Contracts Management ProceduresChapter I General ProvisionsArticle 1 These Procedures have been formulated in accordance with the provisions of theP.R.C Contract Law and other relevant laws and regulations in conjunction with the actual conditions of the company in order to make the contracts management of the Company standardizedand procedural to improve the quality and efficiency of contracts management and to protectthe lawful rights and interests of the Company. Article 2 Contracts management referred to herein means a series of such activities as theplanning, organization, control, mediation,litigation and supervision and inspection by the Company as a subject to the economic legal relationship pursuant to law, in relation to thesignature, performance, modification and rescission of and disputes over contracts.Article 3 Contracts management shall be subject to the management system integrating theassumption of the responsibility for contracts management by the persons handling contractsand department managers, the review of contracts by legal counsels and theexamination and approval thereof by the leaders. Article 4 These Procedures shall apply to various departments of the company and all branches thereof. Chapter II Signature of ContractsArticle 5 Signature of contracts must comply with state laws, regulations and policies underthe principles of equality and mutual benefit, consensus through consultations and making compensation for equal value in order to protect the interest of the Company. No contracts maybe signed illegally, and no contracts to the disadvantage of company may be entered into.Article 6 Before entering into a contract, we shall know of in all respects such conditionsas the cooperating party 's creditworthiness and capability to perform the contract to be entered into. No contracts may be entered into withentities/individuals without good creditworthinessand the capability to perform investigationson the cooperating party 'screditworthiness and capability to perform a contract include but are not limited to:1. Its business license and other license if it is ina licensed operation industry and statusof annual inspection by industrial and commercialauthorities;2. Its economic type and articles of association;3. The information on the opening of its basic account (including account name, bankand number);4. Its financial statements;5. Its operation history, market shares and recent developing tendency;6. The conditions of other performance by it7. If the cooperating party is a natural person, we shall know of in all respects his/heridentity, habitual residence address, and job background as well as the status of his/her personal and family propertiesArticle 7 In making a contract, we shall examinestrictly the qualifications of the personsmaking the contract. The legal representative of a legal person entity or the main responsibleperson of a non legal person entity may sign the contract, if other person as an agent signsthe contract, he/she must submit the letter of authorization produced by the legalrepresentative or the main responsible person.In making a contract, we shall examine in all respects the materials necessary to make thecontract. When the person handing the contract enters into the contract, he/she shall requirethe other party to provide the certificate proving its legal representative qualification, thecopy of its business license counterpart and other necessary materials that need to be providedby it under specific conditions, if the contract is an especiallymaterial one, the said person shall require the other party to provide directly the counterpartof its business license sealed by the administration for industry and commerce, if its agententers into the contract on its behalf, the said person shall require the agent to provide theeffective letter of authorization issued and signed by its legal representative if it is a legalperson entity or by its main responsible person if it is a non legal person entity, and examinewhether the name of its legal representative is the same as that stated in its business license.The person handling the contract shall be responsible for examining whether the copies ofmaterials provided by the other party are the same as originals thereof.When representing the Company to sign a contract with an external party, the person handlingcontracts must have the qualifications to sign the contract, i .e he/she must have the writtenletter of authorization produced by the legal representative of the Company. No person may signa contract with any external party without or beyond the authorization, otherwise, he/she shallbear all legal responsibilities.Article 8 A contract shall be entered into in writing.Before the Company signs a contract with an external party, both parties to the contractshall draft generally the contract text through consultation, if the State laws and regulationsor ministerial rules have special provisions in relation thereto, the standard contractformulated by the State competent authority shall be used legally, and the model contract draftedby the Company on its own may also be referenced. If an open model contract is used, the relevant terms or provisions thereof shall be writtenin clearly and completely; otherwise, the contract shall not be signed and sealed, suchunnecessary terms or provisions thereof shall be all deleted, ‘/ 'shall be drawn in theunnecessary open place therein, and the contract shall be fixed with a checking seal, officialseal or special seal for signing contracts.Article 9 Contracts shall include such main clauses as the subject matter (means cargo, currencylabor and engineering project etc.), quantity and quality, price and remuneration, the period,location and method of performance, responsibility for breach of the contract, the method tosettle disputes and the date of signature, and the guarantee clause shall be also includedtherein as far as possible.Article 10 A contract shall become effective only after it is signed by the person with thequalifications to sign the contract (the legal representative or agent authorized by the legal representative) and fixed with the official seal of the Company or the special seal for signingcontracts.Article 11 Each branch of the Company shall sign a contract with an external party onlywithin its legal business scope or authorized scope. If a contract beyond its business scopeor authorized scope needs to be executed the matter shall be approved by the leaders of theCompany, the contract shall be executed by the leader of the Company with the authority to doso, and the special authorization of signing the contract shall be made or applied for in thename of the Company.Article 12 All contracts to be signed by each department or branch of the Company with externalparties must be submitted to the legal counsels of the Company for examination and signed onlyafter the legal counsels examine them to be correct, express the opinions thereon, and reporton them to the leaders of the Company for approval. The examination of contracts shall be subject to the principle integrating the legality,feasibility and profitability.Each person handling a contract and each examiner shall express his/her examinationopinions and make signatures on the Form for Examining Legal Documents (see Annex 2),and then only after the contract is approved by the leaders of the Company, may it be submittedfor the signature by the other party, and eventually for the signature by the financialdepartment of the Company.Article 13 The examination of a contract shall be carried out under the following procedures:1. The examination by the person handling the contract on his/her own;2. The examination by the responsible person of the department or branch handling the contract;3. The examination by the legal counsels of the Company;4. The examination by the vice-president of the Company in charge;5. The approval by the president of the Company; and6. The signature by the legal representative or president of the Company or the representativewith the authority to do so.See Annex 1 for the specific working process ofexamining legal documents.Article 14 A contract shall have legal binding upon legal signing, and must be complied withstrictly and performed in all respects. If some matter is not included or is not clear in acontract, the matter may be handled in accordance with the relevant provisions of the P.R.CContract Law.Article 15 A contract may be modified or rescinded after both parties to a contract reach aconsensus thereon, or a legal or agreed mater therefore occurs.Article 16 The modification or rescission of a contract may be handled, mutatis mutandis,under the procedures for entering into contracts. Chapter III Handling of Contracts DisputesArticle 17 After a contract dispute arises between parties to the contract, the persons handlingthe contract shall be responsible for settling the contract dispute on a coordination basisunder the assistance of the legal counsels.Article 18 A contract dispute shall be settled through consultation and negotiation as far aspossible in order to reduce the litigation costs. Article 19 The contract dispute that is really unable to be settled through consultation maybe submitted to the competent court or arbitration for mediation, judgment or arbitration.The specific proposal for handling the same shall be drafted under the guiding opinions ofthe legal counsels, and reported on to the leaders of the Company for approval.Article 20 If we still have the objections to the effective judgment or arbitral award renderedby the court or arbitration institution, we shall make an appeal legally under the opinionsof the legal counsels of the Company. If the other party refuses to perform thejudgment or arbitral award that has become effective, we may apply to the court for enforcingthe judgment or arbitral award. If an application for such enforcement will befiled, the legal opinions hereon shall be produced by the legal counsels of the Company andreported on to the leaders of the Company for approval. Chapter IV Management of Contract ArchivesArticle 21 The persons handling contracts shall establish and keep detailed projects archives completely, including the projects proposals, feasibility study reports, contracts drafts, telephone records minutes. Letters exchanged between parties, the relevant documents andofficial replies from governments, relevant rights certifications or certificates at the stageof entering into contracts and the archives contents relating to the performance of contracts.Such faxes of material letters received shall be copied and kept in archives together with thecopies thereof in order to avoid the vagueness and even disappearance of words thereon withthe lapse of time.Article 22 The legal counsels of the Company shall establish the contracts archives and contract examination archives for the contracts counterparts and contracts performance reports submittedby the persons handling the contracts.Article 23 The legal working persons set up by each branch specially shall be responsible。