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subject to the ratification of the board directors. The general managers and deputy general managers’ terms of office is three years. Article 31

The responsibility of the general manager is to carry out the decisions of the board of directors, to organize and conduct the daily management of the joint venture company. The deputy general managers shall be accountable to general manager..

Several functional department managers may be appointed by the management respectively, they shall handle the matters assigned by the general manager and deputy managers and shall be accountable to them.

Chapter 11 Purchase of Equipment Article 33

In purchasing required raw materials, fuel, parts, means of transportation and articles for office use, etc., the joint venture company shall give priority to purchasing in China where conditions are the same.

Article 34

When the joint venture company entrusts Party B to purchase equipment on overseas markets, persons appointed by 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 nine persons, among whom five persons will be from Party A, four from Party B. The office shall have a director recommended by Party B. The director and deputy director shall be appointed by the board of directors. Article 36

During the construction period of the project, the preparation and construction office is responsible for the following activities: examining the design of the project, signing project construction contract, organizing the purchasing and inspecting of relevant equipment and materials, etc., working out the general

schedule of project construction, compiling the budget plans, controlling interim payments and final accounts of the project, drawing up managerial methods and keeping and filing documents, drawings, files and materials, etc. Article 37

A technical group with several technical personnel appointed by Party A and Party B shall be organized under the preparation and construction office. The group is in charge of examining, supervising, inspecting, testing, checking and accepting, evaluating the project design, the project quality, the equipment and materials and the imported technology. Article 38

The establishment, remuneration and the expenses of the staff of the preparation and construction office, when by both parties, shall be converted in the project budget. Article 39

After completing the project and the turn-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 contracts shall be drawn up between the joint venture company and the Trade Union of the joint venture company as a whole or separately in accordance with relevant laws and rules to address the recruiting, employment, dismissal and resignation, wages, labor insurance, welfare, rewards, penalty and other matters concerning employees of the joint venture company. Such contract shall, after being signed, shall be filed with the local labor management department. Article 41

The appointment of senior staff by both parties, their salaries, social insurance , welfare and the standard of traveling expenses, etc., shall be decided by the board of directors.

Chapter 14 Taxes, Finance and Audit Article 42

The joint venture company shall pay taxes in accordance with the stipulations of Chinese laws and