CONTRACT FOR JOINT VENTURE TIANJIN KIWA FEED CO., LTD.
CHAPTER 1 GENERAL
Article 1
In accordance with the "Law of the People's Republic of China on Chinese-foreign
Joint Ventures" and other applicable Chinese laws and regulations, Tianjin
Challenge Feed Co., Ltd. and Kiwa Bio-Tech Products Group Corporation, adhereing
to the principle of equality and mutual benefit and through friendly
consultations, agree jointly invest to set up a joint venture enterprise in Da
Xxxx Xxxxxx Town, Wuqing District, Tianjin, the People's Republic of China.
Article 2 Parties of the Joint Venture
Parties of this contract are as follows:
Tianjin Challenge Feed Co., Ltd. (hereinafter referred to as Party A),
registered with Wuqing District, Tianjin, China, and its legal address is at Da
Xxxx Xxxxxx Town, Wuqing District, Tianjin, China.
Legal representative: Name: Xx, Xxxxxx
Title: General Manager
Nationality: China
Kiwa Bio-Tech Products Group Corporation (hereinafter referred to as Party B).
Its legal address is at 000X.Xxxxxxxx Xxxx, Xxxxx000, Xxxxxxxxx.XX00000, XXX.
Legal representative: Name: Xx, Xxx
Title: Chairman of the Board
Nationality: China
Article 3
The name of the joint venture company is Tianjin Kiwa Feed Limited Liability
Company. The name in English language is Tianjin Kiwa Feed Co., Ltd. The legal
address of the joint venture company is at the West to Xxxx-xxx Highway, Da Xxxx
Xxxxxx Town, Wuqing District, Tianjin, China.
Article 4
All activities of the joint venture company shall be governed by the laws,
decrees and pertinent rules and regulations of the People's Republic of China
and all legal activities and interests of the joint venture company shall be
protected by the laws and regulations of the People's Republic of China.
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Article 5
The organization form of the joint venture company is a limited liability
company. Each Party to the joint venture company is liable to the joint venture
company within the limit of the capital subscribed by it. The profits, risks and
losses of the joint venture company shall be shared by the parties in proportion
to their contributions of the registered capital.
CHAPTER 2 THE PURPOSE, SCOPE AND SCALE OF PRODUCTION AND BUSINESS
Article 6
The purpose of the parties to the joint venture is to raise economic results and
ensure satisfactory economic benefits for each investor by combining existing
technologies developed by Party A and advantage in capital of Party B.
Article 7
The productive and business scope of the joint venture company is to develop,
manufacture and market supportive and concentrated feeds.
Article 8
The production scales of the joint venture company are as follows: The annual
output of supportive and concentrated feeds may amount to 40,000 tons.
CHAPTER 3 TOTAL AMOUNT OF INVESTMENT AND THE REGISTERED CAPITAL
Article 9
The total amount of investment and the registered capital of the joint venture
company are USD 850,000 and USD 600,000 respectively and other capital is raised
by the joint ventures.
Article 10
In the total investment, Party A shall pay USD 120,000, accounting for 20% of
the total and Party B shall pay USD 480,000, accounting for 80% of the total.
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Article 11
Both Party A and Party B will contribute the following as their investment:
Party A: machines and equipments equivalent to USD 120,000
Party B: in cash in USD at a exchange rate that is announced by People's Bank of
China when payment
Article 12
Both parties shall pay their investments within 6 months as from the issue of
the business license of the joint venture company. Overdue payment of the
investment constitutes breach of this contract. Party A shall provide Assets
Assessment Report.
Article 13
Upon the completion of the payment by both parties, the joint venture company
shall invite certified public accountants for verification of capital and
relevant reports, which will be distributed to the chairmen of the board of both
parties for signature on investment certificates.
Article 14
Transfer of partial or complete investment of either party shall be subject to
approval for its directorate and permission of the other party and the priority
in purchase of the transferred investment shall be given to the other party. The
transferor shall not make a transfer to the third party on preferential term and
condition.
Article 15
The total registered investment of the joint venture company shall not be
subjected to reduction. Any necessary change in the total amount and scale of
business shall be subject to approval by authorities having the jurisdiction.
Article 16
Any addition and transfer of the registered capital of the joint venture company
shall be subject to approval by its directorate and authorities having the
jurisdiction and shall be registered with administrations for industry and
commerce.
CHAPTER 4 RESPONSIBILITIES OF EACH PARTY TO THE JOINT VENTURE
Article 17 Party A and Party B shall be respectively responsible for the
following matters:
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Responsibilities of Party A:
1. Handling of applications for approval, registration, business license and
other matters concerning the establishment of the joint venture company
from responsible authorities in China;
2. Paying due investment on schedule in the joint venture company in
accordance with Article 10, 11 and 12;
3. Assisting the joint venture in recruiting Chinese management personnel,
technical personnel, workers and other personnel needed;
4. Assisting the joint venture company in purchasing raw materials, articles
for office use, communication facilities etc.;
5. Assisting foreign workers and staff in applying for the entry visa, work
license and processing their traveling matters;
6. Upon the signature of this contract, forming a marketing team and
providing market training for them to ensure the continuation of existing
marketing team and market network;
7. Ensuring the integrity and operation of production line to be used in the
joint venture company;
8. Assisting the joint venture company in research and development and if
necessary establishing a RD center
9. Responsible for handling other matters entrusted by the joint venture
company.
Responsibility of Party B:
1. Paying due investment on schedule in the joint venture company in
accordance with Article 10, 11 and 12;
2. Assisting the joint venture company in purchasing machines, equipments,
raw materials, articles for office use, means of transportation and
communication facilities abroad;
3. Responsible for providing information on international market and trend in
product development;
4. Responsible for handling other matters entrusted by the joint venture
company.
CHAPTER 5 SITE, PLANT AND UTILITY
Article 18
Tianjin Challenge Feed Co., Ltd. shall provide site for the joint adventure
company. The service life of the site shall be the same with the term of the
joint venture and the site covers an area of 900 sq.m.
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Article 19
The plant, warehouse and offices cover an area of 660 sq.m. And utility and
heating facilities shall be provided by Party A and the rent of the premise and
utility and heating facilities shall be in line with market price.
CHAPTER 6 PROVISION OF TECHNOLOGY
Article 20
Required production techniques shall be provided the joint venture company.
CHAPTER 7 PURCHASE OF EQUIPMENT AND RAW MATERIAL
Article 21
The purchase of required production equipments, transportation means, articles
for office use, etc. shall be left to the joint venture company.
Article 22
The purchase of required raw material in or outside China shall be left to the
joint venture company.
Article 23
Party B is liable for provision of information on international raw materials
market to the joint venture.
CHAPTER 8 SELLING OF PRODUCTS
Article 24
40,000 ton mixed and supportive feeds each year shall be marketed in China. The
joint venture company is responsible for the marketing.
Article 25
In order to market in China, the joint venture company may set up sales branches
in China subject to the approval of the relative Chinese department.
Article 26
The joint venture may design the trademark of its products in accordance with
applicable law regarding trademark in China.
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Article 27
The product of the joint venture company shall be subject to the inspection of
commodity inspection authorities in China.
Article 28
Party B is liable to provide the joint venture company with information on
price, development, specification and improvement in quality of the same
products in international market.
CHAPTER 9 DIRECTORATE
Article 29
The joint venture company shall be governed by directorate. The date of
registration of the joint venture company shall be the date of the establishment
of the directorate of the joint venture company.
Article 30
The directorate is composed by 5 directors, of which 2 shall be appointed by
Party A and 3 by Party B. The chairman of the board shall be appointed by Party
B and its vice-chairman by Party A. The term of office for the directors is four
years and their term of office may be renewed if continuously appointed by the
relevant party. The appointment shall be made in written and the directors shall
perform their obligations.
Article 31
The highest authority of the joint venture company shall be its directorate, the
jurisdiction of which is as follows:
1. Review and approval for important reports submitted by the general
manager, including annual plan and reports on business, finance and loan;
2. Approval for annual financial statements, budget for revenues and
expenditures and annual appropriation of profits;
3. Approval for rules and regulations;
4. Decision about establishment or withdrawal of subsidiary;
5. Modification in the Articles of Association;
6. Decision about addition or transfer of the registered capital;
7. Decision about the termination of the joint venture company and the
settlement at the end of the term;
8. Decision about merging with other organizations;
9. Decision about appointment and removal of general xxxxxx, financial
director and vice general manger and other officers;
10. Decision about other major issues.
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Article 32
Unanimous approval shall be required before any decisions are made concerning
the following major issues.
1. Modification in the Articles of Association;
2. Addition or transfer of registered capital;
3. Termination and dissolution of the joint venture company and
4. Merging with other organizations.
For other matters, approval by a three fifth of directors shall be required.
Article 33
The chairman of the board is the legal representative of the joint venture
company. Should the chairman be unable to exercise his responsibilities for some
reasons, he shall authorize the vice-chairman or any other directors to
represent the joint venture company temporarily.
Articles 34
The directorate shall convene at least one meeting every year. The meeting shall
be called and presided over by the chairman of the board. The chairman may
convene an interim meeting based on a proposal made by three fifth of the total
number of directors. Minutes of the meetings shall be placed on file and on
responsible authorities.
CHAPTER 10 BUSINESS MANAGEMENT OFFICE
Article 35
The joint venture company shall establish a management office which shall be
responsible for its daily management. The management office shall have a general
manager, financial director and vice-general manager, whose terms of office are
four years and shall be appointed by the directorate.
Article 36
The responsibility of the general manager is to carry out the decisions of the
board meeting and organize and conduct the daily management of the joint venture
company. Assisting the general manger, the financial director shall be
responsible for overall financial management and directly report to the
directorate. The vice general managers shall assist the general manager in his
work. The business management department shall include financial, purchasing,
product management, production, marketing and personnel departments, which shall
execute the tasks assigned by general or deputy general managers and report to
general manager, financial director and vice-general manager.
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Article 37
The general manger, deputy general manger and financial director shall not work
for other companies during their term of office and participate in competition
against the joint venture company.
Article 38
In case of graft or serious dereliction of duty on the part of the general
manager and deputy general mangers, the directorate shall have the power to
dismiss them at any time. If violation of criminal law, they will be held
criminally liable.
CHAPTER 11 PREPARATION
Article 39
During the period of preparation, a preparation office shall be set up under the
directorate. The preparation office shall consist of three persons, among which
the director will be from Party A and together with deputy director, will be
appointed by the directorate.
Article 40
The preparation office is responsible for working out the general schedule,
compiling the expenditure plans, controlling financial payments and final
accounts, drawing up managerial methods and keeping and piling documents,
drawings, files and materials, etc., during the preparation.
Article 41
After approved upon by both parties, the establishment, remuneration and the
expenses of the staff of the preparation office shall be covered in the
preparation budget.
Article 42
After having completed the preparation and finishing the turning over procedure,
the preparation office shall be dissolved upon the approval of the directorate.
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CHAPTER 12 LABOR MANAGEMENT
Article 43
Labor contract covering the recruitment, employment, dismissal and resignation,
wages, labor insurance, welfare, rewards, penalty and other xxxxxx concerning
the staff and workers of the joint venture company shall be drawn up between the
joint venture company and the Trade Union of the joint venture company as a
whole, or the individual employees in the joint venture company as a whole or
individual employees in accordance with applicable regulations on labor and
social security of the PRC and Tianjin.
Article 44
The appointment and wages of high-ranking administrative personnel in the joint
venture company shall be decided by the meeting of the directorate.
CHAPTER 13 TRADE UNION
Article 45
Employees of the joint venture company are entitled to form a trade union under
Trade Union Law of the People's Republic of China, the purpose of which is to
safeguard the right and interest of the employees, assist the joint venture
company in allotting bonus and welfare funds, organize the employees to learn
about policies and expertise and carry out entertainment and sports, educate
employees in observation of labor disciplines, perform the responsibilities and
meet the objects set down by the joint venture company.
Article 46
The joint venture company shall allocate an amount equal to 2 percent of the
total salary to the union and the union shall spend the amount in accordance
with Union's Fund Management Method of the People's Public of China.
CHAPTER 14 TAXES, FINANCE AND AUDIT
Article 47
The joint venture company shall pay taxes in accordance with the stipulations of
Chinese laws and other relative regulations.
Article 48
Staff members and workers of the joint venture company shall pay individual
income tax according to the Individual Income Tax Law of the People's Republic
of China.
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Article 49
Allocations for reserve funds, expansion funds of the joint venture company and
welfare funds and bonuses for staff and workers shall be set aside in accordance
with the stipulations in the Law of the People's Republic of China on
Chinese-foreign Joint Ventures. The annual proportion of allocations shall be
decided by the board of directors according to the business situations of the
joint venture company.
Article 50
The fiscal year of the joint venture company shall be from January 1 to December
31. All vouchers, receipts, statistic statements and reports shall be written in
Chinese.
Article 51
Financial checking and examination of the joint venture company shall be
conducted by an accountant registered in China and reports shall be submitted to
the directorate and the general manager. In case either party considers it is
necessary to employ an auditor by itself to undertake annual financial checking
and examination, the other party shall give the consent. All the expenses
thereof shall be borne by the employing party.
Article 52
In the first three months of each fiscal year, the financial director shall
prepare previous year's balance sheet, profit and loss statement and proposal
regarding the disposal of profits, and submit them to the directorate for
examination and approval.
Article 53
All matter regarding foreign exchange shall be dealt with in accordance with the
Regulations on the Foreign Exchange System of the People's Republic of China and
other regulations.
CHAPTER 15 INSURANCE
Article 54 Insurance policies of the joint venture company on various kinds of
risks shall be underwritten with the People's Republic of China. The type,
value, currency and duration of insurance shall be decided by the directorate in
accordance with the stipulations of the China Insurance Regulatory Commission.
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CHAPTER 16 THE DISPOSAL OF ASSETS AFTER THE EXPIRATION OF THE DURATION
Article 55
The duration of the joint venture company is 20 years. The establishment of the
joint venture company shall start from the date on which the business license of
the joint venture company is issued. An application for the extension of the
duration, proposed by one party and unanimously approved by the directorate,
shall be submitted to responsive authorities.
Article 56
Upon the expiration or termination, the joint venture shall carry out
liquidation and pay taxes upon the liquidation income, that is the balance
between the amount of net assets or residual property minus undistributed
profit, various funds and balance of liquidation expense and contributed
capital, and shall made an allocation in proportion to the contributed capital.
CHAPTER 17 THE AMENDMENT, ALTERATION AND DISCHARGE OF THE CONTRACT
Article 57 the amendment of the contract or other appendices shall come into
force only after the written agreement signed by Party A and Party B
and approved by the original examination and approval authorities.
Article 58 in case of inability to fulfill the contract or to continue
operation due to heavy losses in successive years or force majeure,
the duration of the joint venture and the contract shall be
terminated before the time of expiration after unanimously agreed
upon by the directorate and approved by the original examination and
approval authorities.
Article 59 Should the joint venture company be unable to continue its
operations or achieve the business purpose stipulated in the
contract due to the fact that one of the contracting parties fails
to fulfill the obligations prescribed by the contract and articles
of association, or seriously violate the stipulations of the
contract and articles of association, that party shall be deemed as
having unilaterally terminated the contract. The other party shall
have the right to terminate the contract in accordance with the
provisions of the contract after approved by the original
examination and approval authority as well as to claim damages. In
case Party A and Party B of the joint venture company agree to
continue the operation, the party who fails to fulfill the
obligations shall be liable to the economic losses thus caused to
the joint venture company.
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CHAPTER 18 LIABILITIES FOR BREACH OF CONTRACT
Article 60
Should either Party A or Party B fail to pay on schedule the contributions in
accordance with the provision as defined in Article 10, 11 and 12, the breaching
party shall pay to the other party 1% of the contribution starting from the
first month after exceeding the time limit. Should the breaching party fail to
pay after 2 months, 2% of the contribution shall be paid to the other party, who
shall have the right to terminate the contract and to claim damages to the
breaching party in accordance with applicable provisions.
Article 61
Should all or part of the contract and its appendices be unable to fulfilled
owing to the fault of one party, the breaching party shall bear the
responsibilities thus caused. Should it be the fault of both parties, they shall
bear their respective responsibilities according to actual situations.
CHAPTER 19 FORCE MAJEURE
Article 62
Should either of the parties to the contract be prevented from executing the
contract by force majeur, such as earthquake, typhoon, flood, fire and war and
other unforeseen events, and their happening and consequences are unpreventable
and unavoidable, the prevented party shall notify the other party by cable
without any delay, and within 15 days thereafter provide the detailed
information on the events and a valid document for evidence issued by the
relevant public notary organization for explaining the reason of its inability
to execute or delay the execution of all or part of the contract. Both parties
shall, through consultations, decide whether to terminate the contract or to
exempt the part of obligations for implementation of the contract or whether to
delay the execution of the contract according to the effects of the events on
the performance of the contract.
CHAPTER 20 APPLICABLE LAW
Article 63
The formation of this contract, its validity, interpretation, execution and
settlement of the disputes shall be governed by the related law of the People's
Republic of China.
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CHAPTER 21 SETTLEMENT OF DISPUTES
Article 64
Any disputes arising from the execution of, or in connection with the contract
shall be settled through friendly consultations between both parties. In case no
settlement can be reached through consultation, the disputes shall be submitted
for mediation. If the mediation doesn't function, the disputes shall be
submitted to China International Economic and Trade Arbitration Commission for
arbitration. The arbitral award is final and binding upon both parties.
Article 65
During the arbitration, the contract shall be observed and enforced by both
parties except for matters in dispute.
CHAPTER LANGUAGE
Article 66
The contract shall be written in Chinese version.
Article 67
The contract shall be made in quintuplicate. Party A and Party B shall, signing
all copies, each retain one copy and submit the remaining ones to authorities
for approval and registration as well as filing. Several copies shall be made
and distributed to relevant authorities.
CHAPTER 23 EFFECTIVENESS OF THE CONTRACT AND MISCELLANEOUS
Article 68
The appendices drawn up in accordance with the principles of this contract are
integral part of this contract and equally authentic. The appendices include a
list of equipments provided by Party A as due investment, including but not
limited to name, date of delivery, service life, depreciation and integrity.
Article 69
Should notices in connection with any party's rights and obligations be sent by
either Party A or Party B by telegram, telex or fax etc., the written letter
notices shall be also required afterwards. The legal addresses of Party A and
Party B listed in this contract shall be the posting addresses. Any change in
the legal addresses of either party shall be notified to the other party.
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Article 70
The contract and its appendices shall come into force beginning from the date of
approval of foreign economic and trade committee of Wuqing District, Tianjin.
Article 71
The contract is signed in Tianjin, China, by the authorized representatives of
both parties on July , 2006.
Party A: TIANJIN CHALLENGE FEED CO., LTD.
/s/ Xxxxxx Xx
Legal Representative (Signature):
Party B: KIWA BIO-TECH PRODUCTS GROUP CORPORATION
/s/ Xxx Xx
Legal Representative (Signature):
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