Exhibit 10.14
JOINT VENTURE CONTRACT
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TABLE OF CONTENTS
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CHAPTER 1 GENERAL PROVISION
CHAPTER 2 PARTIES TO THE JOINT VENTURE
CHAPTER 3 ESTABLISHMENT OF THE JOINT VENTURE
CHAPTER 4 PURPOSES, SCOPE AND SCALE OF PRODUCTION AND BUSINESS
CHAPTER 5 TOTAL AMOUNT OF INVESTMENT AND REGISTERED CAPITAL
CHAPTER 6 RESPONSIBILITIES OF THE PARTIES
CHAPTER 7 SALES OF PRODUCTS
CHAPTER 8 BOARD OF DIRECTORS
CHAPTER 9 PURCHASE OF EQUIPMENT, RAW MATERIALS, LAND LEASING
CHAPTER 10 LABOR MANAGEMENT
CHAPTER 11 TAXES, FINANCE AND AUDIT
CHAPTER 12 FOREIGN EXCHANGE CONTROL
CHAPTER 13 DURATION OF THE JOINT VENTURE
CHAPTER 14 DISPOSAL OF ASSETS UPON EXPIRATION OF THE DURATION
CHAPTER 15 INSURANCE
CHAPTER 16 AMENDMENT, ALTERATION AND TERMINATION OF THE CONTRACT
CHAPTER 17 LIABILITIES FOR BREACH OF THE CONTRACT
CHAPTER 18 FORCE MAJEURE
CHAPTER 19 APPLICABLE LAW
CHAPTER 20 DISPUTE RESOLUTION
CHAPTER 21 LANGUAGE
CHAPTER 22 EFFECTIVENESS OF CONTRACT AND MISCELLANEOUS
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CHAPTER 1: GENERAL PROVISIONS
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ART. 1.1 In accordance with the "Law of the P.R. China on Joint Venture Using
Chinese and Foreign Investment" and other relevant published laws and
regulations of China, the following Parties
Party A: Chinese Party: Qinyang Hotel
Party B: Foreign Party: Yi Wan Group, Inc. have agreed to invest in the
Joint Venture Enterprise:
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CHAPTER 2: PARTIES TO THE JOINT VENTURE
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ART. 2.1 Parties to the Joint Venture under this contract are as follows:
Party A: Chinese Party: Qinyang Hotel
legal representative: Guo Ruxing
nationality: China title: President
Party B: Foreign Party: Yi Wan Group, Inc.
legal representative: ▇▇▇▇▇ ▇▇▇▇▇▇▇
nationality: China
title: President
Parties A and B may as the contract requires be herein after referred
to individually as a "Party" and collectively as the "Parties."
Each of the Parties hereby presents and warrants to the other Party
that it has full legal authority and the power to enter into this
contract and perform its obligations hereunder and that its
representation named above is duly authorized to sign this contract
and other relevant documents on behalf of such Party.
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CHAPTER 3: ESTABLISHMENT OF THE JOINT VENTURE
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ART. 3.1 In accordance "Law of the P.R. China on Joint Venture Using Chinese
and Foreign Investment" and other relevant published laws and
regulations, the Parties agree to establish a Joint Venture Limited
Liability Company (hereinafter referred to as "Joint Venture") within
the Chinese territory.
ART. 3.2 The name of the Joint Venture in English shall be: Qinyang Yi Wan Hotel
Co., Ltd.
The legal address of the Joint Venture shall be in: ▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇'▇ ▇▇▇▇▇▇▇▇ of China
If needed, through the discussion and the decision of the Board
of Directors, the Joint Venture will establish offices in other
places of China, Hong Kong or other countries and regions.
ART. 3.3 All activities of the Joint Venture in China shall be governed by the
laws, decrees and relevant rules and regulations of the People's
Republic of China.
ART. 3.4 The form of organization of the Joint Venture shall be a limited
liability company. The liability of each Party is limited to making
contribution to the registered capital in accordance with CHAPTER 5
of this contract, including each Party's stake in all other capital
increases decided in compliance with the Chinese regulations, and no
Party shall have any liability of any sort for the debts and
obligations of the Joint Venture. The profits of the Joint Venture
shall be shared by the Parties in proportion to their respective
subscribed contributions to the registered capital of the Joint
Venture. During the term of the Joint Venture, profits shall be
shared 10% by Party A and 90% by Party B. The liability of each Party to
the Joint Venture is limited up to the Parties respective contribution of
the registered capital of the Joint Venture.
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CHAPTER 4: PURPOSES, SCOPE AND SCALE OF PRODUCTION AND BUSINESS
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ART. 4.1 The purposes of the Joint Venture shall be, in conformity with the
wish of strengthening economic cooperation and technical exchanges,
to improve the product quality and the production capacity, develop
new products and gain competitive position in both the domestic and
international markets in quality, variety and price by adopting
advanced technology, and scientific, management methods, so as to
constantly raise economic results and, ensure satisfactory economic
benefits for each Party.
ART. 4.2 The scope of production and business of the Joint Venture shall be to
provide up-scale lodging, food and beverage, entertainment and meeting
and conference facility services. The products made by the Joint Venture
shall be sold on the domestic market. The Joint Venture will, on a best
efforts basis, investigate the possibilities of selling some of the
production on the export market.
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CHAPTER 5: TOTAL INVESTMENT AND REGISTERED CAPITAL
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ART. 5.1 The total amount of the investment and the registered capital of the
Joint Venture is twenty million renminbi (20,000,000 RMB). Party A shall
contribute four million renminbi (4,000,000 RMB) and hold 20% shares.
Party B shall contribute sixteen million renminbi (16,000,000 RMB) and
hold 80% shares. Without the written consent of the other Party, no Party
shall pledge the interest of the other Party. Without the permission of
the one Party, any Party cannot be required to guarantee the loans of the
Joint Venture or to implement other responsibilities.
ART. 5.2 Should a Party intend to assign all or part of its interest in the
Joint Venture to a third Party, written consent must be obtained from
the other Party and an affirmative decision by the Board of Directors
and approval from the appropriate examination and approval authority
shall be required. The registration procedures for the changes shall
be dealt with. In this procedure, the Parties will have a preemption
right. The Parties however will have the right to transfer the
ownership of their shares to any subsidiary or holding company in
which they have the majority of the shares.
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CHAPTER 6: RESPONSIBILITIES OF THE PARTIES
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ART. 6.1 Responsibilities of the Chinese Party:
a. In charge of applying for and obtaining the approval, registration
and Business License and dealing with other formalities with relevant
Chinese Governmental Departments for the establishment and operation
of the Joint Venture and for obtaining the best advantages granted to
sino-foreign joint ventures.
b. Making capital contributions at the specified time in accordance
with ART. 5.1 hereof.
c. At the request of the Joint Venture Company, assisting to purchase
equipment, materials, office facility, transportation facility and
communication facility.
d. At the request of the Joint Venture Company, assisting to purchase
equipment, materials, office facility, transportation facility and
communication facility.
e. Assisting foreign staff in applying for entry visas, work permits,
and processing their travel documents.
f. Assisting to recruit for the Joint Venture the local staff in all
level of management and workers.
g. Assisting the Joint Venture Company in obtaining a loan from a
local bank for the working capital.
h. Assisting the Joint Venture in selling and distributing the
products in the local market.Assisting the joint venture in
purchasing the necessary quantities of raw materials annually, at
prices not higher than other factories in the region.
i. Party A guarantees that it will not enter into competition with
the Joint Venture Company.
ART. 6.2 Responsibilities of the Foreign Party.
a. Making capital contributions in accordance with ART. 5.1, ART.
b. Assisting the Joint Venture in purchasing equipment, raw materials
and other items outside China.
c. Making its best effort in assisting the Joint Venture in exporting
its products and assisting the Joint Venture with information about
the international market for similar and related products
d. Causing the Joint Venture to obtain equipment and detailed
engineering design of the Joint Venture factory within the scope of
total investment and registered capital set forth in CHAPTER 5
hereof.
e. Assisting the Joint Venture in purchasing equipment, raw
materials, articles for office use, means of transportation, all of the
best terms and prices attainable.
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CHAPTER 7: SALES OF PRODUCTS
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ART. 7.1 The products of the Joint Venture shall be sold on the Chinese
markets and the best efforts will be made in order to sell part of
the production on the overseas markets.
ART. 7.2 The products of the Joint Venture shall be sold throughout the
People's Republic of China without geographic restriction and may be
sold by the Joint Venture directly or by appropriate distributors.
The sales methods and prices shall be determined by the General
Manager's decision following recommendation of the board of directors
with respect to domestic market conditions, competitiveness of the
products and the economic situation of the Joint Venture. The Joint
Venture shall be free to determine and raise the selling prices of,
and sell at its own discretion, in accordance with the preceding
provisions.
ART. 7.3 The sales of its products, both on Chinese and on overseas markets,
shall be managed by the Joint Venture. The Joint Venture Company,
with the assistance of the Foreign Party, will endeavor to seek
export markets for the Joint Venture products.
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CHAPTER 8: BOARD OF DIRECTORS
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ART. 8.1 The board of directors shall be established within one month after
the date of issuance of the Business License.
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CHAPTER 9: PURCHASE OF EQUIPMENT, RAW MATERIALS AND LAND LEASING
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ART. 9.1 The Joint Venture will purchase required equipment transportation
facilities, fuels and articles for office use in China and abroad,
but shall give first priority to purchase in China when conditions
(quality, price, time of deliver, compatibility and so forth) are the
same.
ART. 9.2 The Joint Venture will purchase abroad equipment which has been
approved by all Parties. The equipment should be in line with advanced
technology and the price should be lower than or same as the one of
similar equipment.
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CHAPTER 10: LABOR MANAGEMENT
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ART. 10.1 Policies relating to matters as the total number of workers,
recruitment, dismissal, wages, welfare, benefits, labor insurance,
bonuses and labor discipline shall be determined by the general
manager in accordance with Labor Law of the P.R. China, the "People's
Republic of China Administration on Labor Management of Foreign
Investment Enterprises Provisions" and other promulgated relevant
P.R. China laws and regulations, the policies stipulated by the board
of directors, and the actual financial conditions of the Joint
Venture.
ART. 10.2 The Joint Venture shall have the right to recruit and hire employees
directly from any available sources in the P.R. China. In all cases,
the Joint Venture shall employ only those employees who are
sufficiently qualified for employment, as determined through tests
and/or examinations.
ART. 10.3 The Joint Venture, acting through the general manager, will sign
individual labor contracts with each of its employees. Each labor
contract shall include type of work, technical ability and wages of
such employee, according to the framework duly approved by the board
of directors, and shall be filed for reference at the local labor
management department.
ART. 10.4 The employees of the Joint Venture shall have the right to establish
a labor union in accordance with relevant P.R. China laws and
regulations. The labor union shall have the right to represent the
interest of employees in signing labor agreement and in supervising
the execution of labor contracts. It shall have the right to protect
the legal rights and material benefits of the employees, and shall
assist in the mediation of labor disputes when requested by the
relevant employee or the Joint Venture.
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CHAPTER 11: TAXES, FINANCE, AUDIT AND PROFIT DISTRIBUTION
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ART. 11.1 The Joint Venture shall pay various taxes in accordance with relevant
Chinese laws and regulations.
ART. 11.2 Staff members and workers of the Joint Venture shall be responsible
for paying their own individual income tax or personal income adjustment
tax in accordance with relevant Chinese laws and regulations.After paying
their taxes, the expatriate members of the Joint Venture can remit their
money abroad.
ART. 11.3 In accordance with the "Laws of the People's Republic of China on the
Joint Ventures using Chines and Foreign Investment," allocations for a
reserve fund, an enterprise expansion fund and a bonuses and welfare
fund for the staff and workers shall be decided by the board of directors
each year according to the actual business situation and profitability of
the Joint Venture of the after tax profit. The Joint Venture will benefit
of all the best fiscal privileges available in Henan Province and namely
the statute of a sino-foreign joint venture enterprise.
ART. 11.4 Finance and accounting of the Joint Venture shall be handled in
accordance with the "Regulations of the People's Republic of China on the
Financial Administration for Foreign Investment Enterprises" and the
"Accounting System for the Foreign Investment Enterprises." The fiscal
year of the Joint Venture shall be from January 1 to December 31 of each
year.All vouchers, receipts, statistical statements, reports and account
books shall be written in Chinese, provided that any such documents upon
request of Party B shall be translated into English. Monthly, quarterly
and annual financial reports shall be prepared in Chinese and English and
submitted to the board of directors.
ART. 11.5 The Joint Venture shall engage an accountant registered in China
agreed upon by both Parties to conduct its annual financial audit and
examination and to provide a report for submission to the board of
directors and the general manager, in the event that Party B considers it
necessary, a foreign auditor may be engaged to conduct a separate annual
financial audit.
ART. 11.6 All disbursements shall be signed by the general manager or his
authorized personnel.
ART. 11.7 Within the first three (3) months of each fiscal year, the general
manager shall organize the preparation of a balance sheet and a profit
and loss statement in respect of the preceding year as well as a proposal
regarding the allocation and distribution of profits, and submit them to
the board of directors for approval after being examined and signed by
the auditor. Dividends to be paid to Foreign Party shall be transferred
in foreign currencies.
ART. 11.8 Upon the decision of the board of directors, the Joint Venture will
distribute dividends to the shareholders proportionately to their
shareholding.
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CHAPTER 12: FOREIGN EXCHANGE CONTROL
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ART. 12.1 All foreign exchange matters of the Joint Venture shall be handled in
accordance with the provision of the "Provisional Regulations of the
People's Republic of China on Foreign Exchange Conto" and other relevant
regulations. The Joint Venture shall remit the profit due to the Foreign
Party to bank accounts designated by the Foreign Party respectively in
accordance with the "Regulations of the People's Republic of China on the
Foreign Exchange Control."
ART. 12.2 The Joint Venture is entitled to open foreign exchange deposit
accounts and Renminbi deposit accounts with the Bank of China or other
designated banks. All foreign exchange receipts of the Joint Venture
(including capital contributions made by Party B, loans from foreign
banks, export revenues, and so forth) shall be deposited in the Joint
Venture's foreign exchange deposit account. All normal foreign exchange
disbursements, as listed herebelow but not limited to, by order of
priority:- principal and interest repayments for foreign bank loans.
- import of raw materials.- salaries of foreign staff, overseas traveling
expenses.- technical assistance contract.- transportation expenses.
- dividends to the Foreign Party.
ART. 12.3 Based on its business needs, the Joint Venture may borrow foreign
exchange funds from banks abroad or in Hong Kong, provided that the
Joint Venture shall file such matters with the local Administration of
Foreign Exchange Control for the record within fifteen (15) days of
borrowing as required by law.
ART. 12.4 Renminbi shall generally be used in the settlement of accounts for
transactions between the Joint Venture and the Chinese entities,
enterprises or individuals unless otherwise approved by the local
Administration of Foreign Exchange Control or where relevant government
regulations permit the Joint Venture to use foreign exchange in the
settlement of accounts.
ART. 12.5 The Joint Venture will be entitled to utilize all legal means in
order to obtain the foreign currencies needed such as swap centers or all
other legal exchange structure.
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CHAPTER 13: DURATION OF THE JOINT VENTURE
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ART. 13.1 The duration of the Joint Venture shall be 30 years. The date of
establishment of the Joint Venture shall be the date of issuance of the
business license. The duration can be prolonged if one Party suggests it
before six months of the expiring date and if it is approved by the board
of directors.
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CHAPTER 14: DISPOSAL OF ASSETS UPON LIQUIDATION OF THE JOINT VENTURE
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ART. 14.1 Upon termination of the Joint Ventures, liquidation shall be carried
out according to relevant laws and regulations. The liquidated assets
shall be distributed in proportion to the capital contribution made by
Party A and the Foreign Party.
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CHAPTER 15: INSURANCE
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ART. 15.1 The Joint Venture shall maintain appropriate insurance policies with
an insurance company in P.R. China. The types, value and duration of
insurance shall be decided by the board of directors in accordance with
the standards of the insurance company in P.R. China. The Joint Venture
should maintain the insurance for all staff and workers in the local
labor management department.
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CHAPTER 16. AMENDMENT, ALTERATION AND TERMINATION OF CONTRACT
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ART. 16.1 Any amendment to this contract or its appendices shall come into
force only by written agreement signed by Party A and the Foreign Party
and approved by the original examination and approval authority.
ART. 16.2 Should it become impossible to fulfill this contract as a result of
force majeure,or should it become not possible to continue the operations
of the Joint Venture as a result of heavy losses sustained by the Joint
Venture in successive years, the Joint Venture and this contract may be
terminated prior to the date of expiration if unanimously decided by the
board of directors and approved by the original examination and approval
authority. The registration of the Joint Venture must then be canceled at
the original registration office. The Joint Venture may be terminated
prior to its expiration date in the event that both Parties agree that
termination of the Joint Venture is the mutual and the best interest of
the Parties.
ART. 16.3 If due to any one Party being unable to fulfill the obligations of
this contract and the articles of association, and if for that reason
the Joint Venture Company cannot continue its normal business or cannot
reach its target mentioned in the contract, then the contract would be
deemed to have been stopped by the Party who made the violation.The other
Party has the right to claim damage and to apply for the termination of
the contract. If the other Party agrees to continue the business, the
Party who made the violation should compensate the economic damage. The
other Party would have in that case a buying option for the shares owned
by the defaulting Party.
ART. 16.4 In the event that the Joint Venture intends to merge with or acquire
another production enterprise or economic organization in the future,
approval by all the Parties shall be required.
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CHAPTER 17: LIABILITIES FOR BREACH OF CONTRACT
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ART. 17.1 Should any of the Parties fail to pay on schedule its capital
contributions subscribed as herefore, it shall, from the first month of
delay, pay monthly interest to the Joint Venture Company at the rate of
10% per annum and a 0.5% penalty to the other Party, calculated on the
default amount. If more than three months the Party still fails to pay
its capital contributions, the other Party has the right to claim
according to the ART 17.3.
ART. 17.2 Should it become impossible to fulfill all or part of this contract
and its annexes due to the fault of either Party, the Party at fault
shall bear the responsibilities for such breach of contract. Should both
Parties be at fault, each Party shall bear its responsibilities
according to the actual situation.
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CHAPTER 18: FORCE MAJEURE
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ART. 18.1 Should the performance of this contract be directly affected or
should it become impossible to perform this contract in accordance with
the prescribed terms as a result of a force majeure event such as
earthquake, typhoon, flood, fire, war, civil disorder, unforeseeable
events where the occurrences and consequences are unpreventable and
unavoidable without limitation, the Party affected by such event shall
notify the other Party by telegram or facsimile without any delay and,
within fifteen (15) days thereafter, provide the detailed information on
such event and a valid certification document giving reasons for such
Party's inability to perform all or part of this contract or its delay of
the performance.
ART. 18.2 If possible, the said document shall be issued by a notary public
office at the location where the force majeure event occurs. The Parties
shall decide through consultations whether to terminate this contract or
to waive part of the obligations to be performed under this contract or
to delay the performance of this contract according to the effects of the
force majeure event on the performance of this contract.
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CHAPTER 19: APPLICABLE LAW
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ART. 19.1 The execution, validity, interpretation and performance of this
contract and dispute resolution under this contract shall be governed and
protected by the laws of the P.R. China.
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CHAPTER 20: DISPUTE RESOLUTION
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ART. 20.1 Any disputes arising from the execution of or in connection with this
contract shall first be settled through friendly consultations between
the Parties. In the event that no settlement can be reached through
consultations, the disputes shall be first submitted to the China
International Economic and Trade Arbitration Commission for conciliation.
If no settlement can be reached within six months after the beginning of
this procedure,the claim will be submitted and definitely settled through
the rules and the procedure of the International Chamber of Commerce
(Paris). The arbitration will be held in Paris, France and the English
language will be used. The arbitration fee shall be borne by the losing
Party.
ART. 20.2 When the dispute,controversy or claim arising out of or in connection
with this contract are being resolved either through friendly
consultation or through arbitration, the Parties should take the interest
of the whole into account and shall not hinder or affect the performance
of the provisions other than in dispute, so as to guarantee the smooth
operation of the Joint Venture to the extent possible.
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CHAPTER 21. LANGUAGE
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ART. 21.1 The contract is written in Chinese and English versions, both
languages are equally authentic.
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CHAPTER 22: EFFECTIVENESS OF CONTRACT AND MISCELLANEOUS
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ART. 22.1 This contract and its annexes shall become effective upon approval by
the original examination and approval authority. The same applies in
event of amendment.
ART. 22.2 This contract together with its annexes constitute the entire
agreement of the Parties with respect of the subject matters hereof and
shall supersede all prior agreements between the Parties with respect to
the matters hereof.
ART. 22.3 The Parties shall take all such efforts to carry out the purposes of
this contract and its annexes. Neither Party shall take any action that
might have an adverse competitive effect of adverse consequence on the
operation of the Joint Venture.
ART. 22.4 Any waiver by either Party at any time of a breach of any term or
provision of this contract shall not be construed as a waiver b such a
Party of any subsequent breach, its rights to such term or provision, or
any of its other rights hereunder.
ART. 22.5 If any one or more of the provisions contained in this contract or
the annexes hereto shall be invalid, illegal or unenforceable in any
respect under any applicable law,the validity legality and enforceability
of the remaining provision contained herein or therein shall not in any
way be affected or impaired.
ART. 22.6 Unless otherwise specifically provided,notices or other communications
to either Party required or permitted hereunder shall be: (a) personally
delivered; (b) transmitted by postage prepaid registered airmail or by
international courier; or (c) transmitted by telex or facsimile with
answerback or followed by registered airmail or air courier.The addresses
of the Parties listed in this contract shall be their respective mailing
addresses and their respective facsimile numbers.
ART. 22.7 In witness whereof the Parties have signed this contract on March 20,
2001, in Jiaozuo by their duly authorized representatives in four
originals, each Party receiving one original in each version, Chinese
and English.
The Chinese Party The Foreign Party
Signature: Guo Ruxing Signature: ▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ /s/
