Supply Agreement, dated January 16, 2008, between Henan GengSheng Refractories Co., Ltd. and Hanbao Iron and Steel Co., Ltd

Contract No. XQ-ZG-GN-JRL-014

Date: January 16, 2008
The Buyer: Hanbao Iron & Steel Co., Ltd.
The Supplier: China GengSheng Minerals, Inc.

Pursuant to the laws and regulations of the People's Republic of China ("PRC"), and on the basis of agreement reached through comprehensive negotiations, the Buyer and the Supplier enter into and consent to be bound by this supply and sales contract (the "Contract") regarding the supplies of chimney refractory materials and other related materials for 2500mm hot rolled strip units walking beam furnace.  

3. Payment and Methods:

The total amount of contract is approximately US$ 501,842 (RMB 3,814,000). The Buyer will pay 20% of total amounts approximately US$ 100,000 (RMB 760,000) as the down payment within 15 days upon the effectiveness, another 40 % payment approximately US$ 201,316 (RMB 1,530,000) within 15 days upon the delivery of the materials to the buyer’s site, and the other 30% payment approximately US$ 150,000 (RMB 1,140,000) within 10 days upon the test operation and the balance of 10% approximately US$ 50,526 (RMB 384,000) will be held as the security and be paid within 15 days after 12- month warranty period is mature.

4.1

The delivery shall be completed by February 15, 2008.

4.2

The Supplier shall be responsible for all the costs from any mistakes of delivery or any quality disparity caused by the supplier.

5.1

The Supplier shall be responsible for providing all the technical support and assistance during the installation period.

5.2

The Supplier shall submit the bio of the on-site technicians 20 days upon the effectiveness of contract for the approval.

5.3

The Supplier shall be responsible for all the damages resulted from technicians’ mistakes during the contract period.

5.4

The Supplier shall be responsible for assigning at least two technicians for on-site services. The Buyer is eligible to request the increase of technicians when necessary.

6.1

The warranty period is 12 months upon the final inspection.

6.2

The Supplier shall be responsible all the costs for the repairs or exchanges of materials or any mistakes caused by the Supplier within 15 days upon the determination of mistakes.

6.3

The Buyer shall be eligible to deduct 5% of total sales amounts as penalty when any malfunctions and damages occurred during warranty period.

6.4

The Supplier shall expend the warranty period when any delays of repairs caused by the supplier during the warranty period. The Supplier shall also pay 5% of total repairs amounts as the violation compensation. The penalty amounts will not exceed 10 % of total amounts of purchase.

6.5

The warranty period shall be extended another 12 months upon the date of discovering factual damages caused by the Supplier.

6.6.

The Supplier shall pay penalty for the delays of delivery or installation caused by the Supplier:

(1)

Delay within 1-4 week, the supplier shall pay 0.5% of the total amounts of the products to be delivered.

(2)

Delay within 5-8 week, the supplier shall pay 1% of the total amounts of the products to be delivered.

(3)

Delay more than 9 weeks, the supplier shall pay 1.5 % of the total amounts of the products to be delivered.

The penalty amounts for the delays of delivery will not exceed 10 % of total amounts of contract. The Buyer is eligible to terminate the contract when the delays of materials delivery critically impair operations over 2 months.

6.7

The Supplier shall pay the penalty of 5% of the materials amounts, which are delayed to be delivered due to the violation of technical instructions.

The Supplier is not eligible to subcontract or outsource the supplies to fulfill this contract.

8.1

Force majeure herein means natural disasters (earthquakes, hurricanes, and floods), wars, riots or other major upheaval. Neither party shall be liable in damages or have the right to terminate this Agreement for any delay or default in performing hereunder if such delay or default is caused by conditions beyond its control including.

8.2

The impacted party shall notify another party within 15 days when force majeure occurs and ends.

8.3

Both parties can re-negotiate the terms when the delays are expected to exceed 120 days due to the force majeure.

This Contract will be effective upon the execution of both parties with the certification of contract stamp. This contract has two originals that are identical to one other held by each party. The contract will be duplicated six copies, which the Buyer holds four copies and the Supplier holds two copies.

Both parties shall settle the disputes via negotiations possibly. Either party can file the case under the jurisdiction of the local people's court where the buyer is located when the consensus cannot be reached. The losing party shall be responsible for all the suit expenses. The contract is still enforceable during the trial.

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