Chapter 7 Profit Sharing

Article 37
The joint¹ venture company shall allocate² reserve funds， expansion funds and bonuses welfare funds for staff and workers after payment of taxes. The proportion of allocation shall be decided³ by the board of directors.
Article 38
After paying the taxes in accoudance wiht law and drawing the various funds， the profits in net will be distributed according to the proprtion of each party's investment in the registered capital.
Article 39
The joint venture company shall distribute its profits once a year. The profit distribution plan and amount of profit distributed to each party shall be published within the first three months following each fiscal⁴ year.

Chapter 8 Staff and Workers

Article 41
The employment， recruitment， dismissal and resigntion of the staff and workers of the joint venture company and their salary， welfare， labor⁵ insurance， labor protection， labor discipline and other matters shall be handled according to the "Regulations of the People's Re-public of China on Labor Management in Joint Ventures Using Chinese and Foreign Investment" and its implementation⁶ rules， and relevant regulations issued by ×× province (City).
Article 42
The joint venture company has the right to take disciplinary actions， such as warning， demerit recording⁷ and salary reducing against those staff and workers who violate the rules and regulations of the joint venture company and labor disciplines. Those with serious cases
may be dismissed. Discharging of workers shall be filed with the local labor and personnel department.
Article 43
The salary treatment of the staff and workers shall be set by the board of directors ac-cording to the specific situation of ________， and the joint venture company， with reference to the regulations issued by the Bureau of Labor of _________， and shall be specified⁸ in detail in the labor contract. The salary of the staff and workers shall be increased correspondently with the development of production and the progress of the worker's ability and technology. The pensions of the staff and workers who retired⁹ from the joint venture company shall be paid ac-cording to the specific regulations issued by the Bureau of Labor of __________.
Article 44
The matters concerning the welfare funds， bonuses， labor protection and labor insurance， etc， shall be stipulated¹⁰ respectively in various rules by the joint venture company in ac-cordace with relevant regulations of the Pepole's Republic of China and________ ， to ensure that the staff and workers go in for production and work under normal condition.

Chapter 9 The Trade Union Organization

Article 45
The staff and workers of joint venture company have the right to establish tade union organization and carry out activities in accordance with the stipulation¹¹ of the "Trade Union Law of the people's Republic of China".
Article 46
The trade union in the joint venture company is the representative of the interests of the staff and workers. The tasks of the trade union are: to protect the democratic rights and ma-terial interests of the staff and workers pursuant to the law; to assist the joint venture company to arrange and make rational use of welfare funds and bonuses; to organize political， professional， scientific and technical studies， to carry out literary， art and sports activities; and to educate staff and workers to observe labor discipline and strive to fulfil the economic tasks of the joint venture company.
Article 47
The persons in charge of the trade union of the joint venture company has the right to attend as nonvoting members and to report the opinions and demands of staff and workers to meetings of the board of directors held to discuss issues such as development plans， production and managing activities of the joint venture company.
Article 48
The trade union shall take part in the mediation¹² of disputes arising between the staff and workers and the joint venture company.
Article 49
The joint venture company shall allot¹³ an amount of money totally 2% of all the salaries of the staff and workers of the joint venture company as trade union's funds which shall be used by the trade union in accordance with the "Managerial Rules for the Traed Union Funds" formulated¹⁵ by the All China Federation¹⁶ of Trade Union.

Chapter 10 Duration， Termination and Liquidation¹⁷ of the Joint Venture

Article 50
The duration of the joint venture company is ___________ years. The establishment of the joint venture company shall start from the date on which the business license¹⁸ of the joint venture company is issued.
An application for the extension of the duration. proposed by one party and unamiously approved by the board of directors， shall be submitted to the original examining and approving authority 6 months prior to the expiry date of the joint venture.
Article 51
With the agreement between both parties on the termination which should be pursuing the best benefits for the parties， the joint venture will be terminated. In this case， the decision for the termination shall be made by the board meeting 90 days before the date of termination of the joint venture， and be submitted to the original examining and approving authority.
Article52
When the following situations happened， either party have right to terminate the joint venture:
1)expiration¹⁹ of the duration of the joint venture company;
2)inability to continue operations due to heavy losses;
3)inability to continue operations due to heavy losses caused by the Force Majeure;
4)inability to continue operations due to the failure of the party to fulfil its obligations prescribed in the contract and the Articles of Association;
5)failure to obtain the desired objectives of the operation and noprospects for the future development of the joint venture company.
Article 53
Upon the expiration of the duration or termination of the joint venture company， the board of directors shall work out proceduers and principles for the liquidation， nominate candidates for the liquidation committee for liqidating the assets of the joint ventrue company.
Article 54
The task of the liquidation committee are: to conduct through check of the property of the joint venture company， its claims and indebtedness; to work out the statement of assets and liabilities and list of property; to formulate¹⁴ a liquidation plan. All these shall be earried out upon the approval of the board of directors.
Article 55
The remaning property after the clearance²⁰ of debts of the joint venture company shall be earried out upon the approval of the board of directors.
Article 56
On completion of the liquidation， the joint venture company shall submit a liquidation report to the original examining and approving authority， go through the formalities for nullifying its registration²¹ in the original registration office and hand in its business license， at the same time， make an anouncement to the public.
Article 57
After winding²² up of the joint venture company， its accounting²³ books shall be left in the care of Party A.

Chapter 11 Regulations

Article 58
Following are the rules and regulations formulated by the board of directors of the joint venture company:
1) Management regulations， including the powers and functions of the managerial branches and its working rules and procedures;
2)Rules for the staff and workers;
3)System of labor and salary;
4)System of work attendance record， promotion²⁴ and awards and penalty for the staff and workers;
5)Detailed rules of staff and worker's welfare;
6)Financial system;
7)Liquidation procedures upon the dissolution of the joint venture company;
8)Other necessary rules and regulations.

Chapter l2 Applicable Law

Article 59
The formation of this contract， its validity， interpretation²⁵， execution and settlement of the disputes shall be governed by the relevant laws of the People's Republic of china.

Chapter 13 Supplementary²⁶ Articles

Article 60
The amendment²⁷ to the Articles of Association shall be unanimously agreed and decided by the board of directors and submitted to the original examining and approving authority for approval.
Article 61
The contract shall be written in chinese and in English. Both languages are equally au- thentic. In events of any discrepancy²⁸ between the two aforementioned versions， the Chinece version shall prevail.
Article 62
The Articles of Association shall come into effect upon the approval by People's Repablic China. The same applies ×× Economic Relation and Trade Commisston， in the events of amendments²⁹.
Article 63
The Articles of Association is signed in province (city) China by the authorized representatives of both parties on