Joint Venture Contract

JOINT VENTURE CONTRACT
----------------------


between


WUHAN ELECTRIC POWER INSTRUMENT FACTORY,
----------------------------------------


BEIJING HUADIAN ELECTRIC POWER AUTOMATION CORPORATION
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and


HATHAWAY CORPORATION
--------------------


for the establishment of


HATHAWAY POWER MONITORING SYSTEMS COMPANY, LTD.
-----------------------------------------------


TABLE OF CONTENTS
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Article Page - ------- ---- Preliminary Statement......................................... 1


1 Definitions............................................... 1 2 Parties to the Contract................................... 2 3 Establishment of the Joint Venture Company................ 3 4 The Purpose and Scope of Business of the Company.......... 4 5 Total Amount of Investment and Registered Capital......... 5 6 Responsibilities of the Parties........................... 8 7 Sales of Joint Venture Products and Technology............ 11 8 Board of Directors........................................ 11 9 Operation and Management.................................. 15 10 Supply and Purchase of Materials, Equipment and Services.. 16 11 Labor Management.......................................... 16 12 Financial Affairs and Accounting.......................... 18 13 Taxation and Insurance.................................... 21 14 Confidentiality........................................... 21 15 The Joint Venture Term.................................... 22 16 Termination, Buyout and Liquidation....................... 23 17 Breach of Contract........................................ 25 18 Force Majeure............................................. 25 19 Settlement of Disputes.................................... 26 20 Applicable Law............................................ 27 21 Miscellaneous Provisions.................................. 27


Signatures................................................ 29


Schedule


Appendix A Technology License Contract


JOINT VENTURE CONTRACT
----------------------


In accordance with the "Law of the People's Republic of China on Joint Ventures Using Chinese and Foreign Investment" and other relevant Chinese rules and regulations, WUHAN ELECTRIC POWER INSTRUMENT FACTORY ("Party A"), BEIJING HUADIAN ELECTRIC POWER AUTOMATION CORPORATION ("Party B") and HATHAWAY CORPORATION ("Party C"), adhering to the principle of equality and mutual benefit and through friendly consultation, agree to set up a joint venture enterprise in Wuhan, People's Republic of China. Party A, Party B and Party C are hereinafter collectively referred to as "Parties" and individually as "Party".


ARTICLE 1 - DEFINITIONS
-----------------------


Unless the terms or context of this Joint Venture Contract ("Contract") otherwise provides, the following terms shall have the meanings set out below:


1.01 "Articles of Association" shall mean the Articles of Association of
the Company executed by the Parties on June 12, 1995.


1.02 "Affiliate" shall mean any company which, through ownership of voting
stock or otherwise directly or indirectly, is controlled by, under common
control with, or in control of, a Party; the term "control" being used in
the sense of power to elect the majority of directors or to direct
management.


1.03 "Board" shall mean the board of directors of the Company.


1.04 "Company" shall mean Hathaway Power Monitoring Systems Company, Ltd.,
the joint venture limited liability company formed by the Parties
pursuant to the Joint Venture Law, the Joint Venture Regulations, and
other relevant Chinese laws and this Contract.


1.05 "Effective Date" means the effective date of this Contract, which
shall be the date on which this Contract and the Articles of Association
have been approved by the Examination and Approval Authority.


1.06 "Examination and Approval Authority" shall mean the Ministry of
Foreign Trade and Economic Cooperation or its local delegate.


1.07 "Joint Venture Law" shall mean the Law of the People's Republic of
China on Joint Ventures Using Chinese and Foreign Investment.


1.08 "Joint Venture Regulations" shall mean the Regulations for the
Implementation of the Law of the People's Republic of China on Joint
Ventures Using Chinese and Foreign Investment.


1.9 "Management Personnel" shall mean the Company's General Manager,
Deputy General Manager and other management personnel as decided by the
Board.


1.10 "Renminbi" or "RMB" shall mean the lawful currency of China.


1.11 "SAIC" shall mean the State Administration for Industry and Commerce
of China or a branch thereof.


1.12 "Technology License Contract" shall mean the technology license
contract to be entered into between Party A and Party B on behalf of the
Company and Party C in the form of Appendix A.


1.13 "United States Dollars" or "US$" shall mean the lawful currency of the
United States of America.


1.14 "Working Personnel" shall mean the employees of the Company, other
than the Management Personnel.


ARTICLE 2 - PARTIES TO THE CONTRACT
-----------------------------------


2.01 The Parties
-----------


The Parties to this Contract are:


(a) Party A, Wuhan Electric Power Instrument Factory, a Chinese state-
owned enterprise registered in Wuhan, People's Republic of China,
with its legal address at 2 Qiujiawan, Guangbutun, Wuhan, 430072,
People's Republic of China.


Legal Representative of Party A:


Name: Yuan Jiaqing
Position: Director - Senior Engineer
Nationality: Chinese


(b) Party B, Beijing Huadian Electric Power Automation Corporation, a
Chinese state-owned enterprise registered in Beijing, People's
Republic of China, with its legal address at Jia 17, Xi San Huan
Nan Lu, Beijing, 100073, People's Republic of China.


Legal Representative of Party B:


Name: Xu Quankun
Position: General Manager
Nationality: Chinese


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(c) Party C, Hathaway Corporation, a corporation registered in the
State of Colorado, U.S.A. with its legal address at 8228 Park
Meadows Drive, Littleton, Colorado, 80124, U.S.A.


Legal Representative of Party C:


Name: Eugene Prince
Position: President and Chief Executive Officer
Nationality: American


2.02 Authority and Representations
-----------------------------


Each of the Parties represents that it possesses full power and authority
to enter into this Contract and to perform its obligations hereunder and
that the signatory of each of the Parties is fully authorized to sign
this Contract. If an individual other than a Party's legal
representative shall sign this Contract, he shall do so only pursuant to
a valid power of attorney, a copy of which shall be provided to the other
Party. At the time of the execution of this Contract, Party A and Party
B shall provide Party C with a copy of their business licenses, and Party
C shall provide Party A and Party B with certified copies of its Articles
of Incorporation.


2.03 Change of Legal Representative
------------------------------


Each Party shall have the right to change its legal representative and
shall promptly notify the other Party of such change and the name,
position and nationality of its new legal representative.


ARTICLE 3 - ESTABLISHMENT OF THE JOINT VENTURE COMPANY
------------------------------------------------------


3.01 Establishment of the Company
----------------------------


The Parties hereby agree to establish the Company promptly after the
Effective Date in accordance with the Joint Venture Law, the Joint
Venture Regulations and the provisions of this Contract.


3.02 Name and Address of the Company
-------------------------------


(a) The name of the Company shall be " " in
Chinese, and "Hathaway Power Monitoring Systems Company, Ltd."
in English.


(b) The legal address of the Company shall be 2 Qiujiawan, Guangbutun,
Wuhan, 430072, People's Republic of China.


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3.03 Laws and Decrees
----------------


The Company shall be a legal person under the laws of China. The
activities of the Company shall be governed and protected by the laws,
decrees and relevant rules and regulations of China.


3.04 Limited Liability Company
-------------------------


The form of organization of the Company shall be a limited liability
company. Subject to the following, the profits, risks and losses of the
Company shall be shared by the Parties in proportion to their respective
contributions to the Company's registered capital. Except as otherwise
provided herein, once a Party has paid in full its contribution to the
registered capital of the Company, it shall not be required to provide
any further funds to or on behalf of the Company by way of capital
contribution, loan, advance, guarantee or otherwise. Creditors of the
Company shall have recourse only to the assets of the Company and shall
not seek repayment from any of the Parties. The Company shall indemnify
the Parties against all losses, damages, liability suffered by the
Parties in respect of any third party claims arising out of the operation
of the Company.


3.05 Branch To Be Established in Beijing
-----------------------------------


The Parties agree that after the establishment of the Company and
pursuant to a unanimous board resolution, the Company will establish a
branch in Beijing in accordance with relevant local laws and regulations.


ARTICLE 4 - THE PURPOSE AND SCOPE OF
------------------------------------
BUSINESS OF THE COMPANY
-----------------------


4.01 Purpose of the Company
----------------------


The purpose of the Company is to manufacture and sell fault recorders and
automation instrumentation products, use the designs of Party C to
improve fault recording technology, set up an international standard
manufacturing, research and development facility in China and market the
Company's products in China and overseas, subject to Article 7.01. The
Joint Venture Products will be sold to, among other purchasers, Chinese-
owned contractors for installation into power generation, transmission
and distribution facilities under construction by such contractors
outside of China.


4.02 Scope of Business of the Company
--------------------------------


Business scope of the Company is to design, manufacture and sell digital
fault recorders and automation instrumentation products for use by
electric power


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companies for substations in power transmissions and distribution systems
(the "Joint Venture Products"). The scale of production is estimated to
be two hundred (200) units per year.


ARTICLE 5 - TOTAL AMOUNT OF INVESTMENT AND
------------------------------------------
REGISTERED CAPITAL
------------------


5.01 Total Investment
----------------


The Company's total amount of investment shall be Five Hundred Thousand
United States Dollars (US$500,000).


5.02 Registered Capital
------------------


The Company's registered capital shall be Three Hundred Fifty Thousand
United States Dollars (US$350,000). If the Company requires additional
cash to operate the business of the Company as determined by the Board of
Directors, the Parties agree to contribute additional capital of One
Hundred Fifty Thousand United States Dollars (US$150,000) with Party A
contributing forty percent (40%) of such additional registered capital,
Party B contributing twenty percent (20%) of such additional registered
capital and Party C contributing forty percent (40%) of such additional
registered capital. Any further increases will be handled pursuant to
Article 5.07 of this Contract.


5.03 Contribution to Capital
-----------------------


(a) Party A's contribution to the registered capital of the Company
shall be the Renminbi equivalent of One Hundred Forty Thousand
United States Dollars (US$140,000), representing a forty percent
(40%) share of the registered capital of the Company.


(b) Party B's contribution to the registered capital of the Company
shall be Seventy Thousand United States Dollars (US$70,000),
representing a twenty percent (20%) share of the registered
capital of the Company.


(c) Party C's contribution to the registered capital of the Company
shall be One Hundred Forty Thousand United States Dollars
(US$140,000), representing a forty percent (40%) share of the
registered capital of the Company. Of Party C's total
contribution to the registered capital of the Company, Seventy
Thousand United States Dollars (US$70,000) will be paid in cash
and, as indicated in 5.04(a), Seventy Thousand United States

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Dollars (US$70,000) or 20% of the total amount of registered capital
of the Company will be in the form of the technology licensed to the
Company from Party C pursuant to the Technology License Contract.


5.04 Payment of Registered Capital and Conditions Precedent Thereto
--------------------------------------------------------------


(a) Subject to Article 5.04(c) below, each Party shall pay into the
Company via electronic or bank transfer its registered capital
contribution within ten (10) days of the fulfilment of all of the
conditions precedent set forth in Article 5.04(c).


Party C will pay its contribution to the registered capital of the
Company, as specified in Article 5.03(c), less the initial license
fee required to be paid by the Company to Party C pursuant to
Article 4.01 of the Technology License Contract.


(b) In the event that a Party fails to pay in the respective share of
registered capital to be subscribed by it in whole or in part as
described above, such Party shall be liable to pay simple interest
to the Company on the deficit from the time due until the time paid
at two (2) percentage points above the six-months London Interbank
Offered Rate (LIBOR) for United States Dollars.


(c) The Parties' obligations to complete their respective contribution
to the Company's registered capital shall not arise until each of
the following conditions has been fulfilled:


(i) approval of the Contract and Articles of Association without
varying the terms hereof or thereof;


(ii) approval of the Technology License Contract without varying
the terms thereof; and


(iii) issuance of the business license of the Company by the SAIC
without varying the terms of this Contract or the Articles of
Association.


Each of the above documents shall be satisfactory in form and
substance to the Parties. If any of the above conditions precedent
are not fulfilled within sixty (60) days after the date of execution
of this Contract, and the Parties do not agree in writing to waive
such conditions precedent or to extend the time for their
fulfilment, any Party shall have the right to terminate this
Contract, in which case no Party shall have any right whatsoever to
require the other Parties to make any contribution to the registered
capital or to claim any damages from the other Parties.


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5.05 Investment Certificate
----------------------


After each Party makes a contribution to the registered capital, a
Chinese registered accountant shall verify the contribution and issue a
contribution verification report. Once each Party's registered capital
contribution has been paid in full, the Company shall issue an investment
certificate to each Party signed by the Chairman and the Vice Chairman of
the Board.


5.06 Assignment of Registered Capital
--------------------------------


(a) Each Party to this Contract may assign all or part of its amount of
capital contribution (the "Disposing Party") to a third party
provided the Disposing Party obtains the written consent of all the
other Parties and the approval of the Examination and Approval
Authority.


(b) When a Party is to assign all or part of its amount of capital
contribution pursuant to (a) above, each of the remaining Parties
has a pre-emptive right of purchase at a price equal to that offered
by the third party. The Disposing Parties shall notify the remaining
Parties in writing of the terms and conditions of the assignment,
and such remaining Parties shall have the right to exercise their
pre-emptive right of purchase within thirty (30) days after receipt
of the notice. If all of the remaining Parties exercise their pre-
emptive right of purchase, the Disposing Party shall assign its
amount of capital contribution to such Parties in the proportion of
their respective capital contributions. If only one of the remaining
Parties exercises its pre-emptive rights of purchase, the Disposing
Party shall assign the full amount of its capital contribution to
such Party. If all remaining Parties fail to exercise their pre-
emptive rights of purchase, the Disposing Party may assign its
amount of capital contribution only upon the consent of all such
Parties. In the event that all such Parties consent to the sale of
the capital contribution of the Disposing Party, the assignee shall
execute a document by which it becomes a party to this Contract.


(c) Any sale or assignment pursuant to the above shall be unanimously
agreed to at a meeting of the Board and must be submitted to the
Examination and Approval Authority for examination and approval.
Upon receipt of the approval of the Examination and Approval
Authority the Company shall register the change in ownership with
the appropriate office for the SAIC.


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5.07 Increase of Registered Capital
------------------------------


(a) Any increase in the registered capital of the Company which is
deemed necessary by the management of the Company must be approved
by a unanimous vote of the Board present in person or by proxy at a
duly constituted meeting thereof and submitted to the Examination
and Approval Authority for examination and approval. Upon receipt of
the approval of the Examination and Approval Authority, the Company
shall register the increase in registered capital with the
appropriate office for the administration of industry and commerce.


(b) Any increase in the registered capital of the Company shall be
contributed by the Parties in the same manner and in accordance with
the ratio of each Party's share of the registered capital at the
time of such increase, and within the time limit specified by the
Board for such increase.


(c) In the event any Party fails to pay in registered capital as
provided in Article 5.04 or fails to provide its portion of any
increase in its registered capital as described in (b) above then in
addition to any other rights it may have against the defaulting
Party, the Company will offer such portion to the non-defaulting
Parties on a pro-rata basis. Such offer to provide a portion of any
increase in the registered capital as described in this paragraph
shall be approved by the Examination and Approval Authority.


5.08 Additional Financing
--------------------


Besides the registered capital, the Company's future additional financing
will be obtained through loans from sources in China or outside China.
If the Company needs the assistance of the Parties when arranging for
loans, the Parties, subject to their mutual approval, shall provide
guarantees in proportion to the ratio of their respective contributions
to the Company's registered capital.


ARTICLE 6 - RESPONSIBILITIES OF THE PARTIES
-------------------------------------------


6.01 Responsibilities of Party A and Party B
---------------------------------------


In additional to their obligations under this Contract Party A and Party
B shall have the following responsibilities which shall be provided at
their own expense:


(a) assist the Company in obtaining necessary approvals, permits and
licenses for the establishment and operation of the Company;


(b) provide their contributions to the registered capital of the Company
as provided in Article 5.04;


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(c) assist the Company in applying for and obtaining the most
preferential tax reductions and exemptions and other investment
incentives available under the laws and regulations of Wuhan
Municipality;


(d) assist the Company in liaising with and making business arrangements
for operations pursuant to its authorized scope of business;


(e) assist the Company in liaising with the relevant authorities to
effectively procure the external water supply, fuel supply, power
supply, transportation, communications and other services required
for the Company's operations;


(f) assist the Company in obtaining from local banks necessary working
capital Renminbi loans;


(g) assist the Company in arranging for the transportation of equipment,
materials and products within China and for the purchase or lease of
equipment, materials, raw materials, office equipment, means of
transportation and communication equipment;


(h) assist the Company in carrying out required import and export
customs declaration formalities with respect to goods imported and
exported by the Company;


(i) assist the Company in developing sales channels for the Joint
Venture Products;


(j) assist the Company in opening Renminbi and foreign currency bank
accounts;


(k) assist the expatriate employees of the Company to obtain necessary
entry visas and work permits;


(l) assist the Company in recruiting various types of qualified Chinese
personnel;


(m) assist the Company in handling the necessary approvals to enable the
Company to utilize the various methods permitted under Chinese law
to balance its foreign exchange;


(n) assist the Company in arranging for the design and construction of
the premises and engineering facilities; and


(o) handle other matters entrusted by the Board from time to time.


6.02 Responsibilities of Party A ---- ---------------------------


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In addition to its obligations under this Contract, Party A shall have
the following obligations:


(a) build mechanical parts, including the cabinets for the Company at a
price to be unanimously agreed upon by the Board of Directors, which
price shall not be greater than the market price charged by a third
party supplier in Wuhan municipality;


(b) lease space to the Company consisting of fifty (50) square meters at
its factory in Wuhan at a monthly rental rate of twenty Renminbi
(RMB(Yen)20) per square meter and upon terms to be unanimously
agreed upon by the Board of Directors, which terms shall be
comparable to the prevailing market practices in Wuhan; and


(c) commencing from December 1996, lease additional space to the Company
which is required to carry on its business and which is initially
estimated to consist of five hundred (500) square meters at its
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