Common use of Taxes, Finance and Audit Clause in Contracts

Taxes, Finance and Audit. 12.1 The Joint Venture Company shall pay taxes in accordance with the requirements of the relevant Chinese laws. 12.2 Staff members and workers of the Joint Venture Company shall pay individual income tax according to the “Individual Income Tax Law of the People’s Republic of China”. 12.3 Allocations for reserve and expansion funds of the Joint Venture Company and welfare funds and bonuses for staff and workers from after-tax profits shall be set aside in accordance with the stipulations of the “Law of the People’s Republic of China on Joint Ventures Using Chinese and Foreign Investment”. The annual allocations shall be determined by the Board of Directors according to the business situation of the Joint Venture Company at the relevant time. 12.4 The fiscal year of the Joint Venture Company shall be January 1 through December 31. All vouchers, statistical statements, account books and reports shall be written in Chinese and English. The quarterly report and financial statement as well as the annual accounts of the Joint Venture Company shall be prepared in Chinese and English for the Board of Directors. 12.5 The Joint Venture Company’s annual financial auditing shall be conducted by an internationally recognized auditor registered in China and appointed by the Board of Directors. The results of auditing shall be a report in accordance with international accounting principles to be submitted to and unanimously approved by the Board of Directors. The books of account of the Joint Venture Company will be available for examination by duly authorized representatives of any of the parties provided such examination is made during normal business hours upon reasonable prior notice to and upon the premises of the Joint Venture Company. Any party may appoint its own auditors to audit the accounts of the company at its own expense. 12.6 Within 30 days after each calendar quarter, the General Manager shall submit to the Board of Directors the profit and loss statement for that quarter and the balance sheet as of the close of that quarter. 12.7 Within the first three (3) months of each fiscal year, the General Manager shall present to the Board of Directors for approval the previous year’s balance sheet, profit and loss statement, statement of changes in financial position, cash flow statement, and proposals regarding the distribution of profits of the Joint Venture Company. By the end of the third month of each fiscal year, the Board of Directors shall determine the required allowances for funds discussed in Article 12.3 and for the payment of income taxes, and determine by unanimous vote the appropriate distribution out of the balance of retained earnings in the form of dividends to shareholders in proportion to each party’s contribution to registered capital as of the end of the previous fiscal year. The Company shall distribute dividends after all the taxes have been paid and the amounts towards the development fund, the reserve fund and the bonus and welfare fund have been deducted in accordance with the Chinese regulations with regard to financial affairs. Dividends shall be distributed after all the previous losses have been recovered. 12.8 The General Manager shall be responsible for the preparation of the Joint Venture Company’s budgets. The budgets (including the projected balance sheet, profit and loss statements and cash transaction report) for the next fiscal year shall be submitted to the Board for approval 60 days prior to the commencement of the fiscal year. Detailed information on training and personnel issues shall be included with the annual budget. Once approved, the General manager shall be responsible for implementation of budgets and other operational plans. 12.9 In addition, the General Manager shall be responsible for preparation of quarterly reports on the following topics: a. Marketing and sales reports; b. Operational reports, and, c. Capital expenditure reports 12.10 The Joint Venture Company shall establish an accounting system in accordance with the internationally used accrual basis and debit and credit system. 12.11 The Joint Venture Company shall adopt the Chinese RMB as the standard currency for entries in the books of account. For financial statement reporting, conversion of transactions or translation of the financial statement into US dollars or other currencies shall be in accordance with international accounting standards. Financial reporting and control shall satisfy both Chinese and International accounting standards. 12.12 The Joint Venture Company shall open RMB and foreign exchange accounts with banks in China, and the General Manager shall decide the procedure for issuing and signing bank checks. 12.13 The Joint Venture Company may also open foreign exchange accounts with foreign banks in foreign countries as designated by the Board of Directors and approved by the State Administration of Foreign Exchange. All foreign income to the Joint Venture Company earned and paid abroad shall be deposited in those accounts and all payments in foreign exchange currencies outside of China may be made from the same accounts. Any conversion of foreign exchange by the Joint Venture Company must be approved by the General Manager under guidelines approved by the Board of Directors. 12.14 All Parties recognize that maintenance of a Foreign Exchange balance is a goal of the company. For this reason, the Joint Venture Company will make its best efforts to increase international sales as permitted under Chinese law to balance its foreign exchange account on its own. If necessary, in addition to obtaining foreign exchange through export sales, the parties and the Joint Venture Company will be permitted to enter the Foreign Exchange Market. In no event, however, will Party B or Party C be obligated to contribute or otherwise provide foreign currency to the Joint Venture Company after the parties’ contributions to the Registered Capital of the Joint Venture Company have been made pursuant to Article 6.5 of this Contract.

Taxes, Finance and Audit. 12.1 Article 10.1 The Joint Venture Company shall pay taxes in accordance with the requirements provisions of the relevant Chinese lawslaws and other applicable regulations. 12.2 Article 10.2 Staff members and workers of the Joint Venture Company shall pay individual income tax according to the “Individual Income Tax Law of the People’s 's Republic of China”. 12.3 Article 10.3 Allocations for reserve and funds, expansion funds of the Joint Venture Company Venture, and welfare funds and bonuses for staff and workers from after-tax profits shall be set aside in accordance with the stipulations provisions of the “Law of the People’s Republic of China on Joint Ventures Using Chinese and Foreign Investment”Venture Law. The annual proportion of allocations shall be determined decided by the Board of Directors according to the business situation of the Joint Venture Company at the relevant timeVenture. 12.4 Article 10.4 The fiscal year of the Joint Venture Company shall be January from June 1 through December to May 31. All vouchers, receipts, statistical statements, account books statements and reports shall be written in Chinese and EnglishChinese. The quarterly report and financial statement as well as the annual accounts All accounting statements of the Joint Venture Company shall also be prepared made and kept in Chinese and English for the Board of DirectorsEnglish. 12.5 The Article 10.5 Financial checking and examination of the Joint Venture Company’s annual financial auditing shall be conducted by an internationally a recognized auditor Chinese or international firm registered in China and appointed capable of producing audited statements, as chosen by the Board of Directors. The results of auditing Party B. Such reports shall be a report in accordance with international accounting principles to be submitted to and unanimously approved by the Board of Directors. The books of account of the Joint Venture Company will be available for examination by duly authorized representatives of any of the parties provided such examination is made during normal business hours upon reasonable prior notice to and upon the premises of the Joint Venture Company. Any party may appoint its own auditors to audit the accounts of the company at its own expense. 12.6 Within 30 days after each calendar quarter, the General Manager shall submit to the Board of Directors the profit and loss statement for that quarter and the balance sheet as of the close of that quarterGeneral Manager both in English and Chinese. 12.7 Article 10.6 Within the first three one (31) months month of each fiscal year, the General Manager shall present to the Board of Directors for approval prepare, or have prepared, both in English and Chinese, the previous fiscal year’s 's audited balance sheet, profit and loss statement, statement of changes in financial position, cash flow statementflow, and proposals regarding notes to the distribution of profits of financial statements, prepared in accordance with International or United States generally accepted accounting principles and audited by a firm approved by Party B. Within the Joint Venture Company. By the end of the third month first forty-five (45) days of each fiscal year, the Board General Manager shall also provide a proposal regarding the allocation of Directors shall determine the required allowances for funds discussed in Article 12.3 and for the payment of income taxes, and determine by unanimous vote the appropriate distribution out of the balance of retained earnings in the form of dividends to shareholders in proportion to each party’s contribution to registered capital as of the end of profits from the previous fiscal year. The Company shall distribute dividends after all the taxes have been paid and the amounts towards the development fund, the reserve fund and the bonus and welfare fund have been deducted in accordance with the Chinese regulations with regard to financial affairs. Dividends shall be distributed after all the previous losses have been recovered. 12.8 The General Manager shall be responsible for the preparation of the Joint Venture Company’s budgets. The budgets (including the projected balance sheet, profit and loss statements and cash transaction report) for the next fiscal year shall be submitted to the Board for approval 60 days prior to the commencement of the fiscal year. Detailed information on training and personnel issues shall be included with the annual budget. Once approved, the General manager shall be responsible for implementation of budgets and other operational plans. 12.9 In addition, the General Manager shall be responsible for preparation of quarterly reports on the following topics: a. Marketing and sales reports; b. Operational reports, and, c. Capital expenditure reports 12.10 The Joint Venture Company shall establish an accounting system in accordance with the internationally used accrual basis and debit and credit system. 12.11 The Joint Venture Company shall adopt the Chinese RMB as the standard currency for entries in the books of account. For financial statement reporting, conversion of transactions or translation of the financial statement into US dollars or other currencies shall be in accordance with international accounting standards. Financial reporting and control shall satisfy both Chinese and International accounting standards. 12.12 The Joint Venture Company shall open RMB and foreign exchange accounts with banks in China, and subject the General Manager shall decide the procedure for issuing and signing bank checks. 12.13 The Joint Venture Company may also open foreign exchange accounts with foreign banks in foreign countries as designated by proposal to the Board of Directors for examination and approval. Article 10.7 The Joint Venture shall separately open a foreign exchange account and a Renminbi account at an authorized bank within or outside China approved by the State Administration of Foreign Exchange. All The Joint Venture’s foreign income exchange transactions shall be handled in accordance with the regulations of China relating to foreign exchange control including use of authorized foreign exchange adjustments centers and foreign exchange banks. Article 10.8 The Joint Venture shall likely maintain a balance in its foreign exchange receipts and expenditures account through the sale of its products and through other methods permitted under the laws of China. Liquid funds in the Joint Venture Company earned and paid abroad Venture’s foreign exchange account shall be deposited used in those accounts the following order of priority: 1. payments of principal and all payments in interest on foreign exchange currencies outside of China may be made from the same accounts. Any conversion of foreign exchange loans borrowed by the Joint Venture Company must be approved from a third party; 2. payments of principal and interest on foreign exchange loans borrowed by the General Manager under guidelines approved by the Board of Directors. 12.14 All Parties recognize that maintenance of a Foreign Exchange balance is a goal of the company. For this reason, the Joint Venture Company will make its best efforts to increase international sales as permitted under Chinese law to balance its foreign exchange account on its ownfrom any one or more of the Parties; 3. If necessary, in addition to obtaining foreign exchange through export sales, the parties and the Joint Venture Company will be permitted to enter the Foreign Exchange Market. In no event, however, will Party B or Party C be obligated to contribute or otherwise provide foreign currency to the Joint Venture Company after the parties’ contributions to the Registered Capital payment of the Joint Venture Company have been made pursuant Venture’s expatriate staff salaries; 4. payment for imported raw materials and equipment; 5. payment for imported services; 6. payment of profits to Article 6.5 Party B; and 7. payment of this Contract.profits to Party A.

Taxes, Finance and Audit. 12.1 Article 10.1 The Joint Venture Company shall pay taxes in accordance with the requirements provisions of the relevant Chinese lawslaws and other applicable regulations. 12.2 Article 10.2 Staff members and workers of the Joint Venture Company shall pay individual income tax according to the “Individual Income Tax Law of the People’s 's Republic of China”. 12.3 Article 10.3 Allocations for reserve and funds, expansion funds of the Joint Venture Company Venture, and welfare funds and bonuses for staff and workers from after-tax profits shall be set aside in accordance with the stipulations provisions of the “Law of the People’s Republic of China on Joint Ventures Using Chinese and Foreign Investment”Venture Law. The annual proportion of allocations shall be determined decided by the Board of Directors according to the business situation of the Joint Venture Company at the relevant timeVenture. 12.4 Article 10.4 The fiscal year of the Joint Venture Company shall be from January 1 through to December 31. All vouchers, receipts, statistical statements, account books statements and reports shall be written in Chinese and EnglishChinese. The quarterly report and financial statement as well as the annual accounts All accounting statements of the Joint Venture Company shall also be prepared made and kept in Chinese and English for the Board of DirectorsEnglish. 12.5 The Article 10.5 Financial checking and examination of the Joint Venture Company’s annual financial auditing shall be conducted by an internationally a recognized auditor Chinese or international firm registered in China and appointed capable of producing audited statements, as chosen by Party B. Such reports shall be submitted to the Board of Directors. The results of auditing shall be a report Directors and the General Manager both in accordance with international accounting principles to be submitted to English and unanimously approved by the Board of Directors. The books of account of the Joint Venture Company will be available for examination by duly authorized representatives of any of the parties provided such examination is made during normal business hours upon reasonable prior notice to and upon the premises of the Joint Venture Company. Any party may appoint its own auditors to audit the accounts of the company at its own expenseChinese. 12.6 Article 10.6 Within 30 days after the first two (2) months of each calendar quarterfiscal year, the General Manager shall submit to prepare, or have prepared, both in English and Chinese, the Board of Directors the previous fiscal year's audited balance sheet, profit and loss statement for that quarter statement, cash flow, and notes to the balance sheet as of the close of that quarter. 12.7 financial statements, prepared in accordance with International or United States generally accepted accounting principles and audited by a firm approved by Party B. Within the first three (3) months of each fiscal year, the General Manager shall present also provide a proposal regarding the allocation of profits from the previous fiscal year, and subject the proposal to the Board of Directors for approval the previous year’s balance sheet, profit examination and loss statement, statement of changes in financial position, cash flow statement, and proposals regarding the distribution of profits of the Joint Venture Company. By the end of the third month of each fiscal year, the Board of Directors shall determine the required allowances for funds discussed in Article 12.3 and for the payment of income taxes, and determine by unanimous vote the appropriate distribution out of the balance of retained earnings in the form of dividends to shareholders in proportion to each party’s contribution to registered capital as of the end of the previous fiscal year. The Company shall distribute dividends after all the taxes have been paid and the amounts towards the development fund, the reserve fund and the bonus and welfare fund have been deducted in accordance with the Chinese regulations with regard to financial affairs. Dividends shall be distributed after all the previous losses have been recoveredapproval. 12.8 The General Manager shall be responsible for the preparation of the Joint Venture Company’s budgets. The budgets (including the projected balance sheet, profit and loss statements and cash transaction report) for the next fiscal year shall be submitted to the Board for approval 60 days prior to the commencement of the fiscal year. Detailed information on training and personnel issues shall be included with the annual budget. Once approved, the General manager shall be responsible for implementation of budgets and other operational plans. 12.9 In addition, the General Manager shall be responsible for preparation of quarterly reports on the following topics: a. Marketing and sales reports; b. Operational reports, and, c. Capital expenditure reports 12.10 Article 10.7 The Joint Venture Company shall establish an accounting system in accordance with the internationally used accrual basis and debit and credit system. 12.11 The Joint Venture Company shall adopt the Chinese RMB as the standard currency for entries in the books of account. For financial statement reporting, conversion of transactions or translation of the financial statement into US dollars or other currencies shall be in accordance with international accounting standards. Financial reporting and control shall satisfy both Chinese and International accounting standards. 12.12 The Joint Venture Company shall separately open RMB and a foreign exchange accounts with banks in China, account and the General Manager shall decide the procedure for issuing and signing a Renminbi account at an authorized bank checks. 12.13 The Joint Venture Company may also open foreign exchange accounts with foreign banks in foreign countries as designated by the Board of Directors and within or outside China approved by the State Administration of Foreign Exchange. All The Joint Venture’s foreign income exchange transactions shall be handled in accordance with the regulations of China relating to foreign exchange control including use of authorized foreign exchange adjustments centers and foreign exchange banks. Article 10.8 The Joint Venture shall likely maintain a balance in its foreign exchange receipts and expenditures account through the sale of its products and through other methods permitted under the laws of China. Liquid funds in the Joint Venture Company earned and paid abroad Venture’s foreign exchange account shall be deposited used in those accounts the following order of priority: 1. payments of principal and all payments in interest on foreign exchange currencies outside of China may be made from the same accounts. Any conversion of foreign exchange loans borrowed by the Joint Venture Company must be approved from a third party; 2. payments of principal and interest on foreign exchange loans borrowed by the General Manager under guidelines approved by the Board of Directors. 12.14 All Parties recognize that maintenance of a Foreign Exchange balance is a goal of the company. For this reason, the Joint Venture Company will make its best efforts to increase international sales as permitted under Chinese law to balance its foreign exchange account on its ownfrom any one or more of the Parties; 3. If necessary, in addition to obtaining foreign exchange through export sales, the parties and the Joint Venture Company will be permitted to enter the Foreign Exchange Market. In no event, however, will Party B or Party C be obligated to contribute or otherwise provide foreign currency to the Joint Venture Company after the parties’ contributions to the Registered Capital payment of the Joint Venture Company have been made pursuant Venture’s expatriate staff salaries; 4. payment for imported raw materials and equipment; 5. payment for imported services; 6. payment of profits to Article 6.5 Party B; and 7. payment of this Contract.profits to Party A.