately
mail/deliver the updated information in writing to the communication address
provided by the Lender herein.  Such updated information will only
become effective after it is actually received and the contact methods are
updated by the Lender.

      
        
           

        

        
          14

          
            

          

        

        
           

        

      

      12.2       Unless
expressly specified otherwise herein, the Lender has the right to use any of the
following means for sending notification to the Borrower.  The Lender
has the right to choose the notification method it deems appropriate and shall
not be responsible under any circumstance for any error, miss or delay of the
postal mail, fax, telephone or any other communication system.  If the
Lender chooses several notification methods, the notification will be considered
served on the basis of the faster method.

      
        (1)       Public
announcement: the notification will be considered served on the day when the
Lender publish such announcement on its website, online banking site, telephone
banking system or business website;

      

      
        (2)       Courier
delivery: the notification will be considered served on the day when the
Borrower signs the delivery receipt;

      

      
        (3)       Postal
mail (including special express mail, ordinary mail and registered mail): the
notification will be considered served 3 days (if, in the same city)/5 days (if,
in different regions) such mail is sent to the Borrower’s most recent mailing
address that the Lender knows (even though such mail may be
returned);

      

      
        (4)       Notification
by fax or by other electronic method will be considered served when it is sent
to the most recent fax number or e-mail address that the Lender
knows.

      

      

      Article
13       Disclosure of Information and
Confidentiality

      13.1       The
Lender must have the responsibility to keep confidential the Borrower’s
commercial secrets and other information and documents which carry written
legends requiring confidentiality; however the following circumstances are
excepted:

      (1)         Disclosure
as required by the applicable law and statutes or by the public offering
rules;

      (2)         Disclosure
as required by judicial or government authorities;

      (3)         Disclosure
made to the Lender’s outside business experts;

      (4)         Disclosure
made with the Borrower’s consent or authorization.

      13.2       The
Borrower agrees that, under the following circumstances, Communications Bank may
use or disclose all the information about the Borrower, including but not
limited to the Borrower’s basis information, credit transaction information and
other relevant information and documents and is willing to all the consequences
resulting from such use or disclosure:

      
        
           

        

        
          15

          
            

          

        

        
           

        

      

      
        (1)        Disclose
to and allow the use of such information and documents by business out-source
organization, third party service provider, other financial institution and
other agencies or individuals deemed necessary by the Lender for the following
purposes: (a) to develop lending business or in connection with lending
business, such as promoting Communications Bank’s lending service, collecting
the Borrower’s delinquent debt and transferring creditor’s claims; (b) to
provide, or is likely to provide, new products or services or further services
to the Borrower; and (c) to maintain, manage and improve customer
relations;

      

      
        (2)        Provide
such information and documents to China Credit Information Center or other
credit information agency or credit information data bank established with the
approval of the People’s Bank of China;

      

      
        (3)        Use, or
allow the use by a third party, such information and documents on a confidential
basis for the purposes of business operation, management, statistics and risk
control.

      

      

      Article
14      Governing Law and Dispute
Resolution

      This Contract is governed by the law of
the People’s Republic of China.  Any dispute arising from this
Contract should be submitted to the court of jurisdiction at the location of the
Lender.  During the course of resolving the dispute, both parties must
continue to perform other provisions not involved in the dispute.

      

      Article
15      Other Provisions

      15.1         The
Borrower agrees that the Lender will inquire about and keep the Borrower’s
credit information in connection with the Borrower’s loan application and loan
management.

      15.2         If,
due to Force Majeure or the malfunction in the communication, internet or the
Lender’s internal system, the Lender fails to release the loan proceeds or
processing payment on time, the Lender shall bear no responsibility but must
notify the Borrower promptly.

      
        
           

        

        
          16

          
            

          

        

        
           

        

      

      15.3         The
format of the “Withdrawal Application,” and the “Withdrawal Application,”
“Entrustment Payment Engagement Letter” and “Loan Certificate” executed by the
two parties hereto, and all other relevant documents and material acknowledged
by the two parties, are all inseparable components of this
Contract.

      15.4         The
“affiliate,” “related party transaction” and “major individual investor”
referenced herein have the same definition as the same terms used in “Enterprise
Accounting Principles No. 36 – Related Party Disclosure” (FC[2006]3) and in the
subsequent amendment thereto promulgated by the Ministry of
Finance.

      15.5         This
Contract becomes effective after it is signed by the respective legal
representative (responsible person) or authorized agent and/or imprinted with
the seals of both the Borrower and the Lender.

      15.6         This
Contract is executed in six counterparts, with one to each party hereto and one
to the guarantor(s) (if applicable).

      
        
           

        

        
          17

          
            

          

        

        
           

        

      

      Attachment:
“Withdrawal Application” Format [not translated]

      

      
        
          	
                    The
      Borrower has read carefully all the provisions above, and the Lender has
      provided corresponding explanation at the Borrower’s
      request.  The Borrower has no objection to the contents
      herein.

                

        

      

      

      The
Borrower (seal/signature)

      /seal/ Xi'an Baorun Enterprise
Development Co., Ltd.

      Legal
Representative (Responsible Person)

      /s/        GAO
Xinnian

      October
28, 2010

      

      The
Lender (business seal)

      /seal/ Communications Bank
Holdings Co., Ltd. Sha'anxi Branch.

      Responsible
Person (Authorized Agent)

      /s/        ZHAO
Juxia

      October
28, 2010

      
        
           

        

        
          18

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