UNITED STATES


	
  

 
	
 COOPERATIVE
 JOINT VENTURE CONTRACT

 
	 

 


COOPERATIVE JOINT
VENTURE CONTRACT


For the establishment of


Natcore Technology (Zhuzhou)
Co., Ltd.


by and between


Zhuzhou Hexing Industrial Co., Ltd.


and


Natcore Asia Technology, Limited


September 21, 2010


Confidential









	
  

 
	
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 JOINT VENTURE CONTRACT

 
	 

 


TABLE OF CONTENTS


	
  

 	
  

 
	
 ARTICLE 1 DEFINITIONS

 	
 1

 
	
 ARTICLE 2
 PARTIES TO THE CJV

 	
 2

 
	
 ARTICLE 3 ESTABLISHMENT OF THE CJV

 	
 3

 
	
 ARTICLE 4
 PURPOSE AND SCOPE OF BUSINESS

 	
 4

 
	
 ARTICLE 5 TOTAL INVESTMENT AND REGISTERED CAPITAL

 	
 4

 
	
 ARTICLE 6 UTILIZATION OF INTELLECTUAL PROPERTY OF THE CJV

 	
 7

 
	
 ARTICLE 7 SALES AND DISTRIBUTION

 	
 7

 
	
 ARTICLE 8 BOARD OF DIRECTORS

 	
 7

 
	
 ARTICLE 9
 SUPERVISOR

 	
 10

 
	
 ARTICLE 10 OPERATION AND MANAGEMENT

 	
 11

 
	
 ARTICLE 11 LABOR MANAGEMENT

 	
 12

 
	
 ARTICLE 12 FINANCIAL AFFAIRS AND ACCOUNTING

 	
 13

 
	
 ARTICLE 13 TAXATION AND INSURANCE

 	
 16

 
	
 ARTICLE 14 CONFTDENTIALITY

 	
 16

 
	
 ARTICLE 15 THE JOINT VENTURE TERM

 	
 17

 
	
 ARTICLE 16 TERMINATION AND LIQUIDATION

 	
 18

 
	
 ARTICLE 17 BREACH OF CONTRACT

 	
 20

 
	
 ARTICLE 18 FORCE MAJEURE

 	
 20

 
	
 ARTICLE 19 DISPUTE RESOLUTION

 	
 21

 
	
 ARTICLE 20 APPLICABLE LAW

 	
 21

 
	
 ARTICLE 21 MISCELLANEOUS PROVISIONS

 	
 21

 


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COOPERATIVE JOINT VENTURE
CONTRACT


This COOPERATIVE JOINT VENTURE CONTRACT (the “Contract”) is made and entered into as of
September 20, 2010 in the People’s Republic of China (the “PRC” or “China”) by and between the
following parties in accordance with the Law
of the People’s Republic of China on Sino-Foreign Cooperative Joint Ventures and
its implementing
measures (the “Cooperative Joint Venture
Law”), and other relevant Chinese laws and regulations adopted in principal
place of the cooperative joint venture:


	
  

 	
  

 
	
 (1)

 	
 Zhuzhou Hexing Industrial Co., Ltd.  a company duly incorporated and validly existing
 under the PRC law, whose registered office is at 5th Fl. Huanzhou
 Town, Lusong District, Zhuzhou City, Hu’nan Province (“Party A”); and

 
	
  

 	
  

 
	
 (2)

 	
 Natcore Asia Technology, Limited, a company duly incorporated and validly existing under the laws of the Hong Kong
 Special Administrative Region (“Hong Kong”), whose registered office is
 at Suite 2208, 22/F, Jardine House,
 1 Connaught Place, Central, Hong Kong (“Party
 B”).

 


In this Contract, Party A and Party B hereinafter shall
be referred to as the “Parties” collectively and a “Party” individually. On the basis of
mutual respects and benefits, the Parties have agreed to establish a Sino-Foreign
Cooperative Joint Venture (the “CJV”)
pursuant to the terms and conditions of this Contract.


ARTICLE 1 DEFINITIONS


Unless the terms or context of this Contract otherwise
provided, the following terms shall have the meanings set out below:


	
  

 	
  

 
	
 1.1

 	
  “Affiliate” means, in relation to
 a Party, any company or entity which, through ownership of voting stock
 (shares), membership interests, or otherwise, directly or indirectly through
 one or more intermediaries, Controls, is Controlled by, or is under common Control with the Party.

 
	
  

 	
  

 
	
 1.2

 	
  “Approval Authority” shall mean the
 Ministry of Commerce and/or its local branch offices, or other government
 entities required by Chinese Law to grant approval to this Contract.

 
	
  

 	
  

 
	
 1.3 

 	
  “Board” shall mean the board
 of Directors of the CJV.

 
	
  

 	
  

 
	
 1.4

 	
  “Business Day” shall mean a day on
 which banks are open for business in the PRC and Hong Kong (excluding Saturdays, Sundays
 and public holidays).

 
	
  

 	
  

 
	
 1.5

 	
  “China” or “PRC” shall mean the People’s Republic of
 China, exclusive of the Hong Kong Special Administrative Region, the Macau
 Special Administrative Region,
 and Taiwan.

 
	
  

 	
  

 
	
 1.6

 	
  “Director” shall mean any
 individual who serves as a member of the Board of the CJV.

 
	
  

 	
  

 
	
 1.7

 	
  “Effective Date” shall mean the
 effective date of this Contract, which shall be the date of the
 approval issued by the Approval Authority in respect of this Contract.

 


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 1.8

 	
  “Joint
 Venture Term” shall mean the term of the CJV as set forth
 in Article 15.

 
	
  

 	
  

 
	
 1.9

 	
  “Renminbi” or “RMB” shall mean the
 lawful currency of China.

 
	
  

 	
  

 
	
 1.10

 	
  “SAFE”
 shall mean the State Administration of Foreign Exchange of China and/or its
 local branch (as appropriate to the context).

 
	
  

 	
  

 
	
 1.11

 	
  “SAIC”
 shall mean the State Administration of Industry and Commerce of China and/or
 its local branches (as appropriate to the context).

 
	
  

 	
  

 
	
 1.12

 	
  “U.S.”
 shall mean the United States of America.

 
	
  

 	
  

 
	
 1.13

 	
  “United
 States Dollars,” “U.S. Dollars”, “USD” and “US$” shall mean the lawful currency of
 the United States of America

 
	
  

 	
  

 
	
 1.14

 	
  “Management
 Personnel” shall mean the General Manager, Chief Financial
 Officer (“CFO”) and the other Management Personnel designated as such by the
 Board.

 
	
  

 	
  

 
	
 1.15

 	
  “Working
 Personnel” shall mean the employees of the CJV except the
 Management Personnel.

 


ARTICLE
2 PARTIES TO THE CJV


	
  

 	
  

 	
  

 
	
 2.1

 	
 The Parties

 
	
  

 	
  

 
	
  

 	
 The Parties to the CJV
 are:

 
	
  

 	
  

 
	
  

 	
 (1)

 	
 Zhuzhou
 Hexing Industrial Co., Ltd., a limited liability company
 duly incorporated and validly existing under the laws of China with its
 registered address at 5th Fl. Huanzhou Town, Lusong District,
 Zhuzhou City, Hu’nan Province.

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Legal
 Representative: Xu Aimin

 
	
  

 	
  

 	
 Title: Chairman

 
	
  

 	
  

 	
 Nationality: PRC

 
	
  

 	
  

 	
  

 
	
  

 	
 (2)

 	
 Natcore
 Asia Technology, Limited, a limited liability company duly
 incorporated and validly existing under the laws of Hong Kong with its
 registered address at Suite 2208, 22/F, Jardine House, 1 Connaught Place,
 Central, Hong Kong.

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Legal
 Representative: Charles Robert PROVINI

 
	
  

 	
  

 	
 Title: President

 
	
  

 	
  

 	
 Nationality: USA

 
	
  

 
	
 2.2

 	
 Representations
 and Warranties

 
	
  

 	
  

 
	
  

 	
 The Parties hereby
 represent and warrant to each other that:

 


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 (1)

 	
 Such Party is a duly
 organized, validly existing company and in good standing under the laws of
 the place of its establishment or incorporation.

 
	
  

 	
  

 	
  

 
	
  

 	
 (2)

 	
 Such Party has all
 requisite power, authority and approval required to enter into this Contract;
 and upon the Effective Date, will have all requisite power, authority and
 approval to perform fully each and every obligation under this Contract

 
	
  

 	
  

 	
  

 
	
  

 	
 (3)

 	
 Such Party has taken
 all action necessary to authorize it to enter into this Contract and such
 Party’s representative (if applicable) whose signature is affixed to this
 Contract is fully authorized to sign this Contract or other similar
 documents, and to bind such Party thereby, pursuant to a valid authorization
 or other such similar instrument.

 
	
  

 	
  

 	
  

 
	
  

 	
 (4)

 	
 Upon the Effective
 Date, this Contract shall constitute valid and binding legal obligations of
 such Party.

 
	
  

 	
  

 	
  

 
	
  

 	
 (5)

 	
 Neither the execution
 of this Contract, nor the performance of such Party’s obligations under this
 Contract, will conflict with, or result in a breach of, or constitute a
 default under, any provision of the articles of incorporation, business
 license, by-laws or articles of association of such Party, or any law, rule,
 regulation, authorization or approval of any government agency or body, or
 any contract or agreement to which it is a party or is subject.

 
	
  

 	
  

 	
  

 
	
  

 	
 (6)

 	
 There is no lawsuit,
 arbitration or legal, administrative or other proceeding or governmental
 investigation pending or, (to the best knowledge of such Party), threatened
 against such Party with respect to the subject matter of this Contract that
 would affect in any way such Party’s ability to enter into or perform this
 Contract.

 


ARTICLE
3 ESTABLISHMENT OF THE CJV


	
  

 	
  

 	
  

 
	
 3.1

 	
 Establishment
 of the CJV

 
	
  

 	
  

 
	
  

 	
 The Parties hereby
 agree to establish the CJV in accordance with the Cooperative Joint Venture
 Law and the provisions of this Contract. The legal service fees paid for the
 establishment of the CJV shall be born by the CJV.

 
	
  

 	
  

 
	
 3.2

 	
 Name
 and Address of the CJV

 
	
  

 	
  

 
	
  

 	
 (1)

 	
 Name: The name of the
 CJV shall be in Chinese:  and
 in English: Natcore Technology (Zhuzhou) Co., Ltd.

 
	
  

 	
  

 	
  

 
	
  

 	
 (2)

 	
 Address: The legal
 address of the CJV shall be Zone No. 52, Liyu Industry Zone, the National
 High-tech Industrial Development Zone, Zhuzhou City, Hu’nan Province.

 
	
  

 	
  

 
	
 3.3

 	
 Commencement
 of Operations

 
	
  

 	
  

 
	
  

 	
 The CJV shall commence
 operations upon the issuance of its business license.

 


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ARTICLE
4 PURPOSE AND SCOPE OF BUSINESS


	
  

 	
  

 	
  

 
	
 4.1

 	
 Purpose
 of the CJV

 
	
  

 	
  

 
	
  

 	
 The purpose of the CJV
 is as follows:

 
	
  

 	
  

 
	
  

 	
 (1)

 	
 Use Party B’s licensing
 technology to develop and sell Anti-Reflective Coating on solar cells (the “ARC System”) liquid phase deposition
 process and equipment; or other similar liquid deposition technology, such as
 passivation of LPD / SiN, SiN / PLD technology on crystalline silicon or thin
 film cell surface; as well as optical or surface enhancement application of
 other crystalline silicon cells or thin film cells (collectively referred to
 as the “Technologies”).

 
	
  

 	
  

 	
  

 
	
  

 	
 (2)

 	
 Promote the
 Technologies through China and worldwide sales and marketing channels:
 through sales channels distributing the Technologies including licensing
 agreements and appropriate franchising;

 
	
  

 	
  

 	
  

 
	
  

 	
 (3)

 	
 Promote the
 Technologies through appropriate development agreements with research centers
 / national laboratories, equipment manufacturers or end-users;

 
	
  

 	
  

 	
  

 
	
  

 	
 (4)

 	
 Develop add-on
 intellectual property rights facilitating technology commercialization;

 
	
  

 	
  

 	
  

 
	
  

 	
 (5)

 	
 Research & develop
 a self-closing, self-compensation prototype for the production of ARC System
 or similar materials in crystalline silicon and solar thin film cells;

 
	
  

 	
  

 	
  

 
	
  

 	
 (6)

 	
 Produce products
 marketable in China and the world markets, the products can be with or
 without self-closing, self-compensation ARC System beneficial to subsequent
 sales.

 
	
  

 	
  

 	
  

 
	
 4.2

 	
 Scope
 of Business of the CJV

 
	
  

 	
  

 
	
  

 	
 The scope of business
 of the CJV is as follows: to develop, manufacture, distribute and sell
 anti-reflective coating and related products, and to provide related
 after-sales and consulting services.

 
	
  

 	
  

 
	
 ARTICLE
 5 TOTAL INVESTMENT AND REGISTERED CAPITAL

 
	
  

 
	
 5.1

 	
 Total
 Investment

 
	
  

 	
  

 
	
  

 	
 The CJV’s total
 investment shall be USD $3,000,000.

 
	
  

 	
  

 
	
 5.2

 	
 Total
 Amount of Registered Capital

 
	
  

 	
  

 
	
  

 	
 The CJV’s total amount
 of registered capital shall be USD $3,000,000.

 
	
  

 	
  

 
	
 5.3

 	
 Capital
 Contribution and Cooperation Condition

 
	
  

 	
  

 
	
  

 	
 (1)

 	
 Capital
 Contribution

 


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 Party A shall contribute to the CJVan amount equivalent to USD $2,500,000
 in RMB and Party B shall contribute to the CJV an amount of USD $500,000 in
 cash.

 
	
  

 	
  

 
	
  

 	
 (2)

 	
 Cooperation Condition

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (i)

 	
 Party A shall, within
 thirty (30) days upon execution of this Contract, at its own expense,
 reconstruct the plant which is located at Zone No. 52, Liyu Industry Zone,
 the National High-tech Industrial Development Zone, Zhuzhou City, Hu’nan
 Province and owned by Party A’s Affiliate Hunan Chuangke Silicon Co., Ltd. (“Chuangke Silicon”). The reconstructed
 plant shall meet the following conditions in order to comply with the
 standards of usage of common plants and pass the acceptance inspection:

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 a.

 	
 The plant shall comply
 with the relevant national building standards of the PRC, such as fire
 control, power supply, water supply and sewerage and etc., including but not
 limited to, applying 380 voltage output, supplying water, refitting the road,
 reinforcing the doors and windows, whitewashing walls and reserving ancillary
 facilities for telecommunications; and

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 b.

 	
 The plant shall conform
 to the fire control safety requirements of common plants.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 The CJV shall, within
 five (5) Business Days upon the date of issuance of the CJV’s business
 license or the date of the reconstructed plant passing the acceptance
 inspection (whichever occurs later), enter into a plant lease agreement (the “Lease Agreement”) with Chuangke Silicon
 to rent the reconstructed plant and the CJV shall pay rent to Chuangke
 Silicon in accordance with the prevailing market price in Zhuzhou to lease a
 plant which is under the same conditions with the reconstructed one. After
 the Lease Agreement is executed, Party A shall, at the cost of the CJV,
 assist the CJV to establish a number of research, development and production
 facilities to meet relevant requirements on ventilation, water supply,
 production scale, electricity, security and waste disposal.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (ii)

 	
 Party B shall provide
 the CJV with a license to use certain technologies related to the operation
 of the CJV.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (3)

 	
 Both Parties shall make
 their capital contributions within six (6) months from the date of obtaining
 the CJV’s business license. After the CJV has completed the foreign exchange
 registration with the SAFE and opened a foreign currency capital account (the
 “Account”), Party B shall
 immediately wire transfer its portion of the registered capital in US dollars
 in the amount of USD $500,000 to the Account and deliver the copy of the
 remittance slip to Party A. Party A shall contribute its portion of the
 registered capital in RMB equivalent of USD $2,500,000 to the CJV no later
 than three (3) Business Days after receiving the copy of the remittance slip
 from Party B.

 
	
  

 	
  

 	
  

 
	
  

 	
 (4)

 	
 RMB/USD exchange rate
 will be the average between the buying rate and the selling rate based upon
 People’s Bank of China’s published exchange rates on the day the capital is
 contributed by the Parties.

 


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 (5)

 	
 If a Party fails to
 make its registered capital contribution in accordance with the above (1) and
 (3), the other Party has the right, but not the obligation to request
 amendment to the Contract and other relevant documents in respect of the CJV
 to adjust the ratio of the interests held by the Parties in the CJV and of
 the profit sharing between the Parties based on their actual contributions.
 The breaching party shall cooperate with such amendment. Such amendment shall
 be submitted to the Approval Authority for approval and to SAIC for
 registration, and shall take effect upon such approval and registration.

 
	
  

 	
  

 	
  

 
	
 5.4

 	
 Capital
 Contribution Certificate

 
	
  

 	
  

 
	
  

 	
 After each Party has
 made its capital contribution or provided its cooperation conditions pursuant
 to this Article 5, a Chinese registered accountant shall verify the payment
 or the provision in each installment and issue a contribution verification
 report. Thereupon, the CJV shall issue within 30 days after the payment or
 provision in full of the contribution a final capital contribution
 certificate signed by the legal representative of the CJV.

 
	
  

 	
  

 
	
 5.5

 	
 Assignment
 of Interest

 
	
  

 	
  

 
	
  

 	
 (1)

 	
 Subject to Article 15.1
 hereunder, in the event that either Party needs to assign its interest in the
 CJV in whole or in part to any third party, it shall obtain written consent
 from the other Party hereof and the unanimous approval by the Board, and
 shall submit relevant documentation to the relevant Approval Authority for
 its approval.

 
	
  

 	
  

 	
  

 
	
  

 	
 (2)

 	
 Upon receipt of the
 approval of the Approval Authority, the CJV shall register the change with
 the SAIC.

 
	
  

 	
  

 	
  

 
	
 5.6

 	
 Increase
 of Registered Capital

 
	
  

 	
  

 
	
  

 	
 (1)

 	
 The registered capital
 may be increased during the Joint Venture Term with the written consent of
 the Parties and the unanimous approval of the Board.

 
	
  

 	
  

 	
  

 
	
  

 	
 (2)

 	
 An agreement to
 increase the registered capital must be submitted to the Approval Authority
 for examination and approval before it becomes effective. Upon receipt of the
 approval of the Approval Authority, the CJV shall register the increase with
 the SAIC.

 
	
  

 	
  

 	
  

 
	
 5.7

 	
 Reduction
 of Registered Capital

 
	
  

 	
  

 
	
  

 	
 The Parties agree that,
 during the Joint Venture Term, the CJV shall not reduce the amount of
 registered capital.

 
	
  

 	
  

 
	
 5.8

 	
 Encumbrance
 of Registered Capital

 
	
  

 	
  

 
	
  

 	
 Without prior written
 consent from other Party, neither Party shall mortgage, pledge, or otherwise
 encumber in part or in whole its registered capital, or other rights or
 interest in the CJV.

 


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ARTICLE
6 UTILIZATION OF INTELLECTUAL PROPERTY OF THE CJV


	
  

 	
  

 	
  

 
	
 6.1

 	
 Party B shall ensure
 that the liquid phase deposition technology (the “Technology”) is developed by the Rice University, and has
 received the United States Patent
 No US 2006/013 5001 A1.

 
	
  

 	
  

 
	
 6.2

 	
 Party B shall ensure
 its sole shareholder, Natcore Technology Inc., has entered into an exclusive
 patent licensing agreement on the Technology with the Rice University on
 March 31, 2004 (See attachment of the exclusive patent licensing agreement).

 
	
  

 	
  

 	
  

 
	
 6.3

 	
 Party B shall ensure
 that Natcore Technology Inc. or it will authorize the CJV exclusive rights to
 use the technology globally by a Letter of Authorization, and that all
 intellectual properties generated during the term of the CJV shall belong to
 the CJV.

 
	
  

 	
  

 
	
 6.4

 	
 The copyright fees
 required for using the technology shall be paid by the CJV by 2%of the difference between sales revenue
 and cost, and the royalties should be included in the production costs of the
 CJV.

 
	
  

 	
  

 
	
 6.5

 	
 Party B shall authorize
 the CJV to use the following intellectual properties, R & D facilities
 and personnel: meeting Professor Andrew Barron, meeting with Dr. Dennis
 Flood, and using shared R&D
 resources of the Rice University and the equipment of the Nanotech West
 Laboratory with a reasonable business purposes in order to promote
 realization of the established goals of the CJV.

 
	
  

 	
  

 
	
 6.6

 	
 Party A shall ensure
 that the intellectual property rights owned by Party B and Natcore Technology Inc. shall not violated by
 any other companies or individuals within the territory of PRC. Party
 A shall be liable for any infringement caused to the intellectual property
 rights owned by Party B and Natcore Technology Inc. conducted by any company
 or individual (including the CJV and its employees). Party B shall ensure the
 clean and lawful ownership of its intellectual properties.

 
	
  

 	
  

 
	
 ARTICLE
 7 SALES AND DISTRIBUTION

 
	
  

 
	
 7.1

 	
 The Parties agree that
 the CJV shall permanently enjoy exclusive production rights and distribution
 rights of the ARC System in China.

 
	
  

 	
  

 
	
 7.2

 	
 The Parties agree that,
 from the date the first technology products of the CJV is delivered to users,
 the CJV shall have the exclusive right of five (5) years to produce and
 distribute the ARC System in the global market.

 
	
  

 	
  

 
	
 ARTICLE
 8 BOARD OF DIRECTORS

 
	
  

 
	
 8.1

 	
 Formation
 of the Board

 
	
  

 	
  

 
	
  

 	
 (1)

 	
 The date on which the
 CJV obtains its business license shall be considered the date of
 establishment of the Board.

 
	
  

 	
  

 	
  

 
	
  

 	
 (2)

 	
 The Board shall consist
 of five (5) Directors, two (2) of whom shall be appointed by Party A and
 three (3) of whom shall be appointed by Party B.

 


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 The CJV shall maintain one (1) chairman of the Board,
 who shall be appointed by Party B. The legal representative of the CJV shall be
 the chairman
 of the Board. The CJV shall maintain one (1) vice chairman, who shall be appointed by
 Party A. In the event that the chairman is unable to or fails to exercise
 his/her rights and duties, the vice chairman or another Director shall be
 authorized to temporarily perform the powers of the chairman.

 
	
  

 	
  

 	
  

 
	
  

 	
 (3)

 	
 At the time this Contract is executed and each time any
 Director is appointed or removed, the Party which made such appointment or removal
 shall
 promptly notify other Party in writing of the same. Any appointment or
 removal of Director(s) shall take effect from the date it is notified to the CJV in writing, and
 shall be filed with the SAIC for the record.

 
	
  

 	
  

 	
  

 
	
  

 	
 (4)

 	
 Each Director shall be appointed for a term of three
 (3) years and may serve consecutive terms if reappointed by the Party which
 originally appointed
 him. If a seat on the Board is vacant due to retirement, resignation, illness, disability or death of a
 Director or by the removal of such
 Director by the Party which originally appointed him, the Party which originally appointed such Director shall appoint
 a successor to serve the remainder
 of such Director’s term. Each Party may replace its appointed Director
 at its own discretion.

 
	
  

 	
  

 	
  

 
	
 8.2

 	
 Meetings and Powers of the Board

 
	
  

 	
  

 
	
  

 	
 (1)

 	
 The Board shall be the highest authority of the CJV.

 
	
  

 	
  

 	
  

 
	
  

 	
 (2)

 	
 The first Board meeting shall be held within fifteen
 (15) Business Days after the day of issuance of the business license. The
 meeting shall be convened by chairman. Where the chairman fails to
 perform his/her duty, the vice chairman shall convene the meeting. Upon the
 written request of two or more of the Directors specifying the matters to be discussed,
 the chairman
 may convene an interim meeting of the Board by a written notice ten (10) Business Days in advance.

 
	
  

 	
  

 	
  

 
	
  

 	
 (3)

 	
 Board meetings shall be held at the registered address
 of the CJV or a place inside or outside of China as designated by the
 chairman. Meetings shall be held at least once per year on prior written notice to
 all Directors (Such notice shall be given 15 days prior to the meeting date). A notice of
 a Board meeting
 shall cover the agenda, all relevant data and documents, time and place for such
 meeting. A board meeting convened without proper notice to all Directors shall be
 deemed null and void, unless the relevant Director(s) has submitted to the
 chairman and vice chairman of the Board a written statement waiving
 such notice requirement before or after the meeting. The chairman of the
 Board shall be responsible for convening and presiding over such meetings. In
 the event that chairman fails to perform his/her duty, the vice chairman
 shall convene and preside over such meetings.

 
	
  

 	
  

 	
  

 
	
  

 	
 (4)

 	
 In case a Board member is unable to participate in a
 Board meeting in person, he may issue a proxy and entrust another person
 to participate in the meeting on his behalf. The representative so entrusted
 shall exercise rights within the scope of being authorized. If a Board
 member fails to participate or to entrust another to participate, he will be deemed
 as having waived such right. A Board member may also participate by telephone or other electronic
 method, provided that each Director in such a meeting may hear and be heard
 by all other Directors. In the event of Directors participating meetings by
 telephone or other electronic method, the voting process shall be tape
 recorded.

 


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 (5)

 	
 Four (4) or more
 Directors present in person, by telephone or other electronic means, or by
 proxy shall constitute a quorum which shall be necessary for the conduct of
 business at any meeting of the Board.

 
	
  

 	
  

 	
  

 
	
  

 	
 (6)

 	
 Each Director present
 in person, by telephone or other electronic means, or by proxy at a meeting
 of the Board of Directors shall have one vote.

 
	
  

 	
  

 	
  

 
	
  

 	
 (7)

 	
 In exercising their
 powers, the Directors shall be obliged to act in the best interests of the CJV, which shall prevail in
 the event of any conflict between them and the interests of the Party
 who appointed that Director.

 
	
  

 	
  

 	
  

 
	
  

 	
 (8)

 	
 Resolutions involving
 the following matters shall only be adopted upon the unanimous affirmative
 vote of all Directors of the Board present at the meeting, whether in person
 or by telephone or other electronic means:

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 a)

 	
 amendment to the
 article of associations;

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 b)

 	
 increase or reduction
 of the CJV’s registered capital;

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 c)

 	
 termination or dissolution
 of the CJV; and

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 d)

 	
 merger or division of
 the CJV.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (9)

 	
 Except for the issues
 listed in Article 8.2(8), all other issues that require resolutions by the
 Board may be motioned at a duly convened meeting of the Board and must be
 adopted by the affirmative vote by four (4) or more Directors.

 
	
  

 	
  

 	
  

 
	
  

 	
 (10)

 	
 Any action by the Board
 may be taken without a meeting if all members of the Board consent in writing
 to such action. Such written consent shall be filed with the minutes of the
 Board and shall have the same effect as a unanimous affirmative vote of all
 Directors of the Board at a convened meeting of the Board

 
	
  

 	
  

 	
  

 
	
  

 	
 (11)

 	
 The Board will cause
 complete and accurate minutes of all meetings to be kept (in both English and
 Chinese) (including a copy of the notice of the meeting) and of business
 transacted at such meetings. Minutes of all meetings of the Board shall be
 distributed to all the Directors as soon as practicable after each meeting
 (but not later than 10 Business Days from the day of such meeting). Any
 Director who wishes to propose any amendment or addition thereto shall submit
 the same in writing to the chairman and the vice-chairman within 10 Business
 Days after receipt of the proposed minutes. The minutes shall be finalized by
 the chairman not later than 30 Business Days after the relevant meeting and
 signed by all the Directors within 10 Business Days after receipt of the
 final minutes.

 
	
  

 	
  

 	
  

 
	
  

 	
 (12)

 	
 Members of the Board
 shall serve without any remuneration, but all reasonable costs incurred by
 the Directors, including but not limited to travel and accommodation
 expenses, in the performance of their duties as members of the Board, shall
 be borne by the CJV.

 


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 (13)

 	
 All information discussed at Board meetings shall be
 treated as confidential by the Directors and shall not be disclosed to any
 third party unless required by law.

 
	
  

 	
  

 	
  

 
	
  

 	
 (14)

 	
 The CJV shall bear all liabilities incurred to any
 Directors due to his or her identity as Director, except for such liabilities
 caused by the willful misconduct, gross negligence or violation of criminal
 causes by such Director.

 
	
  

 	
  

 	
  

 
	
 ARTICLE
 9 SUPERVISOR

 
	
  

 
	
 9.1

 	
 Functions of Supervisor

 
	
  

 	
  

 
	
  

 	
 The CJV shall have two supervisors (“Supervisors”). Each of Party A and
 Party B has the right to appoint one. The Supervisors shall exercise the
 following functions:

 
	
  

 	
  

 
	
  

 	
 (1)

 	
 to examine the financial affairs of the CJV;

 
	
  

 	
  

 	
  

 
	
  

 	
 (2)

 	
 to bring the proposal to dismiss those Directors and
 senior executives violating the laws, administrative regulations and/or the
 articles of association of the CJV;

 
	
  

 	
  

 	
  

 
	
  

 	
 (3)

 	
 to investigate any irregularities in the CJV’s
 operations which the supervisor discovers and, if necessary and with the
 consent of the investors in writing, engage at the expense of the CJV a
 professional services firm to assist in such investigations; and

 
	
  

 	
  

 	
  

 
	
  

 	
 (4)

 	
 to perform all other duties which may not be
 abrogated by contractual agreement under applicable law.

 
	
  

 	
  

 	
  

 
	
 9.2

 	
 Term of Office

 
	
  

 	
  

 
	
  

 	
 The term of the office of each Supervisor is three
 years, and may be renewed or shortened by the Party appointing the
 Supervisor. A Party removing its designated Supervisor may replace such
 Supervisor with someone it otherwise designates.

 
	
  

 	
  

 
	
 93

 	
 Attendance in the Board Meeting

 
	
  

 	
  

 
	
  

 	
 The Supervisors may attend the meetings of the Board
 as non-voting attendees, and may make enquiries and suggestion on the matters
 decided by the Board.

 
	
  

 	
  

 
	
 9.4

 	
 Expenses

 
	
  

 	
  

 
	
  

 	
 All reasonable expenses required by the Supervisors
 in the exercise of their functions and powers shall be borne by the CJV.

 
	
  

 	
  

 
	
 9.5

 	
 Records

 


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 The Supervisors shall keep up to date written records
 of decisions and actions taken in discharging their duties. A copy of such
 records shall be given to the Parties.

 
	
  

 	
  

 
	
 ARTICLE 10 OPERATION AND MANAGEMENT

 
	
  

 
	
 10.1

 	
 The CJV shall adopt a “General Manager Assumes Full
 Responsibility” management system under which Management Personnel
 shall be responsible to and under the leadership of the Board. The CJV shall
 have one General Manager, one CFO, and other Management Personnel confirmed by
 the Board. The General Manager shall be jointly nominated by Party A and
 Party B, and the CFO shall be nominated by Party B. The Parties agree that
 the CFO nominated by Party B shall speak English and shall be competent in U.S.
 GAAP standards and procedures. Subject to the aforementioned nominations, the
 appointment and removal of the General Manager, CFO and other Management
 Personnel shall be decided by a vote cast by the Board. If the General Manager or the
 CFO is removed by the Board, a successor shall be nominated and appointed in
 the same manner as the original
 appointee.

 
	
  

 	
  

 
	
 10.2

 	
 The General Manager shall be in charge of the
 day-to-day operations and management of the CJV. The General Manager shall be
 responsible to the Board and shall carry out all matters entrusted to him by
 the Board. The CFO shall assist and report to the General Manager in their work and
 shall be accountable to the General Manager. The General Manager and the CFO shall
 perform all duties as described in the Contract and the articles of
 association of the CJV. The General Manager, CFO and other Management Personnel shall not hold posts concurrently with other enterprises in competition
 with the CJV.

 
	
  

 	
  

 
	
 10.3

 	
 The responsibilities of the General Manager are set
 forth as below:

 
	
  

 	
  

 
	
  

 	
 (1)

 	
 organizes, plans, directs and supervises operations of
 the CJV under the leadership
 of the Board;

 
	
  

 	
  

 	
  

 
	
  

 	
 (2)

 	
 organizes and coordinates the implementation of the
 budget plans of the CJV to ensure its compliance with financial policies
 and establishing priorities of
 the CJV;

 
	
  

 	
  

 	
  

 
	
  

 	
 (3)

 	
 formulates and implements a strategy for fiscal and
 capital improvement which
 are approved by the Board;

 
	
  

 	
  

 	
  

 
	
  

 	
 (4)

 	
 formulates, implements and monitors the organizational
 budgets which are
 approved by the Board;

 
	
  

 	
  

 	
  

 
	
  

 	
 (5)

 	
 represents the CJV’s interest before local state
 provincial and federal agencies;

 
	
  

 	
  

 	
  

 
	
  

 	
 (6)

 	
 attends conferences and public and professional
 meetings;

 
	
  

 	
  

 	
  

 
	
  

 	
 (7)

 	
 plans,
 implements and coordinates technical and administrative programs;

 
	
  

 	
  

 	
  

 
	
  

 	
 (8)

 	
 develops internal management structure and integrate
 this structure with the technology side of the CJV;

 


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 (9)

 	
 develops the CJV’s
 specific rules and regulations;

 
	
  

 	
  

 	
  

 
	
  

 	
 (10)

 	
 takes responsibility
 for product quality control;

 
	
  

 	
  

 	
  

 
	
  

 	
 (11)

 	
 takes responsibility
 for establishing the operation policies and strategies of the CJV in
 expectation for obtaining profitabilities of the CJV;

 
	
  

 	
  

 	
  

 
	
  

 	
 (12)

 	
 takes responsibility
 for the technology development and IP worldwide; and

 
	
  

 	
  

 	
  

 
	
  

 	
 (13)

 	
 implements all the
 resolutions adopted by the Board.

 
	
  

 	
  

 	
  

 
	
 10.4

 	
 The responsibilities of
 the CFO are set forth as below:

 
	
  

 	
  

 
	
  

 	
 (1)

 	
 directs the fiscal
 functions of the CJV in accordance with both US GAAP and China Accounting
 Standards;

 
	
  

 	
  

 	
  

 
	
  

 	
 (2)

 	
 integrates Chinese
 Financial Statements into US Financial Statements for a US public company in
 accordance with US GAAP;

 
	
  

 	
  

 	
  

 
	
  

 	
 (3)

 	
 provides strategic financial
 leadership for the CJV by working with the Management Personnel of the CJV to
 establish long-term goals and planning;

 
	
  

 	
  

 	
  

 
	
  

 	
 (4)

 	
 supervises bid
 activities for commercial and government contracts;

 
	
  

 	
  

 	
  

 
	
  

 	
 (5)

 	
 achieves growth through
 strategic marketing and sales force management;

 
	
  

 	
  

 	
  

 
	
  

 	
 (6)

 	
 takes responsibility
 for financial planning and banking relations;

 
	
  

 	
  

 	
  

 
	
  

 	
 (7)

 	
 communicates to
 government, board, shareholders, investors, brokerage firms; and

 
	
  

 	
  

 	
  

 
	
  

 	
 (8)

 	
 takes responsibility
 for English and Mandarin Financial Reporting.

 
	
  

 	
  

 	
  

 
	
 10.5

 	
 Without limiting the
 authority of the Board to remove the General Manager, CFO and other
 management personnel, the Board shall have the authority to dismiss at any
 time the General Manager, CFO and any of the Management Personnel in the
 event that the Board determines that the General Manager, CFO or any of the
 Management Personnel have engaged in any fraudulent acts or have grossly
 neglected their duties or have engaged in criminal activities. In such event,
 the General Manager, CFO or the member of the Management Personnel (as the
 case may be), shall be personally liable to the CJV for any financial losses
 incurred by the fraudulent act, gross neglect of duties or criminal
 activities.

 
	
  

 	
  

 
	
 ARTICLE 11 LABOR MANAGEMENT

 
	
  

 
	
 11.1

 	
 Governing
 Principle

 


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 The General Manager
 shall formulate a plan for matters concerning the recruitment, employment,
 dismissal, wages, labor insurance, welfare benefits, reward and discipline of
 the workers and staff members of the CJV, in accordance with the Labor Law of
 the People’s Republic of China and other PRC laws and regulations and modern
 management standards, practices and policies. The plan shall be submitted for
 the approval of the Board of Directors.

 
	
  

 	
  

 
	
 11.2

 	
 Working
 Personnel

 
	
  

 	
  

 	
  

 
	
  

 	
 Working Personnel shall
 be employed by the CJV in accordance with contracts which shall be entered
 into between the CJV and each worker after the establishment of the CJV. Such
 contracts shall establish all terms governing the employment, duties and
 benefits of such Working Personnel (inclusive of obligations regarding
 confidentiality and non-competition). The Board shall approve the general
 form and terms and conditions included in such contracts.

 
	
  

 	
  

 
	
 11.3

 	
 Management
 Personnel

 
	
  

 	
  

 
	
  

 	
 (1)

 	
 Management Personnel
 shall be employed by the CJV in accordance with the terms of individual
 employment contracts.

 
	
  

 	
  

 	
  

 
	
  

 	
 (2)

 	
 The salary and benefits
 of Management Personnel shall be fixed by the Board.

 
	
  

 	
  

 	
  

 
	
 11.4

 	
 Conformity
 with Labor Protection Regulations

 
	
  

 	
  

 
	
  

 	
 The CJV shall conform
 to rules and regulations of the PRC government concerning labor protection
 and ensure safe and civilized operations. Labor insurance for the working
 personnel of the CJV shall be handled in accordance with the relevant
 regulations of the PRC government.

 
	
  

 	
  

 
	
 ARTICLE
 12 FINANCIAL AFFAIRS AND ACCOUNTING 12.1 Accounting System

 
	
  

 
	
  

 	
 (1)

 	
 The CFO of the CJV,
 under the leadership of the General Manager, shall be responsible for the
 financial management of the CJV.

 
	
  

 	
  

 	
  

 
	
  

 	
 (2)

 	
 The General Manager and
 the CFO shall establish the accounting system and procedures in accordance
 with the “China Accounting System for Business Enterprises”, the
 supplementary stipulations promulgated by the Ministry of Finance of the PRC,
 and then in accordance with generally accepted accounting principles as
 applied by Party B in its own accounts and with Party B’s reporting and
 management requirements. The CJV shall adopt, in accordance with the
 requirements of the Board, the operating and financial policies and
 procedures and shall prepare periodic reports of financial information. The
 CJV shall adopt Renminbi and/or USD as legal currency in the accounting
 bookkeeping. The CJV shall maintain accurate and complete accounting and
 other financial reports made both in English and Chinese and shall procure
 that such accounting records are, during normal business hours, available for
 inspection by each Party or its respective authorized representatives.

 


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 (3)

 	
 The management of the
 CJV shall prepare the following statements and reports for review by the
 Board of Directors and the Parties:

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 a)

 	
 Complete monthly
 financial reporting in response to reporting packages prepared by the
 Parties, sufficient for preparation of each Party’s financial reports, within
 four Business Days of the end of each calendar month.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 b)

 	
 Quarterly unaudited
 financial statements within four weeks of the end of each fiscal quarter.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 c)

 	
 Financial express of
 the previous fiscal year, including but not limited to balance sheet, income
 statement, cash flow statement and statement of stockholder’s equity, within
 five (5) Business Days after the end of the previous fiscal year.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 d)

 	
 Annual unaudited
 financial statements and the related report within thirty (30) days after the
 end of the previous fiscal year; and annual audited financial statements and
 the related auditor’s report within four (4) months after the end of the
 previous fiscal year.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (4)

 	
 Each Director and each
 Party shall have the right to inspect, copy, and audit the CJV’s books of
 account at any time.

 
	
  

 	
  

 	
  

 
	
 12.2

 	
 Auditing

 
	
  

 	
  

 
	
  

 	
 (1)

 	
 An accountant licensed
 in China shall be engaged by the CJV.

 
	
  

 	
  

 	
  

 
	
  

 	
 (2)

 	
 The Parties shall have
 the right to nominate internationally recognized accounting firms as the
 auditor of the CJV, among which the Board shall engage one as the auditor of the CJV. In the event that the Board
 determines that the audited statements submitted by the retained
 accounting firm fail to meet the standards set forth above, the Board may
 replace the accounting firm or retain another accounting firm (at the CJV’s
 expense) to supplement or adjust the work or to perform specific accounting
 and auditing tasks.

 
	
  

 	
  

 	
  

 
	
  

 	
 (3)

 	
 The Parties may, during
 normal business hours, appoint representatives to inspect and audit the CJV
 and the production premises of the CJV, inspect and audit any approved
 subcontractor, and any accounts and records relating to the operation of the
 CJV. The Parties shall cause the Directors of the CJV appointed by them, as
 well as any approved subcontractors, to provide assistance as required by
 this provision.

 
	
  

 	
  

 	
  

 
	
 12.3

 	
 Bank
 Account and Foreign Exchange Control

 
	
  

 	
  

 
	
  

 	
 The CJV shall
 separately open a foreign exchange account and a Renminbi account at Bank of
 China or the banks designated by the SAFE. The CJV’s foreign exchange
 transactions shall be handled in accordance with the Regulations for Exchange
 Control of the People s Republic of China.

 
	
  

 	
  

 
	
 12.4

 	
 Foreign
 Currency Equilibrium

 
	
  

 	
  

 
	
  

 	
 The CJV shall use its
 best to maintain the foreign currency s equilibrium by all methods permitted
 by the PRC laws.

 


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 12.5

 	
 Fiscal Year

 
	
  

 	
  

 
	
  

 	
 The CJV shall adopt the
 calendar year as its fiscal year, which shall begin on January 1 and end on
 December 31 of the same year.

 
	
  

 	
  

 
	
 12.6

 	
 Periodic
 Reports

 
	
  

 	
  

 
	
  

 	
 The CJV shall provide
 each Party with:

 
	
  

 	
  

 
	
  

 	
  

 	
 a)

 	
 monthly accounts and
 progress reports;

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 b)

 	
 audited accounts of the
 CJV;

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 c)

 	
 copies of bank
 statements on a monthly basis;

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 d)

 	
 such further
 information as each Party may from time to time reasonably require as to all
 matters relating to the businesses or the financial position of the CJV; and

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 e)

 	
 a quarterly report on
 the CJV’s performance during the current fiscal year of the CJV compared to
 budget.

 
	
  

 	
  

 	
  

 	
  

 
	
 12.7

 	
 Distribution
 of CJV’s Net Profit

 
	
  

 	
  

 
	
  

 	
 (1)

 	
 If the PRC laws and
 regulations require to establish employee bonus and welfare fund and other
 statutory reserves, the CJV shall comply with such requirements to the extent
 of meeting the lowest standards as required thereby;

 
	
  

 	
  

 	
  

 
	
  

 	
 (2)

 	
 The after-tax net
 profit shall be determined in accordance with applicable PRC accounting
 regulations by the Board according to the annual final accounting;

 
	
  

 	
  

 	
  

 
	
  

 	
 (3)

 	
 The distributable net
 profit of the CJV shall be distributed among the Parties pursuant to the
 following proportions: Party A 45% and Party B 55%.

 
	
  

 	
  

 	
  

 
	
  

 	
 (4)

 	
 The Board of Directors
 shall determine the distribution of the net profit. The Board of Directors
 shall, after deducting necessary reserve as compulsorily required under
 relevant laws and regulations, distribute the distributable net profit to the
 Parties pursuant to section 11.7(3), and the net profit distributed to the
 Parties shall be no less than fifty percent (50%) of the aggregate net profit
 of the CJV in that year. In the event the CJV has an investment plan or other
 significant business plans, after obtaining the consent of the Parties, the
 Board may adjust the proportion of the net profit used to be distributed to
 the Parties in the aggregate net profit of the CJV in that year. The Board
 and the General Manager shall ensure to distribute CJV’s distributable net
 profit to Parties in each fiscal year when it is available. Such distribution
 shall be made no later than the end of June in the next calendar year.

 


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ARTICLE
13 TAXATION AND INSURANCE


	
  

 	
  

 	
  

 	
  

 
	
 13.1

 	
 Taxes

 
	
  

 	
  

 
	
  

 	
 The CJV shall pay tax
 under the relevant laws of China, Chinese and foreign management and working
 personnel shall pay their individual income tax in accordance with the tax
 laws of China.

 
	
  

 	
  

 
	
 13.2

 	
 Insurance

 
	
  

 	
  

 
	
  

 	
 The CJV shall take out
 and maintain insurance of the CJV with a PRC insurance company, to protect
 the CJV against various types of disasters during its operation. The
 insurance coverage, value and duration shall be decided by the Board under
 the provisions of the Chinese People’s Insurance Company.

 
	
  

 	
  

 
	
 ARTICLE 14 CONFIDENTIALITY

 
	
  

 
	
 14.1

 	
 Confidentiality

 
	
  

 	
  

 
	
  

 	
 (1)

 	
 From time to time,
 prior to and during the Joint Venture Term, either Party has disclosed or may
 disclose confidential and proprietary information to the other Party. In
 addition, the Parties may, during the term of this Contract, obtain
 confidential and proprietary information of the CJV or the other Party in
 connection with the operation of the CJV. Alternatively, the CJV may, from
 time to time during the term of this Contract, obtain confidential and
 proprietary information of the Parties. Each of the Parties receiving such
 information shall, during the term of this Contract and for five years
 thereafter:

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 a)

 	
 Maintain the
 confidentiality of such information;

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 b)

 	
 Not
 disclose it to any person or entity, except to their directors, senior staff
 and other employees who need to know such information to perform their
 responsibilities; and

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 c)

 	
 Not utilize such
 information for any purpose other than the transaction contemplated herein.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (2)

 	
 The provisions of paragraph
 (1) shall not apply to information that:

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 a)

 	
 could be shown to be
 known by the receiving Party by written records made prior to disclosure by
 the disclosing Party;

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 b)

 	
 is (or becomes) public
 knowledge otherwise than through the receiving Party’s breach of this
 Contract;

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 c)

 	
 was obtained by the
 receiving Party from a third party having no obligation of confidentiality
 with respect to such information;

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 d)

 	
 is under the obligation
 to be disclosed according to law of the jurisdiction of either Party, valid
 order of any government entity and any court’s judgment or verdict;
 importance of complying with the obligations set forth in paragraph (1)
 above.

 


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 (4)

 	
 If required by any
 Party, the CJV shall execute a separate confidentiality agreement with
 provisions similar to those set out above with respect to confidential and
 proprietary information obtained by the CJV from any Party or its Affiliates.
 Notwithstanding the above, the CJV shall execute non disclosure agreements
 with third parties to whom confidential information may be disclosed.

 
	
  

 	
  

 	
  

 
	
  

 	
 (5)

 	
 Each of the Parties and
 the CJV shall formulate rules and regulations to cause its directors, senior
 staff, and other employees, and those of their Affiliates to comply with the
 confidentiality obligation set forth in this Article 14. Certain important
 Working Personnel shall be required to sign a confidentiality undertaking in
 accordance with this section.

 
	
  

 	
  

 	
  

 
	
  

 	
 (6)

 	
 The know-how and any
 other technical information licensed or provided in any way by any Party or
 its Affiliate to the CJV or otherwise acquired in any way or developed by the
 CJV shall be used only under the conditions of its license or provision.

 
	
  

 	
  

 	
  

 
	
  

 	
 (7)

 	
 This Article 14 and the
 obligations and benefits thereunder shall survive for five years after the
 expiration or termination of this Contract or the transfer of its equity
 interest in the CJV by either Party, notwithstanding the termination,
 dissolution or liquidation of the CJV or the transfer of its equity interest
 in the CJV by either Party.

 
	
  

 	
  

 	
  

 
	
 ARTICLE
 15 THE JOINT VENTURE TERM

 
	
  

 
	
 15.1

 	
 Joint
 Venture Term

 
	
  

 	
  

 
	
  

 	
 The Joint Venture Term
 of the CJV shall commence upon the issuance of the Business License and shall
 expire 20 years therefrom. During this period, both Parties may not terminate
 the joint venture cooperation with any reasons unless any event of force
 majeure occurs or both Parties agree in writing.

 


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 15.2

 	
 Extension of the Joint Venture Term

 
	
  

 	
  

 
	
  

 	
 One year prior to the
 expiration of the Joint Venture Term, the Parties shall discuss whether to
 extend the cooperation term. If the Parties so decide, an application for
 such extension shall be submitted to the Approval Authority for approval no
 less than six months prior to the expiration of the Joint Venture Term. If
 only one Party wishes to extend the cooperation term, such Party shall be
 entitled to acquire the entire interests of the other Party in the CJV based
 on a purchase price determined by evaluation by an independent evaluation
 agency jointly determined by the Parties.

 
	
  

 	
  

 
	
 15.3

 	
 Intellectual
 Property

 
	
  

 	
  

 
	
  

 	
 If Party B ceases to be
 a shareholder of the CJV for any reason, Party B’s license to the CJV to use
 certain technologies related to the operation of the CJV shall be
 automatically terminated.

 
	
  

 	
  

 
	
 ARTICLE 16 TERMINATION AND LIQUIDATION

 
	
  

 
	
 16.1

 	
 Reasons
 for Termination

 
	
  

 	
  

 
	
  

 	
 Neither Party shall
 have the right, in its sole discretion and without cause, to terminate this
 Contract. However, the Parties may mutually agree in writing to terminate
 this contract at any time. Also, any Party may submit written notice to the
 other Party of a desire to terminate this Contract (subject to Article 16.2)
 at any time if:

 
	
  

 	
  

 
	
  

 	
 (1)

 	
 Any Party materially
 breaches this Contract or violates the articles of association of the CJV,
 and such breach or violation is not cured within 60 days of written notice by
 the other Party to the breaching Party;

 
	
  

 	
  

 	
  

 
	
  

 	
 (2)

 	
 The business license of
 the CJV has been revoked or the Joint Venture Term was terminated and not
 renewed;

 
	
  

 	
  

 	
  

 
	
  

 	
 (3)

 	
 The CJV or any Party
 becomes bankrupt, or is the subject of proceedings for liquidation or
 dissolution (or a petition for bankruptcy has been filed with a court), or
 ceases to carry on business or becomes unable to pay its debts as they come
 due;

 
	
  

 	
  

 	
  

 
	
  

 	
 (4)

 	
 All or a material part
 of the assets of the CJV or any Party has been received, taken-over or
 forfeited by the government, such that the either CJV or the Party to
 operate;

 
	
  

 	
  

 	
  

 
	
  

 	
 (5)

 	
 Any Party transfers or
 dispose of its share of the registered capital of the CJV in violation of the
 provisions of this Contract;

 
	
  

 	
  

 	
  

 
	
  

 	
 (6)

 	
 The conditions or
 consequences of Force Majeure (as hereinafter defined) significantly
 interfere with the normal functioning of the CJV for a period in excess of
 six months; or

 


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 The mere submission by
 either Party of a notice indicating a desire to terminate this Contract shall
 not by itself constitute a termination of this Contract.

 
	
  

 	
  

 	
  

 
	
 16.2

 	
 Notification Procedure

 
	
  

 	
  

 
	
  

 	
 If a Party gives
 notice, pursuant to Article 16.1, of a desire to terminate this Contract, the
 Parties shall, within 15 Business Days after such notice is given, commence
 negotiations and endeavor to resolve the reason for notification of
 termination. In the event matters are not resolved to the satisfaction of the
 Parties within 15 Business Days after commencement of negotiations or the
 non-notifying Party refuses to commence negotiations within the period stated
 above, the notifying Party may terminate this Contract by giving the other
 Party written notice of termination and such termination shall be effective
 upon the approval of the Approval Authority.

 
	
  

 	
  

 
	
 16.3

 	
 Liquidation

 
	
  

 	
  

 
	
  

 	
 (1)

 	
 If this Contract has
 been terminated for any reason and the Parties have not agreed on an
 acquisition of the CJV as a going concern by a Party or by a third party,
 then all assets of the CJV shall be valued by and liquidated under the
 direction of a liquidation committee formed in accordance with relevant
 Chinese law.

 
	
  

 	
  

 	
  

 
	
  

 	
 (2)

 	
 In valuing and selling
 physical assets, the liquidation committee shall use every effort to obtain
 the highest possible price for such assets, including the retention of an
 independent third party expert, who is knowledgeable in assessing the value
 of the types of assets owned or held by the CJV to assist in such valuation.

 
	
  

 	
  

 	
  

 
	
  

 	
 (3)

 	
 After liquidation and
 the settlement of all outstanding debts of the CJV and subject to the payment
 of any applicable taxes, the proceeds shall be paid over to the Parties in
 accordance with the following ratio: Party A 45% and Party B 55%.

 
	
  

 	
  

 	
  

 
	
 16.4

 	
 Sale
 of Interests

 
	
  

 	
  

 
	
  

 	
 Unless there is any
 mandatory provision of laws, in the event that a Party or both Parties intend
 to transfer or dispose of its or their interests in the CJV, the interest
 each Party held in the CJV shall be distributed in accordance with the
 following ratio: Party A 45% and Party B 55%.

 
	
  

 	
  

 
	
 16.5

 	
 Survival

 
	
  

 	
  

 
	
  

 	
 To the extent permitted
 by law,

 
	
  

 	
  

 
	
  

 	
  

 	
 (a)

 	
 the liabilities or
 duties accruing but have not been satisfied or performed by the Parties
 before the date of termination of this contract,

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (b)

 	
 the provisions of
 Articles Article 14, Article 16 and Article 19, and

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (c)

 	
 any other provisions of
 this Contract required for the interpretation of above mentioned articles
 shall survive the termination of this Contract and the termination,
 dissolution or liquidation of the CJV.

 


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ARTICLE
17 BREACH OF CONTRACT


	
  

 	
  

 	
  

 
	
 17.1

 	
 Liability for Breach of Contract

 
	
  

 	
  

 
	
  

 	
 (1)

 	
 In the event of either
 Party’s breach of this Contract to render this Contract impossible to perform
 in part or in whole, such Party shall bear its default liabilities and
 compensate all damages incurred by other the Party. In the event that the
 Parties breach this contract, each Party shall bear its respective liability.

 
	
  

 	
  

 	
  

 
	
  

 	
 (2)

 	
 In the event that
 either Party fails to make its capital contribution or provide its
 cooperation conditions to the CJV three months beyond the due date stipulated
 in this Contract, the non-defaulting Party shall have the right to terminate
 this Contract (except in the event of Force Majeure).

 
	
  

 	
  

 	
  

 
	
 ARTICLE 18 FORCE MAJEURE

 
	
  

 
	
 18.1

 	
 Force Majeure

 
	
  

 	
  

 
	
  

 	
 (1)

 	
 “Force Majeure” shall
 mean any event which is beyond the control of the Parties to this Contract,
 and which is unforeseen, or if foreseen, unavoidable, and which prevents
 total or partial performance by a Party. Such events shall include but are
 not limited to any strikes, lockouts, explosions, shipwrecks, acts of nature
 or the public enemy, terrorism, fires, flood, sabotage, accidents, wars,
 riots, interference by military authorities, insurrections, government
 action, government prohibition, and any other similar or different
 contingency.

 
	
  

 	
  

 	
  

 
	
  

 	
 (2)

 	
 If an event of Force
 Majeure occurs, to the extent that the contractual obligations of the
 Parties, or either Party that is affected by such event of Force Majeure to
 this Contract (except the obligations under Article 17) cannot be performed
 as a result of such event, such contractual obligations shall be suspended
 during the period of delay caused by the Force Majeure and shall be
 automatically extended, without penalty, for a period equal to such
 suspension.

 
	
  

 	
  

 	
  

 
	
  

 	
 (3)

 	
 The Party claiming
 Force Majeure shall promptly inform the other Party in writing of the
 occurrence and duration of such event of Force Majeure. The Party claiming
 Force Majeure shall also use all reasonable endeavors to eliminate or reduce
 the impact of such event of the Force Majeure.

 
	
  

 	
  

 	
  

 
	
  

 	
 (4)

 	
 In the event of Force
 Majeure, the Parties shall immediately consult with each other in order to
 find an equitable solution and shall use all reasonable endeavors to minimize
 the consequences of such Force Majeure.

 


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ARTICLE
19 DISPUTE RESOLUTION


	
  

 	
  

 	
  

 
	
 19.1

 	
 Consultations

 
	
  

 	
  

 
	
  

 	
 In the event of any
 dispute between the Parties arising out of or relating to the performance or interpretation
 of this Contract, representatives of the Parties shall, within 15 Business
 Days of service of a written notice from either Party to the other Party (“Dispute Notice”), hold a meeting (“Settlement Meeting”) in an effort to
 resolve the dispute. Tne representatives of the Parties shall make their best
 efforts to settle the disputes amicably through consultation.

 
	
  

 	
  

 
	
 19.2

 	
 Arbitration

 
	
  

 	
  

 
	
  

 	
 (1)

 	
 If the Parties are not
 able to resolve a dispute within 30 Business Days after the dispatch of the
 Dispute Notice, whether or not a Settlement Meeting has been held, such
 dispute shall be referred to and finally settled by arbitration at the
 Changsha Arbitration Committee in accordance with then applicable arbitration
 rules adopted by Changsha Arbitration Committee. The arbitration tribunal
 shall consist of three arbitrators. The language of the arbitration shall be
 English and Chinese.

 
	
  

 	
  

 	
  

 
	
  

 	
 (2)

 	
 The arbitration award
 shall be final and binding on the Parties, and the Parties agree to be bound
 thereby and to act accordingly.

 
	
  

 	
  

 	
  

 
	
  

 	
 (3)

 	
 Unless otherwise ruled
 in the arbitration award, all fees (including attorney and expert fees),
 costs, and expenses incurred by the prevailing Party shall be born by the
 losing Party.

 
	
  

 	
  

 	
  

 
	
  

 	
 (4)

 	
 When any dispute occurs
 and when any dispute is under arbitration, except for the matters under
 dispute, the Parties shall continue to exercise their remaining respective
 rights, and to perform remaining respective obligations under this Contract.

 
	
  

 	
  

 	
  

 
	
 ARTICLE
 20 APPLICABLE LAW

 
	
  

 
	
 20.1

 	
 Applicable
 Law

 
	
  

 	
  

 
	
  

 	
 The formation,
 validity, interpretation and performance of this Contract shall be subject to
 the jurisdiction of the promulgated laws of China, which is publicly
 available and then in effective upon the execution of this Contract

 
	
  

 	
  

 
	
 ARTICLE
 21 MISCELLANEOUS PROVISIONS

 
	
  

 
	
 21.1

 	
 Amendments

 
	
  

 	
  

 
	
  

 	
 This Contract may not
 be changed orally, but may be amended only by a written instrument signed by
 all Parties and approved by the Approval Authority, if such approval is
 necessary.

 


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 21.2

 	
 Language

 
	
  

 	
  

 
	
  

 	
 This
 Contract shall be written and executed in five copies in Chinese and English,
 and both language versions shall be equally valid. If there is any conflict
 between the Chinese and English version of this Contract, the Chinese
 version shall prevail. These copies may
 be executed in one or more counterparts, each of which shall be an
 original but all of which shall together constitute one and the same
 instrument.

 
	
  

 	
  

 
	
 21.3

 	
 Severability

 
	
  

 	
  

 
	
  

 	
 If any provision of
 this Contract is invalid, illegal, or incapable of being enforced by any rule
 of law or public policy, all other provisions of this Contract shall
 nonetheless remain in full force and effect so long as the economic or legal
 substance of the transactions contemplated by this Contract is not affected
 in any manner adverse to any Party. Upon such determination that any
 provision is invalid, illegal, or incapable of being enforced, the Parties
 shall negotiate in good faith to modify this Contract so as to effect the
 original intent of the Parties as closely as possible in an acceptable manner
 to the end that the transactions contemplated hereby are fulfilled.

 
	
  

 	
  

 
	
 21.4

 	
 Entire
 Agreement

 
	
  

 	
  

 
	
  

 	
 This Contract and the
 appendices attached hereto (if any) constitute the entire agreement between
 the Parties with respect to the subject matter of this Contract and supersede
 all prior discussions, negotiations and agreements among them. In the event
 of any conflict between the terms and provisions of this Contract, and those
 of the articles of association or the joint feasibility study, the terms and
 provisions of this Contract shall prevail.

 
	
  

 	
  

 
	
 21.5

 	
 Headings

 
	
  

 	
  

 
	
  

 	
 The headings used
 herein are for convenience only and shall not be used to interpret, construe
 or otherwise affect the meaning of the provisions of this Contract.

 
	
  

 	
  

 
	
 21.6

 	
 Notices

 
	
  

 	
  

 
	
  

 	
 Any notice or written
 communication provided for in this Contract by one Party to the other Party,
 including but not limited to any and all writings or notices to be given
 thereunder, shall be given in writing in both English and Chinese and may be
 delivered in person or sent by registered airmail letter or by facsimile
 confirmed by transmittal report, to other Party at the location or fax number
 set forth below. The date and time of receipt of a notice or communication
 thereunder shall be deemed at the time of delivery if delivered in person, or
 at 10:00 a.m. on the tenth Business Day after its postmark in the case of an
 airmail letter, or one Business Day after dispatch in the case of a
 facsimile. All notices and communications shall be sent to the appropriate
 address or fax number set forth below, until the same is changed by notice
 given in writing to the other Party.

 
	
  

 	
  

 
	
  

 	
 Party
 A: Zhuzhou Hexing Industrial Co., Ltd. 

 
	
  

 	
  

 
	
  

 	
 Attn: Wu Zengming

 


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 Address: 5th
 Fl. Huanzhou Town, Lusong District, Zhuzhou City, Hu’nan Province

 
	
  

 	
 Phone:
 86 (0731)28602088

 
	
  

 	
 Facsimile:
 86 (0731)28602088

 
	
  

 	
  

 
	
  

 	
 Party B: Natcore Asia Technology, Limited

 
	
  

 	
  

 
	
  

 	
 Attn:
 Charles Robert PROV1NI

 
	
  

 	
 Address:
 Suite 2208, 22/F, Jardine House, 1 Connaught Place, Central, Hong Kong

 
	
  

 	
 Phone:
 1(732)576-8800

 
	
  

 	
 Facsimile:
 1(732)576-8809

 
	
  

 	
  

 
	
 21.7

 	
 Interpretation

 
	
  

 	
  

 
	
  

 	
 The Parties acknowledge and agree that (a) each Party
 and its counsel reviewed and negotiated the terms and provisions of this
 Contract and have contributed to its revision, (b) the rule of construction to
 the effect that any ambiguities are resolved against the drafting party shall not
 be employed in the interpretation of this Contract, and (c) the terms and
 provisions of this Contract shall be construed fairly as to both Parties,
 regardless of which Party was generally responsible for the preparation of this Contract.

 
	
  

 	
  

 
	
 21.8

 	
 Approval

 
	
  

 	
  

 
	
  

 	
 The Contract shall be submitted by Party B to its board
 of directors and the Stock Exchange where its sole shareholder, Natcore
 Technology Inc., is listed (the “Stock Exchange”) for approval. Party B
 shall provide Party A with a definite response as to the decisions of its board of
 directors and the Stock Exchange within twenty (20) Business Days upon the signing of
 this Contract. The Contract shall be deemed to be approved by the board of
 directors of Party B and the Stock Exchange if Party B fails to provide Party
 A with said response within twenty (20) Business Days upon the signing of this Contract.
 Within twenty (20) Business Days after the date on which the Contract is approved
 or deemed to be approved, the Parties shall submit the Contract for approval by
 the Approval Authority.

 




 [No text below
but signature page hereto]


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IN WITNESS WHEREOF, each of the Parties hereto has caused
this Contract to be executed by their duly authorized representatives on the
date first set forth above.


	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Party A:

 	
  

 	
 Party B:

 
	
 Zhuzhou Hexing Industrial Co., Ltd.

 	
  

 	
 Natcore Asia Technology, Limited

 
	
 

 	
  

 	
  

 
	
  (affixed with the company’s chop)

 	
  

 	
  

 
	
  

 	
  

 	
  

 
	
 by:

 	
  

 	
  

 	
 by:

 	
  

 
	
  

 	 

 	
  

 	
  

 	 

 
	
 Name: Wu Zengming

 	
  

 	
 Name:
 Charles Robert PROVINI

 
	
 Title: General Manager

 	
  

 	
 Title: Director

 
	
 Nationality: PRC

 	
  

 	
 Nationality: USA

 


Confidential