Premises Leaseback Agreement

1  

Party A is a duly established foreign invested enterprise.  It owns the land use right to the land lot located at No. 93, Xin Song Road, Kaifeng City, Henan and the titles to the buildings thereon.  This land lot has been granted by the state for the purpose of industrial use.

2  

Party B is a limited liability company established by two natural persons (Zhang Peizhuang and Fang Binjie).

3  

Now, the Parties have agreed that Party A will lease parts of Factory Premises on the aforesaid land to Party B.

1.1  

The Factory Premises to be leased by Party A to Party B are located at No. 93, Xin Song Road, Kaifeng City, Henan with total construction area of 27,451 m ² .  Reference is made to Appendix I to this Agreement for the numbers of the building title certificates for the Factory Premises to be leased to Party B (the Factory Premises to be leased to Party B by Party A would hereinafter be referred to as the “Factory Premises ”).

1.2  

Party A hereby enters into this lease with Party B as the owner of titles to the Factory Premises.  Before entering into this Agreement, Party A has demonstrated to Party B the Agreement for Transfer of Land Use Right and Housing Titles under which Party A obtained titles to The Factory Premises

2.1  

Party A has examined the business license or the contemplated business scope of Party B.  Party B warrants to Party A that Party B will use The Factory Premises strictly in accordance with its approved business scope during Party B’s lease thereof.

2.2  

Party B warrants that Party B will not, unless having been approved in writing by Party A or by competent regulatory authorities (including work safety authority, fire control authority, etc.) according to relevant regulations, conduct in the Factory Premises any production activities other than those set forth in Article 2.1.

3.1  

Party A will deliver The Factory Premises to Party B immediately after Party A acquires title to the Factory Premises pursuant to the Agreement for Transfer of Land Use Right and Housing Titles entered into between Party A and Party B on August 26, 2008.  The term of this lease will start on the date of such delivery and lasts for one whole year.

3.2  

Upon expiration of this lease, Party B will return The Factory Premises on a timely basis.  If Party B intends to extend the lease, it will inform Party A in writing of its intent for extension of the lease three months prior to the expiration to the lease.  If Party A so agrees, both Parties will sign a new Factory Premises Lease Agreement.

4.1  

The annual total rental for The Factory Premises will be the RMB equivalent of US$ 80,000 (the applicable conversion rate will be the foreign exchange rate quoted by the People’s Bank of China for Renminbi on the date of the execution of this Agreement).

4.2  

Party B will pay each annual rental prior to December 31 each year.  Party B will wire transfer the payment to the below bank account designated by Party A, or pay the amount in other methods as agreed upon in writing by the Parties:

5.1  

At the delivery of The Factory Premises, Party B will pay no earnest money for the lease of The Factory Premises.

5.2  

During the term of this lease, Party B will be responsible for payment of fees relating to tap water, electricity, gas, telecommunication, facilities, property management, etc.

5.3  

During the term of this lease, Party A is responsible to secure property insurance for The Factory Premises, and Party B is responsible to secure property insurance for Party B’s assets in The Factory Premises.

6.1  

During the term of this lease, Party B shall be responsible for reasonable maintenance of the equipment and other assets inside the building; Party A will, at its own cost, be responsible to maintain and repair for damages during ordinary use of the Factory Premises unless such damages are caused by Party B’s fault or negligence.  Party A will repair within three working days after the receipt of Party B’s notice.  If Party A fails to repair within the aforesaid time limit, Party B could repair such damages itself, and then promptly inform Party A of such repair and present to Party A relevant invoices for the expense incurred, and Party A will bear expenses reasonably incurred in connection with Party B’s repair.

6.2  

During the term of this lease, Party B will reasonably use and take care of The Factory Premises and relevant facilities.  Party B will bear mainten