Chinese Joint Venture Agreement

JOINT VENTURE ("JV") AGREEMENT - TERMS AND CONDITIONS


ZHUHAI SPECIAL ECONONIC ZONE PARTY A (PRC): MIN GUANG INDUSTRIAL CO.


PARTY B (USA): CRAIG CONSUMER ELECTRONICS, INC.


It is agreed by both parties that they will enter into a JV agreement with terms summarized as follows:


ARTICLE 1: GENERAL PRINCIPLE


Section 1: Party A and together with Party B, will abide by the Law of the
Peoples Republic of China ("PRC") on Sino-Foreign Equity Joint
Venture ("Equity JV Law") and other applicable regulations with
equally beneficial terms, hereafter agree to establish a Sino-US
joint venture in Zhuhal City, Guangdong Province of the People's
Republic of China.


ARTICLE 2: SHARE CAPITAL STRUCTURE


Section 2: Each "party" owns 50% of the JV and their contribution of Capital
will be as follows:


PARTY A: US $250,000 (cash)
PARTY B: US $250,000 (US$100,000 - cash;
US $150,000 - equipment & parts)


Section 3: Each "party" will pay an initial set up capital of US$150,000
first upon signing of this Agreement and will pay its balance within
one month after the JV's registration date. Subject to the approval
of party A and such approval 2
should not be unreasonably withheld, it is agreed that any moveable
and usable fixed assets & equipments with good conditions from party
B's current factory will be brought by the JV at a price to be based
on the net book value of the injected assets using a 5-year straight
line depreciation rate method on a monthly calculation basis.


Section 4: When any of the parties wants to transfer part of all of its
investment, then the consent from the other owners must be obtained.
The written agreement of the transfer will be subject to the
approval from the board of directors, as well as, the applicable
government agency of the Zhuhai Municipaly Government.


If any of the parties wants to transfer all or part of his
investment, the existing investors will have the first right of
refusal and priority to buy such investment. When transferring such
ownership to outside investors, the terms and conditions offered to
such investors may not be better than those offered to the existing
investors.


ARTICLE 3: THE JOINT VENTURE ("JV")


Section 5: JOINT VENTURE COMPANY NAME: (PENDING)


ENGLISH NAME: ZHUHAI CRAIG ELECTRONICS CO. LTD.


4. Agree that it will be party B's sole responsibility to make sure
the physical balance of inventory (both refurbished products and
repairing parts) can be properly matched with the balance of the
quota books;


5. Pay for the JV's expenses on a monthly timely basis from
overseas to the JV and it is agreed that there will be no
charges to the JV for the time and traveling costs to be spent
by all the JV's directors;


6. To safeguard the assets of JV and in the event of any
loss or damages to the assets of the JV (including 3
damages by fire, theft) will be the sole responsibility
of party B;


7. To pay to party A a handling fee on a monthly basis per
calculation under schedule 1 and a sum equal to party A's
portion of profits on an annual basis per calculation under
schedule 2;


8. To remit foreign currency to main bank A/C of the JV to ensure
the foreign margin balancing of the JV can be properly done.


9. To resolve any regulatory conflict outside of PRC;


10. To disclose and obtain consent from the other "party"
if any relative of the directors from each party to be
employed and work in the JV;


ARTICLE 6: PRODUCTS DISTRIBUTION


Section 11: 100% of the finished products will be exported. However, party A
will assist to obtain the domestic sales rights in PRC. Once the
domestic right is obtained, JV will first consider to use party A or
party designated by party A as its PRC sales agent with terms to be
agreed later.


ARTICLE 7: BOARD OF DIRECTORS


Section 12: The date of the JV's registration will be the date for the
establishment of the board of directors.


Section 13: The board will consist of four directors, with two directors
from each "party." The directors cannot be replaced without written
notice by both "parties" and approval by the board.


Section 14: The board is the highest overseeing body of the JV and shall
make all of the major decisions. The board will meet at least twice
a year. One in China and one in the U.S. Each party shall pay its
own expenses incurred to attend the board meetings. 4 ARTICLE 8: OPERATION MANAGEMENT STRUCTURE


Section 15: Under the supervision of the board, the general manager is
responsible for managing the company. He is appointed and can be
terminated by the board. All other senior management are hired and
can be terminated by the general manager. The general manager will
be appointed by party B and approved by party A and such approval
should not be unreasonably withheld. ...