Document:

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EXHIBIT 10.12

                         EQUITY JOINT VENTURE AGREEMENT
                                     BETWEEN
                               COMTECH GROUP INC.,
                                       AND
                              BROADWELL GROUP LTD.,

                                December 8, 2004

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                                TABLE OF CONTENTS

Acticle 1.      DEFINITION.....................................................3
Article 2.      ESTABLISHMENT AND LEGAL FORM OF THE JV COMPANY.................6
Acticle 3.      PURPOSE AND BUSINESS SCOPE.....................................7
Acticle 4.      TOTAL INVESTMENT AND REGISTERED CAPITAL........................8
Acticle 5.      OBLIGATIONS AND RIGHTS OF THE PARTIES..........................9
Acticle 6.      REPRESENTATIONS, WARRANTIES AND INDEMNITY.....................11
Acticle 7.      BOARD OF DIRECTORS............................................12
Acticle 8.      MANAGEMENT ORGANIZATION.......................................17
Acticle 9.      LABOR MANAGEMENT..............................................19
Acticle 10.     FINANCIAL AFFAIRS AND ACCOUNTING..............................20
Acticle 11.     DISTRIBUTION OF PROFITS.......................................22
Acticle 12.     TAXATION AND INSURANCE........................................23
Acticle 13.     NON COMPETITION...............................................24
Acticle 14.     CONFIDENTIALITY...............................................25
Acticle 15.     TERM OF THE JV COMPANY........................................27
Acticle 16.     MERGER, DIVISION, BANKRUPTCY, TERMINATION AND LIQUIDATION.....28
Acticle 17.     FORCE MAJEURE.................................................31
Acticle 18.     SETTLEMENT OF DISPUTES........................................32
Acticle 19.     APPLICABLE LAW................................................33
Acticle 20.     MISCELLANEOUS PROVISIONS......................................34
Acticle 21.     MILESTONES....................................................36

                                       1
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                              PRELIMINARY STATEMENT

This EQUITY JOINT VENTURE AGREEMENT (hereinafter referred to as "AGREEMENT" or
"CONTRACT") is entered into in Hongkong on January 17, 2005 by and between
COMTECH GROUP INC., (hereinafter referred as "GROUP") a OCTBB listed company
under the symbol of COGO and BROADWELL GROUP LTD., (hereinafter referred as
"BROADWELL, or THE TEAM") a British Virgin Island (BVI) company in accordance
with the Company Law of Hong Kong and other relevant laws and regulations. After
friendly consultations conducted in accordance with the principles of equality
and mutual benefits, the parties have agreed to establish an Equity Joint
Venture Enterprise------COMTECH BROADBAND INC, (hereafter referred to as the "JV
COMPANY, JV, JOINT VENTURE, or BROADBAND") in Hong Kong, and therefore make
agreements herein below:

                                       2
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                             ACTICLE 1. DEFINITION

DEFINITIONS
-----------

         Unless otherwise provided herein, the following terms used in this
         Agreement shall have the meanings set forth below:

         "AFFILIATE" means, with respect to any entity, any other entity, which,
         directly or indirectly, is controlled by, under common control with, or
         in control of, such entity; the term "CONTROL" shall mean ownership of
         fifty per cent. (50%) or more of the voting stock or registered
         capital, or the power to appoint or elect a majority of the directors
         or to direct the management of an entity.

         "APPROVAL AUTHORITIES" means the governmental departments, authorized
         under the laws of the PRC and the State Council administrative
         regulations regarding the examination and approval of foreign
         investment projects, which have the power to examine and approve this
         Contract and the Articles of Association.

         "ARTICLES OF ASSOCIATION" means the articles of association of the JV
         Company signed by each of the Parties immediately following execution
         of this Contract and approved by the Approval Authorities
         simultaneously with the approval of this Contract and any amendment
         thereto approved in accordance with the provisions of this Contract.

         "BOARD OF DIRECTORs" or "BOARD" means the board of directors of the JV
         Company established pursuant to Article 7 hereof.

         "BUSINESS LICENSE" means the business license of the JV Company issued
         by the State Administration of Industry and Commerce or its authorized
         local Administration of Industry and Commerce.

         "CEO" means the chief executive officer.

         "CFO" means the chief financial officer.

         "CTO" means the chief technical officer.

         "DIRECTOR" means a director of the JV Company.

         "EFFECTIVE DATE" means the effective date on which this Agreement
         becomes effective, which shall be the date upon which the Agreement and
         the Articles of Association are approved by the Approval Authorities.

                                       3
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         "ENCUMBER" means to, directly or indirectly, pledge, mortgage, grant a
         security interest, or otherwise encumber, or enter into any contract,
         any voting trust or other agreement or arrangement therefore; and
         "ENCUMBRANCE" shall have correlative meanings.

         "EQUITY INTERESTS" means, in respect of any Party, its proportional
         shareholding in the JV Company as a result of its capital contribution
         to the JV Company in accordance with the terms of this Contract and all
         rights in relation to the JV Company accruing to and/or enjoyed by such
         Party as a result of such capital contribution including, without
         limitation, voting rights and rights to profits. Such Equity Interests
         shall changed from time to time according to this Contract, and may be
         adjusted in accordance with the actual capital contributions of
         Parties.

         "FISCAL YEAR" has the meaning ascribed to it in Article 10.

         "HONG KONG" means the Hong Kong Special Administrative Region of the
         PRC.

         "MANAGEMENT PERSONNEl" means the JV Company's CEO, CFO, CTO and any
         other management personnel who report directly to the CEO.

         "PARTIES" means, collectively, Comtech Group, The Steve Team, and any
         other party which becomes a party to this Agreement pursuant to the
         terms hereof; "Party" means any one of them.

         "PRC" means the People's Republic of China, for the purposes of this
         Agreement only, excluding Hong Kong, Macau Special Administrative
         Region and Taiwan.

         "RIGHT OF FIRST REFUSAL" is a Company's Option. The Company shall have
         an option for a period of thirty (30) days from receipt of the Transfer
         Notice to elect to purchase the Offered Shares at the same price and
         subject to the same material terms and conditions as described in the
         Transfer Notice. The Company may exercise such purchase option and,
         thereby, purchase all (or a portion of) the Offered Shares by notifying
         the Founder in writing before expiration of such thirty (30) day period
         as to the number of such shares which it wishes to purchase.

         "RMB" or "RENMINBI" means the legal currency of the PRC.

         "SPECIFIED ACCOUNTANTS" means PricewaterhouseCoopers, KPMG, Ernst &
         Young, and Deloitte & Touche.

         "SUBSIDIARY" means, with respect to any entity, any other entity with
         legal person status, which, directly or indirectly, is controlled by,
         such entity; the term "control" shall mean ownership of fifty per cent.
         (50%) or more of the voting stock or registered capital, or the power
         to appoint or elect a majority of the directors or to direct the
         management of an entity.

                                       4
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         "THIRD PARTY" means any natural person, legal person or other
         organization or entity other than the Parties to this Contract.

         "THREE FUNDS" means the JV Company's reserve fund, expansion fund and
         employee bonus and welfare fund constituted in accordance with and
         subject to the laws and regulations governing Sino-foreign joint
         ventures in the PRC.

                                       5
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           ACTICLE 2. ESTABLISHMENT AND LEGAL FORM OF THE JV COMPANY

ESTABLISHMENT OF THE JV COMPANY
-------------------------------

         The Parties hereby agree to establish and operate, and keep maintaining
         the nature of, the JV Company as an equity joint venture enterprise in
         accordance with the laws of Hongkong, laws of jurisdiction at which the
         JV's subsidiary, or subsidiaries, may present, and the provisions in
         this Agreement.

NAME AND ADDRESS OF THE JV COMPANY
----------------------------------

         The name of the JV Company shall be Comtech Broadband Inc., in English
         and [__________________] in Chinese.

         The legal address of the JV Company is
         Rm, 514 5/ F., Manhattan Centre, 8 Kwai Cheong Road, Kwai Chung,
         Hongkong

LEGAL FORM
----------

         The JV Company shall be a limited liability company with independent
         legal status. The liability of each of the Parties for the debts and
         obligations of the JV Company shall be limited to its respective
         contribution to the registered capital of the JV Company. Creditors of
         the JV Company shall have recourse only to the assets of the JV
         Company.

LAWS OF REGULATIONS
-------------------

         The activities of the JV Company shall comply with the laws and
         relevant regulations of BVI and jurisdictions under which the JV
         Company conducts business, and its legitimate rights and interests
         shall be protected by such laws and relevant regulations.

                                       6
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                     ACTICLE 3. PURPOSE AND BUSINESS SCOPE

PURPOSE OF THE JV COMPANY
-------------------------

         The purpose of the JV is to serve as an independent distributor
         promoting IC's and components into China market in start with
         distributing products made by Broadcom Corporation, a NASDAQ listed
         company under the symbol of BRCM, into China.

BUSINESS SCOPE OF THE JV
------------------------

         Business scope of the JV shall be: sales of Broadcom's products, and/or
         other products, which were originally initiated or later are captured
         by BROADWELL.

CERTAIN BUSINESS PRACTICES
--------------------------

         1)       each Party shall use its best efforts to cause the JV Company
                  to, and the JV Company shall, take all necessary actions to
                  cause the Management Personnel, representatives, consultants,
                  employees and agents of the JV Company and its Subsidiaries to
                  comply with all applicable laws, rules and regulations of the
                  USA and all other applicable countries (as they may be amended
                  from time to time) of which such party is or ought reasonably
                  to have been aware, including, without limitation, the USA
                  Foreign Corrupt Practices Act of 1977 (as amended), and any
                  other law regulating payments to government officials;

         2)       without limiting the generality of the foregoing, each Party
                  shall use its best efforts to cause the JV Company to be aware
                  of the USA Foreign Corrupt Practices Act of 1977 (as amended),
                  and shall cause the JV Company not to knowingly, directly or
                  indirectly, make any offer, payment or promise to pay or
                  authorize the payment of any money or anything of value to any
                  Non-US official, candidate for political office or political
                  party for the purpose of influencing any act or decision of
                  such Non-US official, political party or candidate for office,
                  or for the purpose of inducing such Non-US official, political
                  party or candidate for office to use his or her influence with
                  any Non-US government or instrumentality thereof to affect or
                  influence any act or decision of such government or
                  instrumentality in order to obtain or retain business for or
                  with, or directing to, any person in violation of the U.S.
                  Foreign Corrupt Practices Act of 1977 (as amended);

         3)       no Party shall knowingly take or omit to take any action that
                  would cause the JV Company, its Management Personnel,
                  representatives, consultants, employees or agents to violate
                  or otherwise fail to comply with any applicable laws, rules
                  and regulations.

                                       7
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               ACTICLE 4. TOTAL INVESTMENT AND REGISTERED CAPITAL

TOTAL INVESTMENT
----------------

         The total investment of the JV Company shall be HKD1,000,000

CAPITAL CONTRIBUTION
--------------------

         The JV is to issue 10,000,000 common shares at the par value of
         HKD0.1/share. The Team is to buy 4,500,000 or 45% of its total
         outstanding common shares while Group is to buy 5,500,000 or 55% of its
         total outstanding common shares.

ENCUMBRANCE ON EQUITY RIGHTS
----------------------------

         None of the Parties may, without the written consent of each of the
         other parties, encumber all or any part of its Equity Interests.

                                       8
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                ACTICLE 5. OBLIGATIONS AND RIGHTS OF THE PARTIES

THE OBLIGATIONS AND RIGHTS OF GROUP
-----------------------------------

1)    In order for the JV to function properly, Group is responsible to provide
      the credit line of four million dollars for Broadband for the first year
      as soon as the JV is eligible to conduct business legally and increase the
      credit line to five million and six million for the second and third year
      respectively.

2)    Notwithstanding Article 7, Group should be in charge of the JV's legal and
      financial control, including, without limitation, determining the
      legitimacy of JV's business operations, proving or terminating JV's
      certain practice, appointing CFO, consulting on tax issues and deciding on
      customer's trade credits.

3)    Group shall use its best efforts to assist the JV to establish Comtech
      Broadband China in PRC and obtain its business license, tax registration,
      and the certification of Value Added Tax (VAT) status from Chinese
      taxation authorities.

4)    Group shall use its best efforts to assist the JV to obtain any tax
      privilege, and/or exemption.

5)    Group shall have the right of first refusal to purchase JV's shares
      offered by The Team.

THE OBLIGATIONS AND RIGHTS OF THE TEAM
--------------------------------------

1)    The Team is responsible for carrying out normal business functions,
      including, without limitation, market promotion, negotiation with clients
      and suppliers, product development, business operation, research and
      development, customer selection, human resources control, and technical
      cooperation with outside sources.

2)    Without violating labor laws and other regulations, The Team should be
      able to nominate CEO, CTO, any key members of the management team, and/or
      any employees except CFO and members of accounting department, of the JV
      Company.

3)    The Team should be able to decide on establishment or termination of
      offices or subsidiaries for the JV Company.

4)    The Team shall use its best efforts to generate business for the JV
      Company.

5)    In the event that the JV gets listed on NASDAQ, The Team has the right to
      purchase back 500,000 common shares from Group at par value.

6)    Once the right of The Team in this section 5) of this Article 5 is
      satisfied, all the rights listed in the Article 11 DISTRIBUTION OF PROFITS
      (1), (2), (4) will be terminated.

                                       9
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7)    Due to the licensing requirements and timing issues, Group and Comtech
      Communication Technology (Shenzhen) Co., Ltd (hereinafter referred as
      "COMTECH COMMUNICATION") needs to perform the duties for the JV Company
      written in this Agreement prior to the formation and finalization of the
      JV Company and its subsidiaries. Any business conducted through Group and
      Comtech Communication shall not be, in any ways, discounting the JV
      Company's annual performance in terms of revenue calculation, bonus,
      and/or profit distribution. The JV Company will take back the duties and
      rights presented in this Agreement as soon as the JV is able to operate
      normally.

                                       10
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              ACTICLE 6. REPRESENTATIONS, WARRANTIES AND INDEMNITY

MUTUAL REPRESENTATIONS AND WARRANTIES
-------------------------------------

         Each Party hereby represents and warrants to each other Party that, as
         of the date hereof and as of the Effective Date:

         1)       it is duly incorporated, validly existing and in good standing
                  under the laws of the place of its establishment or
                  incorporation and it has full power and authority under those
                  laws to enter into this Agreement and to perform all of its
                  obligations hereunder;

         2)       the execution and delivery of this Agreement by it has been
                  duly authorized and, upon the Effective Date, this Agreement
                  shall be legally binding on it, and enforceable in accordance
                  with its terms against such Party, subject to bankruptcy,
                  insolvency or other similar laws affecting creditors' rights
                  generally, in each case, applicable to such Party.

         3)       neither the execution of this Agreement nor the performance of
                  its obligations hereunder will conflict with, or result in a
                  breach of, or constitute a default under, any provision of its
                  Articles of Association, or other constitutive documents or
                  internal regulations, or any law, regulation, rule,
                  authorization or approval of any applicable government agency
                  or body, or of any contract or agreement to which it is a
                  party or subject;

         4)       no lawsuit, arbitration, other legal or administrative
                  proceeding or governmental investigation against it which
                  would materially affect its ability to enter into or perform
                  its obligations under this Agreement is in progress or, to the
                  best of its knowledge, any threatened against it.

INDEMNITY
---------

         Each Party hereby respectively undertakes to indemnify each of the
         other Parties against only direct losses and costs (including legal
         costs) or any other direct liability suffered or incurred by the other
         Parties as a consequence of the indemnifying Party's breach of the
         representations, warranties or undertakings given or made by it
         hereunder or the occurrence of any Event of Default in relation to it,
         provided that the aggregate liabilities of any Party shall be limited
         to an amount equal to its respective capital contribution to the
         registered capital of the JV Company.

                                       11
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                         ACTICLE 7. BOARD OF DIRECTORS

FORMATION OF THE BOARD OF DIRECTORS
-----------------------------------

         1)       The Board of Directors shall be the highest authority of the
                  JV Company. The date of issue of the Business License shall be
                  deemed to be the date of establishment of the Board of
                  Directors.

         2)       The Board of Directors shall be composed of three (3)
                  Directors for the first fiscal year, two (2) of whom shall be
                  appointed by Group, one (1) of whom shall be appointed by The
                  Team. One more Director from each party shall be appointed
                  into the Board pursuant to the procedure of election of
                  directors in the ARTICLE OF ASSOCIATION of the JV Company at
                  the beginning of the second fiscal year. Therefore, starting
                  from the second fiscal year, the Board shall be composed of
                  five (5) directors, three (3) of whom shall be appointed by
                  Group, (2) of whom shall be appointed by The Team. The Board
                  shall have one Chairman. The Director or one of the Directors
                  appointed by the Party with the largest Equity Interest shall
                  serve as Chairman of the Board, who shall be the legal
                  representative of the JV Company. Whenever the Chairman is
                  unable to perform his responsibilities for any reason, upon
                  the authorization of the Chairman, another appointed Director
                  may represent him temporarily.

         3)       In the case of equality between affirmative and negative
                  votes, the Chairman shall not have a second or casting vote.

         4)       Each Director shall be appointed for a term of one (1) year,
                  but the Party, which has appointed a Director, may remove that
                  Director and appoint a replacement from time to time. A
                  Director may serve consecutive terms if reappointed by the
                  Party that originally appointed him. If a seat on the Board of
                  Directors is vacated for the reason of retirement,
                  resignation, removal, disability or death of a Director, the
                  Party that originally appointed such Director shall appoint a
                  successor to serve the remaining term of such Director.

         5)       Directors shall serve without any remuneration. The reasonable
                  expenses incurred by the Directors for the performance of
                  their duties as Directors shall be reimbursed by the JV
                  Company following approval by the Board of Directors. This
                  Article shall not restrict the JV Company from paying salaries
                  to Directors in their role, if any, as employees of the JV
                  Company.

         6)       To appoint or remove a Director, or to designate or change the
                  Chairman, the relevant Party shall notify each other Party in
                  writing. The appointment and removal of a Director, and the
                  designation and change of the Chairman, shall become effective
                  upon receipt of such notice by each other Party. Any such
                  appointment, removal, designation or change shall be filed by
                  the JV Company with the relevant authority and registered with
                  the relevant Administration of Industry and Commerce to the
                  extent required by law.

                                       12
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INDEMNIFICATION OF DIRECTORS
----------------------------

         The JV Company shall indemnify each Director against any claim or
         liability arising from his performing his obligations as a Director,
         provided that such claim or liability is not a result of any misconduct
         or violation of any laws, regulations and Articles of Association of
         the JV Company by such Director.

MEETINGS OF THE BOARD
---------------------

         1)       The first meeting of the Board of Directors shall be held
                  within sixty(60) days of the date of issue of the Business
                  License. Thereafter, the Board of Directors shall hold at
                  least two (2) meetings in each calendar year. Upon the written
                  request of one-third or more of the Directors or of any Party
                  and specifying the matters to be discussed, the Chairman of
                  the Board shall, within ten (10) days of receipt of such
                  request, convene an interim meeting of the Board of Directors.

         2)       The Chairman of the Board shall give written notice,
                  specifying the time, place and agenda of the meeting, to each
                  of the Directors at least ten (10) days prior to any meeting
                  of the Board. A Board meeting held without proper notice
                  having been given to any Director shall be invalid unless such
                  Director, before the meeting, delivers a written notice of
                  waiver to the Chairman. Meetings shall be held at the
                  registered address of the JV Company or such other address(es)
                  in or outside of the PRC as agreed by the Chairman. The
                  Chairman of the Board shall determine the agenda for Board
                  meetings from proposals of Directors and shall be responsible
                  for convening and presiding over such meetings. If the
                  Chairman of the Board fails to attend a Board meeting, or
                  another Director appointed, by the Chairman of the Board shall
                  convene and preside over the meeting.

                  A meeting of the Board may be held through video conference,
                  telephone conference or other communication equipment agreed
                  to by all Directors which allows everybody to take part in the
                  meeting by being able to hear each of the other people at the
                  meeting and by being able to speak to all of them at the same
                  time. Any board resolution, which is passed through video
                  conference or telephone conference or other communication
                  equipment, shall come into effect upon voting by the Directors
                  and shall be signed by such Directors after the relevant Board
                  meeting. Any director or proxy participating in a Board
                  meeting through any of the above means shall be deemed to be
                  present thereat for the purposes of this Agreement.

         3)       If a Director is unable to attend a Board meeting, such
                  Director may issue a letter of authorization and appoint a
                  representative to attend the meeting on his behalf. The letter
                  of authorization shall state the scope of authorization. The
                  representative so appointed shall have the same rights and
                  powers as the Director who appointed him. One person is able
                  to represent more than one Director by proxy.

                                       13
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         4)       The Board of Directors shall keep complete and accurate
                  minutes in English and in Chinese of all Board meetings, which
                  shall be signed by the Directors present. The draft minutes of
                  each Board meeting shall be distributed within fifteen (15)
                  days after the relevant meeting to all Directors. Any
                  suggested revision or supplement of the draft minutes shall be
                  delivered in writing to the Chairman of the Board within
                  fifteen (15) days of receipt. The Chairman shall finalize the
                  minutes within sixty (60) days after the meeting and
                  distribute a copy to each Director and each Party. The JV
                  Company shall keep the minutes of the Board meetings, which
                  shall be provided upon request of any Party or its authorized
                  representatives.

POWERS OF THE BOARD
-------------------

         The Board of Directors shall have the power to make all major decisions
         pertaining to the JV Company. Subject to Articles 7 POWERS OF THE BOARD
         (1) and (2), all major decisions shall require the approval of a simple
         majority of Directors present in person or by proxy at a duly convened
         meeting of the Board of Directors.

         1)       The approval of all the Directors present in person or by
                  proxy or by any manner permitted by Article 7 MEETINGS OF THE
                  BOARD at a duly convened meeting of the Board of Directors
                  shall be required for each of the following matters:

                  a)       any increase or adjustment of the JV Company's total
                           investment and/or registered capital;

                  b)       any amendment to the Articles of Association;

                  c)       division of the JV Company;

                  d)       the dissolution or termination of the JV Company; and

                  e)       all such other matters which the Board of Directors
                           may decide from time to time pursuant to Article 7
                           POWERS OF THE BOARD (1) that approval by the Board of
                           Directors under this Article 7 POWERS OF THE BOARD
                           (2) is required.

         2)       The following matters shall require the approval of simple
                  majority of the Directors present in person or by proxy at a
                  duly convened meeting of the Board of Directors;

                  f)       any appointment or change of the accounting firm of
                           the JV Company for the purpose of auditing matters;

                  g)       any material change in the business scope of the JV
                           Company;

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                  h)       the JV Company's annual financial budget, accounts,
                           business plan;

                  i)       the creation of any Encumbrance over any of the
                           property, business or assets of the JV Company;

                  j)       the establishment of any Board or other committee and
                           any terms on which it is to operate;

                  k)       any merger or consolidation of the JV Company with
                           another economic organization or entity;

                  l)       the approval of any settlement plan submitted to it
                           in relation to the termination of consultancy
                           services provided by the JV Company to other parties;

                  m)       any application for the listing of any shares or
                           other securities of the JV Company on any stock
                           exchange or for permission for dealings in any shares
                           or other securities of the JV Company in any
                           securities market;

                  n)       any change in the basis of accounting or accounting
                           principles or policies employed by the JV Company
                           other than as required by law or accounting policies
                           generally accepted in the PRC from time to time;

                  o)       any change in the accounting period of the JV
                           Company;

                  p)       the raising of any indebtedness other than by way of
                           trade credit on normal commercial terms and in the
                           ordinary course of business, or the variation or
                           termination of any agreement for the raising of any
                           such indebtedness (including without limitation early
                           repayment);

                  q)       the entering into, variation or termination of any
                           transaction by the JV Company with (i) a Party or
                           (ii) any Affiliate of a Party or (iii) any Director
                           or officer of any such Party or any Affiliate
                           thereof;

                  r)       the grant of option to purchase equity interest in
                           the JV Company to any of its Management Personnel;
                           and

                  s)       any investment by the JV Company in any other company
                           or enterprise;

                  t)       the adoption of the Tax Statement and the audited
                           Financial Statement by registered accountant;

                  u)       the opening of any bank accounts and designation of
                           signing authorities;

                                       15
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                  v)       any major expenses over RMB50,000; and

                  w)       the commencement or settlement by the JV Company in
                           any jurisdiction of legal or arbitration proceedings
                           by the JV Company for an amount less than RMB300,000,
                           including, without limitation, any proceedings
                           seeking to adjudicate the JV Company insolvent
                           involving the above amount;

WRITTEN RESOLUTIONS
-------------------

         The Board of Directors may adopt any resolution without a meeting of
         the Board if all of the Directors then holding office sign the relevant
         resolution in written form. Such written resolutions shall be filed
         with the minutes of Board of Directors' meetings and shall have the
         same force and effect as a unanimous resolution adopted at a meeting of
         the Board of Directors.

                                       16
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                       ACTICLE 8. MANAGEMENT ORGANIZATION

MANAGEMENT ORGANIZATION
-----------------------

         The JV Company's management organization shall be under the leadership
         of a CEO, who shall report directly to the Board of Directors. In
         addition to the CEO, the JV Company may have one or more deputy general
         managers, who shall assist the CEO. The JV Company may have a CFO and,
         may also set up several internal departments with department managers
         and deputy department managers being responsible for the departments'
         work thereof respectively.

APPOINTMENT AND REPLACEMENT OF MANAGEMENT PERSONNEL
---------------------------------------------------

         The CEO and the CFO may be nominated by any Party, and all the
         above-mentioned Management Personnel shall be subject to the
         appointment by the Board of Directors. The other Management Personnel
         shall be nominated by the CEO and subject to the appointment by the
         Board of Directors. Replacements of the Management Personnel, whether
         by reason of the retirement, resignation, disability or death of any
         Management Personnel or of the removal of any Management Personnel by
         the Board of Directors, shall be nominated and appointed in the same
         manner as mentioned above. However, the first CEO shall be nominated by
         The Team and the first CFO shall be nominated by Group.

SCOPE OF MANAGEMENT AUTHORITY AND PERFORMANCE OF DUTIES
-------------------------------------------------------

         1)       The CEO shall be in charge of the day-to-day operation and
                  management of the JV Company and shall carry out all matters
                  entrusted to him by the Board of Directors.

         2)       Except as otherwise agreed by all Parties in writing, the CEO,
                  and all other Management Personnel shall perform their duties
                  on a full-time basis and shall not concurrently serve as a
                  manager or other employee of any other company or enterprise,
                  nor shall they serve as a director or consultant of, or hold
                  or obtain any interest in, any company or enterprise that
                  competes with the JV Company.

         3)       The Board of Directors may remove at any time without notice,
                  the CEO, the CFO, or other Management Personnel if any of them
                  breaches paragraph (2) above or is otherwise in material
                  breach of his or her duties.

         4)       The general manager shall have the following powers and
                  responsibilities without limitation to the generality of the
                  other provision:

                  a)       to preside over the JV Company's production,
                           operation and management and to implement any
                           resolutions of the Board;

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                  b)       to implement the JV Company's annual business plan;

                  c)       to propose a plan for the structure of internal
                           management for the JV Company for the Board's
                           approval;

                  d)       to propose the basic bylaws for the management of the
                           JV Company for the Board's approval;

                  e)       to make specific operating rules for the JV Company
                           for the Board's record;

                  f)       to appoint or dismiss employees other than the
                           Management Personnel;

                  g)       any other powers delegated to him by the Articles of
                           Association or by the Board of Directors.

MANAGEMENT STRUCTURE
--------------------

         The JV Company's basic management structure shall be determined by the
         Board of Directors. The details of the JV Company's organizational
         structure and the establishment of employment positions other than
         Management Personnel positions shall be determined by the CEO

                                       18
<PAGE>

                          ACTICLE 9. LABOR MANAGEMENT

GOVERNING PRINCIPLE
-------------------

         Matters relating to the recruitment, employment, dismissal,
         resignation, wages and welfare of the staff of the JV Company shall be
         dealt with in accordance with the Labor Law of the PRC, the Trade Union
         Law of the PRC and related laws and regulations governing the JV
         Company (hereinafter collectively referred to as the "LABOR LAWS"). The
         JV Company's labor rules and policies shall be approved by the Board of
         Directors pursuant to Article 7, and the implementation thereof shall
         be handled by the CEO or under the his supervision.

EMPLOYMENT EXAMINATION AND RECRUITMENT
--------------------------------------

         1)       The JV Company's working personnel, other than the Management
                  Personnel, shall be employed by the JV Company in accordance
                  with the terms of an individual labor contract approved by the
                  Board. The Management Personnel shall be employed by the JV
                  Company in accordance with the terms of individual employment
                  contracts approved by the Board of Directors.

         2)       The JV Company shall maintain strict control over the number
                  and quality of its employees. The CEO shall have the right to
                  dismiss any unsuitable or unqualified employees other than
                  Management Personnel in accordance with the Labor Laws.

CONFORMITY WITH LABOR PROTECTION
--------------------------------

         The JV Company shall conform to rules and regulations of the Chinese
         government and any governing bodies concerning labor protection and
         ensure safe and civilized operations. Labor insurance for employees of
         the JV Company shall be handled in accordance with the Labor Laws.

TRADE UNION
-----------

         The JV Company's employees shall have the right to establish a trade
         union in accordance with the Trade Union Law of the PRC. Based on the
         Equity Joint Venture Law, the JV Company shall allot each month two
         percent (2%) of the total amount of the actual total base wages of the
         JV Company's employees for payment into a trade union fund if such
         trade union is established, such payment shall be an expense of the JV
         Company. The trade union shall use these funds in accordance with the
         relevant control measures for trade union funds formulated by the All
         China Federation of Trade Unions.

                                       19
<PAGE>

                  ACTICLE 10. FINANCIAL AFFAIRS AND ACCOUNTING

ACCOUNTING SYSTEM
-----------------

         1)       The CFO of the JV Company shall be responsible for the
                  accounting affairs of the JV Company. Subject to Article 8, no
                  expenditure shall be permitted out of the JV Company's
                  accounts without written authorization jointly from (i) the
                  CFO and (ii) either the CEO or the deputy general manager.

         2)       The CFO shall prepare the JV Company's accounting system in
                  accordance with the Enterprise Financial and Accounting System
                  and other relevant PRC laws and regulations, and submit such
                  to the Board of Directors for adoption. All relevant
                  documentation relating to the accounting system shall be filed
                  with the relevant government department in charge of the JV
                  Company and with the relevant local department of finance and
                  shall also be delivered to the relevant tax authorities for
                  their records. The CFO shall also maintain the financial
                  reports of the JV Company, prepared in accordance with US
                  GAAP.

         3)       The JV Company shall adopt Renminbi as its bookkeeping base
                  currency, but upon request of all the Parties, may also adopt
                  US Dollars, Hong Kong Dollars or other foreign currencies as
                  supplementary bookkeeping currencies.

         4)       All accounting records, vouchers, books and statements of the
                  JV Company must be made and kept in Chinese with the exception
                  of the separate accounts to be prepared in accordance with US
                  GAAP which may be kept in English. All financial statements
                  and reports of the JV Company shall be made and kept in both
                  Chinese and English.

         5)       The exchange rate between any applicable foreign currency and
                  RMB for the purposes of profit and loss accounts shall be the
                  end of the month rate quoted by the People's Bank of China or
                  otherwise required under the Enterprise Financial and
                  Accounting System. The exchange rate for any other financial
                  statements and reports shall be the middle rate quoted by the
                  People's Bank of China on the last date of the relevant
                  accounting period.

         6)       The exchange rate between any applicable foreign currency and
                  RMB for the purposes of entry of any accounting records,
                  vouchers and books shall be the middle rate quoted by the
                  People's Bank of China on the date of occurrence of the
                  relevant transaction.

FISCAL YEAR
-----------

         The JV Company shall adopt the Gregorian calendar year as its Fiscal
         Year. The JV Company's first Fiscal Year shall commence on the date of
         receipt of the Business License and shall end on the immediately
         succeeding December 31.

                                       20
<PAGE>

AUDITING
--------

         1)       The Parties shall have full and equal access to the JV
                  Company's accounts, which shall be kept at the legal address
                  of the JV Company. The JV Company shall furnish to each Party
                  unaudited financial reports on a monthly basis (within 20 days
                  after the end of any month) and quarterly basis (within 30
                  days after the end of any quarter). In addition, each Party,
                  at its own expense and upon advance notice to the JV Company,
                  may appoint an accounting firm registered in the PRC or abroad
                  to audit the accounts of the JV Company on behalf of such
                  Party. The JV Company shall permit any such accounting firm to
                  examine all of its accounting and financial records and other
                  documents subject to such accounting firm undertaking to
                  maintain the confidentiality of such documents.

         2)       The JV Company shall engage one of the Specified Accountants
                  to audit its accounts and issue an auditors' report. Drafts of
                  the audited financial statements and report shall be provided
                  to each Party and to the Board of Directors for review within
                  two (2) months after the end of each Fiscal Year, and the
                  final audited financial statements and report shall be
                  completed not later than three (3) months after the end of
                  each Fiscal Year.

         3)       The activities of the CEO and the CFO shall be reviewed and
                  the related accounts audited by the JV Company on each of the
                  following occasions:

                  a)       termination of tenure;

                  b)       removal by the Board of Directors;

                  c)       voluntary resignation.

BANK ACCOUNTS AND FOREIGN EXCHANGE CONTROL
------------------------------------------

         Subject to the approval of relevant authority, the JV Company shall
         open foreign exchange accounts and RMB accounts at banks within the PRC
         which have been approved to operate foreign exchange business and, upon
         approval by the State Administration of Foreign Exchange, shall open
         foreign exchange accounts at banks in Hong Kong or elsewhere outside
         the PRC. The JV Company's foreign exchange transactions shall be
         handled in accordance with the PRC regulations relating to foreign
         exchange control.

                                       21
<PAGE>

                      ACTICLE 11. DISTRIBUTION OF PROFITS

DISTRIBUTION OF PROFITS
-----------------------

         1)       The JV Company shall not distribute any net profits of the
                  current year unless the losses of previous years have been
                  made up and the requirements in the Milestone 1 in Article 21
                  are satisfied. Retained profits from previous years may be
                  distributed together with those of the current year.

         2)       Once requirements listed in the Milestone 1 at the end of each
                  fiscal year are satisfied, The Team is subject to receive 5%
                  of net income of that fiscal year as bonus

         3)       After the JV Company has paid any applicable taxes and made up
                  any losses incurred in previous years, the Board of Directors
                  shall decide the allocations of the after-tax profits to the
                  Three Funds in accordance with applicable PRC laws.

         4)       The Board of Directors shall reserve 20% of NET INCOME for
                  long term investment not later than four (4) months after the
                  end of each Fiscal Year. Any amount of after-tax profits not
                  so required to be retained after allocation to the Three Funds
                  shall be promptly distributed to each party in proportion to
                  each Party's actual capital contribution to the JV Company
                  (e.g., 45% for The Team). The Team shall propose to the Board
                  of Directors on the amount for profit distribution; then
                  decisions regarding profit distribution can be made.

         5)       Dividends of the JV Company shall be calculated and declared
                  in RMB, HKD, or USD.

         6)       The right set in Article 5 OBLIGATIONS AND RIGHTS OF THE TEAM
                  (5) and the rights set in this section (2) of this Article 11
                  for The Team are mutually excluded.

LOSSES RECUPERATION
-------------------

         If the JV Company incurs an annual loss, the JV Company shall make up
         the losses from the following funds in the following order:

         a)       the JV Company's reserve fund;

         b)       the JV Company's profits of the next year. ACTICLE 12.

                                       22
<PAGE>

                             TAXATION AND INSURANCE

INCOME TAX AND OTHER TAXES
--------------------------

       The JV Company shall pay all taxes required under laws and regulations of
       the PRC and any other governing bodies. The JV Company's employees shall
       pay individual income tax in accordance with the Individual Income Tax
       Law of the PRC and other governing bodies.

INSURANCE
---------

         The JV Company shall at all times maintain insurance coverage of the
         types and in the amounts determined by the CEO and approved by the
         Board of Directors. The JV Company shall obtain insurance from
         insurance companies in the PRC, subject to any applicable PRC laws and
         regulations.

                                       23
<PAGE>

                          ACTICLE 13. NON COMPETITION

         The Team, without Group's prior written consent, not to, with or on
         behalf of any person, directly or indirectly, be interested in, or
         carry on, any business or activity, in selling Broadcom Corporation's
         products, and/or products sold by the JV through other entity or
         entities for the period in which such Party holds an Equity Interest in
         the JV Company and until the expiry of six (6) months thereafter.

                                       24
<PAGE>

                          ACTICLE 14. CONFIDENTIALITY

CONFIDENTIALITY
---------------

         1)       Each Party acknowledges that it may have disclosed or may
                  disclose to the other Parties confidential and proprietary
                  information concerning its business, financial condition,
                  proprietary technology, research and development and other
                  confidential matters in connection with entry into this
                  Agreement. Each of the Parties further acknowledges that it
                  may obtain such confidential and proprietary information
                  concerning the JV Company and the JV Company may also obtain
                  such confidential and proprietary information about each of
                  the Parties. Except to the extent otherwise agreed, each Party
                  which receives any such information as aforesaid (hereinafter
                  referred to as "CONFIDENTIAL INFORMATION") undertakes, and
                  shall cause the JV Company, to at all times during the
                  continuation of this Agreement:

                  a)       to maintain the confidentiality of such Confidential
                           Information and not, without the prior written
                           approval of the Party whose Confidential Information
                           is concerned, to disclose or permit it to be made
                           available to any person or entity; and

                  b)       only to use the Confidential Information for purposes
                           specified in this Agreement and for the carrying on
                           by the JV Company of its ordinary business and for
                           this purpose, subject to paragraph 4) below, a Party
                           may only disclose the Confidential Information to
                           such of its officers, employees and its Affiliates,
                           or professional advisers acting for any of the above
                           persons, on a "need-to-know" basis.

         2)       The provisions of paragraph (1) above shall not apply to
                  Confidential Information that:

                  a)       is or becomes public knowledge otherwise than through
                           the receiving Party's breach of this Agreement;

                  b)       was obtained by the receiving Party from a Third
                           Party having no obligation of confidentiality with
                           respect to such Confidential Information; or

                  c)       is required to be disclosed by order of any competent
                           court or governmental authority or other regulatory
                           authorities having jurisdiction over the JV Company
                           or the relevant Party provided that such disclosure
                           is limited to the extent required.

         3)       Each Party undertakes to advise its directors, senior staff,
                  and other employees receiving such Confidential Information of
                  the existence of and the importance of complying with the
                  obligations set forth in paragraph (1) above.

                                       25
<PAGE>

         4)       Each Party undertakes to, and to cause the JV Company to
                  formulate rules and regulations to cause its Directors, senior
                  staff, other employees and professional advisors, and those of
                  its Affiliates, as such persons are in receipt of Confidential
                  Information, to comply with the confidentiality obligations
                  set forth in this Article. All Directors and such senior staff
                  and other employees of the JV Company as directed by the Board
                  of Directors, shall be required to sign a confidentiality
                  undertaking in a form reasonably acceptable to each of the
                  Parties.

                                       26
<PAGE>

                       ACTICLE 15. TERM OF THE JV COMPANY

TERM OF THE JV COMPANY
----------------------

         The JV Company shall have a term of fifty (50) years from the date of
         the issue of the Business License, unless this Agreement is terminated.

EXTENSION OF THE TERM
---------------------

         If each of the Parties agrees to extend the term of the JV Company, the
         JV Company shall file an application with the Approval Authorities at
         least six (6) months before the end of the term.

                                       27
<PAGE>

     ACTICLE 16. MERGER, DIVISION, BANKRUPTCY, TERMINATION AND LIQUIDATION

MERGER OR DIVISION
------------------

         The merger or division of the JV Company shall be subject to the
         majority approval of the Board of Directors pursuant to Article 7 and
         the approval of the Approval Authorities.

         If the JV Company is declared bankrupt or insolvent by a people's court
         in accordance with the laws of PRC, the liquidation of the JV Company
         shall be conducted in accordance with applicable laws of PRC and with
         Article 15 TERMINATION below.

TERMINATION
-----------

         1)       This Contract shall terminate under any of the following
                  circumstances:

                  a)       the term of the JV Company expires;

                  b)       the JV Company suffers losses and the Board of
                           Directors unanimously resolves that the JV Company be
                           liquidated on the basis that in its opinion the JV
                           Company is likely to continue to suffer financial
                           losses from which it is unlikely to recover;

                  c)       subject to Article 16, if the JV Company is resolved
                           to be dissolved in accordance with Article 17 in
                           connection with any Force Majeure;

                  d)       if the JV Company is declared bankrupt or insolvent
                           by a court in the relevant jurisdiction in accordance
                           with the applicable laws;

                  e)       subject to Article 16 TERMINATION 3), if any of the
                           Parties is declared bankrupt or insolvent by a court
                           in the relevant jurisdiction in accordance with the
                           applicable laws;

                  f)       if this Agreement is determined to be unenforceable
                           by the arbitration tribunal upon application of
                           Article 18 hereof; or

                  g)       all Parties agree in writing.

         2)       If any of the circumstances set out in Article 16 TERMINATION
                  (1) has occurred, each of the Parties shall consent, and cause
                  the JV Company, to (THE FILING IS MADE BY THE JV COMPANY UNDER
                  PRC LAWS) file an application with the Approval Authorities
                  for termination of this Contract and the JV Company. Each
                  Party agrees to take all actions and to sign all documents,
                  and to procure its nominee Director on the Board of Directors
                  to take all actions and to sign all documents, which are
                  legally required to effect the termination of this Agreement
                  and the JV Company.

                                       28
<PAGE>

         3)       If any of the circumstances set out in Article 16 TERMINATION
                  (1)(c) or (f) has occurred on the part of any of the Parties
                  (the "Affected Party"), each of the other Parties shall have
                  the right to, within 60 days of such occurrence, to the extent
                  permitted by the PRC laws and regulations, purchase the Equity
                  Interests of the Affected Party in proportion to its actual
                  capital contribution to the JV Company as compared against the
                  aggregate actual capital contribution of all the Parties
                  (apart from the Affected Party), on the same principles as
                  contained in Articles 4 mutatis mutandis (except otherwise is
                  provided in this sub-paragraph) at a price equal to the value
                  of the i) actual capital contribution made by the Affected
                  Party to the JV Company, or ii) the affected or declared
                  Party's pro rata share of the net book value of net assets of
                  the JV Company by reference to the proportion its actual
                  capital contribution bears to all the actual capital
                  contribution to the JV Company, whichever is lower; provided,
                  however, that the JV Company shall carry on its business in
                  full force after the foregoing purchase of Equity Interests.
                  The Affected Party hereby agrees to take all actions and
                  execute all documents necessary for such acquisition,
                  including, without limitation, (i) causing the Director(s) it
                  has appointed to the JV Company to vote for such approval, and
                  (ii) executing a written consent to such acquisition.

LIQUIDATION
-----------

         1)       If this Agreement is terminated under Article 16 TERMINATION
                  (1), the Board shall establish a Liquidation Committee
                  according to the Measures on the Liquidation of the Foreign
                  Invested Enterprise. The following procedures only cover
                  normal liquidation, procedures for special and bankruptcy
                  liquidations will be in accordance with the applicable PRC
                  laws and regulations. The number of the members of the
                  Liquidation Committee shall be determined by the Board of
                  Directors, but each Party not in default, bankruptcy or
                  insolvency shall be entitled to appoint at least one member.

         2)       The Liquidation Committee shall value and liquidate the JV
                  Company's assets in accordance with relevant laws and
                  regulations.

         3)       The Liquidation Committee shall conduct a thorough examination
                  of the JV Company's fair market value and its assets and
                  liabilities. On the basis of such examination, the Liquidation
                  Committee shall develop a liquidation plan for the liquidation
                  of the JV Company.

         4)       All actions, including, without limitation, the disposition of
                  any assets with a value in excess of RMB 1,000,000.00 of the
                  JV Company, of the Liquidation Committee shall require the
                  unanimous consent in writing from all the members of the
                  Liquidation Committee. No member of the Liquidation Committee
                  shall have the power to take any action binding the JV Company
                  without the express authorization in writing of all members of
                  the Liquidation Committee.

                                       29
<PAGE>

         5)       Upon completion of all liquidation procedures, the Liquidation
                  Committee shall submit its final report, after approval by the
                  Board of Directors, to the relevant government authorities for
                  record. Thereafter, the Business License of the JV Company
                  shall be cancelled and the JV Company shall be dissolved.

         6)       If during the course of the liquidation, the Liquidation
                  Committee concludes that the assets of the JV Company are not
                  sufficient to pay off its debts, the Liquidation Committee,
                  subject to the unanimous approval of the Board of Directors
                  (excluding those appointed by any Party in default, bankruptcy
                  or insolvency), shall apply to the local court to declare the
                  JV Company bankrupt or insolvent and commence bankruptcy or
                  insolvency proceedings.

         7)       The total assets of the JV Company shall be applied in the
                  following order upon the completion of the liquidation of all
                  the assets of the JV Company:

                  a)       all costs of the liquidation;

                  b)       wages and labor insurance premiums of the staff and
                           personnel of the JV Company;

                  c)       due taxes;

                  d)       the JV Company's other debts, including due expenses
                           of management and operation;

                  e)       distribution to the Parties pro rata to their
                           respective Equity Interests in the JV Company
                           (however, where one or more of the Parties fails to
                           make full contribution, pro rata to their respective
                           actual capital contribution).

         8)       As of the establishment of the Liquidation Committee, the JV
                  Company shall not develop any new business. ACTICLE 17.

                                       30
<PAGE>

                            ARTICLE 17. FORCE MAJEURE

"FORCE MAJEURE" shall mean any act or event that prevents an affected Party from
performing its obligations in accordance with the provisions of this Contract,
if such act or event is beyond the reasonable control of and not the result of
the fault or negligence of the affected Party and such Party has been unable to
overcome such act or event by taking any reasonable action, including, without
limitation, natural phenomena (including but not limited to storms, hurricanes,
floods, drought, lightning and earthquakes), fires, wars, civil disturbances,
riots, insurrections and sabotage and actions by a governmental authority that
are not voluntarily induced or promoted by a Party, including any change in
applicable law.

Except where the nature of the event shall prevent it from doing so, the Party
suffering any Force Majeure shall, promptly after the occurrence of such Force
Majeure, notify the other Parties in writing and provide proper evidence of the
occurrence of the event and an estimate of its duration and effect and shall in
every instance, to the extent reasonable and lawful under the circumstances, use
its reasonable efforts to mitigate any losses, damages, or costs arising
directly or indirectly from such Force Majeure.

After the occurrence of Force Majeure, all Parties shall negotiate on the issue
as to the continuous performance of this Contract.

If a Party is unable to perform its contractual obligations under this Contract
due to an event of Force Majeure, and such event continues for a period
exceeding six (6) months after written notice of the occurrence of such event is
given by the affected Party to each of the other Parties and the Parties have
been unable to find an equitable solution pursuant to this Article 17, subject
to Article 16, the Directors representing the unaffected Parties may, by a
unanimous decision, resolve to dissolve the JV Company notwithstanding Article
7.

                                       31
<PAGE>

                       ACTICLE 18. SETTLEMENT OF DISPUTES

ARBITRATION
-----------

         a)       In the event of any dispute, controversy, or claim
                  (collectively, a "DISPUTE") arising out of or relating to this
                  Contract, the Parties shall attempt in the first instance to
                  resolve such Dispute through friendly consultations. If no
                  mutually acceptable settlement of a Dispute is made within
                  sixty (60) days after the last Party becoming aware of the
                  Dispute, the Dispute shall be submitted for, and be decided
                  finally by, arbitration.

         b)       Any arbitration of a Dispute arising out of or in connection
                  with this Contract shall be conducted at the Hong Kong
                  International Arbitration Center in Hong Kong and in
                  accordance with the UNCITRAL Arbitration Rules. The
                  arbitrators may refer to this Agreement and all proceedings in
                  such arbitration shall be conducted in English. The
                  arbitration shall be handled by a panel of three arbitrators
                  all of whom shall be fluent in Chinese and English. One
                  arbitrator shall be appointed, individually or jointly, by the
                  claimant Party/Parties, another arbitrator shall be appointed,
                  individually or jointly, by the respondent Party/Parties, the
                  third arbitrator shall be a person agreed upon by the above
                  claimant and respondent. If they fail to agree within thirty
                  (30) days, the third arbitrator shall be chosen as provided in
                  the UNCITRAL Arbitration Rules and shall serve as chairman of
                  the panel. The arbitrators shall decide in their award the
                  allocation of costs, including, without limitation, the
                  arbitrator's fees, expenses for translators and translations
                  required in connection with the arbitration and all other
                  costs to which the Dispute may give rise. The arbitration
                  award shall be final and not be subject to appeal. Any
                  competent court may enforce such an award.

EFFECT OF ARBITRATION AWARD
---------------------------

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

COSTS
-----

         The costs of arbitration shall be borne by the losing Party unless
         otherwise determined by the arbitration award.

CONTINUING RIGHTS AND OBLIGATION
--------------------------------

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

                                       32
<PAGE>

                           ACTICLE 19. APPLICABLE LAW

APPLICABLE LAW
--------------

         The formation, validity, interpretation and performance of this
         Agreement, and any Disputes arising under this Agreement, shall be
         governed by the laws of the PRC.

PREFERENTIAL TREATMENT
----------------------

         The JV Company and the Parties shall be entitled in accordance with
         applicable PRC laws to enjoy any tax, investment or other preferential
         treatment that becomes available to foreign invested enterprises or
         foreign investors after the signing of this Agreement and which are
         more favorable than those set forth in this Agreement. The Parties
         agree that they shall promptly apply or procure that the JV Company
         shall apply, if required by law, to the relevant PRC authorities for
         the JV Company or any of the Parties to enjoy such preferential
         treatment.

                                       33
<PAGE>

                      ACTICLE 20. MISCELLANEOUS PROVISIONS

WAIVER
------

         Unless the laws otherwise stipulate or this Agreement otherwise
         provides, failure or delay on the part of any Party hereto to exercise
         a right under this Agreement shall not operate as a waiver thereof, nor
         shall any single or partial exercise of a right preclude any other
         future exercise thereof within the legal period or the period
         stipulated in this Agreement.

ASSIGNMENT
----------

         Except as otherwise provided herein, neither this Agreement nor any
         rights and obligations hereunder may be assigned in whole or in part by
         any Party without the prior written consent of each of the other
         Parties, where required by law, the approval of the Approval
         Authorities.

AMENDMENT
---------

         This Agreement is made for the benefit of the Parties and their
         respective lawful successors and assignees and is legally binding on
         them. This Agreement may not be amended orally, and any amendment
         hereto must be agreed to in a written instrument signed by each of the
         Parties and, where required by law, approved by the Approval
         Authorities before taking effect.

SEVERABILITY
------------

         The invalidity of any provision of this Agreement shall not affect the
         validity of any other provision of this Agreement.

SURVIVAL
--------

         Notwithstanding anything contained in this Agreement to the contrary,
         the provisions contained in Articles 6 INDEMNITY, 7 INDEMNITY OF
         DIRECTORS, 13, 14, 16, 18, 19 and this Article 20 shall survive the
         termination of this Contract.

LANGUAGE
--------

         This Contract is signed in the English language in four (4) originals.
         Each Party may keep one original, each of which shall have equal legal
         effect and the others shall be submitted to the Approval Authorities.

                                       34
<PAGE>

COUNTERPARTS
------------

         This Agreement may be executed in any number of counterparts and by the
         Parties on separate counterparts, each of which, when so executed and
         delivered, shall be an original but all the counterparts shall together
         constitute one and the same instrument.

NOTICE
------

         Any notice or written communication provided for in this Agreement from
         one Party to any other Party or to the JV Company shall be made in
         writing in English or Chinese and sent by courier service, or by
         facsimile or electronic communication with a confirmation copy sent by
         courier service. The date of receipt of a notice or communication
         hereunder shall be deemed to be seven (7) days after the date on which
         such notice or written communication is given to a-courier service or
         the day following that on which a facsimile or electronic communication
         was sent, provided the facsimile or electronic communication is
         evidenced by a confirmation receipt and the confirmation copy is sent.
         All notices and communications shall be sent to the appropriate address
         set forth below, until the same is changed by notice given in writing
         to each other Party.

         Comtech Group Inc
            Addressee: Yi Kang
                Mailing Address: Rm 1001, Tower C, Skyworth Building, high-tech
                                 Industrial Park Shenzhen 518057, P R China
                  Telephone: 86-755-26743210
                  Facsimile: 86-755-26743508

         Broadwell Group Limited.
                Addressee: Steve Deng
             Mailing Address: c/o Overseas Management Company Trust (B.V.I)
                              Limited, P.O.Box 3152, Road Town, Tortola,
                              British Virgin Islands
                  Telephone:
                  Facsimile:

                                       35
<PAGE>

                             ACTICLE 21. MILESTONES

         In order to monitor the performance conducted by management team of the
         JV, the Parties have agreed to set following Milestones. Milestone 1 is
         set for the early stage of the JV in serving the purpose of profit
         distribution. Milestone 2 is set for the mature stage of the JV Company
         to serve purpose of equity transformation.

MILESTONE 1
-----------

         The JV Company has listed the following targets for performance
         evaluation, which will ultimately decide bonus and dividends of The
         Team at the end of each fiscal year. According to audited financial
         report at the end of each fiscal year pursuant to Article 10, if the JV
         Company can generate REVENUE equal or higher, NET INCOME equal or
         higher, and CASH INFLOW FROM OPERATION equal or higher than the
         criteria listed in the following table, the requirements of Milestone 1
         is satisfied.

                         Revenue         Net Income    Cash Inflow from
                                                       Operation
        -------------- ---------------- -------------- --------------------
        First fiscal   USD 11 million   US$ 500,000    70% of revenue of
        Year                                            this year
        -------------- ---------------- -------------- --------------------
        Second fiscal  USD 18 million   US$ 830,000    70% of revenue of
        Year                                           this year
        -------------- ---------------- -------------- --------------------
        Third fiscal   USD 29 million   US$ 1,380,000  70% of revenue of
        Year                                           this year
        -------------- ---------------- -------------- --------------------

                                       36

<PAGE>

IN WITNESS WHEREOF, the duly authorized representative of each Party has signed
this Contract in Hong Kong.

Comtech Group Inc.

/s/ Jeffrey Kang
-----------------------------------------------
         Sign             Date
Name: Jeffrey Kang
Position: CEO

BROADWELL GROUP LIMITED

/s/                           1/17/2005
-----------------------------------------------
         Sign             Date
Name:
Position:

                                       37Exhibit 10.26

FORBEARANCE AGREEMENT

THIS FORBEARANCE AGREEMENT is dated as of January 15, 2005 by and between CAPITAL TEMPFUNDS, INC., a North Carolina corporation, with its principal place of business at One Brixham Green, 15800 John J. Delaney Drive, Suite 300, Charlotte, North Carolina 28277, (hereinafter referred to as “Capital”), and STRATUS SERVICES GROUP, INC., a Delaware corporation with its principal place of business at 500 Craig Road, Manalapan, New Jersey 07726 (hereinafter referred to as “Borrower”).

W I T N E S S E T H:

WHEREAS, the Borrower and the Capital have entered into loan transactions (collectively hereinafter collectively referred to as the “LOAN”) which are evidenced, inter alia, by a Loan and Security Agreement dated as of December 8, 2000, as amended from time to time (the “Loan Agreement”) (the Loan Agreement and any and all documents executed or delivered in connection therewith being collectively hereinafter referred to as the “Loan Documents”); and

WHEREAS, the outstanding principal balance of the Loan as of December 17, 2004 is $10,956,924.02; and

WHEREAS, the Borrower is in default under the terms of the Loan Documents, as a result of, inter alia, the following:

	
A.
	
the Borrower’s common stock being delisted from NASDAQ for the period beginning October 1, 2004;

	 	 
	
B.
	
the Borrower’s failure to meet the financial covenant for the period beginning October 1, 2004;

	 	 
	
C.
	
the Borrower having delinquent state, local or federal taxes

(the foregoing being collectively referred to as the “Existing Defaults”); and

WHEREAS, the Borrower has not cured the Existing Defaults or repaid the Loan, and by virtue thereof the Borrower continues to be in default under the terms of the Loan Documents; and

WHEREAS, the Borrower has requested that the Capital forbear from accelerating obligations and/or enforcing the Existing Defaults at the present time; and

WHEREAS, Capital is willing to forbear as aforesaid upon terms and conditions more specifically described herein;

	  
	 	1	 
	

	 

NOW THEREFORE, the parties hereto hereby agree as follows:

1.    Borrower’s Representations. The Borrower hereby represents with respect to the Loan that:

	
a.
	
The Loan is in default due to the Existing Defaults under the terms of the Loan Documents and the Loan is presently due and payable in full.

	 	 
	
b.
	
The Borrower is liable, without offset, counterclaim and/or defense of any kind whatsoever, for the payment of the Loan and any other amounts due under the Loan Documents.

	 	 
	
c.
	
The Loan Documents are legal, valid, binding and enforceable against the Borrower and it has no counterclaim, claim of offset or defense with respect thereto.

	 	 
	
d.
	
Interest and Capital Expenses continue to accrue on the Loan.

2.    Loan Amendment. The parties agree that the Loan Agreement is modified as follows:

	
a.
	
Item 6 to Exhibit A is deleted in its entirety, and the following is substituted in its place:

“6. “Maximum Credit Line” as referred to in Section 1.25 means TWELVE MILLION DOLLARS ($12,000,000.00), which shall be reduced by $250,000.00 per month commencing March 1, 2005; provided, however, that in the event that the amount of the Obligations owing to Capital (the “Capital Obligations”) are reduced below $7,500,000.00, then such monthly reduction to the Maximum Credit Line shall be suspended until such time as the Capital Obligations exceed $7,500,000.00 (the “Reduction Suspension”), in which event the initial monthly reduction to the Maximum Credit Line shall be an amount equal to $250,000.00 multiplied by the number of months since the Reduction Suspension. As an example, in the event that on April 1, 2005 there is a Reduction Suspension, and on May 31, 2005 the Capital Obligations exceed $7,500,000.00, then the Maximum Credit Line shall be reduced by $750,000.00 on June 1, 2005.”

3.    Borrower Obligations. The Borrower agrees to take the following actions and make the following deliveries to Capital:

	
a.
	
The Borrower shall continue to provide all financial reporting to Capital and otherwise be in compliance with all of the terms of the Loan Documents.

	  
	 	2	 
	

	 

4.    Forbearance Period. So long as the Borrower is in compliance with all of the terms and conditions of this Agreement, Capital agrees that it will refrain from exercising its rights and remedies under the Loan Documents and applicable law until June 12, 2005, said period being sometimes hereinafter referred to as the “Forbearance Period”). During the Forbearance Period, Borrower will be in compliance with all of the terms and conditions of the Loan Documents. In addition, during the Forbearance Period and thereafter, Borrower agrees to provide all financial statements required to be delivered to Capital on a timely basis, as required by the Loan Documents.

5.    Default. Each of the following shall constitute an “Event of Default” under this Agreement:

	
a.
	
Failure of the Borrower to comply in any material respect with any of the terms and conditions of this Agreement, including any of the terms and conditions of any of the documents attached hereto as exhibits; and

	 	 
	
b.
	
The occurrence of a default under any of the Loan Documents other than the Existing Defaults.

	 	 
	
c.
	
Failure to make when due any payment of principal or interest or any sum due under the Loan Documents or hereunder when the same shall be due and payable.

	 	 
	
d.
	
Failure of the Borrower to be in compliance with the financial covenants contained in the Loan Documents.

	 	 
	
e.
	
Any representation or warranty made to Capital by the Borrower proves to have been untrue in any material respect as of the date hereof, or any statement, certificate or data furnished by the Borrower proves to have been untrue in any material respect as of the date as of which the facts therein set forth were stated or certified.

	 	 
	
f.
	
Default by the Borrower in the payment or performance of any obligation on its part to be paid or performed, or breach by the Borrower of any representation, warranty, term, covenant, or condition of or under the Loan Documents, or in any documents or instruments referred to therein.

	 	 
	
g.
	
Any material loss, theft, substantial damage, destruction, sale, exchange, or other disposition, or any encumbrance of any of the collateral securing the Loan Documents, or the making of any levy, seizure, or attachment thereof or thereon, or the placing of any lien or liens thereon or generally on the property of Borrower by the United States of America or any federal, state or local governmental agency or authority.

	
h.
	
Death or incompetency of, dissolution of, termination of existence or insolvency of, business failure of, appointment of a receiver of any part of the property of, assignment for the benefit of creditors by, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against, the borrower or any guarantor, endorser, or surety of the Borrower.

	 	 
	
i.
	
Default in the payment of any sum due under any indebtedness for borrowed money owed by the Borrower to any person, firm or corporation, or any other default under such indebtedness which results in such indebtedness being due prior to its stated maturity.

	 	 

Upon the earlier of (a) the occurrence of any of the foregoing Events of Default, or (b) the expiration of the Forbearance Period, the Borrower will:

	 	(1)	Immediately, upon demand of Capital, surrender possession of the assets covered by the Loan Agreement upon terms and conditions satisfactory to Capital; and

	 	(2)	Further, Capital may immediately pursue any or all of the remedies provided hereunder or under the Loan Documents, including, without limitation, instituting the default interest rate and bringing actions against the Borrower and any party guaranteeing the obligations of Borrower to Capital, and the provisions of paragraph “4” hereof shall be void and of no further effect.

6.    Reaffirmation of Guaranty. By signing below, Joseph J. Raymond (“Guarantor”) reaffirm the terms of his Fidelity Guaranty dated as of December 8, 2000 (the “Guaranty”), consents to the terms of this Forbearance Agreement and confirms that the Guaranty remains in full force and effect, and binding on the Guarantor, without any defenses, setoffs or counterclaims of any kind whatsoever.

7.    Voluntary Agreement. The Borrower and Guarantor represent and acknowledge that in connection with the negotiation of this Agreement and the other documents contemplated hereby, the Borrower and Guarantor have been represented by their own counsel, who has reviewed this Agreement and the other documents contemplated hereby, and advised the Borrower and Guarantor as to the legal significance and consequences of entering into the transaction contemplated hereby.

8.    Legal Fees. The Borrower acknowledges that it (a) is liable for the payment of attorneys’ fees incurred by Capital through and including the date of this Agreement, (b) shall hereafter be liable for such attorneys’ fees and other costs incurred by Capital in connection with the Loan, and (c) agrees that, to the extent they remain unpaid, said sums shall be added to the amount of the Loan pursuant to the Loan Documents.

	  
	 	3	 
	

	 

9.    Liability Waiver. By executing this Agreement, the Borrower and Guarantor waive, release and discharge any and all claims or causes of action of any kind whatsoever, whether at law or in equity, arising on or prior to the date hereof, which the borrower and/or Guarantor may have against Capital in connection with the Loan. The Borrower and Guarantor also agree that all waivers, releases and agreements made herein are made in consideration of, and in order to induce Capital to forbear the exercise of its rights and remedies under the Loan Documents and to induce Capital to enter into this Agreement. The waivers and releases made herein include the borrower’s and Guarantor’s waiver of any damages which may have been or may in the future be caused to the Borrower and/or Guarantor, their properties or business prospects because of the actions waived and released and the agreements made herein, including without limitation, any actual or implicit, direct or indirect, incidental or consequential damages suffered by the borrower and/or Guarantor therefrom, including but not limited to (1) lost profits, (2) loss of business opportunity, (3) increased financing costs, (4) increased legal and other administrative fees and (5) damages to business reputation.

10.    Miscellaneous. The Borrower, Guarantor and Capital further agree as follows:

a.    Notices. Unless otherwise specifically provided herein, all notices and service of any process shall be in writing addressed to the respective party as set forth below and may be personally served, telecopied or sent by overnight courier service or United States mail and shall be deemed to have been given: (a) if delivered in person, when delivered; (b) if delivered by telecopy, on the date of transmission if confirmed and if transmitted on a Business Day before 4:00 p.m. (eastern standard time) or, if not, on the next succeeding Business Day; (c) if delivered by overnight courier, two days after delivery to such courier properly addressed; or (d) if by U.S. Mail, four Business Days after depositing in the United States mail, with postage prepaid and properly addressed.

If to “Borrower”:    STRATUS SERVICES GROUP, INC.

500 Craig Road, #201

Manalapan, NJ 07726

Attn: Michael A. Maltzman

Telecopier Number (732) 866-0063

If to “Guarantor”:    Joseph J. Raymond

500 Craig Road, #201

Manalapan, NJ 07726

Telecopier Number (732) 866-0063

If to “Capital”:    CAPITAL TEMPFUNDS, INC.,

A North Carolina Corporation

	  
	 	4	 
	

	 

15800 John J. Delaney Drive

Suite 300

Charlotte, NC 28277

Attn: James Rothman

Executive Vice President

Telecopier Number (954) 714-3144

The parties hereto may change the address at which they are to receive notices and the telecopier number at which they are to receive telecopies hereunder, by notice in writing in the foregoing manner given to the other.

b.    Entire Agreement. This Agreement (including the exhibits annexed hereto and made a part hereof and the other documents executed and delivered in connection herewith) constitutes the entire and final agreement among the parties hereto and there are no agreements, understandings, warranties or representations among the parties except as set forth herein.

c.    Binding Effect. This Agreement shall be binging upon and inure to the benefit of the parties hereto and their respective successors and assigns. This Agreement shall not be assignable or otherwise transferable by the Borrower.

d.    Severability. If any clause or provision of this Agreement is determined to be illegal, invalid or unenforceable under any present or future law by the final judgment of a court of competent jurisdiction, the remainder of this Agreement will not be affected thereby. It is the intention of the parties hereto that if any such provision is held to be illegal, invalid or unenforceable, there will be added in lieu thereof a provision as similar in terms to such provision as is possible and be legal, valid and enforceable.

e.    Headings. Paragraph or other headings contained in this Agreement are for reference purposes only and are not intended to affect in any way the meaning or interpretation of this Agreement.

f.    Counterpart Execution. This Agreement may be executed in counterparts, each of which will be deemed an original document, but all of which will constitute a single document. This Agreement will not be binding on or constitute evidence of a contract between the parties hereto until such time as a counterpart of this document has been executed by each party and a copy thereof delivered to each other party to this Agreement.

g.    Governing Law. This Agreement will be interpreted and construed under the laws of the State of North Carolina. This Agreement shall be interpreted without regard to any presumption or other rule requiring construction against the party which drafted this Agreement.

	  
	 	5	 
	

	 

h.    Amendment. Neither this Agreement nor any of the provisions hereof may be changed, waived, discharged or terminated, except by an instrument in writing signed by the party against whom enforcement of the change, waiver, discharge or termination is sought.

i.    Governing Law, Venue, Waiver of Trial by Jury and Service of Process. CAPITAL, THE BORROWER AND THE GUARANTOR ACKNOWLEDGE THAT THE TRANSACTIONS AND MATTERS SET FORTH IN THIS AGREEMENT AND THE LOAN DOCUMENTS ARE COMPLEX IN NATURE AND THAT ANY LITIGATION ARISING THEREFROM WOULD BE MOST APPROPRIATELY, ECONOMICALLY AND SPEEDILY RESOLVED BY A NON-JURY TRIAL. THE BORROWER, CAPITAL AND THE GUARANTOR THERFOR HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT THAT THEY MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION, DIRECTLY OR INDIRECTLY, BASED ON OR ARISING OUT OF, INDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE LOAN DOCUMENTS OR THE LOAN AND FACILITIES CONTEMPLATED THEREBY, OR IN ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENT (WHETHER WRITTEN OR ORAL) OR ACTIONS OR OMISSIONS OF ANY PARTY TO THIS AGREEMENT. THIS PROVISION IS A MATERIAL INDUCEMENT FOR CAPITAL’S ENTERING INTO THIS AGREEMENT.

j.    Automatic Relief from Stay. IN CONSIDERATION OF CAPITAL’S ENTERING INTO THIS AGREEMENT AND AGREEING TO FORBEAR FROM TAKING ACTION AGAINST THE BORROWER AT THIS TIME, THE BORROWER AGREES THAT IF ANY PROCEEDING IS COMMENCED UNDER TITLE 11 OF THE UNITED STATES CODE RELATIVE TO IT, CAPITAL SHALL BE AUTOMATICALLY ENTITLED TO IMMEDIATE RELIEF FROM STAY UNDER 11 U.S.C. SECTION 362 WITHOUT ESTABLISHING EQUITY OR NEED OR LACK OF NEED FOR THE PROPERTY SECURING THE LOAN OR CAUSE OR LACK OF CAUSE, AND THE BORROWER HEREBY CONSENTS TO SUCH RELIEF, IT BEING EXPRESSLY ACKNOWLEDGED THAT THIS PROVISION WAS SPECIFICALLY NEGOTIATED AND CONSTITUTES A MATERIAL INDUCEMENT TO CAPITAL ENTERING INTO THIS AGREEMENT AND AGREEING TO FOREBEAR FROM TAKING ACTION AGAINST THE BORROWER AT THIS TIME.

k.    No Waiver. Except as expressly set forth herein, nothing contained herein shall constitute a waiver by Capital of any of its rights or remedies under any of the documents evidencing the Loans, including without limitation, the Loan Documents. Without limiting the generality of the foregoing, except as set forth herein, Capital has not waived (a) Capital’s right to repayment in full of the Loans, (b) any Existing Defaults, or (c) Capital’s right to exercise any, some or all of its rights and remedies under the Loan Documents and/or applicable law, all of which Capital hereby reserves. Capital’s agreement to forbear is only an agreement for temporary forbearance, during the Forbearance Period, from exercising its rights under the Loan Documents and applicable law, and only so long as there is no occurrence of any event or change in the financial or operating condition of the Borrower which may, in Capital’s sole and absolute discretion, materially impair its ability to collect the obligations or realize upon its collateral.

l.    Reaffirmation. The borrower hereby ratifies and reaffirms its obligations under the Loan Documents and all other documents executed in connection with the Loan and agrees to be bound, without defense, setoff or counterclaim of any kind whatsoever, by all of terms and conditions contained therein, which terms and conditions remain in full force and effect except as expressly modified hereby.

IN WITNESS WHEREOF, the parties have caused these presents to be signed as of the day and year first above written.

Witnesses:

	 	
“BORROWER”

	 	
STRATUS SERVICES GROUP, INC., a

	 	
Delaware corporation

	
/s/ L Connallon
	
By: /s/ Michael A. Maltzman

	
L Connallon
	
Print Name: Michael A. Maltzman

	 	
Title: Executive VP/CFO

	 	 

	 	
“CAPITAL”

	 	
CAPITAL TEMPFUNDS, INC., a North

	 	
Carolina corporation

	
/s/ Lorie Berle
	
By: /s/ James Rothman

	
Lorie Berle
	 
	 	 

	 	
“GUARANTOR”

	
/s/ L Connallon
	
 /s/ Joseph J. Raymond

	
L Connallon
	
Joseph J. Raymond

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