CONTRACT FOR PROCESSING & ASSEMBLY

Contract No: ________________
Conclusion Date: ____________
Conclusion Place: ___________
Party A: __________ Company (Party of Processing or Assembling)
Legal Address: ________________________________
Tel: _______________ Fax: ______________ E-mail: ___________
　　
Party B:___________ Ltd. (Party of Supplying Materials and Parts)
Legal Address: ________________________________
Tel: _______________; Fax: ______________; E-mail: __________

　　 Party A and Party B, according to the laws and policies of the People's Republic of China and the relevant regulations and the principles of equality and mutual benefit, have held discussions relating to the processing and assembling of (plastic toy products) and have reached agreement on the following contractual clauses:

1. Responsibilities

(1)Responsibilities of Party A
　　 1) Party A shall provide factory space consisting of _____ square metres, field of _____ square metres without covering, _____ factory management person and _____ workers for the first phase. The number of workers shall be increased to _____ twelve months after operation. Within the Contract term, Party A shall process the products for party B which shall be re-exproted to _____.

　　 2) The water supply and utility equipment required for processing shall be provided by Party A. If additional installations of water and electric facilities are required, the expenses thereof shall be borne by Party B.
　　 3) Party A shall arrange all the necessary import and export approvals required for processing and assembly and provide administration and accounting management for the processing plant. Party A cannot assign Party A's responsibilities to any other party or individual in any way.

(2) Responsibilities of Party B
　　 1) To provide the equipment with the total value of _____.
　　 2) To provide the raw materials, indirect materials and packaging materials for processing the products. Quantities and specifications are to be specified in separate processing contracts.
　　 3) In the event any personnel, including management shows substandard performance and makes no improvement after retraining, Party B shall have the right to request Party A to replace such persons. However, any physical search of the workers shall be regarded as illegal and prohibited.

2. Quantity of Products

　　 During the first year, the total processing fee shall amount to _____. From the second year, the quantity shall be increased. Details shall be specified in separate processing contracts.

3. Price & Salary

　　 (1) The trial production (including training) period shall be _____. During such period, the workers shall be paid _____ per month on the basis of _____ working days per month and _____ working hours per day.
　　 (2) After the trial production period, the worker's payment shall be calculated according to actual production quantities. On the basis of mutual benefit, both parties shall consider the processing fee, which shall be specified in separate processing contracts, according to different kinds of products, specifications, styles and engineering procedures. In order to ensure the reasonable income of the workers, the worker's monthly salary shall be maintained no lower than _____. If overtime work is required, payment shall be calculated separately. However, overtime shall not exceed _____ hours a day.
　　 (3) Expenses for water and electricity in Party A's plant shall be borne by Party B.
　　 (4) Every month Party B shall pay _____ to Party A for management expenses.

4. Proportion Products Damaged

　　 (1) During the trial production period, Party B shall absorb the cost of products damaged.
　　 (2) After the trial production period, the proportion of damaged products shall be mutually considered and decided by both parties and specified in separate processing contracts.

5. Shipment of Raw Materials & Finished Products

　　 (1) Every month, Party B shall provide sufficient raw materials and packaging materials according to the contracted processing volume. To ensure the normal production of Party A's plant, Party B shall ship such materials to the plant_____ days before the production of each lot of products. Except for reason of force majeure, the plant shall operate for more than _____ days in a month. In case production is held up for _____ days to insufficient supply of raw materials, Party B shall calculate the actual days when production is shut down and pay to Party A the workers' living expenses at the rate of _____ per person per day.
　　 (2) To ensure the normal operation of Party B's business activities, Party A shall deliver the finished products to Party B in accordance with the time of delivery, quality and quantity. Except for reason of force majeure, in case losses to Party B are caused due to Party A's failure to make delivery as mentioned above, Party A shall be responsible for the compensation. Details of such compensation shall be mutually agreed upon in separate processing contracts.
　　 (3) Both parties shall mutually inspect and document the equipment and materials provided by Party B, such as machinery, ventilation and lighting equipment and raw materials. After the finished products are inspected and shipped from the plant by Party B, Party A shall be free of any responsibility in regard to specifications, quality and quantity, etc.