Chapter 7 Distribution of Profits and Repayment 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, accounting for _________%. The cooperative venture company may sign sales contracts with Chineseforeign trade companies, entrusting them to be the sales agencies orexclusive sales agencies, accounting for __________%. The cooperative venture company may entrust 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 explicitly 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 authorize the vice-chairman orany other directors to represent the joint venture company temporarily.

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