C3 Capital, Limited And Changchun Master Industry Co., Ltd In matter of Yili Master Carborundum Production Co., Ltd. Enter Into Equity Interest Transfer Contract July, 2008

 
C3
      Capital, Limited 
 
And
 
Changchun
      Master Industry Co., Ltd 
 
In
      matter of
 
Yili
      Master Carborundum Production Co., Ltd.
 
Enter
      Into
 
Equity
      Interest Transfer Contract
 
July,
      2008

Contents
 
            Chapter
                I

            Definitions
                of the Contract

            2

            Chapter
                II

            Object
                Equity Interest

            4

            Chapter
                III

            Price
              of Equity Interest Transfer
            4

            Chapter
                IV

            Capital
                Increase

            6

            Chapter
                V

            Approval
                and Checking

            7

            Chapter
                VI

            Assumption
              of Debts of Object Company
            8

            Chapter
                VII

            Dispositon
              of Credits of the Object Company
            9

            Chapter
                VIII

            Employees
            10

            Chapter
                IX

            Rights,
              Obligations and Guarantees of Party B
            10

            Chapter
                X

            Rights,
                Obligations and Guarantees of Party A

            12

            Chapter
                XI

            Performance,
              Wind-up and Termination
            12

            Chapter
                XII

            Representations
              and Statements of Party B
            13

            Chapter
                XIII

            Representations
              and Statements of Party A
            16

            Chapter
                XIV

            Confidentiality
            17

            Chapter
                XV

            Liability
              for Breach of Contract
            17

            Chapter
                XVI

            Force
              Majeure
            19

            Chapter
                XVII

            Disputes
                Settlement

            20

            Chapter
                XVIII

            Applicable
                Law

            20

            Chapter
                XIX

            Miscellaneous

            20

Equity
      Interest Transfer Contract
 
The
      equity interest transfer contract (hereinafter referred to as “Contract”) is
      made and entered into as the date of July
      31st
      , 2008
      at
      Beijing P. R. China by and among:

Party
      A: C3
      Capital, Limited,
      a
      company registered and established under the laws of the BVI Business Companies
      Act 2004 and incorporated in the British Virgin Islands on 25th
      day of
      October, 2007, BVI Company Number: 1439706;

Party
      B: Changchun
      Master Industry Co., Ltd,
      a
      company registered and incorporated under the laws of People’s Republic of
      China, registered No. 220107020002801ôregistered
      address: Xxxxx 000, 0xx
      Xxxxx,
      Xxxx-xxxxxxxxxx Xxxxxxxx, Xxxx
      Xxxx
      Xxxxxx Xx.0000, xxxx xxx xxx xxxxxxxxxx xxxxxxxxxx xxxxxxxxxxx xxxxx, Xxxxxxxxx
      Xxxx, and its legal representative is Xxx Xxxxxxx. 

WHEREAS:
 
          1.  
          Yili
              Master Carborundum Production Co. Ltd (the “Object Company”) has
              registered with Administration of Industry and Commerce for Yining
              County,
              Xxxx Xxxxx Autonomous Prefecture, XinJiang Uygur Autonomous Region,
              registered No. 65402100000504. The Object Company has constructed and
              is
              now operating 35,000 tonnes Carborundum Metallurgy Project of YiLi
              Master
              (the “Carborundum Project”). At present, a set of 5,500 kilovolt-ampere
              carborundum metallurgy and production system, corollary producing
              equipment and infrastructure has been built up, (hereinafter referred
              to
              as “Project Phase I”). Phase II of the Carborundum Project plans to make
              the production capacity of carborundum metallurgy project rise to 15,000
              tons per year. Phase III of the Project plans to make the production
              capacity of carborundum metallurgy project rise to 35,000 tons per
              yearôand
              build up a plant which has the capacity to process 5,000 tons granulation
              and micro mist of carborundum per year.

1

          2.  
          The
              registered capital for the Object Company is RMB 3.8 million Yuan which
              is
              invested solely by Party B. Party B plans to transfer to Party A all
              its
              holding shares of the Object Company (“the Object Equity Interest”). Party
              A intends to purchase the equity
              interest.

          According
              to the principle of equality and mutual benefit and through friendly
              consultation, Party A and Party B agree on the following terms and
              conditions, in accordance with the Contract Law of the People’s Republic
              of China, and other applicable Chinese laws and regulations. The parties
              will abide by and fulfill the Contract in good
              faith.

Chapter
      I      Definitions
      of the Contract
 
Article
      1  Definition
      
The
      terms
      hereinafter used in the Contract shall have the meanings set forth as follows:
      
          1.1  
          “Industrial
              and commercial administration”
              (AIC) means the industrial and commercial administration of People’s
              Republic of China which performs the job of business registration and
              issues business license.

          1.2  
          “Department
              of Commerce”
              means Ministry of Commerce of People’s Republic of China, or so far as the
              examination and approval is concerned, the local department of commerce
              with competent power of examination and
              approval.

          1.3  
          “Foreign
              Exchange Administration”
              means the State Administration of Foreign Exchange and local foreign
              exchange administrations at all levels.

          1.4  
          “Examination
              and Approval Authority”
              means the relevant Chinese governmental departments having authority
              defined by relevant Chinese laws, regulations, regulatory rules and
              policies to examine and approve the Contract, the equity interest transfer
              and the capital increase, including but not limited to Ministry of
              Commerce (MOC),

2

          National
              Development and Reform Commission (NDRC), State Administration of Foreign
              Exchange (SAFE), Industrial and Commercial Administration (AIC),
              etc.

          1.5  
          “Capital
              Increase”
              means, after Party A accepts the equity interests of the Object Company
              from Party B, Party A puts additional registration capital into the
              Object
              company.

          1.6  
          “Encumbrance”
              shall mean any mortgage, pledge, other security interest, assignment,
              lien, charge, option, trust interest, pre-emptive right, lease and
              any
              other restrictions or conditions.

          1.7  
          “Closing
              date”
              means the date on which the Object Equity Interest Transfer has performed
              the formality of alteration registration with the industrial and
              commercial administration, subject to the date on which the industrial
              and
              commercial administration has performed examination and approval procedure
              and issued new business license to the Object
              Company.

          1.8  
          “New
              Business License” means
              the new business license issued by the industrial and commercial
              administration to the Object Company after completion of the Equity
              Interest Transfer.

          1.9  
          “Disclosed
              Information” means
              the related materials, explanation, statement and other information
              disclosed or made by Party B to Party A or its designated intermediaries
              during Party A’s due diligence investigation of the object company, the
              Carborundum project and the object equity interest; or the information
              disclosed by the Party B to Party A in relation to the object company,
              the
              Carborundum project and the object equity
              interest.

          1.10  
          “Employees”
              mean all personnel who work in the Object Company and have employment
              relations with or de facto employment relations with the Object Company
              by
              the date the contract is executed.

          1.11  
          “Force
              Majeure”
              means the special events such as earthquake, typhoon, flood disaster,
              fire
              disaster, war, political disturbance, etc., or the events defined by
              Chinese laws and regulations as Force Majeure.

3

          1.12  
          “PRC”
              or
              “China”
              means the People’s Republic of China, and insofar as the Contract is
              concerned, shall exclude Hong Kong, Taiwan and
              Macau.

          1.13  
          “Tax”
              means the state or local taxes defined by Chinese laws and regulations,
              including relevant interest, fine or any other burden imposed by any
              government authorities in relation to such
              taxes.

Chapter
        II   
        Object
        Equity Interest

              Article
                  2
 
              According
                  to the Contract, Party B shall sell to Party A their respective
                  equity
                  interests of the Object Company and all the related rights and
                  interests
                  in a way free of any encumbrance. Party A shall pay the equity
                  interest
                  transfer price.

              Article
                  3

              After
                  the transfer of the equity interest is completed as per the Contract,
                  Party A will hold 100% equity interest of the Object
                  Company.

Chapter
      III     Price
      of Equity Interest Transfer

              Article
                  4
 
              The
                  price of the equity interest transfer will be based on the evaluation
                  of
                  the object equity interest by the assets evaluation agency. The
                  two
                  parties confirm that the price of the equity interest transfer
                  is US
                  dollar equal to RMB 3,800,000.00 Yuan, reading RMB three million
                  eight
                  hundred thousand Yuan (equity interest transfer price).

              Article
                  5

              Each
                  payment of the equity interest transfer shall be based upon satisfaction
                  of the following conditions: 

          5.1  
          The
              equity interest transfer and the Contract have been examined and approved
              by all examination and approval authorities. Party A and Party B have
              duly
              opened bank accounts which are used to pay and
              receive the price of the equity
              interest.

4

          5.2  
          The
              flaws, defects of the Object Company discovered in the course of the
              due
              diligence investigation and in the course of the handover and operation,
              have all been solved in a way accepted by Party A or have been provided
              guarantee as per requirement of Party A.

          5.3  
          The
              representations and statements made by Party B in the Contract are
              all
              true and correct.

Article
      6 Payment of the equity interest transfer price

          6.1  
          First
              payment

          Within
              3 days after the competent department of commerce has approved the
              equity
              interest transfer and the competent authority has issued new approval
              certificate of foreign invested enterprise to the Object Company as
              per
              the said approval, Party A shall pay 50% (first payment) of the equity
              interest transfer price to Party B.

          6.2  
          Second
              payment

          Within
              3 days after the industrial and commercial alteration registration
              procedure has been duly performed and the Object Company has obtained
              new
              business license, Party A shall pay 40% (second payment) of the equity
              interest transfer price to Party B.

          6.3  
          Arrears
              of payment

          The
              arrears of equity interest transfer price are used as Party B’s deposit.
              After
              the obligations under Article 27, 28 have been fulfilled and within
              3 days
              after Party A confirms in writing that the Carborundum Project operates
              legally and no significant issue exists in the facilities and equipments,
              Party A shall pay the arrears of the equity interest transfer price
              to
              Party B.

              Article
                  7

              The
                  parties to the Contract shall bear their respective payable taxes
                  arising
                  from the revenue or activity under the Contract according to the
                  relevant
                  laws, administrative regulations, rules and normative documents.
                  
5

              Article
                  8

              Party
                  B shall issue formal and valid receipt and invoice to Party A immediately
                  after receiving each equity interest transfer payment from Party
                  A. Within
                  5 (five) days after receiving the equity interest transfer payment,
                  Party
                  B shall go to the local foreign exchange administration and perform
                  the
                  registration for receiving foreign exchange from foreign investor
                  for the
                  Equity Interest Transfer, a corresponding certificate procured
                  by Party B
                  shall be provide to Party A.

Chapter
                  IV Capital Increase
 
              Article
                  9

              Purpose
                  of the capital increase

              Up
                  until the execution of this Contract, the Carborundum Project Phase
                  I
                  under the Object Company has finished construction and was put
                  into use on
                  January 16th, 2006. After closing date, Party A commits the capital
                  increase to the Object Company, in order to invest in the construction
                  of
                  continual project for the Carborundum Project.

              Article
                  10

              Scheme
                  of increase

              The
                  first capital increase shall be conducted within 21 days upon the
                  closing
                  date (in case that the preconditions stipulated by Article 11 are
                  all met
                  after the closing date, the date on which such preconditions are
                  all met
                  will govern instead of the closing date) and the amount is US$
                  8.00
                  Million. The time and amount of capital increase later on by Party
                  A shall
                  be fixed depending on the construction process of the continual
                  project
                  and fund demand.

            Article
              11
            The
                preconditions for the capital increase

          11.1  
          Party
              B has already performed all the obligations stipulated by this contract
              and the statements and guarantees made by Party B in this contract
              are all
              true and correct.

6

          11.2  
          The
              approval procedures including the project approval, environmental
              protection, construction and planning required for the construction
              and
              operation of the continual project of the first phase Carborundum Project
              and the follow-up projects have been performed and the follow-up project
              construction can be started legally.

          11.3  
          The
              debts of the Object Company before the closing date have been fully
              paid
              off by Party B or Party B has provided adequate guarantee for the debt
              as
              mentioned before.

Chapter
      V    Approval
      and Checking
 
            Article
                12

            Upon
                the Contract coming into force, Party A and Party B shall cooperate
                and immediately perform procedures relating to the industrial and
                commercial alteration registration of the object equity interest
                transfer.

            Article
                13

            Checking

          13.1  
          Party
              B commits that, after the execution of this Contract, all assets or
              any
              documents (including electronic data and written materials) of the
              Object
              Company, shall be kept in full and safe condition and checking procedure
              shall be conducted.

          13.2  
          Upon
              the Contract coming into force, Party A and Party B shall form a checking
              team and work together to do the checking work relating to the Object
              Company.

          13.3  
          The
              checking work shall include but not limited
              to:

          (1)  
          All
              the official seals, financial seals and contract seals and other seals
              of
              the Object Company;

          (2)  
          All
              certificates and licenses of the Object
              Company;

          (3)  
          The
              assets of the Object Company;

7

          (4)  
          The
              financial books and the accounting records of the Object
              Company;

          (5)  
          All
              documents on the archives of the Carborundum Project (including but
              not
              limited to the project application, feasibility study report, preliminary
              design report, engineering drawings, equipment drawings, all competent
              authorities’ replies, permits, records or acceptance documents relating to
              the Carborundum Project);

          (6)  
          All
              contracts for which the Object Company is one party (including but
              not
              limited to Engineering Construction Contract, Equipment Purchase Contract
              and Installation Contract, Electricity Provision contract, Raw Materials
              Purchase Contract, Product Sales Contract and Loan Contracts)
              ;

          (7)  
          Other
              check and handover procedures reasonably required by Party
              A.

          13.4  
          The
              check and handover work shall be completed within seven days after
              the
              Contract is effective. The completion of the check and handover work
              shall
              be confirmed by the representatives of both parties in
              writing.

          13.5  
          After
              the completion of the handover, the parties shall draw up detailed
              list of
              the handover items which shall be confirmed by representatives of both
              parties.

Chapter
      VI Assumption of Debts of Object Company
 
              Article
                  14
 
              Party
                  B shall disclose to Party A all loans of the Object Company before
                  the
                  execution date of this Contract (including tax payable and administration
                  cost). Party B shall provide Party A with detailed list of the
                  foregoing
                  debts (the list shall contain the amount of each debt, the debtor,
                  the
                  fulfillment period, the guarantee condition and the names of the
                  documents
                  related to the debts, etc.). 

              Article
                  15
 
              All
                  debts owed by the Object Company before the closing date shall
                  be borne by
                  Party B. Party B shall perform the payment obligation according
                  to the
                  deadline and the amount as agreed in the underlying documents of
                  the
                  paid-off debts. The payment conduct shall be legal and
                  valid.

8

              Article
                  16
 
              The
                  debts owed by the Object Company before the closing date and undisclosed
                  by Party B at the time of executing the Contract shall be borne
                  by Party
                  B. If Party A or the Object Company detects that the undisclosed
                  debts do
                  exist, Party A or the Object Company is entitled to ask Party B
                  to
                  immediately pay off the debts or dispose of the debts. 

              Article
                  17

              In
                  respect of the debts owed by the Object Company before the closing
                  date
                  and agreed to be borne by Party B according to Article 15 and Article
                  16
                  of the Contract, if Party B does not pay off the debts or Party
                  B does not
                  bear the debts according to the Contract, thus causing a result
                  that the
                  related creditors make claims against the Object Company, the Object
                  Company or Party A is entitled to seek compensation from Party
                  B on the
                  basis of this Contract. The scope of compensation includes the
                  debts
                  itself and all costs and expenses incurred by the Object Company
                  or Party
                  A in disposing of and settling the debts, including but not limited
                  to
                  litigation cost, arbitration fee, enforcement fee, attorney’s fee and
                  traveling costs, etc.

Chapter
        VII Disposition
        of Credits of the Object Company
 
              Article
                  18

              Except
                  the Contract provides otherwise, all credits of the Object Company
                  before
                  the closing date shall be owned by Party B. 

              Article
                  19

              Party
                  B shall complete the work of disposing of the credits of the Object
                  Company as per Article 18 of the Contract in timely manner. The
                  disposing
                  work performed by Party B shall be in compliance with Company Law
                  of
                  People’s Republic of China and the related provisions of the Articles
                  of
                  Association of the Object Company. 

              Article
                  20

              When
                  Party B disposes of the credits of the Object Company before the
                  closing
                  date as per the Contract and the disposing work is performed after
                  the
                  closing date, Party A shall provide necessary assistance without
                  contravening relevant laws and regulations.

9

Chapter
        VIII Employees
 
              Article
                  21

              Within
                  three days after the contract comes into force, Party B shall provide
                  Party A with detailed list of employees and managers of the Object
                  Company
                  before the closing date (including gender, age, deadline of the
                  employment
                  contracts, remuneration level, position, code for employment contracts
                  and
                  etc).

Chapter
        IX Rights,
        Obligations and Guarantees of Party B
 
In
        addition to Party B’ rights, obligations and guarantees specified by other
        clauses of the Contract, Party B shall enjoy rights, bear obligations and
        provide guarantees as per the following provisions of this chapter:
 
              Article
                  22 

              Except
                  as otherwise provided by this Contract,
                  upon execution of the Contract, no act shall be performed which
                  leads to
                  or may lead to loss or damage of the assets, rights and interests
                  of the
                  Object Company. 

              Article
                  23

              Upon
                  execution of the Contract, Party B shall not pledge, transfer or
                  put into
                  trusteeship its holding equity interest of the Object Company or
                  do any
                  other act which may affect Party A’s procurement of the object equity
                  interest.

              Article
                  24

              Upon
                  execution of the Contract, Party B guarantees that: it will operate
                  and
                  manage the Object Company in normal matter with duty of care of
                  a
                  kindhearted administrator, after the execution of the Contract,
                  including
                  but not limited to: (1) not to change the documents for establishing
                  the
                  Object Company; (2) not to change the financial policies of the
                  Object
                  Company; (3)on disposing of the assets, the credits and debts and
                  other
                  rights and obligations of the Object Company, Party B shall procure
                  advance approval from Party A.

10

              Article
                  25

              Party
                  B shall assist Party A to complete the examination, approval and
                  filing
                  procedures for the equity interest transfer.

              Article
                  26

              Party
                  B shall timely conduct the checking working specified in Chapter
                  Five of
                  the Contract. 

              Article
                  27

              Within
                  42 days upon the full payment of the first capital increase stipulated
                  in
                  Article10, Party B shall perform the procedure relating to land
                  use for
                  Carborundum Project for the Object Company and obtained the “certificate
                  for stated-owned land use right”.

              Article
                  28

              Within
                  six months upon the full payment of the first capital increase
                  stipulated
                  in Article 10, Party
                  B shall conduct the rights registration procedure for real estate
                  including the office premises, factory buildings and other buildings,
                  perform and complete
                  the procedures of planning permit for construction land, planning
                  permit
                  for construction project, and other registration procedure for
                  real
                  estateåParty
                  B shall conduct and complete the overall completion acceptance
                  for the
                  Carborundum Project Phase I within 6 months after the increased
                  capital is
                  paid.

              Article
                  29

              Party
                  B guarantee that, all losses (including the administrative liability)
                  suffered by the Object Company from flaws in the project approval,
                  land,
                  engineering, design, machine and equipment, installation and operation,
                  enviromental protection, completion acceptance etc., will be compensated
                  by Party B if the flaws are confirmed to be incurred or exist before
                  the
                  Contract is executed. 

              Article
                  30

              Party
                  B shall provide Party A with necessary assistance for Party A to
                  perform
                  its obligations or enjoy rights under this Contract.

              Article
                  31

              Party
                  B shall give timely written notice to Party A when Party B is in
                  knowledge
                  of any situation which may lead to failure in fulfilling all or
                  any part
                  of the Contract.

              Article
                  32

              Party
                  B are entitled to receive the equity interest transfer price as
                  per the
                  Contract.

11

Chapter
        X
Rights,
        Obligations and Guarantees of Party A
 
In
        addition to Party A’s rights, obligations and guarantees specified by other
        clauses of the Contract, Party A shall enjoy rights, bear obligations and
        provide guarantees in accordance with the following provisions:
 
              Article
                  33

              Party
                  A shall assist Party B to perform all approval procedures in relation
                  to
                  the equity interest transfer and commit to provide all necessary
                  cooperation.

Article
                  34

Party
                  A shall assist Party B to perform all industrial and commercial
                  registration alteration procedures in relation to the equity interest
                  transfer and promise to provide all necessary
                  cooperation.

Article
                  35

Party
                  A shall pay the equity interest transfer price to Party B as per
                  the
                  Contract and shall increase the registration capital of the Object
                  Company
                  as per the Contract in order to ensure the start of construction
                  for the
                  Carborundum Project Phase II.

Article
                  36

Party
                  A shall give necessary cooperation to Party B when Party B perform
                  their
                  obligations under the Contract or exercise their rights under the
                  Contract.

Article
                  37
 
Party
                  A shall give timely written notice to Party B when Party A is in
                  knowledge
                  of any situation which may lead to failure in fulfilling all or
                  any part
                  of the Contract.

Chapter
        XI Performance,
        Wind-up and Termination
 
              Article
                  38

              The
                  parties shall perform their contractual obligations fully and completely
                  as per the provisions of the Contract.

12

              Article
                  39

              Party
                  B and Party A shall work well together, give mutual cooperation,
                  prepare
                  all necessary application documents and complete all procedures
                  relating
                  to the equity interest transfer under the Contract, including but
                  not
                  limited to examination and approval, record-keeping, industrial
                  and
                  commercial registration. The costs and expenses incurred therefrom
                  shall
                  be borne evenly among the parties.

Article
                  40
 
If
                  there are any undisclosed facts or circumstances relating to the
                  Object
                  Company before the Contract is executed, which have material and
                  adverse
                  impact on the legal and normal operation of the Object Company
                  after the
                  closing date, Party A is entitled to terminate the Contract.
 
              Article
                  41

              If
                  Party A does not pay the equity transfer price or does not pay
                  the price
                  of increased capital according this Contract, resulting in the
                  Project
                  Phase II construction unrealizable, Party B has the right to terminate
                  this Contract.

Article
                  42

If
                  the abiding party terminates the Contract as per Article 40 and
                  Article 41
                  of the Contract, it shall give written termination notice to the
                  breaching
                  party. The breaching party shall bear the liability of breach a
                  contract
                  as per the Contract.

Article
                  43

If
                  the Contract and the equity interest transfer fail to be approved
                  by the
                  examination and approval authority and such failure is not due
                  to Party A
                  or Party B, the Contract shall be automatically terminated and
                  no parties
                  to the Contract shall bear breach of contract
                  liability.

Chapter
        XII Representations
        and Statements of Party B
 
As
        the
        substantial basis for Party A to execute the Contract, Party B represent
        and
        state that: 
 
13

              Article
                  44

              Party
                  B has full civil right capability and capacity for civil conduct
                  to
                  execute and fulfil the Contract and Party B has procured due authorization
                  to execute and fulfil the Contract.

Article
                  45

After
                  the Contract is effective, the Contract is legally binding upon
                  Party B
                  and is enforceable against Party B under relevant Chinese laws
                  of
                  bankruptcy, liquidation, reorganization, moratorium and other laws
                  relating to the creditor’s rights and remedies.

Article
                  46

The
                  registered capital of the Object Company has been fully paid in
                  as per
                  related Chinese laws. The Object Company is a legal person duly
                  incorporated and validly existing under Chinese laws. The Object
                  Company
                  legally owns the Carborundum Project and has procured business
                  license,
                  permit, registration and approval, which are legal and have not
                  been
                  violated.

Article
                  47

The
                  equity interest to be transferred by Party B to Party A does not
                  bear any
                  encumbrance preventing the transfer to Party A.

Article
                  48

The
                  execution, closing and fulfilment of the Contract by Party B, will
                  not (1)
                  violate any articles of association of the Object Company; (2)
                  cause the
                  Object Company, or Party B to violate any agreements, covenants,
                  commitments or other documents; (3) violate any laws, administrative
                  regulations, rules, normative documents, administrative replies
                  or any
                  judgments, awards, verdicts, orders or decrees, where the violation
                  will
                  have material adverse impact on the business, operation, assets
                  or
                  financial condition of the Object Company or Party B, or (4) result
                  in the
                  creation of (or the obligation to create) any encumbrance or restriction
                  of any kind on any properties or equity interests of the Object
                  Company.
                  
Article
                  49

Except
                  the disclosed information, there is no other circumstance affecting
                  the
                  legality and validity of the equity interest transfer and there
                  is no
                  circumstance affecting the legal interest of the Object Company.
                  The
                  copies of the materials provided by Party B or the Object Company
                  to Party
                  A or Party A appointed professional agencies are consistent with
                  the
                  original copies and the original copies are truly existent, legal
                  and
                  valid. There are no other credits, debts, restrictive rights, potential
                  disputes, defects or flaws of the assets (including design and
                  building
                  defects or flaws) of the Object Company which are undisclosed to
                  Party
                  A.

14

              Article
                  50

              Except
                  the information disclosed by Party B, the assets (construction
                  projects,
                  machines and equipment) of Carborundum Project are in good standing
                  and
                  have no material defects. They are in good operational condition
                  and fit
                  well the purpose of their design, construction and manufacture.
                  
Article
                  51

The
                  Object Company has full ownership of the assets under its name.
                  The assets
                  are free of any encumbrance, mortgage, pledge or liens.

Article
                  52

By
                  the date the Contract is executed, the Object Company does not
                  have any
                  pending litigation, arbitration, administrative penalty nor does
                  the
                  Object Company have any fact or issue which may lead to a
                  dispute.

Article
                  53

The
                  Object Company is in compliance with requirements of all Chinese
                  laws in
                  respect of environment protection, health and safety and does not
                  have any
                  harmful act which will entitle a third party to file a claim against
                  the
                  Object Company, demanding removal of the harm or obstacle or compensation
                  for its loss.

Article
                  54

The
                  Object Company has legally completed tax registration and has legally
                  and
                  sufficiently fulfilled its tax payment obligations before the closing
                  date. The Object Company does not have any pending tax claim and
                  is not
                  threatened by any auditing and investigation. 

Article
                  55

The
                  Object Company before the closing date does not have any outstanding
                  salaries, remuneration, housing accumulation fund, social insurance,
                  employment compensation, employment injury compensation, nor does
                  the
                  Object Company have any labor disputes or potential issue which
                  may lead
                  to labor disputes. 

15

Article
                  56

Regarding
                  the financial statement of the Object Company up to May 31st ,
                  2008, the
                  statement is: (a) true, accurate and complete; (b) consistent with
                  the
                  accounting books of the Object Company;(c) reflecting the uniform
                  financial condition, assets and debts of the Object Company at
                  the
                  respective dates and the operational result and cash flow change
                  of the
                  Object Company within the time period, and (d) prepared according
                  to the
                  sustainable accounting principle and financial system. 

Article
                  57

From
                  the date the Contract is executed until the closing date, Party
                  B will
                  operate and manage the Object Company and the Carborundum Project
                  in
                  normal manner. The operation, business and condition of the Object
                  Company
                  and the Carborundum Project will not have any material and adverse
                  change
                  compared with the condition before the Contract is
                  executed.

Chapter
        XIII Representations
        and Statements of Party A
 
As
        the
        substantial basis for Party B to execute the Contract, Party A represent
        and
        state that: 
 
Article
                  58

Party
                  A has full civil right capability and capacity for civil conduct
                  to
                  execute and fulfil the Contract and has procured due authorization
                  to
                  execute and fulfil the Contract.

Article
                  59

After
                  the Contract is effective, the Contract is legally binding upon
                  Party A
                  and is enforceable against Party A under relevant Chinese laws
                  of
                  bankruptcy, liquidation, reorganization, moratorium and other laws
                  relating to the creditor’s rights and remedies.

Article
                  60

The
                  execution and fulfilment of the Contract by Party A will not (1)
                  cause
                  Party A to violate any agreement, covenant, commitment or other
                  document;
                  (2) violate any laws, statutory laws, regulations, statutory rules
                  or any
                  judgments, injunctions, orders or decrees where the violation will
                  have
                  material and adverse impact on the business, operation, assets
                  or
                  financial condition of Party A.

16

Chapter
        XIV Confidentiality
 
              Article
                  61

              The
                  party which receives the disclosed information as per the Contract,
                  shall:

                (1)

                Keep
                    the disclosed information confidential within five years upon
                    execution of
                    the Contract;

                (2)

                Except
                    that the above materials and information are disclosed to the
                    employees or
                    consultants on need-to-know basis, any party to the Contract
                    shall not
                    disclose to the third party the above materials and
                    information.

              Article
                  62

              Article
                  61 is not applicable to the following
                  cases:

                  (1)

                  Before
                        the disclosing party discloses the information to the receiving
                        party, the
                        receiving party has already known the information or the
                        receiving party
                        can prove the materials and information may be known through
                        other legal
                        channels. 

                  (2)

                  The
                      receiving party obtains the materials and information from
                      the third Party
                      who is not subject to any confidentiality obligations. 

                  (3)

                  The
                    materials and
                    information are disclosed as per requirement of laws and
                    regulations.
                
 Chapter
        XV Liability
        for Breach of Contract
 
              Article
                  63

              If
                  Party A and Party B fail to obtain internal authorization to execute
                  and
                  fulfill the Contract, or, the execution and fulfillment of the
                  Contract
                  contradicts with or contravenes articles of association, government
                  authorization or approval, or due to something one party shall
                  take blame
                  for, the Contract is invalidated, becomes impossible to be fulfilled
                  or
                  fully fulfilled, such party shall be deemed to have breached the
                  Contract.
                  The breaching party shall pay the abiding party 1% of the Equity
                  Interest
                  Transfer Price as penalty. 

17

              Article
                  64 
 
              If
                  the significant issues related to Party A
                  but not disclosed by Party A before this Contract is executed,
                  causes the
                  equity interest transfer and Phase II construction of the Carborundum
                  Project impossible, then Party B is entitled to terminate this
                  Contract.
                  Party A shall return the equity interest of the Object Company
                  transferred
                  according to this Contract and shall also compensate Party B for
                  the total
                  loss resulted from the execution and performance of this
                  Contract.

Article
                  65
 
If
                  Party B, before this Contract is executed, has not disclosed the
                  facts
                  which may impact the legal existence of the Object Company and
                  the
                  Carborundum Project, thus the legal existence of the Object Company
                  or the
                  Carborundum Project is seriously impacted after the Equity Interest
                  Transfer is completed, Party A is entitled to terminate this Contract
                  and
                  Party B shall immediately repay all payments received as per the
                  Contract.
                  Party B shall also compensate Party A for the total loss resulted
                  from the
                  execution and performance of this Contract.
 
              Article
                  66 
 
              In
                  case that Party A does not perform any of
                  its obligations under this Contract, and this non-performance has
                  a
                  significant adverse impact on the construction of Carborundum Project
                  Phase II, in addition, Party A does not eliminate the adverse effect
                  or
                  fulfill the compensation obligation, Party B has the right to terminate
                  this Contract. Then Party A shall compensate Party B for its loss
                  resulting from the execution and performance of this
                  Contract.

              Article
                  67 

              If
                  Party B does not perform any of its
                  obligations under this Contract, and this non-performance has a
                  significant adverse impact on the Object Company after closing
                  date, in
                  addition, Party B does not eliminate the adverse effect or fulfill
                  the
                  compensation obligation, Party A has the right to terminate this
                  Contract.
                  Then Party B shall repay all payments received as per the Contract.
                  Party
                  B shall also compensate Party A for the total loss resulted from
                  the
                  execution and performance of this
                  Contract.

18

              Article
                  68
 
              During
                  the period from the Contract execution date to the closing date
                  of the
                  equity interest, if Party B commits any act which xxxxx the assets,
                  rights
                  and interests of the Object Company, it shall constitute a breach
                  of the
                  Contract. Party B shall be liable to make compensation to Party
                  A or the
                  Object Company for any damages arising from the breach of the Contract.
                  
              Article
                  69

              If
                  Party A does not make the payment of equity
                  interest transfer price according to the deadline as agreed, for
                  each day
                  delay, Party A shall pay 0.5‰ of the delayed amount as late payment
                  fee.

Article
                  70

If
                  either Party A or Party B violates the obligations under the Contract
                  or
                  the representations and statements are false, or the guarantee
                  responsibilities are not fulfilled, it shall constitute a breach
                  of
                  contract. If the penalty as agreed is not sufficient to cover the
                  financial losses suffered by the abiding party in executing and
                  fulfilling
                  the Contract, the breaching party shall make up the losses suffered
                  by the
                  observant party.

Chapter
        XVI Force
        Majeure
 
              Article
                  71

              In
                  case Force Majeure event occurs, the obligations of the affected
                  party and
                  any time period binding on such affected party shall be suspended
                  and
                  extended automatically during the period of the Force Majeure event.
                  In
                  such case, the affected party shall not bear any liability for
                  breach of
                  the Contract as provided in the Contract.

              Article
                  72

              The
                  Party alleging the occurrence of a Force Majeure event shall inform
                  the
                  other Party in writing within seven (7) days after the Force Majeure
                  event, and shall provide sufficient evidence issued by competent
                  authority
                  proving the occurrence and the continuation of the Force Majeure
                  event
                  occurs. The party alleging Force Majeure shall to the best of its
                  ability
                  eliminate the adverse effect of the Force Majeure event on the
                  fulfillment
                  of the Contract.

19

Chapter
        XVII Disputes
        Settlement
 
              Article
                  73

              Any
                  dispute arising from the Contract or related to the contract, may
                  be
                  submitted the dispute to China International Economic and Trade
                  Arbitration Commission (hereinafter referred to as “CIETAC”) for
                  arbitration pursuant to the prevailing CIETAC arbitration rules,
                  the
                  arbitration site is Beijing .

Article
                  74

The
                  arbitration award issued by CIETAC shall be final and binding on
                  each
                  party. 

Chapter
        XVIII Applicable
        Law
 
              Article
                  75

              The
                  establishment, validity, interpretation and implementation of this
                  Contract shall be governed and bound by the laws and regulations
                  of the
                  PRC. In the event the laws of the PRC do not have provision on
                  a certain
                  issue relating to this Contract, a reference shall be made to the
                  general
                  international commercial practice.

Chapter
        XIX Miscellaneous
 
              Article
                  76
 
              Amendment
 
              An
                    Amendment of the Contract is only effective upon the execution
                    of written
                    document by both Parties. If the amendment is only effective
                    upon approval
                    by relevant administrative departments according to Chinese laws,
                    it shall
                    be approved by such competent administrative
                    departments.

              Article
                  77

              Severability

20

              The
                  invalidity of any article in this Contract shall not affect the
                  validity
                  of the other articles in this Contract.

              Article
                  78

              The
                  Contract is written and executed in Chinese and English. If there
                  is any
                  discrepancy between the Chinese and English version, the Chinese
                  version
                  shall prevail.

              Article
                  79

              The
                  Contract has six copies in duplicate. Each party keeps two copies.
                  The other two copies shall be submitted for approval.
                  
              Article
                  80

              The
                  Contract shall be effective upon seals of both parties and the
                  date when
                  the approval is granted by examination and approval
                  authority.

              Article
                  81

              Notification

              81.1

              Unless
                as otherwise
                specified in the Contract, any notice or written communication shall
                be
                sent by one party to the other party via express mail service. All
                notices
                shall be deemed to have been served on the fifth day after the date
                (subject to the postal seal) when the notices are sent to the
                correspondence address specified in the Contract. If the date of
                actual
                receipt is earlier than the said date, the date of actual receipt
                shall be
                the date of receipt.
            
              81.2

              All notices
                and
                correspondences shall be sent to the following addresses unless the
                other
                party gives written notice to update such
                addresses.
            
Party
        A’s
        correspondence address:
 
Phoneæ  
 
Addresseeæ
 
Party
        B’s
        correspondence address:
        Xxxxx
        000, Xxxxxxxx X, Xxxxxxx Baisheng Huayuan, Xinhua Xxxxx Xxxx Xx.00, Xxxxxx
        Xxxxxxxxxxxx, Xxxxxxxx; post code: 830004
 
Phoneæ
        13999966895
 
AddresseeæGao
        Zhigang
 
Execution
        page follows
 
21

No
        text
        on this page, for signature only.
 
Party
        A
 
Authorized
        representative:
 
Date:
 
Party
        B
 
Authorized
        representative:
 
Date:
 
22

Chapter I	Definitions of the Contract	2

Chapter II	Object Equity Interest	4

Chapter III	Price of Equity Interest Transfer	4

Chapter IV	Capital Increase	6

Chapter V	Approval and Checking	7

Chapter VI	Assumption of Debts of Object Company	8

Chapter VII	Dispositon of Credits of the Object Company	9

Chapter VIII	Employees	10

Chapter IX	Rights, Obligations and Guarantees of Party B	10

Chapter X	Rights, Obligations and Guarantees of Party A	12

Chapter XI	Performance, Wind-up and Termination	12

Chapter XII	Representations and Statements of Party B	13

Chapter XIII	Representations and Statements of Party A	16

Chapter XIV	Confidentiality	17

Chapter XV	Liability for Breach of Contract	17

Chapter XVI	Force Majeure	19

Chapter XVII	Disputes Settlement	20

Chapter XVIII	Applicable Law	20

Chapter XIX	Miscellaneous	20

Article 12	Upon the Contract coming into force, Party A and Party B shall cooperate and immediately perform procedures relating to the industrial and commercial alteration registration of the object equity interest transfer.

Article 13	Checking

Document Metadata

Table of Contents

C3 Capital, Limited And Changchun Master Industry Co., Ltd In matter of Yili Master Carborundum Production Co., Ltd. Enter Into Equity Interest Transfer Contract July, 2008

Document Metadata

Article 2	According to the Contract, Party B shall sell to Party A their respective equity interests of the Object Company and all the related rights and interests in a way free of any encumbrance. Party A shall pay the equity interest transfer price.

Article 3	After the transfer of the equity interest is completed as per the Contract, Party A will hold 100% equity interest of the Object Company.

Article 4	The price of the equity interest transfer will be based on the evaluation of the object equity interest by the assets evaluation agency. The two parties confirm that the price of the equity interest transfer is US dollar equal to RMB 3,800,000.00 Yuan, reading RMB three million eight hundred thousand Yuan (equity interest transfer price).

Article 5	Each payment of the equity interest transfer shall be based upon satisfaction of the following conditions:


Article 8	Party B shall issue formal and valid receipt and invoice to Party A immediately after receiving each equity interest transfer payment from Party A. Within 5 (five) days after receiving the equity interest transfer payment, Party B shall go to the local foreign exchange administration and perform the registration for receiving foreign exchange from foreign investor for the Equity Interest Transfer, a corresponding certificate procured by Party B shall be provide to Party A.
Chapter IV Capital Increase

Article 9	Purpose of the capital increase

	Up until the execution of this Contract, the Carborundum Project Phase I under the Object Company has finished construction and was put into use on January 16th, 2006. After closing date, Party A commits the capital increase to the Object Company, in order to invest in the construction of continual project for the Carborundum Project.

Article 10	Scheme of increase

	The first capital increase shall be conducted within 21 days upon the closing date (in case that the preconditions stipulated by Article 11 are all met after the closing date, the date on which such preconditions are all met will govern instead of the closing date) and the amount is US$ 8.00 Million. The time and amount of capital increase later on by Party A shall be fixed depending on the construction process of the continual project and fund demand.

Article 14	Party B shall disclose to Party A all loans of the Object Company before the execution date of this Contract (including tax payable and administration cost). Party B shall provide Party A with detailed list of the foregoing debts (the list shall contain the amount of each debt, the debtor, the fulfillment period, the guarantee condition and the names of the documents related to the debts, etc.).

Article 15	All debts owed by the Object Company before the closing date shall be borne by Party B. Party B shall perform the payment obligation according to the deadline and the amount as agreed in the underlying documents of the paid-off debts. The payment conduct shall be legal and valid.

Article 16	The debts owed by the Object Company before the closing date and undisclosed by Party B at the time of executing the Contract shall be borne by Party B. If Party A or the Object Company detects that the undisclosed debts do exist, Party A or the Object Company is entitled to ask Party B to immediately pay off the debts or dispose of the debts.

Article 17	In respect of the debts owed by the Object Company before the closing date and agreed to be borne by Party B according to Article 15 and Article 16 of the Contract, if Party B does not pay off the debts or Party B does not bear the debts according to the Contract, thus causing a result that the related creditors make claims against the Object Company, the Object Company or Party A is entitled to seek compensation from Party B on the basis of this Contract. The scope of compensation includes the debts itself and all costs and expenses incurred by the Object Company or Party A in disposing of and settling the debts, including but not limited to litigation cost, arbitration fee, enforcement fee, attorney’s fee and traveling costs, etc.

Article 18	Except the Contract provides otherwise, all credits of the Object Company before the closing date shall be owned by Party B.

Article 19	Party B shall complete the work of disposing of the credits of the Object Company as per Article 18 of the Contract in timely manner. The disposing work performed by Party B shall be in compliance with Company Law of People’s Republic of China and the related provisions of the Articles of Association of the Object Company.

Article 20	When Party B disposes of the credits of the Object Company before the closing date as per the Contract and the disposing work is performed after the closing date, Party A shall provide necessary assistance without contravening relevant laws and regulations.

Article 22	Except as otherwise provided by this Contract, upon execution of the Contract, no act shall be performed which leads to or may lead to loss or damage of the assets, rights and interests of the Object Company.

Article 23	Upon execution of the Contract, Party B shall not pledge, transfer or put into trusteeship its holding equity interest of the Object Company or do any other act which may affect Party A’s procurement of the object equity interest.

Article 24	Upon execution of the Contract, Party B guarantees that: it will operate and manage the Object Company in normal matter with duty of care of a kindhearted administrator, after the execution of the Contract, including but not limited to: (1) not to change the documents for establishing the Object Company; (2) not to change the financial policies of the Object Company; (3)on disposing of the assets, the credits and debts and other rights and obligations of the Object Company, Party B shall procure advance approval from Party A.


Article 25	Party B shall assist Party A to complete the examination, approval and filing procedures for the equity interest transfer.

Article 26	Party B shall timely conduct the checking working specified in Chapter Five of the Contract.

Article 27	Within 42 days upon the full payment of the first capital increase stipulated in Article10, Party B shall perform the procedure relating to land use for Carborundum Project for the Object Company and obtained the “certificate for stated-owned land use right”.

Article 28	Within six months upon the full payment of the first capital increase stipulated in Article 10, Party B shall conduct the rights registration procedure for real estate including the office premises, factory buildings and other buildings, perform and complete the procedures of planning permit for construction land, planning permit for construction project, and other registration procedure for real estateåParty B shall conduct and complete the overall completion acceptance for the Carborundum Project Phase I within 6 months after the increased capital is paid.

Article 29	Party B guarantee that, all losses (including the administrative liability) suffered by the Object Company from flaws in the project approval, land, engineering, design, machine and equipment, installation and operation, enviromental protection, completion acceptance etc., will be compensated by Party B if the flaws are confirmed to be incurred or exist before the Contract is executed.

Article 30	Party B shall provide Party A with necessary assistance for Party A to perform its obligations or enjoy rights under this Contract.

Article 31	Party B shall give timely written notice to Party A when Party B is in knowledge of any situation which may lead to failure in fulfilling all or any part of the Contract.

Article 32	Party B are entitled to receive the equity interest transfer price as per the Contract.

Article 33	Party A shall assist Party B to perform all approval procedures in relation to the equity interest transfer and commit to provide all necessary cooperation.
Article 34	Party A shall assist Party B to perform all industrial and commercial registration alteration procedures in relation to the equity interest transfer and promise to provide all necessary cooperation.
Article 35	Party A shall pay the equity interest transfer price to Party B as per the Contract and shall increase the registration capital of the Object Company as per the Contract in order to ensure the start of construction for the Carborundum Project Phase II.
Article 36	Party A shall give necessary cooperation to Party B when Party B perform their obligations under the Contract or exercise their rights under the Contract.
Article 37	Party A shall give timely written notice to Party B when Party A is in knowledge of any situation which may lead to failure in fulfilling all or any part of the Contract.

Article 39	Party B and Party A shall work well together, give mutual cooperation, prepare all necessary application documents and complete all procedures relating to the equity interest transfer under the Contract, including but not limited to examination and approval, record-keeping, industrial and commercial registration. The costs and expenses incurred therefrom shall be borne evenly among the parties.
Article 40	If there are any undisclosed facts or circumstances relating to the Object Company before the Contract is executed, which have material and adverse impact on the legal and normal operation of the Object Company after the closing date, Party A is entitled to terminate the Contract.
Article 41	If Party A does not pay the equity transfer price or does not pay the price of increased capital according this Contract, resulting in the Project Phase II construction unrealizable, Party B has the right to terminate this Contract.
Article 42	If the abiding party terminates the Contract as per Article 40 and Article 41 of the Contract, it shall give written termination notice to the breaching party. The breaching party shall bear the liability of breach a contract as per the Contract.
Article 43	If the Contract and the equity interest transfer fail to be approved by the examination and approval authority and such failure is not due to Party A or Party B, the Contract shall be automatically terminated and no parties to the Contract shall bear breach of contract liability.

Article 44	Party B has full civil right capability and capacity for civil conduct to execute and fulfil the Contract and Party B has procured due authorization to execute and fulfil the Contract.
Article 45	After the Contract is effective, the Contract is legally binding upon Party B and is enforceable against Party B under relevant Chinese laws of bankruptcy, liquidation, reorganization, moratorium and other laws relating to the creditor’s rights and remedies.
Article 46	The registered capital of the Object Company has been fully paid in as per related Chinese laws. The Object Company is a legal person duly incorporated and validly existing under Chinese laws. The Object Company legally owns the Carborundum Project and has procured business license, permit, registration and approval, which are legal and have not been violated.
Article 47	The equity interest to be transferred by Party B to Party A does not bear any encumbrance preventing the transfer to Party A.
Article 48	The execution, closing and fulfilment of the Contract by Party B, will not (1) violate any articles of association of the Object Company; (2) cause the Object Company, or Party B to violate any agreements, covenants, commitments or other documents; (3) violate any laws, administrative regulations, rules, normative documents, administrative replies or any judgments, awards, verdicts, orders or decrees, where the violation will have material adverse impact on the business, operation, assets or financial condition of the Object Company or Party B, or (4) result in the creation of (or the obligation to create) any encumbrance or restriction of any kind on any properties or equity interests of the Object Company.
Article 49	Except the disclosed information, there is no other circumstance affecting the legality and validity of the equity interest transfer and there is no circumstance affecting the legal interest of the Object Company. The copies of the materials provided by Party B or the Object Company to Party A or Party A appointed professional agencies are consistent with the original copies and the original copies are truly existent, legal and valid. There are no other credits, debts, restrictive rights, potential disputes, defects or flaws of the assets (including design and building defects or flaws) of the Object Company which are undisclosed to Party A.

Article 50	Except the information disclosed by Party B, the assets (construction projects, machines and equipment) of Carborundum Project are in good standing and have no material defects. They are in good operational condition and fit well the purpose of their design, construction and manufacture.
Article 51	The Object Company has full ownership of the assets under its name. The assets are free of any encumbrance, mortgage, pledge or liens.
Article 52	By the date the Contract is executed, the Object Company does not have any pending litigation, arbitration, administrative penalty nor does the Object Company have any fact or issue which may lead to a dispute.
Article 53	The Object Company is in compliance with requirements of all Chinese laws in respect of environment protection, health and safety and does not have any harmful act which will entitle a third party to file a claim against the Object Company, demanding removal of the harm or obstacle or compensation for its loss.
Article 54	The Object Company has legally completed tax registration and has legally and sufficiently fulfilled its tax payment obligations before the closing date. The Object Company does not have any pending tax claim and is not threatened by any auditing and investigation.
Article 55	The Object Company before the closing date does not have any outstanding salaries, remuneration, housing accumulation fund, social insurance, employment compensation, employment injury compensation, nor does the Object Company have any labor disputes or potential issue which may lead to labor disputes.

Article 58	Party A has full civil right capability and capacity for civil conduct to execute and fulfil the Contract and has procured due authorization to execute and fulfil the Contract.
Article 59	After the Contract is effective, the Contract is legally binding upon Party A and is enforceable against Party A under relevant Chinese laws of bankruptcy, liquidation, reorganization, moratorium and other laws relating to the creditor’s rights and remedies.
Article 60	The execution and fulfilment of the Contract by Party A will not (1) cause Party A to violate any agreement, covenant, commitment or other document; (2) violate any laws, statutory laws, regulations, statutory rules or any judgments, injunctions, orders or decrees where the violation will have material and adverse impact on the business, operation, assets or financial condition of Party A.

(1)	Keep the disclosed information confidential within five years upon execution of the Contract;

(2)	Except that the above materials and information are disclosed to the employees or consultants on need-to-know basis, any party to the Contract shall not disclose to the third party the above materials and information.

(1)	Before the disclosing party discloses the information to the receiving party, the receiving party has already known the information or the receiving party can prove the materials and information may be known through other legal channels.

(2)	The receiving party obtains the materials and information from the third Party who is not subject to any confidentiality obligations.

(3)	The materials and information are disclosed as per requirement of laws and regulations.

Article 64	If the significant issues related to Party A but not disclosed by Party A before this Contract is executed, causes the equity interest transfer and Phase II construction of the Carborundum Project impossible, then Party B is entitled to terminate this Contract. Party A shall return the equity interest of the Object Company transferred according to this Contract and shall also compensate Party B for the total loss resulted from the execution and performance of this Contract.
Article 65	If Party B, before this Contract is executed, has not disclosed the facts which may impact the legal existence of the Object Company and the Carborundum Project, thus the legal existence of the Object Company or the Carborundum Project is seriously impacted after the Equity Interest Transfer is completed, Party A is entitled to terminate this Contract and Party B shall immediately repay all payments received as per the Contract. Party B shall also compensate Party A for the total loss resulted from the execution and performance of this Contract.
Article 66	In case that Party A does not perform any of its obligations under this Contract, and this non-performance has a significant adverse impact on the construction of Carborundum Project Phase II, in addition, Party A does not eliminate the adverse effect or fulfill the compensation obligation, Party B has the right to terminate this Contract. Then Party A shall compensate Party B for its loss resulting from the execution and performance of this Contract.

Article 67	If Party B does not perform any of its obligations under this Contract, and this non-performance has a significant adverse impact on the Object Company after closing date, in addition, Party B does not eliminate the adverse effect or fulfill the compensation obligation, Party A has the right to terminate this Contract. Then Party B shall repay all payments received as per the Contract. Party B shall also compensate Party A for the total loss resulted from the execution and performance of this Contract.

Article 68	During the period from the Contract execution date to the closing date of the equity interest, if Party B commits any act which xxxxx the assets, rights and interests of the Object Company, it shall constitute a breach of the Contract. Party B shall be liable to make compensation to Party A or the Object Company for any damages arising from the breach of the Contract.
Article 69	If Party A does not make the payment of equity interest transfer price according to the deadline as agreed, for each day delay, Party A shall pay 0.5‰ of the delayed amount as late payment fee.
Article 70	If either Party A or Party B violates the obligations under the Contract or the representations and statements are false, or the guarantee responsibilities are not fulfilled, it shall constitute a breach of contract. If the penalty as agreed is not sufficient to cover the financial losses suffered by the abiding party in executing and fulfilling the Contract, the breaching party shall make up the losses suffered by the observant party.

Article 71	In case Force Majeure event occurs, the obligations of the affected party and any time period binding on such affected party shall be suspended and extended automatically during the period of the Force Majeure event. In such case, the affected party shall not bear any liability for breach of the Contract as provided in the Contract.

Article 72	The Party alleging the occurrence of a Force Majeure event shall inform the other Party in writing within seven (7) days after the Force Majeure event, and shall provide sufficient evidence issued by competent authority proving the occurrence and the continuation of the Force Majeure event occurs. The party alleging Force Majeure shall to the best of its ability eliminate the adverse effect of the Force Majeure event on the fulfillment of the Contract.

Article 73	Any dispute arising from the Contract or related to the contract, may be submitted the dispute to China International Economic and Trade Arbitration Commission (hereinafter referred to as “CIETAC”) for arbitration pursuant to the prevailing CIETAC arbitration rules, the arbitration site is Beijing .
Article 74	The arbitration award issued by CIETAC shall be final and binding on each party.

Article 76	Amendment
	An Amendment of the Contract is only effective upon the execution of written document by both Parties. If the amendment is only effective upon approval by relevant administrative departments according to Chinese laws, it shall be approved by such competent administrative departments.

Article 77	Severability


	The invalidity of any article in this Contract shall not affect the validity of the other articles in this Contract.

Article 78	The Contract is written and executed in Chinese and English. If there is any discrepancy between the Chinese and English version, the Chinese version shall prevail.
Article 79	The Contract has six copies in duplicate. Each party keeps two copies. The other two copies shall be submitted for approval.

Article 80	The Contract shall be effective upon seals of both parties and the date when the approval is granted by examination and approval authority.

Article 81	Notification

81.1	Unless as otherwise specified in the Contract, any notice or written communication shall be sent by one party to the other party via express mail service. All notices shall be deemed to have been served on the fifth day after the date (subject to the postal seal) when the notices are sent to the correspondence address specified in the Contract. If the date of actual receipt is earlier than the said date, the date of actual receipt shall be the date of receipt.

81.2	All notices and correspondences shall be sent to the following addresses unless the other party gives written notice to update such addresses.