Exhibit 3(7)
Sino-foreign Joint Venture
Yangzhou Tongsheng Container Company Ltd. (TSC)
Contract
Chapter 1 General Provisions
In accordance with the "Law of the People's Republic of China on
Sino-foreign Equity Joint Venture Enterprises" and other relevant Chinese laws
and regulations, based on the principle of equality and mutual benefit and
through friendly negotiation, Jiangsu Tongyun Group Company, China Automobile
Import and Export Company, Benxi Iron and Steel Company and China Container
Holdings Ltd. have agreed to jointly invest to set up a Sino-foreign joint
venture enterprise in Yangzhou City, Jiangsu Province of the People's Republic
of China, and hereby entered into the following contract (the "Contract")
Chapter 2 Parties of the Joint Venture
Article 1.
Parties of this contract as follows:
Jiangsu Tongyun Group Company (the " Party A"), registered in Yangzhou
City, Jiangsu Province, the People's Republic of China (the "PRC"), with its
legal address at Qionghua Building 16th Floor Site A, Xuningmen Road, Yangzhou
City, Jiangsu Province, PRC. Its legal representative is Zhang Shouyong,
General Manager, a citizen of PRC.
China Auto Industry Import & Export Company (the "Party B"), registered
in Beijing, PRC, with its legal address at 0 Xxxx Xxxxxx Xxxx, Xxxxxxx, XXX. Its
legal representative is Zhang Cundao, General Manager, a citizen of PRC.
Benxi Steel & Iron Company (the " Party C"), registered in Benxi City,
Liaoning Province, PRC, with its legal address at 2 Renmin Road, Pingshang
District, Benxi City, Liaoning Province, PRC. Its legal representative is Xxxxx
Xxxxx, General Manager, a citizen of PRC.
China Container Holdings Ltd. (the "Party D"), registered in British
Virgin Islands, with its legal address at British Virgin Islands. Its legal
representative is Zhang Shouyong, General Manager, a citizen of PRC.
Chapter 3 Establishment of the Joint Venture Company
Article 2
The Parties have agreed to set up a joint venture container company
with limited liabilities (the "Joint Venture Company") in China in accordance
with the "Law of the People's Republic of China on Sino-foreign Equity Joint
Venture Enterprises" and other relevant Chinese laws and regulations.
Article 3
The name of the Joint Venture Company is Yangzhou Tongsheng Container
Co. Ltd. (TSC) and its legal address is 00 Xxxx Xxxxxx Xxxx, Xxxxxxxx, Xxxxxxx
Xxxxxxxx, XXX.
Article 4
All activities of the Joint Venture Company shall be governed by the
laws, decrees, pertinent rules and other relevant regulations of the People's
Republic of China.
Article 5
The organization form of the Joint Venture Company is a limited
liability company. All Parties to the joint venture are liable to the Joint
Venture Company within the limit of their respectively subscribed contribution
to the registered capital. The profits, risks and losses of the Joint Venture
Company shall be shared by the Parties in proportion to their contribution to
the registered capital.
Chapter 4 The Purposes, Scope and Scale of Production
Article 6
The purposes of the joint venture are to enhance the economic
cooperation and technology exchanges, to import and adopt advanced equipment and
scientific management methods, to improve the quality of products and to develop
new products, as well as to increase the company's capacity of competition in
the world market in respect of price and quality, so as to raise economic
efficiency and to ensure satisfactory benefit for all Parties.
Article 7
The Joint Venture Company's operation includes manufacturing and
marketing 20', 40' and 45' international standard sea-freight container,
non-standard special containers and container accessories, and providing
container maintenance services.
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Article 8
The Joint Venture Company's production capacity after obtaining the
business operation license is outlined as follows:
Second year 20,000 containers
Third year 20,000 containers
Fourth year 20,000 containers
Thereafter each year normally 20,000-30,000
Chapter 5 Total Amount of Investment and Registered Capital
Article 9
The total amount of investment in the Joint Venture Company shall be
US$9.6 million.
Article 10
Investment contributed by four Parties shall be US$4.8 million, which
will be the Joint Venture Company's registered capital and is 50% of the total
investment.
Party A shall contribute US$240,000, i.e., 5% of the registered
capital.
Party B shall contribute US$240,000, i.e., 5% of the registered
capital.
Party C shall contribute US$480,000, i.e., 10% of the registered
capital.
Party D shall contribute US$3,840,000, i.e. 80% of the
registered capital.
Article 11
The Parties shall make their respective capital contribution as
follows:
Party A: Cash US$240,000
Party B: Cash US$240,000
Party C: Cash US$480,000
Party D: Cash US$3,840,000
Article 12
The Joint Venture Company's registered capital shall be paid in by the
Parties in proportion to their respective investments within thirty days after
receiving the business license.
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Article 13
Any Party should not transfer all or part of its investment to a third
party without obtaining consent from all the other Parties of the joint venture
and the approval from the original approving authority. If any party assigns all
or part of its interests in the Joint Venture Company, the other Parties shall
have the preemptive right under the same terms and conditions. Each Party will
be responsible for its own credit and liabilities.
Chapter 6 The Responsibilities of the Parties to the Joint
Venture
Article 14
The Parties shall be responsible respectively for the following
matters:
I. Party A:
1. to make cash contribution and provide machines and equipment
and factory buildings according to Article 11 and Article 12
of the Contract;
2. to assist in handling all matters during the preparatory and
establishment period of the Joint Venture Company;
3. to apply for the land use right certificate to the relevant
local authorities where the company's premises locate, upon
authorization of the Joint Venture Company;
4. to cooperate with other relevant Parties to negotiate and
investigate for import of equipment, to be responsible for
installation of the imported equipment and purchase and
installation of equipment made domestically;
5. to organize the design and construction of the premises and
other engineering facilities of the Joint Venture Company;
6. to apply to relevant authorities for the registration of
Joint Venture Company and to receive business license, etc.;
7. to assist the Joint Venture Company in processing import
customs declaration for the imported equipment;
8. to assist the Joint Venture Company in dealing with relevant
departments to ensure the availability of the fundamental
facilities such as water, electricity, transportation, etc.;
9. to assist the Joint Venture Company's foreign workers and
staff in applying for the entry visa, work permission and
processing their traveling matters;
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10. to assist the Joint Venture Company in recruiting Chinese
management personnel, technical personnel, workers and other
staff needed;
11. to assist the Joint Venture Company in applying for loans to
the relevant banks;
12. to handle other matters entrusted by the Joint Venture
Company.
II. Party B
1. to make cash contribution to the Joint Venture Company
according to the Article 11 and Article 12 of the Contract.
2. to be responsible for importing equipment as entrusted by
the Joint Venture Company;
3. to handle products export as entrusted by the Joint Venture
Company;
4. to handle import of major materials necessary to production
of the Joint Venture Company which are not available in
China, such as steel;
5. to be responsible for other matters entrusted by the Joint
Venture Company.
III. Party C
1. to make cash contribution to the Joint Venture Company
according to the Article 11 and Article 12 of the Contract;
2. to participate in discussion and investigation for import of
equipment and to handle import of equipment, materials and
parts and components upon authorization of the Joint Venture
Company;
3. to develop overseas market for the Joint Venture Company's
products and to handle sales of products and other matters
entrusted by the Joint Venture Company.
4. to be responsible for supply of steel plate and other parts
and components which are manufactured by Party C and
satisfying the needs of the Joint Venture Company;
IV. Party D
1. to make cash contribution to the Joint Venture Company
according to the Article 11 and Article 12 of the Contract.
2. to provide advanced and reliable equipment and technology
for container production and parts and components needed for
maintenance of such equipment in accordance with the
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contract signed between Party D and the Joint Venture
Company;
3. to be responsible for improving the Joint Venture Company's
production, operation and management, and to handle the
product marketing, purchasing of raw material and other
related matters.
Chapter 7 Selling of Products
Article 15
All products of the Joint Venture Company will be sold abroad.
Article 16
Products may be sold on overseas markets through the following
channels:
1. arranging sales according to the principle of selling more
products at favorable prices when sale is at the same time,
on the same market and related to the same product;
2. entrusting in priority Jiangsu Tongyun Group Trading Co. to
handle the selling to the overseas market under the same
conditions according to Article 16.1;
3. the Joint Venture Company and the Parties have the right and
obligations to do their best to sell products on the conditions
referred to in the above two clauses in order that the Joint Venture
Company will make more profits.
Article 17
The Joint Venture Company may set up branches for sale and maintenance
service both in China and abroad in order to provide after-sale maintenance
service upon the approval of the relative Chinese authorities.
Article 18.
The trademark of the Joint Venture Company shall be processed according
to the "Trademark Law of the People's Republic of China".
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Chapter 8 The Board of Directors
Article 19
The date of registration of the Joint Venture Company shall be the date
of the establishment of the board of directors (the "Board") of the Joint
Venture Company.
Article 20
The Board is composed of eleven(11) directors, of which one(1) shall be
appointed by Party A, two(2) by Party C, eight(8) by Party D, among which one
Director appointed by Party D shall have two(2) votes, one of which shall be on
behalf of Party B. The Board shall have one(1) chairman (the "Chairman") to be
appointed by Party D and four(4) vice-chairmen of which one(1) shall be
appointed by Party A, one(1) by Party C and two(2) by Party D. The term of
office for the Chairman, vice-chairmen and directors shall be four(4) years and
may be renewed if reappointed by the original appointing party.
Article 21
The highest authority of the Joint Venture Company shall be the Board.
The Board shall decide all major issues concerning the Joint Venture Company.
Unanimous approval shall be required if any decisions are to be made concerning
the major issues. As for other matters, approval by more than two-thirds of
directors shall be required.
[Article 22
The Chairman shall be the legal representative of the Joint Venture
Company. If the Chairman is unable to perform his/her powers and duties for
reasons, he/she shall authorized a vice-chairman or any other director to
represent the Joint Venture Company provisionally.
Article 23
The Board meeting shall be convened at least once a year. The meeting
shall be called and presided over by the Chairman. The Chairman may convene an
interim meeting based on a proposal made by more than one-third of the
directors. Minutes of the meetings shall be placed on file. In case of emergency
and the Chairman deems it necessary, a Board decision can be made without a
Board meeting by acquiring unanimous written agreements from all directors.
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Chapter 9 Business Management Office
Article 24
The Joint Venture Company shall establish a management office and
several production and business management departments which shall be
responsible for daily business management. The management office shall have a
general manager to appointed by the Board; three deputy general managers to be
recommended by the general manager (or recommended by the Parties to the general
manager) and appointed by the Board. Several department managers may be
appointed by the general manager.
Article 25
The term of office of the general manager and the deputy managers is
four years. The responsibility of the general manager is to carry out the
decisions of the Board meeting and the Contract and Articles of Association, to
organize and handle the daily management of the Joint Venture Company. The
deputy managers shall assist the general manager in his work. The department
managers shall be responsible for the works in various departments and carry out
the instruction from the general manager and the deputy managers.
Article 26
In case of graft or serious dereliction of duty on the part of the
general manager and deputy general managers, the Board shall have the power to
dismiss them at any time.
Chapter 10 Purchasing
Article 27
The Joint Venture Company shall give first priority to purchase in
China where conditions are the same in purchasing of necessary raw materials,
fuel, parts, means of transportation and articles for office use, etc.
Article 28
Parties B, C and D shall have first priority to be entrusted by the
Joint Venture Company to handle the foreign purchasing.
Chapter 11 Labor Regulation
Article 29
A labor contract covering the recruitment, employment, dismissal and
resignation, wages, labor insurance, welfare, rewards, penalty and other
relevant matters shall be prepared by the Board according to the "Provisions of
the People's Republic of China on Labor Regulation in Joint Ventures Using
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Chinese and Foreign Investment" and its Implementation Rules and signed between
the Joint Venture Company and the Trade Union of the Joint Venture Company
collectively or the employees individually. After execution, the labor contracts
shall be filed with the local labor regulatory department.
Article 30
1. Salaries, social insurance and welfare of the general
manager and the deputy managers shall be decided by the meeting
of the Board.
2. Administrative management personnel in the Joint
Venture Company shall not exceed 5% to 10% of the company's total
employees.
Chapter 12 Taxes, Finance and Audit
Article 31
The Joint Venture Company shall pay taxes according to the stipulations
of Chinese laws and other relative regulations.
Article 32
Foreign and Chinese 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.
Article 33
Allocations for reserve funds, enterprise expansion funds and welfare
and bonus funds for staff and workers shall be set aside in accordance with the
stipulations in the "Law of the People's Republic of China on Joint Ventures
Using Chinese and Foreign Investment". The annual proportion of allocations
shall be decided by the Board according to the business situations of the Joint
Venture Company.
Article 34
The fiscal year of the Joint Venture Company shall be from January 1 to
December 31 of each year. All vouchers, receipts, statistical statements and
reports, account books shall be written in Chinese.
Article 35
Financial auditing of the Joint Venture Company shall be conducted by
an accountant registered in China and reports on the results shall be submitted
to the Board and the general manager.
In case any of the Parties considers it is necessary to invite a
foreign or domestic auditor to conduct the annual financial auditing, all
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other Parties shall give their consent and such inviting Party shall be
responsible for all expenses involved.
Article 36
In the first four months of each fiscal year, the general manager shall
prepare the previous year's balance sheet, profits and losses statement and
profit distribution plan and submit them to the Board for examination and
approval.
Chapter 13 Duration of the Joint Venture
Article 37
The duration of the Joint Venture Company is 15 years. The date of
establishment of the Joint Venture Company shall be the date on which the
business license of the Joint Venture Company is issued.
Upon proposal by any of the Parties and unanimous approval by the
Board, an application for the duration extension shall be submitted to the
original approving authority six months prior to the expiration of the joint
venture.
Chapter 14 Disposal of Assets after the Expiration of
the Duration
Article 38
The Joint Venture Company shall be liable for its debts with all of its
assets. Upon expiration or termination before the expiration of the joint
venture, liquidation shall be carried out by the Joint Venture Company according
to the relevant law. The remaining assets and debts after liquidation shall be
distributed to or borne by the Parties in accordance with the proportion of
their respective investment.
Chapter 15 Insurance
Article 39
Insurance policies of the Joint Venture Company on various kinds of
risks shall be purchased with the People's Insurance Company of China, Yangzhou
division. The insurance types, value and duration shall be decided by the Board
in accordance with the stipulations of the People's Insurance Company of China.
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Chapter 16 Amendment, Alteration and Discharge of the
Contract
Article 40
The amendment of the Contract or appendices hereto shall come into
effect only after a written agreement thereof has been signed by Parties A, B, C
and D and approved by the original approving authority.
Article 41
In case of inability to fulfill the contract as a result of force
majeure or inability to continue operation due to heavy losses of the joint
Venture Company in successive years, the Joint Venture Company and the Contact
may be terminated prior to their expiry upon the unanimous agreement of the
Board and the original approving authority.
Article 42
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 or several parties fails to fulfill its or their obligations under the
Contract and Articles of Association, or seriously violate the stipulations of
the Contract and Articles of Association, such defaulting parties shall be
deemed as unilaterally terminating the contract. The non-defaulting parties
shall have the right to terminate the Contract in accordance with the provisions
of the Contract after approved by the original approving authority, as well as
to claim against such defaulting parties for damages. In case all the Parties
agree to continue the joint venture, the defaulting parties shall be liable to
compensate the economic losses thus caused to the Joint Venture Company.
Chapter 17 Liabilities for Breach of Contract
Article 43
Should any of the Parties fail to make on schedule its capital
contribution in accordance with the provisions in Chapter 5 of the Contract, the
breaching party shall pay the non-breaching parties an penalty equivalent to 1%
of its overdue contribution monthly from the first month after such contribution
is due. Should the breaching party fail to make its contribution in three months
after due, the non-defaulting parties shall have the right to terminate the
contract and to claim against the breaching party for damages in accordance with
the stipulations in Article 42 of the Contract, in addition to the accrued
penalty equivalent to 3% of the overdue contribution in three months.
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Article 44
Should all or part of the Contract and its appendices be unable to be
fulfilled due to the fault of one or more parties, the breaching parties shall
be responsible for breach of contract. The Board shall make decision on the
breaching of contract; in case of any dispute arising, it shall be settled
according to Article 47 of the Contract.
Chapter 18 Force Majeure
Article 45
Should any of the Parties to the contract be prevented from performing
the contract by force majeure, such as earthquake, typhoon, flood, fire and war
and other unforeseeable events which happening and consequences are
unpredictable and unavoidable, the prevented party shall notify other parties by
cable without any delay and, within 15 days thereafter, provide details of the
events and a valid document of evidence issued by the relevant public notary
organization for explaining the reason of its inability or delay to perform all
or part of the Contract. All Parties shall consult together and decide whether
to terminate the Contract or to partially exempt obligations of implementation
of the contract or whether to delay the performance the contract according to
the effects of the events on performance of the contract.
Chapter 19 Applicable law
Article 46
Formation, validity, interpretation and execution of the Contract and
the related dispute settlement shall be governed by the law of the People's
Republic of China.
Chapter 20 Settlement of Disputes
Article 47
Any disputes arising from the execution of or in connection with the
Contract shall be settled through friendly consultations among all Parties. In
case no settlement can be reached through consultations, the disputes shall be
submitted to the Foreign Economic and Trade Arbitration Commission of the China
Council for the Promotion of International Trade for arbitration in accordance
with its rules of procedure. The arbitral award is final and binding upon all
Parties.
Chapter 21 Language
Article 48
The Contract shall be written in Chinese.
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Article 49
The contract and its appendices shall come into force from the date of
approval by the Ministry of Foreign Economic Relations and Trade of the People's
Republic of China (or its authorized approving authority).
Article 50
Should any notice in connection with any party's rights and obligations
is to be sent by telegram or telex, it shall be required be followed by a
written notice of the same by mail.
Article 51
The Contract is a revised version based on the version formally signed
in Yangzhou City, Jiangsu province, PRC on July. 5, 1995 to meet the latest
needs of the container project construction and has been formally signed in
Yangzhou City, Jiangsu Province, PRC on April 1, 1996. In the event of any
discrepancy between the Contract and other documents such as agreements and
contracts signed among the Parties prior to the date hereof, the Contract shall
prevail.
Signatures of the Parties:
Representative of Party A: Zhang Shouyong
Representative of Party B: Xxx Xxxxxx
Representative of Party C: Wang Xihe
Representative of Party D: Zhang Shouyong
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