Ex 10.8
JOINT VENTURE CONTRACT
Between
Guandong Shunao Industry and Commerce Co. and Foreign Party: Yiwan Xxxxx.Xxx
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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: Guandong Shunao Industry and Commerce Co.
Party B: Foreign Party: YIWAN Xxxxx.Xxx
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: Guandong Shunao Industry and Commerce Co.
legal representative: You Yingliu
nationality: Chinese
title: President: Vice-president
Party B: Foreign Party: YiWan Xxxxx.Xxx
legal representative: Xxxxx Xxxxxxx
nationality:
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: Yi Wan Jiaozuo Yi
Wan Hotel Co., Ltd. The legal address of the Joint Venture shall be in: 189
Minzhu Road, Jiaozou, Henan, People's Republic 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 and the Articles of Association for the Joint Venture, as approved by the
appropriate examination and approval authority. Any conflict between the
provisions of this Contract and the Articles of Association for the Joint Favor
shall be resolved according to the terms and conditions of the Articles of
Association.
ART. 3.4 The form of organization of the Joint Venture shall be a limited
liability company and shall be governed in all respects by the terms and
provisions of the Articles of Association for the Joint Venture. 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 ninety-nine million renminbi (25,000,000 RMB). Party A shall
contribute two million, five hundred thousand renminbi (2,500,000 RMB) and hold
10% shares. Party B shall contribute twenty two million, five hundred thousand
renminbi (22,500,000 RMB - estimated 2,710,000 U.S. DOLLARS) and hold 90%
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, all as set
forth in and governed by the Articles of Association for the Joint Venture.
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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. All matters pertaining to the powers,
responsibilities and procedures with respect to the creation, continuation,
operation of and management of the Joint Venture by Board of Directors shall be
governed by the terms and provisions of the Articles of Association for the
Joint Venture.
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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 ex patriate 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 an advanced
technology 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, shall
engage a foreign auditor 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 shareholders,
in accordance with the Articles of Association for the Joint Venture.
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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, pursuant to the terms and conditions of
the Articles of Association for the Joint Venture.
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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 and the procedures and
substantive rights of the Parties as set forth in the Articles of Association
for the Joint Venture. 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 goals as
set forth in the Contract, then the Contract shall 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 and the Joint
Venture pursuant to the terms and provisions of the Articles of Association for
the Joint Venture.
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 the
Party still fails to pay its capital contributions for more than three
consecutive months, the other Party has the right to make a claim for damages
according to the ART 17.2.
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 in accordance with the terms and provisions of the Articles of
Association for the Joint Venture, and 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, as governed by the Articles of Association for the
Joint Venture, 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 resolved in accordance with the terms and provisions of the
Articles of Association for the Joint Venture.
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 This Contract is written in Chinese and English versions, both
languages are equally authentic.
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CHAPTER 22: EFFECTIVENESS OF CONTRACT AND MISCELLANEOUS MATTERS
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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 January 2,
2000 in Henan 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
/s/ /s/
