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Joint Venture Contract

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Joint Venture Contract


China Hainan Shenhai Group, China Heinan Yung Tzuo Enterprise Co., China Dalian Green Source Co. And PCC Group Inc. Based on equality and mutual benefits, have decided to establish a joint venture according to International Joint Venture Business Management Law of People's Republic of China. This contracts is made between them.


Article 1 Parties of Joint Venture


1.1 China Hainan Shenhai Group (hereafter referred to as Party A), registered corporation in Heinan. Legal address: F.11, No. 73, Haifu Road, Haikou City, Hainan Province, China.
Legal Representative -
Name: Ming-Shan Ding
Position: General Manager
Nationality: China


1.2 China Hainan Yung Tzuo Enterprise Co. (Hereinafter referred to as Party B), a register corporation in Hainan Province. Legal address: Rm.4502, Jing New Village, Haishao Road, Haikou City, Hainan Province, China.
Legal Representative -
Name: Ray-Jung Lin
Position: General Manager
Nationality: China


1.3 China Dalian Green Source Corp (hereinafter referred to as Party C) a register corporation in Dalian, China. Legal address: Cheng Pung Industry, Dalian Investment Area.
Legal Representative -
Name: Tian-Quan Sun
Position: President
Nationality: China


1.4 PCC Group Inc. (hereinafter referred to as Party d) a register corporation in USA with registered no.A415655. Legal address: 640 Puente Street, Brea. California 92621
Legal Representative -
Name: Zheng-Nan Wen
Position: President
Nationality: USA


Exhibit 10.5
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Article II Establishment of Joint Venture


2.1 Each parties according to International Joint Venture Business Management Law of People's Republic of China agree to establish joint venture business corp in Hainan Province, China.


2.2 Chinese name of the Joint Venture: (Chinese characters appear here)


2.3 English name of the Joint Venture: Hainan Shenhai Energy Resources & Chemical Industry Co., Ltd.


2.4 Legal address of the Joint Venture: Quei Lin Young Economic Technology Development Zone, Hainan Province, China.


2.5 The Joint Venture is a Chinese corporation. All of its activities must comply with the Chinese law, decree and related regulations.


2.6 The Joint Venture is organized as a liability limited company. The Joint Venture parties' responsibility is limited to the amount of each of their investment in the registered capital. Each party will share the profits, losses and risks of the Joint Venture based on the amount of investment each party put in.


2.7 The managing department of the Joint Venture: People's Government Economic Bureau, Hainan, People's Republic of China.


Article III Business Purpose, Scope and Scale


3.1 The purpose of the Joint Venture: To establish an international-level business with patented and most advanced equipment based on the aspiration to enhance business cooperation and technical exchange; To utilize recycled resources to manufacture industrial raw materials and products; To obtain satisfactory economic benefits through scientific operation and management.


3.2 Business Scope: Vacuum distillation of old rubbers, deeply process coconut shell and research & develop new products.


3.3 Production Scale: Old rubber material process 6000 tons a year. Coconut shell process 15,000 tons a year.


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Article VI Total Investment and Registered Capital


4.1 Total Investment of the Joint Venture: 18 millions US dollars.


4.2 Registered Capital: 5.5 millions US dollars, in which:
2.475 million US dollars come from Party A's investment, 45% of the registered capital;
0.55 million US dollars come from Party B's investment, 10% of the registered capital;
0.275 million US dollars come from Party C's investment, 5% of the registered capital;
2.2 million US dollars come from Party D's investment, 40% of the registered capital; 4.3 The Joint Venture parties will put in their investment in the following forms:


Party A Property & cash
Party B 0.55 millions US dollars in cash
Party C 0.275 millions US dollars in cash
Party D Patented technology and cash in US dollars. (In which: the patented technology is 1.375 million US dollars and cash is 0.825 million US dollars.)
4.4 Payment for registered capital of the Joint Venture: Four parties shall pay off their investment in installments within 120 days starting on the day the corporation is issued. After each party has paid off its investment, a certificate of investment will be issued by a Chinese CPA after the inspection as acknowledge for the receipt of the investment. If the investment is overdue and unpaid, the unpaid party will be charged 5% of the unpaid amount each month as late payment interest to the party who keeps its words. If any loss occurs due to one party's delinquency in payment, the delinquent party shall be responsible for the loss.


4.5 The Joint Venture will apply for bank loan to make up the difference between the total investment and registered capital. The interest of the loan will be accounted for as the cost. The risk of bank loan will shared by all Parties as invest ratio.


4.6 Approval from the other Joint Venture party and the original evaluation is required if one Joint Venture wishes to transfer all or part of its investment to a third party. Also, any change in the investment shall be registered with the Business Administration Bureau.


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4.7 When one Joint Venture party wishes to transfer all or part of its investment, the other Joint Venture party has the purchase priority.


4.8 During the period of Joint Venture, the Joint Venture can not reduce the total registered capital. Any increase in the registered capital or change in investment proportion must be resolved in the Board of Directors, and shall be filed with the original evaluation agency for approval. The change shall also be registered at the original registration agency.


4.9 China Hainan Shenhai Group is responsible for all the necessary cost to establish the Joint Venture Company, and all the other parties agree that this cost is shared by the Joint Venture Company.


Article V Reponsibility of Each Joint Venture Parties


5.1 Both Joint Venture parties shall do their best to effectively and economically accomplish the business principle and goal of the company.


5.2 Party A is obligated to complete the followings:
5.2.1 To obtain approval for the establishment of the Joint Venture from the related Chinese government agency; to obtain and receive certificate and to register and receive business license and etc;
5.2.2 To pay its share of investment according to the contract;
5.2.3 To take care of all formalities for requisition of land in the Development Zone for the Joint Venture;
5.2.4 To coordinate the designing and construction of the workshop and othe facilities in the Joint Venture;
5.2.5 To assist the Joint Venture in the implementation of water, electricity, transportation, communication and other fundamental facilities;
5.2.6 To assist the Joint Venture in the recruitment of management staff, technical staff, workers and other staff;
5.2.7 To assist the Joint Venture to purchase processing equipment, materials, appliances, transportation tools, communication equipment and etc. In China;
5.2.8 To assist the Joint Venture to take care of custom formalities for the equipment, raw materials imported, and take care some of the formalities for the products exported;
5.2.9 To assist foreign workers to take care of visa, work, living and travel procedures;
5.2.10 To assist the Joint Venture to take care of related loan, insurance and etc;
5.2.11 Responsible for domestic sales of all diesel oil, natural gas, old steel wire products;


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5.2.12 To assist the Joint Venture to apply for tax reduction and exemption and other favorable treatment based on related law in China;
5.2.13 To take care of other matters entrusted by the Joint Venture.


5.3 Party B obligated to complete the following:
5.3.1 To pay its share of investment according to the contract;
5.3.2 To take care of other matters entrusted by the Joint Venture


5.4 Party C obligated to complete the following:
5.4.1 To pay its share of investment according to the contract;
5.4.2 To provide the Joint Venture with related international market product information for the products manufactured by the Joint Venture;
5.4.3 To take care of other matters entrusted by the Joint Venture.


5.5 Party D obligated to complete the following;
5.5.1 To pay its share of investment according to the contract;
5.5.2 Responsible for the quotation inquiry of the equipment's, cars and accessories needed to be imported, and to order the selected products and take care of related formalities for their shipment to Haikou Port.
5.5.3 Responsible for import old rubber material to port Haikou, if the material is insufficient in domestic market and after the Joint Venture Company apply the temporary import permission from the Environment Control Department.
5.5.4 Responsible for the sales of charcoal products in International market,
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