1, Responsibilities
(1) Responsibilities of Party A
1) Party A shall provide factory spaceconsisting of two floorswith a total space of 850square metres, field of 500 square me-tres without covering, one factory management person andeighty
workers for the first phase. The number ofworkers shall be in-creased to 200 twelve months after operation. (Employment ofteenages under 16 is prohibited). If the local labour is not suffi-cient, PartyA can employ workers from other places with the ap-provalof the relevant departments of Shenzhen Municipality.
Within the contract term, Party A shallprocess the above prod-ucts for Party B which shallbe re-exported to Hong Kong.
2)The water supply and utility equipmentrequired for processingshall be provided by Party A.If additional installations of waterand electricfacilities are required, the expenses thereof shall beborneby Party B.
3) Party A shall arrange all the neccessary import and export ap-provalsrequired for processing and assembly and provide ad-minittrationand accounting management for the processingplant.Party A cannot contract Party A's responsibilities to anyotherParty or individual in any way.
(2) Responsibilities of Party B
1 ) To provide the equipment with the totalvalue of 4. 15 millionHong Kong Dollars.
2 ) To provide the raw materials, indirectmaterials and packagingmaterials for processing theproducts. Quantities and specifica-tions are to bespecified in separate contracts.
3) In the event any personnel, includingmanagement shows sub-standard performance and makes no improvement afterretrain-ing, Party B shall have the right to requestParty A to replacesuch persons. However, any physicalsearch of the workers shallbe regarded as illegal andprohibited.
2. Quantity of ProductsDuringthe first year, the total processing fee shall amount to HK$ 432, 000. 00. Fromthe second year, the quantity shall be in-creased. Details shall be specifiedin separate contracts.
3. Pricing &- Salary
(1) The trial production (includingtraining) period shall be twomonths. During suchperiod, the workers shall be paid HK$ 450. 00 per month on the basis of 25. 5working days permonth and 8 working hours per day.
(2) After the trial production period, theworkers' payment shallbe calculated according toactual production quanities. On the ba-sis of mutual benefit, both parties shall consider the processingfee, which shall be specificedin separate contracts, according todifferent kinds ofproducts, specifications, styles and engineeringprocedures.In order to ensure the reasoriable income of the
workers, the worker's monthly salary shallbe maintained nolower than HK $ 550. 00. If overtimework is required, paymentshall be calculatedseparately. However,Overtime shall not exceedthree hours a day.
(3) Expenses for water and electricity inParty A's plant shall beborne by Party B.
(4) Every month Party B shall pay HK , 400.00 to Party Afor management expenses.
4. Proportion o Products Damaged
(1) During the trial production period,Party B shall absorb thecost of products damaged.
(2) After the trial production period, theproportion of damagedproducts shall be mutuallyconsidered and decided by both par-ties and specified in separate contracts.
5. Shipment of Raw Materials &-Finished Products
(1) Every month, Party B shall providesufficient raw materialsand packaging materialsaccording to the contracted processingvolume. Toensure the normal production of Party A's plant ,Par-tyB shall ship such materials to the plant seven days before theproductionof each lot of products. Except for reason of force ma-jeure,the plant shall operate for more than 21. 5 days. In caseproductionis held up for more than four days due to insufficientsupplyof raw materials, Party B shall calculate the actual dayswhenproduction is shut down and pay to Party A the workers'livingexpenses at the rate of HK $ 15. 00 per person per day.
(2) To ensure the normal operation of PartyB's business activi-ties, Party A shall deliver thefinished products to Party B in ac-cordance with thetime of delivery, quality and quantity. Except
for reason of force majeure,in case losses to Party B are causeddue to Party A'sfailure to make delivery as mentioned above,Party Ashall be responsible for the compensation. Details ofsuchcompensation shall be mutually agreed upon in separatecontracts.
(3) Both parties shall mutually inspect anddocument the equip-ment and materials provided byParty B, such as machinery, ven-tilation and lightingequipment and raw materials. After the fin-
ished products are inspected and shipped from the plant by PartyB, Party A shall be free of any responsibility inregard to specifi-cations, quality and quantity, etc.
6. Method of PaymentPaymentof workers' salary and management fee shall be settledoncea month by D/P, which shall be conducted through Bank ofChinaShenzhen Branch by Party B's bank in Hong Kong (______Bank, Account NO. ___) inaccordance with the invoices issued