GREEN FOOD PEREGRINE CHILDREN'S FOOD COMPANY, LIMITED
JOINT VENTURE CONTRACT
between
CHINA NATIONAL GREEN FOOD CORPORATION
and
CHINA PEREGRINE ENTERPRISES, LIMITED
and
AMER-CHINA PARTNERS LIMITED
DATED APRIL 13, 1993
TABLE OF CONTENTS
Page
ARTICLE I
Section 1.1 General Provisions 1
ARTICLE II
Section 2.1 Parties to the Contract 1
ARTICLE III
Section 3.1 Establishment of the Joint Venture 2
Section 3.2 Effective Date of this Contract and Date of
Establishment of the Joint Venture 2
Section 3.3 The First Meeting of the Board 2
Section 3.4 The Name of the Joint Venture 2
Section 3.5 Laws and Decrees 3
Section 3.6 The Organization of the Joint Venture 3
ARTICLE IV
Section 4.1 Purposes of the Joint Venture 3
Section 4.2 Business Scope of the Joint Venture 3
Section 4.3 Geographical Scope of the Joint Venture 3
Section 404 Production Scale of the Joint Venture 3
ARTICLE V
Section 5.1 The Total Investment and Registered Capital 4
Section 5.2 Loans 4
Section 5.3 Contribution of Capital 4
Section 5.4 Conditions Precedent to the Payment of
Registered Capital Contribution 5
Section 5.5 Audit of Contributed Capital 5
Section 5.6 Assignments 5
Section 5.7 Changes in Registered Capital 6
ARTICLE VI
Section 6.1 Responsibilities of the Parties to the Contract 6
Section 6.2 Responsibilities of Party A 6
Section 6.3 Responsibilities of Party B and Party C 8
Section 6.4 No Right to Compensation 9
ARTICLE VII
Section 7.1 Use of the Green Food Trade ▇▇▇▇ 9
ARTICLE VIII
Section 8.1 Marketing of the Products 9
Section 8.2 Marketing Prices 9
Section 8.3 Marketing in Domestic and International Markets 9
ARTICLE IX
Section 9.1 The Board of Directors 9
Section 9.2 Term of Board Members 10
Section 9.3 Vacancy of a Board Member 10
Section 9.4 Chairman of the Board 10
Section 9.5 Power of the Board 10
Section 9.6 Meetings of the Board 10
Section 9.7 Absenteeism of Board Members 11
Section 9.8 Power and Procedures of the Board 11
Section 9.9 Authority of Initiate/Terminate 11
ARTICLE X
Section 10.1 Administrative Management 11
Section 10.2 Responsibilities of the General Manager 11
Section 10.3 Responsibilities of the Department Managers 11
Section 10.4 Dismissal of Executives 11
Section 10.5 Salaries of Administrative Staff 12
Section 10.6 Annual Business Plan and Budget 12
Section 10.7 Duty of Managers 12
ARTICLE XI
Section 11.1 Import of Materials, Spare Parts and Equipment 13
Section 11.2 Purchase of Materials, Spare Parts and Equipment 13
ARTICLE XII
Section 12.1 Preparatory Office 13
Section 12.2 Responsibilities of the Preparatory Office 13
Section 12.3 Construction Budget 13
ARTICLE XIII
Section 13.1 Management of Labor 13
Section 13.2 Contracted Invitation System 14
Section 13.3 No Other Employment 14
Section 13.4 Employees 14
Section 13.5 Labor Management Affairs 14
Section 13.6 Laws and Regulations 14
ARTICLES XIV
Section 14.1 Taxation 14
Section 14.2 Foreign Staff 14
ARTICLES XV
Section 15.1 Responsibilities of the Treasurer 15
Section 15.2 Responsibilities of the General Manager 15
Section 15.3 Fiscal Year 15
Section 15.4 Standard Accounting Currency 15
Section 15.5 Financial Statements 15
Section 15.6 Auditors 16
Section 15.7 Balance Between Receipts and Expenditures 16
Section 15.8 Savings of Foreign Currency 16
Section 15.9 Band Accounts 16
Section 15.10 Allocation of Reserve Fund 16
Section 15.11 Distribution of After-Tax Profits 16
ARTICLES XVI
Section 16.1 Insurance 17
ARTICLES XVII
Section 17.1 Confidence 17
ARTICLE XVIII
Section 18.1 Term of the Joint Venture 17
Section 18.2 Procedures for Extension of the Term 18
Section 18.3 Termination of the Term 18
Section 18.4 Circumstances for Continuance of Operations 18
ARTICLE XIX
Section 19.1 Liquidation 19
Section 19.2 Form and Responsibilities of the Liquidation
Committee 19
Section 19.3 Receipt of Liquidation Property Committee 20
ARTICLE XX
Section 20.1 Revisions Procedure 20
ARTICLE XXI
Section 21.1 Liability 20
ARTICLE XXII
Section 22.1 Force Majeure 21
ARTICLE XXIII
Section 23.1 Concerned Laws 21
ARTICLE XXIV
Section 24.1 Dispute Resolution 22
Section 24.2 Arbitration 22
ARTICLE XXV
Section 25.1 Language 23
ARTICLE XXVI
Section 26.1 Survival Rights 23
Section 26.2 No Assignment without Chinese Government Approval 23
Section 26.3 Effectiveness of Other Provisions 23
Section 26.4 Agreement in Total 23
Section 26.5 Non-Compete 23
Section 26.6 Procedures for Notices 23
SIGNATURE 24
ARTICLE I
General Provisions
Section 1.1. General Provisions. On the principle of equality and mutual
interest, through friendly consultation, and according to the terms and
conditions of this Contract, China National Green Food Corporation ("Party
A") and China Peregrine Enterprises, Limited ("Party B") and Amer-China
Partners Limited ("Party C") have agreed to establish a C``hinese-foreign
Joint Venture limited (the "Joint Venture"), in accordance with the "Law of
the People's Republic of China on Chinese-Foreign Equity Joint Ventures",
the implementing deregulations issued thereunder as well as the provision
set forth under this Contract.
ARTICLE II
Parties to the Contract
Section 2.1. Parties to the Contract. The "Parties" to this Contract are:
1. Party A: China National Green Food Corporation
Legal Address: ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇. ▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, People's Republic of China
Fax: ▇▇▇▇▇▇▇
Telephone: 4228888-7206
Legal Representative: Liu Lianfu
Post: General Manager
Nationality: People's Republic of China
2. Party B: China Peregrine Enterprises, Limited
Legal Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ of America
Fax: (▇▇▇)▇▇▇-▇▇▇▇
Telephone: (▇▇▇)▇▇▇-▇▇▇▇
Legal Representative: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Post: President
Nationality: United States of America
3. Party C: Amer-China Partners
Legal Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇.▇.▇.
Fax: (▇▇▇)▇▇▇-▇▇▇▇
Telephone: (▇▇▇)▇▇▇-▇▇▇▇
Legal Representative: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Post: President
Nationality: United States of America
ARTICLE III
Establishment of the Joint Venture
Section 3.1. Establishment of the Joint Venture. When this Contract is
signed, Party A shall take the following procedures to establish the Joint
Venture.
1. When this Contract is signed, Party A shall immediately submit it
to the Ministry of Foreign Economic Cooperation and Trade of the People's
Republic of China (hereinafter referred to as the Ministry of Foreign
Economic Cooperation and Trade) or its authorized agencies the application
document, signed originals of this Contract and the Articles of Association
and the list of names of the Board of Directors appointed by each Party
according to the provisions of this Contract. When Party A receives any
official approval documents, it shall immediately send a written notice to
Party B and Party C.
2. When Party A receives a certificate of approval from the
examination and approval authority, Party A shall, within the period
stipulated by relevant laws and regulations, immediately take all necessary
measures to register the Joint Venture with the State Administration for
Industry and Commerce (hereafter referred to as the Agency for Registration
and Administration) or its authorized agency and acquire a business license
signifying Chinese legal person status. A copy of these certifications and
registrations shall be provided to Party B and Party C.
Section 3.2 Effective Date of this Contract and Date of Establishment of
the Joint Venture. This Contract shall become effective on the date on
which the Ministry of Foreign Economic Cooperation and Trade has approved
this Contract and the Articles of Association without altering the terms and
conditions hereof or thereof and without imposing any additional obligations
on any Party or the Joint Venture. The date when the Agency for
Registration and Administration issues the business license to the Joint
Venture without altering the terms and conditions of this Contract or the
Articles of Association or imposing any additional obligations on any Party
or the Joint Venture shall be the date of establishment of the Joint Venture
as a Chinese legal person.
Section 3.3 The First Meeting of the Board. The Board of Directors shall
hold the first meeting of the Board within ninety (90) days after the
provisions set forth in Section 9.6 become effective.
Section 3.4 The Name of the Joint Venture.
The Chinese name of the Joint venture shall be
, and the English name shall be Green Food
Peregrine Children's Food Company, Limited. The legal address of the Joint
Venture is the Chongqing Hotel, Beijing. The Joint Venture may set up
branches both in China and abroad after approval by the Board of Directors
and relevant departments of the Chinese government.
Section 3.5 Laws and Decrees. All the activities of the Joint Venture
should abide by and be protected by the laws, decrees and concerned
regulations of China.
Section 3.6. The Organization of the Joint Venture. The form of
organization of the Joint Venture shall be a limited liability company. The
liability of each Party is limited to its contribution of registered capital
contributed under this Contract. The Joint Venture is responsible to third
parties to the full extent of its property. No Party has any responsibility
for the other Parties, the Joint Venture or a third party for any losses of
the Joint Venture or claims against the Joint Venture except according to
any guaranty provided by each Party. If any Party, entrusted by the Joint
Venture with and entrusted letter, acts on behalf of the Joint Venture and
such acts lead to claims for compensation by a third party, the Joint
Venture shall compensate such Party's expenses, losses, compensation, claims
and responsibility. Subject to the foregoing provisions, all Parties shall
share the profits, losses and risks of the Joint Venture according to the
amount of their respective registered capital in the Joint Venture.
ARTICLE IV
Purposes, Scope and Scale of this Joint Venture
Section 4.1 The Purposes of the Joint Venture. The purpose of the Joint
Venture shall be to strengthen economic cooperation and exchange of
technology, to adopt advanced and practical technology and scientific
methods of management to improve the quality of products, to develop new
products competitive in the domestic and international markets in quality
and price, to improve economic efficiency and ensure satisfactory economic
profits to all Parties.
Section 4.2 The Business Scope of the Joint Venture. The business scope of
the Joint Venture shall be the manufacture distribution and marketing of
children's fresh milk ("infant formula"), other children's food products,
and a range of baby foods and supplements. The Joint Venture may sell its
products both in China and abroad.
Section 4.3 The Geographic Scope of the Joint Venture. The Joint Venture
shall, in its initial stage, set up production lines for children's fresh
milk in Shanghai and Beijing. When the Board of Directors determines that
conditions are appropriate, it may set up productive branches in other
cities with the approval of concerned departments in accordance with related
Chinese regulations. The Parties presently anticipate that the Joint
Venture will apply to establish production branches in cities in China with
a population exceeding 2,000,000 and may establish branches in other cities.
Section 4.4 The Production Scale of the Joint Venture. The initial
production scale of the Joint Venture is 30,000 tons of children's fresh
mile and the production of other foods for children. The Board of Directors
may adjust production capacity in response to market conditions.
ARTICLE V
Total Investment and Registered Capital
Section 5.1 Total Investment and Registered Capital. The total investment
of the Joint Venture is US$9,900,000. The total registered capital of the
Joint Venture is US$5,000,000 in which:
1. Party A shall invest in cash US$1,500,000 for the Joint Venture's
registered capital, an amount equal to 30% of the total registered capital.
2. Party B shall invest in cash US$3,000,000 for the Joint Venture's
registered capital, an amount equal to 60% of the total registered capital
3. Party C shall invest in cash US$500,000 for the Joint Venture's
registered capital, an amount equal to 10% of the total registered capital.
Section 5.2. Loans. The Joint Venture shall make up the difference between
the total investment and the registered capital by loans. Upon agreement by
all parties, each Party hereto may provide a guarantee for the loan
according to its proportion of the registered capital.
Section 5.3 Contribution of Capital.
1. Subject to Section 5.4, each Party shall contribute its registered
capital in accordance with Article 5.1.
2. Subject to Section 5.4, each Party shall, for the first phase in
Shanghai and Beijing, contribute 24% of its registered capital within 90
days after the Joint Venture's business license becomes effective.
Party A: US$360,000
Party B: US$720,000
Party C: US$120,000
3. Subject to Section 5.4, each Party shall contribute its registered
capital within three (3) years of the date of issuance of the business
license according to the resolutions of the Board of Directors.. The Board
of Directors shall determine the specific dates of contribution according to
the obtaining of governmental approvals for projects in other cities and the
construction schedule.
4. If any Party fails to contribute its portions of the registered
capital within the time set forth in this Contract, it shall pay the Joint
Venture 10% annual interest for the late portion. From the date the
contribution is due (including the due date) until the date the contribution
is made (not including such date), the interest shall be paid on a monthly
basis. If any Party fails to make the contribution ninety (90) days after
the due date, the other Parties shall have the right and option to terminate
this Contract according to Section18.3, or make the contribution, and
thereafter own the additional portion of the Joint Venture represented by
the contribution so made by the total registered capital of the Joint
Venture.
Section 5.4 Conditions Precedent to the Payment of Registered Capital
Contribution. The Parties shall not be obligated to contribute their
respective shares of the registered capital unless the following conditions
have been fulfilled:
1. The Parties have signed this Contract and the Articles of
Association and both documents are approved by the examination and approval
authority without altering the terms and conditions hereof or thereof and
without imposing any additional obligations on any Party or the Joint
Venture.
2. The Agency for Registration and Administration issues the business
license to the Joint Venture without altering the terms and conditions
hereof or thereof and without imposing any additional obligations on any
Party or the Joint Venture.
If any of the prerequisite conditions in (1) or (2) above are not
achieved within ninety (90) days after the Contract is signed, and if no
Party presents a written document wishing to waive any of the above
prerequisite conditions, or to agree to extend time for achieving the
prerequisite conditions, any Party shall have the right to terminate this
Contract, and upon such termination, no Party shall have the right to
require the other Parties to contribute registered capital, or to require
the other Parties to make any compensation.
Section 5.5 Audit of Contributed Capital. The date on which any amount of
contribution in cash has been transferred by any Party to the account of the
Joint Venture shall be deemed to be the date of such contribution.
Following each Party's contribution of capital, the Joint Venture shall
draft and submit a verification report regarding the contribution(s) to
respective Parties, and the Chairman and Vice-Chairman of the Joint Venture
shall sign a contribution certificate.
Section 5.6 Assignment. Any Party may assign or sell its total or partial
amount of registered capital (ownership) to the other Parties to this
Contract or a third Party; however, to do so, it must obtain a written
consent from the other Parties to this Contract.
1. When one Party wishes to assign, sell or dispose of its total or
partial registered capital, it shall send a written notice to the other
Parties setting forth the terms and conditions of the assignment, sale or
other methods of disposal. The other Parties shall have the priority to
purchase in proportion to their respective shares of registered capital the
above-mentioned registered capital (ownership) according to the terms and
conditions described in the notice.
2. If no Party of this Contract exercises its priority right within
ninety (90) days after it receives written notice of the intent to so
exercise, the selling Party may assign, sell or dispose of its registered
capital, in total or in part, as set out in the notice; however, it shall
not give the buyer terms or conditions of better preferential treatment to
the buyer than those listed in the notice. The selling Party shall present
to other Parties copies of written agreement of the sale or assignment.
3. Provided there is no other agreement to the contrary among the
Parties hereto, the business, other contract liabilities, fulfilment of the
liabilities and the structural organization shall not be affected in any way
by this assignment or sale.
4. Any sale or assignment under this Contract shall be within the
scope provided by law, and subject to the approval of the examination and
approval authority.
The Joint Venture shall apply to the Agency for Registration and
Administration to fulfill the formalities related to the change.
Section 5.7 Changes in Registered Capital. Any increase to the registered
capital shall be approved unanimously by the Board of Directors, and
approved by the examination and approval authority. Upon receiving the
approval from the examination and approval authority, the Joint Venture
shall register the increased capital with the Agency for Registration and
Administration.
ARTICLE VI
Responsibilities of the Parties to the Contract
Section 6.1 Responsibilities of the Parties to the Contract. All parties
to the Joint Venture shall cooperate sincerely and safeguard the rights and
interests of the Joint Venture. One Party cannot benefit at the expense of
the other Parties.
Section 6.2. Responsibilities of Party A. Apart from responsibilities
under this Contract, Party A shall also assume the following
responsibilities:
1. Deliver its amount of contribution to the registered capital as
provided in Article V;
2. Assist in the fulfilment of all formalities for the establishment
of the Joint Venture, including affairs concerning application,
registration, obtaining the business license and other requirements of the
establishment of the Joint Venture required by the departments in charge in
China;
3. Assist the Joint Venture in all affairs related to its business,
including the application for permission, certificates and licenses related
to security and hygiene, environmental affairs, product and product
formulation approval, the sale of products on a foreign currency basis, and
other affairs requested by the governmental authorities;
4. Ensure that the Joint Venture has the right to use adequate sites
reasonable required to carry out the purposes of this Contract;
5. Assist the Joint Venture to fulfill all the customs formalities
and do the best to fulfill the import duties and taxes on all imported
machines, equipment, material and goods which are allowed to import
according to relevant regulations in China, and assist with their
transportation in Chinese territory;
6. Assist the Joint Venture to purchase machines, equipment,
material, office necessities, transport vehicles, communication equipments
and other goods and services necessary to carry out the purposes of the
Joint Venture;
7. Assist the Joint Venture in contacting and negotiating with
related departments to secure its electricity, water, communication and
transportation facilities necessary to carry out the purposes of the Joint
Venture;
8. In cooperation with Party B and Party C, organize the designing
and construction work to expand and renew the production facilities of the
Joint Venture;
9. Prepay the related expenditures and fees related to the
establishment of the Joint Venture, where such related expenditures and
fees, following confirmation by the Board of Directors, shall be included in
the initial expenditures of the Joint Venture;
10. Assist the Joint Venture to find a number of qualified personnel
from which the Joint Venture shall be able to employ as management and
administrative personnel, technical staff and other needed personnel;
11. Assist the foreign personnel of Joint Venture and of the
companies which are a party hereto to obtain the necessary visa and work
permission, as well as provide recommendations, offices, transportation and
medical care and other health facilities;
12. Assist the Joint Venture in obtaining approval for loans and
assist the Joint Venture to apply to branches of the Bank of China and other
authorized banks in China in order to open foreign currency accounts,
foreign currency credit accounts and Renminbi accounts;
13. Ensure that, after Contract has been approved by the Ministry of
Foreign Economic Cooperation and Trade, Party A has the authority and power
to undertake and perform all of its obligations hereunder;
14. Assist the Joint Venture to handle its relations with local
government and other Chinese companies in the general sense;
15. Provide the required supply of raw materials and distribution
channels for products to provide the opportunity for each facility to
operate at full capacity. Raw materials/products shall be provided at
competitive prices similar to those offered for respective domestic
consumption by processors or consumers;
16. Assist the Joint Venture to give Party B and Party C any part or
all of the distribution of profits of the Joint Venture in U.S. dollars, or
any other foreign currency Party B and Party C may chose, at the exchange
rate as quoted by the Foreign Exchange Adjustment Centers of the State
Administration for Exchange Control on that day;
17. Assist the Joint Venture in submitting an application to the
examination and approval authority no less than one hundred and eighty (180)
days before the term terminated in a manner that achieves the maximum
renewal options. Each time there is an increase in registered capital,
assist the Joint Venture in applying for extension; and
18. Handle other affairs entrusted by the Joint Venture.
Section 6.3. Responsibilities of Party B and Party C. Apart from other
responsibilities under this Contract, Party B and Party C have the following
responsibilities:
1. Deliver their amount of contribution to the registered capital as
provided in Article V;
2. Assist in the procurement of advanced, brand-new, reasonably
priced machines, equipment and material which are otherwise impossible to be
obtained in China, or for the consideration of the competitiveness of their
price, quality, performance and other factors which require the Joint
Venture to import from outside China, and other project affairs;
3. Provide the design drawings and relative technical materials
concerning the building of plant, and/or expansion and renovation of the
plants;
4. Assist the Joint Venture to install and adjust equipment;
5. Train the Joint Venture's managerial, administrative, technical
and sales personnel;
6. For the interest of all Parties and that of the Joint Venture
provide suggestions and assistance regarding export products;
7. Assist the Joint Venture to purchase machines, equipment,
material, office necessities, transport vehicles, communication equipment
and other goods and services necessary to carry out the purposes of the
Joint Venture;
8. In cooperation with Party A, organize the designing and
construction work to expand and renew the construction facilities of the
Joint Venture;
9. Prepay the expenditures and fees related to the establishment of
the Joint Venture which, following confirmation by the Board of Directors,
shall be included in the project expenditures of the Joint Venture;
10. Assist the Joint Venture to find a number of qualified personnel
which the Joint Venture shall be able to employ as management and
administrative personnel, technical staff and other needed personnel;
11. Ensure that, Party B and Party C have the authority and power to
undertake and perform all of their obligations hereunder; and
12. Handle other affairs entrusted by the Joint Venture.
Section 6.4 No Right to Compensation. Except as otherwise provided in this
Contract or its appendices, no Party has the right to claim compensation or
repayment from any assistance or service provided under the Article VI of
this Contract.
ARTICLE VII
Trade ▇▇▇▇
Section 7.1. Use of the Green Food Trade ▇▇▇▇. The Joint Venture shall
establish business trust and fame through development of Green Food and the
excellent quality of its products and service. Trade marks of its products
shall be decided by its Board of Directors. The Joint Venture shall
register its trade marks at an appropriate time both in China and outside.
If the trade marks to be used by the Joint Venture are the same or similar
to those possessed by the related companies of one Party, the Joint Venture
shall sign permission Contracts with the companies that possess them.
Related fees and other conditions shall be decided through talks between the
Joint Venture and other companies. The Joint Venture shall apply for the
right to use Green Food label on its products through formal procedures and
pay related fees.
ARTICLE VIII
Marketing of the Products
Section 8.1. Marketing of the Products. The marketing of the Joint
Venture's products shall cover both the domestic and international markets.
In order to secure maximum economic efficiency, the Joint Venture shall make
effort to raise the quality of its products to that of an international
standard. The proportions of domestic and international sales shall be
decided by the Board of Directors.
Section 8.2. Marketing Price. The marketing prices shall be decided by the
Board of Directors. The Parties realize, according to the differences in
marketing, sale, advertisement and message, it might be suitable to pursue
different prices in different markets.
Section 8.3. Marketing in the Domestic and International Markets. The
Joint Venture shall undertake marketing in the domestic market and in the
international market.
ARTICLE IX
The Board of Directors
Section 9.1. The Board of Directors.
1. The Board of Directors shall consist of five members. Party A
shall appoint two members. Party B shall appoint three members. Party C
shall appoint one advisory director who shall have no right to vote.
2. Party A or Party B has the right to appoint an advisory directors
who shall have no right to vote.
3. No members of the Board shall bear personal responsibility of
liability when they act on behalf of the Joint Venture unless that action
will cause the Joint Venture or a respective member of the Board to violate
the law.
Section 9.2 Term of Board Members. The term of office of members of the
Board shall be four (4) years which can be extended if the appointing Party
so decides. The Chairman of the Board shall be elected from the members
appointed by Party A. The Vice Chairman shall be elected from members
nominated by Party B.
Section 9.3. Vacancy of a Board Member. If there is a vacancy arising from
the retirement, resignation, illness, inability in performance, or death
among the members of the Board, or one Party terminates its appointed
member, the nomination Party shall appoint a successive member to the post,
to serve the remaining term of the previous member.
Section 9.4. Chairman of the Board. The Chairman of the Board of Directors
is the legal representative of the Joint Venture. However, the Chairman is
not permitted to bind the Joint Venture other than within the power clearly
entrusted to him by the Board of Directors. When the Chairman is not able
to fulfill his responsibilities he shall authorize the Vice Chairman or
another member of the Board to represent the Joint Venture in his place.
Section 9.5. Power of the Board. The Board of Directors is the highest
organ of power of the Joint Venture and is responsible for the discussion of
all important matters related to the Joint Venture. The combination,
termination, dissolution or liquidation of the Joint Venture, or the
revision of the Articles of Association, or the increase or assignment of
registered capital, shall only be decided by unanimous vote of approval by
all Board members. Resolutions with respect to other matters may be adopted
by a majority of the Board members taking part in the meeting (by the Board
member himself or the entrusted representative). At least two-thirds of the
total number of Board members shall constitute a quorum which shall be
necessary for a meeting to be held. The procedure and methods regarding the
meeting of the Board of Directors and its resolutions are written in detail
in the Articles of Association.
Section 9.6. Meeting of the Board. Meeting of the Board of Directors shall
be held at the least once a year. The first meeting shall be held within
ninety (90) days after the date of issuance of the business license. The
meeting shall be called by any member and shall be chaired by the Chairman
of the Board of Directors once chosen. When at least two Board members
apply in written form to discuss a certain matter, the Chairman shall call
for an interim meeting of the Board after consulting his deputies as to the
time and place of the meeting. For any meeting of the Board of Directors,
the Chairman shall inform the members of the Board at least 14 days prior to
the meeting. The notice of meeting shall include a detailed schedule of the
meeting an matters to be discussed, with all related reports, documents and
other materials. The notice, detailed schedule and related reports,
documents and other materials shall be written in Chinese and English.
Records of every meeting of the Board shall be signed by the Chairman and
his deputies. The original signed record shall be kept in the files of the
Joint Venture. Copies shall be provided to every member and the legal
representatives of all Parties.
Section 9.7. Absenteeism of Board Members. When a member is unable to
attend a meeting of the Board, he may entrust another person (who may be
another member of the Board) to take part in the meeting with a letter of
trust. The representative so entrusted shall have the same rights and power
as the absent member in addition to his own rights and power.
Section 9.8. Power and Procedures of the Board. The specific power and
procedures shall be stipulated in relative provision of the Articles of
Association which shall be approved unanimously by the Board of Directors.
Section 9.9. Authority to Initiate/Terminate. The Board of Directors shall
have the authority to initiate and/or terminate production facilities,
markets and products as required by business needs.
ARTICLE X
Administrative Management
Section 10.1. Administrative Management. The Board of Directors shall
appoint one (1) general manager and one (1) assistant general manager. The
general manager shall be nominated by Party B and approved by the Board of
Directors. The assistant general manager shall be nominated by Party A and
approved by the Board of Directors.
Section 10.2. Responsibilities of the General Manager. The general manager
is responsible for implementing all resolutions of the meeting of the Board
of Directors and for organizing and exercising leadership of the daily
administrative and management of the Joint Venture. The general manager
shall consult with the assistant general manager when dealing with serious
matters. The assistant general manager shall assist the general manager
with his work.
Section 10.3. Responsibilities of the Department Managers. The
administrative and management body shall employ department managers to be in
charge of the work of various departments of the Joint Venture, to implement
the work assigned by the general manager and the assistant general manager,
and to be responsible to them.
Section 10.4. Dismissal of Executives. The general manager and assistant
general manager may be dismissed at any time by resolution of the Board of
Directors. However, replacements must be chosen in the manner set out in
Section 10.1.
Section 10.5. Salaries of Administrative Staff. The Board of Directors
shall be wholly responsible for deciding the salaries and other rewards of
the administrative staff including the general manager and the assistant
general manager.
Section 10.6. Annual Business Plan and Budget. The general manager shall
draft the annual business plan and budget. The annual business plan and
budget of every fiscal year (including the estimated capital indebtedness
plan, deficit and profit plan and cash income and expenditure report) shall
be submitted to the Board of Directors, and shall include the following
detailed information:
1. The procurement of equipment and other property of the Joint
Venture;
2. Raising and expenditure of capital;
3. Plans for production and product marketing;
4. Maintenance and repair of the property and equipment of the Joint
Venture;
5. Budgetary estimate of the Joint Venture based on production plan
and budget;
6. Training plan for the personnel of the Joint Venture;
7. The raw material, fuel, water, electricity and other public
facilities needed during the next year;
8. The plan for proportion of export and internal sales and
recommendations on export and domestic sales prices;
9. Foreign currency income and expenditure balance plan; and
10. Report on any other matters that might be asked for by the Board
of Directors or any member of the Board.
The general manager shall write an administrative report which shall
include the information required by the Board of Directors. The general
manager shall also prepare and deliver all other report required by the
Chairman, Vice Chairman, or the Board of Directors.
Section 10.7 Duty of Managers. The general manager, the assistant general
manager and senior and senior administrative personnel are employees of the
Joint Venture and not the representatives of a Party hereto. They shall
safeguard the interest of the Joint Venture. In case of graft or serious
dereliction of duty by the above mentioned persons, they may be dismissed at
any time by resolution of the Board of Directors.
ARTICLE XI
Procurement of Materials, Spare Parts and Equipment
Section 11.1 Import of Materials, Spare Parts and Equipment. The Joint
Venture may import equipment, raw materials, fuel, spare parts, transport
vehicles, office necessities and other items that are needed. If the above-
mentioned materials are available in China at a competitive price, quality,
service and delivery time, the Joint Venture may purchase such materials
domestically. The general manager shall list his recommendations in the
annual business plan regarding such procurement and shall be approved or
disapproved by the Board of Directors. The provider shall be chosen by the
Board of Directors according to their quality, price, service and delivery
time table.
Section 11.2 Purchase of Materials, Spares Parts and Equipment. Except as
otherwise provided by the law, the Joint Venture has the right to purchase
equipment, raw materials and services in China with Renminbi. The price
shall not be higher than that paid by the Chinese state-run enterprises.
When the Joint Venture entrusts Party B or Party C to purchase equipment in
the international markets, representatives from Party A shall be invited to
take part.
ARTICLE XII
Preparation and Construction
Section 12.1 Preparatory Office. A preparatory office shall be appointed
within thirty (30) days after the Contract comes into effect. The director
and deputy director of the preparatory office shall be appointed by the
Board of Directors and be responsible for the Board.
Section 12.2 Responsibilities of Preparatory Office. The preparatory
office shall be in charge of project planning, signing construction
contracts, organizing procurement and testing of the equipment and
materials, planning the constructions schedule, making expenditure plans,
handling the affairs of the Joint Venture until a permanent office shall be
established by the Board of Directors.
Section 12.3 Construction Budget. The staff, rewards, and expenditures of
the preparatory office, when approved by all the Parties, shall be added
into the construction budget. When a permanent office is established by the
Board of Directors, the preparatory office shall be closed.
ARTICLE XIII
Management of Labor
Section 13.1 Management of Labor. Party A shall assist the Joint Venture
in finding qualified candidates to be selected by the Joint Venture. The
general manager shall employ the most qualified candidates from the
recommended personnel by exam and evaluation results. The Joint Venture
also has the right to find and employ workers on its own.
Section 13.2 Contracted Invitation System. The Joint Venture shall employ
the contracted invitation system. All its personnel shall have to pass an
exam and an evaluation. The terms of the exam and evaluation shall be
provided in the invitation contract. The Joint Venture shall decide whether
it shall employ them.
Section 13.3 No Other Employment. None of the Joint Venture's selected
personnel may be employed part or full time by other companies or units.
Section 13.4 Employees. The labor management affairs such as employment,
dismissal, wages, labor insurance, career security and hygiene, welfare, and
rewards of the employees of the Joint Venture shall be planned by the Board
of Directors according to the related Chinese laws, regulations and rules of
departments in charge. The Joint Venture shall sign collective contracts
through the Labor Union or sign individual contracts with each employee to
stipulate the above mentioned matters. Such labor contracts shall be filed
with the local agencies of labor.
Section 13.5 Labor Management Affairs. According to the plan approved by
the Board of Directors and the Labor contract stipulated in Section 13.4,
the general manager shall have the full power to handle all the labor
management affairs, including dismissal of unqualified and surplus
personnel, and those who failed to fulfill or efficiently implement the work
assigned to them, and the ones who refuse to obey or have violated the rules
and regulations f the Joint Venture, on the basis of the"Regulations of the
People's Republic of China on Labor Management in Joint Ventures Using
Chinese and Foreign Investment".
Section 13.6 Laws and Regulations. The Joint Venture must abide by the
Chinese rules and regulations regarding labor protection and environmental
protection to ensure safe and civilized production.
ARTICLE XIV
Taxation
Section 14.1 Taxation. The Joint Venture shall fulfill the registration
formalities at the local taxation departments within one (1) month after the
date of establishment of the Joint Venture. The Joint Venture shall pay all
taxes in accordance with the related laws and regulations in China, and
shall enjoy favourable treatment offered by the state of local government to
Chinese-foreign Joint Ventures.
Section 14.2 Foreign Staff. Foreign staff and workers in the Joint Venture
shall pay individual income tax in accordance with the "Individual Income
Tax Law of the People's Republic of China" and other related regulations.
Chinese staff and workers shall pay individual income tax in accordance with
the "Provisional Rules of the People's Republic of China on Individual
Income Adjustment Tax".
ARTICLE XV
Finance and Foreign Currency
Section 15.1 Responsibilities of the Treasurer. The treasurer recommended
by the general manager and approved by the Board of Directors shall be
responsible for the financial management of the Joint Venture.
Section 15.2 Responsibilities of the General Director. According to the
"Regulations of the People's Republic of China on Financial Administration
of Foreign Investment Enterprises" and its attached regulations as well as
modern management methods, the general manager and the treasurer shall
formulate the Joint Venture's system of financial management and procedures.
The system of financial management of procedures adopted by the Joint
Venture shall be submitted to the Board of Directors for approval. The
system of financial management and procedures shallb e filed in the
department in charge within the Joint Venture and also concerned local
financial departments and taxation agencies. The Joint Venture shall adopt
the debit and credit accrual basis for accounting as its accounting system
and principles.
Section 15.3. Fiscal Year. The annual financial year of the Joint Venture
shall be from January 1 to December 31 of the same year. Although all
original "source documents" such as daily vouchers, receipts, and statements
shall be in the language in which they are provided, which in most cases
will be Chinese, the accounting will be done on a computer system and
software provided by Party B. Accounting reports, including detailed
general ledger reports will be provided monthly on paper as well as MS-DOS
computer readable format. The Joint Venture shall provide all reasonable
assistance and cooperation to each Party of the Joint Venture to assist in
their understanding of these records.
Section 15.4. Standard Accounting Currency. The Joint Venture adopts
Renminbi as its standard accounting currency. If cash deposits, other cash
receipts and expenditures as well as the currency for losses or gains in
remittances are different from the currency in the accounting statement, the
currency in the actual receipts and expenditures shall be the accounting
currency. The actual profit or loss resulting from exchange shall be
accounted as profit or loss. The exchange rate adopted by the Joint Venture
in remittance sand account (and any changes thereto) shall be chosen by the
Board of Directors in accordance with applicable Chinese laws and
regulations.
Section 15.5 Financial Statements. The general manager shall draft a
financial statement of accounts, including statements of assets and
liabilities, statements of losses and gains, and a plan for the distribution
of profits within the first three (3) months of every business year for the
preceding business year. The Joint Venture shall invite an accountant
registered in China as its auditor, who shall examine the Joint Venture's
financial condition twice a year. After the examination, the annual report
shall be submitted to the Board of Directors for approval. Following
approval by the Board of Directors, the Joint Venture shall also draft a
quarterly business report and other reports as may be required by the Board
of Directors and shall send such reports to all Parties.
Section 15.6 Auditors. Each Party may employ at its own expense and
accountant (an accounted registered either in China or in a foreign country)
to examine the Joint Venture's accounting items. The Joint Venture shall
provide all reasonable assistance to the auditor. The auditor shall keep
secret all material he comes across during the examination.
Section 15.7 Balance Between Receipts and Expenditures. The Joint Venture
may achieve balance between receipts and expenditures in foreign currency
through exporting products or othe methods allowed by Chinese laws.
Section 15.8 Savings of Foreign Currency. With respect to foreign currency
savings, the Joint Venture may mortgage its foreign currency to the
appropriate branch of the Bank of China or other specified financial
agencies for Renminbi of the relative amount in accordance with the
"Provisional Measures of the People's Bank of China on Foreign Exchange
Secured RenminbiLoans for Foreign Investment Enterprises". The Renminbi
borrowed shall be used for Renminbi expenditures of the Joint Venture.
Section 15.9 Bank Accounts. If it is necessary for the Joint Venture to
open an account in a Hong Kong or a foreign country bank outside China, it
shall obtain permission from the State Administration for Exchange Control
and submit the receipts and expenditures and provide bills or checks. The
foreign currency trade of the Joint Venture shall be in accordance with the
foreign exchange control regulations in the People's Republic of China.
Section 15.10 Allocation of Reserve Fund. The Joint Venture shall allocate
the reserve fund, Joint Venture expansion fund, and bonus and welfare fund
for staff and workers in Renminbi, with the ratio for such allocations to be
determined by the Board of Directors.
Section 15.11 Distribution of After-Tax Profits. When the three funds are
allocated in accordance with Section 15.10, and any loans are repaid by the
Joint Venture in accordance with the terms thereof, the after-tax profits of
the Joint Venture shall be distributed based upon the ratio of each Party's
registered capital. The profits shall be decided by the Board of Directors
whether for distribution or for the expansion of the Joint Venture's
business, provided, however, that where profits are used for expansion the
Board of Directors shall distribute to Party B and Party C from
the profits that are available for distribution to Party B and Party C an
amount of profits sufficient to enable Party B and Party C to pay the tax
liabilities, if any, that they each may incur in respect of the Joint
Venture's profits. At the same time, the Board of Directors shall
idstribute to Party A from the profits available to Party A a corresponding
amount of profits. After the Shanghai plant is in production, the Joint
Venture may distribute profits to the Parties. If the Joint Venture has
incurred losses in previous years, the profits of the current year shall be
first used to make up losses. The Joint Venture shall not distribute
profits until he previous losses are made up. Remaining profits from
previous years may be added to the current year for profits distribution, or
for distribution after making up the current year's deficit. The profits of
Party B and Party C may be used for further investment inside China or may
be remitted outside China.
Where the Joint Venture has foreign currency available for profit
distribution, each Party shall receive an amount of such foreign currency in
proportion to its respective contribution to registered capital. The Joint
Venture shall assist each Party upon requesting exchanging profits available
for distribution in Renminbi into United States Dollars using the Foreign
Exchange Adjustment Centers and any other reasonable methods that ma e
available to the Joint Venture or any Party. The costs of cash exchanges
shall be borne by the Party receiving the foreign currency profit
distribution. All profits distributed to Party B or Party C in foreign
shall be freely remittable outside of China to a bank account designated by
such Party. If Party A desires to convert into Renminbi any of the foreign
currency it receives pursuant to this Article, it shall first offer such
foreign currency to Party B and Party C (in proportion to their respective
contributions to registered capital) at an exchange rate to be agreed by the
Parties.
ARTICLE XVI
Insurance
Section 16.1. Insurance. During the preparatory and operation periods of
the Joint Venture, the Joint Venture shall procure insurance with the
approval of the Board of Directors in accordance with related Chinese
regulations. The risks, value and terms of insurance shall be determined by
the Board of Directors.
ARTICLE XVII
Confidentiality
Section 17.1. Confidentiality. During the term of existence of the Joint
Venture as well as the period before information is made available to the
public by the Board of Directors, all Parties shall not inform any parties
outside this Contract of any information regarding the establishment of the
Joint Venture and the management of the Joint Venture, including but not
limited to proprietary technology of the Joint Venture or either Party. All
Parties and the Joint Venture shall assume responsiblity to ensure that all
employees observe the regulations of this Article XVII, and are responsible
for violation of these regulations by their own employees.
ARTICLE XVIII
Term and Termination of the Joint Venture
Section 18.1 Term of the Joint Venture. The term of this Joint Venture
shall be fifty (50) years from the date when the Stare Administration for
Industry and Commerce issues the Joint Venture its business license
signifying legal person status.
Section 18.2 Procedure for Extension of the Term. If the Board of
Directors agree to extend the term, the Joint Venture shall submit an
application to the examination and approval authority no less than one
hundred eighty (180) days before the expiration of the term.
Section 18.3 Termination of the Term. This Contract expires when the term
of the Joint Venture terminates. However, if any of the following occurs,
and other Parties may give written notice the other Parties to terminate the
Contract before the expiration of the term;
1. Any Party violates this Contract or regulations, and fails to
resolve the violation within sixty (60) days after it receives written
notice of the violation;
2. The accumulated losses of the Joint Venture exceed 100% of its
total registered capital while respective Parties cannot reach a written
agreement on a plan to adjust the Joint Venture's capital structure;
3. The Party assigns its investment in the registered capital
violating this Contract and the Articles of Association;
4. The Joint Venture's property or substantial part thereof is
imposed or taken by any government so that the Joint Venture cannot carry on
its production and management;
5. Force Majeure (see Section 22.1 for a definition of Force Majeure)
or its consequences remain over one hundred twenty (120) days while
respective Parties fail to find a fair settlement in accordance with Article
XXII;
6. An unexpected situation occurs which creates difficulties for the
normal operation of the Joint Venture;
7. Other reasons formulated by this Contract or other related laws or
regulations;
8. If the operation of the Joint Venture violates Chinese laws, the
Agency for Registration and Administration and the examination and approval
authority will jointly terminate the operation of the Joint Venture in
accordance with law; or
9. The arbitration body or the People's Court pronounces to terminate
the Contract and the Articles of Association.
If one party issues a notice requesting a termination of this
Contract, respective Parties shall hold negotiations and make efforts to
solve the problem leading to the desire to terminate the Contract within
sixty (60) days after the issue of the notice. If respective Parties cannot
reach an agreement to settle the problem after sixty (60) days, the Board of
Directors shall submit an application to the examination and approval
authority for dissolution, and provisions in Section 18.4 shall be applied.
Section 18.4 Circumstances for Continuance of Operations. If the term of
the Joint Venture in not extended in accordance with Section 18.2, or if no
agreement is reached in accordance with the regulations in Section 18.3 and
one Party submits an notice of dissolution under Section18.3, the Joint
Venture may carry out its operations only under the following circumstance:
one of the Parties gives notice to the other Party, stating a desire to
purchase the other Party's rights and interests (a Purchase Notice) in the
Joint Venture, and offers to purchase the above rights and interests on the
following conditions:
1. The price of the purchase is negotiated until all Parties are
satisfied; if respective Parties fail to reach an agreement within four (4)
weeks after they receive the Purchase Notice, the price shall be decided
according to the next paragraph.
2. Each Party selects an accountant or an assessor officially
registered in China to jointly value the Joint Venture in U.S. Dollars. The
above appointment shall be sent in the form of written notice to other
Parties within six (6) weeks after the date when the Purchase Notice is
issued. Failure by a Party to select an accountant or an assessor shall
cause the Party to forfeit its right to do so. The team of the accountants
and assessors shall complete and carry out the valuation of the Joint
Venture within four (4) weeks on the following conditions: the Joint Venture
shall continue operation and shall continue to have the right to use the
site(s) in accordance with the contract of the leasing of site(s). If the
accountants and or assessor cannot agree on a value, the average of the
values assigned by each accountant or assessor shall be the value used. The
purchase price shall equal the value of the Joint Venture multiplied by the
percentage of the registered capital owned by the seller.
3. The purchase price decided upon in the above Section 18.4.1 and
Section 18.4.2 shall be transferred by the buyer to the seller in U.S.
Dollars within fourteen (14) days after the value is determined.
4. If the seller is Party B or Party C, the purchase price shall be
paid in U.S. Dollars.
5. If no agreement is reached upon the above provisions concerning
the purchase price, or if the seller does not receive the total payment in
accordance with the above regulation, the Joint Venture shall carry out
liquidation.
ARTICLE XIX
Liquidation
Section 19.1 Liquidation. If the Joint Venture does not continue operation
according to the conditions described in Section 18.4, the Joint Venture
shall dissolve and carry out liquidation under the leadership of the
liquidation committee.
Section 19.2 Form and Responsibilities of the Liquidation Committee. The
liquidation committee shall consist of the Board of Directors. The
liquidation committee shall arrange the handling of the capital and property
of the Joint Venture. The liquidation committee shall value the properties
and sell them, and the committee shall use its reasonable efforts to obtain
the highest possible sale price. If a Party hereto shall offer an amount
not lower than that of a third party, the Party hereto shall have the
priority of buying the property. The property of the Joint Venture shall,
by all possible means, be sold in foreign currencies that are validly
convertible to other foreign currencies. After liquidation and when all
other debts and due taxes (including the expenses and the rewards of the
liquidation committee) are paid, the remaining capital (including that in
foreign currency) shall be divided according to the Parties' registered
capital. All the money that is to be paid to Party B and Party C shall be
in U.S. Dollars and shall be transferred to the foreign bank appointed by
Party B and Party C. If there is an insufficient amount of U.S. currency to
pay Party B and Party C, the liquidation committee shall purchase the amount
of foreign currency from the Foreign Exchange Adjustment Center to pay Party
B and Party C.
Section 19.3 Receipt of Liquidation Property Committee. When the bank
outside China appointed by Party B or Party C has received the money that is
to be paid to Party B or Party C under Section 18.3 and Section 18.4 or it
has received liquidation property from the Joint Venture outside China, then
Party B or Party C no longer bears any responsibility or debts to the Joint
Venture and or Party A, and Party B or Party C shall cease to enjoy any
rights except those stipulated in Article XVI. This provision shall apply
equally to Party A.
ARTICLE XX
Procedure for Changing this Contract
Section 20.1 Revision Procedure. Any revision, modification and supplement
of the Contract or its appendices shall be done by written agreement among
the Parties. According to the provisions of the laws in China, revisions or
modifications of the agreement shall come into effect only if approved by
the examination and approval authority.
ARTICLE XXI
Liability for Breach of Contract
Section 21.1 Liability for Breach of Contract. If any Party fails to
fulfill its liabilities under this Contract or its appendices, or its
statements or assurances made herein are not real or in fact are incorrect,
the Party shall be judged as having breached this Contract. The breaching
Party shall have thirty (30) days to correct such breach after receiving
such written notice from the other Parties. If it fails to correct the
breach, it shall compensate the other Parties for all the direct and
foreseeable loss arising from the breach of contract. If all Parties have
breached this Contract or any appendices of it, they shall bear
responsibilities accordingly. Under any circumstances, any Party's
compensation responsibility shall not exceed its registered capital
contribution to the Joint Venture (in case or in other form).
ARTICLE XXII
Force Majeure
Section 22.1. Force Majeure.
1. "Force Majeure" refers to affairs that occur after this Contract
is signed, and that prevent any Party from performing, fully or partially,
its obligations under this Contract and that occurrence cannot be controlled
by the respective Parties or the Joint Venture, cannot be anticipated or
cannot be avoided even if it is anticipated, including such events as
earthquake, typhoon, fire, flood, war and others.
2. If Force Majeure occurs, the Party affected thereby shall be
allowed to cease fulfilling its liabilities under this Contract, not
including the liabilities specified in Article XXII during the period
affected by the Force Majeure, and this period is extended automatically,
the extended period affected by the Force Majeure, and this period is
extended it is unnecessary to pay any fine or compensation to the other
Parties.
3. The Party that claims the occurrence of Force Majeure shall
immediately notify the other Parties, present proper proof of the occurrence
of Force Majeure and make all reasonable efforts to terminate the Force
Majeure and its influence.
4. When Force Majeure occurs, the Parties shall immediately consult
each other to find a rational solution, and do their efforts to reduce the
effects of the said Force Majeure to the least possible extent.
5. The Party which is prevented from the implementation of the
Contract and its appendices because of the Force Majeure is not responsible
for breaching Contract. As soon as the Force Majeure is over, the Party
shall implement the Contract immediately by appropriate measures, otherwise
the Party shall be seen as breaching the Contract and must hold the
responsibilities resulted from this breach.
ARTICLE XXIII
Concerned Laws
Section 23.1 Concerned Laws. The signing, effective date, explanation, and
implementation of this Contract, and the resolution of any disputes
concerned with this Contract shall be governed by the published Chinese
laws. If the dispute fails to be resolved within sixty (60) days after
consultation has begun, it shall be resolved through arbitration for a final
and indisputable solution as set out in the next paragraph.
Section 24.2 Arbitration. If the dispute is not resolved within the time
period stated in the previous paragraph or such longer period as the Parties
agree to in writing at that time, then the dispute shall be submitted to the
Arbitration Institute of the Stockholm Chamber of Commerce in Stockholm,
Sweden for final decision in accordance with the Arbitration Rules of the
Institute. Arbitration shall be conducted as follows:
1. English Proceedings. All proceedings in any such arbitration
shall be conducted in English.
2. Three Arbitrators. There shall be three (3) arbitrators, all of
whom shall be fluent in English. The Party or Parties acting as plaintiffs
shall appoint one arbitrator and the Party or Parties acting as defendants
shall appoint one arbitrator and the third arbitrator shall be appointed by
the President of the Arbitration Institute and shall serve as chairman of
the Panel.
3. Award Binding. The arbitration award shall be final and binding
on the Parties,and the Parties agree to be bound thereby and to act
accordingly.
4. Costs. The costs of arbitration shall be borne by the losing
Party or Parties, unless otherwise determined by the arbitration award.
5. Obligations to Continue. When any dispute occurs and when any
dispute is under arbitration, expect for the matters under dispute, the
Parties shall continue to exercise their remaining respective rights, and
fulfill their remaining respective obligations under this Contract.
6. Enforcement. In any arbitration proceeding, any legal proceeding
to enforce any arbitration award or any legal action among the Parties in
relation to this Contract, each Party expressly waives the defense of
sovereign immunity and any other defense based on the fact or allegation
that it is an agency or instrumentality of a sovereign state. Any award of
the arbitrators shall be enforceable by any court having jurisdiction over
the Party against which he award has been rendered, or wherever assets of
the Party against which the award has been rendered can be located and shall
be enforceable in accordance with "United nations Convention on the
Recognition and Enforcement of Foreign Arbitral Awards (1958)."
ARTICLE XXVI
Language
Section 25.1 Language. This Contract shall be signed in both Chinese and
English languages. Both language versions shall be equally valid.
ARTICLE XXV
Others
Section 26.1 Survival of Rights. If any party to this Contract fails or
postpones to use any right, power or privilege under the provisions of this
Contract, the Party shall not be judged that it has given up those rights,
powers or privileges. Any unilateral or partial use of any right, power or
privileges shall also not obstruct future use of such right, power or
privileges.
Section 26.2 No Assignment without Chinese Government Approval. Without
the other Party's written agreement and all necessary approval by the
Chinese government, no Party can wholly or partially assign this Contract.
Section 26.3 Effectiveness of Other Provisions. The invalidity of any
provision of this Contract does not affect the effectiveness of any other
provisions of this Contract.
Section 26.4 Agreement in Total. This Contract constitutes all agreement
of all Parties in the aim of this Contract and shall replace all the
discussions, talks and agreements between all Parties.
Section 26.5 Non-Compete. Party A agrees that during the term of the Joint
Venture and for one (1) year after the expiration or termination of the
Joint Venture, Party A shall not manufacture, distribute or sell inside or
outside China any products for the infant and/or children's market,
including children's fresh milk ("infant formula"), other children's food
products and baby foods and supplements, unless otherwise agreed by other
Parties. Party B and Party C agree that during the term of the Joint
Venture, they shall not manufacture, distribute, or sell in China any
products for the infant and/or children's market, including children's fresh
milk ("infant formula"), other children's food products and baby foods and
supplements, unless otherwise agreed by the other Parties.
Section 26.6 Procedures for Notices. Any notice or written communication
under this Contract shall be in Chinese and English and shall be sent out by
air mail (with receipt), fax, ocean cable, cable or telex. If notices are
sent out by fax, ocean cable, cable or telex, they shall be confirmed with
airmail and its receipt. If notices of communication under this Contract
are sent out by air mail, the date on the receipt shall be considered as the
receiving date. If they are sent out by fax, ocean cable, cable or telex,
two (2) working days after the sending out dated shall be considered as the
receiving date. Unless the legal address is changed by written notice to
other Party, the legal address and communication numbers in Article II shall
be the address and numbers of the Parties.
This Contract signed on the 13th day of April, 1993 by the authorized
representative of the Parties. This contract shall come into effect after
the approval by the related departments of the Chinese government.
Party A:
China National Green Food Corporation
By
________________________
Name
______________________
Position
__________________
Party B:
China Peregrine Enterprises Limited
By
________________________
Name ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------
Position President
------------------
Party C:
Amer-China Partners
By
------------------------
Name ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------
Position President
------------------
