Exhibit 10.11


 


CONTRACT TO ESTABLISH AN EQUITY

JOINT VENTURE ENTERPRISE


 


Chapter  1:  General Provisions


 


In accordance with the “Law of the People’s Republic of China on
Sino-foreign Equity Joint Venture Enterprises” (hereinafter, the “EJV Law”),
the implementing regulations thereto, and other relevant laws and regulations,
Ningbo Longxing Group Corporation Limited, a limited liability company
incorporated pursuant to the laws of the People’s Republic of China
(hereinafter, “China” or “the PRC”), and Thermadyne Holdings Corporation, a
limited liability company incorporated pursuant to the laws of the State of
Delaware of the United States of America, having engaged in friendly
consultations conducted in accordance with the principle of equality and mutual
benefit, now agree to jointly invest in, and to establish in accordance with
the EJV Law and other relevant Chinese laws and regulations, an equity joint
venture enterprise in Ningbo, China.


 


Chapter  2:  Parties to the Joint Venture Contract


 


Article 1       The parties to this
joint venture contract are as follows:


 


1.       Ningbo Longxing Group
Corporation Limited (hereinafter referred to as “Party A”), a legal entity
incorporated in China and having its registered legal address at Luguang
Bridge, Hengxi Town, Yinzhou District, Ningbo, Zhejiang Province, China and


 


2.       Thermadyne Holdings
Corporation (hereinafter referred to as “Party B”), a legal entity incorporated
in the United States and having its registered legal address at 16052 Swingley
Ridge, Suite 300, St. Louis, MO  63017,
United States of America.


 


Chapter  3:            Establishment of the Joint Venture
Enterprise


 


Article 2       In accordance with
the EJV Law, the implementing regulations thereto,  and other relevant laws and regulations, each
of Party A and Party B agrees to establish an equity joint venture enterprise
(hereinafter referred to as the “EJV”) that shall have independent legal person
status and limited liability.


 


Article 3       The name of the EJV
shall be宁波富利达气割设备有限公司
in Chinese and Ningbo Fulida Gas Equipment Co., Ltd. in English.  The legal address of the EJV shall be Renmin
Road (to be finalized), Hengxi Town, Yinzhou District, Ningbo, Zhejiang
Province, China.


 


Article 4       All activities of
the EJV shall comply with, and be governed by, the published and freely
available laws, regulations, decrees and pertinent judicial interpretations of
China and of the relevant courts of China.


 


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Article 5         The organizational
form of the EJV shall be that of a limited liability EJV.  Each of Party A and Party B, unless they
otherwise expressly assume an additional liability, shall be liable for the
liabilities and losses of the EJV only to the limit of their respective
subscription to the registered capital of the EJV.  The after-tax profits of the EJV shall be
distributed between Party A and Party B in the following ratio:  to Party A, fifty percent; and to Party B,
fifty percent.


 


Chapter 4              Purpose,
Business Scope and Scale of Production


 


Article 6         The purpose of
the EJV will be to provide services to customers in China and around the world,
through manufacture and sale of high-quality gas equipment and products
(hereinafter, “the Products”), EJV’s use of the international brands of Party B
and registration of its own trademarks.


 


Article 7         The business
scope of the EJV will be to manufacture and sell high-quality gas equipment and
products Without limiting the generality of the foregoing, the purpose of the
EJV shall also include engaging in such other business activities as, in the
discretion of the Board of Directors, are necessary or desirable in order to
promote the successful marketing and sale of the Products, such as providing
after-sales service.


 


Article 8         Recognizing that
market conditions may change within China and in the international markets the
EJV will initially target, each of Party A and Party B intends to cooperate so
that the EJV can achieve an estimated initial annual scale of production of
approximately 2,000,000 units of the Products. 
The Parties recognize that production will fluctuate over time and in
response to changing market conditions.


 


Chapter 5              Total
Amount of Investment and Registered Capital


 


Article 9         The total amount
of investment of the EJV shall be US$5,000,000.


 


Article l0        The registered
capital of the EJV shall be US$3,000,000, of which Party A shall contribute
fifty (50) percent and Party B shall contribute fifty (50) percent. Fifteen
percent (15%) of the registered capital will be contributed within three months
following the issuance of business license, and the remaining contribution
shall be completed within two years after the issuance of business license.


 


Article 11       The contribution
to registered capital to be made by Party A shall be in the form of cash equal
to fifty (50) percent of the total registered capital amount.  The contribution to registered capital to be
made by Party B shall be in the form of cash equal to fifty (50) percent of the
total registered capital amount.


 


Article 12       The EJV may
borrow up to US$2,000,000 additional funds required to carry on the business
activities stipulated at Article 7 of this Contract and may mortgage 


 


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its assets in relation to such borrowing. Neither of Party A nor Party
B shall be obligated to lend additional funds to the EJV or to guarantee loans
made to the EJV by third parties or financial institutions.  Notwithstanding the foregoing, however, any
Party making a loan or giving a guarantee in connection with debt assumed by
the EJV, as aforesaid, shall be entitled to be paid interest and / or related
transaction fees as if it were not a Party to this Contract and as if the
transaction were a negotiated arm’s-length financing concluded with a third
party.


 


Article 13       The registered
capital of the EJV may be increased or decreased only with the unanimous
written approval of the Board of Directors of the EJV and the approval of the
Original Examination and Approval Authority.


 


If the Board of Directors of the EJV decides to change the registered
capital of the EJV, each of Party A and Party B shall have the option - in
order to maintain its original percentage ownership share in the registered
capital of the EJV as changed - of changing its contribution to the registered
capital in proportion to its original equity share.


 


Article 14       Where either of
Party A and Party B wishes to assign ownership of all or part of its registered
capital contribution to a third party, written consent must be obtained from
the non-assigning Party and, promptly thereafter, written approval shall be
sought and obtained from the Original Examination and Approval Authority.


 


Article 15       Where a Party
(the “Transferring Party”) wishes to assign, sell or otherwise dispose of all
or part of its registered capital contribution to the EJV to a third party (the
“Transfer”), it shall give written notice (the “Transfer Notice”) to the other
Party of: (i) its wish to make the Transfer; (ii) the interest it wishes to
transfer; (iii) the terms and conditions of the Transfer; and (iv) the identity
of the proposed transferee.  The other
Party shall have a pre-emptive right to purchase the whole of such interest on
the same terms and conditions as are specified in the Transfer Notice.


 


Article 16       Within thirty
(30) days of actual delivery to it of the Transfer Notice, the other Party
shall give the Transferring Party written notice of whether it will purchase
the whole of the interest to be transferred. 
If the other Party fails to give written notice to the Transferring
Party within such thirty (30) day period that it will purchase such interest,
it shall be deemed to have agreed to the Transfer specified in the Transfer
Notice, and the Transferring Party may assign, sell or otherwise dispose of
such interest to the proposed transferee on the terms and conditions set out in
the Transfer Notice.  The Parties shall
cause the directors of the EJV to unanimously agree to such assignment, sale or
other disposition.  The Transferring Party
shall provide the other Party with a duplicate of the executed written
agreement concluded with the transferee within fourteen (14) days of execution
of such agreement.


 


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Chapter 6              Responsibilities
of Each Party to the EJV


 


Article 17       Party A, in
addition to its other responsibilities under this Contract, shall be
responsible for:


 


(1) assisting the EJV to handle matters incidental to (i) submitting
applications to, and obtaining the approval of this Contract from, the Original
Examination and Approval Authority in Ningbo and / or any other Chinese
government Original Examination and Approval Authority whose approval is
required; (ii) completing registration formalities with the Administration for
Industry and Commerce in Ningbo and obtaining a valid business license for the
EJV; (iii) registering the EJV with relevant tax authorities and other relevant
registrations authorities; and (iv) timely contributing the cash amount to the
registered capital of the EJV as is indicated in Article 12 hereof;


 


(2) assisting the EJV, in cooperation with the relevant government
departments in Ningbo, to handle registration procedures for the EJV’s land-use
rights to the site or sites on which it carries on its business activities; and
in handling all other necessary procedures to ensure that the EJV has the right
to use such site or sites for operations throughout the full term (including
any extensions) of its operation; and in making certain that the EJV is issued
and receives, from the relevant government department(s) in Ningbo, a valid
land-use rights certificate(s) for the site or sites on which it carries on its
business activities;


 


(3) if requested in writing to do so, assisting the EJV in obtaining
approval from the Original Examination and Approval Authority in Ningbo
confirming that all equipment and components, and other machines and materials
to be imported by the EJV for manufacturing purposes are exempt from PRC
Customs duties and other import-related taxes; handling PRC Customs declaration
procedures (including obtaining all relevant import and export licenses, to be
handled in accordance with existing tax and duty stipulations of PRC) for
imported raw materials, machinery, equipment, materials, supplies, and related
documentation and exported products of the EJV; and arranging for the inland
transportation of imports to the site or sites on which the EJV carries on its
business activities; and in applying for other governmental approvals required
for operation of the EJV in China;


 


(4) assisting the EJV in obtaining all required approvals, permits and
certificates relating to the construction, renovation, ownership, management
and maintenance of the site or sites on which the EJV carries on its business
activities;


 


(5) if requested in writing to do so, assisting the EJV in obtaining,
sourcing, purchasing or leasing within China adequate supplies of fuels, raw
materials, local equipment, articles for office use, means of transportation,
communication facilities etc.;


 


(6) assisting the EJV in contracting for, and obtaining, the
fundamental facilities, services and utilities required by the EJV, such as,
but not limited to, water, electricity, heating, sewage and waste treatment,
telecommunications, and transportation and such as conform to specifications
and conditions specified by the EJV in writing, on a continuous uninterrupted
basis, in quantities sufficient to meet the full operational requirements of
the EJV and in line with the practice of other comparable joint ventures in
Ningbo, at a 


 


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favorable cost in Renminbi not higher than that paid by state-owned
enterprises for similar facilities, services and utilities in the Ningbo area;


 


(7) assisting expatriate personnel of the EJV and of Party B in
handling the necessary procedures for entry visas, work permits and traveling
arrangements, and assisting in arranging appropriate housing acceptable to
Party B for expatriate employees of the EJV, and hotel accommodations for Party
B personnel visiting China on temporary assignment to the EJV;


 


(8) ensuring that management and technical personnel and workers hired
and trained by the EJV are not transferred to Party A (or to subordinate
companies wholly or partially owned by Party A) or, especially, without the
consent of General Manager of the EJV, to competitors of Party B or the EJV
operating in China;


 


(9) assisting the EJV in obtaining Renminbi and foreign exchange loans
from financial institutions within China;


 


(10) assisting the EJV to apply for and obtain all possible tax
reductions and exemptions and all other relevant investment incentives,
privileges and preferences available to the EJV under Chinese law, including,
if appropriate, designation of the EJV as a technologically advanced enterprise
or a high-or-new technology enterprise;


 


(11) if requested in writing to do so, and thereafter on an on-going
basis, assisting the EJV in applying for and being granted all necessary
approvals, permits, certificates and licenses required in connection with
safety, environmental matters (especially waste disposal) and other matters
regulated by Chinese governmental authorities;


 


(12) generally assisting the EJV in establishing and maintaining good
relations with the Ningbo local government authorities and Chinese companies
able to contribute to the success of the EJV; and


 


(13) handling such as other matters as are entrusted to it by the EJV
from time to time.


 


Article 18       Party B, in
addition to its other responsibilities under this Contract, shall be
responsible for:


 


(1) assisting the EJV to purchase or lease all necessary items of
machinery, equipment, supplies, office appliances, means of transportation,
communication facilities and other materials required by the EJV from outside
China and necessary for successful operation of the EJV;


 


(2) assisting the EJV, at the EJV’s expense, in arranging with the
manufacturers of the imported machinery and equipment referenced in (1), above,
for the provision of necessary technical personnel during the installation and
testing of such machinery and equipment during commissioning, if the Parties
deem such assistance to be necessary;


 


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(3) assisting the EJV in recruiting expatriate management and technical
personnel;


 


(4) assisting the EJV in formulating standards for recruiting,
evaluating and promoting both locally hired and expatriate staff and workers;


 


(5) assisting the EJV in arranging foreign visas and suitable
accommodations for personnel and directors of the EJV who are required to
travel outside China on legitimate business or other purposes of the EJV;


 


(6) timely contributing cash amount to the registered capital of the
EJV as is indicated in Article 12 hereof; and


 


(7) handling such other matters as are entrusted to it by the EJV from
time to time.


 


Chapter 7              Transfer
of Technology


 


Article 19       Each of Party A
and Party B agrees that a no-cost technology transfer agreement shall be signed
between the EJV and Party B and that, pursuant to and in consequence of such
agreement, Party B shall disclose and license to the EJV certain confidential
and proprietary information and know-how necessary for the EJV to achieve the
production and sale of Products as specified in Chapter 4 of this Contract.


 


Article 20       Party B offers
the following guarantees with respect to the technology it will transfer to the
EJV pursuant to the technology transfer agreement:


 


(1) Party B guarantees that the technology will meet all operating
requirements of the EJV and permit the EJV to manufacture Products at a
consistent standard of quality and production capacity so that the EJV is able
to achieve its purpose as set out in Article 6 hereof;


 


(2) Party B guarantees that the technology specified in this Contract
and in the technology transfer agreement shall be fully transferred to the EJV,
and pledges that the said technology shall be truly advanced among the same
type of technology produced by Party B and that the model, specifications, and
quality of the equipment shall be excellent and able meet the requirements of
technological operation and practicality;


 


(3) Party B shall work out a detailed list of the technology to be
transferred and provide this to the EJV as soon as possible following execution
of this Contract;


 


(4) Relevant drawings, technological conditions and other detailed
information shall be included as part of the transferred technology and shall
be timely provided to the EJV; and


 


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(5) During the term of the technology transfer agreement, and for no
additional fee, Party B shall provide to the EJV all improvements in the
technology transferred to the EJV as provided in the technology transfer
agreement.


 


Chapter 8              Right to Use the Site; Lease of
Facilities to EJV; Utilities


 


Article 21       Party A
represents and warrants that: (i) it has obtained granted land use rights to
the site on which are located the premises it will lease to the EJV at start-up
of operations in China; (ii) the term of the granted land use rights is 50
years and will be available to the EJV for the full length of its term,
including any extensions thereof; (iii) official documents issued to Party A by
the Ningbo Land Bureau, or other relevant Ningbo governmental agency, will be
presented to Party B’s attorney for review prior to execution of this Contract;
(iv) pursuant to the lease agreement it will conclude with the EJV, Party A
will provide preferential treatment to the EJV in respect to all matters
relating to the leased premises; and (v) with assistance from Party A as
required, the EJV will obtain a sufficient and uninterrupted supply of various
public utilities services required by the EJV on terms and conditions no less
favorable than those obtained by other Chinese-owned and operated enterprises
located in the vicinity.


 


Chapter 9              Trademark
License Agreement


 


Article 22       Within thirty
(30) days following execution of this Contract, Party B and the EJV will enter
into a no-charge trademark license agreement such that the EJV will be
authorized to use certain licensed trademarks belonging to Party B, including
those indicated below in the course of marketing and offering for sale, both in
China and in international markets, the Products.


 


Article 23       The trademarks licensed
by Party B to the EJV are:  Victor and
Cutskill.


 


Chapter 10            Sale
of Products


 


Article 24       The Products will
be sold in China and in such international markets as shall be determined by
the Board of Directors of the EJV from time to time.


 


Article 25       The Products
shall be sold in international markets through the following channels:


 


(1) the EJV may directly sell the Products into a certain international
market using marketing and sales channels known and introduced to it by Party
B;


 


(2) the EJV may, through supply contracts and at a price equal to the
actual cost of manufacturing the Products plus a fifteen percent (15%) markup,
sell Products to Party B and/or its subsidiary companies for export from China
by Party B and/or its subsidiary 


 


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companies. The aforesaid actual costs of manufacturing are defined as
material costs, direct and indirect manufacturing labor costs and other costs
directly related to the manufacture of the Products; or


 


(3) with the prior written approval of Party B, the EJV may sign
marketing and sales contracts with Chinese or foreign trading companies,
thereby entrusting such companies to function as a sales or exclusive sales
agent within an area defined in each particular sales contract.


 


Article 26       The Products of
the EJV that are to be sold within China may be marketed and sold by the EJV
itself or, in the discretion of the Board of Directors of the EJV, may be
entrusted to a Chinese marketing and sales agent appointed by them pursuant to
a written contract.


 


Article 27       In order to
provide high-quality maintenance service to the Products sold in China in
international markets, the EJV may (subject to the approval of the relevant
Chinese governmental authority) establish sales and service branch operations
of the EJV both in China and in such international markets.


 


Chapter 11            The
Board of Directors


 


Article 28       The Board of
Directors of the EJV shall be formed on the date on which the Ningbo
Administration for Industry and Commerce issues the valid business license of
the EJV.


 


Article 29       The Board of
Directors of the EJV, including the Chairman and vice-Chairman, shall consist
of four (4) directors.  Each of Party A
and Party B shall appoint two (2) directors. 
The Chairman shall be appointed by Party B and the vice-Chairman shall
be appointed by Party A.  Each of the
Chairman, vice-Chairman and the other two directors shall be appointed for a
term of four (4) years. Four (4) years later, the Chairman shall be appointed
by Party A and the vice-Chairman shall be appointed by Party B. Thereafter,
such power of appointment shall be rotated every four years.


 


Article 30       A Party may, at
any time, remove any director appointed by such Party by giving written notice
to the EJV and a copy of such notice to the other Party.  If a seat on the Board of Directors is
vacated by retirement, removal, resignation, illness, disability or death of a
director, the Party that originally appointed such director may appoint a
successor to serve out such director’s term.


 


Article 31       Notice of a
meeting of the Board of Directors of the EJV shall be in writing and sent
simultaneously to each of Party A and Party B at their usual business address
using any of the means for delivery of notices stipulated in Article 105
hereof.


 


Article 32       To transact any
business or adopt any resolutions, a quorum of not less than three (3)
directors must be present, either in person or by proxy, at a meeting of the 


 


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Board of Directors of the EJV. 
Each director shall be entitled to cast one vote in response to each
proposed resolution and, in the event of an equal number of votes being cast,
the deadlock shall be handled in accordance with the dispute settlement
provisions set out in Chapter 26 hereof.


 


Article 33       Assuming a quorum
is present, decisions of the Board of Directors relating to the following
matters shall be deemed to be properly made only upon the unanimous agreement
of directors present at a Board of Directors meeting:


 


(1) unplanned expenditure of capital outside the ordinary course of
business of the EJV;


(2) hiring and firing of high-ranking management personnel of the EJV;


(3) expenditures required for employees of the EJV involved in
international business on behalf of the EJV;


(4) amendment of the Articles of Association of the EJV;


(5) termination and dissolution of the EJV;


(6) increase or assignment of the registered capital of the EJV;


(7) merger of the EJV with another economic organization;


(8) incurring short or long term debt; or


(9) sale of assets outside the normal course of business.


 


Decisions on other matters shall be deemed to be properly made if made
in accordance with rules of procedure stipulated in the Articles of Association
of the EJV.


 


Article 34       The Chairman of
the Board of Directors is the legal representative of the EJV.  Should the Chairman, for any reason, be
unable to discharge his responsibilities as legal representative, he shall
authorize the vice-Chairman or any other director to act as the legal
representative of the EJV on a temporary basis.


 


Article 35       The Board of
Directors of the EJV shall convene at least one (1) meeting each year.  The meeting shall be called and presided over
by the Chairman of the Board of Directors. 
In addition, the Chairman may elect to convene an interim meeting, or
interim meetings, of the Board of Directors following a proposal made by at
least one-half of the total number of directors and provided that at least one
(1) director from each of Party A and Party B participates in making such
proposal.


 


Article 36       Meetings of the
Board of Directors shall be conducted in English and Chinese and, to the extent
necessary, Party A will provide an interpreter to carry out consecutive
translation.  Likewise, minutes of the
meetings of the Board of Directors shall be kept in both English and Chinese,
copied to each of Party A and Party B and kept on file at the registered office
of the EJV for review by any director.


 


Article 37       In lieu of a
meeting of the Board of Directors, the directors may adopt a written
resolution.  Such a written resolution
shall be adopted if sent to all members of the Board of Directors and returned
to the registered office of the EJV affirmatively signed by the number of
directors necessary to make such a decision as stipulated in Article 34 hereof.


 


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Article 38       Directors shall
not be paid a salary by the EJV. 
However, reasonable transportation and accommodation expenses incurred
by a director in connection with his or her attendance at a meeting of the
Board of Directors shall be reimbursed by the EJV on presentation of acceptable
documentation.  Nothing in the foregoing
shall prohibit the EJV from paying a salary to a director where such director
concurrently acts as an officer or employee of the EJV.


 


Chapter 12            The
Operation and Management Organization


 


Article 39       The EJV shall
adopt a management system under which the management organization shall be
responsible to, and under the leadership of, the Board of Directors.  Initially, the management organization of the
EJV shall consist of: (1) a General Manager in charge of Operations
(hereinafter, the “General Manager”); (2) a Vice General Manager, Finance
(hereinafter, the “Vice General Manager, Finance”); and (3) a Vice General
Manager, Sales (hereinafter, the “Vice General Manager, Sales”).  Party A shall appoint the Vice General
Manager, Sales, while Party B shall appoint the General Manager and the Vice
General Manager, Finance.


 


Article 40       The EJV may elect
to expand its operation and management organization as business circumstances
evolve and the EJV grows more successful. 
In the event of any such future expansion, the Board of Directors will
adopt a duly made resolution to increase the number of senior management staff
of the EJV and will specify the role(s) such individual(s) will assume in the
new management structure.


 


Article 41       Unless otherwise
determined by the Board of Directors of the EJV, the General Manager shall be
the senior management officer and shall be responsible for day-to-day
operations and management of the EJV. 
All Vice General Managers shall report to the General Manager and shall
assist him in his work as required.


 


Article 42       Unless otherwise
determined by the Board of Directors of the EJV, the precise responsibilities
and powers of the General Manager shall be as set out in the relevant
provisions of the Articles of Association of the EJV (as amended from time to
time).  Without limiting the generality
of the foregoing, however, the General Manager, 
together with a copy of disaggregated by month financial statements
concerning sales, orders and inventory for the year just ended, shall submit an
annual business plan to the Board of Directors for approval by not later than
30 November of each fiscal year.


 


Article 43       The General
Manager shall have the right to sign contracts within type and financial limits
authorized by the Board of Directors and as arise within the normal course of
business of the EJV.  Without limiting
the generality of the foregoing, the General Manager shall have signing
authority on behalf of the EJV in regard to such matters as contracts for the
purchase of equipment, materials and supplies, and sale of Products to
end-users in China and in international markets.


 


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Article 44       Each of the Vice
General Manager, Finance and the Vice General Manager, Sales shall be appointed
by the Board of Directors and shall be responsible both to the General Manager
and to the Board of Directors.


 


Article 45       Neither the
General Manager nor any other senior management officer of the EJV may
concurrently hold any position as general manager, manager, or as any officer
or employee, of any other economic organization, provided, however, that the
General Manager, the Vice General Manager, Finance and the Vice General
Manager, Sales - where such individuals have been seconded to the EJV by either
of Party A or Party B - may concurrently be employees of Party A or of Party B.


 


Article 46       The terms and
conditions of any secondment of personnel at or above the level of supervisor
from either of Party A or Party B to the EJV shall be contained in separate
Personnel Secondment Agreements to be signed by whichever of Party A or Party B
is party thereto and kept by the Board of Directors of the EJV for the record.


 


Article 47       In case of graft
or serious dereliction of duty on the part of the General Manager, the Vice
General Manager, Finance or the Vice General Manager, Sales, the Board of
Directors shall have the power to dismiss any or all of such senior management
staff at any time.


 


Chapter 13            Labor
Management


 


Article 48       The number of
staff and workers to be employed by the EJV at any point in time shall be
determined by the General Manager in accordance with the requirements of the
EJV and the specific conditions of the labor market in Ningbo.


 


Article 49       In accordance
with Chinese laws and regulations, the General Manager will formulate specific
plans regarding the recruitment, dismissal, wages, labor insurance, welfare,
rewards and penalties of the EJV’s staff and workers and will submit such plans
to the Board of Directors for approval.


 


Article 50       The EJV may
recruit local and expatriate staff and workers in accordance with relevant laws
and regulations of China.  In so doing,
the EJV shall recruit and hire such staff and workers based on their education
and skills as determined, in the discretion of the General Manager, through
competitive examination.  The EJV, on a
preferential basis, shall hire employees currently employed by Party A
wherever, in the discretion of the General Manager, it is in the interest of
the EJV to do so.


 


Article 51       The EJV shall
adopt the employment contract system for all its staff and workers. The agreed
standard form of labor contract is attached to this Contract as Appendix
D.  The EJV shall sign labor contracts
with individual staff members and workers in a form which, to the extent
required by law, will be reviewed and verified by the labor bureau of the
Ningbo Municipal Government.


 


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If necessary, the EJV may also enter into employment contracts with
expatriate personnel on such terms and conditions as may be approved by the
Board of Directors.


 


Article 52       The salary and
other remuneration of EJV personnel (except for senior management staff, as set
forth in this Chapter 13, and personnel seconded from either of Party A or
Party B to the EJV) will be determined by the General Manager based on the
ability and skill of such personnel and with reference to pertinent Chinese law
and regulations.  Salary and remuneration
details shall be set forth in the labor contracts concluded with each employee
of the EJV and, reflecting the changed circumstances of the EJV over time,
shall be adjusted based on those then-actual circumstances and the ability and
skills of the staff and workers.


 


Article 53       The compensation
of the senior management staff of the EJV shall be decided (except for
personnel seconded to the EJV by either of Party A or Party B, in which case
such remuneration shall be governed by the applicable Personnel Secondment
Agreement) by the Board of Directors.


 


Chapter 14            Purchase
of Equipment


 


Article 54       In making its
purchases of required raw materials, fuel, parts, means of transportation and
articles for office use etc., the EJV, without regard to point of origin, may
purchase the highest quality products at the lowest price available in either
the Chinese or international market.


 


Article 55       In the event the
EJV elects to entrust Party B to purchase equipment on the international
market, persons appointed by Party A shall be invited to participate in the
purchasing.


 


Chapter 15            Finance
and Audit


 


Article 56       The EJV shall
formulate its own financial and accounting systems in light of the stipulations
of relevant Chinese laws and financial accounting regulations, taking into
account the specific operations of the EJV and the accounting reporting
requirements of the Parties.  The EJV
shall adopt the internationally recognized debit and credit accounting system
to record financial transactions (including the accrual basis of
accounting).  The accounting system and
procedures to be adopted by the EJV shall be jointly prepared by the General Manager
and the Vice General Manager, Finance and shall be submitted to the Board of
Directors for approval.  Once approved by
the Board of Directors, the accounting system and procedures shall be filed
with the relevant Ningbo bureaux of finance and tax for the record.


 


Article 57       The following
items shall be covered in the financial account books:


 


(1)           the amount of all
cash receipts and expenses of the EJV;


 


12





















 


(2)           all material and
supply purchases and all income and sales of the EJV;


(3)           the registered
capital and debt situation of the EJV; and


(4)           the time of payment,
increase in and / or assignment of the registered capital of the EJV.


 


The accounting methods adopted by the EJV in each fiscal year shall be
consistent.  Any change in accounting
methods shall be subject to the approval of the Board of Directors and
explained in the next accounting report.


 


Article 58       The fiscal year
of the EJV shall run from 1 January to 31 December of each year.


 


Routine accounting records, vouchers, books and statements of the EJV
shall be made and kept in Chinese.  All
financial statement of the EJV shall also be made and kept in English.


 


All accounting books, records and statements of the EJV shall be kept
at the EJV’s registered office.  Matters
concerning how long such accounting books, records and statements shall be kept
and the method of their ultimate disposal shall be handled in accordance with
relevant Chinese regulations.


 


Article 59       The EJV shall
adopt the Renminbi as its bookkeeping base currency, but may also use United
States Dollars or other foreign currencies as supplementary bookkeeping
currencies.


 


Article 60       The EJV shall
separately open foreign currency and Renminbi bank accounts at bank(s)
authorized to accept deposits in China from foreign investment
enterprises.  The EJV may open bank
accounts outside of China in accordance with relevant Chinese laws and
regulations.


 


Article 61       All checks,
drafts or other orders for payment of money, notes or other evidence of
indebtedness, issued in the name of or payable by the EJV, shall be signed or
endorsed by such person(s) and in such manner as the Board of Directors
determines from time to time by resolution.


 


Article 62       Every month, and
within the first three months of each fiscal year, the Vice General Manager,
Finance shall compile a balance sheet and a profit and loss statement for the
preceding year, and submit them to the General Manager for review and approval.
The Vice General Manager, Finance shall also prepare, on a quarterly basis and
within thirty (30) days of the end of the EJV’s fiscal year, related financial
statements of the EJV in accordance with U.S. generally accepted accounting
principles (“U.S. GAAP”).  Promptly after
his receipt and review, the General Manager shall provide copies of the said
financial statements to the Parties and summaries of such statements to the
Board of Directors.


 


13





















 


The Board of Directors shall engage a major international accounting
firm registered in China to be the EJV’s auditor and to examine and verify the
EJV’s financial accounting. The results of the auditor’s examination shall be
reported to the Board of Directors and the General Manager.  The EJV shall submit to the Parties and to
each director the audited annual accounts together with the audit report of the
auditor within seven (7) working days after such report is issued.


 


If a Party wishes to audit the EJV’s accounts, such Party shall, not
less than thirty (30) days before the expected audit date, inform the EJV of
the purpose and scope.  The audit shall
be conducted at such Party’s expense through an internationally reputable
independent firm of accountants registered in China.  If, however, the results of any such audit
are significantly different from that conducted by the EJV’s auditor and are
accepted by the Board of Directors, the expense shall be borne by the EJV. Such
other auditor shall keep confidential all documents audited by him.  The EJV shall permit such other auditor to
have access to the books and records of the EJV and shall provide the necessary
office space and facilities to enable such examination to be carried out
effectively.  The results of such audit
shall be reported to the Board of Directors, the General Manager and the EJV’s
auditor.


 


Article 63       All foreign
exchange matters of the EJV shall be handled in accordance with relevant
Chinese foreign exchange regulations in effect from time to time.


 


Chapter 16            Distribution
of Profits and Taxes


 


Article 64       Unless the Board
of Directors decides otherwise, one hundred (100) percent of the after-tax
profits of the EJV remaining after contributions to the statutory funds set
forth in this Chapter 16 shall be distributed annually to the Parties in exact
proportion to their contributions to the registered capital of the EJV.
Accordingly, the distribution of profits to the parties will be in the
following ratio:


 


	
  To Party A

  	
  fifty percent

  	
  To Party B

  	
  fifty percent

  



 


Undistributed distributable profits from prior years may be
distributed, in the same ratio, together with those of the current year.


 


Article 65       The EJV shall
make timely payment of taxes, and apply for reduction or exemption of taxes, in
accordance with the provision of relevant Chinese laws and regulations.  Any duty payable in China shall be paid in
Renminbi.  The EJV may also apply for
preferential treatment under relevant Chinese laws and regulations.  At the end of each fiscal year, the Vice
General Manager, Finance shall prepare such information as shall be necessary
for the preparation of any tax returns and statements as may be required by U.
S. law.  This shall include furnishing
Party B with certified copies of government receipts for income taxes paid
within China.


 


14





















 


If any new laws, decrees, rules, regulations or amendments are
promulgated which provide more favorable treatment to Sino-foreign co-operative
joint venture companies operating in Ningbo Municipality than under existing laws,
decrees, rules and regulations or amendments thereto, the EJV shall be entitled
to the benefit of such new laws, decrees, rules, regulations or amendments.


 


The staff and workers of the EJV shall pay individual income tax
according to the relevant and published individual income tax laws and
regulations of China.


 


Article 66       The EJV shall set
aside a certain amount of money from its after-tax profits each year for the
Reserve Fund, the Staff and Workers’ Bonus and Welfare Fund and the Enterprise
Development Fund in accordance with the stipulations in the EJV Law.  The amount to be set aside annually for these
three funds shall be discussed and decided by the Board of Directors according
to the actual business situation of the EJV.


 


When the cumulative aggregate of the funds in the Reserve Fund and
Enterprise Development Fund equals fifty (50) percent of the registered capital
of the EJV, the EJV need not make further allocations to these funds.


 


Within the limits of the laws and regulations of China, all money
placed in the three funds maintained by the EJV as provided in this Article 67
shall be placed by the EJV with internationally recognized banks or financial
institutions in China or abroad providing the best available terms, as approved
by the Board of Directors.


 


Article 67       The Board of
Directors may distribute the profits of the EJV as and when it deems
appropriate.  Before declaring any profit
distribution, there may be set apart out of the profit of the EJV available for
distribution such sum or sums as the Board of Directors from time to time in
its discretion considers proper for working capital or as a reserve fund to
meet contingencies or for such other purposes permitted by law as the Board of
Directors believes to be in the best interests of the EJV.


 


Article 68       Party B shall
have the right to receive its share of the profits of the EJV in U.S. Dollars
or other freely convertible foreign currency acceptable to Party B.  The amount in the relevant foreign currency
shall be calculated at the base exchange rate set by the People’s Bank of China
and shall be paid on the day it is declared.


 


Chapter 17            Insurance


 


Article 69       Subject to the
decision of the Board of Directors, the EJV shall purchase various types of
insurance from insurance companies permitted by Chinese law to provide
insurance coverage to foreign investment enterprises.  Such insurance coverage may include property
insurance, product liability insurance, third party liability insurance and other
relevant insurance coverage in order to protect the EJV, its employees, agents
and other appropriate parties from claims.


 


15





















 


Chapter 18            Duration
of the EJV


 


Article 70       The EJV, unless
terminated earlier in accordance with Chapter 19 below, shall have a term
(hereinafter, the “EJV Term”) of twenty-five (25) years beginning from the date
of issuance of the EJV’s initial business license by the Ningbo Administration
of Industry and Commerce.


 


The effective term of this Contract shall begin when it is executed by
the Parties and approved by the Original Examination and Approval Authority,
and shall end when the EJV Term ends, or upon dissolution of the EJV if this
Contract is terminated early.


 


Chapters 18, 25 and 26 shall survive termination of this Contract.


 


Article 71       At least two (2)
years before the EJV Term expires, the Parties shall hold consultations to
discuss extension of the EJV Term.  It
the Parties agree to extend the EJV Term, an application for such extension
shall be submitted to the Original Examination and Approval Authority for
approval not less than six (6) months before the EJV Term expires.  Any extension of the term that is approved
shall be registered with the Ningbo Administration of Industry and Commerce.


 


Dissolution of the EJV upon early termination or at expiration of the
EJV Term shall be subject to the provisions of Chapters 19 and 23.


 


Chapter 19            Early
Termination and Dissolution


 


Article 72       The EJV may be
dissolved and this Contract terminated before the EJV Term expires if any of
the following events or circumstances occurs:


 


(1)           not earlier than two
years following issuance to the EJV of a business license, the EJV has incurred
heavy losses and is unable to continue operations (for purposes of this Chapter
19, the term “heavy losses” shall mean that the accumulated losses of the EJV
have reached seventy-five (75) percent or more of the registered capital of the
EJV in any calendar year);


 


(2)           the EJV is unable to
continue operations due to the occurrence of an Event of Force Majeure, as
provided in Chapter 24;


 


(3)           the EJV is unable to
operate due to the loss of its business license for its core business (or its
inability to renew such license), or it is prohibited from pursuing its core
business (pursuant to any regulatory, judicial action or otherwise), or
permanently cannot pursue it in a commercially practicable way due to a change
in the laws of China;


 


(4)           a Party declares
itself, or is declared, bankrupt and is unable to continue business operations;


 


16





















 


(5)           the Parties
unanimously agree to early dissolution of the EJV;


 


(6)           the Parties do not
reach agreement on the adjustments to the economic benefit of the damaged Party
as provided under Article 92 within ninety (90) days of the request by the
damaged Party for such adjustments, and the damaged Party gives the other Party
written notice that it wishes the Parties to consider early termination;


 


(7)           the EJV ceases to
have the right to maintain foreign exchange bank account(s) or to have access
to sufficient foreign exchange to perform its foreign exchange payment
obligations (including royalties, profits, fees or other payments owed to Party
B), through the designated foreign exchange banks or other legal means as provided
under Chinese law, and Party B gives Party A written notice that it wishes the
Parties to consider early termination;


 


(8)           one Party has
breached this contract, has been given notice by the other Party, and has not
timely remedied the breach, as set forth in Article 80; or


 


(9)           the Parties are
unable to resolve a dispute that interferes with the EJV’s ability to be
successful, despite good faith efforts of the Parties.


 


Article 73       When any event
set out in Article 73 (1) to (8) occurs, either Party may request that a
special Board of Directors meeting be convened to discuss early dissolution of
the EJV.  The Chairman shall convene such
meeting within thirty (30) days of the receipt of such request.  Each Party shall ensure that its directors
attend such meeting in person or by proxy, discuss the alternatives, and use
their best efforts to achieve a solution acceptable to both Parties by adopting
by unanimous vote one of the following solutions:


 


(1)           dissolution and
liquidation of the EJV pursuant to Chapter 19;


 


(2)           purchase by the
Party opposing dissolution, or by its designee, or by a third party or parties
acceptable to it, of the equity interest of the Party favoring dissolution,
such equity interest to be valued using the method set out in Articles 85 and
86;


 


(3)           sale of the EJV on a
going concern basis to a third party or parties at a value to be agreed between
the Parties and such third-party purchaser(s);


 


(4)           another course of
action acceptable to the Parties.


 


If the Board of Directors unanimously adopts one of the above
solutions, the Chairman and vice Chairman of the Board of Directors, on behalf
of the EJV, shall (i) promptly give the Original Examination and Approval
Authority, and other Chinese government departments who must approve, written
notice of the solution adopted and request approval; or (ii) use their best
efforts to obtain such approval.  If (i)
the directors do not adopt any of the solutions given above, (ii) such special
Board of Directors meeting cannot be held within three (3) months of a Party’s
request for it pursuant to this Article, 


 


17





















 


or (iii) the solution adopted by the Board of Directors cannot be
carried to completion within six (6) months of the special Board of Directors
meeting, then, unless the Parties otherwise agree: (i) the Board of Directors
shall be deemed to have unanimously approved the dissolution and liquidation of
the EJV;  (ii) each Party shall ensure
that its directors promptly approve a resolution to that effect;  and (iii) the Board of Directors or, on its
behalf, the Party favoring dissolution, may request the Original Examination
and Approval Authority to approve liquidation and dissolution of the EJV.


 


Article 74       Notwithstanding
the provisions of Article 74, if the event in Article 73 (9) occurs, and
provided that Chinese law in force at the date of dissolution permits a foreign
invested enterprise having the purpose and business scope of the EJV to be licensed
and operated as a wholly owned foreign enterprise, any Party (hereinafter, the “Offeror”)
may, before application is made to the Original Examination and Approval
Authority to liquidate the EJV, make an irrevocable offer (hereinafter, the “Offer”)
to the other Party (hereinafter, the “Offeree”) by giving written notice of it
to the other Party; provided, however, that if neither Party makes an Offer,
the matter will be resolved in accordance with Article 74.  The Offer shall specify a purchase price,
payable in cash in United States Dollars if Party A is the purchaser or in
Renminbi if Party B is the purchaser. 
The Offeree may elect either to:


 


(1)           sell its whole
interest in the EJV to the Offeror; or


 


(2)           purchase the Offeror’s
whole interest in the EJV at a pro-rata price equal to the purchase price
specified in the Offer multiplied by the ratio of the Offeror’s equity interest
to the Offeree’s equity interest.


 


The Offeree shall give the Offeror written notice of its election
within thirty (30) days of receiving the Offer, and shall be deemed to have
elected to sell its interest if it fails to give such notice.  All necessary steps in connection with the
transfer of any interest, and payment therefor, shall be completed as soon as
possible, subject to the review and approval of the Original Examination and
Approval Authority.  If more than one
Offer is made, such Offers shall be handled in accordance with the principle, “first
in time, first in right”.


 


Article 75       If Party B’s
interest in the EJV is nationalized or expropriated, or if the assets or a
material part of the assets of the EJV have been taken over by a government
entity, Party B shall have the right to unilaterally terminate this Contract
and dissolve the EJV, and Party B shall be equitably compensated in accordance
with the law of China, including relevant international treaties to which China
is a party, and international practice.


 


Chapter 20            Representations
and Warranties of the Parties


 


Article 76       Party A hereby
represents and warrants to Party B as follows:


 


18





















 


(1)           Party A is a limited
liability company duly organized and validly existing as an enterprise legal
person under the laws of China;


 


(2)           Party A has full
legal right, power and authority to execute this Contract and all contracts and
documents referred to in this Contract to which Party A is a Party and to
observe and perform its obligations under this Contract and those contracts and
documents;


 


(3)           Party A has taken
all appropriate and necessary action to authorize the execution of this
Contract and all of the contracts and documents referred to in this Contract to
which Party A is a Party and to authorize the performance and observance of the
terms and conditions of this Contract and those contracts and documents; and


 


(4)           Party A has obtained
all consents, approvals and authorizations necessary to validly execute this
Contract and all of the contracts and documents referred to in this Contract to
which Party A is a Party and to observe and perform its obligations under this
Contract and those contracts and documents; provided, however, that this
Contract is subject to the approval of the Original Examination and Approval
Authority before it becomes effective.


 


Article 77       Party B hereby
represents and warrants to Party A as follows:


 


(1)           Party B is a
corporation duly organized and validly existing under the laws of the State of
Delaware;


 


(2)           Party B has full
legal right, power and authority to execute this Contract and all of the
contracts and documents referred to in this Contract and to which Party B is a
Party and to observe and perform its obligations under this Contract and those
contracts and documents;


 


(3)           Party B has taken
all appropriate and necessary action to authorize the execution of this
Contract and of all of the contracts and documents referred to in this Contract
to which Party B is a party, and to authorize the performance and observance of
the terms and conditions of this Contract and those contracts and documents;
and


 


(4)           Party B has obtained
all consents, approvals and authorizations necessary to validly execute this
Contract and all of the contracts and documents referred to in this Contract to
which Party B is a party, and to observe and perform its obligations under this
Contract and those contracts and documents; provided, however, that this
Contract is subject to the approval of the Original Examination and Approval
Authority before it becomes effective.


 


19





















 


Chapter 21            Non-Competition


 


Article 78       Party A agrees
that it, its successors and assigns, its subsidiaries and affiliates, shall
not, directly or indirectly, whether as an investor, co-venturer, technology
licensor, technology licensee, agent, distributor, consultant or otherwise
howsoever, during the EJV Term, including any extensions of the original term,
maintain, establish, or engage in a business, operation or plant in China, or
participate in the production and / or sale of any products which (1) use the same brand
names, or use any confusingly similar brand names, of Party B, or of any
products of a similar style to those of Party B, that Party A had not sold in
either the domestic Chinese or international markets prior to the date of
execution of this Contract , or (2) use the technology transferred pursuant to
Chapter 7 of this Contract, or any improvements to said technology, to improve
Party A’s existing products or to produce new products ..


 


Chapter 22            Breach
and Penalties for Breach


 


Article 79       If a Party fails
to perform any of its material obligations under this Contract, or if any
representation or warranty of that Party under this Contract is materially
untrue or inaccurate, then that Party (hereinafter, the “Breaching Party”) has
breached this Contract.  In such case,
the Party performing this Contract (hereinafter, the “Performing Party”) may
give the Breaching Party notice that it has breached this Contract and should
remedy such breach within sixty (60) days of the date of such notice.  If the breach has not been remedied by the
end of such sixty-day period, the Performing Party may give the Original
Examination and Approval Authority written notice that the Breaching Party has
breached this Contract and request early dissolution of the EJV as provided in
Chapter 19 hereof.


 


Article 80       In the event of a
breach of this Contract, the Breaching Party shall be liable to the Performing
Party for direct (but not consequential) damages incurred as a result of such
Breaching Party’s breach of contract. 
The rights provided for in Article 80 shall be in addition to any other
remedies available to the Performing Party. 
Termination of this Contract in the exercise of such rights shall not
relieve either Party from any obligations accrued to the date of such
termination or relieve the Breaching Party from liability for damages to the
Performing Party for breach of this Contract. 
Waiver by either Party of one or more defaults shall not deprive such
Party of a right to terminate this Contract arising by reason of any subsequent
default.


 


Article 81       Should a Party
not contribute on time to the EJV its subscribed amount of registered capital
stipulated in Article 11 hereof , such Party shall pay the EJV liquidated
damages for default at the rate of one (1) percent per month of the overdue
amount, calculated based on the number of days the amount is overdue, provided
that the liquidated damages are payable only when the amount is one (1) month
or more overdue.  If no payment has been
made, or if full payment of the amount overdue has not been made in three (3)
months, the Party in default shall be deemed to have waived its right to
subscribe to the capital overdue. 
Besides claiming from the defaulting Party for the EJV the cumulative
three (3) percent on the subscribed amount overdue as liquidated damages for
default, the non-defaulting Party may also subscribe to such overdue amount,
and 


 


20





















 


require the defaulting Party to compensate it for its direct losses
sustained as a result of the defaulting Party’s breach.  If the non-defaulting Party elects to
subscribe to such overdue amount pursuant to this Article, each Party shall
ensure that its directors approve such subscription and shall use its best
efforts to obtain the approval of the Original Examination and Approval
Authority.


 


Chapter 23            Termination
and Dissolution


 


Article 82       Upon approval by the Board of Directors of early dissolution
of the EJV, the EJV shall notify the Original Examination and Approval
Authority to obtain approval for liquidation of the EJV.  Within seven (7) days from the date of such
approval or the expiration of the EJV Term, the Board of Directors shall notify
the relevant authorities as required by law. 
Within fifteen (15) days from the date of such approval or the
expiration of the EJV Term, the Board of Directors shall appoint a Liquidation
Committee.


 


The
Liquidation Committee shall be composed of five (5) members appointed by the
Board of Directors, of which two (2) shall be nominated by Party A and three (3)
by Party B.  The Liquidation Committee
shall include a director, who shall be nominated by Party B.


 


Members
of the Liquidation Committee may be directors or senior employees of the EJV,
or other qualified persons such as accountants and lawyers qualified in the
PRC.


 


Article 83       Within ten (10) days of the appointment of the Liquidation
Committee, the Liquidation Committee shall notify in writing the creditors of
the EJV to report the amounts the EJV owes the creditors.  The Liquidation Committee shall also publish
announcements of the liquidation in newspapers in accordance with the relevant
laws and regulations.


 


The
Liquidation Committee shall carry out its duties according to applicable law,
and in particular shall:


 


1.                                       conduct an overall
inventory of the EJV’s property, creditors’ rights and liabilities;


 


2.             prepare a balance sheet and
property inventory;


 


3.                                       value all the property
of the EJV at fair market value;


 


4.             prepare a liquidation plan;


 


5.                                       apply the assets of
the EJV to satisfy the costs of the liquidation and the EJV’s liabilities,
including all obligations under the Ancillary Agreements;


 


6.             carry out other duties required by
relevant laws and regulations.


 


21





















 


Thereafter,
the remaining assets of the EJV may be distributed to the Parties in accordance
with the ratio of their capital contributions; provided, however, that any
property to be distributed to the Breaching Party may be used to pay for the
damages sustained by the Performing Party. 
Damages payable to Party B and Party B’s share of any distribution shall
be paid in foreign exchange.  The Parties
may elect to receive their respective share of any distribution of assets in
kind, including machinery and equipment, with Party A being given preference
with respect to machinery and equipment made in the PRC and Party B being given
preference with respect to machinery and equipment made outside the PRC.


 


Article 84       If at the termination or expiration of this Contract the EJV
is actively engaged in business, the value of the EJV may, on written request
of either of the Parties, be established by three (3) qualified appraisers, one
(1) to be appointed by Party A, one (1) to be appointed by Party B and the
third one to be appointed by the two (2) appraisers appointed by the
Parties.  If a Party fails to appoint an
appraiser within sixty (60) days of being requested to do so by the other
Party, the appraiser appointed by such Party shall appoint an appraiser on
behalf of the Party failing to make such an appointment.  Such appraisers shall each value the EJV on a
going-concern basis with reference to a co-operative joint venture with
facilities comparable to those of the EJV, which co-operative joint venture is
qualified to continue to carry on its business in the jurisdiction in which it
is located.  In making such a valuation,
the appraisers shall make full provision for and take into account the debts
and liabilities of the EJV.


 


Article 85       If one or all of the three values given by the three (3)
appraisers is/are not within ten (10) percent of the nearest of the other two
values (using the lower of the two values being compared as the numerator, and
the higher as the denominator, when calculating the ten (10) percent), then
that value or values shall be discarded. 
If no values are discarded, the EJV’s value shall be the average of the
three values.  If one value is discarded,
the EJV’s value shall be the average of the remaining two values.  If all three are discarded, then new
appraisers shall be appointed as provided in the previous paragraph.


 


Either
before or after the value of the EJV has been established, the Parties may
agree that one Party shall purchase the interest of the other at a pro-rata
price equal to the value of the EJV multiplied by the selling Party’s equity
ratio in the EJV.  If Party A buys Party
B’s interest, payment shall be made in convertible currency.  If neither Party is willing to buy at the
value established by the appraisers or at any other price agreed upon, then the
Parties shall sell the EJV to a third party at the appraised value or for a
better price, or if this cannot be done, then at any other favorable price to which the
Parties agree.  Failing this, the EJV
shall be dissolved and liquidated as provided in Chapter 23.


 


Chapter 24            Force
Majeure


 


Article 86       Should either Party be prevented from performing its
obligations under this Contract by force majeure, such as earthquake, epidemic,
typhoon, flood, or other 


 


22





















 


acts of nature, fire, explosion, acts of
civil or military authority including the inability to obtain any required
export licenses, labour disputes, riots, inability to obtain raw materials,
spare parts, war or other unforeseen event beyond the prevented Party’s
reasonable control (hereinafter, an “Event of Force Majeure”), the prevented
Party shall give the other Party written notice without delay, and within
fifteen (15) days of the event provide detailed information about and documents
evidencing the event, explaining the reasons for its inability to perform, or
for its delay in the performance of, all or part of this Contract.


 


Article 87       If an Event of Force Majeure occurs, neither Party shall be
responsible for any damage, increased costs or loss which the other Party may
sustain by reason of its inability to perform or delayed performance, and such
inability or delay shall not be deemed a breach of this Contract.  The Party claiming force majeure shall take
appropriate means to minimize or remove the effects of force majeure and,
within the shortest possible time, attempt to resume the performance affected
by the Event of Force Majeure.


 


Article
88       Should an Event of Force Majeure or the effects of an Event
of Force Majeure prevent one or both Parties from performing part or all of its
or their obligations under this Contract for a period of 120 days or more, then
the Parties shall, through consultations, decide whether to terminate this
Contract, to exempt one or both Parties from part of its or their obligations
under this Contract, or to delay the performance of such obligations in
accordance with the effects of the Event of Force Majeure.


 


Chapter 25            Applicable
Law


 


Article 89       This Contract shall be governed and protected by the laws of
the PRC.  This Contract shall be
performed in accordance with its terms.


 


Article 90       If, during the term of this Contract, any relevant authority
in the PRC adopts any law, regulation, rule or policy, or a treatment is
extended to another equity or coperative joint venture company or investor in
the high-quality gas equipment manufacturing business in the PRC specified in
Article 6 which is more favorable than the laws, regulations, rules, policies
or a treatment previously applicable to the EJV and/or either Party (including
reducing or eliminating filing, reporting, registration or approval
requirements), then the EJV and/or the Parties as the case may be shall be
entitled to receive, or apply (if application is necessary) to the appropriate
governmental agency or authority to receive the benefit of such law,
regulation, rule, policy or treatment.


 


Article 91       If, during the term of this Contract, an adverse material
change occurs to either Party’s economic benefits derived from this Contract
because any relevant authority in the PRC adopts new laws, regulations, rules
or policies, amends or reinterprets existing laws, regulations, rules or
policies, or alters its treatment of either Party, the Parties shall promptly
consult with each other and use their best efforts to 


 


23





















 


implement any adjustments necessary to
keep the damaged Party’s economic benefits derived from this Contact
substantially equivalent as they would have been if such laws, regulations,
rules, policies or treatments had not been adopted, amended, reinterpreted or
altered.


 


Chapter 26            Settlement
of Disputes


 


Article 92       Subject to the Parties’ right to terminate this Contract, in
the event a dispute arises in connection with the interpretation or
implementation of this Contract and its Attachments, any Party may notify the
other Party in writing of the
substance of the dispute and of its desire to attempt to reach an amicable
settlement, in which event the Parties shall endeavor for a period of one
hundred and eighty (180) days after the date of such notice to reach an
amicable settlement of the dispute.


 


Article 93       If no mutually
acceptable settlement of a dispute is made within the one hundred and eighty
(180) day period, then any Party may submit the dispute for final settlement by
arbitration conducted in accordance with the Singapore International
Arbitration Center Rules as presently in force. The arbitration award shall be
final and binding upon the Parties. Any competent court shall enforce such
award. Such arbitration shall be conducted as follows:


 


(a)          the appointing authority shall be Singapore
International Arbitration Center;


(b)         the arbitrators may refer to both the
English and Chinese texts of this Contract;


(c)          a daily transcript in Chinese and English of
such proceedings shall be prepared;


(d)         there shall be three (3)
arbitrators. Each Party shall select one arbitrator. The third
arbitrator shall be a person selected by the arbitration authority and
he shall serve as Chairman of the panel;


(e)          the place of arbitration shall be
Singapore;  and


(f)            the costs of arbitration, including travel
expenses and attorney fees, shall be borne by the losing party, unless
otherwise determined by the arbitration award.


 


Article 94       If any Party
fails to observe the terms of an arbitration award, the other Party
may apply to have the award enforced in any court having jurisdiction over the
Party against which the award has been rendered.


 


Article 95       In any arbitration proceeding, any legal proceeding to enforce
any award resulting from an arbitration proceeding and in any legal action
between the Parties pursuant to or relating to this Contract, each Party
expressly waives the defense of sovereign immunity and any other defense of
exemption from suit, judgment or executive order based on the fact or
allegation that it is a party, agency or instrumentality of or representing a
government.


 


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Article 96       During the period when a dispute is being resolved, the
Parties shall in all other respects continue their implementation of this
Contract.


 


Chapter 27            Language


 


Article 97       Five originals of this Contract shall be written in each of a
Chinese language version and an English language version.  Both the Chinese language and English
language versions will be of equal effect. In case of any conflict between the
two language versions, the Chinese language version shall govern. In such
circumstances, the English version may be considered in helping to construe the
real intent of the Parties. Each Party shall keep one original Chinese and one
English language version. The three remaining original language versions, in
each of Chinese and English, shall be submitted to the Original Examination and
Approval Authority.


 


Chapter 28            Effectiveness
of the Contract, Amendment and Miscellaneous


 


Article 98       The Appendices referred to in and attached to this Contract
are an integral part of this Contract. 
They are as follows:


 


Appendix
A          Articles of Association


 


Appendix
B           Technical License Agreement


 


Appendix
C           Lease Agreement


 


Appendix
D           Form of Employment Contract


 


This
Contract with its Appendixes constitutes the entire agreement between the
Parties with respect to the subject matter of this joint venture and supersede
all previous oral and written agreements, contracts, understandings and
communications of the Parties in respect of the subject matter of this
Contract.


 


Article 99       This Contract with its Appendixes shall be submitted for
approval to the Original Examination and Approval Authority and shall come into
force beginning from the date on which the Original Examination and Approval
Authority issues its approval reply. 
Party A shall give Party B written notice immediately upon receiving the
approval reply, and provide Party B with a copy of it.  The same shall apply to receipt of the
approval certificate.


 


Article 100:    If: (i) this Contract is not approved within four (4) months
following the date of submission; or (ii) the Original Examination and Approval
Authority requires the Parties to amend this Contract in a manner that is
unacceptable or imposes conditions that are unacceptable to one or both
Parties, then either Party may terminate the effectiveness of its signature of
this Contract by written notice to the other Party, and upon receipt of such
notice this Contract shall be null and void.


 


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Article 101     Any amendment of this Contract shall come into force only when a
written agreement is signed by Party A and Party B and approved by the Original
Examination and Approval Authority.


 


Article 102     The invalidity of any provision of this Contract shall not
affect the validity of any other provision of this Contract.


 


Article 103     A Party’s failure to exercise any right, power or interest under
this Contract shall not operate as a waiver of it, and any single or partial
waiver of any right, power or interest shall not preclude exercise of any other
right, power or interest.


 


Article 104     All notices between the Parties shall be written in Chinese and
in English and delivered, either by messenger, registered airmail, fax or
telegram, to the following addresses:


 


	
  Address of Party A:

  	
   

  	
  No. 518 Songjiang Zhong Road

  
	
   

  	
   

  	
  Ningbo
  315192, Zhejiang Province, PRC

  
	
   

  	
   

  	
  Attention:  Mr.
  Chen Ding Long

  
	
   

  	
   

  	
  Fax:  86-574-8821
  5078

  
	
   

  	
   

  	
   

  
	
  Address of Party B:

  	
   

  	
  16052 Swingley Ridge, Suite 300,

  
	
   

  	
   

  	
  St. Louis, MO 63017,

  
	
   

  	
   

  	
  United States of America.

  
	
   

  	
   

  	
  Attention:
  General Counsel

  
	
   

  	
   

  	
  Fax:
  (1) 636- 728 3011

  



 


Notice
shall be deemed delivered on the following dates:


 


1.                                       By messenger, on the date of delivery;


2.                                       By registered airmail, seven (7) days after it is mailed (as
indicated by the postmark);


3.                                       By fax or telegram, on the first working day after the date of
sending.


 


Either
of Party A or Party B may change its address for receiving notices at any time
by giving the other Party written notice of such change pursuant to this
Article 105.


 


Article 105     Neither Party shall make any declarations, announcements, or
disclosures to the public with respect to this Contract, the relationship between
the Parties or the business of the EJV without first obtaining the written
consent of the other Party.


 


Article
106     This Contract is signed by the
duly authorized representatives of Party A and Party B on this                 
day of December, 2004.


 


26





















 


	
  NINGBO LONGXING GROUP CORPORATION LIMITED

  
	
   

  
	
  By:

  	
  \s\ Chen Ding Long

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  Chen Ding Long

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  President

  	
   

  
	
   

  
	
   

  
	
  THERMADYNE HOLDINGS
  CORPORATION

  
	
   

  
	
  By:

  	
  \s\ Paul D. Melnuk

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  Paul D. Melnuk

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  Chairman and Chief Executive Officer

  	
   

  



 


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LIST OF APPENDICES


 


Appendix
A          Articles of Association


 


Appendix
B           Technical License Agreement


 


Appendix
C           Lease Agreement


 


Appendix
D           Form of Employment Agreement