Lease Agreement

1.

Party A will lease to Party B his standard workshop, office building, and multiple–use building (correctively “leasehold”) , which are located at No.20, Xinxing Road, New Industry Park, Liujiang County, Liuzhou City. (auxiliary facilities are presented in Exhibit A )

a)

The area of office building is about 1,002 ㎡ and shall be used for office work.

b)

The area of multiple–use building is about 1,000 ㎡ and shall be used as rest room for employees.

c)

The area of No.1 workshop is about 4,090 ㎡ while No.2 workshop is about 2,055 ㎡. They are used as production workshop.

d)

One set of voltage transformation power distribution cabinet of 250 KVA.

e)

No.1 workshop: 2 sets of mono bean 10t bridge crane 24 meters span.

 

1.

No.2 workshop: 1 set of mono bean 10t bridge crane 24 meters span.

f)

Wall of the plant.

2.

Lease term

3.

Security deposit and rental

 

a)

Security deposit for leasing

 

 

b)

Rental

 

4.

Party A represents that the ownership of leasehold and land aforesaid is clarified. The leasehold is used for production of auto parts, office working, management and backup management of some employees. Party B is not allowed to change the use of leasehold at his own decision.

5.

In the period of lease term, Party B promises:

 

a.

The leasehold hereunder is with electricity, water and good transportation.

 

b.

to maintain and repair the leasehold, except for damage caused by improper use of Party B.

 

c.

Party A shall notify Party B six months in advance if he sells or pledges the property hereunder.

6.

In the period of lease term, Party B promises:

 

a.

No change of the structure of the property. Party B can make change to the property or add other facilities, provided the written consent of Party A. The expense incurred shall be responsible by Party B. If Party B infringes this term, the loss or damage incurred shall be responsible by Party B.

 

b.

Party B shall not lease the leasehold to any third party or exchange it for use with any third party; No pledge or assignment of the leasehold and land hereunder.

 

c.

Party B shall assist Party A in the regular property examination, repair and maintenance.

 

d.

Party B shall undertake all the expenses in associated with water, electricity, sanitation, and property management etc., during the lease term.

 

e.

Party B shall use and maintain the leasehold and auxiliary facilities appropriately. In case of damage of leasehold and auxiliary facilities caused by party B, Party B shall make repairs immediately or bear the compensation accordingly.

 

f.

Party B shall not carry on illegal activities or store hazardous materials in use of the leasehold.

 

g.

Party B shall be responsible for the environment protecting and dispose the waste water, waste gas and garbage properly according the requirements of related regulations and rules. Any loss caused by infringement of Party B shall be undertaken by Party B.

7.

a. Party B is responsible for the management, proper use and maintenance of the leasehold and auxiliary facilities as well as the elimination of any potential risk. Otherwise, Party B shall undertake all the responsibilities and make up the loss of party A.

 

8.

The expense for installation of anti-theft system in the plant shall be undertaken by Party B.

9.

In the period of lease, Party B shall comply with Fire Prevention Law of the People's Republic of China and related regulations. If Party B fails to comply, any loss caused herein shall be undertaken by Party B.

10.

When the lease agreement expires and Party B decides not to renewal, Party B shall return the leasehold and auxiliary facilities which are in good condition to Party A. For any damage or lost of the leasehold, Party B should repair or make compensation to Party A. Party B shall move out within five days upon expiration of lease term and clean the property. For the inventory of property in the plant without consent of Party A, Party A has the right to charge Party B liquidated damage, which is 5% of monthly rental, and dispose the property in ten days.

11.

This lease agreement terminates upon expiration of lease term.

12.

 Liability for breach of this lease agreement:

13.

Both parties shall not be responsible for any loss or termination of agreement caused by act of God. Act of God represents unpredictable, unavoidable situation and incidents.

14.

Any disputes arising from the contract shall be solved through consultation. In case no resolution is reached, either party can bring a lawsuit before the court.

15.

the tax related to lease of leasehold hereunder in the period of lease is undertaken by Party A, while the tax related to production, operation and other business activities is undertaken by Party B.

16.

Party A’s Property Ownership Certificate regarding the leasehold is in the process of examination and shall be approved within approximately 6 months.

17.

In case of anything not covered here, supplementary clauses will be formed which have the same effect as those in this agreement.

18.

This agreement in four copies. Party A and Party B hold two copies respectively.

19.

This agreement comes into effect upon signature or seal of both parties and receipt of security deposit and first rental by Party A from Party B.

 

1.

3 sets of mono bean 24 meters span;

 

2.

1 set of 250 KVA voltage transformer power cabinet;

 

3.

Each washroom of the office building is installed with a faucet and basin;

 

4.

Each washroom of the multiple-use building is installed with a basin, faucet and sprinkler.

 

 

5.

Totally 64 extinguishers: 12 in the office building with 4 distributed in each floor, 12 in the multiple-use building with 4 distributed in each floor, 22 in No.1 workshop, and 18 in No.2 workshop.

 

6.

Each window in the second floor of office building is installed with curtain.