JOINT VENTURECONTRACT BETWEEN
Exhibit
10.1
JOINT
VENTURECONTRACT
BETWEEN
JIANGSU
HUALAN BIOTECHOLOGYLTD.(CHINA)
AND
MEDICAL
INTERNATIONAL TECHNOLOGIES(MIT CANADA)INC.
(DATED
ON THE MAY 6th, 2009)
TABLE
OF CONTENT
GENERAL
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ARTICLE
1
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DEFINITIONS
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ARTICLE
2
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PARTIESTO
THE CONTRACT
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ARTICLE
3
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ESTABLISHMENTOF
THE JOINT VENTURE COMPANY
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ARTICLE
4
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THE
PURPOSE, SCOPE AND SCALE OF PRODUCTIONAND OPERATION
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ARTICLE
5
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TOTAL
INVESTMENT, REGISTERED
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ARTICLE
6
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CAPITAL
CONTRIBUTIONS
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ARTICLE
7
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BOARD
OF DIRECTORS
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ARTICLE
8
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MANAGEMENT
ORGANIZATION
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ARTICLE
9
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THE
PARTIES' RESPONSIBILITIES OF ASSISTANCE
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ARTICLE
10
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TRANSFER
OF TECHNOLOGY
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ARTICLE
11
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PURCHASE
OF EQUIPMENTAND RAW MATERIALS
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ARTICLE
12
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UTILITIES,
INFRASTRUCTUREAND SERVICES
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ARTICLE
13
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SALE
OF PRODUCTS
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ARTICLE
14
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SITE
LAND AND BUILDING
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ARTICLE
15
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HEALTH,
S AFETY AND ENVIRONMENT PROTECTION
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ARTICLE
16
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TRADEMARKS
AND TRADE NAMES
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ARTICLE
17
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FOREIGN
EXCHANGE
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ARTICLE
18
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FINANCE,
ACCOUNTING AND AUDITING
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ARTICLE
19
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DISTRIBUTIONAND
PAYMENT OF PROFITS
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ARTICLE
20
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TAXATION
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ARTICLE
21
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INSURANCE
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ARTICLE
22
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LABOR
MANAGEMENT
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ARTICLE
23
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CONFIDENTIALITY
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ARTICLE
24
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FUTURE
COOPERATIONAND NON-COMPETITION
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ARTICLE
25
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THE
JOINT VENTURE TERM
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ARTICLE
26
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ASSIGNMENTOF
INVESTMENT
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ARTICLE
27
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TERMINATION
AND LIQUIDATION
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ARTICLE
28
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BREACH
OF CONTRACT
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ARTICLE
29
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FORCE
MAJEURE
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ARTICLE
30
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APPLICABLE
LAW
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ARTICLE
31
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SETTLEMENTOF
DISPUTES
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ARTICLE
32
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LANGUAGE,
EFFECTIVENESS OF CONTRACTAND MISCELLANEOUS
PROVISIONS
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-2-
THIS
CONTRACT is signed at: XX.0 Xxxxxxx Xxxx Xxxx, xxxxx # 000 Xxxxxxx,
Xxxxxxx China, on the May 6th
2009 by and between A Corporation, and B Corporation.
GENERAL
In
accordance with "The Company Law of the People's Republic of China ", "The Law
of the People's Republic of China on Joint Ventures Using Chinese and Foreign
Investment", "The Implementation Rules for the Law of the People's Republic of
China on Joint Ventures Using Chinese and Foreign Investment" and other relevant
laws and regulations of China, the Parties on the basis of the principle of
equality and mutual benefit, long-term cooperation, joint development and enhancing friendship,
and through friendly consultations, agree to jointly invest, to establish a
joint venture in the planned development area. The Parties will contribute
their respective resources and special knowledge and skills and jointly operate,
manage and develop the joint venture.
Now,
therefore, the Parties have agreed as follows:
ARTICLE
1
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DEFINITIONS
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Unless
the terms or context of this Contract otherwise provides specifically, the
following terms shall have the meanings set out below:
1.01
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"Articles
of Association" shall mean the articles of association of the
Company;
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1.02
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"Board
of Directors" or "Board" shall mean the board of directors of the
Company;
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1.03
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"China"
or "State" shall mean the People's Republic of
China;
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1.04
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"Company"
shall mean the joint venture company to be formed pursuant to this
Contract;
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1.05
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"Contract"
shall mean this Joint Venture
Contract;
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1.06
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“Technology
Transfer Contract” shall mean: License to produce and sell. In
china, Medical International Technologies (MIT Canada) Inc., NEEDLE-FREE
JET INJECTOR products under the Patents and Trade marks, as per annex A
attached.
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1.07
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"
Plant(s)" shall mean: Manufacturing plant for the assembly and production
of the NEEDLE-FREE JET INJECTOR
PRODUCTS.
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1.08
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"
Products" shall mean: NEEDLE-FREE JET INJECTOR FAMILY OF PRODUCTS,
AGRO-JET and MED-JET.
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1.09 |
"Effective
Date" shall mean the effective date of this Contract, which shall be the
date on which all of the following conditions have been
fulfilled:
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(1)
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this
Contract and the Articles of Association have been signed by each of the
Parties and have been approved in their entirety by the
Examination and Approval Authority;
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(2)
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approval
of all Technology Transfer Contracts and, if required, approval of all
Engineering Services Contracts and the Contract for the Assignment of
Experts,
all in their entirety, have been obtained from the Examination and
Approval Authority;
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1.10
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"Examination
and Approval Authority" shall mean the Bureau of Foreign Trade and
Economic Cooperation of China;
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1.11
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"Employees"
shall mean all personnel who have a labour contract relationship with the
Company except Senior Staff and Temporary Delegates and Short-Term
Employees;
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1.12
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"Joint
Feasibility Study Report" shall mean the feasibility study report, jointly
prepared and initialled by the Parties and supplementary reports thereto,
for the purpose of evaluating the technical and commercial feasibility of
building and operating plants;
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1.13
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"Party"
or "Parties", separately or collectively, shall mean any party signed the
JOINT VENTURE CONTRACT.
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1.14
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"Senior
Staff" shall mean the Company's top managerial personnel nominated by the
Parties in accordance with their nomination rights and appointed by the
Board of Directors;
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1.15
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"Temporary
Delegates" shall mean certain persons who are temporarily delegated to,
and employed by, the Company.
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ARTICLE
2
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PARTIES
TO THE CONTRACT
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2.01
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The
Parties to this Contract are:
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(1)
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Party
A is JIANGSU HUALAN
BIOTECHOLOGY LTD. (CHINA)
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The
representative of A Corporation duly authorized to sign this Contract
is:
Name:
Xxx, Xxxxx
Position:
General Manager
Nationality:
China
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(2)
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Party
B is MEDICAL
INTERNATIONAL TECHNOLOGIES (MIT CANADA)
INC.
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The
representative of Party B duly authorized to sign this Contract is:
Name:
XXXXX XXXXXXX
Position: President,
CEO, AND CHAIMAN OF THE BOARD
Nationality:
CANADIAN
2.02
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A
copy of the business license of each Party has been provided to each of
the other Parties.
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2.03
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Each
of the Parties hereby represents and warrants
that:
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(1)
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it
possesses full power and authority to enter into this Contract and to
perform its obligations hereunder;
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(2)
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each
of their representatives whose signature is affixed hereto has been fully
authorised to sign this Contract ;
and
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(3)
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upon
the Effective Date, this Contract shall constitute its legal,
valid and binding obligations.
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ARTICLE
3
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ESTABLISHMENT
OF THE JOINT VENTURE COMPANY
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3.01
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The
Parties agree to establish the Company in accordance with "The Company Law
of the People's Republic of China ", "The Law of the People's Republic of
China on Joint Ventures Using Chinese and Foreign Investment", "The
Implementation Rules for the Law of the People's Republic of China on
Joint Ventures Using Chinese and Foreign Investment" and other relevant
laws and regulations of China and the provisions of the Contract and the
Articles of Association.
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3.02
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The
name of the Company shall be: JIANGSU HUALAN MIT MEDICAL TECHNOLOGY (MIT
China) LTD.
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-4-
3.03
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The
legal address of the Company shall be: XX.0
Xxxxxxx Xxxx Xxxx, xxxxx # 000 Xxxxxxx,
Xxxxxxx China,
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3.04
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The
organization form of the Company shall be: Limited Liability
Company.
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3.05
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The
Company shall be a legal person under the laws of China. The activities of
the Company shall be governed and protected by the present and future
published laws of China.
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3.06
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All
the organization and business activities of the Company shall be conducted
under the leadership of the Board of
Directors.
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ARTICLE
4
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THE PURPOSE
, SCOPE AND SCALE OF PRODUCTION AND OPERATION
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4.01
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Purpose:
The purpose of the Company shall be to adopt most advanced technology
including high standards to protect the environment and to minimize use of
natural resources and energy consumption in integrated systems and to
apply scientific management methods with the aim to build, operate plants,
improve and expand the production and use of Products, as well as to earn
lawful profits, pay dividends to the Parties, and to make contributions to
the economic development of China, especially of Jiangsu
Province.
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4.02
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Business
Scope: research, production and sales of medical equipments, import and
export of medical equipments and components
products.
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ARTICLE
5
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TOTAL
INVESTMENT, REGISTERED CAPITAL
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5.01
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The
total investment by the Company as defined in the approved Joint
Feasibility Study Report shall amount to US$
2,000,000.
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5.02
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The
Company's registered capital shall amount to US$
1,400,000.
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5.03
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The
Parties shall contribute to the registered capital in the proportions and
amounts as follows:
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(1)
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A
shall subscribe for US$714,000, amounting to FIFTY ONE percent (51%) of
the registered capital;
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(2)
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B
shall subscribe for US$686,000, amounting to FORTY NINE percent (49%) of
the registered capital. (20% for the TECHNOLOGY VALUED TO US$280,000 and
US$406,000 in cash for 29% ).
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5.04
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A
shall contribute in USD. B shall contribute
in USD and license to produce and sell. In china, Medical International
Technologies (MIT Canada) Inc., NEEDLE-FREE JET INJECTOR products under
the Patents and Trade marks, as per annex A
attached.
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5.05
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The
Company shall take all feasible measures to control the investment so as
to avoid, to the greatest extent, the total investment as described in
Article 5.01 being exceeded.
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5.06
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Any
increase of the registered capital shall be subject to the unanimous
consent of the Board of Directors and submitted to the Examination and
Approval Authority for approval. Registration procedures for change shall
be dealt with at the relevant registration and administration
authority.
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5.07
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The
exchange rate which will be used for determining the RMB equivalent of
capital contributions in USD shall be the official middle
transaction rate of exchange of RMB to USD as published by the People's
Bank of China pursuant to the floating exchange rate system or, if such
official middle rate is not available, shall be the middle rate of
exchange of RMB to USD as published by the Bank of China, and all in
effect on a date which is four(4) working days before such contributions
are made.
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5.08
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Provided
that the Company's normal operation is not affected, the registered
capital of the Company may be reduced subject to the fulfilment of all the
conditions as stipulated in the relevant laws and
regulations.
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Any
reduction of the registered capital shall be subject to the unanimous
consent of the Board of Directors and submitted to the Examination and
Approval Authority for approval. Registration procedures for change shall
be dealt with at the relevant registration and administration
authority.
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ARTICLE
6
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CAPITAL
CONTRIBUTIONS
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6.01
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The
Parties shall contribute simultaneously their subscribed capital to the
registered capital of the Company according to Article
5.03.
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Further
details shall be agreed upon in a relevant
agreement.
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6.02
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Within
ninety (90) days of the granting of a business license to the Company the
Parties shall pay the total amount of the registered capital, amounting to
US$1,400,000..
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6.03
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Contributions
referred to in Article 6.02 shall be made by the Parties regardless of the
actual progress of the projects. Further payments to the registered
capital shall be made by the Parties according to the financial needs of
the Company in accordance with the actual progress of the projects. The
registered capital shall be fully contributed within six (6) Month after
the issuance of the Company’s business
license.
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6.04
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The
Parties shall pay their contributions according to such updated
contribution schedule.
For funds needed for financing a cost
overrun, the management of the Company shall prepare a plan and submit it
to the Board for determination of sources of
funding.
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6.05
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Based
on the needs of the Company, the dates and amounts of payments of capital
contributions by the Parties shall be decided by the Board of
Directors.
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6.06
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The
Company shall issue a certificate of instalment contribution signed by the
Chairman of the Board based on the certificate of verification issued by
an accountant registered in China to the relevant Party within thirty (30)
days each time after the Company has received the Party's contribution.
The certificate of instalment contribution for each instalment shall list
the actual amount of capital already paid by the Party and the time of
payment.
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After
the registered capital is completely paid up, the certificates of
instalment contribution shall be replaced by a formal certificate of
contribution stamped by the Company and confirmed by an accountant
registered in China.
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6.07
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In
the event that any Party fails to pay in all or part of its required
capital contribution when due, it shall bear the responsibility for
breaching the Contract as
stipulated.
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ARTICLE
7
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BOARD
OF DIRECTORS
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7.01
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The
date of issuance of the Company's business license shall be the date on
which the Board shall be
constituted.
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7.02
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The
Board of Directors is the authority of the Company, deciding all important
and major matters of the Company and supervising the operation and
management work of the management organization of the
Company.
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7.03
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The
Board shall consist of three (3) members, of which one (2) shall be
appointed by A and two (1) by B.
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No
member of the Board shall have any personal liability for any act
performed in his capacity as a member of the Board for the Company’s
operation except for such acts as would constitute a personal violation of
publicly issued laws and regulations of any jurisdiction to which the
Company or the relevant member is
subject.
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7.04
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Each
member of the Board shall be appointed for a term of three (3) years and
may serve consecutive terms if reappointed by the Party originally
appointing him. If a seat on the Board is vacated by the retirement,
resignation or death of a member or by the removal of such member by the
Party which originally appointed him, the Party which originally appointed
such member shall appoint a successor to serve out such member's
term.
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The
members of the Board shall comply with the Articles of Association of the
Company, earnestly implement their duties and protect the interests of the
Company.
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7.05
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Xxx,
Xxxxx, the Chairman of the Board shall be appointed by A, and Xxxxx
Xxxxxxx the Vice Chairman, shall be appointed by B.
The Chairman is the legal representative
of the Company. He shall bind the Company in accordance with this
Contract, the Articles of Association and the resolutions of the Board. In
the event that any act by a Senior Staff violates the Contract, the
Articles of Association or a Board resolution, the Chairman is entitled to
and shall point out such violation in writing to the General Manager and
require him to correct such violation immediately.
Should
the Chairman be unable to exercise his duty due to any reason, he shall
authorize in writing the Vice Chairman to represent the
Company.
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7.06
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Meetings
of the Board shall be held at least twice (2) every year and should be
held at the place of registration of the Company or may be held at other
places either within or outside China decided upon by the Board. The first
Board meeting shall be held within three (3) month after issuance of the
Company's business license. The meetings shall be called and presided over
by the Chairman. If the Chairman is unable to call a meeting, he shall
entrust in written form the Vice Chairman to call and preside over the
meeting.
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Upon
the written request of no less than one third (1/3) of the members of the
Board specifying the matters to be discussed, the Chairman of the Board
shall convene an interim meeting of the Board to be held within six (6)
weeks.
For
the convention of a Board meeting all members shall be informed in writing
of the date, venue and agenda ten (10) days before the meeting is
held.
All
topics requested in writing by no less than one third (1/3) of the members
of the Board shall be included by the Chairman into the agenda of the next
Board meeting.
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7.07
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Three
(3) members of the Board present in person or represented by proxy shall
constitute a quorum for the meeting of the
Board.
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7.07.1
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In
case a member of the Board is for any reason unable to participate in
a Board meeting, he shall issue a power of attorney and entrust
a proxy to participate in the meeting on his behalf. The proxy so
entrusted shall have the same rights and power as the member. Each of the
Parties shall ensure that, after having been duly informed, the members
appointed by it will attend all Board meetings in person or by proxy
.
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7.07.2
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Any
failure to meet the quorum requirements stipulated in Article 7.07 as a
result of the non-attendance of a duly convened Board meeting by one or
more members for other reasons but Force Majeure shall constitute a breach
of this Contract by the Party, which has appointed the non-attending
member or members.
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7.07.3
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In
case that a Board meeting cannot be held because the quorum is not met,
the meeting shall be adjourned and the Chairman
shall convene a Board meeting not later than three (3) months after the
date of the adjourned meeting.
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7.08
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The
General Manager and the Deputy General Manager shall attend the Board
meetings. The Chairman may invite any of the other Managers to attend.
Upon request of the Vice Chairman, the Chairman shall invite any of the
other Managers to attend.
Experts
of each Party may attend the Board meetings upon invitation of a Party,
after consultation between Chairman and Vice Chairman and with the
Chairman's consent.
All
such attendees shall not have a voting
right.
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7.09
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Resolutions
involving the following matters may only be adopted by the affirmative
vote of the majority of the members of the Board present (in person or by
proxy) at the meeting constituting a
quorum
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(1)
Approval of the annual budget (including, but not limited to, total sales,
profit, financing and allocation of funds, investment and expenditures)
and annual operation plan (including, but not limited to, purchasing,
manufacturing and maintenance, marketing, personnel and
training), medium-term plans and long-term
plans;
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(2)
Approval of the annual report and the annual profit distribution
plan;
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(3)
Decision on allocations to the reserve fund, enterprise development fund
and bonus and welfare fund for the workers and staff members and decisions
regarding the use of such funds;
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(4)
Decision on distribution of distributable
profits;
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(5)
Appointment and dismissal of Senior Staff and decisions in regard to their
term of office, remuneration and other terms of
employment;
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(6)
The policy for the salary, bonus and welfare of the
Employees;
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(7)
Any significant change in the structure of the Company's management
organization and establishment and cancellation of any branch organization
of the Company;
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(8)
Appointment and dismissal of the certified accounting
company;
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(9)
Establishment and change of important internal regulations and systems of
the Company;
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(10)
The marketing strategy (including pricing guidelines) of the divisions,
the annual sales plan of the Company, the conclusion and termination of
sales agency or distributorship contracts and any application for the
registration of a trademark in the Company's
name;
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(11)
Any economic transaction of the Company with any Party or Affiliate of any
Party in value exceeding RMB 150,000 or over one (1) year in period,,
except those according to or regulated in the Joint Venture Contract or
its Schedules or any Ancillary Contracts specified
therein;
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-8-
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(12)
Any technology transfer between the Company and either Party or third
parties, including, but not limited to, the acquiring or disposing by the
Company of industrial property and/or know how, the disposing or granting
of licenses for industrial property rights and/or know how and agreements
on trademarks;
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(13)
Any investment(s) in fixed assets beyond the annual investment plan with
an accumulated value exceeding RMB 50,000;or any leasing agreement
regarding assets having a value exceeding RMB 50,000; or any leasing
agreement with such other leasing period as may be determined by the
Board;
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(14)
Any investment in another enterprise, or any total or partial acquisition
of another enterprise or of its
business;
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(15)
The utilisation of any financial derivative
instrument;
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(16)
Any decision to change the business scope of the Company or any change of
the capacities of the Plants set forth in the Joint Venture
Contract;
(17)
Any transaction concerning land use rights;
(18)
Any unplanned or non-budgeted transaction regarding buildings with a value
exceeding RMB 50,000;and/or any sale, transfer, mortgage or other
transaction regarding other assets of the Company with a value exceeding
RMB 50,000;
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(19)
Any lawsuit or arbitration of the Company on important
matters;
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(20)Any
non-commercial sponsoring or donation exceeding RMB
10,000;
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(21)
Selection of insurance carriers for the Company's major insurances and
decisions on major insurance
matters;
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(22)
Any other matter to be decided by the Board according to the Joint Venture
Contract or the Articles of
Association;
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(23)
Any transaction or business of an important nature or not in the ordinary
course of business of the Company.
The Board may change the values of the
thresholds set forth above.
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7.10
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Resolutions
involving any lawsuit or arbitration between the Company and any of the
following enterprises shall be adopted by the affirmative vote of the
majority of the members of the Board present (in person or by proxy)
nominated by the other Parties:
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(1)
one Party or its Affiliate;
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(2)
another enterprise one third (1/3) or more of whose registered capital or
voting rights are owned or controlled, directly or indirectly, by one
Party or its Affiliate.
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7.11
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The
Board of Directors shall make minutes in Chinese and English on the
results and resolutions of its meetings. The minutes of the Board of
Directors shall become effective after signature by the Chairman and Vice
Chairman.
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7.12
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Between
meetings, the Board may decide in writing by circular resolutions,
provided that the necessary quorum and majority of all members of the
Board are achieved.
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ARTICLE
8
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MANAGEMENT
ORGANIZATION
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8.01
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The
Company shall have a management organization to be responsible for the
day-to-day operational and managerial work of the Company under the
leadership and supervision of the Board of
Directors.
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8.02
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The
Company shall have a General Manager nominated by Xxx,
Xxxxx and appointed by the Board of Directors. Each term of office
shall be no more than three (3)
years.
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The
Parties shall cause their members of the Board to appoint such
nominee.
Under the leadership of the Board of
Directors, the General Manager shall have the overall responsibility to
organize and lead the day-to-day operation and the management of the
Company in accordance with this Contract, the Articles of Association and
all resolutions of the Board of
Directors
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8.03
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The
Deputy General Manager shall be nominated by Party A. The Parties shall
cause their members of the Board to appoint such
nominee.
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The
Deputy General Manager shall report directly to and assist the General
Manager in his work.
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The
General Manager shall consult and try to reach agreement with the Deputy
General Manager on important matters defined in Article 8.07. Reports and
statements on such matters addressed to the General Manager shall be sent
to the Deputy General Manager for information at the same
time.
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In
case the General Manager is absent he shall authorize the Deputy General
Manager to perform the duties and responsibilities of the General
Manager.
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8.04
|
Based
on actual special needs for certain know-how transfer as well as for
marketing and training experience, the Parties agree that the Company may
employ for periods of three (3) years Temporary Delegates from A/B. Such
employment shall terminate three (3) years after the start of commercial
production of the last Plant, the
latest.
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8.05
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A
Senior Staff may be replaced for any reason at any time by the Party which
originally nominated him. The Party having such intention shall inform the
other Parties thereof as soon as possible.
The Party which originally nominated such
Senior Staff shall nominate a successor as soon as possible. The Parties
shall cause their members of the Board to appoint such
nominee.
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8.06
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The
Company shall have a Management Committee (MC) to discuss and consult on
important matters regarding the day-to-day operation and management. The
MC shall consist of the General Manager, the Deputy General Manager and
the other Managers.
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8.07
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The
General Manager shall convene and preside over routine MC meetings held in
principle twice a month. In case of absence of the General Manager, the
Deputy General Manager shall convene and preside over the MC meeting.
Important matters, including but not limited to the following, shall be
discussed by the MC in order to assist the General Manager to make final
decisions:
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(1)
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Reports
and plans to be submitted to the Board, including but not limited to the
annual budget and operation plan, medium-term plans and long-term plans to
be submitted to the Board;
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(2)
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Appointment
and dismissal of any management staff at supervisor
level;
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(3)
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Establishment
and change of important regulations and systems of the Company which are
to be submitted to the Board;
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-10-
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(4)
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Important
matters relating to procurement, manufacturing, maintenance, sales,
borrowing of the working capital or the annual
budget;
|
|
(5)
|
The
marketing strategy (including pricing guidelines) of each operational
division which is to be submitted to the
Board;
|
|
(6)
|
Selection
of the suppliers of important equipment, raw materials and other goods
required in the production and
operation;
|
|
(7)
|
Any
economic transaction of the Company with any Party or Affiliate of any
Party, except those regulated in this Contract or its Schedules or any
Ancillary Contracts;
|
|
(8)
|
Disciplinary
action against those Employees who seriously violated the
discipline;
|
|
(9)
|
Important
matters submitted by any member of the
MC;
|
|
(10)
|
Any
other matters authorized by the
Board.
|
The
minutes of the MC meeting shall become effective after joint signature by the
General Manager and the Deputy General Manager.
8.08
|
In
case a Senior Staff conducts a serious dereliction of his duties, he can
be dismissed at any time by resolution of the Board followed by issuance
of a dismissal notice signed by the Chairman of the Board. Such Senior
Staff must not be nominated again.
|
8.09
|
Further
details of the management organization of the Company shall be defined in
the Articles of Association of the
Company.
|
The
powers and the responsibilities of the Senior Staff shall be listed in the Job
Descriptions for the Senior Staff ("Job Descriptions") to be signed by the
Parties. The Board may amend the Job Descriptions when necessary.
ARTICLE
9
|
THE PARTIES' RESPONSIBILITIES OF
ASSISTANCE
|
9.01
|
Responsibilities
of A.
In addition to their other obligations
under this Contract, A/B shall assist the Company in the following
matters, as far as requested by the
Company:
|
|
(1)
|
assist
the Company to duly apply for and liaise with relevant Chinese
governmental authorities in relation to all approvals, permits and
licenses, etc. necessary for the build-up and operation of the
Company;
|
|
(2)
|
assist
the Company in obtaining licenses for the import and export of
goods;
|
|
(3)
|
assist
in handling all other matters requested by the
Company.
|
9.02
|
Responsibilities
of B
|
In
addition to their other obligations under this Contract, A/B shall assist the
Company in the following matters, as far as requested by the
Company:
|
(1)
|
assist
the Company to obtain entry visas, permits (if needed) and appropriate
accommodation, transportation and medical care for its personnel and
Chinese experts;
|
|
(2)
|
assist
the Company to obtain necessary licenses and to handle custom formalities
for the import and export of goods;
|
-11-
|
(3)
|
assist
in handling all other matters requested by the
Company.
|
9.03
|
Joint
responsibilities of the Parties:
|
In
addition to its other obligations under this Contract, each Party shall assist
the Company in the following matters, as far as requested by the
Company:
|
(1)
|
assist
the Company in applying for and obtaining investment incentives available
for the Company;
|
|
(2)
|
assist
the Company in applying to Chinese banks approved by the State
Administration for Foreign Exchange ("SAFE") for the opening of foreign
currency and Renminbi (RMB) accounts and in applying for loans required
from Chinese or foreign banks under most favorable
conditions.
|
9.04
|
The
responsibilities of a Party may be performed by a Party's Affiliate,
provided, however, that the Party shall remain responsible for the
performance of its obligations under this
Contract.
|
ARTICLE
10
|
TRANSFER
OF TECHNOLOGY
|
10.01
|
Party
B, Medical International Technologies (MIT Canada) Inc., will License to
Jiangsu Hualan MIT MEDICAL TECHNOLOGY (MIT China) LTD. To produce, Market
and sell. In China, Medical International Technologies (MIT Canada) Inc.,
All NEEDLE-FREE JET INJECTOR existing and future products under the
Patents and Trade marks, as per annex A
attached.
|
ARTICLE 11
|
PURCHASE
OF EQUIPMENT AND RAW MATERIALS
|
11.01
|
The
purchasing of all Machineries, Equipments and Raw materials will be done
based on bidding process.
|
11.02
|
Both
parties will agree on the complete list of equipments and Machineries and
Raw materials than:
(1)The
Chinese party will supervise all purchases within China, and get the
approval from the Canadian party.
(2)The
Canadian party will supervise the purchases outside china, and get the
approval from the Chinese
party.
|
ARTICLE
12
|
UTILITIES,
INFRASTRUCTURE AND SERVICES
|
12.01
|
The
Company shall purchase the necessary utilities as well as services from
the most competitive market source of supply with regard to quantity,
quality, reliability, price, currency and other terms and
conditions.
|
|
The
Company has the right to cover its demand of utilities and services by its
own facilities and resources.
|
12.02
|
Upon
reasonable and competitive terms and conditions to be agreed upon between
A and the Company, A shall supply utilities and render services to the
Company, if and to the extent requested by the Company and technically
feasible and shall allow the Company to use A's infrastructure facilities
and to integrate and connect the Company's infrastructure facilities with
A's infrastructure facilities - and shall provide proper and sufficient
land for those facilities of the Company with the approval of the relevant
authority, provided that A has already a land use right for such
land
|
-12-
ARTICLE
13
|
SALE
OF PRODUCTS
|
13.01
|
The
Products shall be sold both in the domestic market and the export market,
but will primarily be sold in the domestic market. The Board shall
determine, based on market conditions and economic feasibility and the
Company's overall marketing concept for the Products, the budgetary
proportion of domestic and export sales of the Products. The proportion of
the domestic and export sales shall finally depend on market conditions
and profit targets.
|
ARTICLE
14
|
SITE
LAND AND BUILDING
|
14.01
|
Pursuant
to Annex
|
ARTICLE
15
|
HEALTH,
SAFETY AND ENVIRONMENT PROTECTION
|
15.01
|
The
Parties agree to cause the Company to introduce and observe high standards
designed to protect employees and public health, safety and the
environment in conducting its production and other activities and to
minimize the use of natural resources and consumption of energy by
integrated management. They will cause the Company to develop a set of
written standards ("Standards") which will incorporate all applicable laws
and regulations of China and principles of relevant standards applied by
the Parties to their own
facilities.
|
15.02
|
The
General Manager shall at least once per year report to the Board of
Directors on the compliance by the Company with applicable laws and
regulations and the Standards.
|
15.03
|
The
Company shall request the technology
licensors and equipment suppliers to guarantee that the technologies and
equipment provided by them to the Company shall meet the Standards in
order to enable the Company to observe the laws and regulations of China
on health, safety and environment
protection.
|
15.04
|
The
Board shall have the right to inspect at any time the implementation by
the management organization of the Company of the laws, regulations and
Standards on health, safety and environment
protection.
|
15.05
|
Each
Party may send at its own expenses its internal safety and environmental
protection department to inspect the observation by the Company of the
applicable laws, regulations and Standards. The inspection personnel shall
have the right to access all production and auxiliary facilities used by
the Company and shall have the right to inspect all facilities, equipment,
records, files and data. The inspection report shall be handed over to the
Company.
|
|
The
aforementioned inspecting rights of each Party shall not replace or limit
in any respect the legal responsibilities and contractual obligations of
the Company concerning health, safety and environmental protection. That
means the Parties shall not assume any responsibility by having such
inspecting rights.
|
ARTICLE
16
|
TRADEMARKS
AND TRADE NAMES
|
16.01
|
The
Company shall design, register and use its own company trademark (the
"Company Trademark") and special trademarks for particular products, if
deemed necessary, in accordance with the "Trademark Law of the People's
Republic of China" and other relevant regulations. The designs of such
Company Trademark and special trademarks and any of their future revisions
shall be approved by the Board before registration and
use.
|
-13-
16.02
|
The
Company Trademark shall be of a completely new design which shall not be a
combination of registered trademarks of any of the Parties but may reflect
the cooperation of the Parties in the
Company.
|
|
The
Company Trademark, once registered with the Trademark Bureau as the
unifying brand of the Company, shall always be identified by â
or TM,
in accordance with its registration status in the respective country, when
used for the Company's products and
services.
|
|
If
special trademarks are necessary for particular Products, such special
trademarks may be designed and registered by the Company itself or the
Company may license the respective special product trademarks from any
Party, all subject to the approval of the
Board.
|
16.03
|
The
Parties agree that without the prior written consent of A or b, as the
case may be, they will not appropriate for their own use or allow the
Company to appropriate for its use any trademark or trade name of any
other Party, nor use any trademarks or trade names which are
transliterations thereof or confusingly similar
thereto.
|
16.04
|
Unless
otherwise agreed between the Parties, in case the Company is dissolved or
ceases to exist, all trademarks registered by the Company shall be
cancelled.
|
ARTICLE
17
|
FOREIGN
EXCHANGE
|
17.01
|
The
Company's foreign exchange matters shall be handled in accordance with the
regulations of China relating to foreign
exchange.
|
17.02
|
The
Parties shall assist the Company in selecting banks which handle foreign
exchange business to open foreign exchange accounts of the Company. All
income and expenditures in foreign exchange of the Company shall be
handled in the corresponding
accounts.
|
17.03
|
The
Parties shall assist the Company in applying to SAFE for a maximum foreign
exchange retention amount that can meet the requirements of production and
operation.
|
17.04
|
The
Company's annual plan for the use of foreign exchange shall be included in
the annual budget and shall be submitted to the Board for
approval.
|
17.05
|
The
Company shall exert all reasonable efforts to avoid or reduce the risk of
foreign exchange losses.
|
ARTICLE
18
|
FINANCE,
ACCOUNTING AND AUDITING
|
18.01
|
In
the Finance, Accounting Division, there shall be a Accountant who reports
directly to the division's General Manager. Under his direct leadership
the Chief Accountant shall be responsible for the following
areas:
|
|
–
|
financial
accounting and cost accounting,
|
|
–
|
management
information systems,
|
|
–
|
electronic
data processing and systems.
|
|
The
Accountant nominated by A shall be appointed by the
Board.
|
18.02
|
The
Company shall set up its financial and accounting systems in accordance
with the relevant laws and regulations on financial and accounting systems
in China and having regard to the special characteristics of the Company
and have it approved by the Board.
|
|
The
Company shall issue the following financial and accounting
reports:
|
-14-
|
(1)
|
All
reports required in accordance with the relevant laws and
regulations;
|
|
(2)
|
All
reports required in accordance with internal regulations of B and to cope
with legal requirements and rules regarding the consolidation of the
financial statements of B;
|
|
(3)
|
All
reports required in accordance with internal regulations of
A.
|
|
The
financial plans submitted by the Company to the respective Parties shall
meet the requirements of the systems customary at the
Parties.
The
Company shall establish a modern system (hardware and software) in order
to meet the Company’s and the Parties’ reporting
requirements.
|
18.03
|
The
accounting system adopted by the Company shall give a complete status of
assets, liabilities, revenues and expenses and allow efficient management
and control. The cost accounting system should be designed in a way to
produce operating results by product/product groups including a system of
predetermined costs.
|
18.04
|
The
Company shall adopt Renminbi as its book keeping base currency. All
accounting books, statements and reports including the annual report of
the Company shall be made and kept in Chinese and
English.
|
|
All
accounting books, statements and reports, as determined in the Articles of
Association, shall be prepared and signed by the Chief Accountant and
submitted to the General Manager of the Finance, Accounting Division for
approval.
|
18.05
|
The
accounting system and procedures adopted by the Company shall be
implemented upon approval by the Board, and be submitted to the local
financial and taxation authorities for filing as
required.
|
18.06
|
The
Company shall before the preparation of each year's annual statements call
a meeting inviting all Parties to attend for reviewing the annual
financial status and preparing the annual
report.
|
18.07
|
The
following documents, certificates and statements shall become effective
only after verification by the accounting company and with certificates
issued by the accounting company:
|
|
(1)
|
Certificates
issued by the Company to the Parties on the payment of registered
capital;
|
|
(2)
|
The
annual accounting reports of the Company;
and
|
|
(3)
|
The
accounting statement for the liquidation of the
Company.
|
18.08
|
The
General Manager shall submit to the Board of Directors as well as to the
Parties the annual accounting report (including the profit and loss
statement and balance sheet of the current year in both Chinese and
English) and the audit report of the Company's auditor
within three (3) months after the end of the fiscal
year.
|
18.09
|
Each
Party may, at its own expense, appoint an accountant or its internal
auditors, on behalf of such Party to audit the accounts of the Company.
Reasonable assistance in providing the accounting books shall be given to
such auditor and such auditor shall keep confidential all documents under
his auditing.
|
18.10
|
The
fiscal year of the Company shall coincide with the calendar year, i.e.
from January 1 to December 31 each year. The first fiscal year of the
Company shall be from the date when the business license of the Company is
issued to December 31 of that year.
|
-15-
18.11
|
For
any of the transactions, the Company shall have the right to entrust an
independent and licensed certified international auditing company
registered in the country of the creditor to audit the correctness of any
amount invoiced to the Company out of such transactions. Before initiating
such audit, the Company shall request the respective Party in writing to
clarify the relevant matter and shall attempt to settle it in amicable
discussions. Reasonable assistance in providing the relevant documents and
accounting books shall be given to such auditor by the audited party and
such auditor shall keep confidential all documents under his
auditing.
|
|
The
fees of the auditor shall be borne by the
Company.
|
|
If
such auditing shows that an agreed upon price formula is no longer
feasible because of legal, economic or political reasons, the respective
parties shall re-negotiate such price formula in good
faith.
|
ARTICLE
19
|
DISTRIBUTION
AND PAYMENT OF PROFITS
|
19.01
|
After
the payment of all payable taxes and fulfilment of other relevant legal
obligations by the Company, the Board shall determine the allocation to
the reserve fund, to the bonus and welfare fund for the Company's
personnel and to the Company's expansion fund in accordance with the
relevant laws and regulations. Unless otherwise decided by the Board, the
balance of profit after such allocation shall be distributed to the
Parties according to the ratio in the registered capital of the
Company.
|
19.02
|
Profits
shall in principle be distributed and paid-out in RMB. The Board shall set
an appropriate date of payment which shall not be later than thirty (30)
days of the decision on the dividends. The Company shall pay the dividends
on the date set by the Board in a way designated by the
Parties.
|
19.03
|
The
Company shall, at the request of Party B, convert the RMB dividends to be
distributed to such Party into USD and remit the same out of China in
favour of such Party in accordance with the then applicable regulations
governing the payment of foreign exchange. Any foreign exchange rate risk
until the payment date set by the Board as well as the banking expenses
and other expenses shall be for the account of such Party.
In
case the Company has to purchase USD, the exchange rate applicable for
such conversion and remittance outside of China shall be the selling rate
of exchange of RMB to USD on the date of payment set by the Board from the
bank where the Company keeps its foreign exchange account.
The
exchange rate to be used for conversion of RMB into foreign exchange (USD)
available in the Company’s own account shall be the selling rate of
exchange of RMB to USD at the day of payment set by the Board from the
bank where the Company keeps its foreign exchange account. If the
aforementioned selling rate is not available, then any equivalent rate
prevailing at the day of payment set by the
Board
|
19.04
|
Any
reasonable interest accrued on the dividend to which a Party is entitled
from the date of payment set by the Board to the date of actual payment
shall be reimbursed by the Company to such
Party.
|
ARTICLE
20
|
TAXATION
|
20.01
|
The
Company shall pay taxes in accordance with the provisions in the relevant
laws and regulations of the state and local authorities. The personnel of
the Company shall pay individual income tax according to the "Individual
Income Tax Law of the People's Republic of China" and/or other relevant
laws and regulations.
|
-16-
20.02
|
In
their relationship to the Chinese tax authorities the Parties shall bear
all the taxes, dues and fees levied by Chinese tax authorities on the
Parties in accordance with Chinese tax law with regard to the signing of
this Contract and the Schedules or Ancillary Contracts of this
Contract.
|
|
The
Company and the Parties shall fulfil the withholding and paying
obligations stipulated by laws and regulations concerning the above taxes,
dues and fees.
|
20.03
|
The
Parties and the Company shall apply Articles 20.01 and 20.02 in accordance
with the Chinese tax laws including the relevant treaties for avoidance of
double taxation.
|
20.04
|
The
Parties shall as early as possible submit to the department concerned
applications for confirming that the Company is a technologically advanced
enterprise, and assist the Company in its efforts to obtain all
preferential conditions on taxation that are obtainable under Chinese law
or upon specific permits in favour of the Company and/or the Parties and
assist the Company in handling the relevant matters concerning exemption
of customs duties and VAT.
|
ARTICLE
21
|
INSURANCE
|
21.01
|
During
construction and commercial operation, the Company shall take out and
maintain full and adequate industrial insurance as well as appropriate
personnel insurance cover according to the relevant laws and regulations
of China and taking into consideration the insurance standards of A and
B.
|
21.02
|
Various
insurance of the Company shall be effected with licensed insurance
companies incorporated in China. If and insofar as approved by the
relevant Chinese authorities that the insurance can be effected with a
foreign insurance company that has a Chinese
license.
|
21.03
|
The
Parties shall assist the Company by consulting and coordinating the
insurance matters entrusted by the
Company.
|
ARTICLE
22
|
LABOR
MANAGEMENT
|
22.01
|
Within
the scope of the relevant laws and regulations, the stipulations of this
Contract, the Articles of Association and the Ancillary Contracts, the
Company shall enjoy full autonomy in matters of recruitment, employment,
dismissal, personnel development and training, remuneration, wages,
welfare and other matters concerning its Employees and shall establish its
own systems regarding
such matters.
|
22.02
|
The
number of Employees required for the start of commercial operation of the
Company shall be determined in the Joint Feasibility Study Report. After
the start of commercial operation, the management organisation may,
depending on the actual need of the Company, put forward a plan for any
increase or decrease of the number of Employees and submit it to the Board
for discussion and decision.
|
22.03
|
The
Company's principles relating to recruitment, personnel management,
compensation, training, labor safety and health, insurance, welfare, labor
union as well as to other personnel matters are set forth in the Personnel
Guidelines. The Personnel Guidelines may be revised only by a resolution
of the Board.
|
22.04
|
The
Company shall regularly inform the Parties of its requirements for
Employees. The Parties may recommend and, if they do so, shall recommend
qualified personnel for the requirements. The Company shall have the right
to choose from the recommended candidates or, if there are no qualified
candidates, to recruit from the labor market.
All
Employees shall be employed by the Company subject to successful
examination.
|
-17-
In
accordance with the law, a probation period shall be agreed upon in the
labor contracts.
If,
during the probation period, an Employee has been proven to be unqualified
for employment by the Company, the Company has the right to terminate the
labor contract.
|
|
22.05
|
The
Employees shall have the right to establish a labor union and carry out
labor union activities in accordance with the relevant laws and
regulations.
|
22.06
|
The
Company shall apply its personnel development, remuneration and welfare
systems equally to all Employees. In accordance with the laws and
regulations and the principles laid down in the Personnel Guidelines, the
Company shall sign individual labor contracts with its Employees
reflecting their individual qualification for their function and
responsibilities and, through consultations and negotiations, sign a
collective labor contract with the labor union representing the
Employees.
The remuneration for all Employees shall
reflect the functions, responsibilities and performance of the individual
Employees, be in line with the laws and be competitive in the Chinese
professional personnel market.
|
22.07
|
The
Senior Staff shall be employed by the Company with individual employment
contracts according to this Contract, the Articles of Association and the
Personnel Guidelines, signed on behalf of the Company by the Chairman of
the Board after a resolution.
|
22.08
|
In
case of a seasonal or temporary physical labor requirement, the
Company may employ temporarily Chinese personnel ("Short-Term
Employees") from
nearby on an individual contract
basis.
|
22.09
|
The
Company shall conform to the laws and regulations concerning labor
protection and ensure safe and civilised
production.
|
|
Labor
insurance for the Employees shall be handled in accordance with the
relevant laws and regulations.
|
22.10
|
The
Employees shall have a sole employment by the Company; they are not
delegated to the Company. The personnel files
of all Employees shall be provided to the Company or its assigned agency
recognized by the government after their employment by the
Company.
|
22.11
|
The
Company shall make all efforts to conduct training and improve the
qualification of its personnel in cooperation with the Parties. It shall
establish a high-standard training system and examination system, so that
the personnel can satisfy the requirements of the Company in technology,
manufacturing, marketing, sales and
management.
|
22.12
|
Unless
otherwise set forth in this Contract or the Personnel Guidelines, the
relevant labor management stipulations of this Article 22 relating to
Employees shall also apply to Senior Staff and Temporary
Delegates.
|
ARTICLE
23
|
CONFIDENTIALITY
|
23.01
|
The
Parties warrant that they shall not use any Confidential Information which
has been provided by another Party or the Company during the negotiation
or the establishment or operation of the Company and shall not disclose it
to any third party without the written permission from the providing
Party, unless otherwise agreed upon in
writing.
|
|
"Confidential
Information" shall mean any proprietary technical or commercial
information which has not been made public. Documents and information
requiring to be kept secret by the Parties shall be clearly indicated by
the providing Party as such.
|
-18-
|
Irrespective
of any termination of this Contract, this confidentiality obligation shall
end as soon as a Confidential Information has legally come into the public
domain.
|
23.02
|
The
Parties and the Company shall sign confidentiality agreements with their
employees who have access to Confidential
Information.
|
23.03
|
The
confidentiality obligations of the Parties shall survive the termination
of this Contract or an assignment of any Party’s capital contribution in
the Company for any reason, unless otherwise stipulated in the relevant
contract regarding Confidential
Information.
|
23.04
|
The
relevant confidentiality obligations of a Party and the Company relating
to the transfer of technology are referred to in more detail in the
relevant technology transfer
contract.
|
ARTICLE
24
|
FUTURE
COOPERATION AND NON-COMPETITION
|
24.01
|
Unless
the Parties agree otherwise, no Party nor their Affiliates shall, in
China, construct or have constructed by any third party, or otherwise
support the construction of, any new plant or expand any existing plant
for the same products..
|
24.02
|
Unless
the Parties agree otherwise, no Party nor their Affiliates
shall license or otherwise transfer technology to, or
otherwise assist, any third party, to manufacture in China the same
products.
|
24.03
|
Unless the Parties agree
otherwise, no Party nor their Affiliates shall purchase or otherwise
acquire, or hold or otherwise control, any equity interest in, or
financially support, any company or enterprise which carries out or
intends to commence, any production for the same products in
China.
|
ARTICLE
25
|
THE
JOINT VENTURE TERM
|
25.01
|
This
Contract shall commence on the Effective Date and its term shall be
infinite years.
|
25.02
|
The
term of the Company shall be from the issuance of its business license and
shall be infinite years.
|
ARTICLE
26
|
ASSIGNMENT
OF INVESTMENT
|
26.01
|
If
any Party wants to assign all or part of its capital contribution in the
Company to a third party (including Affiliates), it must obtain the
written consent of the other Party in accordance with the following
stipulations.
The
assigning Party is hereinafter referred to as the "Disposing
Party".
|
26.02
|
If
one Party wants to assign all or part of its capital contribution in the
Company to a third party except to an Affiliate, the Disposing Party shall
notify the other Party in writing of such intention, its terms and
conditions for such assignment and, if applicable, shall give detailed
information on the potential assignee ("Notice of
Assignment").
|
The
other Party shall have a pre-emptive right to purchase the offered capital
contribution ("Pre-emptive Right").
The
other Party shall either consent to such assignment or exercise its
Pre-emptive Right not later than forty-five (45) days after receiving the
Notice of Assignment. If, within forty-five (45) days from the receipt of
the Notice of Assignment, the other Party has not expressed its intention
to purchase the Disposing Party’s capital contribution as offered and/or a
written agreement on the purchase price and other terms and conditions of
the assignment has not been reached, the Disposing Party may assign the
offered capital contribution to a third party or, if applicable, to the
nominated potential
assignee.
|
-19-
The
terms and conditions of such assignment must not be more favourable than
those offered to the other Party. The Disposing Party shall provide the
other Party with a duplicate of the executed written agreement with the
third party or a notarized statement confirming the terms and conditions
stipulated in such agreement.
The
other Party shall have the right to investigate the financial ability of
the assignee to fulfil its obligations. If the assignee is
found not qualified, then the other Party does not have to
consent.
If
unforeseeable events occur during one (1) month investigation period which
clearly necessitate additional time, then, upon written request of the
other Party specifying such events, the investigation period shall be
prolonged sufficiently in writing by the Disposing Party.
|
|
26.03
|
Within
the first twelve (12) Month from the issuance of the business license to
the Company, both parties can assign a minimal part (11% max.) of its
capital contribution to a third party by having a written consent of the
other Party. Thereafter and During a period of five (5) years from the
issuance of the business license to the Company, neither Party or parties
shall assign all or part of its capital contribution to a third party
(except to an Affiliate) without the written consent of all the Parties
and the other Parties are not bound to either consent to such assignment
or to exercise the Pre-emptive
Right.
|
26.04
|
If
a member of one Party wants to assign all or part of its capital
contribution in the Company to another member of its Party or to an
Affiliate, then the Disposing Party shall notify the other Party in
writing of such intention and shall give for the other Party’s assessment
all information reasonably necessary to prove that the assignee can meet
the conditions set forth in Article 26.05.
If
the assignee meets the conditions set forth in Article 26.05, the other
Party must consent in writing to such assignment not later than thirty
(30) days after receiving the
information.
|
26.05
|
Regarding
this Contract and its Schedules as well as the Ancillary Contracts, all as
amended from time to time, the assignee
shall:
|
|
(1)
|
have
adequate ability to fulfil or have fulfilled by the Disposing Party or a
third party the contractual obligations
therein,
|
|
(2)
|
accept
in writing all the regulations stipulated therein,
and
|
|
(3)
|
agree
in writing to be bound by them in all
respect.
|
The Disposing Party shall provide the other Party with notarized copies of the assignment agreement with the assignee. | |
26.06
|
Whenever
the Disposing Party is entitled to an assignment in accordance with this
Article 26 and if the conditions set forth in Article 26.05 are met by the
assignee, the Parties shall
|
|
(1)
|
sign
or otherwise confirm in writing the assignment agreement between the
Disposing Party and the assignee,
|
|
(2)
|
amend
this Contract and the Articles of Association accordingly, and
then
|
|
(3)
|
cause
their members of the Board to approve such assignment and the amendment to
the Articles of Association, and
|
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|
(4)
|
follow
all other procedures required by the relevant laws and regulations to
obtain approval of the assignment by the Examination and Approval
Authority.
|
26.07
|
After
affirmative resolution of the Board, the assignment of the capital
contribution shall be submitted to the Examination and Approval Authority
for approval. After receiving such approval, the Company shall register
the change of equity interest with the State Administration for Industry
and Commerce.
|
Any
change of equity interest in the Company shall conform with the relevant
Chinese laws and regulations.
|
26.08
|
The
assignment of its capital contribution by a Party shall not affect the
operation of the Company or the implementation of the Contract and its
Schedules as well as the Ancillary Contracts, all as amended from time to
time.
|
26.09
|
No
Party shall mortgage, pledge, or otherwise encumber all or any part of its
capital contribution to the Company’s registered capital without the prior
written consent of the other Party, provided, however, that each Party may
pledge, assign or otherwise grant a security interest in all or any part
of its rights or benefits in this Contract (including without limitation
its capital contributions) as security for the financing of the Plants,
all as specifically agreed in the financing
contracts.
|
26.10
|
The
assignment, mortgage, pledge or other encumbrance by a Party of its
capital contribution not complying with the stipulations herein shall be
invalid and shall constitute a breach of this Contract and such Party
shall compensate the other Party and the Company for damages caused
thereby.
|
26.11
|
Unless
expressly provided otherwise, the stipulations of this Article 26 shall
not apply in the cases stated in Articles
27.
|
ARTICLE 27
|
TERMINATION
AND LIQUIDATION
|
27.01
|
For
the purpose of this Article 27, a Party shall mean either A or
B.
|
27.02
|
This
Contract may be terminated if the Parties agree in writing that a
termination of the Contract is in the best interests of the Parties, due
to
|
|
(1)
|
circumstances
which make it impossible for the Company to operate effectively (failure
to attain business goals and lack of future development),
or
|
|
(2)
|
the
conditions or consequences of Force Majeure prevailing for a period in
excess of six (6) months which have rendered the Company unable to
continue the operation, or
|
|
(3)
|
any
other reasons.
|
|
The
Parties shall do their utmost to avoid a liquidation of the Company. Thus,
before agreeing on termination, the Parties shall evaluate possibilities
to continue the operation of the Company by one Party or by a third party.
In the termination agreement, the Parties may agree that a Party may
purchase by itself or have a third party purchase the other Party’s
capital contribution and continue the operation of the Company. If both
Parties are willing to purchase or have a third party purchase the other
Party’s capital contribution, the Party which offers the higher price for
the respective capital contribution shall have the right to purchase or
have a third party purchase it. If the Company cannot continue to be
operated in this way, its liquidation may be decided by the
Board.
|
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|
Any
such assignment or decision on liquidate shall be submitted to the
Examination and Approval Authority for
approval.
|
27.03
|
Under
the following circumstances, either Party may terminate this Contract by
written notice to the other Party:
|
|
(1)
|
If
a Party or any member of it materially breaches this Contract or the Articles of
Association (i.e. seriously infringes the non-breaching Party’s and/or the
Company's interests) and such breach
is not cured within fifteen (15) days after receipt of written notice from
the non-breaching Party;
|
|
(2)
|
If
a Party or any member of it assigns or encumbers its capital contribution
in the Company in violation of the provisions of this
Contract;
|
|
(3)
|
If
a member of the other Party is declared 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 become due and therefore is
subject to conciliation and reorganization or receivership, and if in such
case the other members of the other Party do not or cannot take over the
affected member's capital contribution and/or the Subordinated Shareholder
Loans in the Company within thirty (30) days after receipt of written
notice from the non-affected Party;
|
|
(4)
|
If
the accumulated losses of the Company after start of commercial production
exceed seventy percent (70%) of the registered
capital and the Parties are unable to reach an agreement for the
restructuring of the Company's capitalization within thirty (30) days of
receipt of written notice by either Party from the other
Party.
|
27.04
|
No
Party shall exercise its unilateral termination right as provided for in
Article 27.03 without having consulted with the other Party in order to
find an equitable solution. Such equitable solution may include an
assignment of capital contribution within one
Party.
|
27.05
|
If
either Party's economic interests are adversely and materially effected by
the promulgation of any new law of China or the amendment of any existing
law of China after the signing of the Contract, such Party shall inform
the other Party thereof in writing.
|
|
The
Parties shall then immediately consult with each other in order to find a
feasible solution and they shall
|
|
(1)
|
use
all lawful efforts to reduce these adverse effects to a minimum
and
|
|
(2)
|
try
to reach an agreement to avoid a unilateral
termination.
|
|
Either
Party may terminate this Contract if no agreement has been reached within
twelve (12) months from the written information mentioned
above.
|
27.06
|
In
the circumstances of Article 27.03 sub-paragraphs (1) and (2), the Party
failing to implement the obligations specified in the Contract and the
Articles of Association and materially breaching the Contract shall be
liable for compensating the losses thus caused to the other
Party.
|
27.07
|
If
this Contract is terminated pursuant to Article 27.03 sub-paragraphs (1)
or (2), then the non-breaching Party shall have the right and option to
purchase by itself or to cause a third party to purchase the capital contribution of
the breaching member of the other Party ("Purchase
Option").
|
-22-
27.08
|
If
this Contract is terminated according to Article 27.03 sub-paragraph (3),
then the non-affected Party shall have the Purchase Option for the capital
contribution of the affected member of the other
Party.
|
27.09
|
If
the Contract is terminated according to Article 27.03 sub-paragraph (4),
then either Party wishing to implement a restructuring shall have a
Purchase Option. If both Parties, separately, are willing to implement a
restructuring, then the Party which offers the higher price for the
respective capital contribution shall have the Purchase Option. If neither
Party is willing to implement a restructuring and no third party is
willing to continue the operation of the Company, the Company shall be
liquidated, unless otherwise decided by the
Board.
|
27.10
|
In
the event this Contract is terminated according to Article 27.05, the
terminating Party shall have the right to cause the other Party to
purchase itself or to cause a third party to purchase its capital
contribution ("Sale Option") and the other Party shall have a Purchase
Option.
|
27.11
|
The
Party having a Purchase Option or Sale Option according to Articles
27.07 through 27.10 shall exercise this option by written notice to the
other Party within thirty (30) days after the written notice on
termination of the Contract.
|
|
If
a Purchase Option cannot be exercised and consumed because of legal or
political reasons attributable to China, then the Party having the
Purchase Option shall have a Sale
Option.
|
27.12
|
If
a Purchase Option is exercised or in case of an assignment in accordance
with Article 27.09 with the result of members of both Parties still
participating in the Company, then this Contract shall be continued
between such members of both Parties and shall be amended
accordingly.
|
27.13
|
Any
change of equity interest in the Company shall conform with the relevant
Chinese laws and regulations. The exercise of a Purchase Option or Sale
Option shall be subject to the approval of the Examination and Approval
Authority. After receiving such approval, the Company shall register the
change of equity interest with the State Administration for Industry and
Commerce.
|
27.14
|
Each
Party shall be obliged to ensure that at least up to the assignment of its
capital contribution the operation of the Company shall not be interrupted
by any such assignment and that negative effects are kept to a minimum.
After the assignment, they are obligated to continue at reasonable
conditions such services, deliveries, rights etc. which are vital for the
operation of the Company. Services and deliveries shall not be interrupted
until new contracts have been concluded in accordance with the above
mentioned principle.
|
27.15
|
In
the event that the Contract is terminated by any Party for any reason
covered in Article 27.03 or 27.05 and the Party having the Purchase Option
or Sale Option does not exercise its option, the Company shall be
liquidated, unless otherwise decided upon by the
Board.
|
27.16
|
For
dissolution and liquidation of the Company, the Board shall prepare an
application for dissolution and submit it to the relevant Examination and
Approval Authority for approval. The date of approval for the dissolution
of the Company by the Examination and Approval Authority shall be the date
of commencement of the liquidation of the
Company.
|
27.17
|
With
the approval of the Board, the liquidation committee may employ necessary
experts and working personnel to handle concrete matters of
liquidation.
|
-23-
27.18
|
When
the property to be liquidated is sold off, the Parties shall have the
right of first refusal and the property shall be purchased by the Party
which offers the highest price.
|
27.19
|
The
remaining property after the clearance of debts of the Company shall be
sold or disposed of and the proceeds shall be distributed among the
Parties according to the proportion of their capital
contributions.
|
27.20
|
On
completion of the liquidation, the liquidation committee shall submit a
liquidation completion report to the original Examination and Approval
Authority after adoption by the Board, and the Company shall go through
the formalities for nullifying its registration in the original
registration authority and hand back its business
license.
|
27.21
|
After
the conclusion of the liquidation of the Company, all the accounting books
and documents shall be left in the care of
A.
|
27.22
|
In
the event that the Company fails to set up the liquidation committee
within fifteen (15) days starting from the date of commencement of
liquidation or that the liquidation committee comes across serious
obstacles in its work and it is impossible for it to submit the
liquidation report to the Examination and Approval Authority within six
(6) months starting from the date of commencement of liquidation, any
Party may make an application to the Court for
liquidation.
|
27.23
|
If
the Company has been declared to be bankrupt according to law, the
relevant laws and administrative regulations on liquidation in bankruptcy
shall be followed.
|
ARTICLE
28
|
BREACH
OF CONTRACT
|
28.01
|
If
a Party fails to perform any of its obligations under this Contract or if
a Party's representation or warranty under this Contract is untrue or
materially inaccurate, such Party shall be deemed to have breached this
Contract (hereinafter referred to as the Breaching
Party).
|
28.02
|
The
Breaching Party shall correct such breach within thirty (30) days after
receipt of written notice from any other Party specifying the breach. If,
after such a period, the breach is not corrected, then the Breaching Party
shall bear the liability for compensation to the other Parties for all
direct damages as well as foreseeable indirect and consequential damages
caused by the breach.
|
28.03
|
In
the event that a Party fails to pay in all or part of its required capital
contribution when due, it shall pay to the Company interest on the amount
overdue equal to the People’s Bank of China prime interest rate times
4.
|
ARTICLE
29
|
FORCE
MAJEURE
|
29.01
|
"Force
Majeure" shall mean all events which are beyond the control of the Parties
and which are unforeseen, or, if foreseen, the happening and consequences
of which are unavoidable and can not be overcome, that prevent any of the
Parties or the Company from executing the Contract according to the agreed
terms and conditions and that occur after the Effective
Date.
|
29.02
|
If
an event of Force Majeure occurs, the performance of affected contractual
obligations of the Parties shall be suspended during the period of delay
caused by the Force Majeure except for the obligations pursuant to Article
23, and shall be automatically extended for a period equal to such
suspension.
|
29.03
|
The
Party claiming Force Majeure shall notify the other Parties without any
delay.
|
-24-
29.04
|
In
the event of Force Majeure, the Parties shall immediately consult with
each other in order to find an equitable solution and shall use all
reasonable efforts to minimize the consequences of such Force
Majeure.
|
ARTICLE
30
|
APPLICABLE
LAW
|
30.01
|
The
conclusion, validity, interpretation and implementation of this Contract,
and the resolution of disputes thereunder shall be governed by the present
and future published laws of China.
|
30.02
|
The
Company and the Parties shall be entitled to apply for any preferential
treatment under the policies on investment or in other fields that are
issued and implemented by the relevant governmental authorities after
signing of this Contract and that are more favourable than those set forth
in current Chinese policies.
|
ARTICLE
31
|
SETTLEMENT
OF DISPUTES
|
31.01
|
In
the event any dispute arises in connection with the validity,
interpretation or implementation of this Contract, the Parties shall
attempt in the first instance to resolve such dispute through friendly
consultations. If the dispute cannot be resolved in this manner
within thirty (30) days after the date on which one Party has
served written notice on the other Party or Parties for the commencement
of consultations, then any Party may refer the dispute to
court/arbitration.
|
31.02
|
When
any dispute occurs and when any dispute is under arbitration, except for
the matters under dispute, the Parties shall continue to exercise their
remaining respective rights, and fulfil their remaining respective
obligations under this Contract.
|
ARTICLE
32
|
LANGUAGE,
EFFECTIVENESS OF CONTRACT AND MISCELLANEOUS
PROVISIONS
|
32.01
|
Language
|
This
Contract is written in Chinese and English. Both language versions are
equally authentic.
This
contract must be identical to the Chinese version, otherwise this contract
must be corrected by both
parties.
|
32.02
|
Effectiveness
of the Contract
|
This Contract shall become effective on the Effective Date as defined in Article 1. 09. |
32.03
|
Original
version
|
This Contract shall be made in ten (10) originals (each including a Chinese and an English version). |
32.04
|
Severability
|
In the event that any provision in this Contract is illegal, contrary to public policy, or otherwise unenforceable, then such provision shall be deleted from this Contract leaving the remainder of this Contract legal, valid and enforceable. The deleted provision shall be replaced by a valid new provision negotiated by the Parties, having as nearly as is legally possible the same economic and business effect as the illegal or unenforceable provision was intended to have. The new provision shall be submitted to the Examination and Approval Authority for its approval. | |
32.05 | Waiver |
-25-
|
Unless
expressly provided otherwise, failure or delay on the part of a Party to
exercise any right, power or privilege under this Contract, or under any
other agreement relating hereto, shall not operate as a waiver thereof;
nor shall any single or partial exercise of any right, power or privilege
preclude any other future exercise
thereof.
|
32.06
|
Binding
Effect, Amendments
|
This
Contract is made for the benefit of the Parties and is binding on the
Parties.
This
Contract may only be amended by a written instrument signed by the Parties
and, if required, approved by the Examination and Approval
Authority.
|
32.07 |
Notices
|
|
Any
notice or other formal written communication provided for in this Contract
by either Party to the other shall be made in English by telefax or
electronic mail and confirmed by a letter transmitted by courier against
written receipt or by registered airmail letter, promptly transmitted or
addressed to the appropriate
Party.
|
32.08
|
Schedules
|
This
Contract has been signed by the duly authorized representatives of the Parties
at the place and on the date first set forth above.
|
A
Corporation
|
|
By__________________
|
|
B
Corporation
|
|
By__________________
|