SHENZHEN ZHENYE(GROUP)CO., LTD. Equipment Purchasing Contract

2.

Delivery Location

Delivery location: Building Site of Zhenye City Phase 2-5, Henggang Liuyue, Longgang District, Shenzhen

3.

Way of Delivery and Time

Once the contract is validate, Party C should provide Product Purchase Plan to Party B in different parts. Party B must deliver the products to the specified location (reachable by truck) by Party C within 40 calendar days after the order had been received.

4.

Technical Standards and Quality Requirement

4.1

The equipments supplied by Party B should be brand new (including spare parts), and are conform to the national testing standard or have qualification certificate issued by relative quality testing department. The product specification and technical data should conform to the requirement of relative national administrative department. Party B should provide free operation training service and usage instructions and relative material. The Construction Party should organize initial inspection and acceptance within 3 days after the products are delivered to the construction site. The products are to be considered qualified if the Construction Party does not inspect and accept the products after 10 days. The risk for damages and lost should be afforded by Party B before the Construction Party accept the products.

4.2

Party B is not allowed to revise the requirement of the equipment/material.

4.3

Reasonable suggestions regarding revisions and replacement to/of the equipment/material proposed by Party B when supplying the products should be agreed by Party A and Party C. If Party B change and substitute the equipment/material without permit of Party A and Party C, Party B should afford the cost and reimburse the relative loss caused to Party A and Party C, and the delivery date is not allowed to be postponed.

4.4

If Party C agrees with the reasonable suggestions proposed by Party B, the cost and profits generated by such suggestions, Party B and Party C will afford or share in way specified in separate agreement.

4.5

During the contract term, if Party A and Party C require changing the specification of the equipment/material or other actual change happens, it should be solved by the three parties through negotiation.

4.6

Party C should not afford any responsibility for quality.

5.

Equipment Installation/ Material Using for Construction

Before starting to install the equipments, Party B should set a meeting time with the Installation (Construction) Party to specify the technique for the equipment installation and the material usage and meanwhile invite the supervising department and Party A to join the meeting. If there are quality problem, equipment and material damage, failure to pass the inspection and other damage to Party A due to lack of the meeting, the Installation Party should take the whole responsibility while Party B take related responsibility.

6.

Equipment/ Material Quantity and Test/Measure Method

6.1

Party B should supply the products according to the list of this contract, if Party C does not deliver separated written notice according to the contract.

a)

The actual quantity the Construction Party accepts is subject to the quantity of the qualified products passing the inspection. But the quantity could not exceed the agreed quantity specified in the equipment/material list.

b)

During the process of on-site quantity measuring, if Party A authorizes the Installation Party to take part in the inspection process, Party A should coordinate with the Installation Party to arrange at least one person to take part in the inspection process while Party B should also arrange at least one person to join the measuring. The on-site measuring should be prepared and recorded by Party B in written form. All the parties should sign on the written record after the process is finished. If Party B fails to prepare and record the measuring process and does not fill up within 48 hours, and according to need, it could be re-measured but the cost caused should be afforded by Party B.

c)

Party B could accept the requirement for increasing quantity of the Construction Party, in condition that the Construction Party delivers a written notice with signature of representative of Party A at a production cycle in advance, the project manager of Party B confirms by signature. The production cycle time should be specified in the special clauses agreed by both Parties. Party B should deliver the products ASAP if there are finished products in stock.

7.

Packaging and Transportation

7.1

Packaging

a)

Despite the circumstance that Party A specifies requirements about packaging in the special clauses, the packaging of equipment and material is charged by Party B, Party B should design the packaging in method suitable for transporting and warehousing. The cost is already included in the contract price.

b)

The packaging should be anti-wet, anti-rain, anti-rust, anti-shaking or anti-erosion according to different characteristics of different materials. Party B should take the risk of poor packaging. Party B should afford the damage of the products due to poor packaging design, making or quality. If such damages cause the delay of the construction and extra labor cost of Party A, Party A has the right to require reimbursement.

c)

There should be product name, specification, color, quantity, products grade, piling requirement, and environment requirement and manufacturer information on the package. Losses caused by wrong installation, piling and warehousing due to missing or unclear mark on the package should be afforded by Party B. If such losses cause the delay of construction and extra labor cost of Party A, Party A has the right to require reimbursement.

d)

Considering the protection of environment, if Party A requires, Party B should do its best to handle the recycle of the packing material,and the recycling fee should be paid to Party A could be decided by the two parties through negotiation.

7 . 2

Transportation

The transportation and the risk during transportation of the equipment and material specified in this contract should be responsible by Party B. The transportation fee and transportation insurance fee are specified in this contract. Party A and Party C are free of such responsibility.

8.

Delivery and Inspection

8.1

Delivery

8.11

It is specified in this contract that Party B should be responsible for the delivery of the products. Despite the force majeure, Party B should deliver the products to the location and by time specified in this contract. Party B should pay penalty of 0.1 percent of the contract price per day to Party C for delay of delivery.

8.12

Party B should inform Party A the delivery time by written notice 10 days before the delivery and get confirmation by Party A. Party A is responsible for preparing the site and arranging inspector for the inspection.

8.13

Party B should inform Party A the exact time by written notice 48 hours before the delivery and get confirmation by Party A, the confirmed time should be precise to hour, and if the delivery is delayed more than 4 hours, Party B should pay penalty of five hundred Yuan per time.

8.14

Party B can accept Party A’s requirement about the delivery time adjustment, temporary stop of supply or resume supply in condition that: Party A and Party C reach into consensus and deliver a written notice with signature of project manager of Party A 15 days in advance, and this can be executed after the project manager of Party B confirms by writing. In such circumstances, Party A does not bare any contract breach responsibility.

8.2

Inspection and Acceptance

8.21

The inspection and acceptance should start after all the products are downloaded from the truck on the specified location.

8.22

Both Party A and Party B and the entrusted inspector by Party A should conduct inspection and acceptance according to the measuring method, technical standard and quality specified in this contract. The main points to be confirmed: quantity, specification, origin, quality grade, measurement, color, data plate, complete packaging mark, perfect status, delivery material. All the parties’ signatures means the inspection and acceptance are completed. And all the equipment/material can be put into use, but this does not exempt Party B’s responsibility, contract responsibility and reimbursement responsibility to the defected and unqualified manufacture, design and function of the supplied products.

8.23

If there is disqualification in quantity, specification, origin, quality grade, measurement, color, data plate, complete packaging mark, perfect status, delivery material, Party A has the right to refuse to accept or partially accept, return, partially return or terminate the contract, and require Party B to reimburse the losses due to construction delay and re-work.

8.24

Within 3 days after delivery, Party A should take sampling for inspection at time confirmed with Party B, if the sample fails to pass the inspection, Party A has the right to refuse acceptance, return products, terminate the contract and require Party B to reimburse the loss due to construction delay and re-work.

9.

Contract Price and Payment

9.1

Contract Price

9.11

The unit price of each product is specified in the clause 1 Equipment Material List, any of the parties can not change without leave .Despite the three parties agreed or supplement in other special agreement, the contract price includes: the price Party B delivers the finished equipment and material which conform to technical standard and quality requirement according to the contracted list to said location(ground surface) agreed by both Party A and Party B and pass the equipment and material to Party A. This includes: manufacturing, packaging, transporting (including insurance), tax, all the fees regarding delivery to the building site and pile the products to agreed location of Party A and second load and discharge fee, also includes fees for on-site coordination, on-site inspection and acceptance preparation, sampling testing, delivery of sample for inspection, mending and replacing due to quality problem, technical guidance and training. The total price is subject to the actual quantity of supply.

9.12

Under circumstances that Party A requires changes to the equipment/material, Party B should provide a report on price change within 14 days after Party A confirms the changes to the equipment/material. The contract price can be changed after Party A and Party C’s confirmation. The price change follows below method:

If there is unit price conform to the equipment/material change specified in the contract, the contract price should be changed according to the specified unit price in the contract; If there is only similar unit price conform to the equipment/material change specified in the contract, the contract price can be changed accordingly with the specified unit price in the contract for reference; If there isn’t same or similar unit price conform to the equipment/material change specified in the contract, Party B can propose a reasonable price change and such change can be executed after Party A and Party C’s confirmation.

9.13

If Party B does not provide price change report regarding the equipment/material change to Party A within 14 days after both parties confirm the changes to the equipment/material, it will be considered that such change does not lead to the change of the contract price.

9.14

Party B does not have the right to add up the contract price if the change to equipment/material is due to Party B’s own problem.

9.2

Contract Price Payment

1)

20% of the contract price should be paid to Party B as deposit within 20 working days after the signature of this contract.

2)

60% of the contract price should be paid to Party B within 20 days after all the products are inspected and accepted on the building site and all the payment files are complete.

3)

15% of the contract price should be paid to Party B within 20 days after the building project is completed, accepted and squared with all the payment files are complete.

4)

5% of the contract price is to be reserved as warranty fund. This amount should be squared according to the regulations specified in clause 11.2 after the guarantee period.

5)

The paying period is within 20 days after all the payment files are provided.

9.21

The payment proofing files include:

9.22

Party A and Party C do not afford contract breach responsibility if the payment delay is due to Party B’s failure of providing valid payment proofing files in time.

10.

Breach of Contract, Disputes and Claim Indemnity

10.1

Breach of Contract

10.11

Any of the three party can not execute this contract fully would be considered as breach of contract.

10.12

Despite all the three parties all agree to terminate this contract, the party which breach the contract should still execute this contract while afford the responsibilities of breach of contract.

10.13

If Party B does not execute the contract seriously or oversee any work and responsibility of Party B specified in this contract, and does not take effective measures to improve and take effect within 15 days after Party A and Party C deliver written notice of require improvement, Party A and Party C have the right to terminate the contract after consensus and inform Party B by written notice. Party A has the right to inform Party C by written notice to keep back reimbursement for the economic losses caused by the above behavior from the payment should be paid to Party B by Party C.

10.14

Regarding the penalty of breach of contract that Party B should pay to Party A but does not pay to Party A in time after Party B receives the written notice from Party A, Party A has the right to inform Party C to deduct from the payment should be paid to Party B by Party C.

10.2

Dispute

10.3

Claim Indemnity

11.

Construction Guidance and Quality Warranty

11.1

Party B should afford the quality warranty responsibility during the quality warranty term of the equipment and material delivered to the construction party according to law, administrative regulations or relative national regulations regarding quality warranty of the equipment and material.

11.11

Term of Quality Warranty: should not be shorter than the term specified in this contract and the national regulation. The term starts from the date of admission of Zhenye City 2-5 phase. The exact length is two years.

11.12

Quality Warranty Scope: Items included in the contract price of this contract, all the other agreements between Party A and Party B and quality problem caused by Party B are all included in the quality warranty. And all the losses of Party A and property owners due to the quality problem caused by Party B should be responsible by Party B. Construction project quality problem caused by poor design or improper usage by Party A, Party B provide rework service on Party A’s expenses.

11.13

Equipment Installation Guidance and Trial Run of Equipment:

Party B should arrange professional engineer to the building site of Party A to guide the downloading the equipment and arrange trial run for the equipment after the construction party finishes the installation; During the trial run, if any failure happens, Party B should arrive the location of the equipments within 4 hours upon receiving phone calls from Party A or the property owner and solve the failure within 48 hours. If Party B does not arrive at the site in time, Party A can arrange other companies or people to handle and the cost would be deducted from the contract price.

11.14

After Sale Service and Maintenance

During the quality warranty, despite improper operation by the operator, any problem caused by the product itself which influence the normal usage of the equipment, Party B should troubleshoot the failures within 48 hours after receiving the product with fault delivered by the construction party. If Party B does not arrive at the site in time, Party A can arrange other companies or people to handle and the cost would be deducted from the quality warranty bail and the exceeding part should be paid by Party B.

11.15

Party B Maintenance Arrangement

1)

Party B should nominate fully authorized representative to handle the maintenance of this project.

2)

Party B’s responsible person for the maintenance: Jiangang Feng

Address: 4th Floor, Building 3, Maque Ling Industrial Zone, Nanshan District, Shenzhen.
Tel: 0755-26012511
Fax: 0755-26012468

3)

Any change to the above information should be informed to the maintenance responsible person of Party A by written notice, or it would be considered that Party B has already received the information Party A delivers.

11.2

Quality Warranty Bail:

11.21

Party B and Party C agree to keep back 5% of the contract price as quality warranty bail. Party C should pay the balance of the quality warranty bail at a time to Party B within 20 days after the quality warranty term