Document:

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                                                             EXHIBIT 10 (xxviii)

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                            ASSET PURCHASE AGREEMENT

                                  BY AND AMONG

                SHANDONG CHENGSHAN TIRE COMPANY LIMITED BY SHARES

                                       AND

             COOPER CHENGSHAN (SHANDONG) PASSENGER TIRE COMPANY LTD.

                                       AND

                         CHENGSHAN GROUP COMPANY LIMITED

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                          Dated as of October 27, 2005

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                                TABLE OF CONTENTS

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<S>                                                                          <C>
ARTICLE 1     DEFINITIONS AND INTERPRETATIONS.................................2
ARTICLE 2     SALE AND PURCHASE OF PURCHASED ASSETS...........................2
ARTICLE 3     PURCHASE PRICE..................................................5
ARTICLE 4     ASSIGNMENT OF CONTRACTS AND RIGHTS..............................5
ARTICLE 5     CONDITIONS......................................................6
ARTICLE 6     ACTION PENDING CLOSING..........................................8
ARTICLE 7     CLOSING........................................................11
ARTICLE 8     NOTICE OF SALE OF THE PURCHASED ASSETS.........................13
ARTICLE 9     WARRANTIES.....................................................13
ARTICLE 10    INDEMNIFICATION................................................26
ARTICLE 11    GUARANTEE AND INDEMNITY BY GUARANTOR...........................28
ARTICLE 12    FORCE MAJEURE..................................................29
ARTICLE 13    CONFIDENTIALITY................................................29
ARTICLE 14    GOVERNING LAW..................................................30
ARTICLE 15    DISPUTE RESOLUTION.............................................30
ARTICLE 16    MISCELLANEOUS PROVISIONS.......................................31
SCHEDULE 1  DEFINITIONS AND INTERPRETATION...................................34
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This ASSET PURCHASE AGREEMENT (this "AGREEMENT") is made and entered into in the
People's Republic of China ("CHINA" or "PRC") on this 27th day of October, 2005,
in accordance with the PRC Tentative Regulations Regarding Merger with and
Acquisition of Domestic Enterprises by Foreign Investors (the "M&A REGULATIONS")
and other applicable PRC laws and regulations, pursuant to the principles of
equality and mutual benefit, by and among:

SELLER:     SHANDONG CHENGSHAN TIRE COMPANY LIMITED BY SHARES, a company limited
            by shares registered and incorporated under the laws of the PRC,
            with its registered address at No. 98, Nanshan Road North, Rongcheng
            City, Shandong Province, PRC;

PURCHASER:  COOPER CHENGSHAN (SHANDONG) PASSENGER TIRE COMPANY LTD., a
            Sino-foreign limited liability company registered and incorporated
            under the laws of the PRC, with its registered address at No. 99,
            Qingshan Road West, Rongcheng City, Shandong Province, PRC; and

GUARANTOR:  CHENGSHAN GROUP COMPANY LIMITED, a limited liability company
            registered and incorporated under the laws of the PRC, with its
            registered address at No. 98, Nanshan Road North, Rongcheng City,
            Shandong Province, PRC.

(Each of Seller, Purchaser and Guarantor is hereinafter individually referred to
as a "PARTY" and collectively as the "PARTIES".)

RECITALS:

(A)   Seller is the lawful owner of the Purchased Assets as set out in this
      Agreement and lawful party to the Contracts in connection with the HSR
      Business of Seller.

(B)   In accordance with a Sino-foreign equity joint venture contract executed
      on the date as of October 27, 2005 among the Seller and Cooper Tire
      Investment Holding (Barbados) Ltd. and Joy Thrive Investments Limited ("JV
      CONTRACT"), Seller has agreed to contribute the Owned Properties as set
      out in this Agreement to the Purchaser as its capital contribution, in
      exchange for a thirty five percent (35%) equity interest in the Purchaser.

(C)   In accordance with the JV Contract, the Seller agrees to sell the
      Purchased Assets (other than the Owned Properties contributed to the
      Purchaser in accordance with the JV Contract) to the Purchaser upon the
      duly establishment of the Purchaser.

(D)   In accordance with the terms and conditions of this Agreement, the
      Purchaser wishes to purchase and the Seller wishes to sell and transfer
      the Purchased Assets and Contracts, with the Purchaser's assumption of the
      Assumed Liabilities as at the Closing Date as specified herein, so as to
      accomplish the goal of transferring the HSR Business of Seller to
      Purchaser for continuous operation (hereinafter "TRANSACTION").

(E)   The Guarantor, which owns 73.76% equity interests of the Seller, agrees to
      provide a joint and several guarantee for all of the obligations of the
      Seller under this Agreement.

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THE PARTIES HEREBY AGREE AS FOLLOWS:

                    ARTICLE 1  DEFINITIONS AND INTERPRETATIONS

1.1   Unless the terms or context of this Agreement provide otherwise,
      capitalized terms used herein without definition have the meanings
      assigned to them in Schedule 1 as attached to this Agreement.

1.2   In this Agreement, save where the context otherwise requires:

      1.2.1       words in the singular shall include the plural, and vice
                  versa;

      1.2.2       a reference to a person shall include a reference to a firm, a
                  body corporate, an unincorporated association or to a person's
                  executors or administrators;

      1.2.3       a reference to an Article, sub-article, Schedule and Exhibit
                  shall be a reference to an Article, sub-article, Schedule and
                  Exhibit (as the case may be) of or to this Agreement;

      1.2.4       if a period of time is specified and commences from a given
                  day or the day of an act or event, it shall be calculated
                  inclusive of that day;

      1.2.5       references to writing shall include any modes of reproducing
                  words in a legible and non-transitory form;

      1.2.6       a reference to a balance sheet or profit and loss account
                  shall include a reference to any note forming part of it;

      1.2.7       the obligations and liabilities of the Seller and Guarantor
                  hereunder are the joint and severally obligations and
                  liabilities of the Seller and Guarantor;

      1.2.8       references to this Agreement include this Agreement as amended
                  or supplemented in accordance with its terms.

1.3   The designations adopted in the recitals and introductory statements
      preceding this Article apply throughout this Agreement and the Schedules.

                 ARTICLE 2  SALE AND PURCHASE OF PURCHASED ASSETS

2.1   The Purchaser, relying on the agreements, covenants, representations,
      warranties, undertakings and indemnities of the Seller herein, hereby
      agrees to purchase from the Seller and the Seller as legal and/or
      beneficial owner hereby agree to sell to the Purchaser on the Closing Date
      free and clear of all Encumbrances, assets, properties and rights related
      to the HSR Business of every kind and description, wherever located, real,
      personal or mixed, owned, held or used in the conduct of the HSR Business
      by Seller as the same shall exist at the Closing Date, including those
      assets of the HSR Business shown on the Management Accounts and not
      disposed of in the ordinary course of business (but excluding the Owned
      Properties) and those assets of the HSR Business thereafter acquired by
      the Seller (the "PURCHASED ASSETS"), and including, subject to the

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      limitations in Article 2.4, all rights, title, benefits and interests of
      the Seller in, to and under such of the foregoing as are more specifically
      described below:-

      2.1.1       all customer accounts of the Seller relating to the HSR
                  Business, all customer mailing and prospect lists of the
                  Seller relating to the HSR Business, and all of the Seller's
                  rights to service the customer accounts of the HSR Business;

      2.1.2       all the Properties relating to the HSR Business together with
                  all buildings, fixtures, and improvements erected thereon
                  (except for those Owned Properties injected by the Seller as
                  its capital contribution in accordance with the JV Contract);

      2.1.3       all vehicle, machinery, equipment, furniture and computer
                  relating to the HSR Business (together with all the data
                  stored therein);

      2.1.4       all claims, benefits, rights and entitlements under the
                  Lease(s), Insurances and all contracts, contract rights,
                  agreements, licenses, commitments, sales and purchase orders
                  and other instruments (whether uncompleted or pending)
                  relation to the HSR Business and the Purchased Assets, as
                  wholly and fully disclosed to the Purchaser by the Seller
                  (collectively, the "CONTRACTS") including all deposits or
                  progress payments received prior to the Closing Date in
                  respect of the same;

      2.1.5       accounts, notes, receivables and other amounts owing to the
                  Seller by trade debtors in connection with the HSR Business in
                  respect of goods or services supplied by the Seller (whether
                  or not invoiced or which are only payable upon completion of
                  the outstanding work/stage of work under the Contracts at
                  Closing Date) and the benefit of all guarantees or other
                  security in respect thereof (collectively the "ACCOUNTS
                  RECEIVABLE");

      2.1.6       prepaid expenses and deposits in connection with the HSR
                  Business, including, without limitation, ad valorem taxes,
                  leases and rentals;

      2.1.7       Seller's rights, claims, credits, causes of action or rights
                  of set-off against third parties relating to the HSR Business
                  and the Purchased Assets, including, without limitation,
                  unliquidated rights under manufacturers' and Seller'
                  warranties;

      2.1.8       claims and rights (if any) under all franchises, transferable
                  licenses, including, but not limited to, licenses, permits,
                  consents, authorizations, certificates and approvals of any
                  governmental agency or other governmental authorizations
                  affecting, or relating in any way to, the HSR Business;

      2.1.9       all books, records, files and papers, whether in hard copy or
                  computer format, including, without limitation, sales and
                  promotional literature, manuals and data, sales and purchase
                  correspondence, lists of present and former suppliers, lists
                  of present and former customers, personnel and employment
                  records, and any information relating to taxes imposed on the
                  Purchased Assets;

      2.1.10      other properties and assets owned by the Seller and used in
                  connection with the HSR Business at the Closing Date (wherever
                  located).

2.2   Required Consent

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      2.2.1       Where the Seller is unable to transfer to the Purchaser a
                  Contract on the Closing Date because consent from the relevant
                  party to the Contract (other than the Seller) for such
                  transfer has not been obtained on or before that date, without
                  prejudice to Article 4.4 the Seller shall use its best
                  endeavors to obtain such consent and transfer the full benefit
                  and legal right under such Contract to the Purchaser within 90
                  days from the Closing Date.

      2.2.2       The Purchaser shall use its best endeavors to assist the
                  Seller in obtaining the consent for the purpose of Article
                  2.2.1. Without prejudice to Article 4, the Purchaser may at
                  its absolute discretion waive any of the requirements under
                  Article 2.2.1.

2.3   Assumption of Liabilities

      2.3.1       Without prejudice to the provisions in Article 2.3.2, the
                  Purchaser shall assume the transferable liabilities incurred
                  by the Seller in connection with the HSR Business and
                  identified by the Purchaser and stated on the balance sheet of
                  the Seller dated as of the Closing Date (the "ASSUMED
                  LIABILITIES").

      2.3.2       Except as otherwise contained in Article 2.3.1 above or as
                  otherwise agreed by the Parties in writing, the Seller shall
                  remain liable for and the Purchaser shall not assume any other
                  liabilities incurred by the Seller in connection with the HSR
                  Business or the Purchased Assets and any other claims arising
                  from the operation of the HSR Business prior to the Closing
                  Date. The Seller shall promptly pay and discharge in full all
                  liabilities and claims referred to in this Article 2.3.2,
                  which may adversely impact the normal operation of the
                  Purchaser, to the extent practicable and as soon as
                  practicable after the Closing Date in all other cases, but in
                  no event later than sixty (60) days from the Closing Date.

2.4   Limitations

      2.4.1       Those Owned Properties injected by the Seller as its capital
                  contribution in accordance with the JV Contract shall be
                  excluded from the Purchased Assets.

      2.4.2       On or after the Closing Date, Seller will retain the ownership
                  of certain inventories sufficient to liquidate the duty and
                  value-added tax (VAT) exempt importations of raw materials
                  that shall be owned by Seller as of the Closing Date.

      2.4.3       On or after the Closing Date, Seller shall retain the
                  ownership of the working capital assets and liabilities (the
                  "NET WORKING CAPITAL") to the extent that the net of the
                  retained assets less the retained liabilities (including those
                  specified in Article 2.4.2 above) will not exceed the net
                  change in Net Working Capital between December 31, 2004 and
                  the Closing Date.

      2.4.4       The net of the Purchased Assets less the Assumed Liabilities
                  shall not result in the amount of the Purchaser's assumption
                  of debt that will cause the excess of the permitted total
                  investment of the Purchaser stated in the JV Contract.

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                            ARTICLE 3  PURCHASE PRICE

3.1   As consideration for the purchase of the Purchased Assets, in reliance
      upon the representations and warranties, covenants, agreements and
      undertakings of the Seller made herein, and subject to the terms and
      conditions of this Agreement, the Purchaser shall pay to the Seller, the
      sum equivalent to the excess of the Purchased Assets over the Assumed
      Liabilities in United States Dollars (the "PURCHASE PRICE") (determined by
      reference to the appraisal value of the Purchased Assets) within three (3)
      months of the issuance of the Business License of the Purchaser.

3.2   If any liabilities, save to extent the Assumed Liabilities in Article 3.1,
      cannot be transferred to the Purchaser due to any reason arising out of
      legal proceedings or approval procedures, the Purchased Assets described
      in Article 3.1 shall be reduced proportionately.

3.3   Without prejudice to any other remedies available to the Purchaser, in the
      event that the Seller is in material breach of this Agreement or the JV
      Contract ("DEFAULT") before the full amount of the Purchase Price has been
      paid under this Article 3, at the discretion and request of the Purchaser,
      the Seller shall forthwith cease to have any right to receive and the
      Purchaser shall cease to have any further obligation to pay any remaining
      balance of the Purchase Price to the Seller, and the Seller shall refund
      the amount of the Purchase Price, which has been paid by the Purchaser
      immediately preceding the occurrence of the Default, to the Purchaser
      within five (5) days from demand by the Purchaser.

3.4   If the Purchaser fails to pay the Purchase Price within the period set
      forth in Article 3.1 (the amount due and owing is referred to as the
      "DEFAULT PAYMENT"), the Purchaser shall pay to the Seller a default
      penalty of 0.05% per day based on the Default Payment from the first day
      of the default until the day on which the Default Payment is fulfilled in
      full by the Purchaser.

                  ARTICLE 4  ASSIGNMENT OF CONTRACTS AND RIGHTS

4.1   Seller agrees to assign or cause to be assigned to the Purchaser as of the
      Closing Date, all of the rights of the Seller under the Contracts that are
      assignable without license, consent, agreement, approval or waiver of any
      third party or as to which consent has been obtained and, without
      prejudice to Article 4.6, the Purchaser shall assume all obligations of
      the Seller thereunder which will arise after the Closing Date.

4.2   This Agreement shall not constitute an agreement to assign any Purchased
      Asset, Contract, or any claim, right or any benefit arising thereunder or
      resulting therefrom if an attempted assignment thereof, without license,
      consent, agreement, approval or waiver of a third party, would constitute
      a breach or other contravention thereof or in any way adversely affect the
      rights of the Purchaser thereunder and such consent cannot be obtained by
      the Seller.

4.3   If any licenses, consents, agreements, approvals or waivers from third
      parties are required for the transfer, assignment or novation to or in
      favour of the Purchaser of any Contracts under this Agreement, the Seller
      shall use its best efforts (but without requiring any payment of money by
      the Purchaser) to obtain such licenses, consents, agreements,

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      approvals or waivers from the other parties or claim any right or any
      benefit arising thereunder for the assignment thereof to the Purchaser as
      the Purchaser may request.

4.4   If such license, consent, agreement, approval or waiver is not obtained,
      or if an attempted assignment thereof would be ineffective or would
      adversely affect the rights of the Seller thereunder so that Purchaser
      would not in fact receive or otherwise be entitled to the full benefit of
      all such rights, the Seller (i) shall enter into such arrangement with the
      Purchaser at the Purchaser's direction under which the Purchaser will
      obtain the benefits and assume the obligations thereunder in accordance
      with this Agreement, or under which the Seller would exercise for the
      benefit of the Purchaser, with the Purchaser assuming Seller's
      obligations, any and all rights of the Seller against a third party
      thereto in accordance with the applicable PRC laws and regulations. The
      Seller shall promptly pay to the Purchaser when received all monies
      received by the Seller under any Purchased Asset, Contracts, or any claim,
      right or any benefit arising thereunder; or (ii) shall exercise or cause
      to be exercised, at the Purchaser's direction, any rights of the Seller
      arising from such Contracts against the other party(ies) thereto,
      including the right to elect to terminate any such Contracts in accordance
      with the terms thereunder upon the request of the Purchaser.

4.5   The foregoing provisions do not affect Purchaser's rights and remedies
      against the Seller in respect of a Contract which has been warranted to be
      assignable, or may be performed by Purchaser instead of the Seller without
      any novation or transfer agreement.

4.6   Except as otherwise expressly contained herein, nothing in this Agreement:

      4.6.1       shall require the Purchaser to perform any obligation falling
                  due for performance or which should have been performed before
                  the Closing Date;

      4.6.2       shall make the Purchaser liable for any act, neglect, default
                  or omission in respect of any Contracts or for any claim,
                  expense, loss or damage arising from any failure to obtain the
                  consent or agreement of any third party to the entry into of
                  this Agreement or from any breach of any of the Contracts
                  caused by this Agreement or its Closing; or

      4.6.3       shall impose any obligation on the Purchaser for or in respect
                  of any goods supplied by the Seller or any service performed
                  by the Seller.

4.7   The Seller shall indemnify the Purchaser against all actions, proceedings,
      costs, damages, claims and demands in respect of:

      4.7.1       any act or omission on the part of the Seller in relation to
                  the Contracts; or

      4.7.2       any alleged fault, defect or error of any kind arising from
                  goods supplied, services provided by the Seller or otherwise
                  arising from the operation of the HSR Business prior to the
                  Closing Date.

                              ARTICLE 5  CONDITIONS

5.1   Conditions Precedent

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      Closing is conditional upon satisfaction of the following conditions prior
      to the Closing Date:

      5.1.1       Seller's completion of the capital contribution in accordance
                  with the JV Contract, with the contribution having been
                  verified by a PRC registered accountant;

      5.1.2       the completion of satisfactory (in Purchaser' sole and
                  discretionary judgment) legal, commercial, human resources,
                  taxation and financial due diligence on the Seller;

      5.1.3       the completion of any formal internal corporate approvals as
                  may be required by the Purchaser including approval by the
                  board of directors of each of the Purchaser, Seller and
                  Guarantor and approval by the shareholders assembly of Seller;

      5.1.4       Seller's publication of the notice and announcement of
                  transfer relating to the sale of the Purchased Assets within
                  not more than 10 days from the date on which the Seller's
                  board of directors and/or shareholders assembly have approved
                  the sale of the Purchased Assets in compliance with the
                  provisions of the M&A Regulations;

      5.1.5       any and all Claims notified to Seller or Purchaser pursuant to
                  the notice published pursuant to the relevant assets transfer
                  legislation applicable in China as set forth in Article 8 have
                  been paid in full or otherwise settled to the satisfaction of
                  the Purchaser. The Seller having confirmed to the Purchaser in
                  writing that it has had no further Claims in writing notified
                  to it in response to the notices served by it under the
                  relevant assets transfer legislation applicable in China,
                  other than those Claims which have been paid, compromised,
                  defended or otherwise dealt with subject to the prior consent
                  of, and to the satisfaction of the Purchaser;

      5.1.6       the parties to the Contracts (other than the Seller) having
                  given their respective consents if required to the assignments
                  or novations of the same in favour of the Purchaser;

      5.1.7       the Seller have certified in writing:

                  (i)   there having occurred no Material Adverse Change in the
                        period between the date of this Agreement and Closing;

                  (ii)  nothing having occurred or been omitted which is, or had
                        it occurred or been omitted on or before the date of
                        this Agreement would have constituted, a breach of the
                        Warranties;

                  (iii) no order or judgment of any court or governmental,
                        statutory or regulatory body having been issued or made
                        prior to Closing, which has the effect of making
                        unlawful or otherwise prohibiting the purchase of the
                        Purchased Assets by the Purchaser;

                  (iv)  the Seller having performed or complied with, in all
                        material respects, all covenants, obligations and
                        agreements contemplated by this Agreement

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                        to be performed or complied with by it at or prior to
                        Closing, including without limitations those set forth
                        in Article 5.

      5.1.8       any and all approvals, consents, registrations and permissions
                  necessary for or to the best benefit of the Transaction
                  contemplated hereby having been duly obtained from the
                  appropriate government authorities, including, without
                  limitation, approval of this Agreement, approval of the
                  employment settlement plan of Seller, and approval of the
                  transfer of "bonded" equipment from Seller to Purchaser.

      5.1.9       all corporate and other proceedings and actions taken in
                  connection with the Transaction contemplated hereby and all
                  certificates, opinions, agreements, instruments, release and
                  documents referenced herein, or incident to the Transaction
                  contemplated hereby, being in form and substance satisfactory
                  to Purchaser.

5.2   Responsibility for Satisfaction

      Without prejudice to the foregoing, it is agreed that all requests and
      enquiries from any government, governmental, trade agency, court or
      regulatory body shall be dealt with by the Seller and the Purchaser in
      consultation with each other and each of the Seller and the Purchaser
      shall promptly co-operate with and provide all necessary information and
      assistance reasonably required by such government, agency, court or body
      upon being requested to do so by the other.

5.3   Non-Satisfaction

      5.3.1       If any of the conditions in Article 5.1 is not satisfied or
                  waived by the Purchaser within 6 months after the execution of
                  the Agreement such other date as the Purchaser and Seller may
                  agree or the Purchaser becomes aware of any fact that would
                  prevent any of the conditions in Article 5.1 from being
                  satisfied, the Purchaser may, in its sole discretion, by
                  written notice to the Seller, terminate this Agreement and no
                  Party shall have any claim against any other under it, save
                  for any claim arising from any antecedent breach (including
                  breach of any undertaking contained in Article 5.1).

      5.3.2       In the event that the Purchaser shall terminate this Agreement
                  in accordance with Article 5.3.1, and without limiting the
                  Purchaser's right to claim all obligations of the Seller under
                  this Agreement, the Purchaser shall, unless otherwise
                  expressly stated, cease to enjoy and assume all rights and
                  liabilities hereunder, but, for the avoidance of doubt, all
                  rights and liabilities of the Parties which have accrued
                  before termination shall continue to exist.

                        ARTICLE 6  ACTION PENDING CLOSING

6.1   Seller's General Obligations

      The Seller undertakes to procure that from the date of this Agreement
      until Closing:

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      6.1.1       the Seller will carry on HSR Business only in the ordinary and
                  usual course and in the manner and scope carried on as at the
                  date of this Agreement, save insofar as agreed in writing by
                  the Purchaser;

      6.1.2       the Purchaser and its agents will, upon reasonable notice, be
                  allowed access to the employees and premises of the Seller and
                  shall also be allowed access to, and to take copies of, the
                  books and records of the Seller, the HSR Business and the
                  Purchased Assets including, without limitation, the statutory
                  books, minute books, leases, licences, contracts, details of
                  receivables, tax records, supplier lists and customer lists in
                  the possession or control of the Seller;

      6.1.3       such representatives and advisers as the Purchaser requests
                  may be designated to work with the Seller with regard to the
                  management and operations of the HSR Business. The Seller will
                  consult with such representatives and advisers with respect to
                  any action which may materially affect the HSR Business of the
                  Seller taken as a whole. The Seller will furnish to such
                  representatives and advisers such information as it may
                  reasonably request for this purpose;

      6.1.4       the Seller shall take all reasonable steps to preserve its
                  property and assets in relation to the HSR Business (including
                  the Purchased Assets) and, shall notify the relevant insurance
                  companies of the interest of the Purchaser in the Insurances
                  and shall procure that with effect from the Closing Date the
                  interest of the Purchaser therein is noted on the relevant
                  Insurance policies;

      6.1.5       the Seller shall promptly provide to the Purchaser monthly
                  Management Accounts in the usual form.

6.2   Restrictions on the Seller

      Without prejudice to the generality of Article 6.1, the Seller shall not
      between the date of this Agreement and Closing (except as may be expressly
      provided in this Agreement) without the prior written consent of the
      Purchaser:

      6.2.1       enter into or amend any contract or commitment in relation to
                  the HSR Business: (i) which is not capable of being terminated
                  without compensation at any time with one months' notice or
                  less; or (ii) which is not in the ordinary and usual course of
                  business and on arms' length terms or (iii) which involves or
                  may involve total revenue or total expenditure in excess of
                  US$500,000 (excluding purchase contracts for raw materials);

      6.2.2       incur any indebtedness in relation to the HSR Business
                  otherwise than in the ordinary and usual course of business;

      6.2.3       save as required by law, make any amendment to the terms and
                  conditions of employment (including, without limitation,
                  remuneration, pension entitlements and other benefits) of any
                  employee or consultants engaged in the HSR Business, provide
                  or agree to provide any gratuitous payment or benefit to any
                  such person or any of their dependants, or dismiss or
                  terminate (except with good cause) the engagement of any such
                  person or engage or appoint any additional employee in
                  relation to the HSR Business;

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      6.2.4       acquire or agree to acquire or sell, transfer, lease, assign
                  or dispose of or agree to sell, transfer, lease, assign or
                  dispose of any material asset or material stocks or enter into
                  or amend any material contract or arrangement in relation to
                  the HSR Business;

      6.2.5       sell, convey, lease, assign or otherwise transfer or dispose
                  of any interest in any debts or factor any notes or amounts
                  receivable in relation to the HSR Business;

      6.2.6       delay making payment to any trade creditors of the HSR
                  Business generally beyond the date on which payment of the
                  relevant trade debt should be paid in accordance with credit
                  periods authorised by the relevant creditors (or (if
                  different) the period extended prior to the date of this
                  Agreement by creditors in which to make payment);

      6.2.7       amend, to any material extent, any of the terms on which
                  goods, facilities or services in relation to the HSR Business
                  are supplied, such supplies being material in the context of
                  the HSR Business, except where required to do so in order to
                  comply with any applicable legal or regulatory requirement;

      6.2.8       enter into any guarantee, indemnity or other agreement to
                  secure any obligation of a third party or create or agree to
                  create any Encumbrance over any of its assets or undertaking
                  in relation to the HSR Business (including the Purchased
                  Assets);

      6.2.9       amend or discontinue any insurance contract in relation to the
                  HSR Business or the Purchased Assets, fail to notify any
                  insurance claim in accordance with the provisions of the
                  relevant policy or settle any such claim below the amount
                  claimed;

      6.2.10      acquire or agree to acquire any share, shares or other
                  interest in any company, partnership or other venture or
                  incorporate any subsidiary in relation to the HSR Business;

      6.2.11      make any change to its accounting practices or policies or
                  accounting reference date or amend its articles of association
                  (or equivalent constitutional documents);

      6.2.12      make any substantial change in the nature or organisation of
                  its HSR Business;

      6.2.13      discontinue or cease to operate all or a material part of the
                  HSR Business or resolve to be wound up;

      6.2.14      change its residence for Taxation purposes;

      6.2.15      commence, compromise or discontinue any legal or arbitration
                  proceedings in relation to the HSR Business (other than in
                  respect of the collection of debts which are not material in
                  the context of the HSR Business in the ordinary and usual
                  course of business); or

      6.2.16      acquire or agree to acquire or dispose of or agree to dispose
                  of any land use rights or leasehold interest in land in
                  relation to the HSR Business.

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<PAGE>

6.3   Covenant to Pay

      The Seller covenant to pay to the Purchaser an amount equal to the Losses
      suffered or incurred by the Purchaser or, subject to Closing, through the
      Seller's failure or delay in complying with the provisions of Articles 6.1
      and 6.2.

6.4   Exercise of Purchaser's Rights

      It is hereby acknowledged (for the avoidance of doubt) that none of the
      provisions of this Article 6 or the exercise or failure to exercise by the
      Purchaser of its rights thereunder, shall give rise to any liability on
      the part of the Purchaser or any of its employees, consultants or
      representatives or any person connected with it.

                                ARTICLE 7  CLOSING

7.1   Closing shall take place at the offices of the Seller or such other place
      as the Purchase and Seller may agree, on the Closing Date.

7.2   On the Closing Date:

      7.2.1       the Seller shall deliver or cause to be delivered to the
                  Purchaser:

                  (i)   such conveyances, assurances, transfers, assignments,
                        releases, novation agreements, consents and other
                        documents duly executed by the relevant parties as the
                        Purchaser may require to vest in the Purchaser the full
                        benefit of and legal title to the Purchased Assets and
                        all other rights and assets hereby agreed to be sold and
                        the full benefit of this Agreement and all liabilities
                        and debts agreed to be assumed including without
                        limitation;

                        (a)   duly executed assignments in the Agreed Form of
                              the Accounts Receivable;

                        (b)   duly executed assignments or novation agreements
                              in the Agreed Form of the Contracts;

                        (c)   duly executed assignments in the Agreed Form of
                              the Accounts Payable;

                        (d)   duly executed assignments or novation agreements
                              in the Agreed Form of the Borrowings;

                        (e)   in respect of each of the motor vehicles used in
                              the HSR Business owned by the Seller (if any), the
                              prescribed notice and the vehicle registration
                              documents (and shall deliver or procure delivery
                              of a duplicate of the prescribed notice to the
                              relevant transportation authorities in China as
                              soon as possible after Closing);

                  (ii)  the title deeds and documents relating to the Leased
                        Properties and Owned Properties occupied or owned by the
                        Seller (all re-registered in the name of the Purchaser);

                                       11
<PAGE>

                  (iii) all subsisting contracts, license and permits in
                        connection with the HSR Business and all books, papers,
                        records and other documents (including financial
                        records) relating to the HSR Business and Purchased
                        Assets and all lists of customers and suppliers and
                        other information or documents in relation to the HSR
                        Business as the Purchaser may require;

                  (iv)  all the designs and drawings, plans, technical and sales
                        publications, advertising material, brochures,
                        catalogues and other technical and sales matter of the
                        Seller in relation to the HSR Business together with any
                        plates, blocks, negatives and other like material
                        relating thereto as the Purchaser may require;

                  (v)   any other documents of title relating to any of the
                        other Purchased Assets as the Purchaser may require;

                  (vi)  such other documents as may be required to give to the
                        Purchaser good title to the Purchased Assets and to
                        enable the Purchaser or its nominees to become the
                        registered owner thereof as the Purchaser may require;
                        and

                  (vii) certificate in writing duly executed by the Seller
                        pursuant to Article 5.1.7 confirming the matters
                        mentioned thereunder.

      7.2.2       the Seller shall permit the Purchaser to take possession of
                  the HSR Business and Purchased Assets.

7.3   Upon Closing, the Seller shall deliver to the Purchaser a copy of the
      resolution of the shareholders assembly of the Seller approving and
      authorizing the transfer of the Purchased Assets hereunder and all the
      transactions contemplated hereby, and such resolution shall be in form and
      substance in accordance with the applicable laws and regulations.

7.4   Within three (3) months upon compliance by the Seller with the provisions
      of Articles 7.2.1 and 7.2.2 the Purchaser will pay the Purchase Price to
      the Seller in accordance with Article 3.

7.5   Without prejudice to any other remedies available to the Purchaser, if in
      any respect the provisions of Article 7.2 are not complied with on the
      Closing Date the Purchaser may:

      7.5.1       defer Closing to a date not more than thirty (30) days after
                  the Closing Date (and so that the provisions of this Article
                  7.5 shall apply to Closing as so deferred); or

      7.5.2       proceed to Closing so far as practicable (without prejudice to
                  its rights hereunder); or

      7.5.3       terminate this Agreement, and without limiting the Purchaser's
                  right to claim all obligations of the Seller under this
                  Agreement, the Purchaser shall, unless otherwise expressly
                  stated, cease to enjoy and assume all rights and liabilities
                  hereunder, but, for the avoidance of doubt, all rights and
                  liabilities of the Parties which have accrued before
                  termination shall continue to exist.

                                       12
<PAGE>

                ARTICLE 8  NOTICE OF SALE OF THE PURCHASED ASSETS

The Seller shall, within not more than 10 days from the date on which Seller's
board of directors and/or shareholders assembly have approved the sale of the
Purchased Assets pursuant to this Agreement, give notice to its creditors and
release public announcement of the sale of the Purchased Assets contemplated
under this Agreement in accordance with the provisions of the M&A Regulations
and the publication costs of such notifications shall be borne by the Seller.
The Purchaser and the Seller shall notify each other as soon as practicable in
the event of any Claim being received by any of them pursuant to such
notification. Any such notice given shall be without prejudice to the rights and
obligations of the Parties, as against each other, under this Agreement.

                              ARTICLE 9  WARRANTIES

The Seller warrants, represents and undertakes to the Purchaser as to the
matters set forth hereunder:

9.1   General Warranties

      9.1.1       The Accounts and Management Accounts:

                  Except as otherwise disclosed to the Purchaser:

                  (i)   have been prepared in accordance with Chinese GAAP;

                  (ii)  are accurate and show a true and fair view of the
                        affairs of the Seller and the HSR Business as at the
                        specified accounting date and of its results for the
                        accounting reference period ended on that date, with the
                        Management Accounts having been properly prepared in a
                        manner consistent with that adopted in the preparation
                        of the management accounts of the HSR Business for all
                        periods during the financial year ended on the Accounts
                        Date;

                  (iii) comply with the requirements of all relevant statutes;

                  (iv)  are prepared on consistent bases and policies of
                        accounting;

                  (v)   are not affected by any unusual or non-recurring items.

      9.1.2       Purchased Assets

                  (i)   Title to Purchased Assets

                        Otherwise disclosed in writing:

                        the Purchased Assets included in the Accounts and
                        Management Accounts or acquired by the Seller since the
                        Accounts Date (other than trading stock disposed of
                        since that date in the ordinary course of business) and
                        all other Purchased Assets used or employed by the
                        Seller

                                       13
<PAGE>

                        are the absolute property of the Seller free from any
                        mortgage, charge, lien, bill of sale or other
                        encumbrance and are not the subject of any leasing,
                        hiring or hire-purchase agreement or agreement for
                        payment on deferred terms or assignment or factoring or
                        other similar agreement or any interests of the third
                        parties, and all such assets are in the possession or
                        under the control of the Seller.

                  (ii)  Condition of plant machinery and equipment

                        the machinery, office equipment, computer systems and
                        vehicles used by the Seller in the HSR Business are in
                        good repair, regularly maintained and normally usable
                        and comply with any applicable legal requirement or
                        restriction, and the vehicles are duly licensed and
                        suitable for the purposes for which they are used.

                  (iii) Control of records and information

                        all records and information belonging to the Seller
                        (whether or not held in written form) are in its
                        exclusive possession, under its direct control and
                        subject to unrestricted access by it.

      9.1.3       Borrowings

                  (i)   in relation to the HSR Business and the Purchased
                        Assets, except as otherwise disclosed to the Purchaser
                        in the manner acceptable to the Purchaser, the Seller
                        does not have outstanding any obligation for the payment
                        or repayment of money, whether present or future, actual
                        or contingent, in respect of:

                        (a)   monies borrowed or raised;

                        (b)   any recourse to a company selling or discounting
                              receivables in respect of receivables sold or
                              discounted;

                        (c)   moneys raised under any bond, note, stock, or
                              other security;

                        (d)   moneys raised under or in respect of acceptance
                              credit and documentary credit facilities;

                        (e)   the acquisition cost of assets or services to the
                              extent payable after the time of acquisition or
                              possession;

                        (f)   rental payments under chattel leases and hire
                              purchase agreement; or

                        (g)   any guarantee, indemnity or other assurance
                              against or arrangement intended to prevent or
                              limit loss in respect of any obligation for the
                              payment or repayment of money described in
                              paragraphs (a) to (f) above (any such obligation
                              being referred to below as a "BORROWING").

                                       14
<PAGE>

                  (ii)  Except as otherwise disclosed to the Purchaser in the
                        manner acceptable to the Purchaser, the Seller does not
                        have subsisting over the whole or any part of its
                        present or future revenues or assets in relation to the
                        HSR Business any encumbrance, mortgage, charge, pledge,
                        lien or other security interest or any other agreement
                        or arrangement having a similar effect.

                  (iii) no Borrowing of the Seller has become or is now due and
                        payable, or capable of being declared due and payable,
                        before its normal or originally stated maturity and no
                        demand or other notice requiring the payment or
                        repayment of money before its normal or originally
                        stated maturity has been received by the Seller.

                  (iv)  no event or circumstance has occurred, or may occur with
                        the giving of notice or lapse of time determination of
                        materiality or satisfaction of any other condition, such
                        as to entitle any person to require the payment or
                        repayment of any Borrowing before its normal or
                        originally stated maturity or which is or shall be such
                        as to terminate, cancel or render incapable of exercise
                        any entitlement to draw money or otherwise exercise the
                        rights of the Seller under an agreement relating to
                        Borrowing.

      9.1.4       Environment

                  Except as otherwise disclosed to the Purchaser:

                  (i)   the Seller has complied with the applicable
                        environmental law:

                  (ii)  there are no circumstances in relation to the Seller or
                        the HSR Business which give rise or could give rise or
                        have given rise to any civil, criminal, administrative
                        or other action, claim, suit, complaint, proceeding,
                        investigation, decontamination, remediation or
                        expenditure by any person or competent authority under
                        Environmental Law in relation to any matter including
                        properties now owned or formerly owned by the Seller or
                        used in the HSR Business;

                  (iii) the Seller has obtained and there are in full force and
                        effect and the Seller has at all times complied with all
                        Permits necessary for the HSR Business, there are no
                        circumstances which could lead to the revocation,
                        cancellation, suspension, modification, variation or
                        alteration of such Permits and there are no
                        circumstances which necessitate any works, remediation
                        or expenditure (other than routine maintenance) in order
                        to continue to comply with the Permits;

                  (iv)  at no time has the Seller received from the governmental
                        environment authority any unresolved notice or
                        intimation alleging a breach of the terms of a Permit or
                        alleging any other breach of the applicable
                        environmental law;

                  (v)   all assessments reviews reports returns information and
                        audits required by the applicable environmental law or
                        any Permit have been properly carried out and submitted
                        to the appropriate authorities and their

                                       15
<PAGE>

                        recommendations and requirements implemented where
                        required by the applicable environmental law;

                  (vi)  there are no circumstances which could require any
                        further Permits to be obtained in connection with the
                        current HSR Business of the Seller which require works,
                        remediation or additional expenditure to ensure
                        compliance with such Permits.

      9.1.5       Commercial Arrangements and Conduct

                  Except as otherwise disclosed to the Purchaser:

                  (i)   Material contracts

                        In relation to the HSR Business and the Purchased
                        Assets, there is not outstanding:

                        (a)   any contract of guarantee, indemnity or suretyship
                              or any contract to secure any obligation of any
                              person;

                        (b)   any joint venture, consortium or partnership
                              agreement or arrangement to which the Seller is a
                              party;

                        (c)   any sale or purchase option or similar agreement
                              or arrangement affecting any assets owned or used
                              by the Seller or by which it is bound;

                        (d)   any liability, obligation or commitment of any
                              kind (other than those listed in (a) to (c) above)
                              on the part of the Seller (including a capital
                              commitment) which:

                              (1)   is incapable of complete performance
                                    within three months from the date of
                                    Agreement; or

                              (2)   has not been incurred in the ordinary
                                    course of business; or

                              (3)   is, or is likely to be, of major
                                    significance to the Seller; or

                              (4)   exceeds, or is likely to exceed, in
                                    aggregate a sum of US$500,000.

                  (ii)  Effect of Agreement on other agreements

                        there is no agreement or arrangement in relation to the
                        HSR Business and the Purchased Assets between the Seller
                        and any other person which shall or may be terminated as
                        a result of this Agreement (or Closing) or which shall
                        be affected by it or which includes any provision with
                        respect to a change in the control, management or
                        shareholders of the Seller.

                  (iii) Commercial position

                                       16
<PAGE>

                        so far as the Seller is aware:

                        (a)   there is no substantial customer or supplier of
                              the Seller in relation to the HSR Business who has
                              ceased purchasing from or supplying to it or who
                              is likely after the date of this Agreement (or
                              Closing) to reduce substantially or terminate
                              purchases from or supplies to it;

                        (b)   there are no special circumstances which might
                              lead to the supply by the Seller or to it of any
                              goods or services, in relation to the HSR Business
                              being restricted or hindered.

                  (iv)  Restrictive agreements and anti-competitive behaviour

                        so far as the Seller is aware:

                        (a)   the Seller does not infringe and has not infringed
                              any legislation applicable in any jurisdiction
                              relating to anti-competitive agreements or
                              practices or behaviour or any similar matter;

                        (b)   the Seller is not in relation to the HSR Business,
                              bound by or party to any order or decision made or
                              undertakings (binding or not) given to or any
                              court or tribunal of competent jurisdiction or any
                              similar authority in any jurisdiction, under or in
                              any law, regulation or administrative process
                              relating to fair competition anti-trust,
                              monopolies, mergers or other similar matters;

                        (c)   the Seller has not in relation to the HSR
                              Business, within the last two years been party to
                              any merger or other similar arrangement which was
                              capable of review by any anti-trust or similar
                              authorities in any jurisdiction.

                  (v)   Notice of official action

                        the Seller is not aware of any process, notice or
                        communication, formal or informal, by or on behalf of
                        any authority of any country having jurisdiction in
                        anti-trust matters, in relation to any aspect of the HSR
                        Business or the conduct of the Seller or any agreement
                        or arrangement to which the Seller is or was, or is
                        alleged to be or have been, a party, and so far as the
                        Seller is aware it is not likely to receive any such
                        process, notice or communication.

      9.1.6       Litigation, Defaults and Insurance

                  Except as otherwise disclosed to the Purchaser:

                  (i)   Legal proceedings

                        the Seller is not engaged or proposing to engage in any
                        litigation, arbitration, prosecution or other legal
                        proceedings, and there are no

                                       17
<PAGE>

                        claims or actions (whether criminal or civil) in
                        progress, outstanding, pending or threatened against the
                        Seller, any of its assets or any of its directors or
                        officers or in respect of which the Seller is liable to
                        indemnify any party concerned.

                  (ii)  Unlawful acts by the Seller

                        so far as the Seller is aware:

                        neither the Seller nor any of its directors, officers or
                        employees has by any act or default committed, to the
                        extent adversely impacting the normal operation of the
                        Purchaser:

                        (a)   any criminal or unlawful act in connection with
                              the business of the Seller, other than minor road
                              traffic offences;

                        (b)   any breach of trust in relation to the business or
                              affairs of the Seller;

                        (c)   any breach of contract or statutory duty or any
                              tortious act which could entitle any third party
                              to terminate any contract to which the Seller is a
                              party or could lead to a claim against the Seller
                              for damages, compensation or an injunction.

                  (iii) Defaults by others

                        So far as the Seller is aware, no party with whom the
                        Seller has entered into any contract in relation to the
                        HSR Business or the Purchased Assets is in default under
                        it, and there are no circumstances likely to give rise
                        to such a default.

                  (iv)  Official investigations

                        so far as the Seller is aware, no governmental or
                        official investigation or inquiry concerning the Seller
                        is in progress or threatened and there are no
                        circumstances which are likely to give rise to any such
                        investigation or inquiry.

                  (v)   Adequacy of insurance

                        the Seller has, and since 2003 has had, valid insurance
                        cover in respect of the HSR Business and the Purchased
                        Assets:

                        (a)   against all risks (including product liability for
                              a period of at least six months) normally insured
                              against by companies carrying on the same type of
                              business or having similar assets;

                        (b)   for the full replacement value of the Purchased
                              Assets and for such amount in respect of the HSR
                              Business as would in the circumstances be prudent
                              for such a business;

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<PAGE>

                        (c)   from a well-established and reputable insurer.

                  (vi)  Policies

                        All policies of insurance taken out in connection with
                        the HSR Business or the Purchased Assets have been
                        disclosed to the Purchaser, are written in the name of
                        the Seller and are in full force and effect; and the
                        Seller has not done or omitted to do or allowed anyone
                        to do or not to do anything which might render any of
                        those policies void or voidable and has complied with
                        all conditions attached to them.

                  (vii) Claims

                        No claim under any policy of insurance taken out in
                        connection with the HSR Business or the Purchased Assets
                        is outstanding and, so far as the Seller is aware, there
                        are no circumstances likely to give rise to such a
                        claim.

      9.1.7       Corporate Organisation and Business

                  Except as otherwise disclosed to the Purchaser:

                  (i)   Corporate Status

                        The Seller (including any of its representative offices
                        or branches) has been duly incorporated and constituted,
                        and is legally subsisting under the laws of its
                        respective place of incorporation.

                  (ii)  Title to HSR Business and Purchased Assets

                        The Seller has a good and marketable title to, and is
                        the exclusive legal and beneficial owner of the HSR
                        Business and the Purchased Assets, and, therefore, has
                        an absolute right to sell and transfer the HSR Business
                        and the Purchased Assets. All the Purchased Assets will
                        be sold to the Purchaser free and clear of any
                        Encumbrance together with all accrued beneficial rights
                        attached to them at the date of this Agreement or
                        subsequently becoming attached to them;

                  (iii) Licences, permissions or consents

                        so far as the Seller is aware, all licences, permissions
                        and consents required for the carrying on of the HSR
                        Business of the Seller have been obtained by it and are
                        in full force and effect, and the Seller is not aware of
                        any circumstances indicating that any of those licences,
                        permissions or consents is likely to be revoked or not
                        renewed in the ordinary course.

                  (iv)  Existence of subsidiaries and other business

                        The Seller does not have, and has never had, any
                        subsidiary. Save for the HSR Business, the Seller has
                        not carried on any other HSR Business.

                                       19
<PAGE>

                  (v)   No material change

                        No material changes have occurred to the HSR Business
                        since the Accounts Date.

                  (vi)  Conflict of Interest

                        Save for the HSR Business carried on by the Seller, the
                        Seller does not and whether on its own account or in
                        conjunction with or on behalf any person, firm or
                        company, directly or indirectly or whether as a
                        shareholder, partner, agent or otherwise, carry on, and
                        is not engaged or interested in a competing business or
                        restricted services save for the holding of investment
                        up to two (2) % of any class of securities quoted or
                        dealt in on a recognized stock exchange.

      9.1.8       Miscellaneous

                  Except as otherwise disclosed to the Purchaser:

                  (i)   Insolvency

                        (a)   No order has been made and no resolution has been
                              passed for the winding up of, or a provisional
                              liquidator to be appointed in respect of, the
                              Seller and no petition has been presented and no
                              meeting has been convened for the purpose of
                              winding up the Seller;

                        (b)   no receiver has been appointed in respect of the
                              Seller, the HSR Business or the Purchased Assets;

                        (c)   the Seller is not insolvent or unable to pay its
                              debts within the meaning of the applicable
                              legislation to which it is subject and the Seller
                              has not stopped paying its debts as they fall due;

                        (d)   no event analogous to any of the foregoing has
                              occurred with respect to the Seller in any
                              jurisdiction outside China;

                        (e)   no unsatisfied judgment is outstanding against the
                              Seller.

                  (ii)  Consents

                        All consents, permissions, approvals and agreements of
                        third parties which are necessary or desirable for the
                        Seller to obtain in order to enter into and perform this
                        Agreement in accordance with its terms have been
                        unconditionally obtained in writing and have been
                        disclosed to the Purchaser.

                  (iii) Material information

                        all information relating to the Seller, the HSR Business
                        and the Purchased Assets which is known or would on
                        reasonable enquiry be known to the

                                       20
<PAGE>

                        Seller and which should be known by a Purchaser for a
                        proper valuation of the Purchased Assets has been
                        disclosed to the Purchaser.

                  (iv)  Brokers and Finders

                        No person or entity acting on behalf or under the
                        authority of the Seller is or will be entitled to any
                        broker's, finder's or similar fee or commission in
                        connection with the transactions contemplated hereby.

                  (v)   Recitals and disclosures

                        The recitals, Schedules to the Agreement and all
                        information and documents relating to the HSR Business
                        and Purchased Assets (including without limitation
                        budgets and forecasts) supplied by the Seller or any
                        agent of Seller to the Purchaser, its lawyers,
                        accountants or other agents or advisers during or with a
                        view to the negotiations leading up to the Agreement,
                        are true and accurate in material respects, and there is
                        no fact not disclosed which would render any such
                        information or document inaccurate or misleading or
                        which, if disclosed, might reasonably affect the
                        willingness of the Purchaser to purchase the Purchased
                        Assets for the consideration or otherwise on the terms
                        specified in the Agreement.

      9.1.9       Authority of the Seller

                  Except as otherwise disclosed to the Purchaser:

                  (i)   The Seller has full power and authority to enter into
                        and perform this Agreement and the provisions of this
                        Agreement, when executed, will constitute valid and
                        binding obligations on the Seller, in accordance with
                        its terms;

                  (ii)  The execution and delivery of, and the performance by
                        the Seller of its obligations under, this Agreement will
                        not result in a breach of any order, judgment or decree
                        of any court or governmental agency to which any Seller
                        is a party or by which it is bound;

                  (iii) None of the Seller or any of its agents or advisers is
                        aware of any fact or matter which would or may
                        constitute a breach of any of the Seller's Warranties.

9.2   Tax Warranties

      Seller represents and warrants:

      (i)         That it will pay any and all taxes in compliance with the
                  applicable laws and regulations;

      (ii)        that all forms, filings, and information provided to any
                  taxing authority were timely filed and were, at the time of
                  filing and continue to be, complete and accurate;

                                       21
<PAGE>

      (iii)       so far as the Seller is aware, there is no liability in
                  respect of taxation (whether actual or contingent) or any
                  liability for interest, penalties or charges imposed in
                  relation to any taxation arising in any part of the world that
                  is not adequately disclosed or provided for in full in the
                  Accounts and Management Accounts;

      (iv)        so far as the Seller is aware, Seller is not and has not in
                  the last three years been the subject of a Tax Authority
                  unresolved investigation or other dispute regarding Tax or
                  duty recoverable from the Seller or regarding the availability
                  of any relief from Tax or duty to the Seller and there are no
                  facts which are likely to cause such an investigation or audit
                  to be instituted or such a dispute to arise and all returns
                  made by the Seller are agreed with the appropriate Tax
                  Authority;

      (v)         Seller has neither been a party to nor otherwise involved in
                  any transaction, scheme or arrangement:

                  (a)   the sole or dominant purpose of which was to obtain a
                        tax benefit by the avoidance, postponement or reduction
                        of a liability to tax within the meaning of the
                        applicable tax legislation.

                  (b)   which reduces or would reduce the amount of tax payable
                        by any person and which is artificial or fictitious or
                        in respect of which any disposition is not given effect
                        to within the meaning of the applicable tax legislation.

      (vi)        Seller will assist Buyer in responding to any future inquiry
                  from or dispute with a Taxing Authority.

9.3   Property Warranties

      Except as otherwise disclosed to the Purchaser:

      9.3.1       Interests

                  The Properties comprise, and will as at Closing comprise, all
                  the land, buildings and premises used in the HSR Business
                  owned by the Seller or occupied by the Seller or in which the
                  Seller has, or will as at Closing have, any interest.

      9.3.2       Insurance

                  (i)   Where the Seller is responsible for maintaining
                        insurance in respect of any of the Leased Properties,
                        the policy conforms in all respects with the
                        requirements of the Lease.

                  (ii)  True and complete copies of all insurance policies, in
                        respect of the Leased Properties for which the Seller is
                        responsible for maintaining insurance, have been
                        delivered to the Purchaser.

                  (iii) The Seller has not done or omitted to do anything which
                        may result, directly or indirectly, in any of the
                        insurance policies may become void or voidable.

                                       22
<PAGE>

                  (iv)  No claims outstanding or circumstances which the Seller
                        is aware of which would give rise to a claim under any
                        of the insurance policies.

      9.3.3       Owned Properties

                  The Owned Properties represent all the real properties owned
                  by the Seller or in respect of which the Seller has any
                  estate, interest, right or liability (as defined below), and
                  in respect of each of the Owned Properties:

                  (i)   the Seller is the sole beneficial owner of and has a
                        proper legal title (in the form of granted land use
                        rights the premium for which has been fully paid) to the
                        Owned Properties and is entitled to transfer, dispose,
                        sell, mortgage or otherwise deal with the Owned
                        Properties and is entitled the use of such property in
                        the manner in which it is used or is proposed to be
                        used;

                  (ii)  except as otherwise created for the Assumed Liabilities
                        and disclosed to the Purchaser in the manner acceptable
                        to the Purchaser, each of the Owned Properties held by
                        the Seller is free from mortgage, debenture, charge,
                        lien, lease, encumbrances or any third party rights and
                        the Seller has not entered into any agreement to do any
                        of the foregoing;

                  (iii) the Seller has not received or is not aware of there
                        being any notice from any government or other competent
                        authorities requiring it to revise the terms of the
                        ownership rights relating to the Owned Properties or
                        adversely affecting the Owned Properties or the rights
                        of the Seller in relation thereto;

                  (iv)  all land premium, purchase price, land grant fees or
                        other fees payable in respect of the Owned Properties
                        have been paid in full and will be duly paid up to the
                        date of Closing and no further such premiums, price or
                        fees are payable under any applicable laws;

                  (v)   none of the terms and conditions contained in the
                        relevant sale and purchase or transfer contracts, deed
                        of mutual covenants, government grant, occupation
                        permit, real estate title certificate, land use right
                        certificate, building ownership certificates and/or
                        certificate of ownership and the applicable laws, rules
                        and regulations have been breached in respect of the
                        Owned Properties;

                  (vi)  the Seller has duly performed and observed all the terms
                        and conditions contained in the sale and purchase or
                        transfer contracts (if any), assignment, deed of mutual
                        covenant, land use right certificate and building
                        ownership certificates for the Owned Properties to be
                        performed and observed on the part of the Seller as
                        Purchaser thereof;

                  (vii) all relevant legal requirements or conventions for
                        notarization and registration of the sale and purchase
                        contracts and assignments for the Owned Properties have
                        been complied with;

                                       23
<PAGE>

                  (viii) the land and building ownership rights pertaining to
                        the Owned Properties are valid and subsisting and has
                        not been amended, modified or supplemented in any manner
                        whatsoever;

                  (ix)  no contracts have been entered into by the Seller to
                        sell, assign, subdivide, let or lease, licence, charge,
                        mortgage, partition, share, grant any option over or
                        otherwise dispose of an interest in or part with the
                        possession or occupation of the Owned Properties or any
                        part thereof or otherwise encumber the Owned Properties
                        nor is there any agreement by the Seller to do any of
                        the aforesaid;

                  (x)   the Seller is in physical possession and actual
                        occupation of, each and every one of the Owned
                        Properties on an exclusive basis and no right of
                        occupation or enjoyment has been acquired or is in the
                        course of being acquired by any third party or has been
                        granted or agreed to be granted to any third party;

                  (xi)  except as otherwise included in the Assumed Liabilities,
                        the Seller does not have any outstanding liabilities
                        under the terms and conditions upon which the land and
                        building ownership rights pertaining to the Owned
                        Properties are granted;

                  (xii) except as otherwise disclosed to the Purchaser in the
                        manner acceptable to the Purchaser, the Owned Properties
                        are not subject to any restrictive covenants,
                        stipulations, easements, licences, restrictions or other
                        like rights vested in third parties other than those
                        stipulated in the terms and conditions upon which the
                        land and building ownership rights pertaining to the
                        Owned Properties are granted which terms and conditions
                        are of a usual nature with reference to such terms and
                        conditions in China;

                  (xiii) there are no circumstances which would entitle or
                        require any person to exercise any powers of entry or
                        taking possession of the Owned Properties;

                  (xiv) compliance has been made with all applicable statutory
                        and by-law requirements with respect to the Owned
                        Properties;

                  (xv)  all requisite licences, certificates and authorities
                        necessary for the existing use of the Owned Properties
                        by the Seller have been duly obtained and are in full
                        force, validity and effect;

                  (xvi) there are no disputes with any adjoining or neighbouring
                        owner with respect to boundary walls and fences, or with
                        respect to any easement, right or means of access to the
                        Owned Properties;

                  (xvii) the Owned Properties are used by the Seller for legal
                        purposes and has not violated any relevant land or
                        construction regulations;

                  (xviii) all requisite approvals, consents, permits and
                        licences necessary for the user of the Owned Properties
                        as it is presently being used by the Seller have been
                        duly obtained and are in full force, validity and
                        effect;

                                       24
<PAGE>

                  (xix) no default (or event which with notice or lapse of time
                        or both will constitute a default) by the Seller has
                        occurred or is continuing under the government grant,
                        occupation permit, deed of mutual covenant, land use
                        right certificate, building ownership rights certificate
                        and/or other documents applicable to the property and it
                        is not in breach of any applicable laws, rules,
                        regulations, guidelines, notices, circulars, orders,
                        judgments, decrees or rulings of any court, government,
                        governmental or regulatory authorities in respect of the
                        use occupation and enjoyment of the Owned Properties;

                  (xx)  all requisite planning and building approvals required
                        for any government, local or public authority with
                        respect to the Owned Properties have been obtained and
                        are in full force and effect;

                  (xxi) all the buildings and other structures on the Owned
                        Properties are in good and substantial repair and fit
                        for the purposes for which they are being used; and

                  (xxii) there is (and has been) no breach of any applicable
                        statutory, by-law or regulatory requirement as to fire
                        precautions, public health, pollution, discharge of
                        effluents, environmental or any other matters to which,
                        in respect of any of the Owned Properties compliance is
                        required.

      9.3.4       Other involvement in relation to property

                  So far as the Seller is aware, the Seller has not at any time:

                  (i)   had vested in it (whether as an original tenant or
                        undertenant or as an assignee, transferee or otherwise)
                        any immovable property used in relation to the HSR
                        Business other than the Properties.

                  (ii)  given any covenant or entered into any agreement, deed
                        or other document (whether as a tenant or undertenant or
                        as an assignee, transferee, guarantor or otherwise) in
                        respect of any immovable property used in relation to
                        the HSR Business in respect of which any contingent or
                        potential liability remains with the Seller other than
                        those disclosed to the Purchaser in relation to the
                        Properties.

                  (iii) done, omitted or knowingly suffered or been party or
                        privy to any act, deed, matter or thing whereby or by
                        means whereof the Properties or any part thereof are or
                        can or shall or may be impeached, charged, affected or
                        encumbered in title, estate or otherwise.

9.4   The Seller acknowledges that, in entering into this Agreement and in
      purchasing the Purchased Assets, the Purchaser has relied and will reply
      upon the Warranties given herein and the Warranties as confirmed by the
      Seller.

9.5   Each of the Warranties shall be construed as a separate warranty and shall
      not be otherwise limited or restricted by reference to or inference from
      the terms of any other Warranty or any other term of this Agreement.

                                       25
<PAGE>

9.6   The Seller shall procure that the Warranties are true and accurate in
      material respects at the date of this Agreement and, for this purpose the
      Warranties shall be deemed to be repeated at the Closing Date and any
      express or implied reference therein to the date of this Agreement shall
      be replaced by a reference to the Closing Date. The Warranties shall
      remain in full force and effect notwithstanding Closing.

9.7   The Purchaser shall be entitled to claim both before and after Closing
      that any of the Warranties is or was untrue or misleading or has or had
      been breached even if the Purchaser discovered or could have discovered on
      or before Closing that the Warranty in question was untrue misleading or
      had been breached and Closing shall not in any way constitute a waiver of
      any of the Purchaser's rights.

9.8   The rights and remedies of the Purchaser in respect of a breach of any of
      the Warranties shall not be affected by Closing, by any investigation made
      by or on behalf of the Purchaser into the affairs of the Seller and the
      HSR Business, by the giving of any time or other indulgence by the
      Purchaser to any person, by the Purchaser rescinding or not rescinding
      this Agreement, or by any other cause whatsoever except a specific waiver
      or release by the Purchaser in writing; and any such waiver or release
      shall not prejudice or affect any remaining rights or remedies of the
      Purchaser.

9.9   All representations and warranties made by the Seller contained in this
      Agreement, any Exhibit, Schedule, certificate or other instrument
      specifically referred to in the Warranties pursuant hereto or made in
      writing by or on their behalf in connection with the transactions
      contemplated by this Agreement, and all indemnification obligations of the
      Seller under this Agreement shall survive the execution and delivery of
      this Agreement and the Closing of the transactions contemplated hereunder.
      All statements contained in any Exhibit, Schedule, certificate or other
      instrument specifically referred to in the Warranties shall be deemed
      representations and Warranties under this Agreement.

9.10  The Seller undertakes with the Purchaser that it will both before and
      after Closing promptly notify the Purchaser in writing of any event or
      circumstance of which it becomes aware which is or may be inconsistent
      with any of the Warranties or which might make any of the Warranties
      untrue or misleading if given at Closing.

                           ARTICLE 10  INDEMNIFICATION

10.1  General Indemnification

      10.1.1      As used in this Article 10.1, the following terms shall have
                  the following meanings:

                  (i)   "EVENT OF INDEMNIFICATION" with respect to the Seller
                        shall mean:

                        (a)   any untruth, inaccuracy or breach of any
                              representation or Warranty relating to anything
                              undisclosed to Purchaser as of the Closing Date,
                              any untruth, inaccuracy, omission, in
                              non-compliance with PRC laws and regulations or
                              breach of any representation or Warranty relating
                              to anything disclosed the Purchaser as of the
                              Closing Date, or any breach or failure of

                                       26
<PAGE>

                              observance or performance of any agreement,
                              undertaking, commitment, obligation, indemnity or
                              covenant of the Seller contained in this Agreement
                              (including the Schedules) or in any certificate or
                              other writing delivered in connection herewith at,
                              before or after Closing or any facts or
                              circumstances constituting such untruth,
                              inaccuracy or breach; and

                        (b)   except for the Assumed Liabilities, any other
                              Claims, liabilities or obligations of any kind or
                              nature relating to the HSR Business or the
                              Purchased Assets arising from, relating to or in
                              connection with the HSR Business, operations or
                              affairs of the Seller or any of the assets,
                              properties, interests in assets or properties or
                              rights of the Seller which were existing at or as
                              of Closing or arising in whole or in part out of
                              any acts, transactions, conditions, circumstances
                              or facts which occurred or existed on or prior to
                              Closing, and which were not disclosed on or before
                              the execution of this Agreement and explicitly
                              assumed by Purchaser pursuant to this Agreement.

                  (ii)  "LOSSES" shall mean any and all Losses sustained,
                        suffered or incurred by any Indemnified Person directly.

      10.1.2      "INDEMNIFIED PERSONS" shall mean and include the Purchaser and
                  its respective officers, directors, employees, Affiliates,
                  successors and assignees.

      10.1.3      The Seller shall indemnify, defend and hold harmless the
                  Indemnified Persons, and each of them, from and against any
                  and all Losses and Claims (including Claims by third party)
                  arising from or in connection with any Event of
                  Indemnification.

      10.1.4      This indemnity is to be a continuing security to the Purchaser
                  for each representation, Warranty, agreement, undertaking,
                  commitment, obligation, indemnity or covenant on the part of
                  the Seller under or pursuant to this Agreement notwithstanding
                  settlement of account or other matter or thing whatsoever.

      10.1.5      This indemnity is in addition and without prejudice to and not
                  in substitution for any rights or security which the Purchaser
                  may now or hereafter have or hold for performance and
                  observance of any agreement, undertaking, commitment,
                  obligation, indemnity or covenant on the part of the Seller
                  under or in connection with this Agreement.

      10.1.6      The Guarantor shall be jointly and severally liable for the
                  liabilities of the Seller under Article 10.1, as well as all
                  other liabilities of Seller arising under this Agreement.

10.2  Exercise of Purchaser's Rights

      10.2.1      Without prejudice to any other right or remedy of the
                  Purchaser hereunder, if before Closing the Purchaser becomes
                  aware that any of the material Warranties was at the date of
                  this Agreement, or has since become, untrue or misleading or

                                       27
<PAGE>

                  that the Seller is in breach of any term of this Agreement,
                  the Purchaser shall be entitled to, by written notice to the
                  Seller, terminate this Agreement without liability to the
                  Seller. In the event of the termination of this Agreement,
                  without limiting the Purchaser's right to claim all
                  obligations of the Seller under this Agreement, the Purchaser
                  shall, unless otherwise expressly stated, cease to enjoy and
                  assume all rights and liabilities hereunder, but, for the
                  avoidance of doubt, all rights and liabilities of the Parties
                  which have accrued before termination shall continue to exist.

      10.2.2      The rights, including rights of rescission, conferred on the
                  Purchaser by this Agreement are in addition and without
                  prejudice to all other rights and remedies available to the
                  Purchaser; and no exercise or failure to exercise a right
                  under this Agreement or otherwise or to invoke a remedy shall
                  constitute a waiver of that right or remedy by the Purchaser.

                 ARTICLE 11  GUARANTEE AND INDEMNITY BY GUARANTOR

11.1  In consideration of the Purchaser entering into this Agreement, Guarantor
      hereby unconditionally and irrevocably guarantees to the Purchaser the due
      and punctual performance and observance by the Seller of all obligations,
      commitments, undertakings, warranties, indemnities and covenants under or
      pursuant to this Agreement and agrees to indemnify the Purchaser and its
      Affiliates against any and all Losses and Claims which the Purchaser or
      any of its Affiliates may suffer through or arising from any breach by the
      Seller of such obligations, commitments, warranties, undertakings,
      indemnities or covenants. The liability of Guarantor as aforesaid shall
      not be released or diminished by any arrangements or alterations of terms
      (whether of this Agreement or otherwise) or any forbearance, neglect or
      delay in seeking performance of the obligations hereby imposed or any
      granting of time for such performance.

11.2  Guarantor hereby waives any right which it may have to require the
      Purchaser to proceed first against or claim payment from the Seller to the
      intent that as between the Purchaser and Guarantor the latter shall be
      liable as principal obligor as if it had entered into all undertakings,
      agreements and other obligations jointly and severally with the Seller.

11.3  This guarantee and indemnity is to be a continuing security to the
      Purchaser for all obligations, commitments, warranties, undertakings,
      indemnities and covenants on the part of the Seller under or pursuant to
      this Agreement notwithstanding any settlement of account or other matter
      or thing whatsoever.

11.4  This guarantee and indemnity is in addition to and without prejudice to
      and not in substitution for any rights or security which the Purchaser may
      now or hereafter have or hold for the performance and observance of the
      obligations, commitments, undertakings, covenants, indemnities and
      warranties of the Seller under or in connection with this Agreement.

11.5  As a separate and independent stipulation, Guarantor agrees that any
      obligation expressed to be undertaken by the Seller under this Agreement
      (including, without limitation, any moneys expressed to be payable under
      this Agreement) which may not be enforceable against or recoverable from
      the Seller by reason of any legal limitation, disability or incapacity of
      the Seller or any other fact or circumstance shall nevertheless

                                       28
<PAGE>

      be enforceable against or recoverable from Guarantor as though the same
      had been incurred by Guarantor and Guarantor was sole or principal
      obligors in respect thereof and shall be performed or paid by Guarantor on
      demand.

                            ARTICLE 12  FORCE MAJEURE

12.1  Scope of Force Majeure. A "FORCE MAJEURE EVENT" shall mean any event,
      circumstance or condition that (i) directly or indirectly prevents the
      fulfillment of any material obligation set forth in this Contract, (ii) is
      beyond the reasonable control of the respective Party, and (iii) could
      not, by the exercise of reasonable care, have been avoided or overcome in
      whole or in part by such Party. Subject to the aforementioned items (i),
      (ii) and (iii), Force Majeure Event includes, but is not limited to,
      natural disasters such as acts of God, earthquake, windstorm and flood,
      terrifying events such as war, terrorism, civil commotion, riot, blockade
      or embargo, fire, explosion, off-stream or strike or other labor disputes,
      epidemic and pestilence, material accident or by reason of any law, order,
      proclamation, regulation, ordinance, demand, expropriation, requisition or
      requirement or any other act of any governmental authority, including
      military action, court orders, judgments or decrees.

12.2  Notice. Should any Party be prevented from performing the terms and
      conditions of this Agreement due to the occurrence of a Force Majeure
      Event, the prevented Party shall send notice to the other Parties within
      fourteen (14) days from the occurrence of the Force Majeure Event stating
      in the details of such Force Majeure Event.

12.3  Performance. Any delay or failure in performance of this Agreement caused
      by a Force Majeure Event shall not constitute a default by the prevented
      Party or give rise to any claim for damages, losses or penalties. Under
      such circumstances, the Parties are still under an obligation to take
      reasonable measures to perform this Agreement, so far as is practical. The
      prevented Party shall send notice to the other Parties as soon as possible
      of the elimination of the Force Majeure Event, and confirm receipt of such
      notice.

12.4  Consultations and Termination. Should the Force Majeure Event continue to
      delay implementation of this Agreement for a period of more than three (3)
      months, the Parties shall, through consultations, decide whether to
      terminate or modify this Agreement. Should the Force Majeure Event
      continue for a period of six (6) months or longer, any Party may terminate
      this Agreement by giving written notice to the other Parties. In the event
      of the termination of this Agreement, without limiting the Purchaser's
      right to claim all obligations of the Seller under this Agreement, the
      Purchaser shall, unless otherwise expressly stated, cease to enjoy and
      assume all rights and liabilities hereunder, but, for the avoidance of
      doubt, all rights and liabilities of the Parties which have accrued before
      termination shall continue to exist.

                           ARTICLE 13  CONFIDENTIALITY

13.1  The Parties undertake with each other that they shall treat as strictly
      confidential all information received or obtained by them or their
      employees, agents or advisers as a result of entering into or performing
      this Agreement including information relating to the provisions of this
      Agreement, the negotiations leading up to this Agreement, the subject
      matter of this Agreement or the business or Affairs of the Seller or the
      Purchaser

                                       29
<PAGE>

      and that it will not at any time hereafter make use of or disclose or
      divulge to any person any such information (except in relation to the
      operation of the HSR Business after Closing by the Purchase) and shall use
      its best endeavours to prevent the publication or disclosure of any such
      information.

13.2  The restrictions contained in Article 13.1 shall not apply so as to
      prevent the Parties from making any disclosure required by law or by any
      supervisory or regulatory or governmental body or from making any
      disclosure to any professional adviser for the purposes of obtaining
      advice (providing always that the provisions of this Article 13 shall
      apply to and the Parties shall procure that they apply to and are observed
      in relation to, the use or disclosure by such professional adviser of the
      information provided to them) nor shall the restriction apply in respect
      of any information which comes into the public domain otherwise than by a
      breach of this Article 13 by any Party.

                            ARTICLE 14  GOVERNING LAW

The formation of this Agreement, its validity, interpretation, execution and any
performance of this Agreement, and the settlement of any Disputes hereunder,
shall be governed by published and publicly available laws, rules and
regulations of the PRC, the applicable provisions of any international treaties
and conventions to which the PRC is a party, and, if there are no published or
publicly available PRC laws, rules or regulations, or treaties or conventions
governing a particular matter, by general international commercial practices.

                          ARTICLE 15  DISPUTE RESOLUTION

15.1  Consultations and Arbitration. Any and all disputes, controversies or
      claims (the "DISPUTE") arising out of or relating to the formation,
      validity, interpretation, implementation or termination of this Agreement,
      or the breach hereof or relationships created hereby shall be settled
      through friendly consultations. If a Dispute is not resolved through
      friendly consultations within thirty (30) days from the date a Party gives
      the other Parties written notice of a Dispute, then it shall be resolved
      exclusively and finally by arbitration in Beijing at the China
      International Economic and Trade Arbitration Commission ("CIETAC") in
      accordance with the arbitration rules of the CIETAC (the "CIETAC RULES")
      for the time being in force which rules are deemed to be incorporated by
      reference to this clause.

15.2  Arbitration Proceedings and Award. Any arbitration shall be heard before a
      tribunal consisting of three (3) arbitrators. Each side of the Dispute
      shall appoint one (1) arbitrator. The two arbitrators thus appointed shall
      choose the third arbitrator who will act as the presiding arbitrator of
      the tribunal. If the two arbitrators have not agreed on the choice of the
      presiding arbitrator, the presiding arbitrator shall be appointed by the
      Chairman of the CIETAC. The language of the arbitration shall be Chinese
      and English . The arbitration shall be final and binding on the Parties,
      shall not be subject to any appeal, and the Parties agree to be bound
      thereby and to act accordingly. The award of the arbitrators may be
      enforced by any court having jurisdiction to do so. Throughout any dispute
      resolution and arbitration proceedings, the Parties shall continue to
      perform this Agreement, to the extent practical, with the exception of
      those parts of this Agreement that are under arbitration. Except as
      otherwise determined by the arbitration tribunal, each Party shall be
      responsible for its expenses incurred in connection with

                                       30
<PAGE>

      resolving any Dispute, but the arbitration fees shall be borne by the
      losing side of the Dispute.

15.3  Injunctive Relief. Notwithstanding any other provision of this Agreement,
      each Party acknowledges that a breach of confidentiality as provided in
      Article 13 or other obligations under this Agreement may result in
      irreparable harm and damage to the affected Party and its Affiliates in an
      amount that is difficult to ascertain and that cannot be adequately
      compensated by a monetary award. Accordingly, in addition to any other
      relief to which the affected Party and its Affiliates may be entitled,
      such Party shall be entitled to temporary and/or permanent injunctive
      relief from any breach or threatened breach by the relevant Party without
      proof of actual damages that have been or may be caused to such Parties by
      such breach or threatened breach.

                       ARTICLE 16  MISCELLANEOUS PROVISIONS

16.1  Language. This Agreement is written and executed in a Chinese version and
      in an English version. Both language versions of this Agreement are of
      equal validity and effect. In case of any discrepancy between the Chinese
      version and the English version, the Chinese version approved by the
      Examination and Approval Authority shall prevail.

16.2  Waiver and Preservation of Remedies. No delay on the part of any Party in
      exercising any right, power or privilege under this Agreement shall
      operate as a waiver thereof, nor shall any waiver on the part of any Party
      of any right, power or privilege hereunder, nor any single or partial
      exercise of any right, power or privilege hereunder, preclude any other or
      other exercise thereof hereunder. The rights and remedies herein provided
      are cumulative and are not exclusive of any rights or remedies that any
      Party may otherwise have.

16.3  Notices. All notices or other communications under this Agreement shall be
      in writing and shall be delivered or sent to the correspondence addresses
      or facsimile numbers of the Parties set forth below or to such other
      addresses or facsimile numbers as may be hereafter designated in writing
      on seven (7) days' notice by the relevant Party. All such notices and
      communications shall be effective: (i) when delivered personally; (ii)
      when sent by telex, telefacsimile or other electronic means with sending
      machine confirmation; (iii) ten (10) days after having been sent by
      registered or certified mail, return receipt requested, postage prepaid;
      or (iv) four (4) days after deposit with a commercial overnight courier,
      with evidence of delivery provided by the courier.

      Seller            Address:    No. 98, Nanshan Road North, Rongcheng City,
                                    Shandong Province, PRC
                        Tel:        0631-7523205
                        Fax:        0631-7523888
                        Attn:       Zhang Junquan

      Purchaser         Address:    No. 99, Qingshan Road West, Rongcheng City,
                                    Shandong Province, PRC
                        Tel:
                        Fax:
                        Attn:

                                       31
<PAGE>

      Guarantor         Address:    No. 98, Nanshan Road North, Rongcheng City,
                                    Shandong Province, PRC
                        Tel:        0631-7523206
                        Fax:        0631-7506826
                        Attn:       Zhang Junquan

16.4  Severability. If any provision of this Agreement should be or become fully
      or partially invalid, illegal or unenforceable in any respect for any
      reason whatsoever, the validity, legality and enforceability of the
      remaining provisions of this Agreement shall not in any way be affected or
      impaired thereby.

16.5  Entire Agreement. This Agreement, together with its Schedules and Exhibits
      which are hereby incorporated by reference as an inseparable and integral
      part of this Agreement, constitutes the entire agreement among the Parties
      with reference to the subject matter hereof, and supersede any agreements,
      contracts, representations and understandings, oral or written, made prior
      to the signing of this Agreement.

16.6  Modification and Amendment. No amendment or modification of this
      Agreement, whether by way of addition, deletion or other change of any of
      its terms, shall be valid or effective unless a variation is agreed to in
      writing and signed by authorized representatives of each of the Parties.

16.7  Successors. This Agreement shall inure to the benefit of and be binding
      upon each of the Parties and their respective permitted successors and
      permissible assignees.

16.8  Originals. This Agreement is executed in nine (9) original counterparts,
      each of which shall have equal effect in law.

                                       32
<PAGE>

IN WITNESS WHEREOF, each of the Parties has executed this Agreement or has
caused this Agreement to be executed by its duly authorized officer or officers
as of the date first above written.

PURCHASER:                                       SELLER:

COOPER CHENGSHAN (SHANDONG) PASSENGER            SHANDONG CHENGSHAN TIRE COMPANY
TIRE COMPANY LTD.                                LIMITED BY SHARES

Represented by Cooper Tire Investment Holding
(Barbados) Ltd. before legal establishment:

By:                                             By:
   --------------------------                       ---------------------------
Name:  Harold C. Miller                         Name:          Che Hongzhi
Title:  President                               Title:         Chairman
Nationality:  U.S.A.                            Nationality:   Chinese

                                                GUARANTOR:

Confirmed and ratified after legal              SHANDONG CHENGSHAN GROUP COMPANY
establishment:

By:                                             By:
   --------------------------                       ---------------------------
Name:                                           Name:           Che Hongzhi
Title:                                          Title:          Chairman
Nationality:                                    Nationality:    Chinese

                                       33
<PAGE>

                                   SCHEDULE 1

                         DEFINITIONS AND INTERPRETATION

ACCOUNTS -- The audited financial statements of the Seller (including, without
limitation, a balance sheet, profit and loss statement and cash flow statement
together in each case with the notes thereon) made up to the Accounts Date and
for the financial period from January 1, 2005 to the Accounts Date prepared in
accordance with relevant PRC laws and regulations, the Chinese GAAP, and in
manner consistent with past practice.

ACCOUNTS DATE -- The date of Closing.

AFFILIATES -- Any person which directly or indirectly controls, is controlled
by, or is under common control with Seller, or Seller or any of its related
companies; the term "control" means ownership, the power to elect or appoint
directors or senior management, and/or the ability to determine and enforce the
strategic, business or operations policies of any person.

AGREED FORM -- In relation to any document, such document in the terms agreed
between the Purchaser and Seller and signed by or on behalf of them for the
purposes of identification.

AGREEMENT -- This Assets Purchase Agreement

BUSINESS LICENSE -- The business license of the Purchaser as issued, amended and
replaced, as the case may be, from time to time by the Registration Authority.

CERTIFICATE OF APPROVAL -- The certificate of approval issued by the Examination
and Approval Authority approving the JV Contract and establishment of the
Purchaser.

CHINESE GAAP -- The general accepted accounting principles applicable in China,
consistently applied.

CLAIM -- Any claim, demand, dispute, action, suit, investigation or legal or
analogous proceedings

CLOSING -- The completion of the purchase by the Purchaser from the Seller of
the Purchased Assets in accordance with Article 7.

CLOSING DATE -- the date mutually agreed by the Parties subsequent to the
conditions in Article 5.1 being satisfied or such other date as is determined by
the Seller and Purchaser.

CONTRACTS -- The meaning set forth in Article 2.1.4

EMPLOYEES -- The employees to be employed in relation to the HSR Business by
Purchaser.

ENCUMBRANCES -- Any mortgage, charge (fixed or floating), pledge, lien,
hypothecation, trust, right of set off or other third party right or interest
(legal or equitable) including any right of pre-emption, assignment by way of
security, reservation of title or any other security interest of any kind
however created or arising or any other agreement or arrangement (including a
sale and repurchase arrangement) having similar effect.

                                       34
<PAGE>

EXAMINATION AND APPROVAL AUTHORITY -- The Ministry of Commerce, or its
authorized local division or any successor government institution or agency
empowered to approve the JV Contact, this Agreement, and any amendments,
supplements, modifications or termination thereof or hereof.

GUARANTOR -- Chengshan Group Company Limited.

HSR BUSINESS -- The business in relation to the half-steel radial tires for
passenger vehicles and light trucks, which has been carried on by Seller as part
of the business scope specified on the effective business license of Seller,
such as "production and sales of rubber products; import and export business
within the approved scope; sales of vehicles (including cars); contracting of
offshore rubber industry projects and onshore international tender offer
projects and exporting of the equipment and materials required for the aforesaid
projects; and expatriation of the labor personnel required for enforcing the
aforesaid offshore projects.

INSURANCES -- The policies of assurance and insurance in connection with the HSR
Business and the Purchased Assets and the Employees.

LEASE(s) -- The lease(s) or tenancy agreement(s) between the Landlord (as
therein defined) and the Seller by which the premises used by the HSR Business
was let to the Seller.

LEASED PROPERTIES -- All the real properties used by the HSR Business leased by
the Seller, particulars of which are set out in this Agreement.

LOSSES -- All losses, liabilities, costs (including, without limitation, legal
costs arising out of any disputes involving any third party), charges and
expenses.

MANAGEMENT ACCOUNTS -- The unaudited balance sheet of the Seller as at the
Management Accounts Date and the unaudited statements of profit and loss and
cash flow of the Seller for the period commencing from December 31, 2004 and
ended on the Management Accounts Date prepared in a manner consistent with past
practice.

MANAGEMENT ACCOUNTS DATE -- The date of Closing.

M&A REGULATIONS -- The Tentative Provisions Regarding Merger with, and
Acquisition of, Domestic Enterprises by Foreign Investors, promulgated by the
Ministry of Foreign Trade and Economic Cooperation, State Administration of
Taxation, State Administration for Industry and Commerce and State
Administration of Foreign Exchange on March 7, 2003, and effective as of April
12, 2003.

MATERIAL ADVERSE CHANGE -- Any material adverse change in the business, assets
or position (financial, trading or otherwise), profits or prospects of the HSR
Business or any event or circumstance that may result in such a material adverse
change. Without prejudice to the generality of the foregoing and to the extent
that any adverse change or series of adverse change can be quantified, any
adverse change to the extent of more than USD500,000 or series of adverse change
to the aggregate extent of more than USD500,000 shall be deemed to be a material
adverse change.

OWNED PROPERTIES -- All the real properties used by the HSR Business owned by
the Seller.

PRC -- People's Republic of China

                                       35
<PAGE>

PROPERTIES -- The Leased Properties and Owned Properties set out in this
Agreement.

PURCHASER -- Cooper Chengshan (Shandong) Passenger Tire Company Ltd., a
Sino-foreign limited liability company registered and incorporated under the
laws of the PRC, with its registered address at No. 99, Qingshan Road West,
Rongchen City, Shandong Province, PRC.

PURCHASED ASSETS -- The meaning set forth in Article 2.1

REGISTRATION AUTHORITY -- The State Administration of Industry and Commerce, or
its local division or any successor government institution or agency empowered
to issue a Business License to the Purchaser.

RENMINBI or RMB -- The lawful currency of the PRC

SELLER -- Shandong Chengshan Tire Company Limited by Shares. A company limited
by shares registered and incorporated under the laws of the People's Republic of
China, with its registered address at No. 98, Nanshan Road North, Rongchen City,
Shandong Province, People's Republic of China.

TAX AUTHORITY -- Any local, municipal, governmental, provincial, State or
fiscal, revenue, customs or excise authority, body, agency or official in China
having or purporting to have power or authority in relation to Tax, including
without limitation the PRC State Administration for Taxation or any other
relevant fiscal authority in China.

TAXATION/TAX -- All taxes, charges, duties, imposts, fees, levies or other
assessments, and all estimated payments thereof, including without limitation
income, business profits, property, sales, use, value added taxes (VAT),
environmental, franchise, customs, import, payroll, transfer, gross receipts,
withholding, social security, as well as stamp duties and other costs, imposed
by any Tax Authority, or any subdivision or agency thereof, and any interest and
penalty relating to such taxes, charges, fees, levies or other assessments.

WARRANT(IES) -- the warranties, representations, and undertakings stated in
Article 9.

                                       36<PAGE>
                                                               EXHIBIT 10 (xxix)
================================================================================

                   SINO-FOREIGN EQUITY JOINT VENTURE CONTRACT

                                       FOR

                  COOPER CHENGSHAN (SHANDONG) TIRE COMPANY LTD.

                                  BY AND AMONG

                SHANDONG CHENGSHAN TIRE COMPANY LIMITED BY SHARES

                                       AND

                 COOPER TIRE INVESTMENT HOLDING (BARBADOS) LTD.

                                       AND

                         JOY THRIVE INVESTMENTS LIMITED
================================================================================

                                OCTOBER 27, 2005

<PAGE>

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
CHAPTER                                                                                                         PAGE
-------                                                                                                         ----
<S>                                                                                                             <C>
CHAPTER 1            DEFINITIONS.............................................................................      1
CHAPTER 2            PARTIES TO THE CONTRACT.................................................................      1
CHAPTER 3            ESTABLISHMENT OF THE JOINT VENTURE......................................................      2
CHAPTER 4            PURPOSE, BUSINESS SCOPE AND SCALE OF THE JOINT VENTURE..................................      3
CHAPTER 5            TOTAL INVESTMENT AND REGISTERED CAPITAL.................................................      3
CHAPTER 6             REPRESENTATIONS AND WARRANTIES.........................................................      5
CHAPTER 7            RESPONSIBILITIES OF THE PARTIES.........................................................      7
CHAPTER 8            BOARD OF DIRECTORS.....................................................................       9
CHAPTER 9            OPERATION AND MANAGEMENT...............................................................      13
CHAPTER 10           LABOR MANAGEMENT.......................................................................      15
CHAPTER 11           FINANCIAL AFFAIRS AND ACCOUNTING.......................................................      16
CHAPTER 12           PROFIT DISTRIBUTION...................................................................       17
CHAPTER 13           TAXATION AND INSURANCE.................................................................      18
CHAPTER 14           PURCHASE OF MATERIALS AND SALE OF PRODUCTS.............................................      18
CHAPTER 15           CONFIDENTIALITY AND NON-COMPETE........................................................      19
CHAPTER 17           BREACH OF CONTRACT.....................................................................      26
CHAPTER 18           FORCE MAJEURE..........................................................................      26
CHAPTER 19           DISPUTE RESOLUTION.....................................................................      26
CHAPTER 20           GOVERNING LAW & CHANGE OF LAW.........................................................       27
CHAPTER 21           EFFECTIVE DATE OF THE CONTRACT                                                               28
</TABLE>
                                       i
<PAGE>

<TABLE>
<S>                                                                                                             <C>
CHAPTER 22           MISCELLANEOUS PROVISIONS...............................................................      28
APPENDIX 1           DEFINITIONS AND INTERPRETATION                                                               31
APPENDIX 2           CAPITAL CONTRIBUTION SCHEDULE..........................................................      35
APPENDIX 3           ASSET PURCHASE AGREEMENT (FOR THE ASSETS TO
                     BE PURCHASED BY THE JOINT VENTURE FROM PARTY A)........................................      36
</TABLE>

                                       ii
<PAGE>

                          EQUITY JOINT VENTURE CONTRACT

This Sino-foreign Equity Joint Venture Contract (this "CONTRACT") is made and
entered into in the People's Republic of China ("CHINA" or "PRC") on this 27th.
day of October, 2005, in accordance with the PRC Sino-foreign Equity Joint
Venture Law (the "JOINT VENTURE Law") and other relevant PRC laws and
regulations, by and among:

(1)   SHANDONG CHENGSHAN TIRE COMPANY LIMITED BY SHARES, a company limited by
      shares duly organized and existing under the laws of the PRC with its
      legal address at No. 98, Nanshan Road North, Rongcheng City, Shandong
      Province, PRC ("PARTY A");

(2)   COOPER TIRE INVESTMENT HOLDING (BARBADOS) LTD., a company duly organized
      and existing under the laws of Barbados with its legal address at
      Whitepark House, White Park Road, Bridgetown, Barbados ("PARTY B"); and

(3)   JOY THRIVE INVESTMENTS LIMITED, a company duly organized and existing
      under the laws of British Virgin Islands with its legal address at P.O.
      Box 957, Offshore Incorporations Center, Road Town, Tortola, British
      Virgin Islands ("PARTY C").

(Each party is hereinafter individually referred to as a "PARTY" and
collectively as the "PARTIES".)

In accordance with the principles of equality and mutual benefit, the Parties
have held friendly negotiations in relation to the terms and conditions for
establishing a Sino-foreign equity joint venture.

NOW, THEREFORE, the Parties hereby agree as follows:

                              CHAPTER 1 DEFINITIONS

Unless the terms or context of this Contract provide otherwise, capitalized
terms used herein without definition have the meanings assigned to them in
Appendix 1 attached to this Contract.

                        CHAPTER 2 PARTIES TO THE CONTRACT

2.1   The Parties. The Parties to this Contract are as follows:

    (1)  Party A:                        Shandong Chengshan Tire Company Limited
                                         by Shares

         Country of Registration:        PRC

         Legal Address:                  No. 98, Nanshan Road North, Rongcheng
                                         City, Shandong Province, PRC

         Current Legal Representative:  Che Hong-Zhi

                                       1
<PAGE>

         Nationality:                  Chinese

    (2)  Party B:                      Cooper Tire Investment Holding (Barbados)
                                       Ltd.

        Country of Registration:       Barbados

        Legal Address:                Whitepark House, White Park Road,
                                      Bridgetown, Barbados

        Current Legal Representative: Harold C. Miller

        Nationality:                  U.S.A

    (3) Party C:                      Joy Thrive Investments Limited

        Country of Registration:      British Virgin Islands

        Legal Address:               P.O. Box 957, Offshore Incorporations
                                     Center, Road Town, Tortola, British Virgin
                                     Islands

       Current Legal Representative: Nuansir Sirisuwat

       Nationality:                  Thailand

                  CHAPTER 3 ESTABLISHMENT OF THE JOINT VENTURE

3.1   Establishment of the Joint Venture. In accordance with the Joint Venture
      Law and other relevant PRC laws and regulations, the Parties hereby enter
      into this Contract for the establishment of the Joint Venture as a
      Sino-foreign equity joint venture in the form of a limited liability
      company.

3.2   Joint Venture Name, Legal Address.

      (1)   The name of the Joint Venture in English is "Cooper Chengshan
            (Shandong) Tire Company Ltd." The name of the Joint Venture in
            Chinese is [CHINESE CHARACTERS]

      (2)   The legal address of the Joint Venture is No. 98, North Nanshan Road
            , Rongcheng City, Shandong Province, PRC.

3.3   Limited Liability Company. The Joint Venture shall be organized as a
      company with limited liability under PRC law, liable for its own debts
      with its own assets. The liability of each Party shall be limited to the
      amount of the Registered Capital expressly subscribed by such Party
      according to Article 5.2 hereof. No Party shall be obligated at any time
      to provide any funds to, or on behalf of, the Joint Venture by way of
      capital contribution, loan, advance, guarantee or otherwise, except as
      specifically provided in this Contract, or as otherwise agreed to in
      writing by the Parties. The Parties shall not be liable for the debts of
      the Joint Venture, unless otherwise specifically agreed in writing between
      a particular creditor and the Party or Parties concerned. Subject to the
      terms

                                       2
<PAGE>
      and conditions of this Contract, the profits, risks and losses of
      the Joint Venture shall be shared by the Parties in proportion to their
      respective contributions to the Registered Capital.

3.4   PRC Law. The activities of the Joint Venture shall be governed by, and its
      legal rights and operational autonomy shall be protected in accordance
      with, the laws and regulations of the PRC.

      CHAPTER 4 PURPOSE, BUSINESS SCOPE AND SCALE OF THE JOINT VENTURE

4.1   Purpose of Joint Venture. The purpose of the Joint Venture is to fully
      initiate advantages of the Parties so as to enhance production technical
      standard, to promote high quality products, to produce internationally
      reputable products, to apply brand-new operation concept and management
      method, to strengthen overall capacity and competitiveness in the
      international market, to increase economic benefit, and to produce a
      satisfactory return to all investors; meanwhile, to boost the industrial
      level through an integration of the tire industry, to provide job
      opportunities in the locale, to introduce more foreign capital to the
      locale, and for sure to enhance the fast economic development in Rongcheng
      City.

4.2   Scope of Business. The Joint Venture's scope of business shall be to
      design, develop, manufacture, and sell heavy load radial tires, bias tires
      and Related Products; provide technical support and services for such
      products.

4.3   Scale of Joint Venture.

      (1)   The tire manufacture volume of the Joint Venture shall to the extent
            practicable increase by 10% per year over the next three years. The
            Joint Venture shall from time to time introduce and utilize the
            international modern technology and management expertise to fully
            activate investment benefits.

      (2)   Upon its duly establishment, the Joint Venture shall not have any
            investment in the production assembly to enlarge the production
            scale of the bias tires.

      CHAPTER 5 TOTAL INVESTMENT AND REGISTERED CAPITAL

5.1   Total Investment and Registered Capital. The Total Investment of the Joint
      Venture shall be United States Dollars ninety-nine million
      (US$99,000,000). The Registered Capital of the Joint Venture shall be
      United States Dollars forty-three million eight hundred thousand
      (US$43,800,000).

5.2   Capital Contributions. Subject to the Capital Contribution Schedule
      attached as Appendix 2 hereto, each Party shall contribute to the
      Registered Capital as follows:

      (1)   Party A shall contribute all of the land use rights and buildings
            free of all liens and encumbrances to the Joint Venture, valued in
            the amount of United States Dollars fifteen million three hundred
            and thirty thousand (US$ 15,330,000), representing thirty five
            percent (35%) of the Registered Capital;

                                       3
<PAGE>

      (2)   Party B shall contribute cash in the amount of United States Dollars
            twenty-two million three hundred and thirty-eight thousand
            (US$22,338,000), representing fifty one percent (51%) of the
            Registered Capital; and

      (3)   Party C shall contribute cash in the amount of United States Dollars
            six million one hundred and thirty-two thousand (US$6,132,000),
            representing fourteen percent (14%) of the Registered Capital.

5.3   Schedule for Capital Contributions. Subject to Article 5.4 below, the
      Parties shall contribute their respective contributions to the Registered
      Capital in accordance with the Capital Contribution Schedule attached as
      Appendix 2 hereto.

5.4   Conditions Precedent to the Contribution of Registered Capital. The
      Parties' contribution to the Registered Capital of the Joint Venture
      pursuant to Article 5.2 hereof shall be conditioned on the satisfaction of
      all of the following:

      (1)   the Examination and Approval Authority has issued a Certificate of
            Approval, and any required changes to this Contract have been agreed
            to in writing by the Parties; and

      (2)   a Business License has been granted to the Joint Venture which
            authorizes the full scope of business of the Joint Venture described
            in Article 4.2 or any required changes thereto have been agreed to
            in writing by the Parties.

5.5   Capital Contribution Verification and Certificate. An accountant
      registered in the PRC shall be engaged by the Joint Venture to verify the
      respective capital contributions of each Party and provide a capital
      verification report(s) accordingly. The Joint Venture, upon the receipt of
      a satisfactory capital verification report, shall issue a capital
      contribution certificate to the relevant Party. This certificate shall
      include the following items: name of the Joint Venture; the Establishment
      Date; the names of the Parties and the amount of their respective capital
      contributions; the date on which the capital contributions were made; and
      the date of issuance of the capital contribution certificate. Each capital
      contribution certificate shall be signed by the Chairman and the
      Vice-Chairman of the Joint Venture. The capital contribution certificates
      shall only certify the investment of each Party and shall not be deemed as
      a note or other negotiable instrument.

5.6   Financing. Subject to the terms and conditions of this Contract, to the
      greatest extent permitted by relevant law, the Joint Venture may finance
      its operations and capital needs by way of loans, including but not
      limited to shareholder loans, loans from such banks, other financial
      institutions or qualified lenders inside or outside of China and upon such
      terms and subject to such conditions as may be approved by the Board.

5.7   Increase of Registered Capital. The Registered Capital of the Joint
      Venture may be increased by a unanimous resolution of the Board, which
      resolution shall stipulate the timing and other terms of such increase,
      with such increase subject to the approval of the Examination and Approval
      Authority and registration with the Registration Authority. If any Party
      chooses not to participate in any such additional investment in the Joint
      Venture, any other Party or Parties shall have the option to make the
      additional

                                       4
<PAGE>
      contribution to the Joint Venture's Registered Capital and the
      ownership percentages of the Parties' equity in the Joint Venture shall be
      adjusted accordingly.

5.8   Failure to Make Contributions to Registered Capital.

      (1)   If any Party or Parties ("BREACHING PARTY(IES)") fails to make any
            contribution to the Registered Capital within the period set forth
            in Article 5.3 (the amount due and owing is referred to as the
            "DEFAULT CAPITAL CONTRIBUTION"), the Breaching Party(ies) shall pay
            the other Parties or Party (the "NON-BREACHING PARTY(IES)") (in
            proportion to their Percentage Interests) a default penalty of 0.05%
            per day based on the Default Capital Contribution from the first day
            of the breach until the day on which the Default Capital
            Contribution is contributed in full by the Breaching Party(ies).

      (2)   Notwithstanding the foregoing, if the Breaching Party(ies) fails to
            make the Default Capital Contribution for more than 30 days, the
            Non-Breaching Party(ies) shall have the right to determine, in
            accordance with the applicable laws and regulations, to:

            (i)   make the additional contribution to satisfy the amount of the
                  Registered Capital of the Joint Venture, so as to increase the
                  Percentage Interest(s) of the Non-Breaching Party(ies) and
                  dilute the Percentage Interest(s) of the Breaching Party(ies)
                  accordingly; or

            (ii)  terminate this Contract in accordance with Article 16.2,
                  subject to the approval of the Examination and Approval
                  Authority.

      (3)   The provisions of this Article 5.8 shall not prejudice any other
            rights or remedies the Non-Breaching Party(ies) may have under this
            Contract or under applicable laws and regulations with respect to
            the failure of the Breaching Party(ies) to contribute capital.

5.9   Transfer of Equity Interests. If one Party wishes to transfer all or part
      of its Percentage Interest in the Joint Venture to any third party, it
      shall obtain the written consent of (including waiver of preemptive rights
      by) the other Parties, and the transfer shall be presented to the
      Examination and Approval Authority for approval.

5.10  Assets Transfer. On the date of this Contract, Party A and the Joint
      Venture shall enter into an asset purchase agreement (the "ASSET PURCHASE
      AGREEMENT") in substantially the form attached as Appendix 3 hereto for
      any existing assets of Party A in respect of the business specified in
      Article 4.2 hereof, as identified by the Joint Venture and Party A, to be
      transferred to the Joint Venture.

            CHAPTER 6 REPRESENTATIONS AND WARRANTIES

6.1   Representations and Warranties. Each Party hereby represents and warrants
      that, as of the date of this Contract and as of a date on which a Party
      makes a capital contribution to the Joint Venture in accordance with
      Article 5.2 herein, it:

                                       5
<PAGE>

      (1)   has the capacity and authority to enter into this Contract and to
            perform its obligations hereunder, and is duly organized and validly
            existing under the laws of the PRC in the case of Party A, and under
            the laws of Barbados in the case of Party B, and under the laws of
            British Virgin Islands in the case of Party C;

      (2)   is not a party to, bound by or subject to any contract, instrument,
            charter or by-law provision, statute, regulation, order, judgment,
            decree or law which would be violated, contravened or breached by,
            or under which any default would occur as a result of, the execution
            and delivery by such Party of this Contract or the performance by
            such Party of any of the terms of this Contract, or which restricts
            such Party from entering into this Contract or performing its
            obligations and abiding by the terms hereunder;

      (3)   has duly authorized, executed and delivered this Contract and that
            this Contract constitutes a legal, valid and binding obligation
            enforceable in accordance with its terms;

      (4)   will contribute or transfer assets in a manner which does not
            conflict with, violate or result in a breach of, any of the terms,
            conditions or provisions of any law, regulation, order, writ,
            injunction, decree, determination or award of any court,
            governmental department, board, agency or instrumentality or any
            arbitrator, or result in the creation or imposition of any lien,
            charge, security interest or encumbrance of any nature whatsoever
            upon such assets;

      (5)   freely enters into this Contract and has not and will not hereafter
            incur any obligations or commitments of any kind which would in any
            way hinder or interfere with its acceptance or performance of its
            obligations hereunder; and

      (6)   (i) has carefully read the entire Contract including the Appendices
            hereto; (ii) fully understands all of the terms, conditions,
            restrictions and provisions set forth in this Contract, (iii) agrees
            that the terms, conditions, restrictions and provisions herein are
            necessary for the reasonable and proper protection of the business
            of the Joint Venture and the other Parties, and (iv) acknowledges
            that each such term, condition, restriction and provision is fair
            and reasonable with respect to the subject matter thereof.

6.2   Representations and Warranties in Respect of Party A's Assets. In respect
      of Party A's existing assets relating to the business specified in Article
      4.2 hereof, Party A represents, warrants and undertakes to Party B and
      Party C, as of the date of this Contract and as of the Closing Date (as
      such term defined in the Asset Purchase Agreement), those representations,
      warranties and undertakings set forth in the Asset Purchase Agreement are
      true and accurate in material way.

6.3   Cure and Indemnification Obligations.

      (1)   In case of any breach of the Contract by any Party, it shall, in
            accordance with the direction of any non-breaching Party within
            thirty (30) days after receiving a notice of such non-breaching
            Party concerning any breach, take all necessary actions to cure such
            breach.

                                       6
<PAGE>

      (2)   Each Party agrees to indemnify and hold the other Parties and the
            Joint Venture harmless from and against any and all claims, losses,
            damages, and costs arising out of any of its breach of any of its
            covenants or representations and warranties contained herein,
            including reasonable attorneys' fees incurred in connection with the
            enforcement of this Contract or the undertaking of any necessary
            legal actions or responses involving any third parties.

            CHAPTER 7 RESPONSIBILITIES OF THE PARTIES

7.1   Party A's Responsibilities. In addition to its other obligations under
      this Contract, Party A shall be responsible for the following matters:

      (1)   Providing capital contributions in accordance with the terms and
            conditions of this Contract and the Capital Contribution Schedule
            attached as Appendix 2 hereto;

      (2)   Using its best endeavors (acting at all times in close consultation
            with Party B and Party C) to assist the Joint Venture to:

            (a)   obtain all necessary governmental approvals and completing all
                  required registrations for the establishment and operation of
                  the Joint Venture;

            (b)   liaise with PRC national, provincial, municipal or local
                  governmental authorities and other relevant institutions or
                  organizations;

            (c)   obtain the most preferential tax, customs, foreign exchange
                  and other favorable treatment that are or may become available
                  to the Joint Venture and/or the Parties under relevant
                  national and local laws and regulations of the PRC; and

            (d)   procure necessary equipment, materials, articles for office
                  use, means of transportation, telecommunications facilities
                  and other public utilities, in accordance with the Joint
                  Venture's request.

      (3)   Using its best endeavors (acting at all times in close consultation
            with Party B and Party C) to assist the Joint Venture to register
            with the relevant tax bureau, to open such foreign exchange and RMB
            bank accounts, assist the Joint Venture with all required foreign
            exchange approvals, and assist the Joint Venture in applying for all
            approvals required to remit to Party B and Party C in foreign
            exchange distributable profits and all other payments required to be
            paid to Party B and/or Party C;

      (4)   Providing necessary assistance to the Joint Venture in recruiting
            suitable management personnel, technical personnel and other
            necessary employees to be employed by the Joint Venture;

      (5)   Assisting the Joint Venture to contact banks and other financial
            institutions inside the PRC and hold discussions with them with
            respect to the raising of any loans required by the Joint Venture;

                                       7
<PAGE>

      (6)   Assisting foreign workers, staff, and personnel (including
            Directors, managers, technicians, and contractors appointed or
            selected by Party B and/or Party C) in obtaining PRC visas and work
            permits for travel to China directly related to the operation of the
            Joint Venture if requested by Party B and/or Party C;

      (7)   Causing Chengshan Group to enter into the lease agreements in
            substantially the form attached as Appendix 5 hereto in respect of
            the office space, single-worker dormitories and employee cafeteria
            with the Joint Venture, pursuant to which Chengshan Group, at the
            discretion and request of the Joint Venture, shall lease the office
            space, single-worker dormitory and employee cafeteria to the Joint
            Venture as necessary for normal and effective use and operation of
            the Joint Venture.

      (8)   Executing and performing, in accordance with the terms therein, the
            various Supplementary Contracts to which it is a party;

      (9)   Be responsible for any environmental pollution, fines, charges or
            losses caused by it prior to the Establishment Date, and indemnify
            the Joint Venture for any financial burden and/or losses arising out
            of any contamination caused by Party A prior to the Establishment
            Date; and

      (10)  Assisting with and carrying out other relevant matters as may be
            reasonably requested by the Board from time to time.

7.2   Responsibilities of Party B. In addition to its other obligations under
      this Contract, Party B shall be responsible for the following matters:

      (1)   Providing capital contributions in accordance with the terms and
            conditions of this Contract and the Capital Contribution Schedule
            attached as Appendix 2 hereto;

      (2)   Providing any necessary assistance to the Joint Venture's
            recruitment of suitable expatriate management personnel, technical
            personnel and other necessary expatriate employees to be employed by
            the Joint Venture on the basis of merit;

      (3)   Assisting the Joint Venture to contact banks and other financial
            institutions outside of the PRC and hold discussions with them with
            respect to the raising of any foreign exchange loans required by the
            Joint Venture;

      (4)   Assisting the Joint Venture in training key staff and employees;

      (5)   Seconding relevant management personnel, technical personnel and
            other necessary staff to work for the Joint Venture as per the Joint
            Venture's request;

      (6)   To the extent practicable, providing internationally advanced
            technology to the Joint Venture; and

      (7)   Assisting with and carrying out other relevant matters requested by
            the Joint Venture from time to time.

                                       8
<PAGE>

7.3   Responsibilities of Party C. In addition to its other obligations under
      this Contract, Party C shall be responsible for the following matters:

      (1)   Providing capital contributions in accordance with the terms and
            conditions of this Contract and the Capital Contribution Schedule
            attached as Appendix 2 hereto; and

      (2)   Assisting with and carrying out other relevant matters requested by
            the Joint Venture from time to time.

7.4   Execution of Supplementary Contracts. Before the Establishment Date, the
      Parties may jointly sign the Supplementary Contracts on behalf of the
      Joint Venture. After the Establishment Date, all Supplementary Contracts
      signed by the Parties shall be ratified by the Board in accordance with
      the procedures set forth herein and in the Joint Venture's Articles of
      Association and formally executed by the legal representative of the Joint
      Venture. Each Party shall be bound by the relevant Supplementary Contracts
      to which it is a contracting party on his own behalf, provided that,
      however, no Party shall incur any liability or assume any obligations
      solely as a result of its signing of any Supplementary Contracts on behalf
      of the Joint Venture before the Establishment Date.

7.5   Related Party Transactions. The Parties shall procure that all related
      party transactions with respect to the Joint Venture shall be transparent
      to the Parties and be conducted on an arm's length basis. Any significant
      purchases (including purchases of raw materials but excluding Products) by
      the Joint Venture from Party B or its Affiliates shall be sold by Party B
      or its Affiliates to the Joint Venture at cost, unless otherwise agreed by
      the Parties. The Vice General Manager or another member of the senior
      management team nominated by Party A, and either the General Manager or
      another member of the senior management team nominated by Party B shall
      approve all related party purchases.

                          CHAPTER 8 BOARD OF DIRECTORS

8.1   Formation of the Board.

      (1)   The Board shall be the highest authority of the Joint Venture. It
            shall discuss and determine all strategic business and financial
            issues and operational issues of the Joint Venture in accordance
            with the provisions of this Contract and the Articles of
            Association.

      (2)   The Board shall consist of seven (7) Directors, of which two (2)
            shall be appointed by Party A, four (4) shall be appointed by Party
            B, and one (1) shall be appointed by Party C. At the time this
            Contract is executed and when replacement Directors are appointed,
            the Parties shall notify one another in writing of the names and
            addresses of its appointees, together with a brief curriculum vitae
            and a list of other official functions, if any, that the relevant
            appointees will concurrently carry out for the Joint Venture. Each
            Party shall cause the Directors appointed by it to perform the
            obligations specified in this Contract and as required under
            relevant PRC laws and regulations.

      (3)   Directors shall each be appointed for terms of four (4) years, and
            may serve consecutive terms if reappointed by the Party originally
            appointing such Director.

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      (4)   Any Party may, at any time with or without cause, remove and replace
            a Director that it has appointed by written notice to the Joint
            Venture and to the other Party. If a seat on the Board is vacated
            due to the retirement, resignation, illness, disability or death of
            a Director or by the removal of such Director by the original
            appointing Party, the Party which originally appointed such Director
            shall appoint a successor to serve the remainder of such Director's
            term.

      (5)   If either Party or the Board has reason to believe that a Director
            has materially breached his/her duties as a Director (provided such
            breach appear to be supported by reasonable grounds as determined by
            a simple majority of the Directors), or has been convicted of
            committing an act or omission constituting fraud, theft,
            embezzlement or other violations of relevant PRC law, the Board may
            remove the relevant Director immediately. Following any such
            removal, the Party that originally appointed the relevant Director
            shall appoint a successor to serve the remainder of such Director's
            term.

8.2   Chairman and Vice Chairman of the Board.

      (1)   The Board shall have one (1) Chairman and one (1) Vice Chairman. A
            Director appointed by Party B shall serve as Chairman of the Board,
            and a Director appointed by Party A shall serve as Vice Chairman of
            the Board.

      (2)   The Chairman of the Board shall be the sole legal representative of
            the Joint Venture. The Chairman shall perform his or her duties and
            responsibilities within the scope of authority delegated by the
            Board, and in accordance with this Contract and relevant PRC laws.
            Without prejudice to Article 8.1(4) above, when the Chairman is
            temporarily unable to perform his or her responsibilities, he or she
            may designate in writing the Vice Chairman or any other Director to
            represent the Joint Venture in such capacity within such temporary
            period.

8.3   Powers of the Board.

      (1)   Each Director shall have one vote on any matter subjected to Board
            vote. Neither the Chairman nor the Vice-Chairman, in their capacity
            as such, shall be entitled to have any extra vote in any meeting of
            the Board. This provision is without prejudice to Article 8.4(6) on
            proxies.

      (2)   The quorum necessary for a meeting of the Board shall be two thirds
            (2/3) of the Directors. This requires at least five (5) directors to
            be in attendance for a quorum.

      (3)   The following matters require a decision by the Board supported by
            the affirmative vote of all Directors present and eligible to vote
            (or represented in accordance with Article 8.4(6) in a duly
            constituted meeting of the Board or as per Article 8.4(9):

            (a)   any amendment of the Articles of Association;

            (b)   termination of this Contract;

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<PAGE>

            (c)   dissolution of the Joint Venture;

            (d)   increase or decrease of the Registered Capital of the Joint
                  Venture;

            (e)   amalgamation or merger of the Joint Venture with any other
                  company, association, partnership or legal entity; and

            (f)   division or change in the form of legal organization of the
                  Joint Venture.

      (4)   The following matters require a decision by the Board supported by
            the affirmative vote of two thirds (2/3) of the Directors present
            and eligible to vote (or represented in accordance with Article
            8.4(6) in a duly constituted meeting of the Board or as per Article
            8.4(9):

            (a)   overall macro business strategy;

            (b)   derivation from profit distribution plan set forth in Article
                  12;

            (c)   the Joint Venture's external guarantee;

            (d)   major assets disposal (defined as assets with a net book value
                  greater than Five Million United States Dollars
                  (US$5,000,000));

            (e)   selection of the External Financial Auditor with the
                  restriction that the selected Auditor must be one of the Big
                  Four; and

            (f)   approval of financial control and financial reporting /
                  accounting policies (must be in compliance with Chinese law
                  and applicable U.S. law)

      (5)   The Parties agree that all matters except those listed in Article
            8.3(3) and Article 8.3(4) above can be decided by the Board
            supported by a simple majority of Directors present and eligible to
            vote (or represented in accordance with Article 8.4(6)) in a duly
            constituted meeting of the Board or as per Article 8.4(9).

      (6)   The Board shall by resolution supported by a simple majority of
            Directors formally authorize the General Manager and/or other
            Persons with necessary powers to implement decisions of the Board in
            accordance with this Contract, and, more generally, to conduct the
            day-to-day business of the Joint Venture in accordance with the then
            current business plan.

      (7)   The Board shall adopt rules and procedures regarding (a) provision
            of guarantee or security by the Joint Venture to any Person, (b)
            creation of any security interest on any property of the Joint
            Venture, (c) custody of the Joint Venture's chops, and (d) such
            other matters as the Board deems necessary.

8.4   Board Meetings.

      (1)   Board meetings shall be held at least twice (2) a year. Meetings
            shall be held at the registered address of the Joint Venture or such
            other address in China or abroad as may be agreed by the Board. The
            first Board meeting shall be held no later than sixty (60) days
            after the Establishment Date.

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<PAGE>

      (2)   The agenda for Board meetings shall be determined by the Chairman of
            the Board, but shall include in any event the items proposed by
            other members of the Board.

      (3)   Board Meetings shall require prior written notice to all Directors
            of not less than four (4) weeks (unless otherwise agreed unanimously
            by all the Directors) setting forth the date, time, place and
            agenda. Directors may waive their right to receive prior written
            notice of any meeting.

      (4)   Upon the written notice of the Chairman of the Board or upon written
            request of one third (1/3) or more of the Directors of the Joint
            Venture specifying the matters to be discussed, the Chairman of the
            Board shall within thirty (30) days convene an interim meeting of
            the Board, provided that a quorum will be present for such an
            interim meeting, whether in person or by proxy.

      (5)   The Chairman is responsible for convening and presiding over all
            Board meetings. If the Chairman is unable to convene and/or preside
            over a Board meeting, the Vice Chairman or a Director designated in
            writing by the Chairman shall convene and/or preside over such Board
            meeting.

      (6)   Board meetings may be attended by Directors in person, by telephone
            or video conference, provided, however, that if a Director is unable
            to participate in a Board meeting, he/she shall issue a written
            proxy authorizing another Director or individual to attend the
            meeting on his/her behalf. A Director or other individual so
            entrusted shall have the same rights and powers as the Director who
            issued the proxy.

      (7)   Board meetings shall be duly convened if a quorum is constituted in
            attendance, in person or by proxy. In the event that the Directors
            appointed by any Party fail to attend a Board meeting resulting in a
            lack of a quorum, and such failure to attend is due to a dispute
            between the Directors or Parties, such Party shall be deemed to be
            in breach of this Contract, and Article 17 will become applicable.
            If after two attempts to convene Board meetings that are not
            achieved due to the lack of a quorum, a Board meeting may be
            convened with a simple majority of Directors (provided such policy
            only applies to the face-to-face Board meetings).

      (8)   For the purpose of this clause, if a written resolution is executed
            in identical counterparts, such signed counterparts shall together
            be deemed to constitute a single resolution, effective on the day
            the last Director signs the relevant counterpart.

      (9)   Notwithstanding any other provisions herein, Board resolutions may
            be adopted by written consent by the Board in lieu of a meeting if
            the relevant resolutions are sent to all Directors and the
            resolutions are affirmatively signed and adopted by all Directors.
            Such written Board resolutions may consist of several counterparts
            in identical form each signed by one or more of the Directors. Such
            written Board resolutions shall be filed with the Board meeting
            minutes and shall have the same force and effect as a Board
            resolution adopted at a duly constituted and convened Board meeting.

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<PAGE>

      (10)  Board meetings shall be held in English and Chinese and all Board
            minutes and Board resolutions and agendas and other Board meeting
            documents shall be prepared and provided in both English and
            Chinese. The Chairman shall cause complete and accurate minutes (in
            English and Chinese versions) to be kept of all meetings (including
            meeting notices) and of matters addressed or raised at such
            meetings. Minutes of all Board meetings shall be circulated to all
            Directors promptly after each meeting. Any Director who wishes to
            propose any amendment or addition to the meeting minutes shall
            submit the same in writing to the Chairman not later than fifteen
            (15) days after receipt of the minutes, and the Chairman shall
            circulate such proposal to all the Directors. Any Director who
            wishes to object to the proposed amendment to the minutes shall
            submit the same in writing to the Chairman and all other Directors
            not later than fifteen (15) days after receipt of the proposed
            amendment, otherwise such proposed amendment shall be adopted and
            the minutes shall be amended accordingly. If the proposed amendment
            and relevant objection are not resolved within thirty (30) days of
            the Chairman's receipt of such objection, neither the proposal nor
            the objection shall be adopted but both would be noted as an
            attachment to the minutes. All Directors shall sign each page of the
            final minutes within sixty (60) days after receipt of same, and
            return such signed copy to the Joint Venture. The original minutes
            shall be kept on file with the Joint Venture and shall be available
            to any Director or their proxies for inspection or copying at any
            reasonable time.

      (11)  No remuneration shall be paid by the Joint Venture to any of its
            Directors in his/her capacity as such; provided, however, that in
            the event that a Director is concurrently an officer of the Joint
            Venture, such Director shall be entitled to remuneration for his/her
            service as an officer only. A Director may recover from the Joint
            Venture such expenses as are reasonably and properly incurred in
            connection with his/her attending the Board meetings or other
            activities of the Joint Venture where his/her presence is required.
            The Board shall establish a policy to implement this subsection.

                       CHAPTER 9 OPERATION AND MANAGEMENT

9.1   Operation Principle. The Joint Venture will through the technical exchange
      of the Parties constantly boost production technical level to reach an
      international modern level, including product design, manufacture process,
      testing method, material recipe, quality standard and personnel training.
      The Joint Venture will constantly exert efforts on technical reform based
      on the current production equipment, in order to enhance capability of
      product line and automatization, satisfy the technical requirement and the
      needs to promote the product grade.

9.2   Management Organization

      (1)   The Joint Venture shall establish an operation and management team
            to be responsible for the Joint Venture's daily operation and
            management. Such team shall include the General Manager and such
            other personnel as determined by the Board of Directors (the
            "MANAGEMENT PERSONNEL").

      (2)   The General Manager shall be appointed by the Board upon the
            nomination of Party B and the Joint Venture Controller ("JV
            CONTROLLER") shall be appointed by

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<PAGE>

            the Board upon the nomination of Party A. Each of the Management
            Personnel shall be appointed or removed by the General Manager,
            except that the Vice General Manager and JV Controller shall be
            appointed or removed by the Board. Any of the Management Personnel
            shall handle matters delegated to him or her by the General Manager
            and shall be responsible to the General Manager for the efficient
            implementation of such responsibilities.

      (3)   In the event that the General Manager, Vice General Manager or JV
            Controller is found incompetent, commits graft or serious
            dereliction of duty, he/she shall be dismissed by the Board.

9.3   Responsibilities of Management Personnel

      (1)   The responsibility of the General Manager shall be to carry out the
            various resolutions of the Board and to organize and direct the
            daily operation and management of the Joint Venture. The General
            Manager may consult with the Vice General Manager in dealing with
            material matters, but the General Manager shall have the authority
            to make final decisions.

      (2)   Subject to the terms and conditions imposed by the Board, the JV
            Controller shall be in charge of the day-to-day financial operations
            of the Joint Venture under the supervision of the General Manager,
            shall assist the General Manager in preparation of the documents set
            out in Article 9.3(5)(a)(1) below, and shall carry out the decisions
            of the Board and General Manager.

      (3)   If the General Manager or any other Management Personnel intends to
            resign from his or her position, such person shall be required to
            submit the resignation notice to the Board at least thirty (30) days
            prior to the intended departure date.

      (4)   The General Manager shall, within the scope of the authority
            conferred upon him/her by the Board, represent the Joint Venture in
            dealings with other parties, and appoint and dismiss subordinates.

      (5)   The General Manager shall be responsible for preparation of
            following documents (all in both Chinese and English languages):

            (a)   he/she shall prepare for submission to the Board for review
                  and approval, and upon such approval shall implement, the
                  following:

                  (i)   an annual operating plan, operating budget, marketing
                        and sales budget, financial budget, business and sales
                        performance targets for the Joint Venture;

                  (ii)  the organizational and managerial rules of the Joint
                        Venture;

                  (iii) any other documents or plans for the Joint Venture that
                        are deemed necessary by the Board.

            (b)   he/she shall submit any major revisions to such budgets, plans
                  or manuals for the Joint Venture to the Board for review and
                  approval prior to their implementation.

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<PAGE>

      (6)   The General Manager shall submit a quarterly production and sales
            report and quarterly financial statements for the Joint Venture to
            the Board. Such reports and statements shall be submitted in both
            Chinese and English languages within thirty (30) days following the
            close of the quarter to which such a report relates.

      (7)   When the General Manager is unable to carry out his duties, the Vice
            General Manager may serve as the acting General Manager until a new
            General Manager or acting General Manager is appointed by the Board
            upon the nomination of Party B in the next Board meeting convened in
            accordance with Article 8.4 herein.

      (8)   The General Manager and all other Management Personnel and working
            personnel of the Joint Venture shall be required not to disclose any
            commercial secrets or trade secrets of the Joint Venture.

9.4   Qualifications of Management Personnel

      (1)   The General Manager and the other Management Personnel shall be
            skilled and qualified as for the management of the Joint Venture,
            and meet other qualifications and the performance criteria
            established by the Board.

      (2)   Compensation and other terms and conditions of employment for the
            General Manager and other Management Personnel shall be determined
            by the Board and provided in the employment contracts signed between
            the relevant individual and the Joint Venture. The Joint Venture
            shall bear the salary as well as proper compensation package of
            expatriate employees (if any).

                           CHAPTER 10     LABOR MANAGEMENT

10.1  Governing Principle. Matters relating to the recruitment, employment,
      management, dismissal, resignation, wages, welfare benefits, subsidies,
      labor insurance, social security and other matters concerning the staff of
      the Joint Venture shall be determined by the Board in accordance with the
      labor and social security laws and regulations of the PRC. The General
      Manager shall implement plans approved by the Board.

10.2  Working Personnel. Employees of the Joint Venture shall be employed in
      accordance with the provisions of this Contract, the Articles of
      Association, and the terms and conditions of the individual employment
      contracts concluded with each respective employee.

10.3  Compensation. In accordance with PRC laws and regulations concerning labor
      compensation, the General Manager shall implement a compensation system
      whereby employees are compensated in accordance with their technical
      ability, education, performance and position.

10.4  Confidentiality and Non-compete. The Joint Venture shall enter into
      Non-Disclosure and Non-Compete Contracts with each of its key employees,
      and the terms of such contract shall be determined by the Board. The Board
      may require the Joint Venture to enter into similar contracts with other
      employees.

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<PAGE>

10.5  Labor Union. Employees of the Joint Venture may establish a labor union in
      accordance with the Labor Union Law of the PRC (the "LABOR UNION LAW") and
      other laws and regulations relating to labor union activities of foreign
      invested enterprises. The Joint Venture shall allocate an ascertained
      amount of funds to the labor union in accordance with the published and
      effective laws and regulations in relation to labor union, which amount
      shall be determined by the Board in accordance with the applicable laws
      and regulations in China.

10.6  Agreement on Labor/Personnel Issues. The Parties shall, at the same time
      of the execution of this Contract, enter into an agreement on
      labor/personnel issues as attached as Appendix 4 hereto to provide for the
      details of the labor personnel issues.

                   CHAPTER 11    FINANCIAL AFFAIRS AND ACCOUNTING

11.1  Business Plan and Financial Budget

      The Parties have agreed on the procedure to make the annual business plan
      and annual financial budget as follows: the Parties shall work together in
      the manner of from bottom to the top and for the best interest of the
      Joint Venture to establish the annual business plan and annual financial
      budget to be submitted to the Board.

11.2  Accounting System.

      (1)   The Joint Venture shall maintain its books and record in accordance
            with accounting systems and procedures established in accordance
            with relevant PRC laws and regulations. Accounting systems and
            records in accordance with any international accounting rules
            preferred by Party B shall also be maintained to the full extent
            permitted by PRC law. The accounting systems and procedures to be
            adopted by the Joint Venture shall be submitted to the Board for
            approval. Once approved by the Board, the accounting systems and
            procedures shall be filed with the relevant government finance
            department and tax department for records. The debit and credit
            method, as well as the accrual basis of accounting, shall be adopted
            as the methods and principles for keeping accounts.

      (2)   Unless this Article 11.2 provides otherwise, all accounting books
            and financial statements of the Joint Venture, and all routine
            accounting records, vouchers, etc., shall be made in both English
            and Chinese if necessary.

      (3)   The Joint Venture shall adopt RMB as its standard bookkeeping base
            currency and shall also use US Dollar as supplementary bookkeeping
            currency. For purposes of preparing the Joint Venture's accounts and
            statements of the Parties' capital contributions, and for any other
            purposes where it may be necessary to effect a currency conversion,
            such conversion shall be made in accordance with the applicable
            accounting rules and relevant PRC laws and regulations.

      (4)   Monthly and annual financial statements for the Joint Venture shall
            be prepared in both the Chinese and English languages, and in RMB
            and in US Dollars. Such statements shall include at least the
            following: balance sheet, profit and loss statements, and cash flow
            statement, and shall be kept and provided to each

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<PAGE>

            Party and to the relevant authorities as required by relevant PRC
            accounting regulations, and to Party B within ten (10) days
            following the close of the quarter to which each of them relates to
            meet the relevant U.S. reporting requirement.

11.3  Auditing.

      (1)   At the expense of the Joint Venture, the Joint Venture's Auditor
            shall be appointed by the Board to conduct an audit of the annual
            financial statements and accounts of the Joint Venture. The Parties
            agree that the Joint Venture shall, within three (3) months after
            the end of a fiscal year, submit to the Parties an annual statement
            of final accounts (including the audited profit and loss statement,
            balance sheet, cash flow statement, and statement for retained
            earnings for the fiscal year), together with the audit reports of
            the Joint Venture's Auditor.

      (2)   Each Party shall have the right at any time to audit the entire
            accounts of the Joint Venture within thirty-six (36) months from the
            end of the period to be audited. At the end of such audit, the Party
            requesting such an audit may submit queries concerning the audit to
            the Board. The Board shall reply in written form within sixty (60)
            days after receipt of the queries concerning the audit. Reasonable
            access to the Joint Venture's financial records shall be given to
            such auditor and such auditor shall keep confidential all documents
            under his/her audit.

      (3)   When a Party conducts an audit pursuant to Article 11.3(2), it shall
            bear the expenses incurred and the responsibility for the appointed
            auditor in maintaining confidentiality of all the documents so
            audited.

11.4  Bank Account & Foreign Exchange Control. The Joint Venture shall open
      foreign exchange accounts and RMB accounts and handle foreign exchange
      transactions in accordance with relevant PRC laws and regulations. The
      Board shall determine the signatories required for any disbursements of
      funds from such accounts and shall establish internal control policies
      relating to these accounts.

11.5  Fiscal Year. The Joint Venture shall adopt the calendar year as its fiscal
      year, which shall begin on January 1 and end on December 31 of the same
      year. The first fiscal year of the Joint Venture shall commence on the
      Establishment Date and shall end on December 31 thereafter.

                         CHAPTER 12 PROFIT DISTRIBUTION

12.1  Allocation to Funds. After payment of income taxes by the Joint Venture,
      the Board shall determine the annual allocations from the after-tax net
      profits to set aside reserve funds, expansion funds and bonus and welfare
      funds for staff and workers in accordance with applicable PRC laws and
      regulations.

12.2  Dividend Policy. After payment of all payable income tax, and the
      allocation of funds pursuant to Article 12.1 hereof, the Board shall
      determine the annual dividend distribution of the Joint Venture each year.
      The amount of dividend to be distributed in respect of any year shall be
      25% (or such higher percentage as determined by the Board)

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<PAGE>

      of the Joint Venture's net income after tax as reported in the audited
      annual financial statements of the Joint Venture for the year as provided
      for in Article 11.5 above, but not to exceed the projected Free Cashflow
      of the Joint Venture for the immediate following year. The projected Free
      Cashflow for the immediate following year shall be the amount of surplus
      cash projected to be generated by the Joint Venture in its ordinary course
      of business less any projected capital expenditures for that immediate
      following year based on the Joint Venture's operating budget as approved
      by the Board for that immediate following year.

      For fiscal years 2009, 2010 and 2011, a dividend in the amount of the
      greater of (i) the amount calculated above; or (ii) 10% of the Joint
      Venture's net income after tax as reported in the audited annual financial
      statement will be distributed. In 2011, the Parties shall review and agree
      the methodology of the amount of dividend distribution for subsequent
      fiscal years.

      For the avoidance of doubt, the Joint Venture shall not, in any
      circumstances, obtain any additional borrowings from any bank or other
      third party for the purpose of financing such dividend payment other than
      the 10% dividend payable in fiscal years 2009, 2010 and 2011.

      All dividends payable to Party B and Party C shall be paid in US$. The
      Joint Venture shall bear any loss, gain or bank charges or other fees
      associated with the dividends payment.

                        CHAPTER 13 TAXATION AND INSURANCE

13.1  Income Tax, Customs Duties and Other Taxes. The Joint Venture and its
      employees shall pay taxes pursuant to relevant PRC laws and regulations.
      The Joint Venture shall use its best endeavors to apply for and obtain
      preferential treatment, including tax and customs benefits, permitted by
      the law.

13.2  Insurance. The Joint Venture shall maintain, in accordance with relevant
      PRC law, insurance as determined by the Board from time to time to cover
      the Joint Venture's assets, operations and other business activities.

13.3  Product Liability Insurance. The Joint Venture shall secure and will
      maintain combined limits of twenty-five million U.S. dollars
      (US$25,000,000.00) product liability insurance for each occurrence and
      aggregate. Such insurance coverage shall name Cooper and its Affiliates
      which might be held liable for the Products of the Joint Venture as
      additional insureds and such insurance shall not be subject to
      cancellation without thirty (30) calendar days prior written notice to
      Cooper. A certificate of such insurance will be provided to Cooper.

              CHAPTER 14 PURCHASE OF MATERIALS AND SALE OF PRODUCTS

14.1  Purchase of Materials

      (1)   In meeting its requirements for materials, equipment, components,
            transportation vehicles and articles for office use, the Joint
            Venture will at its discretion

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<PAGE>

            purchase such items inside or outside the PRC to the maximum extent
            consistent with the efficient operation and quality standards of the
            Joint Venture.

      (2)   All the reasonable costs and expenses incurred by any Party in
            connection with the sourcing and purchase for the Joint Venture as
            stipulated in Article 14.1(1) shall be reimbursed by the Joint
            Venture.

14.2  Sale of Products

      (1)   The Joint Venture shall formulate and, with the approval of the
            Board, adopt both domestic and international sales plans for the
            Products. The Joint Venture shall market, distribute and sell its
            Products according to a pricing policy approved by the Board. The
            Joint Venture may appoint distributors and sale agents in different
            regions inside or outside the PRC, subject to the general terms and
            conditions of such appointment.

      (2)   In order for the convenience of distributing, marketing and selling
            the Products, the Joint Venture may establish branch offices inside
            or outside the PRC subject to authorization by the Board and the
            approval by the relevant authorities.

14.3  Sale of Cooper Branded Products

      The Parties hereby acknowledge that the Products to be produced by the
      Joint Venture and branded with the trademarks belonging to Cooper (the
      "COOPER BRANDED PRODUCTS") will be merely sold to and distributed by
      Cooper or its Affiliates.

                   CHAPTER 15 CONFIDENTIALITY AND NON-COMPETE

15.1  Confidentiality.

      (1)   Except as otherwise specifically provided in this Article 15.1,
            neither any Party nor the Joint Venture shall divulge, disclose or
            communicate, or permit to be divulged, disclosed or communicated, to
            any unaffiliated third party in any manner, directly or indirectly,
            any Confidential Information, and each Party and the Joint Venture
            shall ensure that their respective Affiliates, officers, directors,
            employees (including, without limitation, individuals seconded
            thereto), agents and contractors (collectively "REPRESENTATIVES") do
            not divulge, disclose or communicate, or permit to be divulged,
            disclosed or communicated, to any unaffiliated third party in any
            manner, directly or indirectly, any Confidential Information.
            Confidential Information shall remain the exclusive and sole
            property of the relevant disclosing party (the "PROTECTED PARTY")
            and shall be promptly returned upon the request of the Protected
            Party.

      (2)   The Parties and the Joint Venture shall only disclose or permit to
            be disclosed Confidential Information to those of their respective
            Representatives who have a need to know such Confidential
            Information (and then shall only disclose such portion of the
            Confidential Information as is necessary) in order to consummate the
            transactions contemplated herein and to establish or conduct the
            Joint Venture's business and operations in the ordinary course. Each
            Party and the Joint Venture shall advise its Representatives of the
            confidentiality provisions

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<PAGE>

            hereunder, shall require relevant Representatives to sign agreements
            substantially similar to the Non-Disclosure and Non-Compete
            Contract, and shall be responsible to the Protected Party for any
            noncompliance by any such Representative.

      (3)   In the event that any Party, the Joint Venture, or any of their
            respective Representatives is required by applicable law or is
            validly ordered by a governmental entity having proper jurisdiction
            to disclose any Confidential Information, the affected party shall,
            as soon as possible in the circumstances, provide the Protected
            Party with prompt prior written notice of the disclosure request or
            requirement, and, if requested by the Protected Party, shall furnish
            to the Protected Party an opinion of legal counsel that the release
            of all such Confidential Information is required by applicable law.
            The proposed disclosing party shall seek, with the reasonable
            cooperation of the Protected Party if necessary, a protective order
            or other appropriate remedy and shall exercise best efforts to
            obtain assurances that confidential treatment will be accorded to
            any Confidential Information disclosed.

      (4)   The Parties and the Joint Venture shall take all other necessary,
            appropriate or desirable actions to preserve the confidentiality of
            the Confidential Information.

      (5)   This Article 15.1 and the obligations and benefits hereunder shall
            survive for a period of ten (10) years after the termination or
            expiration of this Contract or the termination, dissolution or
            liquidation of the Joint Venture or any of the Parties, provided
            that, however, any information concerning, directly or indirectly,
            the proprietary trade secrets of the Joint Venture or a Party shall
            be preserved in confidentiality and be entitled to the obligations
            and benefits hereunder in perpetuity.

15.2  Non-Compete.

      (1)   Party A hereby specifically undertakes that it shall, and shall
            cause its Affiliates or related companies, to refrain from directly
            or indirectly engaging in, whether by itself or through any
            individual or entity, any activities that competes with any business
            or activities of the Joint Venture anywhere in the PRC, except as
            otherwise provided in this Contract, during the period when it holds
            any Interest in this Joint Venture and for a period of five (5)
            years after it has ceased to hold any Interest in the Joint Venture,
            provided, however, that Party A shall has the right to sell its
            inventories under Customs control outside of China within nine (9)
            months from the date of this Contract.

      (2)   Without prejudice to the terms and conditions under this Contract,
            in the event that Party B or any of its Affiliates contemplates an
            investment in Shandong Province in a full-steel radial passenger and
            light truck tires manufacturing entity other than the Joint Venture
            during the period of Party A or its permitted successor holding any
            Interest of the Joint Venture, Party B or its said Affiliate will
            consider and support in good faith and with every best effort the
            opportunity for Party A or its permitted successor to participate in
            such investment, subject to the following conditions that:

                                       20
<PAGE>

            (a)   Party B or its said Affiliate shall own majority percentage of
                  such investment;

            (b)   Party A or its permitted successor shall use its own fund for
                  such investment;

            (c)   the extent of Party A or its permitted successor's
                  participation in such investment shall be agreed upon by Party
                  B or its said Affiliate, Party A or its permitted successor
                  and the said tire manufacturing entity where such investment
                  will be made; and

            (d)   the said investment of Party A or its permitted successor
                  shall originate from within the territory of China.

                CHAPTER 16 DURATION, TERMINATION AND LIQUIDATION

16.1  Joint Venture Term and Extension. The term of the Joint Venture shall be
      fifty (50) years ("JOINT VENTURE TERM"), which shall commence on the
      Establishment Date. One (1) year prior to the expiration of the Joint
      Venture Term, the Parties may discuss the extension of such term. If the
      Parties agree and the Board approves, an application for such extension
      shall be submitted to the Examination and Approval Authority for approval
      no less than six (6) months prior to the expiration of the Joint Venture
      Term.

16.2  Termination.

      (1)   Unless extended in accordance with Article 16.1, this Contract shall
            terminate automatically upon the expiration of the Joint Venture
            Term.

      (2)   This Contract may be terminated at any time upon the written
            agreement of all of the Parties, in which case the Parties shall
            instruct the Directors to vote to liquidate the Joint Venture as per
            this Contract and the relevant laws and regulation of the PRC.

      (3)   A Party (the "NOTIFYING PARTY") shall have the right to terminate
            this Contract by providing written notice ("TERMINATION NOTICE") to
            the other Parties if any of the following events occur:

            (a)   one or more of the conditions specified in Article 5.4 are not
                  met within three (3) months of the date of execution by the
                  Parties of this Contract, and no resolution is agreed upon
                  following consultations between the Parties to extend the
                  Capital Contribution Schedule, or the extended Capital
                  Contribution Schedule would go beyond the required time period
                  under the relevant PRC laws and regulations;

            (b)   a Party (not being the Notifying Party) materially breaches
                  the obligations contained in this Contract or any
                  Supplementary Contract to which the Party is a party or any of
                  its representations or warranties under said contract is or
                  becomes untrue in any material respect (the "EVENT OF
                  DEFAULT"), and has failed to remedy such Event of Default
                  within sixty (60) days of a written notice from the Notifying
                  Party;

                                       21
<PAGE>

            (c)   a Party (not being the Notifying Party) is or becomes a party
                  to, bound by or held liable by any orders, decisions,
                  judgments, awards, decrees or rulings of any courts, arbitral
                  tribunals, governmental or regulatory agencies, as a result of
                  such Party's breach in any way of any applicable legislation,
                  laws, regulations, statutes, rules, guidelines, notices, or
                  circulars of any statutory or regulatory bodies, and said
                  breach would affect or change the intent or mind of any other
                  Party to enter into this Contract or maintain the partnership
                  with such Party, or would in any way hinder or interfere with
                  the execution or delivery by any Party of this Contract or its
                  performance of any of the terms and obligations hereof;

            (d)   any Party (not being the Notifying Party) becomes bankrupt, or
                  is the subject of proceedings for liquidation or dissolution,
                  or ceases to carry on business (except Party A) or becomes
                  unable to pay its debts as they come due so as to become
                  insolvent, in which case the relevant Party shall immediately
                  notify the other Parties in respect of such situation;

            (e)   the Joint Venture becomes bankrupt, or is the subject of
                  proceedings for liquidation or dissolution, or ceases to carry
                  on business or becomes unable to pay its debts as they come
                  due;

            (f)   the conditions or consequences of any event of Force Majeure
                  continue for a period of three (3) months without any
                  equitable solution agreed to by the Parties;

            (g)   a majority of the members of the Board are unable to reach an
                  agreement on an annual operating plan, operating budget,
                  marketing and sales budget, financial budget, business and
                  sales performance targets for the Joint Venture or the issues
                  not specified in the business scope of the Joint Venture as
                  defined in Article 4.2 above and such deadlock cannot be
                  resolved after a period of one hundred and twenty (120) days;

            (h)   the Joint Venture's Business License is revoked, suspended, or
                  amended (in a manner not agreed to in writing by the Parties)
                  or in any other situation such that the Joint Venture is
                  precluded or prevented from carrying out its business; or

            (i)   the Joint Venture fails to obtain external finance such that
                  the Joint Venture is substantially prevented from implementing
                  its business plan, except if the Board decides to continue.

16.3  Subsequent Obligations

      (1)   Where a Termination Notice has been served in the circumstances set
            out in Article 16.2(3)(b) or Article 16.2(3)(c), the non-breaching
            Party(ies) shall have the option, but not the obligation, to buy out
            the breaching Party's Percentage Interest in the Joint Venture in
            accordance with the following procedures:

            (a)   within 30 days of the issuance of the Termination Notice, the
                  Board of Directors shall, by a majority vote appoint an
                  internationally recognized

                                       22
<PAGE>

                  accounting firm or other appraiser (an "APPRAISER") to
                  determine the Book Value of the Joint Venture, which value
                  should not take into consideration the values of the
                  trademarks and technologies licensed by Cooper to the Joint
                  Venture. Such Appraiser shall complete its assessment of the
                  Book Value of the Joint Venture and notify the Parties thereof
                  in writing within 60 days of their appointment.

            (b)   upon completion of the determination of the Book Value of the
                  Joint Venture, the non-breaching Party(ies) shall have the
                  option to purchase the breaching Party's share of the
                  Registered Capital of the Joint Venture at a price equal to:

                  Book Value x the breaching Party's share of the Registered
                  Capital at the time of valuation x 80%

                  If more than one non-breaching Party exercises its option,
                  each shall have the right to purchase a fraction of the
                  Interest of the breaching Party equal to its Percentage
                  Interest divided by the sum of the Percentage Interests of
                  both non-breaching Parties.

            (c)   The purchasing Party(ies) shall have the right to designate a
                  third party enterprise to purchase all or part of the
                  breaching Party's Percentage Interest for the price (or
                  portion thereof) set forth in Article 16.3(1)(b) hereof.

            (d)   The Parties agree to take all such steps as may be required to
                  effect the sale of the selling Party's Interest in the Joint
                  Venture, including obtaining all necessary government
                  approvals for the transfer of the Interest to the purchasing
                  Party (or its designee) and causing their respective Board
                  appointees to approve such transfer, and executing all
                  documents necessary or advisable to effect such transfer. If
                  such government approvals are not obtained within ninety (90)
                  days after the signing of the interest transfer agreement
                  between the selling Party and the purchasing Party(ies) (or
                  its designee), the exercise of the option shall be null and
                  void and the Joint Venture shall be liquidated, if so proposed
                  by a non-breaching Party, in accordance with the provisions of
                  Article 16.4 hereof. Such liquidation shall not prejudice the
                  rights that the non-breaching Party(ies) may otherwise have
                  against the breaching Party.

      (2)   Where a Termination Notice has been served in any circumstances
            except as set out in Article 16.2(3)(b) and Article 16.2(3)(c), the
            following shall apply:

            (a)   Party B shall have the right, at its sole discretion, to
                  purchase the Percentage Interest(s) of Party A and/or Party C
                  at a price equal to the Book Value as determined by the
                  Auditor of such Percentage Interest(s) at the time x 80%,
                  which value should not take into consideration the values of
                  the trademarks and technologies licensed by Cooper to the
                  Joint Venture. To exercise its right, Party B must provide a
                  written notice of its intention thereof ("NOTICE") within
                  fifteen (15) days after the Termination Notice was issued. The
                  Parties shall then complete the sale of Percentage Interest(s)
                  of Party A and/or Party C to Party B within the

                                       23
<PAGE>

                  longer of the period of ninety (90) days after receipt of the
                  Notice or fifteen (15) days after such sale of Percentage
                  Interest(s) is duly approved by the Examination and Approval
                  Authority and registered with the Registration Authority. If
                  Party B fails to exercise its right to purchase the Percentage
                  Interest of either Party A or Party C, Party A and/or Party C
                  shall have the right to purchase Party B's Percentage Interest
                  at a price equal to the Book Value of such Percentage Interest
                  at the time x 80%. To exercise its right, Party A and/or Party
                  C shall provide a Notice to Party B within the 15-day period
                  starting from the sixteenth (16th) day after the Termination
                  Notice is issued or a later date on which Party A and/or Party
                  C learns that Party B will not exercise its right stated
                  above. The Parties shall then complete the sale of Party B's
                  Percentage Interest to Party A and/or Party C within the
                  longer of the period of ninety (90) days after receipt of the
                  Notice or fifteen (15) days after such sale of Percentage
                  Interest is duly approved by the Examination and Approval
                  Authority and registered with the Registration Authority. If
                  Party A and Party C both exercise their purchase options, each
                  shall have the right to purchase a fraction of the Interest of
                  Party B equal to its Percentage Interest divided by the sum of
                  the Percentage Interests of Party A and Party C.

                  (b) If no Party wishes to exercise its right to purchase the
                  Percentage Interest(s) of other Party(ies), the Parties shall
                  use all reasonable efforts to sell the Joint Venture as a
                  going concern to one or more third parties, either as a single
                  transaction or through more than one transaction. In this
                  Article 16.3(2), third parties include Affiliates. The Parties
                  shall cooperate and cause the Directors appointed by them to
                  cooperate in any required re-structuring of the Joint Venture
                  prior to such sale if necessary or desirable to facilitate the
                  same or optimize the salability of the Joint Venture and the
                  business conducted by it and the sales proceeds for the
                  Parties. The price and terms of such sale shall be agreed
                  between the third party(ies) concerned and the Parties.

      (3)   In the event that Party B together with any of its Affiliates cease
            to have any interest in the Registered Capital of the Joint Venture,
            each Party shall take all steps necessary to ensure that the name of
            the Joint Venture is immediately changed so that it no longer
            contains any reference to "Cooper" in English or the local Chinese
            language equivalent of such name.

      (4)   Termination of this Contract shall not affect the rights and
            obligations of the Parties and the Joint Venture incurred prior to
            the termination or caused by such termination. If termination of
            this Contract is caused by a Party's breach of any of its
            obligations under this Contract, then such Party shall compensate
            the other Party(ies) and the Joint Venture for all of their losses
            resulting from such breach.

16.4  Liquidation.

      (1)   Liquidation of the Joint Venture shall begin from the earliest of
            the date of liquidation approval by the relevant Examination and
            Approval Authority, the date on which this Contract is terminated
            under Article 16.2 (provided a buy-sell is not effected) or by a
            court or arbitration order, the date on which the Asset

                                       24
<PAGE>

            Purchase Agreement is terminated under Article 5.3.1, Article 7.5.3,
            Article 10.2.1 or Article 12.4 thereof, or the date which is 30-day
            prior to expiration of the Joint Venture Term.

      (2)   The Board shall within fifteen (15) days from the beginning of the
            liquidation as provided in Article 16.4 hereof, appoint a
            liquidation committee that shall be entitled to represent the Joint
            Venture in all legal matters during the period of liquidation. The
            liquidation committee shall value and liquidate the Joint Venture's
            assets in accordance with applicable PRC laws and regulations and
            the principles set out herein.

      (3)   The liquidation committee shall be made up of three (3) members
            appointed by the Board, two (2) of whom shall be recommended by
            Party B and one (1) of whom shall be recommended by Party A and
            Party C. Members of the liquidation committee in principle shall be
            selected from the Directors of the Joint Venture. Any Party may
            recommend the appointment of professional advisors to be members of
            or to assist the liquidation committee.

      (4)   The liquidation committee shall conduct a thorough examination of
            the Joint Venture's assets and liabilities, on the basis of which it
            shall, in accordance with the relevant provisions of this Contract,
            develop a liquidation plan which, if approved by the Board, shall be
            executed under the liquidation committee's supervision. Settlement
            of any claim, debt or assets under liquidation shall be approved
            unanimously by members of the liquidation committee; failing such
            unanimous approval, simple majority approval by the Board shall be
            required.

      (5)   In developing and executing the liquidation plan, the liquidation
            committee shall use every effort to obtain the highest possible
            price for the Joint Venture's assets.

      (6)   The liquidation expenses, including remuneration to members of and
            advisors to the liquidation committee, shall be paid in accordance
            with the PRC law out of the Joint Venture's assets in priority to
            the claims of other creditors.

      (7)   After the liquidation committee has settled all legitimate debts of
            the Joint Venture, including, if applicable, the expenses of the
            liquidation committee in accordance with Article 16.4 (6), any
            remaining assets shall be distributed to the Parties in proportion
            to their Percentage Interests. With respect to fixed assets
            distributed to the Parties, in the event that a Party intends to
            sell such fixed assets to a third party, the other Parties shall
            have the preemptive right during the liquidation period to purchase
            such fixed assets on the same terms and conditions and at the same
            price as offered to any third party.

      (8)   On completion of liquidation, the liquidation committee shall
            prepare a liquidation report and liquidation accounting statement.
            The liquidation committee shall, with its unanimous approval
            (failing such approval, simply majority approval by the Board),
            appoint a certified public accounting firm to examine the report and
            statement and issue a verification report.

      (9)   After completion of the liquidation of the Joint Venture, unless the
            tax authority requires otherwise, the original accounting books and
            other documents of the Joint Venture shall be left in the care of
            Party A to make and retain copies of all

                                       25
<PAGE>

            or any of such books and documents, after which the copies of such
            books and documents shall be left in the care of Party B and Party
            C.

                          CHAPTER 17     BREACH OF CONTRACT

In the event that a breach of contract committed by any Party to this Contract
results in the non-performance of or inability to fully perform this Contract,
the liabilities arising from the breach of Contract shall be borne by the Party
in breach. In the event that the Parties commit a breach of Contract, each Party
shall bear its individual share of the liabilities arising from the breach of
Contract. Any breach of this Contract by any Party's Affiliate shall be deemed a
breach by such Party. Any breach of contract committed by any Party resulting in
the nonperformance of or inability to fully perform any Supplementary
Contract(s) shall be deemed a breach by such Party of this Contract.

                            CHAPTER 18   FORCE MAJEURE

18.1  Scope of Force Majeure. A "FORCE MAJEURE EVENT" shall mean any event,
      circumstance or condition that (i) directly or indirectly prevents the
      fulfillment of any material obligation set forth in this Contract, (ii) is
      beyond the reasonable control of the respective Party, and (iii) could
      not, by the exercise of reasonable care, have been avoided or overcome in
      whole or in part by such Party. Subject to the aforementioned items (i),
      (ii) and (iii), Force Majeure Event includes, but is not limited to,
      natural disasters such as acts of God, earthquake, windstorm and flood,
      terrifying events such as war, terrorism, civil commotion, riot, blockade
      or embargo, fire, explosion, off-stream or strike or other labor disputes,
      epidemic and pestilence, material accident or by reason of any law, order,
      proclamation, regulation, ordinance, demand, expropriation, requisition or
      requirement or any other act of any governmental authority, including
      military action, court orders, judgments or decrees.

18.2  Notice. Should any Party be prevented from performing the terms and
      conditions of this Contract due to the occurrence of a Force Majeure
      Event, the prevented Party shall send notice to the other Parties within
      fourteen (14) days from the occurrence of the Force Majeure Event stating
      in the details of such Force Majeure Event.

18.3  Performance. Any delay or failure in performance of this Contract caused
      by a Force Majeure Event shall not constitute a default by the prevented
      Party or give rise to any claim for damages, losses or penalties. Under
      such circumstances, the Parties are still under an obligation to take
      reasonable measures to perform this Contract, so far as is practical. The
      prevented Party shall send notice to the other Parties as soon as possible
      of the elimination of the Force Majeure Event, and confirm receipt of such
      notice.

18.4  Consultations and Termination. Should the Force Majeure Event continue to
      delay implementation of this Contract for a period of more than three (3)
      months, the Parties shall, through consultations, decide whether to
      terminate or modify this Contract. Should the Force Majeure Event continue
      for a period of six (6) months or longer, any Party may terminate this
      Contract by giving notice to the other Parties in accordance with Article
      16.2.

                                       26
<PAGE>

                          CHAPTER 19     DISPUTE RESOLUTION

19.1  Consultations and Arbitration. Any and all disputes, controversies or
      claims (the "DISPUTE") arising out of or relating to the formation,
      validity, interpretation, implementation or termination of this Contract,
      or the breach hereof or relationships created hereby shall be settled
      through friendly consultations. If a Dispute is not resolved through
      friendly consultations within thirty (30) days from the date a Party gives
      the other Parties written notice of a Dispute, then it shall be resolved
      exclusively and finally by arbitration in Hong Kong at the Hong Kong
      International Arbitration Center ("HKIC") in accordance with the
      arbitration rules of the HKIC (the "HKIC RULES") for the time being in
      force which rules are deemed to be incorporated by reference to this
      clause.

19.2  Arbitration Proceedings and Award. Any arbitration shall be heard before a
      tribunal consisting of three (3) arbitrators. Each side of the Dispute
      shall appoint one (1) arbitrator. The two arbitrators thus appointed shall
      choose the third arbitrator who will act as the presiding arbitrator of
      the tribunal. If the two arbitrators have not agreed on the choice of the
      presiding arbitrator, the presiding arbitrator shall be appointed by the
      Chairman of the HKIC. The language of the arbitration shall be English and
      Chinese. The arbitration shall be final and binding on the Parties, shall
      not be subject to any appeal, and the Parties agree to be bound thereby
      and to act accordingly. The award of the arbitrators may be enforced by
      any court having jurisdiction to do so. Throughout any dispute resolution
      and arbitration proceedings, the Parties shall continue to perform this
      Contract, to the extent practical, with the exception of those parts of
      this Contract that are under arbitration. Except as otherwise determined
      by the arbitration tribunal, each Party shall be responsible for its
      expenses incurred in connection with resolving any Dispute, but the
      arbitration fees shall be borne by the losing side of the Dispute.

19.3  Injunctive Relief. Notwithstanding any other provision of this Contract,
      each Party acknowledges that a breach of provisions on confidentiality as
      provided in Article 15.1 or non-competition in Article 15.2 or other
      obligations under this Contract may result in irreparable harm and damage
      to the affected Party and its Affiliates in an amount that is difficult to
      ascertain and that cannot be adequately compensated by a monetary award.
      Accordingly, in addition to any other relief to which the affected Party
      and its Affiliates may be entitled, such Party shall be entitled to
      temporary and/or permanent injunctive relief from any breach or threatened
      breach by the relevant Party without proof of actual damages that have
      been or may be caused to such Parties by such breach or threatened breach.

                    CHAPTER 20   GOVERNING LAW & CHANGE OF LAW

20.1  Applicable Law. The formation of this Contract, its validity,
      interpretation, execution and any performance of this Contract, and the
      settlement of any Disputes hereunder, shall be governed by published and
      publicly available laws, rules and regulations of the PRC, the applicable
      provisions of any international treaties and conventions to which the PRC
      is a party, and, if there are no published or publicly available PRC laws,
      rules or regulations, or treaties or conventions governing a particular
      matter, by general international commercial practices.

                                       27
<PAGE>

20.2  Change of Law. If any Party's economic benefits as a shareholder in the
      Joint Venture is adversely and materially affected by the promulgation of
      any new PRC laws, rules or regulations or the amendment or interpretation
      of any existing PRC laws, rules or regulations after the Effective Date,
      the Parties shall promptly consult with each other and use their best
      endeavors to implement any adjustments necessary to maintain each Party's
      economic benefits derived from this Contract on a basis no less favorable
      than the economic benefits it would have derived if such laws, rules or
      regulations had not been promulgated or amended or so interpreted.

                    CHAPTER 21   EFFECTIVE DATE OF THE CONTRACT

21.1  Effective Date. This Contract and the Articles of Association shall become
      effective on the date on which this Contract and the Articles of
      Association are approved by the Examination and Approval Authority as
      evidenced by the issuance of the Certificate of Approval (referred to as
      the "EFFECTIVE DATE"). In case of conflict between the provisions of this
      Contract and the provisions of the Articles of Association or any
      Supplementary Contracts, the terms of this Contract shall prevail.

21.2  Delivery. Party A shall promptly deliver to Party B and Party C copies of
      all approval certificates and registration documents issued by, and
      written confirmation of all communications with, the relevant Examination
      and Approval Authority and Registration Authority and all other relevant
      government authorities, in respect of this Contract, the Articles of
      Association, the Asset Purchase Agreement and the other Supplemental
      Contracts, and the operation of the Joint Venture.

                       CHAPTER 22        MISCELLANEOUS PROVISIONS

22.1  Language. This Contract is written and executed in a Chinese version and
      in an English version. Both language versions of this Contract are of
      equal validity and effect. In case of any discrepancy between the Chinese
      version and the English version, the Chinese version approved by the
      Examination and Approval Authority shall prevail.

22.2  Waiver and Preservation of Remedies. No delay on the part of any Party in
      exercising any right, power or privilege under this Contract shall operate
      as a waiver thereof, nor shall any waiver on the part of any Party of any
      right, power or privilege hereunder, nor any single or partial exercise of
      any right, power or privilege hereunder, preclude any other or other
      exercise thereof hereunder. The rights and remedies herein provided are
      cumulative and are not exclusive of any rights or remedies that any Party
      may otherwise have.

22.3  Notices. All notices or other communications under this Contract shall be
      in writing and shall be delivered or sent to the correspondence addresses
      or facsimile numbers of the Parties set forth below or to such other
      addresses or facsimile numbers as may be hereafter designated in writing
      on seven (7) days' notice by the relevant Party. All such notices and
      communications shall be effective: (i) when delivered personally; (ii)
      when sent by telex, telefacsimile or other electronic means with sending
      machine confirmation; (iii) ten (10) days after having been sent by
      registered or certified mail, return receipt requested, postage prepaid;
      or (iv) four (4) days after deposit with a commercial overnight courier,
      with evidence of delivery provided by the courier.

                                       28
<PAGE>

         Party A         Address:         No. 98, Nanshan Road North, Rongcheng
                                          City, Shandong Province, PRC
                         Tel:             ( 86-631) 7523-205
                         Fax:             (86-631) 7523-888
                         Attn:             Zhang Jun-quan

         Party B         Address:         Whitepark House, White Park Road, ,
                                          Bridgetown Barbados
                         Tel:             (1-246) 4310-070
                         Fax:             (1-246) 4310-076
                         Attn:            Keisha N. Hgde

         Party C         Address:         P.O. Box 957, Offshore Incorporations
                                          Center, Road Town, Tortola, British
                                          Virgin Islands
                         Tel:             (852) 2526-8111
                         Fax:             (852) 2526-5322
                         Attn:            Iris Yeung

22.4  Severability. If any provision of this Contract should be or become fully
      or partially invalid, illegal or unenforceable in any respect for any
      reason whatsoever, the validity, legality and enforceability of the
      remaining provisions of this Contract shall not in any way be affected or
      impaired thereby.

22.5  Entire Agreement. This Contract, together with its Appendices which are
      hereby incorporated by reference as an inseparable and integral part of
      this Contract, constitutes the entire agreement among the Parties with
      reference to the subject matter hereof, and supersede any agreements,
      contracts, representations and understandings, oral or written, made prior
      to the signing of this Contract.

22.6  Modification and Amendment. No amendment or modification of this Contract,
      whether by way of addition, deletion or other change of any of its terms,
      shall be valid or effective unless a variation is agreed to in writing and
      signed by authorized representatives of each of the Parties and approved
      by the Examination and Approval Authority.

22.7  Successors. The Parties agree and procure that this Contract shall inure
      to the benefit of and be binding upon each of the Parties and their
      respective permitted successors and permissible assignees.

22.8  Originals. This Contract is executed in nine (9) original counterparts,
      each of which shall have equal effect in law.

22.9  Costs and Expenses. Except as otherwise provided herein, each Party shall
      be responsible for the costs and expenses it incurred in connection with
      the negotiation and execution of this Contract, the Articles of
      Association, and the Supplementary Contracts.

                                       29
<PAGE>

IN WITNESS WHEREOF, each of the Parties has executed this Contract or has caused
this Contract to be executed by its duly authorized officer or officers as of
the date first above written.

                                 PARTY A: SHANDONG CHENGSHAN TIRE COMPANY
                                 LIMITED BY SHARES

                                 By:
                                    -------------------------------
                                 Name:          Che Hong-Zhi
                                 Title:         Chairman of Board
                                 Nationality:   Chinese

                                 PARTY B: COOPER TIRE INVESTMENT HOLDING
                                 (BARBADOS)  LTD.

                                 By:
                                   -------------------------------
                                Name:           Harold C. Miller
                                Title:          Authorized representative
                                Nationality:    U.S.A.

                                PARTY C:        JOY THRIVE INVESTMENTS LIMITED

                                By:
                                   --------------------------------
                                Name:           Stacey Wong
                                Title:          Authorized representative
                                Nationality:    Hong Kong, China

                                       30
<PAGE>

                             JOINT VENTURE CONTRACT

                                   APPENDIX 1

                         DEFINITIONS AND INTERPRETATION

1.1   "AFFILIATE" means, with respect to any Person, any other Person
      controlling or controlled by or under common control with such specified
      Person. For purposes of this definition, "control" when used with respect
      to any specified Person means the power to direct the management and
      policies of such Person, directly or indirectly, whether through the
      ownership of shares, registered capital or voting securities, by contract
      or otherwise, and the terms "controlling" and "controlled" have meanings
      correlative to the foregoing.

1.2   "ASSET PURCHASE AGREEMENT" shall have the meaning ascribed to such term in
      Article 5.10.

1.3   "ARTICLES OF ASSOCIATION" means the articles of association of the Joint
      Venture executed by the Parties simultaneously with this Contract, as such
      articles of association may be amended from time to time by the Parties.

1.4   "AUDITOR" means an accounting firm registered in the PRC, engaged at the
      Joint Venture's own expense upon resolution of the Board, which shall be
      the auditor of the Joint Venture and which firm shall be independent of
      the Parties and independent of the Joint Venture.

1.5   "BIG FOUR" means four internationally reputable accounting firms, such as,
      Price Water Coopers, Deloitte, Ernst & Young, and KPMG.

1.6   "BOARD OF DIRECTORS" or "BOARD" means the board of directors of the Joint
      Venture established in accordance with this Contract.

1.7   "BOOK VALUE" means the historic accounting value of the equity of the
      Joint Venture based on Chinese generally accepted accounting principles
      (GAAP).

1.8   "BREACHING PARTY" shall have the meaning ascribed to such term in Article
      5.8 hereof.

1.9   "BUSINESS LICENSE" means the business license of the Joint Venture as
      issued, amended and replaced, as the case may be, from time to time by the
      Registration Authority.

1.10  "CAPITAL CONTRIBUTION SCHEDULE" means a schedule set forth in Appendix 2
      to this Contract, which schedule specifies the time and amount of
      contribution by the Parties to the Registered Capital of the Joint
      Venture.

1.11  "CHENGSHAN GROUP" means Chengshan Group Company LTD., a limited liability
      company duly organized and existing under the laws of the PRC in Rongcheng
      City, Shandong Province, which owns 73.76% equity interests of Party A.

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1.12  "CERTIFICATE OF APPROVAL" means the certificate of approval issued by the
      Examination and Approval Authority approving this Contract and the
      Articles of Association.

1.13  "CONFIDENTIAL INFORMATION" means the terms of this Contract and all
      technical, financial, business, commercial, operational and strategic
      information and data, know-how, trade secrets and any analysis,
      amalgamation, market studies or compilation, whether written or unwritten
      and in any format or media, concerning, directly or indirectly, the
      business of the Joint Venture or a Party, which has been prior to the
      Establishment Date, or which may be during the Joint Venture Term,
      delivered or furnished by a Party, the Joint Venture, or any of their
      respective Representatives, to another Party, the Joint Venture, or any of
      their respective Representatives, but shall not include any information
      that: (a) at the time of disclosure is (or thereafter becomes) generally
      available to the public through no act of any Person in violation of a
      confidentiality obligation or applicable law; or (b) the receiving Party
      has obtained lawfully from an independent source not subject to a
      confidentiality obligation; or (c) the receiving Party can prove was known
      to it or to its Representatives prior to the receipt of such information
      from the disclosing Party; or (d) is independently developed by the
      receiving Party without any access to or knowledge of such information.

1.14  "COOPER" means Cooper Tire & Rubber Company or its relevant Affiliate,
      which may license or cause to be licensed to the Joint Venture, the
      technology in respect of the Products and Processes after duly
      establishment of the Joint Venture.

1.15  "DAY" refers to a calendar day.

1.16  "DEFAULT CAPITAL CONTRIBUTION" shall have the meaning ascribed to such
      term in Article 5.8(1).

1.17  "DIRECTOR" or "DIRECTOR OF THE JOINT VENTURE" means any member of the
      Board.

1.18  "DISPUTE" shall have the meaning ascribed to such term in Article 19.1.

1.19  "EFFECTIVE DATE" means the date on which this Contract comes into effect
      in accordance with Article 21.1.

1.20  "EQUITY JOINT VENTURE LAW" means the PRC, Sino-foreign Equity Joint
      Venture Law (adopted by the National People's Congress on July 1, 1979 and
      revised on March 15, 2001), as such law may from time to time be amended,
      or its successor laws.

1.21  "EQUITY JOINT VENTURE REGULATIONS" means the PRC, Sino-foreign Equity
      Joint Venture Law Implementing Regulations (promulgated by the State
      Council on September 20, 1983 and revised on July 22, 2001), as such
      regulations may from time to time be amended, or any successor
      regulations.

1.22  "ESTABLISHMENT DATE" means the date on which the Joint Venture's first
      Business License is issued by the Registration Authority.

1.23  "EXAMINATION AND APPROVAL AUTHORITY" means the Ministry of Commerce, or
      its authorized local division or any successor government institution or
      agency empowered to approve the Asset Purchase Agreement, this Contract,
      the Articles of Association, and any amendments, supplements,
      modifications or termination hereof or thereof.

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<PAGE>

1.24  "FAIR VALUE" means the transfer price of the equity interest of the Joint
      Venture calculated by an internationally recognized accounting firm
      jointly appointed by the Parties.

1.25  "FREE CASHFLOW" means the after-tax income less: (i) reserves provided for
      the reserve, expansion, and bonus and welfare fund, (ii) capital spending,
      (iii) working capital funding, and (iv) debt payment, and increased by:
      (i) depreciation and amortization expenses, and (ii) any other non-cash
      expenses included in the after-tax income.

1.26  "JOINT VENTURE" means Cooper Chengshan (Shandong) Tire Company Ltd., the
      Sino-foreign equity joint venture limited liability company established
      and operated by the Parties pursuant to this Contract.

1.27  "JOINT VENTURE TERM" shall have the meaning ascribed to such term in
      Article 16.1 hereof.

1.28  "NET TRUCK AND BIAS TIRE ASSETS" means the price agreed by the Parties to
      pay for the net assets of Party A less the amount allocated to the net
      truck and bias tire assets of Party A

1.29  "NON-BREACHING PARTY" shall have the meaning ascribed to such term in
      Article 5.8(1) hereof.

1.30  "NON-DISCLOSURE AND NON-COMPETE CONTRACT" means the contract between the
      Joint Venture and each of its key employees (including, without
      limitation, the General Manager, all other management personnel, and all
      technical personnel), whereby such key employees undertake to keep
      confidential the confidential information of the Joint Venture and to
      refrain from engaging in any business or activities that directly or
      indirectly compete with any business of the Joint Venture.

1.31  "NOTIFYING PARTY" shall have the meaning ascribed to such term in Article
      16.2(3).

1.32  "PERCENTAGE INTEREST" means, with respect to each Party, such Party's
      percentage interest in the equity of the Joint Venture, as set forth in
      Article 5.2.

1.33  "PERSON" means any individual, company, legal person enterprise, non-legal
      person enterprise, joint venture, partnership, wholly owned entity, unit,
      trust or other entity or organization, including, without limitation, any
      government or political subdivision or any agency or instrumentality of a
      government or political subdivision and other body corporate or
      unincorporated; Person also includes a reference to that Person's legal
      representatives, assignees, successors or heirs.

1.34  "PRC" or "CHINA" means the People's Republic of China.

1.35  "PROCESSES" means the technical and working processes in respect of
      producing and/or processing the Products.

1.36  "PRODUCTS" means bias light truck tires, radial and bias medium truck
      tires, engineering tires and Related Products.

                                       33
<PAGE>

1.37  "PROTECTED PARTY" shall have the meaning ascribed to such term in Article
      15.1(1) hereof.

1.38  "REGISTERED CAPITAL" means the total amount of equity of the Joint Venture
      pursuant to Chapter 5 as such equity amount may be adjusted according to
      the relevant provisions of this Contract and relevant PRC law.

1.39  "RELATED PRODUCTS" means those non-tire products produced by the Joint
      Venture, including but not limited to inner tubes and flaps.

1.40  "REGISTRATION AUTHORITY" means the State Administration of Industry and
      Commerce, or its local division or any successor government institution or
      agency empowered to issue a Business License to the Joint Venture.

1.41  "RENMINBI" or "RMB" means the lawful currency of the PRC.

1.42  "REPRESENTATIVES" shall have the meaning ascribed to such term in Article
      15.1(1) hereof.

1.43  "SUPPLEMENTARY CONTRACTS" shall mean the following: Asset Purchase
      Agreement; Technical Assistance and Technology License Agreement; Real
      Estate Lease Agreement.

1.44  "TERMINATION NOTICE" shall have the meaning ascribed to such term in
      Article 16.2(3).

1.45  "TOTAL INVESTMENT" means the total amount of funds required to establish
      and operate the Joint Venture in accordance with its business scope set
      forth herein, as provided in Article 5.1 and as may be adjusted according
      to the relevant provisions of this Contract and relevant PRC law.

1.46  "UNITED STATES DOLLARS" or "US$" means the lawful currency of the United
      States of America.

1.47  "AND/OR" means that both cases apply, or either the first or the second
      case applies.

1.48  Words used in any gender in this Contract shall include references to all
      other genders; and words used in the singular in this Contract shall
      include references to the plural, and vice versa.

1.49  Descriptive headings in this Contract are for convenience only and shall
      not control or affect the meaning or construction of any of the provisions
      of this Contract or any of the Appendices.

                                       34
<PAGE>

                             JOINT VENTURE CONTRACT

                                   APPENDIX 2

                          CAPITAL CONTRIBUTION SCHEDULE

1.    The Total Investment of the Joint Venture shall be US$99,000,000.

2.    The Registered Capital of the Joint Venture shall be US$43,800,000.

3.    Immediately upon the satisfaction of the conditions specified in Article
      5.4 herein:

      (a)   Party A will contribute land use rights and buildings valued at 35%
            of the Registered Capital of the Joint Venture, payable to the Joint
            Venture in exchange for a 35% ownership interest in the Joint
            Venture.

      (b)   Party B will sign a promissory note for an amount equal to 51% of
            the Registered Capital of the Joint Venture, payable to the Joint
            Venture, in exchange for a 51% ownership interest in the Joint
            Venture.

      (c)   Party C will sign a promissory note for an amount equal to 14% of
            the Registered Capital of the Joint Venture, payable to the Joint
            Venture, in exchange for a 14% ownership interest in the Joint
            Venture.

4.    As specified in Article 5.10 hereof, on the date of this Contract Party A
      and the Joint Venture shall enter into the Asset Purchase Agreement
      transferring certain identified assets to the Joint Venture from Party A
      for the consideration as detailed in Article 3 of the Asset Purchase
      Agreement.

5.    Within ten (10) working days upon satisfaction of the conditions specified
      in Article 5.4 hereof, Party B will contribute US$22,338,000 to the Joint
      Venture satisfying the promissory note issued in step 3.(b) above.

6.    Within ten (10) working days upon satisfaction of the conditions specified
      in Article 5.4 hereof, Party C will contribute US$6,132,000 to the Joint
      Venture satisfying the promissory note issued in step 3.(c) above.

                                       35
<PAGE>

                             JOINT VENTURE CONTRACT

                                   APPENDIX 3

  ASSETPURCHASE AGREEMENT (FOR THE ASSETS TO BE PURCHASED BY THE JOINT VENTURE
                                  FROM PARTY A)

                                       36
<PAGE>

                             JOINT VENTURE CONTRACT

                                   APPENDIX 4

                       AGREEMENT ON LABOR/PERSONNEL ISSUES

                                       37
<PAGE>

                             JOINT VENTURE CONTRACT

                                   APPENDIX 5

 OFFICE, SINGLE-WORKER DORMITORY AND EMPLOYEE CAFETERIA LEASE AGREEMENT (TO BE
             ENTERED INTO BETWEEN CHENGSHAN GROUP AND JOINT VENTURE)

                                       38

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