Product Development Agreement

THIS DEVELOPMENT AGREEMENT (" Agreement ") is entered into and effective as of this 29 th day of April 2008, by and between Kuong U Science & Technology (Group) Ltd. (hereinafter referred to as " Party A "), a corporation organized and existing under the laws of Macau, and having its principal office at No. 1 Pingbei Road 2, Nanping Science & Technology Industrial Park, Zhuhai City, Guangdong Province, China and Zhuhai Yuemao Laser Facility Engineering Co., Ltd. (hereinafter referred to as " Party B "), a Chinese company organized under the laws of the People's Republic of China (" PRC ") and having its registered office at No.1 Pingbei Road 2, Nanping Science & Technology Industrial Park, Zhuhai City, Guangdong Province, China. Party A and Party B are each referred to herein as a " Party " and collectively as the ? Parties ."



RECITALS



WHEREAS, Party A and Party B are owned by the same owners.



WHEREAS, Party A desires to have Party B develop certain prototype products (" Products "), and Party B is willing to develop the Products for Party A pursuant to the terms and conditions of this Agreement.



NOW, THEREFORE, the Parties agree as follows:



1. SCOPE OF WORK; SALES RIGHT




1.1 Party B agrees to develop the Products of which the sample products are more specifically described in Appendix 1.




1.2 Party B shall have the right to sell, at its sole discretion, the Products to a third party.




2. DELIVERY OF TECHNICAL INFORMATION




As soon as practicable at or after the execution of this Agreement, Party A shall transfer to Party B all relevant technical information relating to the Products.



3. PAYMENT




In consideration of the relationship between the two Parties, Party B has been developing these prototype products as a courtesy and free of charge. Party A agrees it will pay Party B a 1% royalty fee on Party A's actual sales of the products. The total amount will be paid when actual sales occur and will be paid on a quarterly base.



4. INTELLECTUAL PROPERTY OWNERSHIP




The Parties acknowledge and agree that Party A or its affiliates shall own all right, title and interest in and to the Products, including without limitation, any know-how, trade secrets, plans, designs, processes, formulas, manufacturing techniques, discoveries, inventions and ideas, product specifications in connection with the development of the Products as well as any and all intellectual property rights invented solely by Party B.








5. REPRESENTATIONS




Each party hereby represents and warrants that it has the full right, authority and power to enter into this Agreement and to make, assume and fully perform the obligations set forth herein, and that this Agreement has been duly executed and constitutes the valid and binding obligation of such party, and is enforceable in accordance with its terms.



6. CONFIDENTIALITY




6.1 Each Party shall maintain the secrecy and confidentiality of, and not disclose to any third party or person, any proprietary, secret or confidential data and information relating to the other Party and its business operations and other such information as disclosed to a Party by the other Party at any time during or for the purpose of negotiation and implementation of this Agreement (" Confidential Information ").




6.2 No Party shall use any Confidential Information of the other Party for its own purposes or any purpose other than implementing this Agreement.




7. TERM AND TERMINATION




7.1 This Agreement shall become effective as of the date hereof, shall continue in full force until expiration or termination of this Agreement.




7.2 Party A may, at its sole discretion, terminate this Agreement at any time which it considers appropriate.




7.3 Upon any breach by Party B of any of its obligations hereunder, Party A may terminate this Agreement by written notice to Party B. Such notice of termination shall be effective upon receipt.




7.4 Upon the change in ownership of Party B or the consolidation with or merger into any other corporation or entity by Party B, Party A may terminate this agreement by giving notice to Party B. Such notice of termination shall be effective immediately upon receipt.




7.5 Notwithstanding the foregoing, any termination or expiration of this Agreement shall not release any party from any liability or obligation which has already accrued as of the date of such termination or expiration.




8. NOTICE




8.1 All notices between the Parties shall be written in Chinese and in English and delivered, either by courier, registered airmail, fax or telegram, to the following addresses:




To Party A: Kuong U Science & Technology (Group) Ltd.
Room 2308, Yuanyangmingzhu Plaza
Hujiangxincheng, Tianhe District
Guangzhou, Guangdong Province, PRC 510623
Attention: Wensheng Chen
Tel: +86 20-3759-1253






2



To Party B: Zhuhai Yuemao Laser Facility Engineering Co., Ltd.
No.1 Pingbei Road 2,
Nanping Science & Technology Industrial Park,
Zhuhai City, Guangdong Province, PRC 519060
Attention: Ling Chen
Tel : 86-756-8682610, 8682787




9. GOVERNING LAW AND DISPUTE RESOLUTION




9.1 This Agreement shall be governed by and construed according to the laws of the United States.




9.2 Any dispute, controversy or claim arising out of or in connection with this Agreement o ...