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 THE CONTRACT FOR SINO-FOREIGN EQUITY JOINT VENTURE

                                   Whole Doc.

                          Chapter 1 General Provisions

    In accordance with the Law of the People's Republic of China on  Joint
Ventures Using Chinese and Foreign Investment (the  "Joint  Venture  Law")
and other relevant Chinese laws  and  regulations,  __________Company  and
___________ Company, in accordance with  the  principle  of  equality  and
mutual benefit and through friendly consultations, agree to jointly invest
to set up a joint venture enterprise in ________of the  People's  Republic
of China.

                     Chapter 2 Parties of the Joint Venture

Article 1
     Parties  to  this  contract  are  as  follows:  ___________Company  (
hereinafter referred to as Party A), registered with __________ in  China,
and its legal address is at  ___________  (street)  __________  (district)
___________ (city) ___________China.
    Legal representative:                   Name:
                                            Position:
                                            Nationality:
    __________Company (hereinafter referred to  as  Party  B),  registered
with __________. Its legal address at ___________.
    Legal representative:                   Name:
                                            Position:
                                            Nationality:
    (Note: In case there are more than two investors, they will be  called
Party C,D...in proper order).
 
 

              Chapter 3 Establishment of the Joint Venture Company

Article 2
    In accordance with the Joint Venture Law and  other  relevant  Chinese
laws and regulations, both parties of the joint venture agree  to  set  up
_____________joint  venture  limited  liability  company   (   hereinafter
referred to as the joint venture company).
Article 3
    The name of the joint venture company is  __________Limited  Liability
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 joint venture company shall be governed  by  the
laws, decrees and pertinent rules and regulations of the People's Republic
of China.
Article 5
    The Organization form of  the  joint  venture  company  is  a  limited
liability company. Each party to the joint venture company  is  liable  to
the joint venture company within the limit of the capital subscribed by
it. The profits, risks and losses of the joint venture  company  shall  be
shared by  the  parties  in  proportion  to  their  contributions  to  the
registered capital.

       Chapter 4 The Purpose, Scope and Scale of Production and Business

Article 6
    The goals of the parties to the joint venture are to enhance  economic
co-operation technical exchanges, to improve the product quality,  develop
new products, and gain a competitive  position  in  the  world  market  in
quality and price by adopting  advanced  and  appropriate  technology  and
scientific management methods, so as to raise economic results and  ensure
satisfactory economic benefits for each investor.
    (Note: This  article  shall  be  written  according  to  the  specific
situations in the contract).
Article 7
    The productive and business scope of the joint venture company  is  to
produce __________ products; provide maintenance service after the sale of
the products; study and develop new products.
    (Note: It shall be written in the contract according to  the  specific
conditions).
Article 8
    The production scale of the joint venture company is as follows:
    1. The production  capacity  after  the  joint  venture  is  put  into
operation is __________.
    2. The production scale may be increased up to ____________  with  the
development of the production and operation. The product varieties may  be
developed 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 joint  venture  company  is  RMB
___________ (or a foreign currency agreed upon by both parties).
Article 10
    Investment contributed by the parties is  Renminbi  __________,  which
will be the registered capital of the joint venture company.
    Of  which:  Party  A  shall  pay  ____________  Yuan,  accounting  for
__________%;  Party  B   shall   pay   ___________Yuan,   accounting   for
__________%.
Article 11
    Both Party A and Party  B  will  contribute  the  following  as  their
investment:
    Party A: cash __________Yuan
             machines and equipment __________Yuan
             premises __________Yuan
             the right to the use of the site __________Yuan
             industrial property __________Yuan
             others __________ Yuan, __________ Yuan in all.
    Party B: cash __________Yuan
             machines and equipment __________Yuan
             industrial property __________Yuan
             others __________Yuan, __________Yuan in all.
    (Note: When contributing  capital  goods  or  industrial  property  as
investment, Party A and Party B shall conclude a separate contract to be a
part of this main contract).
Article 12
    The registered capital of the joint venture company shall be  paid  in
___________ installments by  Party  A  and  Party  B  according  to  their
respective proportion of their investment.
    Each installment shall be as follows:
    (Note: it shall be written  according  to  the  concrete  conditions).
Article 13
    In case any party to the joint venture intends to assign all  or  part
of his investment subscribed to a third party, consent shall  be  obtained
from the  other  party  to  the  joint  venture,  and  approval  from  the
examination and approval authority is required.
    When one party to the  joint  venture  assigns  all  or  part  of  his
investment, the other party has preemptive right.

        Chapter 6 Responsibilities of Each Party to the  Joint  Venture

Article 14
    Party A  and  Party  B  shall  be  respectively  responsible  for  the
following matters:
    Responsibilities of Party A:
    Handling of applications for approval, registration, business  license
and other matters  concerning  the  establishment  of  the  joint  venture
company from relevant departments in charge of China;
    Processing the application for the right to the use of a site  to  the
authority in charge of the land;
    Organizing the design and  construction  of  the  premises  and  other
engineering facilities of the joint venture company;
    Providing cash, machinery and equipment and premises ... in accordance
with the provisions of Article 11;
    Assisting Party B  to  process  import  customs  declaration  for  the
machinery and equipment contributed by Party B as investment and arranging
the transportation within the Chinese territory;
     Assisting  the  joint  venture  company  in  purchasing  or   leasing
equipment, materials, raw materials, articles for  office  use,  means  of
transportation and communication facilities etc.;
    Assisting the joint venture company in  contacting  and  settling  the
fundamental facilities such as water, electricity, transportation etc.;
     Assisting  the  joint  venture  in  recruiting   Chinese   management
personnel, technical personnel, workers and other personnel needed;
    Assisting foreign workers and staff in applying for entry visas,  work
licenses and handling their travel procedures;
    Responsible for handling other matters entrusted by the joint  venture
company.
    Responsibilities of Party B:
    Providing cash, machinery and equipment, industrial  property  ...  in
accordance with the provisions of Article 11, and responsible for shipping
capital  goods  such  as  machinery  and  equipment  etc.  contributed  as
investment to a Chinese port;
    Handling the matters entrusted by the joint venture company,  such  as
selecting and purchasing machinery and equipment outside China, etc.;
    Providing necessary technical personnel for  installing,  testing  and
trial production of the equipment as well as the technical  personnel  for
production and inspecting;
    Training the technical personnel and  workers  of  the  joint  venture
company;
    In case Party B is the licensor,  it  shall  be  responsible  for  the
stable production of qualified products of the joint  venture  company  in
the light of design capacity within the specified period;
    Responsible for other matters entrusted by the joint venture company.
    (note: It shall be written according to the specific situation).

                        Chapter 7 Transfer of Technology

Article 15
    Both Party A and Party B agree that a  technology  transfer  agreement
shall be signed between the joint venture company and Party B (or a  third
party) so as to obtain advanced production technology needed for realizing
the production and operation purpose and the production scale specified in
Chapter  4  of  the  contract,  including  product  design,  manufacturing
technology, means of testing, materials prescription, standard of  quality
and the training of personnel etc.
    (Note: It shall be written in the contract according to  the  concrete
conditions).
Article 16
    Party B offers the following guarantees on the transfer of technology:
     (Note:  Article  applies  only  when  Party  B  is  responsible   for
transferring technology to the joint venture company).
    1. Party  B  guarantees  that  the  overall  technology  such  as  the
designing, manufacturing  technology,  technological  process,  tests  and
inspection of products (Note: The name of the products shall  be  written)
provided to the joint venture company  must  be  integrated,  precise  and
reliable. It is to meet the requirement of the joint  venture's  operation
purpose, and be able to obtain the  standard  of  production  quality  and
production capacity specified in the contract;
    2. Party B guarantees that the technology specified in  this  contract
and the technology transfer agreement shall be fully  transferred  to  the
joint venture company, and pledges that the provided technology should  be
truly advanced among the same type of technology produced by Party B,  the
model, specification and quality of the equipment are excellent and it  is
to meet the requirement of technological operation and practical usage;
    3. Party B shall work out a detailed list of the  provided  technology
and technological service at various stages as specified in the technology
transfer agreement to be an appendix to the contract,  and  guarantee  its
performance;
     4.  The  drawings,  technological  conditions  and   other   detailed
information are part of the transferred technology and shall  be  provided
on time;
    5. During the term of the technology transfer agreement, Party B shall
provide the joint venture company with any improvements in the  technology
and the improved information and  technological  materials  in  time,  and
shall not charge separate fees;
    6. Party B shall  guarantee  that  the  technical  personnel  and  the
workers in the  joint  venture  company  can  master  all  the  technology
transferred  within  the  period  specified  in  the  technology  transfer
agreement.
Article 17
    In  case  Party  B  fails  to  provide  equipment  and  technology  in
accordance with  the  provisions  of  this  contract  and  the  technology
transfer agreement or in case any  deceiving  or  concealing  actions  are
found, Party B shall be responsible for compensating the direct losses  to
the joint venture company.
Article 18
    The technology transfer fee shall be paid in  royalties.  The  royalty
rate shall be ___________% of the net sales value of the products.
    The term for  royalty  payment  is  the  same  as  the  term  for  the
technology transfer agreement specified in Article 19  of  this  contract.
Article 19
    The term for the technology transfer agreement  signed  by  the  joint
venture company and Party B is ___________ years. After the expiration  of
the technology transfer agreement, the joint venture  company  shall  have
the  right  to  use,  research  and  develop   the   imported   technology
continuously.
    (Note: The term for a technology transfer agreement  is  generally  no
longer than 10 years, and it shall be approved by the Ministry of  Foreign
Trade  and  Economic  Cooperation  or  other  examination   and   approval
authorities entrusted by  the  Ministry  of  Foreign  Trade  and  Economic
Cooperation).

                         Chapter 8 Selling of Products

Article 20
    The products of joint venture company will be sold both on the Chinese
and the overseas market, the  export  portion  accounts  for  __________%,
__________% for the domestic market.
    (Note: An annual  percentage  and  amount  for  outside  and  domestic
selling will be written out according to practical situations,  in  normal
conditions, the amount for export shall at least meet the needs of foreign
exchange expenses of the joint venture company).
Article 21
    Products may  be  sold  on  overseas  markets  through  the  following
channels:
    The joint venture company  may  directly  sell  its  products  on  the
international market, accounting for ___________%.
    The joint venture  company  may  sign  sales  contracts  with  Chinese
foreign trade companies, entrusting them  to  be  the  sales  agencies  or
exclusive sales agencies, accounting for __________%.
    The joint venture company may entrust Party B to  sell  its  products,
accounting for ______________%.
Article 22
    The joint venture's products to be sold in China may be handled by the
Chinese materials  and  commercial  departments  by  means  of  agency  or
exclusive sales, or may be sold by the  joint  venture  company  directly.
Article 23
    In order to provide maintenance service to the products sold  both  in
China or abroad, the joint venture company may set up sales  branches  for
maintenance service both in China or abroad subject to the approval of the
relevant Chinese department.
Article 24
    The trade mark of the joint venture's products is __________.

                        Chapter 9 The Board of Directors

Article 25
    The date of registration of the joint venture  company  shall  be  the
date of the establishment of the board of directors of the  joint  venture
company.
Article 26
    The board of directors is composed of  __________directors,  of  which
___________shall be  appointed  by  Party  A,  _________by  Party  B.  The
chairman of the board shall be appointed by Party A, and its vice-chairman
by  Party  B.  The  term  of  office  for  the  directors,  chairman   and
vice-chairman is four years, their  term  of  office  may  be  renewed  if
continuously appointed by the relevant party.
Article 27
    The highest authority of the joint venture company shall be its  board
of directors. It shall decide all major issues (Note:  The  main  contents
shall be listed in the light of Article 36 of the Implementing Regulations
for the Joint Venture Law) concerning the joint venture company. Unanimous
approval shall be required for any decisions concerning major  issues.  As
for other matters, approval by majority or  a  simple  majority  shall  be
required.
    (Note: It shall be explicitly set out in the contract).
Article 28
    The chairman of the board is the legal  representative  of  the  joint
venture  company.  Should  the  chairman  be  unable   to   exercise   his
responsibilities for any reason, he shall authorize the vice- chairman  or
any other directors to represent the joint  venture  company  temporarily.
Article 29
    The board of directors shall convene at least one meeting every  year.
The meeting shall be called and presided  over  by  the  chairman  of  the
board. The chairman may convene an interim meeting  based  on  a  proposal
made by more than one third of the total number of directors.  Minutes  of
the meetings shall be placed on file.

                     Chapter 10 Business Management Office

Article 30
    The joint venture company shall establish a  management  office  which
shall be responsible for its daily management. The management office shall
have a general manager, appointed by Party _______, _______ deputy general
managers, _______by Party ______; _______by Party  ________.  The  general
manager and deputy general managers whose  terms  of  office  is  ________
years shall be appointed by the board of directors.

Article 31
    The responsibility  of  the  general  manager  is  to  carry  out  the
decisions of the board and organize and conduct the  daily  management  of
the joint venture company. The deputy general managers  shall  assist  the
general manager in his work.
    Several department managers may be appointed by the management office,
they  shall  be  responsible  for  the   work   in   various   departments
respectively, handle the matters handed over by the  general  manager  and
deputy general managers and shall be responsible to them.
Article 32
    In case of graft or serious dereliction of duty on  the  part  of  the
general manager and deputy general managers, the board of directors  shall
have the power to dismiss them at any time.

                        Chapter 11 Purchase of Equipment

Article 33
    In its purchase of required  raw  materials,  fuel,  parts,  means  of
transportation and articles  for  office  use,  etc.,  the  joint  venture
company shall give first priority to purchase in  China  where  conditions
are the same.
Article 34
    In case the  joint  venture  company  entrusts  Party  B  to  purchase
equipment on the overseas market, persons appointed by the Party  A  shall
be invited to take part in the purchasing.

                    Chapter 12 Preparation and Construction

Article 35
    During the period of preparation and construction, a  preparation  and
construction office shall be set up under  the  board  of  directors.  The
preparation and construction office shall consist  of  _________  persons,
among which ________ persons will be from Party A,  _______  persons  from
Party B. The preparation and construction office shall  have  one  manager
recommended by Party _________, and one deputy manager by Party  ________.
The manager and  deputy  manager  shall  be  appointed  by  the  board  of
directors.

Article 36
    The  preparation  and  construction  office  is  responsible  for  the
following concrete works: examining the designs of  the  project,  signing
the project construction contract, organizing the purchase and  inspection
of related equipment, materials, etc., working out the general schedule of
project construction, compiling the expenditure plans, controlling project
financial  payments  and  final  accounts  of  the  project,  drawing   up
managerial methods and keeping and filing documents, drawings,  files  and
materials, etc., during the construction period of the project.
Article 37
    A technical group with several technical personnel appointed by  Party
A and Party B shall be organized. The group, under the leadership  of  the
preparation and construction office, is  in  charge  of  the  examination,
supervision, inspection, testing, checking and accepting, and  performance
checking of the project design, the quality of the project, the  equipment
and materials and the imported technology.
Article 38
    After approval by both parties, the  establishment,  remuneration  and
the expenses of the staff of the preparation and construction office shall
be covered in the project budget.
Article 39
    After having completed the  project  and  finished  the  turning  over
procedures, the preparation and construction  office  shall  be  dissolved
upon the approval of the board of directors.

                          Chapter 13 Labor Management

Article 40
    Labor contract covering the  recruitment,  employment,  dismissal  and
resignation, wages, labor insurance, welfare, rewards, penalties and other
matters concerning the staff and workers  of  the  joint  venture  company
shall be drawn up between the joint venture company and the trade union of
the joint venture company as a whole, or the individual employees  in  the
joint venture company as a whole or  individual  employees  in  accordance
with the Regulations of the People's Republic of China on Labor Management
in  Joint  Ventures  Using  Chinese  and  Foreign   Investment   and   its
Implementing Rules.
    The labor contracts shall, after being signed, be filed with the local
labor management department.
Article 41
    The appointment of high-ranking administrative  personnel  recommended
by both  parties,  their  salaries,  social  insurance,  welfare  and  the
standard of travelling expenses etc. shall be decided by  the  meeting  of
the board of directors.

                      Chapter 14 Taxes, Finance and Audit

Article 42
    The joint venture company shall  pay  taxes  in  accordance  with  the
provisions of Chinese laws and other relative regulations.
Article 43
    Staff members and workers of  the  joint  venture  company  shall  pay
individual income tax according to the Individual Income Tax  Law  of  the
People's Republic of China.
Article 44
    Allocations for reserve funds, expansion funds of  the  joint  venture
company and welfare funds and bonuses for staff and workers shall  be  set
aside in accordance with the provisions of  the  Joint  Venture  Law.  The
annual proportion  of  allocations  shall  be  decided  by  the  board  of
directors according  to  the  business  situation  of  the  joint  venture
company.
Article 45
    The fiscal year of the joint venture company shall be from  January  1
to December 31. All vouchers, receipts, statistic statements  and  reports
shall be written in Chinese.
    (Note: A  foreign  language  can  be  used  concurrently  with  mutual
consent).
Article 46
    Financial checking and examination of the joint venture company  shall
be conducted by an auditor  registered  in  China  and  reports  shall  be
submitted to the board of directors and the general manager.
    In case Party B considers it necessary to  employ  a  foreign  auditor
registered in another country to undertake annual financial  checking  and
examination, Party A shall give its  consent.  All  the  expenses  thereof
shall be borne by Party B.
Article 47
    In the first three months of  each  fiscal  year,  the  manager  shall
prepare the previous year's balance sheet, profit and loss  statement  and
proposal regarding the disposal of profits, and submit them to  the  board
of directors for examination and approval.

                    Chapter 15 Duration of the Joint Venture

Article 48
    The duration of the joint venture company is  ___________  years.  The
establishment date of the joint venture company shall be the date on which
the business license of the joint venture company is issued.
    An application for the extension of  the  duration,  proposed  by  one
party and unanimously  approved  by  the  board  of  directors,  shall  be
submitted to the Ministry of Foreign Trade and  Economic  Cooperation  (or
the examination and approval authority entrusted by it) six  months  prior
to the expiry date of the joint venture.

  Chapter 16 The Disposal of Assets  after  the  Expiration  of  the Duration

Article 49
    Upon the expiration of the duration, or termination before the date of
expiration  of  the  joint  venture,  liquidation  shall  be  carried  out
according to the relevant laws. The liquidated assets shall be distributed
in accordance with the proportion of investment contributed by Party A and
Party B.

                              Chapter 17 Insurance

Article 50
    Insurance policies of the joint venture company on  various  kinds  of
risks shall be underwritten with the People's Republic  of  China.  Types,
value and duration of insurance shall be decided by the board of directors
in accordance with the provisions of the  People's  Insurance  Company  of
China.

    Chapter 18 The Amendment, Alteration and  Termination of the  Con- tract

Article 51
    The amendment of the contract or  other  appendices  shall  come  into
force only after a written agreement has been signed by Party A and  Party
B and approved by the original examination and approval authority.
Article 52
    In case of inability to fulfil the contract or to  continue  operation
due to heavy losses in successive years as a result of force majeure,  the
duration of the joint venture and the contract shall be terminated  before
the time of expiration after being unanimously agreed upon by the board of
directors and approved by the original examination and approval authority.
Article 53
    Should the joint venture company be unable to continue  its  operation
or achieve  its  business  purpose  due  to  the  fact  that  one  of  the
contracting parties fails to fulfil  the  obligations  prescribed  by  the
contract and articles of association, or seriously violates the provisions
of the contract and articles of association, that party shall be deemed to
have unilaterally terminated the contract. The other party shall have  the
right to terminate the contract in accordance with the provisions  of  the
contract  after  approval  by  the  original  examination   and   approval
authority, and to claim damages. In case Party A and Party B of the  joint
venture company agree to continue the operation, the party  who  fails  to
fulfil its obligations shall be liable  for  the  economic  losses  caused
thereby to the joint venture company.

                  Chapter 19 Liability for Breach of Contract

Article 54
    should either Party  A  or  Party  B  fail  to  pay  on  schedule  the
contributions in accordance with the provisions defined in  Chapter  5  of
this contract, the party in breach shall pay to the other party _________%
of the contribution starting from the first month after exceeding the time
limit. Should the party in breach fail to pay after 3 months,  __________%
of the contribution shall be paid to the other party, who shall  have  the
right to terminate the contract and to claim damages  from  the  party  in
breach in accordance with the provisions of Article 53  of  the  contract.
Article 55
    Should all or part of the contract and its appendices be unable to  be
fulfilled owing to the fault of one party, the party in breach shall  bear
the liability therefor. Should it be the fault of both parties, they shall
bear their respective  liabilities  according  to  the  actual  situation.
Article 56
    In order  to  guarantee  the  performance  of  the  contract  and  its
appendices, both Party A and Party B shall provide each  other  with  bank
guarantees for performance of the contract.

                            Chapter 20 Force Majeure

Article 57
    Should either of  the  parties  to  the  contract  be  prevented  from
executing the contract by force  majeure,  such  as  earthquake,  typhoon,
flood, fire, war or other unforeseen  events,  and  their  occurrence  and
consequences are unpreventable and unavoidable, the prevented party  shall
notify the other party by telegram without any delay, and within  15  days
thereafter provide detailed information of the events and a valid document
for evidence issued by the relevant public notary organization  explaining
the reason of its inability to execute or delay the execution  of  all  or
part of the contract. Both parties shall,  through  consultations,  decide
whether to terminate the contract or to exempt part of the obligations for
implementation of the contract or whether to delay the  execution  of  the
contract according to the effects of the events on the performance of  the
contract.

                           Chapter 21 Applicable Law

Article 58
    The formation, validity, interpretation, execution and  settlement  of
disputes in respect of, this contract shall be governed  by  the  relevant
laws of the People's Republic of China.

                       Chapter 22 Settlement of Disputes

Article 59
    Any disputes arising from the execution of, or in connection with, the
contract shall be settled  through  friendly  consultations  between  both
parties. In case no settlement can be reached through  consultations,  the
disputes shall be submitted to the Foreign Economic and Trade  Arbitration
Commission of the China Council for the Promotion of  International  Trade
for arbitration in accordance with its rules of  procedure.  The  arbitral
award is final and binding upon both parties.
    Or
    Any disputes arising from the execution of, or in connection with  the
contract shall be settled  through  friendly  consultations  between  both
parties. In case no settlement can be reached through  consultations,  the
disputes shall  be  submitted  to  __________Arbitration  Organization  in
__________for arbitration in accordance with its rules of  procedure.  The
arbitral award is final and binding upon both parties.
    Or
    Any disputes arising from the execution of, or in connection with  the
contract shall be settled  through  friendly  consultations  between  both
parties. In case no settlement can be settled through  consultations,  the
disputes shall be submitted for arbitration.
    Arbitration shall take place in the defendant's country.
    If in China, arbitration shall be conducted by  the  Foreign  Economic
and Trade Arbitration Commission of the China Council for the Promotion of
International Trade in accordance with its rules of procedure.
    If in ___________, the arbitration shall be conducted by ___________in
accordance with its rules of procedure.
    The arbitral award is final and binding upon both parties.
    (Note: When formulating contracts, only  one  of  the  above-mentioned
provisions can be used).
Article 60
    During the arbitration, the contract shall be observed and enforced by
both parties except for the matters in dispute.

                              Chapter 23 Language

Article 61
    The contract shall be written in  Chinese  and  in  ___________.  Both
language versions are equally authentic. In the event of  any  discrepancy
between  the  two  aforementioned  versions,  the  Chinese  version  shall
prevail.

           Chapter 24 Effectiveness of the Contract and Miscellaneous

Article 62
    The appendices drawn up in accordance  with  the  principles  of  this
contract are integral parts  of  this  contract,  including:  the  project
agreement, the technology transfer agreement,  the  sales  agreement  etc.
Article 63
    The contract and its appendices shall come into force commencing  from
the date of approval  of  the  Ministry  of  Foreign  Trade  and  Economic
Cooperation  of  the  People's  Republic  of  China  (or   its   entrusted
examination and approval authority).
Article 64
    Should notices in connection with any party's rights  and  obligations
be sent by either Party A or Party B  by  telegram  or  telex,  etc.,  the
written letter notices  shall  be  also  required  afterwards.  The  legal
addresses of Party A and Party B listed in  this  contract  shall  be  the
posting addresses.
Article 65
    The contract  is  signed  in  ___________,  China  by  the  authorized
representatives of both parties on __________, __________.

    For Party A                       For Party B
    (Signature)                       (Signature)
 

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