Document:

NOTE HAS
      NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS NOTE
      MAY
      NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
      EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE UNDER SAID ACT OR AN OPINION
      OF
      COUNSEL REASONABLY SATISFACTORY TO TERMINUS, INC. AND THE BLACKHAWK FUND THAT
      SUCH REGISTRATION IS NOT REQUIRED.

     

    
      	Principal Amount: $550,000	
              Issue
                Date: April 24, 2008

            

    

     

    SECURED
      PROMISSORY NOTE

    

    FOR
      VALUE
      RECEIVED, TERMINUS, INC., a Nevada corporation, and THE BLACKHAWK FUND, a Nevada
      corporation (hereinafter individually and collectively called "Borrower"),
      hereby, jointly and severally, promise to pay to the order of Professional
      Offshore Opportunity Fund, LLC, 1400 Old Country Road, Suite 206, Westbury,
      New
      York 11590, Fax: (516) 228-8083, (the "Holder")
      or its
      registered assigns or successors in interest or order, without demand, the
      sum
      of Five Hundred Fifty Thousand Dollars ($550,000) ("Principal
      Amount"),
      on
      April 24, 2009 (the "Maturity
      Date"),
      if
      not sooner paid.

     

    This
      Note
      has been entered into pursuant to the terms of a subscription agreement among
      the Borrower, the Holder and certain other holders (the "Other
      Holders")
      of
      promissory notes (the "Other
      Notes"),
      dated
      of even date herewith (the "Subscription
      Agreement"),
      and
      shall be governed by the terms of such Subscription Agreement. Unless otherwise
      separately defined herein, all capitalized terms used in this Note shall have
      the same meaning as is set forth in the Subscription Agreement.
      The
      following terms shall apply to this Note:

     

    ARTICLE
      I

    INTEREST;
      REPAYMENT; SENIORITY

     

    1.1 Interest
      Rate.
      Subject
      to Section 3.7 hereof, interest payable on this Note shall accrue at a rate
      per
      annum (the "Interest
      Rate")
      equal
      to twelve percent (12%). All interest due on this Note shall be paid at the
      Maturity Date.

     

    1.2 Principal
      Payments.
      The
      Principal Amount is due and payable on the Maturity Date.

     

    1.3 Security.
      Payment
      of this Note is secured by the terms of the Pledge Agreement. 

     

    1.4 Liability
      of Borrower.
      Borrower is unconditionally, and without regard to the liability of any other
      person, liable for the payment and performance of this Note and such liability
      shall not be affected by an extension of time, renewal, waiver, or modification
      of this Note or the release, substitution, or addition of collateral for this
      Note. Each person signing this Note consents to any and all extensions of time,
      renewals, waivers, or modifications, as well as to release, substitution, or
      addition of guarantors or collateral security, without affecting Borrower’s
      liabilities hereunder. Holder is entitled to the benefits of any collateral
      agreement, guarantee, security agreement, assignment, or any other documents
      which may be related to or are applicable to the debt evidenced by this Note,
      as
      they now exist, may exist in the future, have existed, and as they may be
      amended, modified, renewed, or substituted.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    ARTICLE
      II

    EVENTS
      OF DEFAULT

     

    The
      occurrence of any of the following events of default ("Event
      of Default")
      shall,
      at the option of the Holder hereof, make all sums of principal and interest
      then
      remaining unpaid hereon and all other amounts payable hereunder immediately
      due
      and payable, upon demand, without presentment, or grace period, all of which
      hereby are expressly waived, except as set forth below and shall further entitle
      Holder to exercise any and all remedies available to it under the Pledge
      Agreement and under applicable law:

     

    2.1 Failure
      to Pay Principal.
      The
      Borrower fails to pay the Principal Amount or other sum due under this Note
      or
      any Transaction Document when due and such failure continues for a period of
      5
      days after the due date.

     

    2.2 Breach
      of Covenant.
      The
      Borrower breaches any material covenant or other term or condition of this
      Note
      or any Transaction Document in any respect and such breach, if subject to cure,
      continues for a period of 10 days after written notice to the Borrower from
      the
      Holder.

     

    2.3 Breach
      of Representations and Warranties.
      Any
      material representation or warranty of the Borrower made herein, in the
      Subscription Agreement, Transaction Document or in any agreement, statement
      or
      certificate given in writing pursuant hereto or in connection herewith or
      therewith shall be false or misleading in any respect as of the date made and
      the Closing Date.

     

    2.4 Receiver
      or Trustee.
      The
      Borrower shall make an assignment for the benefit of creditors, or apply for
      or
      consent to the appointment of a receiver or trustee for them or for a
      substantial part of their property or business; or such a receiver or trustee
      shall otherwise be appointed.

     

    2.5 Bankruptcy.
      Bankruptcy, insolvency, reorganization or liquidation proceedings or other
      proceedings or relief under any bankruptcy law or any law, or the issuance
      of
      any notice in relation to such event, for the relief of debtors shall be
      instituted by or against the Borrower and if instituted against them are not
      dismissed within 45 days of initiation.

     

    ARTICLE
      III

    COVENANTS

     

    So
      long
      as any principal or interest is due hereunder and shall remain unpaid, Borrower
      will, unless the Holder shall otherwise consent in writing:

     

    (a) Maintain
      and preserve its existence, rights and privileges; 

     

    (b) Not
      incur
      any indebtedness, other than indebtedness incurred in the ordinary course of
      business or outstanding on the date hereof, unless such indebtedness is
      subordinated to the prior payment in full of this Note on terms reasonably
      satisfactory to the Holder; 

     

    (c) Not
      (i)
      directly or indirectly sell, lease or otherwise dispose of (A) any of its
      property or assets other than in its ordinary course of business or (B)
      substantially all of its properties and assets, in the aggregate, to any
      person(s), whether in one transaction or in a series of transactions over any
      period of time, or (ii) adopt any plan or arrangement for the dissolution or
      liquidation of Borrower; 

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    (d) Give
      written notice to Holder upon the occurrence of an Event of Default or any
      event
      but for the giving of notice or lapse of time, or both, would constitute an
      Event of Default within five (5) days of such event; 

     

    (e) Not
      use
      the proceeds from the issuance of this Note in any way for any purpose that
      entails a violation of, or is inconsistent with, Regulation U of the Board
      of
      Governors of the Federal Reserve System of the United States of America.

     

    (f) Comply
      in
      all material respects with all applicable laws (whether federal, state or local
      and whether statutory, administrative or judicial or other) and with every
      applicable lawful governmental order (whether administrative or judicial).
      

     

    (g) (i)
      Not
      redeem or repurchase any of its capital stock, including, without limitation,
      the Blackhawk Series C Shares, and (ii) not issue any capital stock of any
      class
      or series if such issuance would reduce below 50.1% of all votes eligible to
      be
      cast in any matter subject to the vote of the stockholders of Blackhawk, the
      votes entitled to be cast by the holder of the Blackhawk Series C Shares (after
      giving effect to any rights of conversion or exercise); 

     

    (h) Not
      prepay any indebtedness, except for trade payables incurred in the ordinary
      course of Borrower's business; and 

     

    (i) Not
      take
      any action which would impair the rights and privileges of this Note set forth
      herein or the rights and privileges of the holder of this Note; and

     

    (j) Deliver
      to the Holder quarterly financial statements within thirty (30) days after
      the
      end of each quarter in form, scope and substance satisfactory to the Holder
      and
      annual audited (as to The Blackhawk Fund only) financial statements within
      ninety (90) days after the end of each fiscal year; 

     

    (k) Not
      elect
      or permit the election of any director to the Board of Directors of Blackhawk
      unless simultaneously with such election such director executes and delivers
      to
      the Holder an undated Certificate of Resignation that the Holder may date and
      deem effective upon an Event of Default; 

     

    (l) Not
      change the transfer agent of Blackhawk’s preferred stock from Indeglia &
Carney or of Blackhawk’s common stock from Computershare. 

     

    ARTICLE
      IV

    MISCELLANEOUS

     

    4.1 Failure
      or Indulgence Not Waiver.
      No
      failure or delay on the part of Holder hereof in the exercise of any power,
      right or privilege hereunder shall operate as a waiver thereof, nor shall any
      single or partial exercise of any such power, right or privilege preclude other
      or further exercise thereof or of any other right, power or privilege. All
      rights and remedies existing hereunder are cumulative to, and not exclusive
      of,
      any rights or remedies otherwise available.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    4.2 Notices.
      All
      notices, demands, requests, consents, approvals, and other communications
      required or permitted hereunder shall be in writing and, unless otherwise
      specified herein, shall be (i) personally served, (ii) deposited in the mail,
      registered or certified, return receipt requested, postage prepaid, (iii)
      delivered by reputable air courier service with charges prepaid, or (iv)
      transmitted by hand delivery, telegram, or facsimile, addressed as set forth
      below or to such other address as such party shall have specified most recently
      by written notice. Any notice or other communication required or permitted
      to be
      given hereunder shall be deemed effective (a) upon hand delivery or delivery
      by
      facsimile, with accurate confirmation generated by the transmitting facsimile
      machine, at the address or number designated below (if delivered on a business
      day during normal business hours where such notice is to be received), or the
      first business day following such delivery (if delivered other than on a
      business day during normal business hours where such notice is to be received)
      or (b) on the second business day following the date of mailing by express
      courier service, fully prepaid, addressed to such address, or upon actual
      receipt of such mailing, whichever shall first occur. The addresses for such
      communications shall be: (i) if to Borrower to: (A) Terminus, Inc., 152 East
      John Street, Carson City, Nevada, 89706, Attention: Frank Marshik, with a copy
      by telecopier only to: Indeglia & Carney, P.C., 1900 Main Street, Suite 125,
      Irvine, CA 92614, Attention: Marc A. Indeglia, Esq., telecopier number: (949)
      851-5940, (B) The Blackhawk Fund, 1802 N. Carson Street, Suite 212, Carson
      City,
      NV 89701, Attention: Frank Marshik, (ii) if to Holder, to the name, address
      and
      telecopy number set forth on the front page of this Note.

     

    4.3 Amendment
      Provision.
      The
      term "Note"
      and all
      reference thereto, as used throughout this instrument, shall mean this
      instrument as originally executed, or if later amended or supplemented, then
      as
      so amended or supplemented.

     

    4.4 Assignability.
      This
      Note shall be binding upon the Borrower and its successors and assigns, and
      shall inure to the benefit of the Holder and its successors and
      assigns.

     

    4.5 Cost
      of Collection.
      If
      default is made in the payment of this Note, Borrower shall pay the Holder
      hereof reasonable costs of collection, including reasonable attorneys'
      fees.

     

    4.6 Governing
      Law.
      This
      Note shall be governed by and construed in accordance with the laws of the
      State
      of New York, without regard to conflicts of laws principles that would result
      in
      the application of the substantive laws of another jurisdiction. Any action
      brought by either party against the other concerning the transactions
      contemplated by this Agreement shall be brought only in the Supreme Court of
      New
      York, New York County, or in the United States District Court for the Southern
      District of New York. Both parties and the individual signing this Note on
      behalf of the Borrower agree to submit to the jurisdiction of such courts.
      The
      prevailing party shall be entitled to recover from the other party its
      reasonable attorney's fees and costs. In the event that any provision of this
      Note is invalid or unenforceable under any applicable statute or rule of law,
      then such provision shall be deemed inoperative to the extent that it may
      conflict therewith and shall be deemed modified to conform with such statute
      or
      rule of law. Any such provision which may prove invalid or unenforceable under
      any law shall not affect the validity or unenforceability of any other provision
      of this Note. Nothing contained herein shall be deemed or operate to preclude
      the Holder from bringing suit or taking other legal action against the Borrower
      in any other jurisdiction to collect on the Borrower's obligations to Holder,
      to
      realize on any collateral or any other security for such obligations, or to
      enforce a judgment or other court in favor of the Holder.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    4.7 Maximum
      Payments.
      Nothing
      contained herein shall be deemed to establish or require the payment of a rate
      of interest or other charges in excess of the maximum permitted by applicable
      law. In the event that the rate of interest required to be paid or other charges
      hereunder exceed the maximum permitted by such law, any payments in excess
      of
      such maximum shall be credited against amounts owed by the Borrower to the
      Holder and thus refunded to the Borrower.

     

    4.8 Construction.
      Each
      party acknowledges that its legal counsel participated in the preparation of
      this Note and, therefore, stipulates that the rule of construction that
      ambiguities are to be resolved against the drafting party shall not be applied
      in the interpretation of this Note to favor any party against the other.

     

    4.9 Expenses.
      The
      Borrower shall pay all reasonable fees and expenses of counsel incurred by
      the
      Holder in connection with the transactions contemplated by this Note, not to
      exceed $10,000.00. Such fees and expenses shall be deductible from the Purchase
      Price. 

     

    IN
      WITNESS WHEREOF,
      Borrower has caused this Note to be signed in its name by an authorized officer
      as of the 24th
      day of
      April, 2008.

     

    
      	 	 	 
	 	
              BORROWER:
                

              
                TERMINUS,
                  INC.

              

            
	 
 	 
 	 
 
	
            	By:  	/s/
              Frank Marshik
	 	
              

              Name:
                Frank Marshik

            
	 	
              Title:
                President

            

    

     

    
      	 	 	 
	 	THE
              BLACKHAWK FUND
	 
 	 
 	 
 
	
            	By:  	/s/
              Frank Marshik  
	 	
              

              Name:
                Frank Marshik

            
	 	
              Title:
                President

            

    

     

    WITNESS:
      

    

    /s/
      Marc
      A. Indeglia

      
   

    
      
         

      

      
        5Unassociated Document

    Exhibit
      10.1 - Securities Purchase Agreement - April 28, 2008

    

    

    

    

    SECURITIES
      PURCHASE AGREEMENT

    

    

    NF
      Energy
      Saving Corporation of America

    

    And

    

    South
      World Ltd.

    Oriental
      United Resources Ltd. 

    

    And

    

    Mr.
      Gang
      Li

    Ms.
      Lihua
      Wang

    Pelaria
      International Ltd. 

    Cloverbay
      International Ltd.

    

    

    

    

    

    April
      28,
      2008

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    This
      SECURITIES PURCHASE AGREEMENT (the “Agreement”) is made and entered into as of
      the 28th day of April, 2008 among the following parties:

    

    Party
      A:
      

    South
      World Ltd.,
      a
      British Virgin Island registered corporation, registered address is P.O. Box
      958, Offshore Incorporations Centre, Road Town, Tortola, British Virgin
      Islands.

     

    Party
      B:
      

    Oriental
      United Resources Ltd.,
      a
      British Virgin Island registered corporation, registered address is P.O. Box
      958, Offshore Incorporations Centre, Road Town, Tortola, British Virgin
      Islands.

    (Party
      A
      and Party B are referred to as “the Investors”)

     

    Party
      C:
      

    Mr.
      Gang
      Li, Miss Lihua Wang, Pelaria International Ltd. and Cloverbay International
      Ltd.
      (Detailed information are listed in Appendix 1, referred to as “the Guarantors”);

    

    Party
      D:
      

    NF
      Energy Saving Corporation of America,
      a
      United States Delaware registered corporation (Detailed information is listed
      in
      Appendix 2, referred to as “the
      Company”).

    

    (The
      Company, the Investors and the Guarantors will be referred individually as
“One
      Party”, together as “Each Party”)

    

    Whereas,

    

    
      	
              1)

            	
              The
                Company is an energy saving technology product and service company,
                a
                corporation incorporated in the State of Delaware in the United States,
                and is publicly traded on the OTCBB. At the time of this agreement,
                the
                Company is authorized to issue 33,227,328 shares of common stock
                with the
                par value of $0.001 USD. At the time of signing this agreement, the
                Company has issued 25,811,429 shares that were purchased with full
                price
                and legally owned by the Guarantors.

            

    

    

    
      	
              2)

            	
              Each
                investor agrees to abide by the terms and conditions of purchase
                set forth
                in this agreement, the Company agrees to abide by the terms and conditions
                in this agreement to issue the subscribed shares. The subscribed
                shares
                will constitute 16.666% of the total number of shares issued by the
                Company after the subscription, including, Party A will own 8.333%,
                and
                Party B will own 8.333%.

            

    

    

    
      	
              3)

            	
              At
                the time of signing this agreement, the Company owns 100% of the
                shares of
                Liaoning Nengfa Weiye Energy Technology Company Ltd. (“Nengfa Energy”), a
                limited liability corporation registered in Liaoning Province, China;
                Nengfa Energy owns 99% of the shares of Liaoning Nengfa Weiye Tie
                Fa
                Valves Sales Company Ltd.
                (“Sales Company”), a limited liability corporation registered in Liaoning
                Province, China. The Company’s stock ownership structure at this time is
                presented in Appendix 3.

            

    

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    
      	
              4)

            	
              The
                Investors agree to abide by the terms and conditions in this agreement
                to
                provide investment to purchase the Company’s stocks, the Guarantors and
                the Company agree to fulfill their responsibilities specified in
                this
                agreement and to provide guarantees
                respectively.

            

    

    

    
      	
              5)

            	
              Each
                party agrees and signs this agreement to ensure the conditions for
                the
                subscription of shares by the investors, also agrees that on the
                date of
                signing this agreement will also sign the stockholders’ agreement and
                after the signing of this agreement will immediately establish the
                terms
                of the Group’s management
                operations.

            

    

    

    Each
      Party Agrees to the Following:

    

    
      	
              1.

            	
              Definitions

            

    

    

    
      	
              1.1

            	
              Unless
                there is other agreed definition in the text of this agreement, this
                agreement (including the preceding portion), the definition of terms
                are
                as follows: 

            

    

    

    
      	Financial
              Statements:	
              means
                audited consolidated financial statements, including audited Balance
                Sheet
                on the date of the audit, the income statement and related footnotes
                for
                five months preceding the date of the
                audit;

            

    

    

    
      	Base
              Date of Audit:	
              means
                December 31, 2007;

            

    

    

    
      	Affiliated
              Company:	
              means related
                to the Company, or
                through stock ownership can individually or join other companies
                to
                directly or indirectly exercise 30% or above 30% votes at the
                stockholders’ meeting or can control the exercise of the aforementioned
                votes, or can control the majority seats of the board of directors
                of a
                company;

            

    

    

    
      	Board
              of Directors:	
              means
                the Company’s board of directors at any
                time;

            

    

    

    
      	Business
              Days:	
              means
                any day of the normal business days (Monday to Friday) of the People’s
                Republic of China; 

            

    

    

    
      	BVI:	
              means
                British Virgin Islands;

            

    

    

    
      	Conditions:	
              means
                the preconditions in term no. 4.1;

            

    

    

    
      	Completion:	
              means
                according to term no. 5, completing the issuance of subscribed shares
                to
                the investors;

            

    

    

    
      	Completion
              Date:	
               means
                the actual date of completion, according to each party’s understanding,
                and upon satisfying all the conditions, the first choice of completion
                date is April 28, 2008 or a date prior to this
                date;

            

    

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    
      	Agree:	
              means
                agree, approve, authorize, permit, forfeit rights, agreement, allow,
                waive
                etc;

            

    

    

    
      	Disclosure
              Information:
              	
              means
                the company discloses financial statements and all other items to
                the
                investors through disclosure
                letter;

            

    

    

    
      	Disclosure
              letter:	
              the
                Company and the Guarantors on a specified date according to agreed
                terms
                provide a letter to the investors;

            

    

    

    
      	Limitation
              in Rights:	
              means
                any mortgage, asset collateral, lien, guarantee, reserve ownership,
                transfer of mortgage, selection rights, purchase rights, preemptive
                rights
                to purchase, cancellation rights, counterclaim, trust or other
                arrangements, preferential rights etc., third party rights or limitations
                (except legal lien);

            

    

    

    
      	Group:	
              means
                the Company and its China subsidiary
                companies;

            

    

    

    
      	China
              Subsidiary Company:	
              means
                the Liaoning Nengfa Weiye Energy Technology Co. Ltd. (“Nengfa Energy”) and
                Liaoning Nengfa Weiye Tie Fa Sales Co. Ltd. established in the People’s
                Republic of China (PRC);

            

    

    

    
      	Transfer
              to Main Exchange:	
              means
                the company will transfer its trading on the OTCBB Exchange to become
                a
                company listed on the main exchange, NASDAQ or US New York Stock
                Exchange
                or other designated Stock Exchange;

            

    

    

    
      	Important
              Unfavorable Change/Impact:	
              means
                the group as a whole on economic or other conditions, operating results,
                management, finance, asset, revenues, forecasts and or operations,
                have
                significant unfavorable change (or impact), regardless whether the
                change
                is caused by a change in executives or other
                reasons;

            

    

    

    
      	China:	
              means
                People’s Republic of China, for the purpose of this agreement, not
                including Hong Kong, Macau and Taiwan
                areas;

            

    

    

    
      	Business
              Facilities:	
               means
                any business facilities occupied by the Group’s China subsidiary
                companies;

            

    

    

    
      	Designated
              Stock Exchange:	
              means
                designated Hong Kong, Japan, London, New York or Australia Stock
                Exchange
                or other similar stock exchange agreed upon in writing by each
                party;

            

    

    

    
      	RMB:	
              means
                China’s legal currency;

            

    

    

    
      
        	Stock:	
                means
                  the Company’s common stock, the par value per share is $0.001
                  USD;

              

      

    

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    
      	Stockholders
              Agreement:	
              means
                on the signing date of this agreement, the Company, the Company’s entire
                shareholders and investors sign the Company’s shareholders’
                agreement;

            

    

    

    
      	Subscription
              Price : 	
              means
                term no. 3 the purchase price for the purchased shares, total $2,000,000
                USD;

            

    

    

    
      	Per
              Share Subscription Price:	
              means
                per “Subscription Share” price, which is $0.30096
                USD;

            

    

    

    
      	Subscription
              Shares:	
              means
                according to this agreement will issue 6,645,376 new shares to investors;
                will constitute 16.666% of all shares issued by the company after
                the
                subscription;

            

    

    

    
      	USD:	
              means
                United States legal currency;

            

    

    

    
      	Guarantee:	
              means
                the statements and guarantees listed in Appendix 4 of this
                agreement.

            

    

    

    
      	
              1.2

            	
              All
                the laws and regulations referred to in this agreement should be
                interpreted as including these often changing regulations, reestablished
                regulations or its applications changed due to the revision of other
                regulations (whether they be before or after the signing of this
                agreement).

            

    

    

    
      	
              1.3

            	
              The
                “Conditions” and “Appendix” referred to in this agreement are conditions
                and appendices of this agreement. Unless otherwise indicated in the
                text,
                the appendices of this agreement should be viewed as an integral
                part of
                this agreement.

            

    

    

    
      	
              1.4

            	
              The
                headings are for the convenience of reading, they do not affect the
                understanding of this agreement.

            

    

    

    
      	
              1.5

            	
              Unless
                otherwise indicated in the text, singular forms include plural forms
                and
                vice versa. Singular sex forms include all sex
                forms.

            

    

    

    
      	
              1.6

            	
              This
                agreement indicates according to “Agreeing Method” means all parties agree
                to (an alternative should be each party agrees to for differentiation,
                each party will use its initials as designation for signing) or the
                way it
                is shown in the appendices of this
                agreement.

            

    

    

    
      	
              2.

            	
              Agreement
                and Subscription

            

    

    

    According
      to this agreement’s agreed upon conditions and terms, investors agree to
      subscribe, the Company agrees to distribute to the investors the subscribed
      shares, such shares shall not have any limitation in rights, and will possess
      the completion date and after the completion date all the rights resulting
      from
      these shares, including but not limited to the rights of receiving dividends
      and
      distribution of profits.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    

    
      	
              3.

            	
              Prices

            

    

    

    
      	
              3.1

            	
              According
                to the agreed conditions and terms in this agreement, each investor
                should
                pay USD $1,000,000 (per share USD $0.30096) for a total price of
                USD
                $2,000,000. The Company should distribute according to term No. 2
                in this
                agreement the subscribed shares at this
                price.

            

    

    

    
      	
              4.

            	
              Preconditions
                before the Completion

            

    

    

    4.1 The
      completion of this agreement depends on satisfying the following
      conditions:

    

    
      	 	
              (a)

            	
              To
                provide a legal opinion letter to the satisfaction of investors for
                opinions on NFES’s adjusted legal structure, the Company as one party
                signing this agreement and signing stockholders agreement and matters
                regarding the enforceability and
                execution;

            

    

    
      	 	
              (b)

            	
              According
                to attorney’s opinion, investors, corporation’s major controlling
                shareholders and the Company have signed stockholders’ agreement according
                to the agreeing method;

            

    

    
      	 	
              (c)

            	
              Provide
                past two fiscal years’ unqualified audited financial statements, by the
                CPA firm agreed upon by both parties, audited according to US generally
                accepted accounting principles (GAAP, or other internationally accepted
                accounting principles); 

            

    

    
      	 	
              (d)

            	
              Since
                the base date of audit, there was no significant unfavorable changes
                or
                impacts;

            

    

    
      	 	
              (e)

            	
              Provide
                to the satisfaction of investors, the Company’s executable business plan
                for the next three years;

            

    

    
      	 	
              (f)

            	
              Guarantors,
                the Group have received all required approvals that will make this
                stock
                subscription agreement and other agreements effective (including
                government approval and other related
                approval);

            

    

    
      	 	
              (g)

            	
              All
                major contents of the guarantee by Guarantors at the completion date
                are
                true and accurate.

            

    

    

    4.2 Each
      party should make their best effort to guarantee the terms in 4.1 will be
      satisfied as soon as possible. Under any circumstances it should be no later
      than each party’s agreed upon date in writing (abbreviated as “the deadline
      date”). If any terms at the deadline date can not be satisfied or was given up,
      then any party has the right to go according to his wishes to inform the other
      parties in writing to terminate this agreement. After the termination of this
      agreement, this agreement (including term No. 4.2) will no longer be binding.
      But the preexisting noncompliant behavior or the agreed upon compensation
      according to terms No. 6, 12 and 15 of this agreement will still be
      effective.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    
      	
              5.

            	
              Responsibilities
                On or After the Subscription Completion
                Date

            

    

     

    
      	
              5.1

            	
              According
                to term no. 4, after all preconditions in term No. 4 are satisfied
                (or
                given up according to agreement), the subscription of shares should
                be
                completed in five working days. The Company and the Guarantors will
                issue
                confirmation letter in writing. But it can not be later than the
                12 pm of
                the second day after the satisfaction of all the condition in term
                no. 4,
                or another time agreed upon in writing by each
                party;

            

    

    
      	
              5.2

            	
              The
                following documents should be transferred at the completion
                date:

            

    

     

    
      	
            	5.2.1	
              The
                Company shall provide the following
                documents:

            

    

    
      	 	
              (a)

            	
              Distribute
                to investors “Subscription Shares”, issue properly signed document
                confirming the receipt of investment for the subscription shares,
                also add
                investors to the list of stockholders according to
                law;

            

    

    
      	 	
              (b)

            	
              Provide
                investors a copy of the list of stockholders that includes the investors,
                the truthfulness of this copy of the list of stockholders should
                be
                verified by an U.S. attorney;

            

    

    
      	 	
              (c)

            	
              Provide
                investors the original of a copy of the properly signed shareholders’
                agreement;

            

    

    
      	 	
              (d)

            	
              Provide
                investors a copy of the Board of Directors’ Resolution according to term
                5.2.2 (b), the truthfulness of the copy of this document should be
                verified by an U.S. attorney;

            

    

    
      	 	
              (e)

            	
              Provide
                investors the document for the completion of the receipt of total
                investment;

            

    

    
      	 	
              (f)

            	
              Provide
                investors the guaranteed items and related
                documents.

            

    

    

    
      	
            	5.2.2	
              The
                Guarantors shall provide the following
                documents:

            

    

    
      	 	
              (a)

            	
              Provide
                investors the guaranteed items and related
                documents;

            

    

    
      	 	
              (b)

            	
              Provide
                investors and the Company the original of a copy of the properly
                signed
                stockholders’ agreement;

            

    

    
      	 	
              (c)

            	
              Call
                for Board of Directors’ meeting, and urge the Board to approve this
                agreement and the related items in the stockholders’
                agreement;

            

    

     

    
      	
            	5.2.3	
              Investors
                shall provide the following
                documents:

            

    

    
      	 	
              (a)

            	
              Provide
                an application letter to the Company requesting the Company for the
                subscription of shares;

            

    

    
      	 	
              (b)

            	
              Provide
                the Company an original letter from the investors’ Board of Directors,
                verifying that investors’ board of directors has approved the signing of
                this agreement and its related
                business;

            

    

    
      	 	
              (c)

            	
              Provide
                the Company and the Guarantors each an original copy of properly
                signed
                shareholders’ agreement;

            

    

    

    
      	 	
              5.2.4

            	
              Investors
                at the completion date shall use non-cancellable wire transfer to
                wire to
                the Company’s designated account the payment for the prices of all
                subscriptions. 

            

    

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    
      	
              6.

            	
              Expenses

            

    

    

    
      	
              6.1

            	
              Unless
                otherwise specified in this agreement, each party shall bear all
                its
                attorneys’ and other special consultants’ expenses and other expenditures
                related to the subscription, the negotiation, signing and execution
                of
                this agreement and related supplemental or other agreement or
                documents.

            

    

    
      	
              6.2

            	
              To
                avoid difference in opinions, the Company and/or Guarantors shall
                bear the
                expenses for obtaining item 4.1(a), (c) and (e) investors approved
                attorney’s legal opinion letter, auditor’s reports and business
                plans.

            

    

    

    
      	
              7.

            	
              Promises,
                Statements and Guarantees

            

    

    

    
      	
              7.1

            	
              Except
                for conditions that have been disclosed, the Company and the Guarantors
                together and separately provide statements, promises and guarantees
                to
                investors (listed in Appendix 4 of this agreement), also guarantee
                that at
                present time and at the completion date every guaranteed item is
                true and
                accurate.

            

    

    
      	
              7.2

            	
              Guarantees
                are separate and independent, unless otherwise stated, shall not
                be
                limited by any items in this
                agreement.

            

    

    
      	
              7.3

            	
              Investors
                can take actions for any non-compliant or non-execution of the guarantees
                after the completion of the subscriptions, even if investors know
                or
                discover such non-compliant or non-execution actions before the completion
                date.

            

    

    
      	
              7.4

            	
              Investors
                state, guarantee and promise:

            

    

    (1)
      Investors have properly established an effective, ongoing and well managed
      company according to the laws of its legal jurisdiction, have full authority
      and
      authorization to utilize its assets and to manage its current business
      operations;

    (2)
      Investors possess all required authorization and authority to sign and execute
      this agreement, and according to this agreement execute their
      responsibilities;

    (3)
      The
      signing of this agreement and other supplemental agreements representing
      investors’ interests’ have been authorized, and investors’ responsibilities
      resulting from this agreement shall be legal, effective and enforceably binding
      on investors; 

    (4)
      To
      sign or execute the responsibilities stated in this agreement do not require
      the
      consent or approval from a third party;

    (5)
      Investors’ signing, payment, execution and following the responsibilities in
      this agreement and other related agreements do not result or will not result
      in
      violating any binding judgments, orders or court orders, trust, collateral
      agreements or other arrangements;

    (6)
      Investors are not under bankruptcy, liquidation or other similar process, not
      planning to enter into liquidation process, not having an application for
      dissolution, not having the possibility of requesting or applying for
      dissolution or having their assets in designated trust.

    

    
      	
              7.5

            	
              One
                party has the right to receive compensation according to law if the
                other
                party violates the guarantee. 

            

    

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    
      	
              8.

            	
              Limit
                on Responsibility

            

    

    

    
      	
              8.1

            	
              Even
                if this agreement has contrary agreed terms, the Company and the
                Guarantors’ total responsibility in this agreement shall not exceed the
                “Subscription Price” except for item no.
                12.

            

    

    

    
      	
              9.

            	
              Business
                Operations

            

    

    

    
      	
              9.1

            	
              The
                Company and Guarantors separately promise that from the signing date
                of
                this agreement until the completion date, the Group will conduct
                its daily
                normal business operations
                carefully.

            

    

    
      	
              9.2

            	
              Not
                violating term no. 9’s general requirements, before “Completion”, the
                Guarantors shall guarantee that the companies within the Group will
                not
                engage in or approve others to engage in the following activities
                without
                the written approval of the investors before the event (such written
                agreement should not be unreasonably
                limiting):

            

    

    
      	 	
              (1)

            	
              Adjust,
                change or substitute the memorandums, charters and other company
                formation
                documents for any company within the
                group;

            

    

    
      	 	
              (2)

            	
              Issue
                or agree to issue any class of stocks, other securities with a price
                or
                issue any option plans (to avoid difference in opinion, if investors
                pre-approve the total number of shares under such option plan, then
                following such stock option plan to issue or to grant options to
                individuals according to the terms in the approved stock option plan,
                are
                not considered as issue stock options, the terms in this section
                shall not
                apply), or the company will issue convertible stock rights or guarantees
                for stock purchase rights, or other rights or new loans or changes
                to the
                rights to the company stocks or other
                securities;

            

    

    
      	 	
              (3)

            	
              Whether
                it be through merger or other method, to sell to a company outside
                the
                Group, or business brands and entire or partial assets exceeding
                $100,000
                USD (including important intellectual property and the company’s direct or
                indirect rights in other affiliated
                company);

            

    

    
      	 	
              (4)

            	
              Significant
                changes or modifications to the business areas, or any company within
                the
                Group receives or engage in a new business exceeding $100,000 USD
                outside
                its current business;

            

    

    
      	 	
              (5)

            	
              Whether
                completing any decision by any company within the Group, or proceeding
                with liquidation or reorganization for any company within the Group,
                or
                apply for a designated trustee, a manager, a legal administrator
                or
                similar government official, or within its related jurisdiction apply
                to
                the court for a meeting or all creditors, or approval to have settlement
                arrangement;

            

    

    
      	 	
              (6)

            	
              Signing,
                approve, adjust or change business terms, one party to the business
                shall
                be a company within the group, the other party shall be the board
                of
                directors and/or company shareholders, business shall be related
                to the
                director or shareholder’s rights to a company within the Group (except
                director’s service agreement or business in routine operations), and the
                amount of the business shall exceed $100,000
                USD;

            

    

    
      	 	
              (7)

            	
              Any
                company within the group to announce or pay any dividends or distribution
                of assets;

            

    

    
      	 	
              (8)

            	
              Any
                borrowing exceeding $1,000,000 USD, provide any guarantee or collateral,
                establish collateral using entire, partial assets or debts on the
                financial statements for any company within the Group, lien or any
                form of
                the rights as encumbrance; this term will be adjusted when the board
                of
                directors implement the authorization
                process;

            

    

    
      	 	
              (9)

            	
              The
                Company or any company within the Group to acquire a company outside
                the
                group, or to obtain the stocks, bonds, or credit bonds, or securities
                with
                a price for any company outside the Group exceeding the price of
                $100,000
                USD.

            

    

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    
      	10.	
              Business
                Reorganization and Development
                Plan

            

    

    

    
      	
              10.1

            	
              Each
                party agrees to make their best effort to come to agreement regarding
                the
                Company’s future reorganization and development plan through consultation.
                The contents include but not limited
                to:

            

    

    

    (1)The
      Company shall step by step develop the energy saving and emission reduction
      as
      its core business and to be an energy saving and emission reduction products
      and
      service provider;

    (2)
      The
      Company shall avoid doing business with current stockholder’s owned and
      affiliated companies;

    (3)
      Establish good corporate governance;

    (4)
      Establish good financing channels, and implement good operating cash
      flows.

    

    
      	11.	
              Performance
                Guarantee and Stock Ownership Ratios
                Adjustment

            

    

    

    
      	
              11.1

            	
              Guarantors
                will guarantee the Company’s operating performance from 2007 to 2009 as
                follows ( “Promised Performance”):

            

    

     

    
      	
               Year

            	 	
               Audited
                after Tax Target Net Income (in USD)

            	 
	
               2007

            	 	
              $2,000,000

            	 
	
               2008

            	 	
              $4,000,000

            	 
	
               2009

            	 	
              $8,000,000

            	 

    

     

    
      11.2        If
        the
        Company’s actual performance is lower than the promised performance, Guarantors
        agree to use the following formula to compensate each investor by transferring
        certain percentage of the Company’s stocks:

    

    

    Investors’
      percentage of stock ownership x [1 - (Actual Net Income/Promised
      performance)]

    

    
      	12.	
              Buy
                Back

            

    

    

    
      12.1       The
        Company and the Guarantors guarantee the investors; the Company will transfer
        to
        a main US Stock Exchange no later than December 31, 2009. If the Company
        does
        not move to the main US Stock Exchange by the above date, the Guarantors
        will be
        obligated to buy back from investors all investors’ stocks in the Company. The
        buy back price will be the initial subscription price plus no less than 10%
        return on investment. 

    

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    
      	13.	
              Confidentiality

            

    

    

    
      	13.1	
              The
                investment and the stock subscription (including but not limited
                to the
                existence of this investment, the agreed terms and conditions in
                this
                agreement and other documents referred to) should be viewed as
                confidential information (“Confidential Information”), no party shall
                disclose it.

            

    

    

    13.2
       Even
      though there is term no. 13.1, the obligation and promise for confidentiality
      of
      this agreement shall not be applied to the following situations:

    
      	 	
              13.2.1

            	
              Not
                violating any terms in this agreement, at present or in the future
                when
                the confidential information enters into public domain;
                or

            

    

    
      	 	
              13.2.2

            	
              Any
                party can use actual written document to prove that the other party
                before
                providing the confidential information, has already possessed such
                confidential information, and the source of such confidential information
                are not limited by the signed confidential agreement, trust or other
                similar confidential obligation with other party;
                or

            

    

    
      	 	
              13.2.3

            	
              Any
                party can disclose confidential information to its employees, investors,
                lenders, accountant, attorneys and other special consultants, directors,
                shareholders, holding company, subsidiary companies or parent company,
                but
                all these informed persons should properly keep confidentiality
                obligation; or

            

    

    
      	 	
              13.2.4

            	
              After
                disclosing confidential information to another party or its employees,
                representatives or advisers, they become publicly obtainable information
                and confidential information by third parties, or through one party,
                its
                directors, managers, employees, representatives or advisers to disclose
                the information using methods not violating this agreement;
                or

            

    

    
      	 	
              13.2.5

            	
              According
                to applicable laws of China, U.S., British Virgin Islands and other
                legal
                jurisdictions, or regulations of any regulatory organizations, or
                regulations of China , U.S., British Virgin Islands’ Stock Exchanges, any
                party ( referred to as “Disclosing Party”), its representative, adviser or
                employee are required by law (or there is a reason to believe that
                the
                party, its representative, adviser, employees will be required by
                law) to
                disclose any confidential information, then the disclosing party
                shall
                distribute the notice of this fact to the other party (referred to
                as
                “Non-disclosing Party) before the disclosure, to allow non-disclosing
                party to seek proper strategies to stop such disclosure or to give
                up
                following the terms in this agreement (expenses will be born by the
                non-disclosing party). If any non-disclosing party decides to challenge
                the effectiveness of the request, and/or bears the expenses to take
                actions, reasonably request to avoid and limit this disclosure, then
                the
                disclosing party, its representative, adviser or employees shall
                coordinate with the non-disclosing party (Under the premises that
                non-disclosing party will compensate reasonable
                expenses).

            

    

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    
      	14.	
              Time
                Importance

            

    

    

    Any
      date
      or deadline referred to in any term can be postponed after written consent
      by
      each party. But the initial confirmed dates or deadlines, or any dates and
      deadlines after postponement, these times are of utmost importance.

    

    
      	15.	
              Notice
                

            

    

    

    According
      to this agreement, every notice, request or other communication documents shall
      be done in written format, and according to the following address or fax number
      (or the recipient has notified the other party its other address or fax number
      five business days prior to the notice) to distribute to the other
      party:

    

    The
      Company and/or Guarantors:

    Fax
      Number: 8624-25609750

    Recipient:
      Mr. Gang Li

    

    Investors:

    Fax
      Number: 0852-21807306

    Recipient:
      Lily Tang

    

    All
      communications to the other party, request or other communicative documents
      will
      be considered delivered at the following times: (1) deliver in person to the
      above address; (2) if to deliver through postal mail, then the fourth day after
      mailing will be considered delivered; (3) if deliver by fax, then the fax report
      is the evidence for delivery. Any notices if delivered on non-business days,
      will be considered delivered on the following business day.

    

    16.
      Governing Law and Conflict Resolution

    

    
      	
              16.1

            	
              This
                agreement is governed by the laws of the People’s Republic of China and
                will be interpreted according to the laws of
                PRC.

            

    

    
      	
              16.2

            	
              Any
                conflict or disputes or claims resulting from this agreement or related
                to
                this agreement, or this agreement’s violation, termination or being
                invalid should be resolved according to the effective or the changes
                under
                this arbitration principle of the China
                International Economic Trade Arbitration Committee.
                Designated arbitration organization is China
                International Economic Trade Arbitration Committee Beijing Office.
                The arbitration location will be in Beijing, China. Any such arbitration
                shall go according to China International Economic Trade Arbitration
                Committee’s arbitration procedures and arbitration principles within the
                effective dates of this agreement. The arbitration language will
                be
                Chinese.

            

    

    
      	
              16.3

            	
              The
                decision of the arbitration is final, will be binding on both parties.
                Both parties agree to be bound by the arbitration and will execute
                the
                arbitration accordingly.

            

    

    
      	
              16.4

            	
              Arbitration
                fees will be born by the losing party, unless arbitrators determine
                otherwise. 

            

    

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    17.
      Other Matters

    

    
      	
              17.1

            	
              This
                agreement shall be signed by each party on a separate original. All
                signed
                originals together will constitute the entire
                agreement.

            

    

    
      	
              17.2

            	
              This
                agreement shall be binding upon each party’s successor and approved
                assigns. Any party without the other party’s written consent, can not
                transfer or try to transfer the rights in this
                agreement.

            

    

    
      	
              17.3

            	
              This
                agreement constitutes the entire agreement concerning this matter
                by both
                parties (any party did not rely on what is not included in this agreement,
                or the statements or guarantees by the other party), and unless through
                signed written document by both parties, any revision to this agreement
                will not be valid. This agreement replaces all previous agreements,
                arrangements or memorandums. All previous agreements, arrangements
                or
                memorandums (if existed), shall no longer be effective after the
                signing
                of this agreement.

            

    

    
      	
              17.4

            	
              Unless
                otherwise required by laws, otherwise any offset, counterclaim or
                other
                discounts of any party’s entire payment under this agreement shall be
                eliminated.

            

    

    
      	
              17.5

            	
              Any
                party did not exercise or postpone the exercise of any rights, authorities
                or special rights under this agreement are not viewed as give up
                the
                rights, individually or partially exercise any rights, authorities
                or
                special rights are not viewed as precluding the exercise of rights
                in the
                future.

            

    

    
      	
              17.6

            	
              If
                any term or several terms became invalid, illegal or not executable,
                or
                can not be carried out, it will not affect or reduce the effectiveness,
                legality, enforceability and execution of the remaining
                parts.

            

    

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    Hereto,
      the parties have signed the agreement on the date listed on the cover page
      of
      this agreement and on this signature page.

    

     

    /s/
      Gang
      Li         

    Gang
      Li,
      Chairman and CEO

    NF
      Energy
      Saving Corporation of America 

    

    

    

    /s/
      Wei Lang                                                                   

    Wei
      Lang,
      CEO

    South
      World Ltd. 

    

    

    

    /s/
      Jun
      Wang                                                                                        
     

    Jun
      Wang,
      CEO

    Oriental
      United Resources Ltd. 

    

    

    

    /s/
      Gang Li                                                                      

    Mr.
      Gang
      Li 

    

    

    

    /s/
      Lihua
      Wang                                                                                     

    Ms.
      Lihua
      Wang 

    

    

    

    /s/
      Gang
      Li                                                                                             

    Gang
      Li,
      CEO

    Pelaria
      International Ltd.

    

    
 

    /s/
      Lihua
      Wang                                                                                     

    Lihua
      Wang, CEO

    Cloverbay
      International Ltd.

    

    

    April
      28,
      2008                                                                                         

    Date
       

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    Appendix
      1

    

    Basic
      Description of Guarantors

    

    1.
      Copy
      of ID Cards

    

    2.
      Copy
      of BVI Corporations

    

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    Appendix
      2

    

    Basic
      Description of the Company

     

    
      	1.	
              Name:

            	
            	NF
              Energy Saving Corporation of America
	 	 	 	 
	2.	
              Place
                of Incorporation:

            	 	State
              of Delaware
	 	 	 	 
	3.	
              Date
                of Incorporation:

            	 	October
              31, 2000
	 	 	 	 
	4.	
              Federal
                ID Number:

            	 	02-0563302
	 	 	 	 
	5.	
              Registration
                Address:

            	 	Delaware
	 	 	 	 
	6.	
              Authorized
                number of shares:

            	 	50,000,000
	 	 	 	 
	7.	
              Number
                of Shares Issued:

            	 	33,227,328
	 	 	 	 
	
              8.

            	
              Shareholders:

            	 	See
              list of shareholders
	 	 	 	 
	9.	
              Directors:

            	 	Gang
              Li, Lihua Wang, Hong Li

    

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    Appendix
      3

    

    NF
      Energy
      Saving Corporation of America

    Stock
      Ownership Structure

     

      

    

    
      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      

    

    

    Appendix
      4

    

    PART
      I 

    The
      Company and Guarantors’ Statements and Guarantees

    

    
      
        
          	1.	
                  Authority

                  The
                    Company and the Guarantors have the full authority to sign and
                    execute
                    this agreement. This agreement once signed will be binding on
                    both the
                    Company and the
                    Guarantors.

                

        

      

    

     

    
      
        	2.	
                Approve,
                  Agree and Permit

                According
                  to the knowledge of the Company and the Guarantors, except the
                  approval,
                  agreement and permission that the Company and guarantors have received,
                  the signing, payment, execution and other related matters of this
                  agreement do not require authorization from China, U.S., or British
                  Virgin
                  Islands’ governments, public organizations, administrative organizations
                  and other bureaus in the form of order, consent, approval, permission,
                  authorization, making effective or waiver.

              

      

    

     

    
      
        	3.	
                Impact
                  of the Agreement

              

      

    

    

    
      
        	3.1	
                No
                  one from any company within the Group is authorized to receive
                  any
                  discounts or commissions to issue stocks to
                  investors.

              

      

    

    
      
        	
                3.2

              	
                There
                  does not exist any company within the group being one party to
                  any
                  agreements or arrangements (whether written or verbal), this agreement
                  and
                  arrangement is determined by the terms in this agreement, or will
                  be or
                  can be determined by the execution or completion of this
                  agreement.

              

      

    

    
      
        	
                3.3

              	
                The
                  Company and the Guarantors for the signing , payment and execution
                  of the
                  terms in this agreement shall
                  not:

              

      

    

    
      
        
          
            
              
                	
                        3.3.1

                      	
                        Cause
                          the companies within the group, the Company or the Guarantors
                          to violate
                          or cause to violate or conflict with the following terms,
                          provisions and
                          conditions:

                      

              

            

          

        

      

    

    
      
        	
              	
                3.3.1.1

              	
                Any
                  agreement;

              

      

      
        	
              	3.3.1.2	
                Any
                  laws, promises or any court judgments, prohibited matters or legal
                  orders;

              

      

    

    
      
        	
              	
                3.3.1.3

              	
                Any
                  companies within the Group’s memorandums, articles and other system’s
                  documents (if any); 

              

      

    

    
      	
              3.3.2

            	
              Waive
                any person of any company within the Group’s responsibility or other
                 responsibilities
                or authorize others to terminate this
                agreement;

            

    

    
      	3.3.3	
              Terminate
                or cause to terminate or from the perspective of any company within
                 the
                Group judge to have significant unfavorable impact on the implementation
                of  present
                interests or special rights;

            

    

    
      	3.3.4	
              According
                to the knowledge of the Company and the Guarantors, cause any  company
                within the group’s any customer or supplier to terminate or drastically
                 reduce
                its business with any company within the
                group;

            

    

    
      	3.3.5	
              Cause
                any company within the group in the implementation of their existing
                debt
                 to
                be paid immediately or to be paid before maturity;
                or

            

    

    
      	3.3.6	
              Cause
                any company within the Group to have responsibility for any agreement
                or
                 other
                responsibilities, or authorize anyone to request any company within
                the
                 group
                to fulfill responsibilities or other responsibilities under any existing
                 agreements.
                

            

    

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    PART
      II

    China
      Subsidiary Company’s Statements and Guarantees

    

    
      
        	1.	
                Organization
                  of the Company

              

      

    

    
      
        	
              	
                1.1.

              	
                Each
                  China subsidiary company of the Group is organized and existing
                  under the
                  laws of the People’s Republic of China. According to disclosed
                  information, China subsidiary companies do not have subsidiaries
                  or branch
                  offices.

              

      

    

    
      
        	
              	
                1.2.

              	
                Each
                  China subsidiary company has obtained required permits from related
                  persons, government regulatory organizations and other supervisory
                  organizations and agrees to operate according to the businesses
                  listed in
                  the current business licenses and has operated
                  accordingly.

              

      

    

    
      
        	
              	
                1.3.

              	
                According
                  to the knowledge of the Company and the Guarantors, there does
                  not exist
                  any violation of any terms or conditions under currently existing
                  effective permits or agreements for each China subsidiary company,
                  and
                  there does not exist any potential to harm the continuity or extension
                  of
                  the above permits or
                  agreements.

              

      

    

    

    
      
        	2.	
                Capital
                  and the Company’s Basic Description

                 

                China
                  subsidiary companies have been registered according to law, shareholders
                  legally own beneficial shares. There are no encumbrances to their
                  rights.

              

      

    

     

    
      
        	3.	
                Finance

              

      

    

    
      
        	
              	
                3.1.

              	
                Bank
                  Borrowings and Other
                  Borrowings

              

      

    

    
      
        	
              	
                3.1.1.

              	
                Each
                  China subsidiary company does not have any bank borrowings or bank
                  overdraft opportunities.

              

      

    

    
      
        	
              	
                3.1.2.

              	
                Each
                  China subsidiary company does not have any unpaid debt, did not
                  agree
                  to establish or issue such debt, there does not exist any unpaid
                  borrowings.
                  But the exception is the debt not exceeding that has been recorded
                  in the financial statements of the China subsidiary
                  company.

              

      

    

    
      
        	
              	
                3.2.

              	
                China
                  Subsidiary Company’s Loans to Others and Rights

                Each
                  China subsidiary company does not have any uncollected loans outstanding,
                  does not own beneficiary rights to any debts (whether they are
                  mature and
                  should be paid off), except the rights to debts in its normal course
                  of
                  operations. Each China subsidiary company did not provide any loan
                  or
                  lending that violates the related laws of the
                  PRC.

              

      

    

    
      	
            	
              3.3.

            	
              Liabilities

              Except
                the liabilities disclosed in the financial statements, “disclosed”
                liability since the date of audit until present resulting from normal
                course of business, there does not exist any liability for each China
                subsidiary company (including contingent
                liability).

            

    

     

    
      	4.	
              Taxes

            

    

    
      
        	
              	4.1.	
                Tax
                  Reserves 

                According
                  to the knowledge of the Company and the Guarantors, the tax reserves
                  on
                  the financial statements are adequate (based on the current laws),
                  sufficient to pay all assessed taxes or taxes that will be assessed,
                  or
                  until the date of audit each China subsidiary company’s taxes related
                  their profits, revenues, transfer or
                  businesses.

              

      

    

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    
      
        	
              	4.2.	
                Reporting
                  Responsibility

                According
                  to the knowledge of the Company and the Guarantors, each China
                  subsidiary
                  company has properly reported to the China Tax Authorities or other
                  government authorities all amount of taxes due or potential taxes
                  due
                  according to “Tax Laws”.

              

      

    

     

    
      
        	
              	4.3.	
                Tax
                  Refunds and Final Settlement

                According
                  to the knowledge of the Company and the
                  Guarantors:

              

      

    

    
      
        	
              	4.3.1.	
                Each
                  China subsidiary company has properly taken care of the tax refunds,
                  and
                  China subsidiary company has followed proper procedures to completely
                  disclose their responsibilities regarding all tax
                  assessments.

              

      

    

    
      
        	
              	
                4.3.2.

              	
                Such
                  tax refunds do not have potential for disputes, there does not
                  exist
                  any
                  potential leading to disputes, or tax claims, or to deprive China
                  subsidiary
                  company’s preferential tax treatment or reduced tax status according
                  to related laws and regulations.

              

      

    

    
      
        	
              	
                4.4.

              	
                Disclosure

                According
                  to the knowledge of the Company and the Guarantors, there does
                  not exist
                  any condition with China Tax Authority or other related tax authorities
                  to
                  cause them to reassess taxes, regardless whether the taxes have
                  been paid,
                  how to proceed with such disputes or which method will the disputes
                  be
                  heard. 

              

      

    

    
      
        	
              	4.5.	
                Tax
                  Exemption

                The
                  tax exemption enjoyed by China subsidiary company has been disclosed.
                  According to the knowledge of the Company and the Guarantors, there
                  does
                  not exist any potential to cause the China subsidiary company to
                  be
                  deprived of such tax
                  exemption.

              

      

    

     

    
      
        	5.	
                Assets

              

      

    

    
      
        	
              	
                5.1.

              	
                Assets
                  Ownership 

              

      

    

    
      
        	
              	
                5.1.1.

              	
                Up
                  to the date of audit, each China subsidiary company has the complete
                  ownership
                  of all the assets recorded in the financial statements of the China
                  subsidiary company. At present we have the ownership rights and
                  have
                  the control of all these assets (not including the disposed assets
                  under
                  the
                  normal operating process). Based on the disclosed information,
                  each
                  China
                  subsidiary company’s assets and assets acquired after the date of
                  audit
                  are not used for collateral and liens etc. as encumbrances, also
                  other
                  parties
                  do not have rights or claims at such
                  assets.

              

      

    

    
      
        	
              	
                5.1.2.

              	
                All
                  China subsidiary company owns and controls its operating fixed
                  assets,
                  or
                  movable installations, plant, equipment, vehicles and other movable
                  assets.
                  They have complete ownership. Such assets do not have liens, collaterals,
                  encumbrances, lease financing, leased out or lease agreement or
                  include delayed payment agreement. Such assets are under good operation
                  condition (except normal wear and
                  tear).

              

      

    

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    
      
        	
              	5.2.	
                Retention
                  of Title

                Any
                  China subsidiary company did not use the retention of titles until
                  the
                  entire amount or all debts have been paid as payment condition
                  to purchase
                  or agree to purchase stocks, merchandise, raw materials or
                  assets.

              

      

    

     

    
      
        	
              	5.3.	
                Insurance

                The
                  detail information regarding the insurance policies owned by all
                  the China
                  subsidiary companies have been disclosed. According to the knowledge
                  of
                  the Company and Guarantors, there does not exist any unsettled
                  claims or
                  potential to cause claims, there does not exist any actions or
                  with the
                  potential to cause the insurance policy to be invalid or insurance
                  fees to
                  be increased.

              

      

       

    

    
      
        	
              	
                5.4.

              	
                Basic
                  Condition of Plant and Maintenance 

                The
                  recorded assets in the financial statements of the China subsidiary
                  company  and its operating machinery, equipment, installations and
                  vehicles are all:

              

      

    

    
      	
            	5.4.1.	
              In
                proper working and safe condition (except normal wear and
                tear);

            

    

    
      
        	
              	5.4.2.	
                Owned
                  and controlled by China subsidiary company that has complete ownership
                  of
                  the above equipment.

              

      

    

     

    
      
        	6.	
                Intellectual
                  Property

              

      

    

    
      
        	
              	
                6.1.

              	
                China
                  subsidiary company has been authorized to follow current methods
                  in
                  operating its current business. According to the knowledge of the
                  Company
                  and Guarantors, such businesses do not infringe or not possible
                  to
                  infringe or conflict with others’ intellectual property
                  rights.

              

      

    

    
      
        	
              	
                6.2.

              	
                China
                  subsidiary company’s related, owned or used trademarks, patents, designs,
                  trade names, business names and copyrights have been disclosed.
                  Each China
                  subsidiary company owns the sole beneficiary rights to their intellectual
                  properties. The intellectual property rights originally created
                  by the
                  China subsidiary company are all effective and are enforceable.
                  According
                  to the knowledge of the Company and Guarantors, the above intellectual
                  property rights are not used, claimed, opposed or attacked by others.
                  There does not exist any potential that will result in the termination
                  of
                  the above intellectual property rights’ effectiveness and enforceability,
                  or the above mentioned conditions of being used, claimed, opposed
                  or
                  attacked by others.

              

      

    

    
      
        	
              	
                6.3.

              	
                China
                  subsidiary company did not approve or agree to approve any permission
                  or
                  authorization, authorize and permit others to use any means to
                  engage in
                  that will infringe or with the potential to infringe its intellectual
                  property rights.

              

      

    

    
      
        	
              	
                6.4.

              	
                According
                  to disclosed information, each China subsidiary company that uses
                  others’
                  intellectual property rights all owns legally, effective permission
                  or
                  authorization. According to the knowledge of the Company and Guarantors,
                  there does not exist any China subsidiary company violating the
                  terms and
                  conditions of such permission or authorization and does not have
                  the
                  potential condition that will result in such permission or authorization
                  to be terminated or cancelled before the end of the
                  agreement.

              

      

    

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    
      	7.	
              Promises
                and Agreements

            

    

    
      
        	
              	7.1.	
                Except
                  for what has been disclosed, not a China subsidiary company is
                  a party to
                  any agreement or arrangement or bear the responsibilities or such
                  agreement or arrangement, or sign any non-routine business needed
                  or
                  unusual, complicated, long-term or unfair
                  agreements.

              

      

    

    
      
        	
              	
                7.2.

              	
                Each
                  China subsidiary company’s raw materials and merchandise purchase, and
                  service agreements and each China subsidiary company’s merchandise supply
                  or service agreements are all non-affiliated
                  businesses.

              

      

    

    
      
        	
              	
                7.3.

              	
                Each
                  China subsidiary company did not agree to be bound by any debenture,
                  guarantee, contract indemnity, or as a guarantor, did not engage
                  in
                  significant guarantee or contract indemnity for China subsidiary
                  company’s
                  loans and other obligations.

              

      

    

    
      
        	
              	
                7.4.

              	
                Each
                  China subsidiary company did not grant any authorization that is
                  still
                  effective. (except the authorization within normal operating
                  processes);

              

      

    

    
      
        	
              	
                7.5.

              	
                Each
                  China subsidiary company did not sign or agreed to sign agreements
                  or
                  arrangements to sell, purchase, produce, or authorize, or agreements
                  or
                  arrangements to limit its entire or partial operations to operate
                  freely
                  in the world.

              

      

    

    
      
        	
              	
                7.6.

              	
                According
                  to disclosed information, each China subsidiary company has not
                  incurred
                  debt or borrowings toward its shareholders, directors or other
                  affiliated
                  persons (based on the definitions of Hong Kong Stock Exchange’s listing
                  requirements);

              

      

    

    
      
        	
              	
                7.7.

              	
                According
                  to disclosed information and according to the knowledge of the
                  Company and
                  the Guarantors, each China subsidiary company did not violate any
                  third
                  party’s agreement, are not knowledgeable of or foresee the conditions
                  of
                  such third party violation of
                  agreement.

              

      

       

    

    
      
        	
                8.

              	
                Business
                  facilities

              

      

    

    
      
        	
              	
                8.1.

              	
                Ownership

              

      

    

    
      
        	
              	
                8.1.1.

              	
                Each
                  China subsidiary company according to lease agreement or terms
                  of
                  permission possesses and utilizes the following business facility:
                  No.
                  118
                  Guangyu Street, Yinzhou District, Tieling City, Liaoning Province
                  and
                  4th
                  Floor, No. 7, Huanghe Nan Da Jie, Huanggu District, Shenyang City,
                  Liaoning Province. 

              

      

      
        The
          above
          business facilities are the total fixed assets occupied or used by China
          subsidiary companies. 

      

      
        
          
            	
                  	
                    8.2.

                  	
                    Utilization

                    According
                      to the knowledge of the Company and the Guarantors, each China
                      subsidiary
                      company at present utilizes the above business facilities according
                      to the
                      regulations of the related and effective
                      laws.

                  

          

        

      

    

    
      
        	
              	8.3.	
                Lease
                  Requirements

              

      

    

    
      
        	
              	
                8.3.1.

              	
                Each
                  China subsidiary company have paid the lease payment (if required),
                  followed and executed lessee’s contract and the terms of the lease
                  contract for these business facilities (including sublet agreement).
                  Such
                  lease contracts are all legal and
                  valid.

              

      

    

    
      
        	
              	
                8.3.2.

              	
                Have
                  obtained all permissions, consent and approval contained in the
                  lease
                  contract
                  from the landlord or the original landlord and all the requirements
                  for
                  the lessee under such permission, consent and approval have been
                  properly
                  followed and executed.

              

      

    

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    
      
        	9.	
                Employment

              

      

    

    
      
        	
              	
                9.1.

              	
                Employment
                  and Terms of Employment

              

      

    

    
      
        	
              	
                9.1.1.

              	
                Each
                  China subsidiary company did not establish any legally or non-legally
                  binding agreements or other arrangements with workers unions or
                  other
                  organizations representing
                  employees.

              

      

    

    
      
        	
              	
                9.1.2.

              	
                According
                  to the knowledge of the Company and the Guarantors, each China
                  subsidiary company has followed related laws or the requirements
                  of
                  contracts to properly withhold, deduct or remit all income taxes,
                  unemployment
                  insurance and other taxes and insurance to government agencies
                  or foundations;

              

      

    

    
      
        	
              	
                9.1.3.

              	
                According
                  to the knowledge of the Company and the
                  Guarantors,

              

      

    

    
      
        	
              	
                (a)

              	
                Each
                  China subsidiary company has according to laws fully implemented
                  and
                  followed the employee welfare obligations, paid for their current
                  employees the pension insurance, unemployment insurance, health
                  insurance
                  and other employee benefits.

              

      

    

    
      
        	
              	
                (b)

              	
                According
                  to the knowledge of China subsidiary companies, there does not
                  exist any
                  claims, lawsuit or penalty or such threats resulting from not executing
                  the above employee welfare obligations for current or past employees,
                  administrative personnel, directors or government
                  organizations,

              

      

    

    
      
        	
              	
                (c)

              	
                According
                  to the knowledge of China subsidiary companies, there does not
                  exist any
                  fact or condition to cause the above claims or
                  lawsuits.

              

      

    

    
      
        	
              	
                9.2.

              	
                Termination
                  of Workers’
Contract

              

      

    

    
      
        	
              	
                9.2.1.

              	
                All
                  current effective workers’ contract that each China subsidiary
                  company
                  participates as one party can be terminated by giving a 30 day
                  notice
                  prior to the termination and there is no need to pay any compensation.

              

      

    

    
      
        	
              	
                9.3.

              	
                Workers’ Salary
                  Disputes and Employee
                  Claims

              

      

    

    
      
        	
              	
                9.3.1.

              	
                Each
                  China subsidiary company and its employees are not involved in
                  any
                  salary
                  disputes, each China subsidiary company. According to the knowledge
                  of the Company, Guarantors, directors, there does not exist any
                  facts
                  that will cause salary disputes. The terms of this agreement will
                  not
                  cause
                  such salary disputes.

              

      

    

    

    
      
        	10.	
                Lawsuits,
                  Disputes and
                  Resolutions

              

      

    

    
      
        	
              	
                10.1.

              	
                Claims

                
                  There
                    does not exist any claim as a resolution for the delay in fulfilling
                    contracts or other matters related to China subsidiary company’s providing
                    service or receiving service. According to the knowledge of the
                    Company
                    and the Guarantors, there do not exist such claims, threat of
                    claims or
                    foreseeing such claims. Outside the normal business operations
                    of each
                    China subsidiary company, any company within the group did not
                    provide any
                    guarantee or assurance for the services provided or will provide.
                    

                

              

      

    

    
       

      
        
          
          

        

        
          23

          
            

          

        

        
          
          

        

      

       

      
        	
              	10.2.	
                Lawsuits

              

      

    

    
      
        	
              	
                10.2.1.

              	
                No
                  China subsidiary company was a plaintiff or a defendant involved
                  in
                  any
                  lawsuit or arbitration process. There
                  are no proceedings pending or threatened
                  either by or against any of the China Subsidiary Companies. According
                  to the knowledge of the Company and the Guarantors, there are no
                  circumstances that will cause or with the potential to give rise
                  to any
                  lawsuits
                  or arbitration.

              

      

    

    

    
      
        	11.	
                Other
                  Operations

              

      

    

    
      
        	
              	
                11.1.

              	
                Each
                  China subsidiary company did not participate in or agree with another
                  organization to jointly operate any partnership, joint operation,
                  cooperation
                  or similar arrangements.

              

      

    

    
      
        	
              	
                11.2.

              	
                The
                  Company and the Guarantors did not directly or indirectly operate
                  those
                  businesses that are closely related to the businesses of China
                  subsidiary
                  companies or according to the knowledge of the Company and the
                  Guarantors to potentially result in competing in the same businesses
                  with
                  the China subsidiary
                  companies.

              

      

    

    

    
      
        
        

      

      
        24

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