THE CONTRACT FOR SINO-FOREIGN COOPERATIVE JOINT¹ VENTURE

Chapter 1 General Provisions

In accordance with the Law of the People’’s Republic of China on Chinese-Foreign Cooperative Joint Ventures and other relevant Chinese laws andregulations, _______________Company and _________Company, in accordancewith the principle of equality and mutual² benefit and through friendlyconsultations, agree to jointly³ set up a Cooperative venture in _______the People’’s Republic of China.

Chapter 2 Parties of the Cooperative VentureArticle

1 Parties to this contract are as follows: _________Company (hereinafterreferred to as Party A), registered with ______in China, and its legaladdress is at____________(street)_______(district)_____________(city)_____________China. Legal representative: Name: Position: Nationality: ___________Company (hereinafter referred to as Party B), registeredwith_______. Its legal address at___________. Legal representative: Name: Position: Nationality: (Note: In case there are more than two investors⁴, they will be calledParty C, D... in proper order).

Chapter 3 Establishment of the Cooperative Venture Company

Article 2 In accordance with the Cooperative Venture Law and other relevantChinese laws and regulations, both parties of the Cooperative ventureagree to set up ___________Cooperative venture limited liability company(hereinafter referred to as the Cooperative venture company).

Article 3 The name of the Cooperative venture company is______________ LimitedLiability Company. The name in foreign language is _________. The legal address of the joint venture company is at__________street________(city)____________province.

Article 4 All activities of the Cooperative venture company shall be governed bythe laws, decrees and pertinent⁵ rules and regulations of the People’’sRepublic of China.

Article 5 The organization form of the Cooperative venture company is a limitedliability company. The profits, risks and losses of the Cooperativeventure company shall be shared by the parties according to the relevantprovisions thereafter. Chapter 4 The Purpose, Scope and Scale of Production and Business

Article 6 The goals of the parties to the Cooperative venture are to enhanceeconomic cooperation technical exchanges, to improve the product quality,develop new products, and gain a competitive position in the world marketin quality and price by adopting advanced and appropriate technology andscientific management methods, so as to raise economic results and ensuresatisfactory economic benefits for each Cooperator. (Note: This article shall be written according to the specificsituations in the contract).

Article 7 The productive and business scope of the Cooperative venture companyis to produce ________products; provide maintenance service after the saleof the products; study and develop new products. (Note: It shall be written in the contract according to the specificconditions).

Article 8 The production scale of the Cooperative venture company is as follows: 1. The production capacity after the Cooperative venture is put intooperation is _________. 2. The production scale may be increased up to_____________ with thedevelopment of the production and operation. The product varieties may bedeveloped into ____________. (Note: It shall be written according to the specific situation).

Chapter 5 Total Amount of Investment and the Registered Capital

Article 9 The total amount of investment of the Cooperative venture company isRMB____________(or a foreign currency agreed upon by both parties).

Article 10 The registered capital of the joint venture company is RMB __________.(Exclusive of the right to the use of the site or the right to theexploitation of the natural resources and premises⁶ contributed by PartyA.)

Article 11 Party A and Party B will contribute the following to the cooperativeventure: Party A: premises__________m2 the right to the use of the site_________m2 Party B: cash ______________Yuan machines and equipment ____________Yuan industrial property __________Yuan others _____________Yuan, ___________Yuan in all. (Note: When contributing industrial property as investment, Party Aand Party B shall conclude a separate contract to be a part of this maincontract).

Article 12 The right to the use of site contributed by Party A shall be for theuse of the cooperative venture company within _______________days afterthe approval of the contract. The cash contributed by Party B shall be paid in_______________installment. Each installment⁷ shall be as follows: (Note: it shall be written according to the concrete conditions).

Article 13 The machines and equipment contributed by Party B as investment shallmeet the needs of the cooperative venture company, and shall be carried tothe Chinese port_________ days before the completion of the premisesconstruction.

Chapter 6 Responsibilities of Each Party to the Joint Venture

Article 14 Party A and Party B shall be respectively responsible for thefollowing matters:

Responsibilities of Party A: Handling of applications for approval, registration⁸, business licenseand other matters concerning the establishment of the cooperative venturecompany from relevant departments in charge of China; Processing the application for the right to the use of a site to theauthority in charge of the land; Organizing the design and construction of the premises and otherengineering facilities of the cooperative venture company; Assisting Party B to process import customs declaration for themachinery and equipment contributed by Party B as investment and arrangingthe transportation within the Chinese territory; Assisting the cooperative venture company in purchasing or leasingequipment, materials, raw materials, articles for office use, means oftransportation and communication facilities etc.; Assisting the cooperative venture company in contacting and settlingthe fundamental facilities such as water, electricity, transportationetc.; Assisting the cooperative venture in recruiting Chinese managementpersonnel, technical personnel, workers and other personnel needed; Assisting foreign workers and staff in applying for entry visas, worklicenses and handling their travel procedures; Responsible for handling other matters entrusted¹¹ by the cooperativeventure company.

Responsibilities of Party B: Providing cash, machinery⁹ and equipment, industrial property... inaccordance with the provisions of Article 11 and Article 12, 13, andresponsible for shipping¹² capital goods such as machinery and equipmentetc. contributed as investment to a Chinese port; Handling the matters entrusted by the cooperative venture company,such as selecting and purchasing machinery and equipment outside China,etc.; Providing necessary technical personnel for installing, testing andtrial production of the equipment as well as the technical personnel forproduction and inspecting; Training the technical personnel and workers of the cooperativeventure company; In case Party B is the licensor¹³, it shall be responsible for thestable production of qualified¹⁴ products of the cooperative venture companyin the light of design capacity within the specified¹⁵ period; Responsible for other matters entrusted by the joint venture company. (note: It shall be written according to the specific situation).

Chapter 7 Distribution of Profits and Repayment¹⁶ for Party B’’s Investment

Article 15 The cooperative venture company shall distribute its profits inaccordance with the following procedure after paying the income tax: ____________% as allocations for reserve funds, expansion funds,welfare funds and bonuses for staff and workers of the cooperative venturecompany; ____________% as repayment for Party B’’s Investment and___________Years scheduled to pay back all Party B’’s Investment; ____________% of the left distributed to Party A and ___________% toParty B.

Chapter 8 Selling of Products

Article 16 The products of cooperative venture company will be sold both on theChinese and the overseas market, the export portion accounts for____________%, ____________% for the domestic market. (Note: An annual percentage and amount for outside and domesticselling will be written out according to practical operations, in normalconditions, the amount for export shall at least meet the needs of foreignexchange expenses of the joint venture company).

Article 17 Products may be sold on overseas markets through the followingchannels: The cooperative venture company may directly sell its products on theinternational market, accounting¹⁷ for _________%. The cooperative venture company may sign sales contracts with Chineseforeign trade companies, entrusting¹⁸ them to be the sales agencies orexclusive sales agencies, accounting for __________%. The cooperative venture company may entrust¹⁰ Party B to sell itsproducts, accounting for ________%.

Article 18 The cooperative venture’’s products to be sold in China may be handledby the Chinese materials and commercial departments by means of agency orexclusive sales, or may be sold by the cooperative venture companydirectly.

Article 19 In order to provide maintenance service to the products sold both inChina or abroad, the cooperative venture company may set up sales branchesfor maintenance service both in China or abroad subject to the approval ofthe relevant Chinese department.

Chapter 9 The Board of Directors.

Article 20 The date of registration of the cooperative venture company shall bethe date of the establishment of the board of directors of the cooperativeventure company.

Article 21 The board of directors is composed of ____________directors, of which___________shall be appointed by Party A, ____________by Party B. Thechairman of the board shall be appointed by Party A, and its vice-chairmanby Party B. The term of office for the directors, chairman andvice-chairmans four years, their term of office may be renewed ifcontinuously appointed by the relevant party.

Article 22 The highest authority of the cooperative venture company shall be itsboard of directors. It shall decide all major issues concerning thecooperative venture company. Unanimous approval shall be required for anydecisions concerning major issues. As for other matters, approval bymajority or a simple majority shall be required. (Note: It shall be explicitly¹⁹ set out in the contract).

Article 23 The chairman of the board is the legal representative of thecooperative venture company. Should the chairman be unable to exercise hisresponsibilities for any reason, he shall authorize²⁰ the vice-chairman orany other directors to represent the joint venture company temporarily.

Article 24 The board of directors shall convene²¹ at least one meeting every year.The meeting shall be called and presided over by the chairman of theboard. The chairman may convene an interim²² meeting based on a proposalmade by more than one third of the total number of directors. Minutes ofthe meetings shall be placed on file.

Article 25 The meeting shall be valid²³ only when more than two thirds of the totalnumber of directors attend. In case of absence, the director shall entrustanother person to attend and vote for him with a trust deed.

Chapter 10 Business Management Office.

Article 26 The cooperative venture company shall establish a management officewhich shall be responsible for its daily management. The management officeshall have a general manager, appointed by Party _____, ______deputygeneral managers, _____by Party _____; _____by Party ______. The generalmanager and deputy general managers whose terms of office is _____yearsshall be appointed by the board of directors.

Article 27 The responsibility of the general manager is to carry out thedecisions of the board and organize and conduct the daily management ofthe cooperative venture company. The deputy general managers shall assistthe general manager in his work.

Article 28 The general manager shall report to the board of directors theoperation conditions of the cooperative company every three months, andmake a financial report every six months.

Article 29 In case of graft²⁴ or serious dereliction of duty on the part of thegeneral manager and deputy general managers, the board of directors shallhave the power to dismiss them at any time.