JOINT VENTURE AGREEMENT

SUNSI ENGERGIES HONG KONG LIMTIED , a private company incorporated with limited  liability under the laws of the Hong Kong Special Administrative Region of the People's Republic of China having is registered office at 401 Jardine House, I Connaught Place, Central, Hong Kong (" SunSi ")

Zibo Baoyun Chemical Plant , an enterprise established under the laws of Peoples Republic of China having its registered office at [CHINESE OMITTED] (name of legal representative: Song Yihua, title: General Manager, nationality: Chinese (" PRC Party ")

("SunSi" and "PRC Party" are hereinafter referred to collectively as tile " Shareholders " and each Individually as a " Shareholder ")

A.           The Shareholders wish to participate together in a joint venture for establishing the Company (as hereinafter defined) for the purpose of conducting the Business (as hereinafter defined);

1.2.1.       a "subsidiary" of a company or corporation shall be construed as a reference to any company or corporation.

(a)           which is controlled directly or indirectly by the first-mentioned company or corporation; more than half of the issued share capital of which is beneficially  owned, directly or indirectly, by the first-mentioned company or corporation; or

(b)           which is a subsidiary of another subsidiary of the first-mentioned company or corporation,

and, for these purposes, a company or corporation shall be treated as being controlled by another if that other company or corporation is able to direct its affairs and/or to control the composition of its board of directors or equivalent body;

1.2.2.       a "person" includes a reference to any individual, firm, company, corporation or other body corporate, government, state or agency of a state or any joint venture, association or partnership, workers' council or employee representative body (whether or not having separate legal personality);

1.2.3. "parties" means the parties to this Agreement and "party" shall mean any one of them.

2.1.          The parties shall cooperate together to establish limited liability company as a sino-foreign joint venture under the laws of the PRC in Baoyung, Shangdong Province under the name of "Zibo Baoyuan Chemical Company Ltd." ([CHINESE OMITTED]) (the " Company "). The registered office of the Company locates at [CHINESE OMITTED]

2.2.          The Company shall engage in the production and sale of tricholorsilane, phosphorus trichloride, phosphorus oxychloride, silicon tetrachloride, and such other byproducts or additional products as may be produced; provision of technology consultancy and related services (the " Business ").

2.3.          The Company may carry out any other commercial, industrial or financial activities that it may deem useful which are additional or ancillary to the Business.

2.4.          Nothing in this Agreement shall limit the Company from migrating to another jurisdiction or entering into a merger with an entity in another jurisdiction, provided that such migration or merger has been approved by the Board of Directors.

3.1.          The total amount of the investment in this joint venture shall be USD20,000,000.

3.2.          As soon as practicable, the parties shall cooperate together to cause the Company to be formed as a sino-foreign joint venture enterprise. The registered capital of the Company shall initially be USD9,600,000 (or other amount to be determined by authorities or the parties. The Shareholders shall inject the registered capital of the Company as required under Clause 4.1.

3.3.          The PRC Party shall cause and procure all of its assets and business to be transferred and assigned to the Company including:

3.3.1.       all land use rights,

3.3.2.       all plant and factory

3.3.3.        all vehicles, equipment, machinery, furniture and fixtures;

3.3.4.        all raw materials, work in progress, finished product, inventory, supplies;

3.3.5.        all contracts, accounts receivables,

3.3.6.        all employees;

3.3.7.        all licenses, leases, permits and authorizations presently issued in connection with the operation of all or any par of the Business as it is presently being operated;

3.3.8.        all warranties, issued by any manufacturer or contractor in connection with construction or installation of equipment or any component of the improvements included as part of the Business;

3.3.9.        all other intangibles associated with the Business, including, without limitation, goodwill, all logos, designs, trade names, trademarks related to the Business,

3.3.10.      all telephone exchange numbers specifically dedicated and identified with the Business;

3.3.11.      all books and records, accounting vouchers, customer and supplier files, customer and supplier lists and customer marketing information relating to the Business;

3.3.12.     all plans and specifications, engineering drawings and prints with respect to the improvements, all operating manuals, and all books, data and records regarding the physical components systems of the improvements at the Property;

3.3.13.      all licenses and permits currently used and as are necessary to operate the business currently operated by the PRC Party and any and all other assets used in

                 the business of the PRC Party (the "Assets").

3.4.          PRC Party shall cause the Directors to be appointed in accordance with Clause 13.2. The PRC Party shall cause the General Manager and legal representative (who shall be the Chairman) to be appointed in accordance with Clause 13.3.

4.1.          SunSi shall subscribe for and acquire such a 90% interest in the Company for the aggregate capital contribution of USD8,640,000 (the "SunSi Initial Capital Contribution ") to be paid as follows:

4.1.1.        USD5,184,000 within six (6) months after Closing; and

4.1.2.        USD3,456,000 within twelve (12) months after Closing.

4.2.          The PRC Party shall acquire a 10% interest in the Company for the capital contribution of USD9,600,000 (the "PRC Party Initial Capital Contribution") when required to do so by the relevant government authorities.

4.3.          If the Board of Directors determines that the Company requires additional funds for its operations, the Shareholders shall provide such funds as Additional Contributions to the Company, pro rata in proportion to their respective Company Percentages. Such Additional Contribution shall be made by way of additional capital Injections.

4.4.          Should either Shareholder (the "Non-funding Shareholder") fail to fund or delay in funding such Additional Contribution as and when required, the other Shareholder (the "Funding Shareholder") may provide to the Company the amounts not funded by the Non-funding Shareholder as Additional Capital Contribution, in which case (i) the Company Percentage of the Non-funding Shareholder shall be subject to dilution at a multiple of up to 2:1 and (ii) the Non-funding Shareholder shall be liable to pay an interest to the Funding Shareholder at such rate of interest not exceeding 10% per annum on the principal amount so funded by the Funding Shareholder from the date of funding to the date of payment of such interest.

5.1.          The PRC Party shall be responsible for the following:

5.1.1.       handling applications for approval, registration, business license and other matters concerning the establishment of the Company to relevant authorities in PRC;

5.1.2.       procuring the signing of a 30-year land lease contract between the Company and Shangzhuang Village for 100mu of land in Shangzhuang Village on which the Company may construct its workshop and manufacturing facilities capable of production of tricholorsilane, phosphorus trichloride, phosphorus oxychloride, and silicon tetrachloride;

5.1.3.       organizing the design and construction of the workshop and other construction facilities of the Company;

5.1.4.       assisting the Company in purchasing or leasing equipment, material, raw materials, articles for office use, means of transportation and communication facilities etc.;

5.1.5.       assisting the Company in contacting and settling the infrastructure facilities such as water, electricity, transportation etc.;

5.1.6.       assisting the Company in recruiting management personnel, technical personnel, workers and other personnel as needed:

5.1.7.       assisting foreign workers and staff in applying for entry visas, work permits and handling their travel procedures; and

5.1.8.       handling any and all other matters relating to the establishment of the Company as a going concern as requested by SunSi.

6.1           SunSi's obligations to make the SunSi Initial Contribution and to acquire a 90% interest in the Company in accordance with Clause 4.1 are subject to and conditioned upon the satisfaction or waiver of following conditions precedent:

6.1.1.       the conduct of a due diligence exercise by SunSi on the business and Assets to the sole satisfaction of SunSi;

6.1.2.       the establishment of the Company in accordance with the terms of this Agreement and all applicable PRC laws and regulations within 30 days from the date of this Agreement and Sunsi has provided the documents necessary for application for approval of the Joint Venture;

6.1.3.       the transfer of all the Assets by the PRC Party to the Company in accordance with the terms of this Agreement and all applicable laws in the PRC to the sole satisfaction of SunSi;

6.1.4.       the approval of this transaction by the legal representative of the PRC Party;

6.1.5.       the approval of the transfer of Assets by the legal representative of the PRC Party;

6.1.6.       the approval of this transaction by the board of directors and shareholders of SunSi;

6.1.7.       the lease or land use rights to the land "cheng bao" as described in Clause 5.1.2 being granted to the Company for a period of 30 years for the initial total "cheng bao fee" of 150,000 RMB per year which "cheng bao fee" maybe adjusted by the Government Authorities according to the Consumer Price Index from time to time ;

6.1.8.       the receipt of all required approvals, consents, licenses and authorizations of state, federal and foreign (e.g., PRC government) regulatory authorities for the formation of Company, the transfer of the Assets and business to by the PRC Party to the Company;

6.1.9.       the receipt of all required consents of third parties, if any;

6.1.10.     all the representations and warranties of the PRC Party remaining true and accurate in all material respects;

6.1.11.     the absence of any material adverse change in the Company or the business operated by it, except as contemplated in this Agreement;

6.1.12.     the absence of any governmental action or proceeding prohibiting or enjoining the transaction; and

6.1.13.     the preparation of a finalize audit of the PRC Party to the sole satisfaction of SunSi under US GAAP (if required).

6.2.          If any of the conditions precedent set forth above have not been fulfilled to SunSi's sole satisfaction or waived by SunSi, at its sole discretion within 90 days of the date of this Agreement, SunSi shall. have the right to:

6.2.1.       transfer the SunSi Company Percentage to the PRC Party; or

6.2.2.       extend the time for the fulfillment of the conditions to a time determined by SunSi, at its sole discretion; or

6.2.3.       proceed to Closing on such terms and conditions as SunSi may determine at its sole discretion.

7.1           The closing of the transactions contemplated in this Agreement (the " Closing ") shall take place within 15 days after the satisfaction or waiver of all the conditions precedent set forth in Clause 6.1 or on such other date agreed upon by the parties hereto (the " Closing Date ").

7.2.          The Closing shall be held on the Closing Date at the offices of Messrs. Boughton Peterson Yang Anderson at 409 Jardine House, I Connaught Place, Central, Hong Kong, or at such other location agreed upon by the parties hereto.

7.3.          If the Conditions Precedent set forth in Clause 6.1 have not been fulfilled to SunSi's sole satisfaction on or before the Closing Date, SunSi shall have the right to terminate this Agreement and upon such termination, no party shall have any further right or obligation hereunder.

8.1.          The PRC Party shall deliver the following documents at Closing:

8.1.1.       documentary proof of its acquisition of a 10% interest in the Company if not already provided;

8.1.2.       such other assignments, instruments of transfer, and other documents as SunSi may reasonably require in order to complete the transactions contemplated hereunder or to evidence compliance by the PRC Party with the covenants, agreements, representations and warranties made by it hereunder;

8.1.3.       documentary evidence satisfactory to SunSi to show that all transfer tax returns, if any, which are required by law and the regulations issued pursuant thereto in connection with the payment of all Taxes that are payable or arise as a result of the consummation of the transactions contemplated by this Agreement, in each case, as prepared and duly executed by the PRC Party, if any;

8.1.4.       formal written opinion of PRC counsel acting for Sunsi dated as of the Closing Date that the Assets have been transferred to the Company in accordance with all applicable PRC laws and regulations, that the Company has good and valid title to the Assets free and clear or encumbrances or claims of any nature whatsoever;

8.1.5.       In relation to the Company the Memorandum and Articles of Association, the certificate of incorporation, common seal, register of members, register of directors, register of directors, register of shareholdings, register of charges, all other requisite registers, minutes of directors and shareholders' meetings in proper order and condition and fully entered up to Closing;

8.1.6.       signed resolutions and/or minutes of the directors of the Company resolving the following:

(a)           the acquisition by SunSi of a 90% interest in the Company and the registration of SunSi as a member of the Company; and

(b)           the appointment of directors and other officers of the Company and the legal representative that have been nominated in writing for that purpose by SunSi and who have consented in writing to such appointment.

9.1.          SunSi shall deliver or shall cause to be delivered the following at Closing a certified true copy of the board resolutions of SunSi approving this Agreement and the transactions contemplated herein.

10.1         A Shareholder (the " Transferring Party ") may not Transfer all or any portion of or all of its Interests to a third party, unless:

10.1.1.     with the prior written consent of the other Shareholder (the " Non-Transferring Party "); and

10.1.2.     with the consent of the relevant Governmental Authorities; or

10.1.3.     the Transferring Party has complied with the provisions of Clause 10.5 below and the Non-Transferring Party has failed to serve the Exercise Notice (as defined in Clause 10.5) in accordance with Clause 10.5; and

10.1.4.     the price and terms offered to such third party by the Transferring Party shall not be more favorable than those offered to the Non-Transferring Party pursuant to Clause 10.5 below in respect of such Interest being offered for sale.

10.2.   &nb