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Dated May 20, 2004
Harbin Tech. Full Industry Co., Ltd
and
Baldor Electric Company
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Joint Venture Contract
Relating to
Sino-Foreign Cooperative USA Baldor- Tech. Full Electric
(Harbin) Company Limited
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1
Catalogue
CHAPTER 1 GENERAL PROVISION
CHAPTER 2 PARTIES TO THE JOINT VENTURES
CHAPTER 3 JOINT OPERATION OF THE COOPERATIVE JOINT VENTURE ENTERPRISE
CHAPTER 4 PURPOSE AND SCOPE OF BUSINESS
CHAPTER 5 TOTAL INVESTMENT AND REGISTERED CAPTIAL
CHAPTER 6 RESPONSIBITIES, REPRESENTATIONS AND WARRANTIES OF THE PARTIES
TO THIS CONTRACT
CHAPTER 7 THE BOARD OF DIRECTORS
CHAPTER 8 BUSINESS MANAGEMENT ORGANIZATION
CHAPTER 9 PURCHASE OF EQUIRMENT
CHAPTER 10 LABOR MANAGEMENT
CHAPTER 11 TAXATION, ACCOUNTING, FINANCIAL AFFAIRS AND AUDIT
CHAPTER 12 TERM OF THE JOINT VENTURE
CHAPTER 13 FOREIGN EXCHANGE AND PROFIT DISTRIBUTION
CHAPTER 14 DISPOSAL OF PROPERTYUPON EXPIRATION OF THE JOINT VENTURE
CHAPTER 15 INSURANCE
CHAPTER 16 AMENDMENT, MODIFICATION AND DISSOULUTION OF THE CONTRACT
CHAPTER 17 LIABILITIES FOR THE BREACH OF CONTRACT
CHAPTER 18 FORCE MAJEURE
CHAPTER 19 APPLICABLE LAW
CHAPTER 20 RESOLUTION OF DISPUTED
CHAPTER 21 LANGAUGE
CHAPTER 22 EFFECTIVENESS AND MISCELLANEOUS
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CHAPTER 1 GENERAL PROVISION
1.1 In accordance with the Law of the People's Republic of China on
Cooperative Joint Venture Enterprises and its implementation rules and
the other relevant laws and regulation of PRC and adhering to the
principles of equality and mutual benefit, Party A, and Party B, after
friendly consultation, agree to jointly invest in and establish a
cooperative joint venture enterprise in Harbin, the People's Republic
of China and hereby enter into this Contract.
CHAPTER 2 PARTIED TO THE JOINT VENTURE
2.1 The parties to this contract are:
Party A: Harbin Tech Full Industry Co. Ltd.
Legal Address: Junction of Haping Road and Weihai
Road of Haping Concentration
District, Harbin Development Zone
Legal Representative: Yang Tian Fu
Position: Chairman of Board
Nationality: PRC
Party B: Baldor Electric Company
Registered Address: 5711 X.X. Xxxxxxx, Xx Street
Fort Xxxxx
Arkansas 72901-8394
United States of America
Authorized Representative: Xxxx XxXxxxxxx
Position: President and Chief Executive
Officer
Nationality: United States Of America
Party A and Party B shall hereinafter be collectively known as the
"Parties" and each a "Party".
CHAPTER 3 JOINT OPERATION OF THE COOPERATIVE JOINT VENTURE ENTERPRISE
3.1 In accordance with the Law of the People's Republic of China on
Sino-Foreign Cooperative Joint Venture Enterprise and its
implementation rules and other relevant laws and regulation of China,
Party A and Party B agree to establish a sino-foreign joint venture
enterprise in Harbin (hereinafter referred to as "JVC")
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3.2 The name of the JVC is:
Name in Chinese:
Name in English: Sino-Foreign Cooperative
USA Baldor-Tech, Full Electric (Harbin) Company Limited Legal Address:
Junction of Haping Road and Weihai Road of Haping Concentration
District, Harbin Development Zone
3.3 All the activities of the JVC shall comply with the provision of the
laws regulations and relevant provisions of China. the legal rights
and interests of the JVC shall be protected by Chinese law, and it
shall be entitled to all preferential treatment accorded by Chinese
law.
3.4 The JVC shall be a limited liability company and the JVC shall assume
liabilities with all of its asset only. Each Party's liability to the
JVC shall be limited to the amount of capital contribution subscribed
and paid up by it. Party A and Party B shall not be severally and
jointly liable for the external debts of the JVC. They shall share the
profits in accordance with the provisions of Clause 13.1 hereof.
3.5 (a) If after the execution of this Contract the Chinese government,
either at the State, provincial, municipal or local level, enacts any
new law regulation or adopts and different interpretation or method of
implementation of any existing law or regulation amends or repeals any
law or regulation, or adopts any different interpretation or method of
implementation of any law or regulation or otherwise which accords to
the JVC or any Party hereto and the JVC shall cooperate in applying
for such favourable treatment so as to promptly enjoy the same.
3.5(b) If after the execution of this Contract, China promulgates any new
law or regulation, amends or repeals any exciting law or regulation or
adopts any different, interpretation or method of implementation of
any exciting law or regulation, which materially and adversely affects
the economic benefits of the JVC or any of the Parties hereto, then
the Parties hereto shall promptly hold consultation and do their best
to effect all necessary adjustments including but not limited to
holding discussion on and making necessary amendments to this Contract
and the Articles of Association of the JVC so as to preserve the JVC's
and /or each Party's economic benefit is under this Contract and its
appendices on a basis no less favourable than the economic benefits
they would have received if such law or regulation had not been
promulgated, amended, repealed or so interpreted or implemented.
CHAPTER 4 PURPOSE AND SCOPE OF BUSINESS
4.1 The purpose of the joint cooperation is : To enable the Parties hereto
to achieve satisfactory economy benefits through the strengthening of
the cooperation between the Parties, efficiently using the advantages
of the Parties and adopting scientific management experience and
advance techniques.
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4.2 The scope and scale of the joint cooperation are:
The manufacturing and marketing of electric machineries and related
equipment in China.
CHAPTER 5 TOTAL INVESTMENT AND REGISTERED CAPITAL
5.1 The total investment of the JVC shall be: 10 Million US dollars
5.2 The registered capital of the JVC shall be : 5 Million US dollars, of
which Party A's contribution shall be 3.25 Million US dollars
accounting for 65% of the registered capital; Party B's contribution
shall be 1.75 Million US dollars accounting for 35% of the registered
capital;
5.3 The Parties hereto shall make their respective contribution as
follows:
Party A: premises, land, equipment and cash in RMB, contribution term:
to be contributed in full within 6 months after the date of the
issuance of the business license of the JVC;
Party B: technology, namely the intellectual property rights to the
patent in respect of the production and marketing of high technology
electric motors and associated apparatus, contribution term shall be
within 6 months after the date of the issuance of the business license
of the JVC. Party B shall grant to the JVC an exclusive license in
respect of the technology (which it has agreed to contribute to the
JVC) for the entire duration in which the JVC remains in operation and
the intellectual property right of the technology is being protected
in China. For the avoidance of doubt, the above license shall be
deemed to have ceased upon the dissolution of the JVC for whatever
reasons whatsoever and (with the exception Party B and its affiliated
companies) neither Party A nor any other entity shall have any right
in respect of the technology.
The Parties promise that they have full property rights and the right
of disposition over the contributed registered capital, and there is
no mortgage or any other security interest over the registered
capital.
5.4 After the Parties have contributed the respective registered capital,
the JVC shall engage a firm of PRC certified public accountants to
verify the capital contribution and issues a capital verification
report. The JVC shall then issue an investment certificate to the
Parties. The main content of the investment certificate shall include
the following: The name and date establishment of the JVC and the name
of the Parties, the contributions of the Parties, the date of
contribution and the date of issuance of the investment certificate,
etc.
5.5 Any party shall have the right to transfer all or part of its share to
any third party provided that the transfer shall obtain the prior
written consent of the other Party and that the conditions for such
transfer may not be more favorable than those offered to the other
Party hereto. If the other Party hereto raises objection, it must
state justifiable and specific reasons. In case a Party assigns its
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share in the JVC to a wholly-owned affiliate of its parent company,
the other Party hereto must give its consent and shall have no right
to exercise its pre-emptive right.
When the above-mentioned transfer has been completed, it shall be
submitted to the original examination and approval authority for
approval and to the original registration office for the registration
of such equity transfer.
CHAPTER 6 RESPONSIBILITIES, REPRESENTATIONS AND WARRANTIES
OF THE PARTIES TO THIS CONTRACT
6.1 In addition to the responsibilities set out in this Contract, Party A
shall have the responsibility to do the following things:
(1) To make its capital contribution pursuant to and in accordance
with the provisions in this Contract;
(2) to assist in the application for approval as well as other
relevant procedures in relation to this Contract and other
relevant documents;
(3) Party A shall not reveal to any other third party without Party
B's prior written consent, any of Party B's and/or the JVC's
technology, data and commercial secrets which Party A obtains in
the course of the discussion of this Contract;
(4) to assist the JVC in purchasing or leasing, at a reasonable price
material, equipment, office supplies, communication equipment and
other necessary equipment in China;
(5) To assist the foreign staff of the JVC in conducting the
necessary entry visa, temporarily residence, working permit and
traveling procedures etc.;
(6) to assist the JVC in processing the necessary customs entry
procedures of imported equipment, material as well as the
obtainment exemptions from customs duties;
(7) To assist the JVC in helping Party B to remit its legal income
out of China;
(8) To assist the JVC in obtaining all the favorable treatment of all
kinds of taxation, exemption of custom duties and any other
favorable treatment; and
(9) To perform the other matters entrusted by the Board of Directors
of the JVC.
6.2 In addition to the responsibilities set out herein, Party B shall have
the responsibility to do the following things:
(1) To make its capital contribution pursuant to and in accordance
with this Contract;
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(2) Party B shall not reveal to any other third party without Party
A's prior written consent, any of Party A's and/or the JVC's
technology, data and commercial secretes which Party B obtains in
the course of the discussion of this Contract;
(3) to assist the JVC in purchasing or leasing, at a reasonable
price, materials, equipment, office supplies, communication
equipment and other necessary equipment outside of China;
(4) to grant to the JVC a license in respect of the Baldor trademark
for the duration which the JVC remains in operation and for the
avoidance of doubt, the above license shall be deemed to have
ceased upon the dissolution of the JVC for whatever reasons
whatsoever and (with the exception of Party B and its affiliated
companies) neither Party A nor any other entity shall have any
right in respect of the Baldor trademark; and
(5) To perform the other matters entrusted by the Board of Directors
of the JVC.
6.3 Each of the Parties hereby represents and warrants to the other
Parties as follows:
(1) It is a duly incorporated and registered company under Clause 2.1
hereof and has the full power and authority under law to execute
this Contract and to perform its obligations hereunder;
(2) The legal representative or authorized representative as stated
in Clause 2.1 hereof has been duly authorized to execute on its
behalf this Contract and other contracts to be entered into
hereunder;
(3) It has taken all proper and necessary actions to authorize the
execution and performance of this Contract and other contracts to
be entered into hereunder;
(4) Upon approval by the examination and approval authority, this
Contract shall constitute the legal, valid and binding obligation
on the part of the Parties hereto, which shall be enforceable in
accordance with the provisions hereof; and
(5) The execution and performance of this Contract and other
contracts to be entered into hereunder shall not contravene any
other contracts to which any of the Parties hereto is a party or
any obligation assumed by the same Party, or violate any existing
and valid law, regulation or decree of China.
6.4 The Parties hereby mutually agree as follows:
(1) The JVC shall not stand as guarantor or surety to any person or
company or any other entity;
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(2) The JVC shall not be pledged as collateral for any loans or other
investments or ventures;
(3) For cheques issued by the JVC for the amount equivalent to the
monthly pay roll of the employees of the JVC and above, the
clearing bank shall be determined by Party B;
(4) The marketing policies of the JVC (including but not limited to
policies over products, pricing, distribution channels and
promotion) shall be jointly approved by the Parties; and
(5) In relation to the products of the JVC which are sold
specifically under the name of Party B, Party B shall have sole
control of the marketing policies (including but not limited to
policies over products, pricing, distribution channels and
promotion) and sales of such products.
CHAPTER 7 THE BOARD OF DIRCTORS
7.1 The JVC shall set up a board of directors. The date of the
registration of the JVC shall be the date of the establishment of the
board of directors.
7.2 The board of directors shall be made up of seven directors, of whom
four shall be appointed by Party A, three shall be appointed by Party
B. The Chairman shall be appointed by Party A, and the vice-chairman
shall be appointed by Party B. The tenure of directors, chairman and
vice-chairman shall be three years. When the tenure of the directors,
chairman and vice-chairman expire, if they continue to be appointed by
the appointing party, they can renew their terms.
7.3 When Party A or Party B appoints or replaces a director, the chairman
or the vice-chairman, it shall notify the other Party as well as the
board of directors in writing. Such appointment or replacement shall
become effective upon the receipt by the other Party and the board of
directors of the written notice, and the JVC shall attend to the
procedure for the registration of such appointment or replacement. If
a director, chairman or vice-chairman ceases to be such for a reason,
the original Party that appointed him shall promptly appoint a new
director, chairman or vice-chairman to replace him.
7.4 The board of directors shall be the highest authority of the JVC,
which shall decide all the important matters of the JVC. Unless
otherwise specified in any other clause hereof, resolutions on the
following important matters may be adopted only when they have been
unanimously approved by all the directors attending the board meeting
in person (or by proxy):
(1) amendment(s) to the Article of Association of the JVC;
(2) increase in or reduction of the registered capital of the JVC;
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(3) termination, dissolution or liquidation of the JVC;
(4) divestiture of the JVC, change in its organizational form, or
merger of the JVC with another economic organization; and
(5) mortgage of the JVC's assets.
Resolutions on any other matters not mentioned above may be made when
they have been approved by more than half of the directors attending
the board meeting in person (or by proxy)
7.5 The chairman of the board shall be the legal representative of the
JVC. In case the Chairman is not able to perform his duties for any
reason, he may, for the time being, authorize in writing the
vice-chairman or another director to perform the duties on his behalf,
provided that such person can only act to the extent authorized by the
chairman.
7.6 The board meeting shall be convened at least twice a year, which shall
be convened and presided over by the chairman. At the request of not
less than two directors and on the condition that the request is made
by at least one director from each of the Parties of the JVC, the
chairman may convene an extraordinary board meeting. The quorum shall
be made up of not less than five directors ( or their proxies), and at
least two director(s) from each of the Parties of the JVC shall be
present at the board meeting (except in the case of abstention).
Resolutions passed by a board meeting which lack the requisite quorum
shall be invalid. In case the quorum is still not reached within 24
hours of the time set for the board meeting, such board meeting shall
be adjourned and postponed the third day following the meeting when it
shall be held at a time and venue to be decided by the chairman. The
quorum for the second meeting shall be deemed to be satisfied
irrespective of the level of attendance. The meeting shall proceed as
usual, and the resolution adopted shall be valid.
7.7 When a director is unable to attend a board meeting, he may appoint in
writing a proxy (or another director) to attend the meeting and vote
on his behalf. Such appointment must be sent to the JVC by facsimile,
post, hand or electronic mail prior to the date of the meeting. If the
director fails to attend or appoint a proxy (or another director) to
attend the board meeting, such failure shall be deemed as abstention.
The proxy (or the other director) may exercise the voting right and
all other rights to the extent authorized by the appointing director.
A proxy may simultaneously represent more than one director in
exercising the powers authorized by the appointing director(s).
7.8 The chairman shall notify each director in writing of the date, time,
venue and agenda of the board meeting 20 days prior to the convening
of the meeting. Subject to the consent of all the directors, the time
for such notification may be shortened.
7.9 The board meeting shall be convened in principle at the location of
the JVC. It may also be held in other places in or out of the
territory of China with the consent of all the parties.
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7.10 At each board meeting detailed minutes must be taken, which shall be
signed by the chairman an d other directors (or their proxies) present
at the meeting for confirmation. Such directors (or their proxies)
shall sign the minutes of the particular board meeting within seven
days of the receipt of the same, otherwise, they shall be deemed to
have agreed to the contents of such minutes. The minutes shall be
prepared in Chinese with English translations and kept by the JVC for
the record. A copy thereof shall be issued to each director.
7.11 Notices and minutes of the board meeting may be sent by facsimile,
post, hand or electronic mail. If they are sent by facsimile, the date
of transmission shall be deemed to be the date of receipt. If they are
sent by hand, the date of personal delivery to the designated address
shall be deemed to be the date of receipt. If they are sent by
airmail, the seventh (7th) day following the date on which they are
mailed shall deemed to be the date of receipt. If they are sent by
electronic mail shall be deemed to be the date of receipt.
7.12 The chairman may send written resolutions to each director. Written
resolutions signed by the directors (whether his signature is affixed
to the same resolution or separate counterparts thereof) shall have
the same effect as those adopted at the duly convened board meetings,
provided that they comply with the provisions of Clause 7.4 of this
Contract. Each director shall state in the document whether he aggress
to the resolutions or not within seven days of the receipt of such
resolutions. Failure to state one's position within the specified time
limit shall be deemed as an abstention.
7.13 After the establishment of the JVC, the Parties shall procure that the
board ratify the relevant documents signed by the Parties for the JVC
prior to the establishment of the JVC.
CHAPTER 8 BUSINESS MANAGEMENT ORGANIZATION
8.1 The JVC shall set up a business management organization to be
responsible for the day to day business management of the JVC. The JVC
shall practice the general manager responsibility system under the
leadership of the board of directors.
8.2 The JVC shall have one general manager, who shall be recommended by
Party A and appointed by the board of directors, and two deputy
general managers, of which one shall be recommended by Party A and the
other by Party B and both to be appointed by the board of directors.
The term of general manager and deputy general managers shall be three
years.
8.3 The JVC shall have one chief financial officer for the term of three
years, one chief marketing officer for the term of three years, and
one chief technology officer for the term of three years. All the
aforesaid officers shall be recommended by Party B and be appointed by
the board of directors.
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8.4 The general manager, the deputy general managers, the chief financial
officer, the chief marketing officer, the chief technology officer and
any other senior officer shall protect the legitimate rights and
interests of the JVC. Without the approval of the board of directors,
none of them may assume any position in or join any economic
organization that is likely to compete with the JVC in its business
and even after they have resigned from the JVC, they shall not reveal
the JVC's technology data and business secret to any third party.
8.5 The general manager shall have the duty to implement the various
resolutions of the board meeting and organize and direct the
day-to-day production and business management work of the JVC. He
shall be responsible to the board of directors. The deputy general
managers shall assist the general manager in his work.
8.6 The business management organization shall comprise several
departments, which shall take charger of the various work of the JVC,
handle the matters assigned by the general managers and deputy general
managers and be responsible to the general manager and deputy general
managers. The general manager shall have the right to make and
implement decisions on the hiring, dismissal, promotion, demotion, and
transfer of the managers of the various departments and staff and
workers at the lower levels in accordance with the labour contract and
the provisions of the relevant laws of China.
8.7 If the general manager, any of the deputy general managers, the chief
financial officer, the chief marketing officer, the chief technology
officer or any other senior officer commits an act of graft or serious
dereliction of duty, the board of directors may adopt a resolution to
dismiss him at any time, and the vacancy shall be filled by another
person to be recommended by the original recommending party and
appointed by the board of directors.
CHAPTER 9 PURCHASE OF EQUIPMENT
9.1 Materials, equipments, accessories and components, means of transport
and office supplies needed by the JVC shall be purchased by the JVC
both in and out of China
9.2 In purchasing the required materials and goods, the JVC shall work out
a purchase plan and budget and make a detailed list for the record.
All major investment projects involving fixed assets must be reported
to the board of directors for approval before they may be carried out.
CHAPTER 10 LABOR MANAGEMENT
10.1 The recruitment, employment, dismissal, remuneration, labour
insurance, welfare benefits, and bonuses and penalties of the
employees of the JVC shall be decided by the board of directors after
a plan thereof has been worked out and submitted by the general
manager in accordance with the Labor Law of PRC and other relevant
provisions.
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10.2 The engagement of the chairman, vice chairman, directors, general
manager, deputy general managers and other senior officers of the JVC
and their salaries, social security, welfare benefits and business
travel allowances shall be decided by the board of directors.
10.3 A plan of the salaries, social security, welfare benefits and business
travel allowances of the managers of the various departments shall be
worked out by the general manager and submitted to the board of
directors for approval.
CHAPTER 11 TAXATION, ACCOUNTING, FINANCIAL AFFAIRS AND AUDIT
11.1 The JVC shall pay various taxes in accordance with the provisions of
the relevant laws and regulations of China.
11.2 The employees of JVC shall pay income tax in accordance with the
Individual Income Tax Law of the People's Republic of China.
11.3 In accordance with relevant laws and regulations, the JVC shall draw
the legal reserved fund and legal public welfare fund. The proportion
of such funds to be drawn each year shall be discussed and decided by
the board of directors in the light of the situation of the JVC's
business and the relevant laws and regulations.
11.4 The fiscal year of the JVC shall be from January 1 to December 31 on
the Gregorian calendar. All vouchers, receipts, account books and
statements shall be written in Chinese and shall be accompanies by a
copy in English.
11.5 The JVC shall adopt Renminbi ("RMB") as its accounts keeping unit.
Foreign exchange in the revenue and expenditure shall be converted to
RMB. The conversion of the foreign exchange to RMB shall be made at
the middle price of the exchange rate published by the People's Bank
of China on the day that such transactions has actually taken place.
11.6 The JVC shall adopt the internationally accepted accrual basis and
debt and credit accounting system in keeping the accounts.
11.7 The JVC shall engage public accountants registered in China to audit
the revenue and expenditure and account books of the JVC, who shall
report the results to the board of directors, the general manager and
the Parties of the JVC. Each of the parties of the JVC shall have the
right to engage an auditor at its own expense to examine the annual
financial statements of the JVC, and the other Party shall give their
consent to and the JVC shall provide the necessary assistance for such
examination.
11.8 The financial department of the JVC shall assist the general manager
to work out the balance sheet, statement of profits and losses and the
plan of distribution of profits to submit to the board of directors
for approval.
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CHAPTER 12 TERM OF THE JOINT VENTURE
12.1 The term of the JVC shall be fifty (50) years. The date on which the
JVC's business licence is issued shall be date of the establishment of
the JVC.
12.2 With the consent of the Parties of the JVC and upon the unanimous
approval by the board of directors, the JVC may apply with the
original examination and approval authority for an extension of the
join venture term 180 days prior to the expiration thereof.
12.3 When the parties of the JVC unanimously agree that the termination of
this Contract is to their best interest, the joint venture maybe
terminated and this Contract shall be dissolved after a resolution
thereon has been unanimously adopted by the board of directors and the
approval has been granted by the original examination and approval
authority.
CHAPTER 13 FOREIGN EXCHANGE AND PROFIT DISTRIBUTION
13.1 The Parties of the JVC both agree that from the year the JVC first
start to attain profit, Party A shall receive 55% of the profit from
the JVC, and Party B shall receive 45% of the profit from the JVC.
13.2 All matters relating to the foreign exchange of the JVC shall be
handled in accordance with the Regulations of the People's Republic of
China on Foreign Exchange Control and other regulations governing
foreign exchange control.
The JVC shall open foreign exchange accounts and RMB accounts with
banks in China
13.3 The Party B may remit its lawful incomes and expenditures in foreign
exchange out of China in accordance with the regulations of the
relevant Chinese laws, including but not limited to:
(1) The profits earned by Party B after taxes have been paid
according to law:
(2) The moneys received by Party B for the transfer of its shares:
and
(3) The moneys received by Party B after the settlements and
liquidation of the JVC.
Party A shall assist to conduct the procedures of the aforesaid
remittance.
13.4 Party B shall have first priority to be paid its profits or its share
of the proceeds of the JVC after the JVC has been liquidated out of
the foreign currency reserves of the JVC. In the event that the
profits payable to Part B is paid in RMB due to the lack of foreign
currency reserve in any year, Party B shall have the right to require
the JVC to open another bank account and deposit such RMB together
with interests into the bank in the name of Party B. Once the JVC has
sufficient foreign currency reserve, the JVC shall convert the RMB
deposited together with the interests into foreign currency and remit
to Party B.
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13.5 If any of the Parties of the JVC fails to perform or violates the
provisions of this Contract, the JVC shall have the right to use the
said Part's share of the distributable profit of the JVC to set off
the amount it shall pay to or indemnify the JVC for such failure or
violation.
CHAPTER 14 DISPOSAL OF PROPERTY UPON EXPIRATION OF THE JOINT VENTURE
14.1 Upon expiration or earlier termination of the joint venture, the JVC
shall carry out liquidation procedures according to law. After
liquidation, the property of the JVC shall be distributed in
accordance with Clause 13.1.
14.2 Liquidation shall be carried out by the liquidation committee
organized by the board of directors of the JVC. The liquidation
committee shall consist of five members. The liquidation committee
shall adopt the method of voting by a simple majority. Liquidation
costs and remuneration to members of the liquidation committee shall
be paid in priority out of the assets of the JVC.
14.3 After the completion of the liquidation, the JVC shall report to the
examination and approval authority, and conduct the cancellation of
registration procedure at the industrial and commercial administration
department, and return the business license, and at the same time
announce the termination.
CHAPTER 15 INSURANCE
15.1 Insurance policies for the JVC shall be purchased from an insurance
company in China. The method, coverage, value and duration of the
insurance shall be decided by the board of directors of the JVC in
accordance with the terms stipulated by the insurance company.
CHAPTER 16 AMENDMENT, MODIFICATION AND DISSOLUTION OF THE CONTRACT
16.1 Any amendment to this Contract and its appendices shall become
effective only when it is in the form of a written document signed by
the Parties hereto and approved by the original examination and
approval authority.
16.2 Unless the term of the joint venture is to be extended in accordance
with Clause 12.2 hereof, this Contract shall be terminated upon the
expiration of the joint venture. Moreover, during the term of the
joint venture, each Party shall the right to terminate this Contract
by notifying the another Party in writing in any of the following
cases, and such termination shall take effect upon the approval by the
original examination and approval authority:
1) Any of the representations or warranties made by any of the
Parties hereto under this Contract is incorrect or untrue;
2) An event of force majeure as described in Clause 18.1 below takes
place, which makes it impossible for the JVC to continue
operation;
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3) The JVC incurs losses in its operation, which makes it impossible
for the LVC to continue operation;
4) The JVC or any of the Parties goes into bankruptcy, enters into
the procedures of liquidation or dissolution or ceases its
business;
5) The Parties hereto unanimously approves of the termination of
this Contract; or
6) Other reasons as provided in this Contract or relevant laws and
regulations.
CHAPTER 17 LIABILITIES FOR BREACH OF CONTRACT
17.1 Any of the Parties hereto that violates or fails to perform its duties
or obligations under this Contract and the Articles of Association of
the JVC shall be liable for the breach of contract and shall indemnify
the JVC and other Parties hereto for all their losses (including
economic losses).
17.2 In the event that this Contract, including its appendices are not able
to be fully or partially performed as a result of the default of a
Party (the "Defaulting Party"), the non-Defaulting Party shall have
the right to take any of the following actions in addition to claiming
damages from the Defaulting Party:
1) to unilaterally terminate this Contract by sending a written
notice to the Defaulting Party and submit termination to the
original examination and approval authority for approval; or
2) to acquire the equity and investment interests of the Defaulting
Party in the JVC by sending a notice of such acquisition to the
Defaulting Party. Following the delivery of such notice, the
non-Defaulting Party shall appoint a firm of qualified valuers
which has been recognized by the government as such to value all
the assets and properties of the JVC.
The net assets of the JVC shall be assessed on their book value. Such
assessor shall issue a report of the assessment within two (2) months,
specifying the value of all the net assets of the JVC as of the date
on which the acquisition notice was served.
The Defaulting Party shall transfer its equity and investment
interests at the assessed value of the above-mentioned net assets to
the non-Defaulting or a third party designated by the non-Defaulting
Party.
The Parties hereto shall take the necessary actions to procure the
board of directors to approve the transfer of such equity and
investment interests and obtain the approval from the original
examination and approval authority.
17.3 If any of the Parties hereto fails to make its capital contribution in
full and within the time limit as specified in this Contract, such
Defaulting Party shall pay to the non-Defaulting Party a penalty
amounting to 0.05% of the outstanding sum payable by the Defaulting
Party per day from the first day of such default. If such default
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exceeds 30 days, in addition to the aggregate penalty amounting to
0.05% of the outstanding sum payable by the Defaulting Party per day
to the Non-Defaulting Party, the non-Defaulting Party shall have the
right to exercise the powers under Clause 17.2 above.
17.4 In the event that:
1) any of the representations or warranties made by any of the
Parties hereto is untrue or incorrect at any time between the
date of the execution of this Contract and the expiration or
earlier termination of the joint venture; or
2) any of the Parties hereto violates any provisions of this
Contract
which causes the other Parties hereto and/or the JVC to suffer or bear
any losses, claims for damages, responsibilities, obligations,
indemnities, charges and expenses (including but not limited to all
charges in connection with the investigation and payment of the
indemnities and reasonable attorney's fees and expenses), the
Defaulting Party shall indemnify the non-Defaulting Party and/or the
JVC for all their losses (including economic losses).
CHAPTER 18 FORCE MAJEURE
18.1 During the joint venture term, if an unforeseeable event of force
majeure such as earthquake, typhoon, flood, fire, strike and war, the
occurrence and consequence of which cannot be prevented or avoided,
directly or indirectly affects the performance of this Contract or
prevents this Contract from being performed on the agreed terms, the
Party affected by such event of force majeure shall promptly notify
the other Party by cable, telex or facsimile and, within fifteen (15)
days thereof, provide details of the force majeure event and a valid
certificate for the reason for not being able to fully perform or
partially perform this Contract or the need in delaying the
performance of this Contract. Such certificate shall be issued by the
notary public office notarized by a notary public at the place where
the force majeure event has occurred. The Parties shall, according to
the extent the Force Majeure event has affected the performance of
this Contract, decide through consultation whether to dissolve this
Contract, exempt or partially exempt the affected Party's
responsibility for performing this Contract, or extend the period for
the performance hereof.
CHAPTER 19 APPLICABLE LAW
19.1 The conclusion, effectiveness, interpretation and performance of this
Contract and the resolution of disputes under this Contract shall be
governed by the laws of the People's Republic of China.
CHAPTER 20 RESOLUTION OF DISPUTES
20.1 All disputes arising from this Contract or in connection with its
performance shall be resolved through friendly consultation between
the Parties hereto. If any Party is unwilling to resolve a dispute
through consultation, or if the dispute cannot be resolved within 30
days of the date on which consultation has commenced, such dispute
shall be submitted to the China International Economic and Trade
Arbitration Commission located in Beijing to be arbitrated in
accordance with its arbitration procedures and rules.
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20.2 The arbitration award shall be final and binding on both Parties in
dispute. It maybe enforced by the competent court or judicial
authority in the place where the losing Party or its assets are
located. Except where the arbitration award stipulates otherwise, the
arbitration costs shall be borne by the losing Party.
20.3 During the course of arbitration, the Parties shall continue to
perform the provisions of this Contract except for the matter(s) under
arbitration.
CHAPTER 21 LANGUAGE
21.1 This Contract shall be written in Chinese and English. In case of
inconsistency between the two versions, the Chinese version shall
prevail. This Contract shall be made in eight counterparts. Each of
the Parties hereto shall hold two counterparts, and the JVC shall keep
1 for the record.
CHAPTER 22 EFFECTIVENESS AND MISCELLANEOUS
22.1 Supplementary documents made in accordance with various principles set
out in this Contract shall form an integral part hereof and shall be
equally authentic as this Contract.
22.2 This Contract and its appendices shall be subject to the approval by
the relevant approving authority and shall become effective on the
date of its approval.
22.3 Party A and Party B shall send notice as follows:
Party A
To: Harbin Tech.Full Industry Co., Ltd.
Attention: Yang Tian Fu
Address: Xx. 00, Xxx Xx Xxxxxx, XxxXxxx District
Harbin, Xxx Xxxx Jiang, China
150000
Fax No. (0000)-000-00000000
Party B
To: Baldor Electric Company
Attention: Xxxx XxXxxxxxx
Address: 0000, X.X. Xxxxxxx, Xx Xx.
Xxxx Xxxxx, Xxxxxxxx
00000-0000
Fax No. x00000000000
22.4 If any Party hereto wishes to change its address or fax number listed
above, it shall notify the other Parties hereto and the JVC 30 days
prior to such change.
If a notice is sent by facsimile, the date of transmission shall be
deemed to be the date of receipt. If it is sent by hand, the date of
personal delivery to the designated address shall be deemed to be the
date of receipt. If it sent by airmail, the seventh (7th) day
following the date on which it is mailed shall be deemed to be the
date of receipt.
22.5 Matters not covered herein shall be set forth in separate written
documents to be entered into by the Party A and Party B through
friendly consultation.
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22.6 Even if any of the Parties hereto fails to exercise or delays in
exercising any of its rights under this Contract, such failure or
delay shall not be construed as a waiver thereof. And any single or
partial exercise thereof shall not prevent such Party from further
exercise of such right or other rights.
22.7 Should any provision of this Contract become invalid, illegal or
unenforceable for any reason, the Parties hereto shall agree to amend
such provision so as to make it valid, legal and enforceable, and the
validity and enforceability of the remaining provisions hereof shall
not be affected thereby.
22.8 If any provisions hereof contravene those of the Articles of
Association of the JVC the provisions hereof shall prevail.
This Contract is signed by the representatives of Party A and Part B in the
United States of America on May 20, 2004.
Party A: Harbin Tech Full Industry Co, Ltd
Authorized Representative signature /s/ Xxxx Xxx
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Xxxx Xxx
Party B: Harbin Tech Full Industry Co, Ltd
Authorized Representative signature /s/ Xxxxxx Xxxx
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Xxxxxx Xxxx
