# SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

# FORM 10-K/A(AMENDMENT NO. 1)

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[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                                       OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended June 29, 2002OR
                               [     ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                                       OF THE SECURITIES EXCHANGE ACT OF 1934
                                 For the transition period from _______ to ________
                                            Commission file number 23103

APPLIED FILMS CORPORATION

                               (Exact name of registrant as specified in its charter)

|COLORADO  
(State of other jurisdiction of
incorporation or organization) | 84-1311581
(I.R.S. Employer
Identification No.)
|------------------------------------------------------------------------- | -----------------------------------------------

9586 I-25 Frontage Road, Longmont CO 80504

                                 (Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (303) 774-3200
                         Securities registered pursuant to Section 12(b) of the Act:   None.
                             Securities registered pursuant to Section 12(g) of the Act:
                                             Common Stock, no par value (Title of Class)

Indicate by check mark
whether the registrant (1) has filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes X  No

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405 of Regulation S-K is not contained
herein,  and will not be contained,  to the best of  Registrant's  knowledge,  in definitive  proxy or  information
statements incorporated by reference in Part III of this Form 10-K or any amendments to this Form 10-K.  [ X ]

The aggregate market value
of the total outstanding common stock of the Registrant, based on a per share
price of $11.16 as of June 28, 2002, was $123,064,780. As of
June 28, 2002, there were outstanding 11,027,310 shares of the
Companys Common Stock (no par value). The aggregate market value of the
common stock held by non-affiliates of the Registrant, based on a per share
price of $11.16 as of June 28, 2002, was $94,240,051.

Documents Incorporated by
Reference: Portions of the Companys Proxy Statement for the 2002 Annual
Meeting of Shareholders are incorporated by reference into Part III of this
Report.



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## EXPLANATORY
NOTE:

Pursuant to this Form
10-K/A, the Registrant amends Item 12: Security Ownership of Certain
Beneficial Owners and Management to include the equity compensation plan
information set forth below and also amends the Exhibit List to include new
Exhibits 10.25 and 13.1. No other changes have been made to the
Registrants Annual Report on Form 10-K for the year ended June 29, 2002.

## ITEM 12:
Security Ownership of Certain Beneficial Owners and Management

Information required to be
furnished by Item 403 of Regulation S-K is included in our 2002 Proxy Statement
and is incorporated herein by reference.

## Equity
Compensation Plan Information

We maintain certain equity
compensation plans under which common stock is authorized for issuance to
employees, consultants and directors in exchange for services, including our
1993 Stock Option Plan, 1997 Stock Option Plan, Outside Director Stock Option
Plan and the Non-Employee, Non-Director Officer and Consultant Non-Qualified
Stock Option Plan. The Non-Employee, Non-Director Officer and Consultant
Non-Qualified Stock Option Plan is our only equity compensation plan under which
common stock is authorized for issuance that has not been approved by our
shareholders.

On October 24, 2001, our
Board of Directors approved the Non-Employee, Non-Director Officer and
Consultant Non-Qualified Stock Option Plan, which provides for the issuance of
24,000 shares of common stock upon the exercise of options. The purpose of this
plan is to encourage stock ownership by non-employee, non-director officers and
consultants, to provide those individuals with additional incentive to serve our
Company more effectively, to contribute to our success and to provide a form of
compensation which will attract and retain highly qualified individuals to serve
in such capacities. Our Board of Directors or the Compensation Committee
administers this plan. The Board, or the Committee, within the limitations of
this plan, determines the persons to whom options will be granted; the number of
shares to be covered by each option; the option purchase price per share; the
manner of exercise; the time, manner and form of payment upon exercise of an
option; and restrictions such as repurchase rights or obligations of our
Company. Options granted under this plan may not be granted at a price less than
the fair market value of the common stock on the date of grant, will expire not
more than 10 years from the date of grant and are generally not transferable
during an optionees lifetime, but are transferable at death by will or by
the laws of descent and distribution.

The following table sets
forth certain information regarding the above referenced equity compensation
plans as of June 29, 2002.

|                                                               | Equity Compensation Plan Information                                                           |                                                                              
|-------------------------------------------------------------- | ---------------------------------------------------------------------------------------------- | -----------------------------------------------------------------------------
|Plan Category                                                  | Number of securities to
be issued upon exercise
of outstanding options,warrants and rights (1) | Weighted-average  
 exercise price of 
outstanding optionswarrants and rights
|Equity compensation
  plans approved by
  security holders     | 730,157                                                                                        | $14.87                                                                       
|Equity compensation
  plans not approved by
  security holders | 7,000                                                                                          | $19.95                                                                       
|Total                                                          | 737,157                                                                                        | $14.92                                                                       

(1) We had not granted warrants or rights applicable to this chart.



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# SIGNATURES

Pursuant  to the  requirements  of  Section  13 or  15(d) of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  Amendment  No.  1 to the  annual  report  to be  signed  on its  behalf  by the
undersigned, thereunto duly authorized.

| | APPLIED FILMS CORPORATION
| | -------------------------

| | By: | /s/ Thomas T. Edman
Thomas T. Edman, President
September 10, 2002 | 
| | --- | ----------------------------------------------------------------- | 

Pursuant to the  requirements  of the Securities  Exchange Act of 1934, this Amendment No. 1 to the annual
report has been signed by the following persons in the capacities indicated on September 10, 2002.

| | Signatures                                      |  | Title                                                                                             
| | ----------------------------------------------- |  | --------------------------------------------------------------------------------------------------
| | /s/ Richard P. Beck*
Richard P. Beck            |  | Director, Chairman of the Board                                                                   
| | /s/ Thomas T. Edman
Thomas T. Edman             |  | Director, President, and Chief Executive
Officer (principal executive officer)                    
| | /s/ Lawrence D. Firestone
Lawrence D. Firestone |  | Treasurer and Chief Financial Officer and 
Secretary (principal financial and 
accounting officer)
| | /s/ John S. Chapin*
John S. Chapin              |  | Director                                                                                          
| | /s/ Vincent Sollitto*
Vincent Sollitto, Jr.     |  | Director                                                                                          
| | /s/ Chad D. Quist*
Chad D. Quist                |  | Director                                                                                          

| | * By: | /s/ Lawrence D. Firestone
Lawrence D. Firestone
Attorney | 
| | ----- | -------------------------------------------------------- | 



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# CERTIFICATIONS

I, Thomas T. Edman, certify that:

|1. | I have reviewed this annual report on Form 10-K, as amended, of Applied Films Corporation;                                                                                                                                                                                                                         
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2. | Based on my knowledge, this annual report does not contain any untrue statement
of material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this report; and
|3. | Based on my knowledge, the financial statements, and other financial information
included in this annual report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this Annual Report.              

Dated:  September 10, 2002

| | /s/ Thomas T. Edman

Thomas T. Edman
Chief Executive Officer and President
| | --------------------------------------------------------------------------

I, Lawrence D. Firestone, certify that:

|1. | I have reviewed this annual report on Form 10-K, as amended, of Applied Films Corporation;                                                                                                                                                                                                                         
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2. | Based on my knowledge, this annual report does not contain any untrue statement
of material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this report; and
|3. | Based on my knowledge, the financial statements, and other financial information
included in this annual report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this Annual Report.              

Dated:  September 10, 2002

| | /s/ Lawrence D. Firestone

Lawrence D. Firestone
Chief Financial Officer, Treasurer and Secretary
| | -------------------------------------------------------------------------------------------------



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## EXHIBIT INDEX

|Exhibit No. | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|----------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1         | Amended and Restated Articles of Incorporation of Applied Films Corporation, as
amended, are incorporated by reference to Exhibit 3.1 of Registrants
Annual Report on Form 10-K for the fiscal year ended June 30, 2001.                                                                                                                                                                                                                                                                                                                                                                                                           
|3.2         | Amended and Restated Bylaws of Applied Films Corporation are incorporated by reference to Exhibit 3.2 of
         Registrant's Registration Statement on Form S-1, as amended (Reg. No. 333-35331).                                                                                                                                                                                                                                                                                                                                                                                                                                 
|4.1         | Specimen common stock certificate is incorporated by reference to Exhibit 4.1 of Registrant's
         Registration Statement on Form S-1, as amended (Reg. No. 333-35331).                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|4.2         | Specimen Series A Preferred Stock certificate is incorporated by reference to Exhibit 4.1 of
         Registrant's Current Report on Form 8-K dated January 16, 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|10.1        | 1993 Stock Option Plan is incorporated by reference to Exhibit 4 of Registrant's Registration Statement
         on Form S-8 (Reg. No. 333-51175).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|10.2*       | 1997 Stock Option Plan, as amended, is incorporated by reference to Exhibit 10-2 of Registrant's
         Registration Statement on Form S-1, as amended (Reg. No. 333-35331), by reference to Exhibit 4.2 of
         Registrant's Registration Statement on Form S-8 (Reg. No. 333-47967) to reference to Exhibit 4.2 of
         Registrant's Registration Statement on Form S-8 (Reg. No. 333-38426) any by reference to Exhibit 4.2 and
         4.3 of Registrant's Registration Statement on Form S-8 (Reg. No. 333-56376) and the Fifth Amendment to
         the 1997 Stock Option Plan is attached hereto as Exhibit 10.2.
|10.3*       | Employee Stock Purchase Plan, as amended, is incorporated by reference to Exhibit 10.3 of Registrant's
         Registration Statement on Form S-1, as amended (Reg. No. 333-35331), by reference to Exhibit 4 to the
         Registrant's Registration Statement on Form S-8 (Reg. No. 333-47951) and by reference to Exhibit 4.2 on
         Registrant's Registration Statement on Form S-8 (Reg. No. 333-56378) and the Fourth Amendment to the
         Employee Stock Purchase Plan is attached hereto as Exhibit 10.3.                                                                                                      
|10.4        | Form of Indemnity Agreement between Registrant and each of its Directors and Executive Officers is
         incorporated by reference to Exhibit 10.4 of Registrant's Registration Statement on Form S-1, as amended
         (Reg. No. 333-35331).                                                                                                                                                                                                                                                                                                                                                                                 
|10.5        | Lease Agreement dated January 30, 1998, between 9586 East Frontage Road, Longmont, CO 80504 LLC and
         Registrant is incorporated by reference to Exhibit 10.9 of Registrant's Quarterly Report on form 10-Q
         for the fiscal quarter ended December 27, 1997.                                                                                                                                                                                                                                                                                                                                                         
|10.6        | Agreement, dated November 18, 1997, between Nippon Sheet Glass Co., Ltd., NSG Fine Glass Co., Ltd. and
         Registrant is incorporated by reference to Exhibit 10.8 of Registrant's Annual Report on Form 10-K for
         the fiscal year ended June 27, 1998.                                                                                                                                                                                                                                                                                                                                                                
|10.7        | Amended and Restated Credit Agreement, dated September 17, 1999, between Registrant and Bank One,
         Michigan, is incorporated by reference to Exhibit 10.7 of Registrant's Annual Report on Form 10-K for
         the fiscal year ended July 3, 1999.                                                                                                                                                                                                                                                                                                                                                                       
|10.8        | Security Agreement dated June 30, 1994, between Registrant and Bank One, Michigan, formerly NBD Bank, is
         incorporated by reference to Exhibit 10.5 of Registrant's Registration Statement on Form S-1, as amended
         (Reg. 333-35331).                                                                                                                                                                                                                                                                                                                                                                               
|10.9        | Outside Director Stock Option Plan is incorporated by reference to Exhibit 4.1 of Registrant's
         Registration Statement on Form S-8 (Reg. No. 333-95367), and by reference to Exhibits 4.2 and 4.3 of
         Registrant's Registration Statement on Form S-8 (Reg. No. 333-75164).                                                                                                                                                                                                                                                                                                                                         
|10.10       | Share Purchase and Exchange Agreement dated October 18, 2000, between Registrant, AFCO GmbH & Co. KG,
         Balzers Process Systems GmbH and Unaxis Holding AG is incorporated by reference to Exhibit 2.1 of
         Registrant's Current Report on Form 8-K dated December 31, 2000.                                                                                                                                                                                                                                                                                                                                          



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|10.11 | Amendment Agreement dated December 29, 2000, between Registrant, AFCO GmbH & Co. KG, Balzers Process
         Systems GmbH and Unaxis Holding AG is incorporated by reference to Exhibit 2.2 of Registrant's Current
         report on Form 8-K dated December 31, 2000.                                                                           
|----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.12 | Second Amendment Agreement dated February 27, 2002, between Applied Films  Corporation, Applied Films
         GmbH & Co. KG, Balzers Process Systems GmbH and Unaxis Holding AG is incorporated by reference to
         Exhibit 2.7 of Registrant's Current Report on Form 8-K/A dated December 31, 2000.                                         
|10.13 | Contribution Agreement dated December 29, 2000, between Balzers Process Systems GmbH and Leybold Coating
         GmbH & Co. KG is incorporated by reference to Exhibit 2.3 of Registrant's Current Report on Form 8-K
         dated December 31, 2000.                                                                                            
|10.14 | Bravo Intellectual Property License Agreement dated December 31, 2000, between Balzers Process Systems
         GmbH and Leybold Coating GmbH & Co. KG is incorporated by reference to Exhibit 2.4 of Registrant's
         Current Report on Form 8-K dated December 31, 2000.                                                                     
|10.15 | Newco Intellectual Property License Agreement dated December 31, 2000, between Balzers Process Systems
         GmbH and Leybold Coating GmbH & Co. KG is incorporated by reference to Exhibits 2.5 of Registrant's
         Current Report on form 8-K dated December 31, 2000.                                                                    
|10.16 | Securities Purchase Agreement dated January 16, 2001, between Registrant and the purchasers identified
         on the signature pages thereto is incorporated by reference to Exhibit 10.1 of Registrant's Current
         Report on Form 8-K dated January 16, 2001.                                                                             
|10.17 | Registration Rights Agreement dated January 16, 2001, between Registrant and the investors identified on
         the signature pages thereto is incorporated by reference to Exhibit 10.2 of Registrant's Current Report
         on Form 8-K dated January 16, 2001.                                                                              
|10.18 | Common Stock Warrant No. 1 dated January 16, 2001 is incorporated by reference to Exhibit 10.3 of
         Registrant's Current Report on Form 8-K dated January 16, 2001.                                                                                                                                                                          
|10.19 | Common Stock Warrant No. 2 dated January 16, 2001 is incorporated by reference to Exhibit 10.4 of
         Registrant's Current Report on Form 8-K dated January 16, 2001.                                                                                                                                                                          
|10.20 | Common Stock Warrant No. 3 dated January 16, 2001 is incorporated by reference to Exhibit 10.5 of
         Registrant's Current Report on Form 8-K dated January 16, 2001.                                                                                                                                                                          
|10.21 | Common Stock Warrant No. 4 dated January 16, 2001 is incorporated by reference to Exhibit 10.6 of
         Registrant's Current Report on Form 8-K dated January 16, 2001.                                                                                                                                                                          
|10.22 | Lease Agreement between RWE Systems Immobilren GmbH & Co. KG/Lahmeyer Grandbesitz GmbH & Co. KG and
         Applied Films GmbH & Co. KG dated January 31, 2001 for the Alzenau, Germany facility, incorporated by
         reference to Exhibit 10.22 of Registrant's Annual Report on Form 10-K for  the fiscal year ended June
         30, 2001.
|10.23 | Commercialization Agreement between The Coca-Cola Company, KRONES AG and Applied Films GmbH & Co. KG (as
         assignee of Balzers Process Systems GmbH) effective September 1, 2000, incorporated  by reference to
         Exhibit 10.23 of the Registrant's Annual Report on Form 10-K/A for the fiscal year ended June 30, 2001.             
|10.24 | Non-Employee, Non-Director Officer and Consultant Non-Qualified Stock Option Plan dated October 24, 2001
         is incorporated by reference to Exhibit 10.3 of Registrant's Quarterly Report on Form 10-Q for the
         fiscal quarter ended December 29, 2001.                                                                               
|10.25 | Equity Joint Venture Agreement between Applied Films Corporation and Nippon Sheet Glass Co., Ltd., dated
         February 17, 1999.                                                                                                                                                                                                                
|11.1* | Statement re: computation of per share earnings.                                                                                                                                                                                                                                                                                                    
|13.1  | Annual Report to Shareholders for the year ended June 29, 2002.  This exhibit is furnished for the information of the Securities
         and Exchange Commission and is not deemed "filed" as part of this filing.                                                                                                                                 



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|21.1  | Subsidiaries of Applied Films Corporation is incorporated by reference to Exhibit 21 of Registrant's
         Registration Statement on Form S-1, as amended (Reg. No. 333-68476).
|----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|23.1* | Consent of Ernst & Young LLP.                                                                                                                                                     
|24.1* | Power of Attorney (included on page 60).                                                                                                                                          
|99.1* | Certificate of the Chief Executive Officer and President of Applied Films Corporation pursuant to
         Section 906 of the Sarbanes-Oxley Act of 2002.                         
|99.2* | Certificate of the Chief Financial Officer of Applied Films Corporation pursuant to Section 906 of the
         Sarbanes-Oxley Act of 2002.                                       

*Indicates previously filed.



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EXHIBIT 10.25

# EQUITY JOINT VENTURE CONTRACT

# BETWEEN

# Applied Films Corporation

# and

# Nippon Sheet Glass Co., Ltd.

# Date:  February 17, 1999



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# TABLE OF CONTENTS

# ARTICLE

|1.0 
2.0 
3.0 
4.0 
5.0 
6.0 
7.0 
8.0 
9.0 
10.0
11.0
12.0
13.0
14.0
15.0
16.0
17.0
18.0 | GENERAL PROVISIONS.............................................................................................................................
PARTIES TO THE JOINT VENTURE........................................................................................................ 
ESTABLISHMENT OF THE JVC...............................................................................................................        
PURPOSE, SCOPE AND SCALE OF PRODUCTION AND BUSINESS.................................................
INVESTMENT AND REGISTERED CAPITAL........................................................................................             
PARTY A'S RESPONSIBILITIES TO JVC.................................................................................................                
PARTY  B'S RESPONSIBILITIES TO JVC..................................................................................................                 
SELLING OF PRODUCT.............................................................................................................................                                 
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS.......................................................................        
MANAGEMENT STRUCTURE.................................................................................................................                          
TAXES, FINANCE AND AUDIT................................................................................................................                
LABOR MANAGEMENT............................................................................................................................                    
TERM OF THE JVC......................................................................................................................................                     
INSURANCE..................................................................................................................................................                           
AMENDMENT AND MODIFICATION....................................................................................................                
DISSOLUTION/WITHDRAWAL.................................................................................................................                
LIABILITIES FOR BREACH OF CONTRACT..........................................................................................               
FORCE MAJEURE........................................................................................................................................ | 1
1
2
3
4
10
12
14
15
19
20
22
22
23
23
23
26
27
|----------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------

-i-

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|19.0 
20.0 
21.0 
22.0 
23.0 
24.0 
25.0 
26.0 
27.0 
28.0 | EXISTING OPERATIONS...........................................................................................................................  
SUPPLY OF MATERIALS...........................................................................................................................          
SETTLEMENT OF DISPUTES....................................................................................................................                
APPLICABLE LAW......................................................................................................................................                            
LANGUAGE..................................................................................................................................................                                  
PARTIAL UNENFORCEABILITY..............................................................................................................                 
ENTIRE AGREEMENT................................................................................................................................                          
NOTICES........................................................................................................................................................                                   
EFFECTIVENESS AND VALIDITY OF THE CONTRACT......................................................................
SIGNATURES................................................................................................................................................ | 28
30
30
31
31
31
31
31
32
32
|---------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -----------------------------

|APPENDIX 1    
APPENDIX 2        
APPENDIX 3            
APPENDIX 4                
APPENDIX 5                 
APPENDIX 6                 
APPENDIX 7                 
APPENDIX 8 | ARTICLES OF ASSOCIATION     
APPLIED EQUIPMENT PURCHASE AGREEMENT
APPLIED KNOW-HOW LICENSE AGREEMENT  
MARKETING SERVICE AGREEMENT(S)      
SNSG EQUIPMENT PURCHASE AGREEMENT   
NSG KNOW-HOW LICENSE AGREEMENT      
LEASE AGREEMENT                     
RIDER TO THE JOINT VENTURE CONTRACT
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

-ii-

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# JOINT VENTURE CONTRACT

# ARTICLE 1.0
GENERAL PROVISIONS

1.1        
In accordance with the Law of the Peoples Republic of China for Foreign
Capital Enterprise and other relevant Chinese laws and regulations, Applied Film
Corporation of 9586 I-25 Frontage Rd., Longmont, Colorado, USA, and Nippon Sheet
Glass Co., Ltd. of 5-11 Doshomachi 3-chome, Chuo-ku, Osaka, Japan, adhering to
the principles of equality and mutual benefit and through friendly
consultations, agree to jointly invest to set up a Joint Venture Company in the
New District of Suzhou, the Peoples Republic of China. This project shall
be implemented on an equal contribution and equal profit-sharing basis.

# ARTICLE 2.0
PARTIES TO THE JOINT VENTURE

2.1        
The Parties to the Joint Venture Company are:

| | Applied Films Corporation (hereinafter referred to as Party A), registered
in the state of Colorado, USA, whose address is 9586 I-25 Frontage Rd.,
Longmont, Colorado 80504, USA.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Legal Representative:                                                                                                                                                                       | Name:       
Position:   
Nationality:
Telephone:  
Fax: | Thomas Edman
President and CEO
USA
(303) 774-3296
(303) 678-9275
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------- | ----------------------------------------------------------------
| | Nippon  Sheet  Glass Co.,  Ltd.  (hereinafter  referred to as "Party  B"),  registered  in Osaka,
                  Japan, whose address is 5-11 Doshomachi 3-chome, Chuo-ku, Osaka, Japan.
| | Legal Representative:                                                                                                                                                                       | Name:       
Position:   
Nationality:
Telephone:  
Fax: | Yozo Izuhara
President
Japan
(3) 5443-9521
(3) 5443-9553        

(Individually referred to as Party and collectively as Parties.)



---

The
Legal Representative of any Party may be changed by any Party by notifying the
other Party and the Joint Venture Company.

2.2        
Each Party represents and warrants that the person indicated as its legal
representative in paragraph 2.1 above is qualified as a legal representative of
its Party and that such person has the authority to make the covenants,
representations and warranties contained herein and to perform its obligations
under this Joint Venture Contract (hereinafter referred to as
Contract).

2.3        
Party A and Party B hereby warrant that each has taken all appropriate and
necessary actions and obtained all consents and approvals to authorize the
execution and delivery of this Contract and its Appendices 1 through 8 and to
authorize the performance and observance of the terms and conditions.

ARTICLE 3.0 ESTABLISHMENT OF THE JVC

3.1        
In accordance with the Law of the Peoples Republic of China
(PRC) on Foreign Capital Enterprise and other relevant Chinese laws
and regulations, the two Parties agree jointly to set up a limited liability
company (hereinafter referred to as the JVC ).

3.2        
The name of the JVC in English shall be Suzhou  NSG AFC Thin Films Electronics      Co.,
Ltd.      ("STEC")     and     its     name     in      Chinese     shall      be

3.3        
The legal address of the JVC is the South of Zhuyan Rd, Zhujiang Road, New District, Suzhou,
China.

3.4        
The JVC shall be a legal person under the laws of the PRC and all activities of the JVC shall
be undertaken in accordance with, and shall be governed and protected by, the laws, decrees and pertinent
regulations of the PRC.

3.5        
The form of the JVC shall be a limited liability company. Each party to the JVC
shall be liable for the obligations incurred by the JVC only to the extent of
the respective registered capital actually subscribed by the Parties to the JVC.
The profits (dividends), risks, losses of the JVC shall be shared by the Parties
in proportion to their respective contribution to the registered capital of the
JVC.

3.6        
If the government or a department of the PRC adopts new laws, decrees or other
pertinent rules or regulations which entitle the JVC or either Party to the JVC
to obtain more preferential treatment than that prevailing at the time this
Contract is signed, the Parties shall cooperate to submit an application at once
to obtain more preferential treatment.

-2-

---

3.7        
Within thirty (30) days after receipt of the certificate of approval from the
relevant examination and approval authority (the Approval
Authority), the JVC shall register with the relevant Administrative Bureau
for Industry and Commerce in accordance with the provisions of the applicable
PRC laws and regulations.

3.8        
The issuing date of the business license for the JVC shall be regarded as the
date of establishment of the JVC (hereinafter called the License
Date). Immediately after the issuance by the Administrative Bureau of such
business license, the JVC shall send each of the parties hereto a copy thereof
with Japanese or English translation.

3.9        
The Articles of Association shall be agreed upon and executed by the parties in
the form and substance as attached hereto as Appendix 1. The Articles of
Association shall incorporate the terms and conditions of this Contract to the
extent allowable under the relevant laws and regulations of the PRC.

As between the parties hereto, the term and conditions of this Contract shall prevail and
override the provisions in the Articles of Association, and if any discrepancy, conflict or inconsistency is
found between the provisions of the Articles of Association and this Contract, the parties agree to be bound by
and to comply with the provisions of this Contract and to amend the Articles of Association to make them in
accordance with this Contract.

ARTICLE 4.0
PURPOSE, SCOPE AND SCALE OF PRODUCTION AND BUSINESS

4.1        
The parties hereto acknowledge that the purpose of establishment of the JVC shall be:

| | (a)        
to engage in the business specified in Article 4.2 below to make profits; and
| | -----------------------------------------------------------------------------------------

| | (b)        
to serve as a modernized enterprise with a capacity to manufacture the
         Products through adopting advanced technology and equipment.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------

4.2        
The scope of business of the JVC shall be:

-3-

---

| | (a)        
The manufacture, process, sale and export of ITO coated glass for TN-type LCD
and STN-type LCD, except transparent electroconductive thin film on micro color
filter (hereinafter called the Products) ; and
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b)        
other activities incidental to or in connection with the scope of business
         described in Item (a) above.
| | ----------------------------------------------------------------------------------------------------------------------------

Unless otherwise specifically agreed upon by the parties hereto and approved by the PRC governmental
authorities concerned, the JVC shall not perform any business other than those specified in Articles 4.2(a) and
(b) above.

The
total production capacity of the JVC is 70,000 square meters per month of
Product, and is expected to reach this capacity within three (3) months after
start-up of operations on both of its coating systems.

Marketing
of the Products within China shall be undertaken by the JVC with the assistance
of both Parties as provided in the Marketing Service Agreements attached as
Appendix 4. Party A and Party B shall advise the JVC on marketing of the
Products abroad so as to enable the JVC to balance its foreign currency
requirements.

# ARTICLE
5.0INVESTMENT AND REGISTERED CAPITAL

5.1        
The total amount of investment in the JVC is US$ 16,000,000. The registered
capital is US$ 6,400,000. The remaining investment of US$ 9,600,000 shall be
from borrowings by the JVC.

5.2        
The registered capital of the Parties of the JVC will be as follows:

| | Party A:         US$3,200,000 (50%)
Party B:         US$3,200,000 (50%)
| | -----------------------------------------------------------------------

5.3

| | (a)        
The parties hereto shall make their contributions to the registered capital of
the JVC and pay up in installments of United States currency all amounts to be
subscribed to by each of them into foreign currency bank account opened by the
JVC within three (3) years from the License Date.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The due date of payment and the amounts to be paid shall be agreed upon
         between the parties hereto; provided, however, that the parties hereto shall pay an amount
         equivalent to at least fifteen percent (15%) of the registered capital of the JVC within ninety
         (90) days after the License Date.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

-4-

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| | (b)        
Notwithstanding the provisions of this Article 5.3, the parties hereto shall
have no obligation to make their contributions to the registered capital of the
JVC unless the conditions precedent stipulated in Article 5.4 hereof are
fulfilled:
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

5.4        
The following events shall be the conditions precedent to the obligations of the parties to
proceed with the implementation of this Contract:

| | (a)        
the issue of the governmental approval and business license in the PRC, which
has been approved and licensed without any significant adverse change imposed in
the economic assumptions contained in the feasibility study and the contents of
this Contract and the Articles of Association; and
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b)        
all of the Related Agreements have been executed between the JVC and each of
Party A and Party B and approved, if necessary, by the PRC governmental
authority concerned to the satisfaction of the parties. The term Related
Agreements, as used herein, means Know-How License Agreement; Equipment
Purchase Agreements, Lease Agreement, and Marketing Service Agreement, each as
provided for in Article 6, 7 and 8.1 hereof.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

5.5        
After the investment is made by each Party, a Chinese registered accountant
shall be engaged by the JVC to verify these documents and to provide a
certificate of verification to the JVC. The JVC shall then issue an Investment
Certificate to the contributing Party. The Investment Certificate shall include
the following:

| | (a)        
Name of the Joint Venture
| | -------------------------------------

| | (b)        
Date of establishment of the Joint Venture
| | ------------------------------------------------------

| | (c)        
Name of Party and amount of investment contributed
| | --------------------------------------------------------------

| | (d)        
Date of contribution
| | --------------------------------

| | (e)        
Date of issuance of Investment Certificate
| | ------------------------------------------------------

5.6        
All contributions to registered capital and loans undertaken by the JVC shall be used only by
the JVC in the implementation of this Contract.

-5-

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5.7

| | (a)        
During the term of this Contract, none of the parties hereto may sell, assign,
pledge, mortgage, give or otherwise dispose of all or any portion of its
interest in the registered capital of the JVC to any third party without the
prior written consent of the other party and the approval by the Approval
Authority.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b)        
If at any time any party desires to sell, assign or give (each a
transfer) all or any portion of its interest in the registered
capital of the JVC (the Proposing Transferor) to any third party,
such interest shall be first offered to the other party with a notice in writing
(the Transfer Notice). The Transfer notice shall be sent by
facsimile, or registered or certified air mail, (a) enclosing a copy of the
offer which the Proposing Transferor received in good faith from the third party
and wishes to accept, and (b) stating (i) its wish to make such transfer, (ii)
the interest it wishes to transfer, (iii) the price and other terms and
conditions of such transfer and (iv) the identity of the said third party.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (c)        
Upon receipt of the Transfer Notice, the other party shall have a right of first
refusal to purchase all (but not less than all) portion of such interest at the
price (and upon the terms and conditions) contained in the Transfer Notice. This
right of first refusal shall be exercised by a written notice to the Proposing
Transferor within sixty (60) days from the receiving date of the Transfer
Notice.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (d)        
If such right of first refusal is not exercised within the period stipulated
above, the Proposing Transferor shall be deemed to be given a prior written
consent that the Proposing Transferor may transfer all (but not less than all)
portion of such interest to any third party at the price and upon terms and
conditions not more favorable than those contained in the Transfer Notice. Such
Proposing Transferors right shall be exercisable for sixty (60) days
following the expiration of the period stipulated above.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (e)        
Notwithstanding the provisions of Clauses (a) through (d) above, the parties
hereto agree that any party may, upon a prior written notice to the other party,
transfer all or any portion of its interest in the registered capital of the JVC
to any of its Affiliates, and each party hereby gives the other its prior
consent to any such transfer; provided, however, that:
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

-6-

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| | (i)        
such transfer shall not relieve the transferring party of
                  any obligation under this Contract and shall remain liable for the performance
                  thereof;
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (ii)       
such Affiliate shall agree in writing upon such transfer to
                  be bound by all obligations of the transferring party hereunder;
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------

| | (iii)      
the transferring party shall, upon such transfer, guarantee
                  in writing the performance by such Affiliate of its obligation; and
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (iv)      
the transferring party shall immediately repurchase or
                  otherwise acquire such interest, or cause any other Affiliate to do so, if
                  such Affiliate has lost a status of an Affiliate of the transferring party for
                  any reason whatsoever.
The
term Affiliate, as used herein, with respect to a party hereto means
any legal entity, directly or indirectly, controlling or controlled by or under
direct or indirect common control with that party. The term control,
as used herein, means the possession, direct or indirect, of the power to direct
or cause direction of management and policies of a legal entity by means of
voting rights, contract or otherwise; provided, however, that the possession,
direct or indirect, of more than fifty percent (50%) of voting stocks for
election of directors shall always be deemed control.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (f)        
Any purported transfer of any interest in the registered capital of the JVC by
any party hereto which is not in accordance with the provisions of Clauses (a)
through (e) above shall be null and void and of no effect whatsoever. In case
that an agreement on the transfer of the interest held by any party shall be
reached or deemed to be reached pursuant to this Article 5.7, the parties agree
to cause all the directors appointed by them respectively to vote for such
transfer. The JVC shall apply for the approval of such transfer to the Approval
Authority and use its best efforts to secure the approval thereby. Upon
completion of such transfer, except in the case of Clause (e), this Contract
shall be amended by the parties.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

-7-

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In the event fifty percent (50%) or more of the ownership interest in Suzhou NSG Electronics
Co., Ltd., an indirectly, wholly-owned subsidiary of Party B (hereinafter called "SNSG") is sold or transferred
to an entity that is not directly or indirectly controlled by Party B, Party A shall have the option to purchase
Party B's registered capital and interest in the JVC or to sell its registered capital and interest in the JVC to
Party B, and Party B shall be obligated to sell or buy on the terms set forth below.  Party B must send a notice
of its intent to sell SNSG to Party A.  The parties shall thereafter determine the fair market value of the JVC
in accordance with Article 9.12(c) of this Contract.  After the fair market value of the JVC has been determined,
Party A shall have thirty (30) days to notify Party B that it exercises its option to purchase all of Party B's
registered capital and interest in the JVC for a price equal to the fair market value of the JVC, multiplied by
the Selling Party's portion of the registered capital of the JVC or to sell all of its registered capital and
interest in the JVC to Party B for a price equal to one hundred twenty percent (120%) of the fair market value of
the JVC, multiplied by the Selling Party's portion of the registered capital of the JVC.

Closing shall occur and payment shall be made in cash, denominated in U.S. Dollars, fifteen
(15) days after a transfer has been approved by the Approval Authority.

5.8

| | (a)        
The parties hereto agree that any increase of the registered capital of the JVC
(a capital increase) shall only be effected by the resolution of the
Board of Directors, subject to the approval by the Approval Authority, and each
party shall be given a preemptive right to subscribe to all capital increase in
accordance with the ratio of the interest in the registered capital of the JVC
at the time of such capital increase.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b)        
If a party does not exercise its right to first subscribe to the capital
increase allocated to it pursuant to Clause (a) above within ninety (90) days
from the date of the resolution of the Board of Directors (or such longer period
as may be agreed upon between the parties), then such right shall be offered to
the other party who has exercised its right to first subscribe to the capital
increase.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

5.9        
If either Party fails to make the full amount of its contribution by the date
specified, such Party shall pay to the JVC, as liquidated damages, an amount
equal to an annual rate of twelve percent (12%) per annum for the time of any
overdue payment.

5.10

| | (a)        
Except the contributions to the registered capital to be made by the parties
hereto, all financial requirements of the JVC for the carrying on of its
business shall be met by funds generated internally and borrowings on its own
credit approved by the Board of Directors (as defined herein).
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

-8-

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| | (b)        
It is expressly agreed and understood by the parties hereto that the JVC shall
not borrow money exceeding the amount which the JVC may borrow on its own
credit. Provided, however, that if (i) such borrowings are resolved by the Board
of Directors, (ii) such borrowings are not obtainable without guarantee, and
(iii) a lender requires guarantee of the parties, then each of the parties shall
provide or obtain from a third party guarantee of the repayment by the JVC of
such borrowings, severally, not jointly, in accordance with the ratio of the
interest in the registered capital of the JVC at the time of such guarantee.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (c)        
It is agreed by the parties hereto that the JVC shall enter into an indemnity
agreement with any party (the Guarantor) that guarantees any
obligation of the JVC whereby the JVC shall indemnify the Guarantor against any
loss comprising the amount paid under the guarantee, interest and costs of
recovery, in the event such guarantee is called upon.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (d)        
It is agreed by the parties hereto that any Guarantor shall be entitled to a
guarantee fee as compensation for making available to the JVC such guarantee,
the terms and conditions of which shall be agreed upon between the parties
hereto.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

5.11        
Film coating systems and other production equipment, machinery, jigs and tools
which are necessary for the manufacture of the Products shall be purchased or
leased by the JVC from Party A, SNSG or any third party. The detailed terms and
conditions of the purchase (lease) contracts shall be agreed upon between the
JVC and the party concerned, subject to the approval by the Board of Directors.

5.12

| | (a)        
The following pre-incorporation expenses with respect to the JVC (the
         "Expenses") shall be borne and reimbursed by the JVC:
| | ------------------------------------------------------------------------------------------------------------------------------------------------

| | (i)        
All reasonable expenses and fees of legal counsels, translators and notaries
relating to the establishment and/or operation of the JVC and the application to
the PRC governmental authorities;
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (ii)       
any fees, taxes, duties or other costs relating to Item (a)
                  above;
| | ------------------------------------------------------------------------------------------------

| | (iii)      
all expenses and fees to obtain the approvals, permits and licenses required or
necessary under applicable laws and regulations of the PRC for the business
operation of the JVC;
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

-9-

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| | (iv)      
all expenses and costs hereunder agreed to be borne by the
                  JVC; and
| | ------------------------------------------------------------------------------------------------

| | (v)       
any other expenses which are mutually agreed in writing in
                  advance by the parties hereto to be borne by the JVC.
| | ---------------------------------------------------------------------------------------------------------------------------------------------

| | (b)        
If for any reason the JVC is not established, or this Contract is terminated and
the JVC dissolved pursuant to Article 16.3 hereof, the parties hereto agree that
the Expenses shall be prorated between the parties in accordance with their
respective contributions to the registered capital of the JVC, and any sum of
money paid into the JVCs account by both parties as subscription to the
registered capital of the JVC shall, after deduction of the Expenses, if any, be
immediately reimbursed to each party in accordance with the ratio of the
interest in the registered capital of the JVC.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

ARTICLE 6.0PARTY A'S RESPONSIBILITIES TO JVC

6.1        
The following responsibilities, not otherwise covered in this Contract, shall be
undertaken by Party A at its own expense and with no compensation from the other
Party or the JVC (unless otherwise specified in the Contract or Appendices):

| | RESPONSIBILITIES OF PARTY A:
| | ----------------------------

| | (a)        
To provide 50% of the registered capital as set forth in this Contract.
| | -----------------------------------------------------------------------------------

| | (b)        
To sell the JVC certain equipment pursuant to an Equipment Purchase Agreement
         (in the form attached as Appendix 2).
| | ----------------------------------------------------------------------------------------------------------------------------------------

| | (c)        
To provide personnel to supervise the installation and commissioning of the
         equipment supplied by Party A.
| | -------------------------------------------------------------------------------------------------------------------------------

| | (d)        
To bring such equipment into stable operation, producing satisfactory quality
         and quantity of Products.
| | ----------------------------------------------------------------------------------------------------------------------------

-10-

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| | (e)        
To assist the JVC to purchase components and raw materials which are not
available in China and to assist with the shipment thereof to the China port of
destination.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (f)        
To train the JVC employees pursuant to a Know-How License Agreement in the
         form attached as Appendix 3 which the JVC shall enter into with Party A upon formation of the
         JVC.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (g)        
To advise the JVC in the formulation and implementation of its        sales
         and marketing plans.
| | ---------------------------------------------------------------------------------------------------------------------

| | (h)        
To advise the JVC on how to sell its products in China and abroad, to assist in
such sales as provided in this Contract, to enter into the Marketing Service
Agreement in the form attached as Appendix 4, and to purchase Product exported
by the JVC.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (i)        
To assist the JVC to arrange foreign currency offshore loans in accordance with
Chinese laws and regulations and subject to approval by the Board of Directors
and the relevant Chinese government authorities.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (j)        
To keep secret and confidential and not use any technical data and other
information supplied to it by Party B or the JVC and other business and
financial information of the JVC in accordance with Article 8.5 to take
appropriate steps to avoid disclosing such data and information to third
parties, and to assist the JVC in preventing third party access to the
production facilities without the prior written approval of the Board.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (k)        
To warrant that: (i) it is the lawful owner of assets it sells to the JVC and
that such assets are free and clear of any liens, mortgages or other security
interests and claims; (ii) it possesses the right to transfer these assets in
the manner described in this Contract; and (iii) there are no pending legal or
administrative proceedings which would prevent it from fulfilling its
obligations under this Contract.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (l)        
To perform and fulfill such other duties which the JVC may entrust to Party A
         from time to time.
| | ---------------------------------------------------------------------------------------------------------------------

| | (m)        
To assist the JVC with recruitment of local personnel in the open market (as
         necessary) and with other employment matters accepted by Party A for smooth operation of the
         JVC.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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ARTICLE 7.0PARTY  B'S RESPONSIBILITIES TO JVC

7.1        
The following responsibilities, not otherwise covered in this Contract, shall be undertaken by
Party B at its own expense and with no compensation from the JVC (unless otherwise specified  in this Contract or
the Appendices):

| | RESPONSIBILITIES OF PARTY B:
| | ----------------------------

| | (a)        
To provide 50% of the registered capital as set forth in this Contract.
| | -----------------------------------------------------------------------------------

| | (b)        
To cause SNSG to sell equipment to the JVC pursuant to an Equipment Purchase
Agreement (in the form attached as Appendix 5), and to sell or lease equipment
to the JVC as required for the operation of the JVC from time to time, and
accepted by SNSG.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (c)        
To bring such equipment into stable operation, producing satisfactory quality
         and quantity of Products.
| | ----------------------------------------------------------------------------------------------------------------------------

| | (d)        
To assist the JVC to purchase components and raw materials which are not
available in China and to assist with the shipment thereof to the China port of
destination.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (e)        
To cause SNSG to train the JVC employees pursuant to a Know-How License
         Agreement, in the form attached as Appendix 6 which the JVC shall enter into with Party B upon
         formation of the JVC.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (f)        
To cause SNSG to enter into a Lease Agreement, in the form attached as Appendix
7, for the land and building in which the JVC will operate.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------

| | (g)        
 To advise the JVC in the formulation and implementation of its sales and
         marketing plans.
| | ---------------------------------------------------------------------------------------------------------------

| | (h)        
To advise the JVC on how to sell its products in China and abroad, to assist in
such sales as provided in this Contract, to enter into a Marketing Service
Agreement in the form attached as Appendix 4 and to purchase Product exported by
the JVC.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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| | (i)        
To assist the JVC to arrange foreign currency offshore loans in accordance with
Chinese laws and regulations and subject to approval by the Board of Directors
and the relevant Chinese government authorities.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (j)        
To keep secret and confidential and not use any technical data and other
information supplied to it by Party A or the JVC and other business and
financial information of the JVC in accordance with Article 8.5 to take
appropriate steps to avoid disclosing such data and information to third
parties, and to assist the JVC in preventing third party access to the
production facilities without the prior written consent of the Board.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (k)        
To warrant that: (i) SNSG is the lawful owner of assets SNSG sells to the JVC
and that such assets are free and clear of any liens, mortgages or other
security interests and claims; (ii) SNSG possesses the right to transfer these
assets in the manner described in this Contract; and (iii) there are no pending
legal or administrative proceedings which would prevent it from fulfilling its
obligations under this Contract.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (l)        
To assist the JVC with recruitment of local personnel in the open market (as
necessary) and with other employment matters accepted by SNSG for smooth
operation of the JVC.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (m)        
To assist the JVC in contracting and settling all basic utilities such as water,
sewer, electricity, gas and communications equipment and with the outfitting of
the building to accommodate installation of the production equipment.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (n)        
To cause SNSG to sell glass substrate to the JVC as provided in Article 20, as
         long as Party B controls SNSG.
| | ----------------------------------------------------------------------------------------------------------------------------------

| | (o)        
To perform and fulfill such other duties which the JVC may entrust to Party B
         from time to time, as accepted by Party B.
| | ---------------------------------------------------------------------------------------------------------------------------------------------

| | (p)        
Pursuant to a service agreement between SNSG and the JVC to be approved by the
Board of Directors, to cause SNSG to render to the JVC services with respect to
support for employment of workers and use of SNSG welfare facilities at a price
equal to SNSGs cost, including administrative costs. Such service
agreement shall not create liability on the part of SNSG for the operations of
the JVC.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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## ARTICLE 8.0
SELLING OF PRODUCT

8.1        
Some of the Products shall be sold by the JVC directly to customers in the PRC.
Each of the parties hereto shall assist the JVC in marketing, promotion and sale
of the Products in the PRC, provided, however, that a consideration for such
assistance shall be five percent (5%) of the net sales of the Products which
have been realized as a result of such assistance. For this purpose, the JVC and
each of the parties shall enter into a Marketing Service Agreement in the form
and substance as attached hereto as Appendix 3 as soon as practicable after the
License Date.

8.2        
Some of the Products shall be exported through Party A and/or Party B, including
products sold to Hong Kong and Macau. The Products sold by the JVC to Party A
and/or Party B for resale shall be sold to Party A and/or Party B at prices
determined by the Board of Directors from time to time which represent a fixed
discount from the anticipated resale price. The sales shall be on commercially
reasonable terms to be agreed upon by the JVC.

8.3        
Each party is entitled to undertake the sales or sales assistance for one-half
of the JVCs aggregate production value. It is the intention of the parties
that the total of the amount received pursuant to the sales assistance fee under
Article 8.1 and the discount granted under Article 8.2 for each party will be
approximately equal. The Board of Directors will review the business plan
semi-annually to maintain the approximate equality in combined return to the
parties.

8.4        
The JVC will have its own trademark which shall be duly registered in China to
protect its use immediately upon issuance of the business license. The trademark
of the Products shall be determined by the Board of Directors.

8.5        
Confidentiality

| | (a)        
During the term of this Contract (including any extensions thereof) and/or for
so long as the JVC continues to exist, and for a period of five (5) years
thereafter, or unless and until the information properly comes into the public
domain, both Parties shall maintain the secrecy and confidentiality of any
proprietary or secret information (Confidential Information) related
to the JVC or the other Party, and without the prior written consent of the
other party shall not disclose to any third party or person or use for itself or
others any Confidential Information disclosed to it by the other Party or the
JVC at any time during or for the purpose of negotiation of this Contract or for
the establishment or operation of the JVC, provided that both Parties
shall be permitted to disclose information received by them under this Contract
to Affiliates or departments when such disclosure is necessary for the Parties
to carry out their obligations under this Contract.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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| | (b)        
The Parties shall cause their directors, staff, and other employees, and also
those of their subsidiaries or affiliated companies, to comply with the
confidentiality obligations set forth in this contract.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

8.6        
During the term of this Contract and for a period of three (3) years after the
termination or expiration of this Contract, if any Party hereto desires to
engage in or associate with, as a principal or shareholder, any business which
manufactures Products in the PRC, it shall consult the other Party, provided
this responds to a request for consultation within thirty (30) days.

# ARTICLE 9.0
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS

9.1        
The Board of Directors of the JVC shall be established immediately after the License Date.

9.2        
The Board of Directors shall be composed of six (6) Directors, of which three
(3) shall be appointed by Party A and three (3) shall be appointed by Party B.
The term of office for each Director shall be two (2) years, which may be
renewed. The composition of the Board of Directors shall be subject to change if
the proportion of investment by the Parties changes. A Director may serve
concurrently as General Manager.

| | (a)        
The Chairman and the General  Manager  shall be appointed  upon an agreement of
         the parties hereto.
| | ------------------------------------------------------------------------------------------------------------------------

| | (b)        
If a party has appointed the Chairman,  the other party shall have the right to
         appoint the General Manager.
| | ---------------------------------------------------------------------------------------------------------------------------------

| | (c)        
The  appointment of the positions  shall  alternate  every  expiration of their
         terms of office.
| | ---------------------------------------------------------------------------------------------------------------------

| | (d)        
For the first term of two (2) years after the License Date, the Chairman shall
be appointed by Party A from among the Directors, the General Manager shall be
appointed by Party B. After the initial terms or any renewal terms which are
agreed upon, the parties may agree to extend the term of the Chairman and/or
General Manager for a period of two (2) years. Upon their failure to agree on
extensions after either the initial term or an extended term, the appointment of
the positions will alternate every two (2) years. During the first two (2) years
after the License Date, Party A shall have the right to appoint the Deputy
General Manager. Thereafter, the Board of Directors shall determine whether a
Deputy General Manager is required and if it is, shall appoint the person to
fill such position.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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9.3        
A Director may be removed only by the Party which appointed the Director and all
vacancies on the Board shall be filled by a person nominated by the Party which
appointed the vacating Director. In case either Party intends to change its
designated Board members for whatever reason, written notice shall be provided
to the other Party one (1) month in advance to facilitate clear communications
and understanding.

9.4        
A quorum of the Board of Directors to constitute a valid meeting shall require
the presence of at least four (4) Directors to be present in person or by proxy.
All resolutions of the Board of Directors shall be adopted by the unanimous
affirmative vote of the Directors present at such meeting, including proxies.

The
Board of Directors is the highest authority of the JVC and shall have sole power
to decide the matters as set forth in the Articles of Association.

9.5        
A resolution in writing signed by all of the Directors then in office shall
constitute the legal and effective action of the Board of Directors, the same as
if voted at a meeting.

Any Director  who is unable to attend a meeting of the Board of Directors  may appoint a proxy in
writing to attend such  meeting and vote in his place.  A proxy may  represent  one or more members of the Board of
Directors.  If a member of the Board of Directors  neither  attends the meeting nor appoints a proxy to attend,  he
shall be considered to have abstained from voting.

A meeting of the Board of Directors  may be validly and  effectively  held by telephonic or other
means so long as all of the  Directors  taking  part in the  meeting  are able to hear  and talk  with  each of the
others at the same time.

All meetings of the Board of Directors,  unless otherwise agreed upon between the Parties,  shall
be  conducted  in the  English  and/or  Japanese  language  as agreed  upon by all the  Directors  present  at such
meeting.  The JVC shall  prepare  complete and accurate  minutes of the Board of Directors  Meeting in the Chinese,
English and Japanese languages.

-16-

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9.6        
The Chairman is a legal representative of the JVC entitled to act on behalf of
the Board of Directors. No Director, including the Chairman, shall have the
power to bind the JVC except with the written consent of the Board of Directors.

9.7        
The Board of Directors shall convene at least two (2) meetings every year. The
meetings shall be called and presided over by the Chairman of the Board or such
other Director that he has authorized to act on his behalf. The Chairman may
convene an interim meeting based on a proposal made by two or more of the
Directors.

9.8        
The Chairman shall send written notice at least thirty (30) days prior to any
Board meeting, stating the subject, time and place of the meeting. Such notice
shall be in English and Japanese and shall include a detailed agenda of matters
to be discussed at the meeting and all reports, documents and other materials
relevant for adequate and informed consideration of each matter on the agenda.

9.9        
In the event of an emergency, the Chairman shall, by the most rapid means of
communication available to him, notify each Director of the nature of emergency
and the proposed action to be taken. If due to the urgency of the situation it
is not possible to obtain a quorum of the Board of Directors within the time
available for the JVC to act, the written approval of one Director appointed by
each Party will suffice for the General Manager to act and a Board of Directors
meeting shall be convened as soon as reasonably possible thereafter to ratify
such action.

9.10      
Members of the Board of Directors shall not be paid by the JVC for their duties
as members of the Board. The JVC shall pay for the costs of air travel (economy
class), meals and lodging expenses incurred by Directors in traveling to and
attending up to two (2) meetings of the Board of Directors in each fiscal year.

9.11      
Each member of the Board of Directors shall have only one vote but may cast the
vote(s) of other director(s) by proxy. In no event shall the Chairman or any
Director acting as the Chairman be entitled to cost a decisive vote.

9.12      
Deadlock.

| | (a)        
If for any reason whatsoever the Board of Directors is unable to resolve any
issue presented before it, the meeting of the Board of Directors at which such
issue or issues are being discussed shall be adjourned for twenty-four (24)
hours. If at the reconvened meeting, the Board of Directors is still unable to
resolve such issue or issues, such issue or issues shall be referred with a
detailed record of the discussions to the President of Party A and to the
corporate officer in charge of the Fine Glass Division of Party B.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

-17-

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| | (b)        
If the President of Party A and the specified corporate officer of Party B
referenced above, through further discussion, fail to reach an agreement within
six (6) months from the date of the reconvened meeting of the Board of
Directors, and the deadlock materially impairs the continued operation of
the JVC in a manner consistent with past practice or an agreed upon business
plan, then either Party may send a notice to the other Party that it wishes to
withdraw from the joint venture. Thereafter, the following procedure shall be
followed:
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (i)        
The Parties  shall  attempt to agree on the fair market value
                  of the JVC.
| | -------------------------------------------------------------------------------------------------------

| | (ii)       
If the Parties  cannot  agree upon the value of the JVC,  the
                  fair market  value shall be  determined  by  appraisal as provided in paragraph
                  9.12(c) below.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (iii)      
After the fair market value has been determined, the Party receiving the
withdrawal notice shall have the option to purchase the entire registered
capital and all interest of the other Party in the JVC at a price equal to
eighty-five percent (85%) of fifty percent (50%) (or such other percentage
ownership then held by the Selling Party) of the fair market value of the JVC,
or to require the Party giving the notice to purchase its entire registered
capital and all its interest in the JVC at a price equal to one hundred fifteen
percent (115%) of fifty percent (50%) (or such other percentage ownership then
held by the Selling Party) of the fair market value of the JVC.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (iv)      
Any closing will occur within thirty (30) days following the approval of the
Approval Authority. Payment of the purchase price shall be cash or its
equivalent in US Dollars or Japanese Yen.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (c)        
The  following  is the  procedure  which  shall be used to  determine  the fair
         market value of the JVC:
| | -----------------------------------------------------------------------------------------------------------------------------

| | (i)        
The Parties shall first attempt to agree on a qualified business appraiser or
appraisal firm, which may, but shall not be required to be, a certified public
accountant. If the Parties can agree, the value determined by such an appraiser
shall be the fair market value of the JVC.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

-18-

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| | (ii)       
If the Parties cannot agree on such an appraiser within thirty (30) days after
the request by one Party, each Party shall appoint such an appraiser and the
fair market value agreed upon by those two appraisers shall be the fair market
value of the JVC. If any Party fails to appoint a qualified business appraiser
within the time limit specified, the fair market value determined by the
appraiser appointed by the other Party shall be the fair market value of the
JVC.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (iii)      
If, within ninety (90) days after being appointed, the two appraisers cannot
agree on a fair market value of the JVC, the two of them shall appoint a third
qualified business appraiser. The value agreed upon by any two of the three
appraisers shall be the fair market value of the JVC.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# ARTICLE 10.0
MANAGEMENT STRUCTURE

10.1        
The Board of Directors shall delegate day-to-day operational decisions to the General Manager.

10.2        
The General Manager shall be responsible for day-to-day operation and management
of the JVC. The General Manager shall report to the Board of Directors and shall
execute decisions made by the Board of Directors. Reporting to the General
Manager shall be the managers of various departments into which the JVC shall be
divided. Such managers will be selected and dismissed by the General Manager.
The General Managers powers and duties shall be as set forth in the
JVCs Articles of Association.

10.3        
The Deputy General Manager will be the financial manager of the JVC and will be
responsible for the accounting personnel and general affairs of the JVC. Such
Deputy General Manager shall report to the General Manager, but may be dismissed
only by or with the consent of Party A.

10.4        
The General Manager shall prepare an annual business plan (production plan,
sales plan and overall policy plan), budget and three (3) year operating plan
for the JVC which shall be submitted to the Board for approval one (1) month
prior to the end of each fiscal year. Upon approval of the plan by the Board,
the General Manager shall be responsible for its implementation.

-19-

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10.5        
The General Manager shall send monthly reports in Japanese and/or English to all
the Directors showing all relevant performance data against the budget and
explanations for major deviations within fourteen (14) days after the end of
each month.

10.6        
The JVC shall have the right, at its discretion, to hire its own employees or to
contract services from any other person, including Party A, Party B or SNSG.

# ARTICLE 11.0
TAXES, FINANCE AND AUDIT

11.1        
The JVC shall pay taxes in  accordance  with the  stipulations  of the relevant  Chinese laws and
regulations.

11.2        
Staff members and workers of the JVC shall pay individual income tax according
to the Individual Income Tax Law of the Peoples Republic of
China or the Individual Income Regulatory Tax Law of the
Peoples Republic of China.

11.3        
Allocations for reserve funds (reserve funds, enterprise expansion funds of the
JVC, welfare and bonus funds for staff and workers) shall be set aside in
accordance with the stipulations of the Law of the Peoples Republic
of China on Joint Venture Using Chinese and Foreign Investment. The annual
proportion of allocations shall be decided by the Board of Directors according
to the business situations of the JVC.

11.4        
The fiscal year of the JVC shall be January 1 through December 31. All vouchers,
receipts, statistical statements and reports shall be written in Chinese. All
statistical statements and reports shall also be written in English and
Japanese.

11.5        
The JVC shall establish its accounting system in accordance with the
internationally used accrual basis and debit and credit system.

11.6        
The JVC shall adopt Renminbi (RMB) as the standard currency for
entries in the books of account. Conversion into RMB from U.S. Dollars, Japanese
Yen and other currencies shall be on the date the transaction is entered into
the accounts of the JVC and shall be in accordance with the State Administration
of Exchange Control of the Peoples Republic of China.

11.7        
The JVCs annual financial auditing shall be conducted by an international
auditor registered in China and appointed by the Board of Directors. The results
of auditing shall be a report in accordance with international accounting
principles in accordance with Generally Accepted Accounting Principles
(GAAP) standards and shall be submitted to the Board of Directors.

-20-

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11.8        
In the event either Party considers it necessary to engage a foreign auditor
registered in another country to undertake annual financial auditing or review
the audit of the JVCs auditor, the JVC and other Party shall give its
consent, and the additional expenses shall be borne by the requesting Party.

11.9        
Within fourteen (14) days of the close of each calendar month, the General
Manager shall submit to the Board of Directors the Profit and Loss Statement for
that month and the Balance Sheet as of the close of that month. English or
Japanese language translations shall be prepared for the Directors.

11.10      
The JVC may open RMB and foreign exchange accounts with banks in China upon
approval by the Board of Directors. The procedure for issuing and signing bank
checks shall be decided by the Board of Directors.

11.11      
The JVC may also open foreign exchange accounts with foreign banks in foreign
countries as designated by the Board of Directors and approved by the State
Administration of Foreign Exchange Control. Foreign income to the JVC earned and
paid abroad may be deposited in those accounts and payments in foreign exchange
currencies outside of China may be made from the same accounts.

11.12      
Within the first two (2) months of the close of each fiscal year, the General
Manager shall present to the Board of Directors for approval the previous
years Balance Sheet, Profit and Loss Statement and proposals regarding the
distribution of profits. By the end of the third month of each fiscal year, the
Board of Directors shall determine the required allocations of reserve funds
(three funds), confirm and pay amounts due to the Parties as marketing service
fee, loan guaranty fees and royalties, confirm the amount of income taxes
payable and determine the balance available for distribution as dividends to the
Parties. Unless otherwise agreed by a majority vote of the Board, one hundred
percent (100%) of the balance available for dividends shall be distributed to
the Parties in proportion to their contribution to the registered capital of the
JVC. Dividends shall be paid within sixty (60) days after the Board has declared
the distribution.

11.13      
The JVC is permitted to take measures to obtain foreign exchange in accordance
with all relevant laws and regulations to (in order of priority): (a) pay for
imported materials; (b) service foreign debt; (c) pay for technical assistance,
technology and trademark licenses; and (d) pay dividends to the foreign partner.

11.14      
Losses of the JVC shall be shared by the Parties in proportion to each
Partys share in the JVCs registered capital.

-21-

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## ARTICLE 12.0
LABOR MANAGEMENT

12.1        
Plans for the employment, recruitment, dismissal, resignation, wages, work
insurance, labor protection, labor discipline, welfare benefits, and bonuses of
JVC employees shall be formulated by the General Manager in consultation with
the Board of Directors and subject to its prior approval, pursuant to the
relevant laws and regulations.

12.2        
The General Manager, with the prior approval of the Board of Directors, has the
authority to enter into individual labor contracts on behalf of the JVC. If
required a copy of any signed labor contract shall be submitted to the local
labor management department.

12.3        
The Board of Directors shall determine matters such as salary and/or wages,
social insurance, welfare, and traveling expenses with respect to the General
Manager and the Deputy General Manager. The General Manager shall determine such
matters with respect to other employees of the JVC with the prior approval of
the Board of Directors.

12.4        
The employees of the JVC shall have the right to establish a trade union
organization and to carry out activities in accordance with the relevant laws
and regulations governing trade unions. In accordance with the relevant laws and
regulations, every month the JVC shall allocate funds to be used by the trade
union. At the time of signing this Contract, the stipulated amount is two
percent (2%) of employees salaries.

# ARTICLE 13.0
TERM OF THE JVC

13.1        
The Term of the JVC shall be fifty (50) years beginning from the date of
issuance of the business license and may be extended for a further period or
periods of fifty (50) years or such other period as the Parties agree upon
mutual agreement of the Parties and subject to the approval by the relevant
Chinese authorities.

13.2        
At least two (2) years prior to the expiration of the Term, the Parties shall
hold discussions on the extension of the Term. If the Parties agree to extend
the Term and it has been unanimously approved by the Board of Directors, an
application for extension shall be submitted to the relevant Chinese approval
authorities six (6) months prior to the expiration date of the JVCs
business license.

13.3        
If the Parties fail to extend the Term, the Party which wanted to extend the JVC
may elect the term to continue the business of the JVC, provided that it can
obtain approval from the relevant Chinese authorities and enter into the
necessary agreements and licenses. The Party choosing to continue the business
shall be obligated to purchase the interest of the other Party at a price equal
to the fair market value of the JVC multiplied by the other Partys
proportion of the registered capital of the JVC. If no selling price can be
agreed upon, the fair market value of the JVC shall be determined as provided in
Article 9.12(c).

-22-

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# ARTICLE 14.0
INSURANCE

The
JVC may obtain insurance policies for various kinds of risks from the
Peoples Insurance Company of China (PICC). Types, value and duration of
the insurance shall be decided by the Board of Directors in accordance with the
stipulations of PICC and relevant laws and regulations.

## ARTICLE 15.0
AMENDMENT AND MODIFICATION

The
amendment and/or modification of this Contract shall be effective only in
writing, signed by both Parties and approved by the applicable examination and
approval authority in China.

# ARTICLE 16.0
DISSOLUTION/WITHDRAWAL

16.1        
The Parties in the JVC have the right to agree that it may be dissolved at any
time prior to expiration of the business license, but in such case it must be
unanimously approved by the Board of Directors and permission granted by the
relevant Chinese authorities.

16.2        
In  addition  to the  rights  granted in  Article  16.1,  the  parties  shall have the  following
rights:

| | (a)        
The following shall constitute Events of Withdrawal/Dissolution:
| | ----------------------------------------------------------------------------

| | (i)        
The JVC incurs losses for three (3) consecutive  fiscal years
                  and the Board of Directors  determines  that no recovery in the near future can
                  be expected;
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (ii)       
The  accumulated  losses of the JVC exceeds the total  amount
                  of the registered capital of the JVC;
| | ---------------------------------------------------------------------------------------------------------------------------------

-23-

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| | (iii)      
The JVC is unable to operate for a continuous period six (6) months due to the
occurrence of any event of Force Majeure or any other reason not attributable to
the Parties;
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (iv)      
The JVC is unable to operate for a period of one (1) month and the Board of
Directors determines that there is no reasonable prospect of being able to
resume business within ninety (90) days due to:
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | A.        
any  change  of the PRC law,  regulation  or
                           rule,  or  any   governmental   order  or   expropriation  or
                           requisition  of all or a  material  portion  of the assets or
                           property of the JVC, or
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | B.        
any  business  license  or  other  licensee,
                           without  which the JVC cannot  operate and produce  Products,
                           expires, is canceled, terminated or suspended.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b)        
After the occurrence of an Event of Withdrawal/Dissolution as provided in Clause
(a) above, either Party may send a notice to the other Party stating that the
JVC should be terminated. Thereafter, the following procedure shall be followed:
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (i)        
the Parties shall attempt to agree on the value of the JVC;
| | -----------------------------------------------------------------------

| | (ii)       
if the Parties  cannot  agree upon the value of the JVC,  the
                  fair market  value of the JVC shall be  determined  by appraisal as provided in
                  Article 9.12(c).
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (iii)      
After the fair market value of the JVC has been determined, the Party receiving
the notice shall have the option to:
| | --------------------------------------------------------------------------------------------------------------------------------

| | A.        
purchase  all  the  registered  capital  and
                           interest  of the other  Party in the JVC at a price  equal to
                           ninety  percent  (90%)  of the fair  market  value of the JVC
                           multiplied  by the Selling  party's  proportion  of the JVC's
                           registered capital, (but not less than book value), or
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

-24-

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| | B.        
liquidate the JVC.
| | -----------------------------

| | (iv)      
If a purchase  occurs,  the closing shall occur within thirty
                  (30)  days  following  approval  by  the  Approval  Authority.  Payment  of the
                  purchase  price  shall be in cash or its  equivalent  in US Dollars or Japanese
                  Yen.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

16.3        
If the Parties agree to dissolve the JVC or if a Party exercises its right to
cause the JVC to be dissolved pursuant to Article 16.2, the parties hereto shall
cause their respective directors appointed by them to vote for the dissolution
of the JVC. Immediately after the Board of Directors resolution for the
dissolution of the JVC, the JVC shall apply to the Approval Authority for the
dissolution and cease to do any further business activities.

16.4        
Upon approval from the relevant Chinese authorities of the request for
dissolution, liquidation shall proceed. The Board of Directors shall appoint a
liquidation committee to work out the procedures. The specific tasks of the
liquidation committee shall be: (a) to conduct a thorough check of the JVC
property; (b) to determine creditors rights and liabilities; (c) to
finalize a balance sheet and a schedule of assets; and (d) to formulate a formal
liquidation plan. All these shall be effected after approval has been granted by
the Board of Directors. The liquidated value of the JVCs assets shall be
appraised by an appraiser and calculated in accordance with relevant Chinese
laws and regulations.

16.5        
During the liquidation process, the liquidation committee shall represent the
JVC in all matters related to the legal aspects of the liquidation process. The
costs of and remuneration to the liquidation committee shall be paid in priority
by the JVC. Any and all expenses and liabilities incurred by either of the
Parties in the liquidation of the JVC in accordance with Chinese law, regulation
or governmental order, shall be shared by both Parties in accordance with the
ratio of their interest in the registered capital of the JVC at the time of
dissolution. In addition, any and all expenses and liabilities incurred by
either of the Parties in the liquidation of the JVC in accordance with normal
custom and practice in the New District of Suzhou shall be shared by both
Parties in accordance with the ratio of their interest in the registered capital
of the JVC at the time of dissolution, provided, that neither Partys
obligation for such payments shall exceed $100,000 unless that party consents.
If the Parties do not agree whether a particular payment is required under
Chinese law, regulations or governmental order or whether a particular payment
is in accordance with normal custom and practice in the New District of Suzhou,
the issue shall be arbitrated pursuant to Article 21.

16.6        
After all debts of the JVC have been cleared by the liquidation committee, the
remaining assets shall be distributed to each Party according to the proportion
of its share of registered capital contributed to the JVC. Technology licensed
to the JVC by each Party shall remain the property of that Party and shall
revert back to that Party without charge and shall not be counted as part of
that Partys distribution pursuant to liquidation.

-25-

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16.7        
On completion of the liquidation process, the JVC shall submit a report to the
relevant Chinese authority, fulfill all formalities related to surrender of the
business license, and publish a liquidation notice to the public.

16.8        
After dissolution of the JVC, all the books of account and records of the JVC
shall be kept by a third party agreed by the parties hereto. The parties hereto
agree that the costs required for the above shall be pro-rated between the
parties in accordance with their contributions to the registered capital of the
JVC at the time of the dissolution.

# ARTICLE 17.0
LIABILITIES FOR BREACH OF CONTRACT

17.1        
If either Party fails to make its contribution to registered capital on time as
stipulated in Article 5.0 of this Contract, the Party in breach shall not be
entitled to any profit distribution for the time it is in default of its
contribution commencing on the due date and shall pay interest on the amount
owing starting from the first month after exceeding the time limit, calculated
at the prime rate of interest of the Bank of China at the time. In addition, the
breaching Party shall compensate the JVC for all direct losses incurred by such
breach.

17.2        
If either Party (the Defaulting Party) (a) fails to pay its
contribution to registered capital for more than three (3) months beyond the due
date, or should the JVC be unable to continue its operations or achieve the
business purpose stipulated in this Contract as a result of such failure to
contribute, or commits any other material breach of its obligations under this
Contract or any Appendix hereto, (b) the other Party gives to the Defaulting
Party a written notice specifying the nature of the breach, and (c) the
Defaulting Party fails to cure such breach within thirty (30) days from the date
on which such notice is received by the Defaulting Party, or if such breach
cannot reasonably be cured within thirty (30) days, if the Defaulting Party does
not diligently work to cure such default, then, the non-defaulting Party shall
have the right to notify the Defaulting Party that it wishes to terminate the
Joint Venture, in which case the following procedure shall apply. A material
default by SNSG under any Appendix to this Contract at a time it is controlled
by Party B shall constitute a default by Party B under this Article.

| | (i)        
the Parties shall attempt to agree on the fair market value of the JVC,
| | -----------------------------------------------------------------------------------

| | (ii)       
if the  Parties  cannot  agree  upon  the  value  of the  JVC,  value  shall be
         appraised as provided in Article 9.12(c);
| | ----------------------------------------------------------------------------------------------------------------------------------------------

-26-

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| | (iii)      
after the fair market value of the JVC has been determined, the non-defaulting
Party shall have the option to purchase the registered capital and all the
interest of the Defaulting Party in the Contract at a price equal to seventy
percent (70%) of the fair market value of the JVC multiplied by the proportion
of the defaulting Partys registered capital of the JVC or require that the
Defaulting Party purchase its registered capital and its interest in the JVC at
a price equal to one hundred thirty percent (130%) of the fair market value of
the JVC multiplied by the proportion of its registered capital of the JVC; and
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (iv)      
the closing will occur within thirty (30) days following the approval of the
Approval Authority. Payment of the purchase price shall be cash or its
equivalent in US Dollars or Japanese Yen, as specified by the selling Party.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

17.3        
If failure to carry out this Contract is due solely to one Partys breach,
then the breaching Party shall be fully liable for any and all losses resulting
from such breach. In addition to other remedies available under the PRC law and
under this Contract, the Party not in breach shall be entitled to recover any
and all damages, including but not limited to, direct economic losses then
caused to the Party not in breach or its portion of damages to the JVC by the
breaching Party. If there has been a reduction in the fair market value of the
JVC as a result of the breach, damages will include fifty percent (50%) (or such
other percentage ownership then held by the non-breaching Party) of the
reduction in fair market value of the JVC resulting from that breach. Under no
circumstances, however, shall the Party not in breach be entitled to duplicate
recovery or value from the breaching Party under different theories, legal
remedies or clauses, including purchase price adjustments under Article 17.2, or
recovery for a reduction in value pursuant to the immediately preceding
sentence. If, however, such failure is due to both Parties breach, each Party
shall bear its own share of the resulting losses.

# ARTICLE
18.0FORCE MAJEURE

18.1        
Should either Party be prevented from performing its obligations under this
Contract due to force majeure, such as major earthquake, typhoon, fire, flood,
war or other events whose occurrence could not be predicted and whose
consequences could not be prevented or avoided, the Party that is adversely
affected by such event shall notify the other Party as soon as possible and
shall within fifteen (15) days thereafter provide the detailed information of
the events giving full explanation of its inability to execute or delay the
execution of the Contract in whole or in part. Both Parties should then decide,
through consultation, whether to dissolve JVC, to relieve the affected Party of
its duties under the Contract, or to delay the performance of the Contract until
the force majeure situation is cured. If no agreement can be reached within
thirty (30) days following the initial notice of a force majeure condition, the
Board of Directors or parties shall act in accordance with Article 16.0 to sell
or dissolve the JVC.

-27-

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18.2        
Neither Party shall claim against the other or against the JVC for compensation
for losses caused by force majeure.

18.3        
Force majeure shall not constitute a valid defense for either Partys
failure to pay monetary obligations that were due and payable at the time a
force majeure situation was declared.

# ARTICLE
19.0EXISTING OPERATIONS

19.1        
General Principles.  The parties acknowledge that the JVC will be established and operated
utilizing facilities which were utilized by SNSG prior to the establishment of the JVC.

19.2        
Representations.  Party A has become a party to this Contract in reliance on information
supplied by Party B concerning its existing operations and assets.  In particular, Party B represents for the
benefit of Party A that:

| | (a)        
Party B is not aware of any litigation, arbitration or administrative proceeding
which is currently taking place or pending or threatened against Party B or
SNSG, or the assets of SNSG, which are related to the subject of this Contract.
Furthermore, neither Party B nor SNSG is, as at the date of this Contract, in
default under any law, regulation, government directive whether having force of
law or not, judgment of a court, governmental order, governmental authorization,
agreement or obligation applicable to the business or assets of SNSG which
relate to the subject of this Contract.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b)        
All information supplied to Party A by Party B in relation to this Contract,
including the information concerning the business and financial status of SNSG
and Party B, and SNSGs assets, inventories and outstanding contractual
arrangements with suppliers and customers with respect to the business which is
the subject of this Contract, is true and correct as at the date of this
Contract, whether the same has been verified or audited by an independent third
party or not.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

-28-

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19.3        
Representations.  Party B has become a party to this Contract in reliance on information
supplied by Party A concerning its existing operations and assets.  In particular, Party A represents for the
benefit of Party B that:

| | (a)        
Party A is not aware of any litigation, arbitration or administrative proceeding
which is currently taking place or pending or threatened against Party A or the
assets of Party A which are subject to this Contract. Furthermore, Party A is
not, as of the date of this Contract, in default under any law, regulation,
government directive whether have the force of law or not, judgment of a court,
governmental order, governmental authorization, agreement or obligation
applicable to its business or assets which relate to the subject of this
Contract.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b)        
All information supplied to Party B by Party A in relation to this Contract,
including information concerning the business and financial status of Party A
and its assets, inventories and outstanding contractual arrangements with
suppliers and customers with respect to the business which is the subject of
this Contract, is true and correct at the date of this Contract, whether the
same has been verified or audited by an independent third party or not.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

19.4        
Liability. Party A, Party B and/or SNSG shall continue to be wholly responsible
for their own debts and liabilities, whether actual or contingent, or accrued
before or after the License Date, and such debts and liabilities shall not be
the responsibility of the other Party or the JVC. In particular, neither Party A
nor the JVC shall assume any of the following liabilities or obligations of
Party B or SNSG and neither Party B nor the JVC shall assume any of the
following obligations of Party A existing prior to the License Date:

| | (a)        
mortgages, charges or security interests against assets to be sold to the JVC;
| | ------------------------------------------------------------------------------------------

| | (b)        
liabilities for income, consolidated industrial and commercial tax or any
         other tax or penalties related to SNSG's business;
| | -------------------------------------------------------------------------------------------------------------------------------------------------

| | (c)        
liabilities with respect to environmental matters related to land or buildings
         to be leased to the JVC;
| | ----------------------------------------------------------------------------------------------------------------------------

| | (d)        
liabilities or obligations with respect to wages, pensions or other benefits
payable to employees of SNSG who subsequently transfer to the JVC, if any.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (e)        
liabilities for the products themselves; and
| | --------------------------------------------------------

-29-

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| | (f)        
liabilities to any third party.
| | -------------------------------------------

Party B will indemnify and
hold Party A and the JVC harmless from and against any loss, cost, damage or
expense arising from any claim which is the responsibility of Party B or SNSG
under this Article 19.4. Party A will indemnify and hold Party B, SNSG and the
JVC harmless from and against any loss, cost, damage or expense arising from any
claim which is the responsibility of Party A under this Article 19.4.

ARTICLE 20.0SUPPLY OF MATERIALS

20.1

| | (a)        
The parties agree in principle that the JVC will purchase all its required
substrate glass from SNSG unless a customer specifies substrate from another
manufacturer.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b)        
SNSG shall sell glass substrate to the JVC at the lowest price for production
quantities and on competitive terms and conditions with respect to quality and
delivery compared to those offered by SNSG to AFC or any other party or by a
third party to AFC. SNSGs price to the JVC, net of all insurance, duties
and taxes (including value-added taxes), shall be compared to SNSGs price
to other buyers (FOB SNSGs plant) and also compared to any price payable
by Party A to SNSG or any other party (FOB Sellers plant).
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# ARTICLE
21.0SETTLEMENT OF DISPUTES

21.1        
The Parties hereto agree to use their best efforts to settle amicably through
mutual consultation of the Parties any disputes, differences or controversies
which may arise between the Parties out of, in relation to or in connection with
this Contract or the breach hereof. Except as otherwise provided in this
Contract, if any of such disputes, differences or controversies cannot be
settled amicably within three (3) months from the date on which the parties had
the first consultation, such disputes, differences or controversies shall be
exclusively and finally settled by an arbitration in Singapore in accordance
with the Arbitration Rules of the Singapore International Arbitration Center
(SIAC) under the auspices of the SIAC.

The arbitration proceedings shall be conducted in the English language.

The decision of the arbitrator shall be final and binding on all Parties and shall be enforceable in any
court of competent jurisdiction.

-30-

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# ARTICLE
22.0APPLICABLE LAW

The
formation of this Contract, its validity, interpretation, execution and the
settlement of disputes shall be governed by the relevant laws of the PRC.

# ARTICLE 23.0
LANGUAGE

This Contract shall be written in English only.

# ARTICLE
24.0PARTIAL UNENFORCEABILITY

If
any portion of this Contract becomes unenforceable for any reason, the remaining
portions of the Contract shall remain in full effect unless doing so would
render the business purpose of the JVC impossible to fulfill.

# ARTICLE
25.0ENTIRE AGREEMENT

This
Contract constitutes the entire agreement between the Parties and supersedes all
prior discussions and agreements between them.

# ARTICLE
26.0NOTICES

26.1        
All official notices, requests and communications (other than routine matters)
shall be given as follows:

| | (a)        
If to a Party: It shall be to that Partys Legal Representative at its
legal address as set forth in Article 2.1 or such other address as the Party may
from time to time designate in writing to the other Party and the JVC and shall
be signed by the Legal Representative of the other Party or by the Chairman of
the JVC, as applicable.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b)        
If to the JVC: It shall be to the General Manager of the JVC at the legal
address as set forth in Article 3.3 or such other address as the JVC may from
time to time designate in writing to both Parties, and shall be signed by the
Legal Representative of the Party.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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26.2        
Notices, requests and communications may be sent by facsimile for expediency,
but shall be followed by airmail copy to the legal address listed in this
Contract. Notices shall be written in English and Japanese and shall be
effective upon first receipt. Notices or other communications hereunder shall be
deemed to have been given and received (i) if delivered personally, on the day
of the delivery, (ii) if sent by a courier, on the seventh (7th) day following
the date of the deposition of the document, or (iii) if transmitted by
facsimile, on the day of the transmission of the message.

26.3        
The provisions contained in Articles 8.5, 8.6, 21 and 22 shall continue to
survive after the expiration or termination of this Contract and the dissolution
of the JVC.

# ARTICLE 27.0
EFFECTIVENESS AND VALIDITY OF THE CONTRACT

27.1        
This Contract shall come in to force beginning with the issuance of the Business License.

27.2        
Appendices 1 through 8 to this Contract are hereby incorporated into this
Contract by and shall be an integral part of this Contract.

27.3        
This Contract shall have five (5) original copies.

# ARTICLE 28.0
SIGNATURES

This
Contract is hereby signed in Colorado / Tokyo by the legal representatives
of both Parties on the 17th day of February, 1999.

|For Party A                | For Party B                   
|-------------------------- | ------------------------------
|BY:                        | /s/ Thomas Edman

Thomas Edman
|TITLE:   President and CEO | TITLE:   President            

|DATE: |  |  | DATE: | February 17, 1999 | 
|----- |  |  | ----- | ----------------- | 

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EXHIBIT 13.1

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