Exhibit 10.17
 Equity Transfer Contract
  RAE Systems (Asia) Limited
 Shenyang Research Institute of China Coal Research Institute
  WHEREAS,
 
   NOW, THEREFORE,
 Article 1 Equity Transfer
 1.1
    
    Subject to the terms and conditions set forth herein, the Transferor agrees to transfer
to the Transferee, and the Transferee agrees to purchase from the Transferor, the 70% of the
equity interest in the Company, together with all the rights, title, interests, liabilities
and obligations associated therewith (the Subject Equity).
 Article 2 Purchase Price
 2.1
    
    The Parties agree that the Subject Equity is here by transferred for free.
 Article 3 Rights and Obligations of the Parties




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3.1
    
    The transfer of the Subject Equity shall be consummated on the date (the Closing Date) on
which the transfer of the Subject Equity is approved by the applicable Authority
of Commerce. The Transferor and the Transferee shall use their best efforts to ensure the transfer
of the Subject Equity is consummated on or before March 31, 2011. In connection therewith, each of
the Transferor and the Transferee shall take all steps necessary and prepare all documents required
to consummate the transfer of the Subject Equity as soon as practicable, including the following
actions:(a)
    
    to cause Liaoning Coal Group to deliver to the Transferor a termination agreement,
substantially in the form and substance attached hereto as Annex A;(b)
    
    to obtain the approval of the competent Authority of Commerce for the transfer of the Subject Equity and the change in the
Company name contemplated by Section 3.6 (the Name Change);(c)
    
    to clear the tax refund issues with the competent tax authorities as contemplated by Section 3.2; and(d)
    
    to make the registrations and filings with the competent governmental authorities, including
the relevant State Administration for Industry and Commerce, the Administration of Foreign
Exchange and the tax authorities, reflecting the transfer of the Subject Equity and the Name
Change.3.2
    
    The Transferee shall bear all the fees, taxes, duties,  costs and expenses incurred for
obtaining the governmental approvals and registrations provided in Section 3. 1 (b) to (d),
whether or not the Transferor is required by law or otherwise to pay such fees, taxes,
duties, costs and expenses, including any and all tax benefits that the Company has enjoyed
but is required to refund to the tax authorities due to fact that the Company is converted
into a PRC domestic company upon the transfer of the Subject Equity.3.3
    
    As of the date of this Contract, the Parties shall ensure and procure that the Beijing
Business Unit established by the Company in Beijing and RAE-KLH Technologies (Beijing) Co.,
Ltd. (RAE-KLH) will terminate the lease agreement between them pursuant to which Beijing
Business Unit leases from RAE-KLH the office premises and that Beijing Business Unit shall
entirely vacate the office premises under the said lease within a reasonable period agreed
between the Beijing Business Unit and RAE-KLH.3.4
    
    Following the execution of this Contract, the Parties shall promptly cause the Company to
terminate and immediately cease the performance of any and all of the sales agreements,
agency agreements, distribution agreements, supply agreements, or any other agreements by and
between the Company on one hand and the Transferor or any of its affiliates (including
RAE-KLH) on the other hand for or in connection with the sale of the products of the Company
or the products of the Transferor or any of its affiliates.3.5
    
    The Transferee undertakes that it shall provide all the facilities to assist the Transferor on
an unconditional-basis to complete in a timely fashion the




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preparation of various financial statements and various audits in respect of the Company
for period ending on the Closing Date, including the audit in accordance with the US
generally accepted accounting principles, the audit under the Sarbanes-Oxley Act (SOA) and
the review under the Foreign Corrupt Practices Act (FCPA). The Transferee shall (including
causing the Company to) assist the Transferor or any of its affiliates to complete in a
timely fashion, within sixty (60) days at the request from the Transferor, the preparation,
audit and review of the financial statements and audits described in this Section 3.5.3.6
    
    Following the date on which the amendment registration of the Companys business license is
completed with the competent Administration for Industry and Commerce reflecting the
transfer of the Subject Equity (the Amendment Registration Date), the Transferee shall,
and shall cause the Company, Liaoning Coal Group and their affiliates to, immediately cease
the use of any words or marks containing RAE or (IMAGE) in connection with its business
operations or in their company names.3.7
    
    On the date hereof, the Transferor shall withdraw the current General Manager of the Company
Chen Shizhong, the current Chief HR Officer Liu Xiaohong, the current manager of sales
administration center of the Company Hu Anhua and the current Chief Financial Officer of the
Company Chang Hong from the Company, all of whom were appointed by the Transferor to the
Company, and cause each of the foregoing persons to submit a resignation to the Company. As
from the date hereof, the employment of the relevant personnel shall be terminated by the
Company and they shall cease to be paid any compensation or benefit by the Company.3.8
    
    From the date hereof until the Amendment Registration Date, the Transferor shall have the
right to keep the company seal, legal person seal, seal for contract execution, and special
financial seal that the Company has as of the date hereof, and supervise the use
thereof. Within five business days following the Amendment Registration Date, the Transferors
designated persons and the Transferees designated persons shall jointly surrender to the
competent government authority for destruction all such seals; provided, however, that the
Company shall on the same date deliver to the Transferor a confirmation letter, substantially
in the form and substance attached hereto as Annex B, which confirmation letter shall be
signed by the new legal representative of the Company then appointed by the Transferee.3.9
    
    The Transferee shall provide sufficient funds to the Company on the date hereof to support
the Companys on-going operations during the period from the date hereof until the Amendment
Registration Date. The Parties hereby acknowledge and confirm that the Transferor has no
obligation to provide any funds to the Company.3.10
    
    The Contract for Sino-foreign Equity Joint Venture (the JVC), dated December 10, 2006,
between the Transferor and Liaoning Coal Group shall be terminated on the Closing Date.




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3.11
    
    On the Closing Date, the Articles of Association of the Company shall be
amended to the effect that the amended Articles of Association are consistent with the
provisions of this Contract.
 Article  4 Representations and Warranties
 4.1
    
    Each Party represents and warrants to the other Party that:
 (1)
    
    It has full power and authority (including the internal corporate approvals and
required governmental approvals, other than the governmental approvals and
registrations provided in Section 3.1(b) to (d)) to execute and perform this
Contract;(2)
    
    The execution, delivery and performance of this Contract will not violate in
any way its business license, certificate of incorporation, bylaws, or any
applicable law, regulation, order, authorization, or approval, or any provisions of
any contractual arrangement to which it is a party or otherwise binding upon it;(3)
    
    Its signing representative has been fully authorized to execute this Contract
on its behalf;(4)
    
    There does not exist any action, arbitration or any other legal or
administrative proceedings whether on-going, pending or to its knowledge
threatened, that may affect the performance of its obligations hereunder; and(5)
    
    It shall execute all necessary documents and take all necessary actions to
consummate the transfer of the Subject Equity or other matters contemplated
hereunder.
 4.2
    
    The Transferor undertakes to the Transferee that the Subject Equity is not subject to any
mortgage or pledge, or any right of first refusal of any third party other than those set
forth in the articles of association of the Company.4.3
    
    (a) The Transferor represents that except as (i) provided in the audit report as of December
31, 2010 prepared by the Transferees auditor or the financial statements of the Company or
otherwise disclosed by the Transferor to the Transferee before March 31, 2011, (ii) known to,
or should have been discovered by, the Transferee prior to the Closing Date, (iii) known to
any director or managerial member of the Company appointed by Liaoning Coal Group prior to the
Closing Date, or (iv) incurred in the ordinary course of business of the Company, the Company
does not have any material non-disclosed liabilities as of December 31, 2010 (the Material
Non-disclosure Liabilities). The foregoing representation of the Transferor shall remain
effective until the second anniversary of the date hereof (the Representation Period),(b)Subject to Section 4.3(d), the Transferor shall indemnify the Company for and against
any Material Non-disclosed Liabilities on a dollar-for-dollar basis; provided,
however,that no claim may be asserted nor may any action be commenced against the
Transferor pursuant to this Section 4.3, unless the Transferor on or prior to the
expiration of the Representation Period receives from the Transferee non-appealable, final
judgments or arbitral awards




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granted by a competent court or arbitral tribunal evidencing the existence of such Material
Non-disclosed Liabilities of the Company. For the purpose of this Section 4. 3(b), within the
Representation Period, the Transferor shall, upon the Transferees reasonable request, assist
the Transferee in connection with the litigation and arbitration proceedings brought by the
Company against any third parties with respect to the Material Non-disclosed Liabilities (the
Litigation Assistance). Notwithstanding any other provisions contained in this
Contract, the Transferee acknowledges and agrees that this indemnification provision of this
Section 4.3 shall be the sole and exclusive remedies of the Transferee for any breach by the
Transferor of this Section 4.3.(c) Before the Company has paid in full the account payables to RAE KLH
and RAE Systems (Shanghai) Co., Ltd. (IMAGE) RAE
Shanghai) under the Settlement Agreement, dated as of January 12, 2011, by and
among the Transferor, the Transferee, the Company, RAE-KLH, and RAE
Shanghai, the Transferor shall have the right to set off any of its liabilities under
this Section 4.3 against the account payables then outstanding under the
Settlement Agreement. On and after the Company has paid in full the account
payables to RAE KLH and RAE Shanghai under the Settlement Agreement, the
Transferee shall have the right to bring claims against RAE KLH and RAE
Shanghai for indemnification pursuant to this Section 4.3.(d) Notwithstanding anything to the contrary contained in this Contract, the total
amount of (i) losses which may be recovered from the Transferor and its
affiliates under this Section 4.3 and (ii) the expenses that the Transferor and its
affiliates may incur in connection with its provision of the Litigation Assistance
shall not exceed RMB 2 million.
 Article 5 Confidentiality
 5.1
    
    The terms of this Contract, the transactions contemplated hereunder, the negotiations
prior to the execution of this Contract and the contents of any other agreements entered into
pursuant to this Contract, shall be confidential information and may not be disclosed to any
person other than those employees, directors, contractors, representatives, counsels or
financial advisors of either Party or actual or prospective acquirers, lenders or investors,
for the need of the performance of their duties and responsibilities or a contract obligation
requirement, which disclosure shall be limited to the extent as necessary for the purpose of
this Contract.5.2
    
    The foregoing confidentiality and non-disclosure obligations shall not apply to any information
required to be disclosed by either Party pursuant to any laws, legal processes, or the orders
or requirements of any competent court or any other governmental authority, or any rules or
mandatory requirements published by any stock exchange on which the securities of the
Transferor or its holding company are listed or any law applicable to such securities.
 Article 6 Breach of Contract




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6.1
    
    In case either Party fails to fully perform or suspends the performance of any of its
material obligations hereunder, the other party (the Non-breaching Party) shall have the
right to notify the breaching Party in writing to request the breaching Party to cure such
breach within fourteen (14) days as of the receipt of such notice.6.2
    
    The breaching Party shall fully indemnify and hold the Non-breaching Party harmless against
any and all the claims, obligations, damages, losses, costs, and expenses (including
reasonable attorneys fees) of any kind or nature, arising from such breach of breaching
Party.6.3
    
    Notwithstanding anything to the contrary herein, neither Party shall be liable for any
indirect or consequential damages incurred by the other Party arising from the performance of
or failure to perform this Contract.
 Article 7 Termination
 7.1
    
    Prior to the Closing Date, this Contract may be terminated:
 (1)
    
    by the mutual written consent of both Parties;(2)
    
    by either Party if the Settlement Agreement is suspended, terminated, or amended for any
reason or cause prior to the Closing Date (other than any amendment made pursuant to written
consent of the Transferor); or(3)
    
    by either Party if the Parties have failed to obtain the
governmental approval provided in Section 3.1 (b) within six (6) months following the date
hereof.
 7.2
    
    In the event of termination of this Contract as provided in Section 7.1, this Contract shall
forthwith become void; provided,that Section 3.2 and Articles 5, 6 and 8 shall survive.
Upon such termination, there shall be no liability on the part of any Party hereto except (a)
as set forth in Section 3.2 and Articles 5, 6 and 8 and (b) that nothing herein shall
relieve any Party from liability for any breach of this Contract.
 Article 8 Dispute Resolution
 8.1
    
    This Contract shall be governed by and interpreted pursuant to the laws of the PRC.8.2
    
    The Parties agree that any dispute or discrepancy arising from or in connection with the
execution or performance of this Contract shall be resolved through consultations between the
Parties. In case any dispute fails to be resolved through such consultations within thirty
(30) days after either Party notifies
the other for consultations, such dispute shall be submitted to China International Economic
and Trade Arbitration Commission (CIETAC) for confidential and binding arbitration in
Beijing in accordance with the arbitration rules of CIETAC in effect on the date of the
submission of such dispute. The Parties further agree that the parties to the arbitration
shall each pay the fees and expenses (including without limitation, attorneys fees) incurred
by it in connection with the arbitration.




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8.3
    
    The arbitral tribunal shall consist of three (3) arbitrators, with one (1) to be
appointed by each of the claiming Party and the responding Party, and the third arbitrator
to be jointly appointed by the first two arbitrators. All the proceedings in the arbitration
shall be conducted in both Chinese and English. The Parties hereby agree that the arbitral
award made by such arbitral tribunal shall be final and binding upon both Parties.8.4
    
    Other than those matters in dispute, the Parties shall continue to perform their respective
obligations hereunder when the dispute is under resolution in accordance with this Article 8.
 Article 9 Miscellaneous
 9.1
    
    The transfer of the Subject Equity shall take effect when this Contract is approved by the
competent Authority of Commerce.9.2
    
    Neither Party may assign this Contract or any of its respective rights or obligations hereunder
without consent of the other Party.9.3
    
    To the extent permitted by PRC law, no failure or delay by either Party to exercise any rights
under this Contract shall operate as a waiver thereof, nor shall any single or partial
exercise of any other rights preclude any further exercise thereof.9.4
    
    Unless otherwise specified in this Contract or any other agreement or contract referred to
herein, this Contract shall constitute the entire agreement of the Parties with respect to
the subject matter hereof and supersede all prior expression of intention or understanding
between the Parties in respect of the subject matter hereof. This Contract may not be
modified or amended unless by written instrument executed by the authorized representatives
of the Parties.9.5
    
    If any provision of this Contract is held to be invalid, illegal or incapable of being
enforced by any law or public policy, all other provisions of this Contract shall
nevertheless remain in full force and effect for so long as the economic or legal substance
of the transactions contemplated by this Contract is not affected in any manner materially
adverse to either Party. Upon such determination that any provision is invalid, illegal or
incapable of being enforced, the Parties shall negotiate in good faith to modify this
Contract so as to effect the original intent of the parties as closely as possible in an
acceptable manner in order that the transactions contemplated by this Contract are
consummated as originally contemplated to the greatest extent possible.9.6
    
    This Contract shall be executed in both Chinese and English with equal force and effect.




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9.7
    
    All notices and written communications from one Party to the other under this Contract shall be
written in English or Chinese and shall be sent by courier service or by facsimile to the
respective Party at the following addresses, unless changed by a Party in a written notice
given to the other Party, and shall be deemed to have been given seven (7) days after deposit
with a courier service if delivered by courier service or two (2) days after the date set
forth on the facsimile record if delivered by facsimile.
 To the Transferor:Address
    
    3775 North First Street, San Jose, CA 95134, USAFacsimile:
    
    001-408-952-8480Attention:
    
    Fei ShenTo the Transferee:Address:
    
    11         Binhe Road, Fushun Economic DevelopmentZoneFacsimile:
    
    0413-6616900Attention:
    
    Liu Bin
 9.8
    
    This Contract shall be binding upon the Transferor, the Transferee and their respective
successors and permitted assigns.




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Transferor: RAE Systems (Asia) Ltd.
    (CHINESE CHARACTER)
 Authorize Representative:Signature:
    
    /s/ Fei ShenName:
    
    Fei ShenTitle:
    
    Director




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Annex A: Termination Agreement
  RAE Systems (Asia) Limited
 Liaoning Energy Investment (Group) Co., Ltd.
   
 
  NOW, THEREFORE,
   Releasors Releasees)




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IN WITNESS WHEREOF,
 RAE Systems (Asia) Ltd.
    (CHINESE CHARACTER)
 Authorize Representative:Signature:
    
    /s/ Fei ShenName :
    
    Fei ShenTitle:
    
    Director




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Annex B: Confirmation Letter
  (1)
    
    Guarantor: Shenyang Research Institute of China Coal Research Institute;
 (2)
    
    RAE Beijing: RAE-KLH (Beijing) Technologies Co., Ltd.;
 (3)
    
    RAE Shanghai : RAE Systems (Shanghai) Co., Ltd.; and
 (4)
    
    RAE Systems: RAE Systems.
    1.
    

we, (formerly known as RAE Coal Mine Safety Instruments (Fushun) Ltd., Co.), a company
incorporated and existing under the laws of the Peoples Republic of China, with its legal address
at No. 3, Binhe Road, Fushun Economic Development Zone, Liaoning Province, PRC, is 30% owned by
Liaoning Coal and 70% Owned by the Guarantor; our legal representative
is ; and2.
    
    we have duly executed the Settlement Agreement as the Debtor, and the Settlement Agreement
has been and will continue to be legally binding upon us.
 Signature:Name:
 Title:
    
    Legal Representative , 2011