**III. Term of Franchise:**From April 1, 2010 to December 31, 2010.**IV. Recommended Distribution Price:**The standard annual service fee of the iQS is RMB3,600 per year. Party B may charge a differentprice according to market competition.**V. Obligations of Both Parties:**Obligations of Party A: 1. Party A undertakes that the products that it provides have been authorized by theGeneral Administration of Quality Supervision, Inspection and Quarantine of the PRC. 2. In order to enhance Party B’s reputation, Party A hereby authorizes Party B to use theNinetowns trade name in its company name, provided, however, that Party B shall not usesuch trade name to engage in business activities that are not related to the business ascontemplated hereunder. 3. Party A undertakes that during the term of this agreement, it will obtain Party B’sprior consent before developing other franchisees within the franchised area. 4. Party A shall provide Party B with marketing and training materials in connection withthe franchised products.  5. Party A shall provide Party B with technical support services.  6. Upgrade services.Obligations of Party B: 1. Party B is responsible for distribution of Party A’s products, after-sale services andtechnical support in the franchised area. 2. Party B undertakes that it will provide users with after-sales service and technicalsupport in accordance with Party A’s service standards and service contents. 3. Party B undertakes that the sales data delivered by Party B to Party A monthly, i.e.the monthly sales report, will be true and accurate.
 
 

 
**VI. Product Settlement Prices:**The settlement prices are as follows:Party A shall be entitled to receive ********** of the total revenue generated by Party B withrespect to the electronic supervision services (iQS) for the users.**VII. Settlement Schedule:**Both parties agree that they shall settle payable amounts within 30 days after three monthsfollowing relevant settlement period. Party B shall deliver a monthly sales report to Party A’sfinancial management center by the end of each month.The form of the monthly sales report is attached hereto.**VIII. Agreement Amendment**If either party hereto requests to amend this agreement, it shall notify the other party inwriting, and the other party shall respond within one week. All amendments of this agreement mustbe made in writing by both parties, and such amendments shall be deemed as inseverable parts ofthis agreement.**IX. Rights of Both Parties to Terminate this Agreement Unilaterally**If any of the following circumstances occurs, Party A is entitled to terminate this agreementunilaterally without any liability for breach of contract: 1. Party B becomes a franchisee for any other product that competes with Party A in thefranchised area during the term of this agreement without Party A’s consent; 2. Party B fails to comply with relevant state or industrial laws or regulations,resulting in damages to Party A’s products and goodwill; 3. Party B engages in any form of counterfeit activities with respect to Party A’sproducts; 4. Party B fails to provide after-sales service and technical support to product users inaccordance with Party A’s service standards and service contents, which results incomplaints by a large number of users.If any of the following circumstances occurs, Party B is entitled to terminate this agreementunilaterally without any liability for breach of contract: 1. Party A develops new franchisees within Party B’s franchised area during the term ofthis agreement without Party B’s consent; 2. Party A refuses to provide product-related marketing and training materials orproduct-related technical training to Party B.
 
 

 
**X. Termination of Agreement**This agreement is automatically terminated upon the occurrence of any of the followingcircumstances: 1. Expiration of this agreement; 2. Mutual consent by the parties during the term of this agreement; 3. Failure by the parties to reach an agreement in the event that either party makes arequest to amend this agreement, which makes the further performance of this agreementimpossible.**XI. Renewal of Agreement**The parties shall notify the other party in writing of its intention whether to renew thisagreement at least 30 days prior to the expiration hereof. This agreement may be renewed upon theparties’ mutual consent. If either party fails to notify the other party prior to expiration, suchparty shall be deemed to have agreed on the termination hereof, and the other party shall beentitled to take any action without assuming any liability for breach of contract.**XII. Force Majeure**A force majeure event means an event that both parties could not foresee when they entered intothis agreement, and the occurrence and consequences of which cannot be prevented or overcome by theparties.If it is impossible for either party to perform this agreement due to a force majeure event, itshall promptly notify the other party of the reasons why it is impossible to perform this agreementor it needs to delay its performance or perform part of this agreement, and it shall providelegally valid supporting documents. Through consultation by both parties, the parties may approve adelay of the performance, a partial performance or a waiver of performance, and part or all of theliabilities for breach of contract may be exempted, if agreed by the parties. If a force majeureevent occurs after either party’s delayed performance, such party may not be exempted from allliabilities for breach of contract.**XIII. Liability for Breach of Contract** 1. If the parties can not continue the performance of this agreement due to either party’sbreach, the breaching party shall pay the other party liquidated damages equal to 10% ofall amounts payable during the performance of this agreement. 2. If Party B fails to settle with Party A within the time limit as set forth herein,Party B shall pay a late penalty to Party A, calculated at the bank lending interest ratefor such overdue period. The calculation shall be made according to the amount of the latepayment and related period.
 
 

 
**XIV. Dispute Resolution**Any dispute arising from this agreement shall be first settled through friendly negotiation. Ifthe parties fail to reach an agreement after negotiation, either party may bring a lawsuit toBeijing Fengtai District People’s Court to settle such dispute by litigation.**XV. **Matters not covered by this agreement shall be settled through consultation by both parties andconfirmed by a written agreement by the parties attached hereto. Such attachments shall be aninseverable part of this agreement and have the same force and effect as this agreement.This agreement shall be executed in four counterparts. Either party shall hold two counterpartswith each counterpart having the same force and effect. This agreement shall take effect upon theparties’ execution with their corporate seals affixed to this agreement.
 
 

 
*(Signature Page)*Party A: