Sino-Foreign Cooperative Joint Venture Contract November 16, 2007
Sino-Foreign
Cooperative Joint
Venture Contract
November
16, 2007
TABLE
OF CONTENTS
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ARTICLE
I GENERAL PROVISIONS
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3
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ARTICLE
II PARTIES TO THE CONTRACT
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3
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ARTICLE
III ESTABLISHMENT OF THE COOPERATIVE JOINT VENTURE
COMPANY
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3
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ARTICLE
IV THE PURPOSE, SCOPE AND SCALE OF OPERATION
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4
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ARTICLE
V CONDITIONS OF COOPERATION AND COMPOSING
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4
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ARTICLE
VI RESPONSIBILITIES OF THE PARTIES
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4
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ARTICLE
VII OBLIGATIONS OF THE COMPANY BETWEEN SIGNING AND
CLOSING
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5
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ARTICLE
VIII OPERATION AND MANAGEMENT STRUCTURE
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6
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ARTICLE
IX LABOR MANAGEMENT
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7
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ARTICLE
X SALES
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7
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ARTICLE
XI FINANCIAL AFFAIRS, ACCOUNTING AND AUDITING
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8
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ARTICLE
XII TAX, PROFIT AND LOSE
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8
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ARTICLE
XIII TERM, TERMINATION AND LIQUIDATION
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8
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ARTICLE
XIIII MISCELLANEOUS
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9
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2
Article
I General Provisions
| 1. |
In
accordance with the Law of the People’s Republic of China on Sino-Foreign
Cooperative Joint Ventures and other relevant Chinese laws and
regulations, Inner Mongolia Yongye Biotechnology Co. Ltd. (“Party A”) and
Asia Standard Oil Limited (“Party B”) entered into this contract based on
equality and mutual benefit in the status of legal
person.
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Article
II Parties to The Contract
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2.
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The
Parties
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Party
A:
Inner Mongolia Yongye Biological Technique Co. Ltd.
Registered
Country: China
Lagal
Address: Yongye Industrial Park, Xxxxxxx Xxxx, Xxxxxxx Xxxxxxxxxxx Xxxxxxxx,
Xxxxxxxxx Xxxx
Party
B:
Asia Standard Oil Limited
Registered
District: Hong Kong
Legal
Address: Floor 00, Xxx Xxxxxxxxx Xxxxx, 00 Xxxxxxxxx Xxxx Xxxxxxx,
XX
Article
III Establishment of the Cooperative Joint Venture Company
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3.
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In
consideration of mutual benefit, both parties hereby agree to cooperate
and establish a Sino-foreign cooperative joint venture company (the
“Company”) in Yongye Industrial Park, Jinshan Road, Xxxxxxx Xxxxxxxxxxx
Xxxxxxxx, Xxxxxxxxx Xxxx xx Xxxxx. The name of the company shall
be
“内xxxx农丰生物科技有榰狝任公司”
in Chinese, and “Inner Mongolia Yongye Biological Technique Co. Ltd.” in
English.
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4.
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The
Company is established in accordance to with the Law of the People’s
Republic of China on Sino-Foreign Cooperative Joint Ventures and
other
relevant Chinese laws and regulations by two legal
persons.
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5.
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All
economic and business activities of the Company shall comply with
and be
protected by laws, decrees, rules and relevant regulations of
China.
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6.
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Both
parties take responsibility of the debts, risks and lost of the company
and share its profit.
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Article
VI The Purpose, Scope and Scale of Operation
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7.
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The
Purpose of Operation: the purpose of operation is to develop domestic
economics of China and obtain legal profit. The xxxxx is to develop
the
promotion and sales of 愼纰植溈系列产品,
to meet the rising need of the domestic and foreign markets and to
obtain
economic benefits.
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3
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8.
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The
Scope of Operation: promotion and sales of 愼纰植溈系列产品;
promotion and sales of 动物生命素and
植物生命素。
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9.
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The
Scale of Operation: 10,000 tons of植物生命素,
4,000 tons of 动物生命素
and other products.
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Article
V Conditions of Cooperation and Composing
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10.
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The
condition of cooperation is comprised of technique, trademark and
patent
from Party A and cash from Party B.
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11.
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The
total investment is US$ 1,450,000 and the registered capital is US$
1,000,000. Party A shall contribute in the form of technique, trademark
and patent totaling US$ 100,000 and Party B contributed US$ 900,000
in
cash.
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12.
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After
approval of establishment of Company, Party A shall open a RMB account
and
a foreign exchange account at the local
bank.
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13.
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After
receipt of account-open certificate, Party B shall deposit US$ 900,000
into an account opened by Party by installments pursuant to relevant
laws
and regulations. If Party B breaches this contract, it shall
take responsibility for the economical loss arising from this
breach.
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14.
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Party
A shall perform the commitment of capital contribution in the form
of
technique, trademark and patent according to the agreement. If Party
A
breaches this contract, it shall take responsibility for
the economical loss arising out of this breach.
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Article
VI Responsibilities of the Parties
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15.
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Responsibilities
of Party A
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15.1
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Applying
with Chinese governments for approval of establishment of Company
and for
registration with relevant administration for industry and commerce.
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| 15.2 |
Handling
relevant procedures in connection with the Company with relevant
governmental authorities.
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4
| 15.3 |
Arranging
housing and public facility requirements of the Company based on
real
circumstances.
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| 15.4 |
Handling
the employment procedures and recommending management technicians who
will be employed by the Board of Directors according to the need
if
passing examinations.
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| 15.5 |
Handling
invitation and housing procedures of the Company’s foreign members and
arranging their work, traffic and life.
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| 15.6 |
Other
responsibility of Party A agreed by both parties.
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16.
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Responsibilities
of Party B
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16.1
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Providing
request of office building.
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16.2
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Providing
trade materials required by the
Company.
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16.3
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Providing
technical guidance on imported (ASO will import products or export
products) product standard and operation rules.
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16.4
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Providing
foreign technique information and market information regarding product
of
the Company.
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16.5
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Providing
the employees with sales technical
training.
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16.6
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Improving
the product’s competition ability in the international market, enlarging
the domestic and foreign markets, ensure the Company’s foreign currency
balance and gain higher economical benefit.
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16.7
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Other
responsibility of Party B agreed by both
parties.
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17.
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Any
Party failing to perform its obligations and therefore causing loss
to the
Company shall be responsible for such loss.
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Article
VII The Formation of the Board of Directors
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18.
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The
Company is a cooperative joint venture in the form of legal person.
The
Board shall be the highest authority of the
Company.
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19.
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The
Board shall consist of three (3) directors, two (2) of whom shall
be
appointed by Party A and one (1) of whom shall be appointed by Party
B.
The Board has one (1) Chairman, one (1) Vice-chairman, one (1) director
and one (1) supervisor, all with a term of three (3) years. The Chairmen
shall be appointed by Party A and can serve consecutive terms. The
supervisor shall be selected by the
Board.
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5
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20.
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The
Chairmen is legal representative of the Company. In the event that
the
Chairmen can not perform his responsibility, the Vice-Chairmen or
other
directors shall be authorized to represent the Company.
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21.
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Meetings
of the board of directors are convened at least once a year usually
at
local place at the end of December, or other place if necessary.
The
Chairmen can also convene an interim meeting after procuring consent
from
the Vice-Chairmen. The meeting shall be presided by the Chairmen.
In the
event that the Chairmen can not convene a meeting, the Vice-Chairmen
or
other directors can be authorized to preside the meeting. Notice
of date,
place and topic of each meeting shall be given to all directors three
weeks before the meeting.
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22.
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The
directors shall attend the meetings of the board of directors in
person. If a director is unable to attend a meeting for any reason,
he may
appoint a representative to attend, speak and vote. One representative
can
not represent two or more directors (the meeting of the Board can
only be
held with more than 2/3 directors including representatives of directors
attending.)
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23.
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The
Board shall research and discuss problems on base of equality, mutual
benefit and friendly negotiation.
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Resolutions
involving the following matters shall be adopted upon the unanimous affirmative
vote of each director of the Board attending the meeting:
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(1)
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an
amendment to contracts and Articles of Association of the
Company
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(2)
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the
shutting down or dissolution of the
Company
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(3)
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the
increasing or assignment of the Company’s registered
capital
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(4)
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the
merger of the Company with another
organization
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Other
matters can be resolved according to the rules in Articles of the Association
of
the Company. Resolution of the Board shall be written in Chinese and in four
counterparts. After execution by the Chairmen, one counterpart shall be held
by
the Company, one shall be held by Party B and two shall be held by Party
A.
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24.
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A
General Manager can be employed by the Board with fixed term. The
General
Manager shall enforce the resolution of the Board, take charge of
the
management of the Company and periodically report to the
Board.
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Article
VIII Operation and Management Structure
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25.
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The
Company has operation and management structure, responsible for daily
management. The operation and management structure is comprised of
one (1)
General Manager and other senior managers employed by the Board with
a
term of three (3) years.
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6
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26.
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Responsibilities
and Powers of the General Manager:
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(1)
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Enforcing
contracts made by the Parties, articles of association and resolutions
of
the Board.
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(2)
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Nominating
directors of each department, examining and approving employees and
reporting to the Board for recordation.
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(3)
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Making
operation and management systems of the Company, disposing, directing,
supervising and examining each functional departments.
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(4)
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Periodically
submitting work report, financial report and profit dividend method
to the
Board.
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(5)
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Making
decisions to product sales, specific cooperation contract and debt
and
credit of flowing fund.
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(6)
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Examining
and approving the price of product for distribution over domestic
and
foreign markets enacted by functional departments and determining
appropriate adjustment of the
price.
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(7)
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Receiving
important clients from partners, negotiating and signing documents.
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(8)
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Presiding
administrative meetings of the Company and executing the issues discussed
in that meetings and the resolutions.
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(9)
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Resolving
other problems raised by each functional department.
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(10)
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Representing
the Company or assigning representatives to attend meetings regarding
the
approval or arbitration, mediation in accordance with the authorization
of
the Board.
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(11)
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Making
final administrative decision to the punishment of the employee offending
regulations.
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(12)
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Other
issues taken in charge of the General
Manager.
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Article
IX Labor Management
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27.
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Unless
regulated by the Regulation on Foreign Invested Enterprise’s Labor
Administrationôemployment,
dismissal, pay, labor discipline and labor benefit shall be practiced
according to the resolution of the Board.
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28.
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Employees
of the Company are entitled to establish labor union according to
the
Chinese Labor Union Law and Articles of Chinese Labor Union and organize
relevant labor union activities. The Company shall actively support
the
work of the labor union.
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Article
X Sales
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29.
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The
Company shall make the next year’s production and sales plan on the
meeting of the Board convened every year. The Plan can be appropriately
adjusted according to the domestic and foreign markets provided that
the
economical benefit and foreign currency balance can be guaranteed.
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30.
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After
passing examination of General Administration of Quality Supervision,
Inspection and Quarantine of the People's Republic of China or its
local
agency, 动、植物生命素系列产品sold
by the Company can be directly exported by the Company according
to the
annual export plan, and also can be sold as exported product on Canton
Fair.
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7
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31.
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The
Company agrees in principle that all products meeting the standard
of
export shall be exported to insure the foreign currency balance and
earn
foreign exchange.
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32.
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Party
B shall take charge of the foreign sales of the Company in the name
of the
Company.
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33.
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The
sales price and quantity of the exported product shall be connected
with
the foreign currency balance and cost calculation and shall be adjusted
from time to time with reference to the change of the international
market.
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34.
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Products
to be sold in domestic markets shall be executed according to the
Chinese
price policy. Particular price shall be determined by the President
and be
reported to governing departments and price departments for registration.
Prices of products to be sold in foreign markets shall be determined
by
the President according to the international market price or the
transaction price of the Canton
Fair.
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Article
XI Financial Affairs, accounting and Auditing
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35.
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Accounting
system of the Company shall be practiced according to relevant regulations
of financial departments of China and any accounting system passed
by the
Board shall reflect the particular situation of the
Company.
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36.
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All
kinds of financial statements of the Company shall be reported to
the
parties by the tenth day of next month. The annual financial statement
shall be submitted by the end of next month and examined by a certified
public accountant in China appointed by the Company. All financial
statements shall be recorded with governing department, statistic
department and relevant departments.
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37.
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The
Company shall adopt credit and debit accounting principles, and all
books
shall be written in Chinese. RMB shall be adopted as Company’s bookkeeping
currency. Other currency belonging to the cooperative investment
shall be
converted according to the foreign currency quote price of Bank of
China.
Currency belonging to trading shall be settled according to the foreign
exchange price for trade. Foreign exchange shall be settled according
to
the Regulations of the People's Republic of China on the Management
of
Foreign Exchanges.
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38.
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Financial
Auditing of the Company shall be checked and conducted by a certified
public account licensed to practice in China. Auditing results shall
be
reported to the Board and
President.
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39.
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The
Company shall open a foreign account in place appointed by Subsidiary
of
Bank of China in Inner Mongolia
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8
Article
XII Tax, Profit and Lost
|
40.
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The
Company shall pay taxes according to articles of the Chinese Tax
Law.
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41.
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Proportion
of the withholding of the reserve fund, development fund, employee
bonus
and welfare fund of the after-tax profit shall be determined by the
Board.
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42.
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All
profits, immediately after payment of enterprise income tax and
reservation of various funds, shall be distributed to Party A and
Party B
since the profitable year as follows: Party A gains 10% and Party
B gains
90%.
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43.
|
The
Company shall distribute the profit once a year. The profit distribution
plan and specfic amount shall be published in four months after end
of
each fiscal year.
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44.
|
Profit
shall not be distributed unless and until the previous fiscal year’s
losses have been made up. Undistributed profits of previous fiscal
year
can be consolidated into the distribution of current fiscal
year.
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Article
XIII Term, Termination and Liquidation
|
45.
|
The
operation term of the Company shall be 10 years, commencing from
issuance
of the Business License.
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46.
|
If
the Parties agree to extend the term, the Board shall make a resolution.
A
written application shall be submitted to the Approval Authority
for
approval no less than six (6) months prior to the expiration of the
term.
The term can be extended with the approval and modification procedures
shall be handled with the Approval
Authority.
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47.
|
If
the Parties believe that the termination of the contract conforms
to best
interest of the Parties, they can terminate the contract in advance.
In
the event that the Company terminates the contract in advance, the
termination shall be determined by the general meeting of the directors
and reported to the original Approval Authority for approval.
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48.
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Any
Party is entitled to terminate this contract in event of occurrence
of
following.
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49.
|
If
term expires or the contrat is terminated in advance, the Board of
Directors shall submit the procedures, principles of liquidation
and
candidates of an liquidation committee so as to establish the liquidation
committee to conduct liquidation over the Company’s
assets.
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50.
|
The
duties of liquidation committee shall be conducting a thorough
investigation agaisnt the Company’s assets, debts and credits, providing a
balance sheet and list of Company assets and drafting a liquidation
plan.
The liquidation committee shall present the same to the Board of
Directors
for approval.
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9
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51.
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During
the period of liquidation, the liquidation committee shall represent
the
Company in initiating and responding to legal
actions.
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52.
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The
liquidation fee and the salary for the liquidation committee members
shall
be reserved from existing assets of the Company and shall enjoy priority
in terms of payment.
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53.
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After
the liquidation committee pay all outstanding debts of the Company,
the
remaining properties shall belong to Party
A.
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54.
|
After
the liquidation is completed, the Company shall report to the Approval
Authority and handle the cancellation registration with the original
registration authority, returning the Business License as well as
making a
public annoucement.
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55.
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After
the Company is terminated, all the account books shall be preserved
by
Party A.
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Article
XIII Miscellaneous
|
56.
|
Amendment
of this contract shall be approved by unanimous resolution of the
Board
and reported to Approval Authority for approval.
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57.
|
This
contract and its amendment shall not become effective unless and
until
approved by the Huhehaote Municipal Bureau of Commerce.
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| 58. |
This
contract will become effective after sealed (or signed) by the
Parties.
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Party
A
Sealed
by
Inner Mongolia Yongye Biotechnology Co., Ltd.
Party
B
Sealed
by
Asia Standard Oil Limited
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