SHANGHAIPUDONG DEVELOPMENT BANK MaximumGuarantee Agreement

2.1

Scope of Guaranty

2.2

Mode of Guaranty

2.3

Guaranty Period

2.4

Alteration of AGREEMENT

3.1

the Guarantor shall be a independent legal subject that has complete civil capacity to perform the obligations of the Agreement under the name of itself and assume the civil responsibility independently;

3.2

The Guarantor has the authority to sign the Agreement, and the Guarantor has already obtained all the authorization and approval required by the Agreement; The terms and conditions of this Agreement are reached on a basis of the Guarantor’s real intent and free will and shall have legal binding force on the Guarantor.

3.3

the Guarantor hereby undertakes that there is no any infringement of the laws (the laws hereof includes laws, regulations, rules, local laws and regulations, judicial interpretation), Articles of Association, relevant documents of the bodies with power, judgments or decisions and any conflict with other Agreements or agreements the Guarantor has already signed or any other obligations the Guarantor has already taken during the execution and performance of this Agreement.

3.4

the Guarantor shall promise all financial statements (if any) complies with the laws and regulations of PRC (excluding Hong Kong, Macau SAR and Taiwan Region) and could gives a real, complete and unprejudiced explanation of the financial conditions of the Guarantor and all documents and materials submitted to Party A are accurate, real, complete, valid without any concealment.

3.5

the Guarantor shall vow to go through the filling, registration or other procedures required by the validity and legal performance of the Agreement and pay relevant expenses;

3.6

there occurs no big adverse change of the operational and financial situation since the latest audited financial statement;

3.7

the Guarantor has disclose all the facts or information it knows or should know which is important for the Creditor to decide whether to offer the loan under the AGREEMENT;

3.8

the Guarantor hereby confirms any arrear of wage, medical care, disability benefits and compensatory payment has not happened or will not happen in the execution date and during the performance of this Agreement;

3.9

the Guarantor undertakes there is no situation or event that has or may have material negative effect on the performance capability of the Guarantor.

4.1

the Commitments of the Guarantor

4.1.1

The Guarantor shall not take the following actions without the written content of the Creditor:

4.1.1.1

dispose the whole or majority of the significant assets in ways of sale, donation, rent, transfer, mortgage, pledge or other measures;

4.1.1.2

change materially the operative mechanism or property organization form, including but not limited to the Agreement operation, leasing, consortium, corporation system reform, shareholding reform, share transfer, merger (or acquisition), joint venture with foreign investment (or cooperation), division, establishment of subsidiaries, transfer of property and decrease of registered capital;

 

4.1.1.3

change the business scope or major businesses and to alter the Articles of Association;

 

4.1.1.4

providing the guarantee to the third parties, which has huge negative effect on the Guarantor’s financial situation and its capability to perform the obligations under the Agreement;

 

4.1.1.5

apply for reorganization, bankruptcy and dismissal of the company;

4.1.1.6

Sign the contracts/agreements that have huge adverse effect on the Guarantor’s ability to perform the obligations under the Agreement or assume relevant obligations that have same effect.

4.1.2

the Guarantor undertakes to promptly notify the Creditor of the event on the day of the event and send the originals of relevant notice (stamped by Non-natural person or signed by natural person) to the Creditor in 5 business days after the day of the event in case of the following circumstances:

 

4.1.2.1

the events that denies the authenticity and accuracy of the statements and commitments the Guarantor makes in this Agreement happen;

 

4.1.2.2

the Guarantor or its controlling shareholder, actual controller or the related parties being involved in litigation or arbitration, or its asset being distrained upon, sealed-up, frozen or enforced or being imposed by other measures that have same effect, or its legal representative, director, supervisor and senior management staffs being involved in actions, arbitrations or other enforcement measures.

 

4.1.2.3

the change of the legal representative or its authorized representatives, responsible person, major financial responsible person, communication address, company name and work place of the Guarantor, or the change of the Guarantor’s domicile, habitual residence, work unit and name, or long-term departure of the residence place, or any adverse change in the Guarantor’s income level;

 

4.1.2.4

the reorganization and bankruptcy applied by other debtors or the revocation made by the governing authority.

4.1.3

the Guarantor undertakes to submit relevant financial materials or income certification as required by the Creditor at any time;

4.1.4

the Guarantor undertakes to assume the joint and several liabilities to complement the security deposit in case that the debtor fails to make up the deficiency of the security deposit (including early making-up) as required by the Creditor in issuing L/C, Letter of Guarantee or Standby L/C. The making-up of the deficiency of the security deposit shall not constitute the exemption of the guarantee liability the Guarantor shall undertake in accordance with the Agreement. Any losses (including interest losses) arising out of the performance of the obligation to complement the security deposit under the Agreement shall be borne by the Guarantor itself.

4.1.5

the Guarantor hereby vows to suspend the exercise of recourse right or relevant rights arising from the performance of the Agreement before the debtor pays off all debts under the AGREEMENT;

4.1.6

The Guarantor shall continue to assume the joint and several liabilities for the early repayment or the sustained debts in case of the revocation of the individual repayment if the debtor repays the debt in whole or in part early or liquidates individually.

4.2

Deduction Provisions

4.2.1

The authorized Creditor should directly deduct the same amount of money from any account the Guarantor opens in Shanghai Pudong Development Bank to clear off the overdue debt or deficient security deposit in case of the overdue debt or that the security deposit shall be made up by the Guarantor.

4.2.2

Unless the authorities have particular regulations, the deducted money should clear off all debts in the following orders: first the money should be used to pay off the overdue expenses charged for the Guarantor and debtor; then the money should be used to pay off the interests of the overdue bills; the remaining money should be used to pay off the principals of the overdue bills; if there are several overdue claims, it is the Creditor’s right to decide the priority of the pay-off.

4.2.3

In case of any discrepancy between the currency of the accounts deducted and the currency of repayment, the Creditor will be responsible for conversion with an exchange rate determined by it and the Guarantor shall bear the exchange rate risk.

4.3

Certification of debt

4.4

Notification & Service

4.4.1

The notice from one party to the other party shall be sent to the address specified at the signature page of this Agreement, or other address changed by the other party against written notice. If the notice is delivered to the address mentioned hereinabove, the service shall be deemed completed in the following date: the seventh bank business day as from the date when the notice is sent by registered mail to the major business place (for the corporation and its branches and subsidiaries or other organization) or the domicile (for natural person) in case of mail service; the date signed by the recipient upon receipt in case of special service; the transmission date in case of facsimile or Email. However, the service of all notice, requirement or other communication sent to the Creditor shall be deemed completed upon the actual receipt of the Creditor. The notices sent to the Creditor in the form of facsimile or Email shall be confirmed by the originals (sealed by Non- natural person or signed by natural person) that could be delivered face-to-face and sent by mail to the Creditor afterwards.

4.4.2

the Guarantor hereby agrees that the service of any court summons and notices during any litigation hereof shall be deemed completed upon their arrival at the domicile stated at the end of the Agreement. Any adjustment to the address hereinabove shall not be valid for the Creditor without prior written notification.

4.5

Validity, Amendment and Termination

4.5.1

This Agreement shall be effective from the date of sealing by the Guarantor and the Creditor and the signing or sealing by their legal representative/ responsible person or authorized representative (signature only for natural person Guarantor) to the date when the guaranteed debts under the Agreement are paid off.

4.5.2

The Agreement is independent of principal AGREEMENT in the validity. In other words, the total or partial invalidity of AGREEMENT shall not affect the effectiveness of this Agreement and the obligation of the Guarantor;

4.5.3

the Agreement shall not be changed unilaterally or terminated early by either party after the Agreement becomes effective; A written agreement shall be reached between the parties hereto after negotiation in case that the Agreement shall be amended and terminated early.

5.1

Breach of Agreement

5.1.1

Any statement, explanation, guarantee made by the Guarantor during the term of the Agreement or other relevant notice, authorization, approval, content, certificate or other documents made by the Guarantor in compliance with or related to the Guarantor are incorrect or misleading, or have been proven incorrect or misleading, or have been proven invalid, revoked or legally unbinding;

5.1.2

Any infringement of one of the provisions of Article 4 of this Agreement;

5.1.3

when the Guarantor’s business is suspended, terminated, shut-down, restructured, reorganized, taken-over or mandated, dissolved, revoked or cancelled or bankrupted;

5.1.4

Death or declaration of death of the Guarantor in case the Guarantor is natural person;

5.1.5

the change and transfer of the asset or attempted transfer of the asset by virtue of marital relations by the Guarantor;

5.1.6

Deteriorating financial situation, serious difficulties in production and business operations or some circumstances that may affect the Guarantor’s operational situation and financial condition or performance capability.

5.1.7

the Guarantor or its controlling shareholder, actual controller or the related parties being involved in litigation or arbitration, or its asset being distrained upon, sealed-up, frozen or enforced or being imposed by other measures that have same effect, or its legal representative, director, supervisor and senior management staffs being involved in actions, arbitrations or other enforcement measures.

5.1.8

Any infringement of this Agreement that could hinder the smooth performance of this Agreement or other behavior of the Guarantor that may lead to the damage of legitimate interest of the Creditor.

5.2

Settlement of Breaches

6.1

Applicable Law

6.2

Settlement of Disputes

6.3

Miscellaneous

(1)

Any matters not provided herein shall be added in Article 7 or supplemented subject to an agreement entered into between the parties. The appendixes to the Agreement (please see Article 7 of this Agreement) shall form integral parts of the Agreement and shall have the same binding force as the Agreement itself.

(2)

Words and expressions in this Agreement shall have the same meanings respectively assigned to them in the AGREEMENT hereafter referred to, unless otherwise provided.

7.1

The AGREEMENT guaranteed by this Agreement (in correspondence with WHEREAS clauses)

 

(1)

The AGREEMENT covers a series of Agreements signed between 26th June, 2009 and 25th June, 2011. The Creditor of this Agreement is Zhengzhou Branch, Shanghai Pudong Development Bank stated in the AGREEMENT;

 

(2)

The debtor under the AGREEMENT is Henan Shuncheng Group Coal Coke Co., Ltd. Domicile: Nangongye Rd., Tongye Town, Anyang.

7.2

The Primary Creditor’s right (in correspondence with Article 1 of this Agreement)

7.3

Settlement of Breaches (in correspondence with Clause 2, Article 5)

7.4

The appendixes of this Agreement includes: (in correspondence with Para.1, Clause 3, Article 6)

7.5

Other provisions (in correspondence with Para.1, Clause 3, Article 6)

7.6

The Agreement shall be in originals, respectively held by the Guarantor, the Debtor, and                     , and the originals have same legal effect.