Contract
Exhibit
10.19
Guangzhou
World Trade Center Club
CONTRACT
1
Guangzhou
World Trade Center Club
CONTRACT
Chapter
I General
Provisions
In
accordance with the
Sino-foreign Cooperative Venture Law of PRC
and
other relevant laws, rules and regulations of PRC, and based on the principle
of
equality and mutual benefit, Guangzhou City International Exhibition Co.
Ltd and
Virtual Edge LTD. hereby agree to jointly found a cooperative venture in
Guangzhou
city, Guangdong Province,
China
after amiable consultations. In light of this, this Contract is hereby
formulated.
Chapter
II Cooperative
Parties
Article
1. Both
cooperative parties are as follows:
Party
A: Guangzhou
City International Exhibition Co. Ltd.
Registered place: Guangzhou city, Guangdong Province, China
Legal address: 0 Xxxxx Xxxx, Xxxxxx Xx, Xxxxxxxxx xxxx, Xxxxxxxxx xxxxxxxx,
Xxxxx
Party
B: Virtual
Edge LTD.
Registered place: British Virgin Islands
Legal
address: 3901B, 00/X Xxxxxxx Xxxxx 000 Xxxxxxxxxx Xx.
Chapter
III Establishment
of Cooperative Venture
Article
2. In
accordance with the
Sino-foreign Cooperative Venture Law of PRC and
other
relevant laws, rules and regulations of PRC, both parties hereby agree to
jointly found a cooperative venture (hereinafter referred to as "Cooperative
Venture") in Guangzhou, Guangdong Province, China.
Article
3. Name
of
the Cooperative Venture:
›B㊥垏³ⅰⅰ妷¾惹倎²¿ěⅰ牊窘¹«槜¾(in
Chinese)
Guangzhou
World Trade Center Club (in English)
Legal
address of the Cooperative Venture: Floor 4, Goldlion Building, East Rd.
Tianhe
District,
Guangzhou City, Guangdong Province.
Article
4. The
Cooperative Venture shall take and behave any or all its acts in accordance
with
the laws, rules and regulations of the People’s Republic of China and shall be
protected by the latter.
Article
5. The
organization form of the Cooperative Venture shall be a limited liability
company.
2
Chapter
IV Purpose
of Cooperation, Business Activities and Scale
of Operation
Article
6. The
purpose of the Cooperative Venture shall be: enhance the economic communication
and cooperation and to promote the development of international trade, to
provide integrated and full range of services to the members of World Trade
Center Association and the members of Guangzhou World Trade Center. The
Cooperative Venture also aims at attaining economic return for both parties
through scientific management.
Article
7. The
business activities of the Cooperative Venture shall be:
| 1. |
Providing
integrated and full range of services to the members of World Trade
Center
Association and the members of Guangzhou World Trade Center, including
scriptorium, meeting room, restaurant, entertainment and business
center,
etc.
|
| 2. |
Providing
information and consulting services, including holding periodic
information release, members reception, seminar, and technical
information
exchange meeting, etc.
|
| 3. |
Mini-products
display service, exhibition service, international
meetings.
|
| 4. |
Miscellaneous
services.
|
Article
8. The
operating scale of the Cooperative Venture shall be bound in: to rent or
purchase the business place, falling into meeting hall, banqueting hall &
restaurant, computer network center, reference library, reception room and
business center, etc.
Chapter
V Gross
Investment and Registered Capital
Article
9. The
gross
investment of the Cooperative Venture shall be USD1,200,000 (USD 4.2 million)
and registered capital shall be USD850,000(USD0.85 million).
Article
10. Party
A
and Party B shall start the cooperation under the following
premises:
| 1. |
Party
A shall obtain the consent from Guangzhou World Trade Center so
as to
endow the Cooperative Venture solely with the name of "Guangzhou
World
Trade Center Club", Without written consent of Party A, Cooperative
Venture shall not assign to
outsider.
|
| 2. |
Party
A shall obtain the relevant service items involved by World Trade
Center
Organization and Guangzhou World Trade Center for the Cooperative
Venture
to operate, as well as the inquiring
work.
|
| 3. |
Party
B shall subscribe the capital of USD 1,200,000 (USD 1.2 million)
as
registered capital and operation capital, also be in charge of
the
operation and management of Cooperative Venture, ensure the well-balanced
operation and attain economic return. Meanwhile shall take all
risks of
Cooperative Venture.
|
Party
A
shall, with the consent of Guangzhou World Trade Center, obtain the relevant
service items involved by World Trade Center Organization for the Cooperative
Venture to operate, Party A shall also be in charge of the earlier-stage
work of
the project as well as the inquiring work.
Party
B
shall subscribe the capital of USD 1,200,000 (USD 1.2 million).
3
Article
11. Subscribing
method of the registered capital shall be as follows:
USD400,000
shall be subscribed within three months after the issuing of business license
of
Cooperative Venture. The rest capital of USD450,000 shall be subscribed with
the
next nine months. All the registered capital of Cooperative Venture shall
be
paid in full within one (1) year.
Article
12. Upon
Party B subscribes the capital, a certified public accountants firm invited
by
the Cooperative Venture shall commence the verification on the capital and
shall
issue a report on verification of capital. Accordingly, the Cooperative Venture
shall issue the certificate of capital subscribed, testifying the name of
cooperative venture, date of establishment, name of investors and their capital
subscribed, date of subscription, as well as the issuing date of the certificate
herein.
Article
13. The
registered capital of Cooperative Venture shall not be reduced during the
period
of cooperation.
Article
14. Without
the consent of the other party and the approval of original approval authority,
any party shall not assign all or part of his capital subscribed to the third
party, nor such assignment be deemed as effective. As to any party’s assignment
acceded, on an equal footing, other party shall have preemptive right.
Chapter
VI Liabilities
of Both Parties
Article
15. Party
A
is liable for the following affairs:
| 1. |
To
handle the project declaration and the feasibility study,
etc.
|
| 2. |
To
apply to the relevant authorities of PRC for the approval of Cooperative
Venture, to handle the registration and to get the business license
for
Cooperative Venture.
|
| 3. |
To
handle the earlier-stage work and inquiring work of the
project.
|
| 4. |
To
obtain the consent from Guangzhou World Trade Center so as to endow
the
Cooperative Venture with the name of åGuangzhou World Trade Center Clubæ
both in Chinese and in English.
|
| 5. |
To
handle the other affairs entrusted by the Cooperative
Venture.
|
Article
16. Party
B
is liable for the following affairs:
| 1. |
To
ensure the registered capital of USD850,000 be subscribed smoothly
as per
the Contract.
|
| 2. |
To
provide any or all the necessary certificates and legal instruments
to the
Cooperative Venture.
|
| 3. |
To
settle the business place of the Cooperative
Venture.
|
| 4. |
To
handle the earlier-stage preparation, promotion and management
of the
Cooperative Venture.
|
| 5. |
Assume
sole responsibility for all risks and financing for the operation
of the
Cooperative Venture--- Guangzhou World Trade Center Club.
|
Chapter
VII Board
of Directors
Article
17. The
board
of directors of Cooperative Venture shall be setup in the even date as of
the
registration of Cooperative Venture.
4
Article
18. The
board
of directors shall be consisted of 5 directors, in whom, 2 directors shall
be
appointed by Party A and 3 by Party B. At the same time, one chairman of
board
shall be appointed by Party B and Party A shall appoint the only vice-chairman.
Article
19. The
tenures of the chairman and the vice-chairman shall be 3 years respectively
and
may be renewed upon the appointment hereinafter.
Article
20. The
board
of directors shall be the highest authority and will decide all the important
matters of the Cooperative Venture. However, the following matters shall
be
approved by all the members of board of directors:
1.
Modification
to the Contract and the Articles of Association of Cooperative
Venture.
2.
Termination,
dissolution and liquidation of the Cooperative Venture.
3.
Increase
of registered capital and mortgage and assignment of assets of the Cooperative
Venture.
4.
Merging
the Cooperative Venture with other business entity.
5.
Other
important matters, in the views of both parties, necessary to be approved
by all
the members of board of directors.
As
to
other matters of the Cooperative Venture, it can be decided based on the
approval by more than three fifth of total number of the directors.
Article
21. The
chairman of board shall be the legal representative of Cooperative Venture.
In
the case that the chairman fails to execute his duties due to any reason,
he may
temporarily authorize the vice-chairman or other director to execute his
duties.
Article
22. At
least
one regular board meeting shall be held each year, convened and presided
over by
the chairman of board. The chairman may convene an interim meeting based
on a
proposal made by more than one third of total number of the directors. All
the
cahiers shall be well filed.
Chapter
VIII Management
Organization
Article
23. The
Cooperative Venture shall setup its management organization to manage the
daily
business. Instructed by the board of directors, the management organization
shall adopt the system of manager assuming the chief responsibility. The
management organization shall employ one general manager, nominated by Party
B,
and shall employ two deputy general managers, nominated by Party A and Party
B
respectively. The general manager and the deputy general managers shall be
invited by the board of directors and shall enjoy 3-year tenure. Upon the
approval of board of directors, their tenures herein can be
renewed.
Article
24. Upon
the
invitation of board of directors, a man who takes the post of chairman of
board,
vice-chairman or director may also take the post of general manager, deputy
general manager or other senior post in the Cooperative Venture.
Article
25. The
duties of general manager shall be to implement the resolutions of board
meetings and to deploy and organize the daily management of the Cooperative
Venture. The deputy general managers shall assist the general
manager.
5
The
management organization may be divided into subordinate departments. Those
departments shall be responsible for the management of different areas, and
shall fulfill and responsible to the tasks entrusted by the general manager
and/or the deputy general manager.
Article
26. Should
the general manager or the deputy general manager fail to execute the resolution
of board of directors, or be subject to any jobbery behavior or any gross
misfeasance, he may be dismissed at any time upon the decision of board meeting
and may be held responsible for any economic and legal liabilities.
Chapter
IX Procurement
of Equipment
Article
27. As
to the
raw material, equipment, transportation means or office supplies, on an equal
footing, it should be preempted at home.
Article
28. In
the
case when the Cooperative Venture entrusts Party B to procure the equipment
aboard, the representative from Party A shall also be invited.
Chapter
X Preparation
and Construction
Article
29. During
the preparation and construction of the Cooperative Venture, a preparation
office shall be attached to the board of directors. Director and deputy director
of the preparation office may be nominated by the general manager and be
appointed by the board of directors. These positions also can be co-taken
by the
general manager and the deputy general manager.
Article
30. The
preparation office shall examine the engineering design, sign the construction
contraction, organize the procurement and acceptance of equipment and goods,
draw up the overall scheme for construction progress, schedule the expenditure
plan, control the project financial expenditure and final account, formulate
the
relevant management rules, and shall keep and arrange the documents, drawing,
files, materials during the construction.
Article
31. The
Cooperative Venture shall employ the technicians to form a technical group.
Instructed by the preparation office, this technical group shall be responsible
for the examination, supervision and inspection over the design, construction
quality, equipment, and imported and exported materials, etc.
Article
32. The
organization, wage and expenses of the staff of preparation office shall
be
incorporated into the construction budget upon the approval of Cooperative
Venture.
Article
33. The
preparation office shall be cancelled under the approval of board of directors
upon the completion of construction and the hand over.
Chapter
XI Financial
Accounting and Audit
Article
34. The
Cooperative Venture shall pay in full any or all the due and payable taxes
and
duties in accordance with the laws, rules and regulations of the People’s
Republic of China.
Article
35. The
employees of Cooperative Venture shall pay in full any or all the individual
income tax in accordance with the
Individual Income Tax Law of PRC.
Article
36. As
per
the
Sino-foreign Cooperative Venture Law of PRC,
the
Cooperative Venture shall take out each year reserve fund, venture expansion
fund, employee incentive fund and employee welfare fund in the proportion
decided by the board of directors in consideration of actual
situation.
6
Article
37. The
Cooperative Venture shall employ one chief accountant, to be responsible
for the
accounting work of the Cooperative Venture. The chief accountant shall be
invited by the board of directors.
Article
38. Fiscal
year of the Cooperative Venture shall be calendar year, starting from January
1
and ending on December 31 of the same year. All the accounting vouchers,
bills,
account books and financial statements of the Cooperative Venture shall be
made
both in Chinese and in English.
Article
39. The
Cooperative Venture adopts Chinese Yuan (Renminbi) as the standard money
unit of
account. As to converting from Renminbi into other currency, the exchange
rate
issued by State Administration of Exchange Control, PRC on the current day
of
conversion will be adopted.
Article
40. The
Cooperative Venture shall keep its accounts in accordance with the
worldwide-customized accrual system and debit-credit accounting system. At
the
same time, monthly, quarterly and annual accounting statement system shall
be
well executed.
Article
41. The
Cooperative Venture shall employ one chief auditor, invited by the board
of
directors. The chief auditor shall examine and check the financial receipts
and
expenditures and the accounts, and submit the auditing report to the board
of
directors, general manager and both parties. Each party shall be entitled,
at
his own expense, to invite an auditor to examine all the account books of
the
Cooperative Venture. The Cooperative Venture shall render the necessary
assistance during the examination.
Article
42. The
financial department of the Cooperative Venture shall, within the first three
months of each fiscal year, prepare the balance sheet, income statement and
scheme for profit distribution of previous fiscal year. All the balance sheet,
income statement and scheme for profit distribution of previous fiscal year
shall be audited and signed by the chief auditor, and shall be submitted
to the
board meeting for approval.
Chapter
XII Period
of Cooperation
Article
43. The
period of cooperation of Cooperative Venture shall be 20 years, counting
from
the date on which the business license is issued.
Article
44. Upon
the
proposal of any party and upon the approval of all the members of board meeting,
an application may be submitted six (6) months prior to the expiration of
cooperation to the original approval authority for renewing the cooperation.
At
the same time, upon the approval of all the members of board of directors
and
the approval of original approval authority, this Contract can be terminated
prematurely.
Chapter
XIII Foreign
Exchange
Article
45. Any
or
all the foreign exchange of the Cooperative Venture shall be handled in
accordance with the Provisional Regulations on Foreign Exchange Control,
PRC and
the other relevant stipulations.
7
Article
46. The
Cooperative Venture shall open RMB accounts and foreign currency accounts
in
Bank of China or in other banks approved by Bank of China, and shall accept
the
supervision of deposit bank(s).
Any
or
all the foreign earnings of Cooperative Venture shall be deposited in the
foreign currency accounts of deposit bank, while any or all the foreign exchange
disbursements shall be remitted from the same foreign accounts
hereof.
Article
47. The
Cooperative Venture shall try its best to keep the balance of exchange. In
the
case that the foreign exchange is insufficient, it shall be used in the
following orders:
1. Maintaining
the necessary balance for daily business.
2. Repaying
the principle of foreign exchange loan with interest.
3. Importing
the necessary equipment, goods and materials.
4. Profit
distribution for both parties.
Chapter
XIV Labor
Management
Article
48. As
to the
employee’s recruitment, training, dismiss, wage, labor insurance, welfare or
reward and penalty, it should be handled and conducted in accordance with
the
Labor Management Provisions on Sino-foreign Cooperative Venture, PRC and
its
enforcement regulations. At the same time, the above-mentioned items shall
be
decided by the board of directors and shall be stipulated in detail in the
personal labor contract or collective labor contract signed by the Cooperative
Venture.
The
signed labor contract shall be submitted to the local labor authority for
record.
Article
49. The
Cooperative Venture is entitled to sign the labor contract with the employee
in
person or to sign a collective labor contract.
Article
50. In
the
case when the Cooperative Venture plans to recruit a Chinese employee, the
candidate shall be assessed from his education, foreign language level, know-how
and technical skill, health condition and professional ethics. Only the
qualified and outstanding candidate can be recruited.
Article
51. The
employment, wage, labor insurance, welfare, standard of travelling expenses
of
the senior management staff nominated by both parties shall be decided by
the
board meeting after discussion.
Chapter
XV Profit
Distribution and Loss Share
Article
52. As
to the
profit or loss after income-tax-paid and funds-taken-out, it should be allocated
or shared in proportion to 25% for Party A and 75% for Party B. Party B shall
assume sole responsibility for losses and risks of Cooperative
Venture.
Article
53. In
order
to compensate Guangzhou World Trade Center so as to endow the Cooperative
Venture with the name of "Guangzhou World Trade Center Club", Party A and
Party
B hereby agree that the Cooperative Venture shall pay Party A RMB 150,000(RMB
one hundred and fifty thousand) each year, the payment shall not be influenced
by the profit and loss of the Cooperative Venture. The payment shall begin
from
year of the issuing business license, from next year, shall be paid before
30th
June of each year. Profit Cooperative Venture obtained shall be used in priority
as an imbursement of Party B’s investment. After that, the profit should be
allocated or shared in proportion to 25% for Party A and 75% for Party
B.
8
Chapter
XVI Confidentiality
Article
54. Both
parties and their employees shall, during and for a period of five (5) years
after the termination or expiration of this Contract, keep strict secret
against
the data or any other materials obtained from the other party and shall not
disclose to outsider or the third party unless for the necessary of execution
of
the Contract.
Chapter
XVII Termination
and Liquidation
Article
55. In
either
of the following cases, the Cooperative Venture can be terminated:
| 1. |
The
cooperation expires.
|
| 2. |
The
Cooperative Venture can not maintain normal operation for more
than six
(6) months due to the great losses caused by force majeure set
forth in
Chapter XX hereof.
|
| 3. |
The
Cooperative Venture can not continue the operation due to any party
fails
to execute his duties under the Contract and the Articles of Association,
and such failure is subject to the breach set forth in Chapter
XIX hereof
and furthermore, the party in breach fails to remedy the loss in
an
effective way within sixty (60) days upon the receipt of written
notice
from the other party.
|
| 4. |
The
Cooperative Venture sustains losses for successive five (5) years
during
the period of operation and is disable to repay the mature
debts.
|
| 5. |
The
Cooperative Venture can not meet its main business objectives while
is
disable to repay the mature debts.
|
| 6. |
The
Cooperative Venture can not meet its main business objectives while
is
uncertain in the future’s
development.
|
As
to the
Sub-clauses 2, 4, 5 and 6 herein, it shall be approved by all the members
of
board of directors and shall be reported to the original approval authority
for
termination of the cooperation and dissolution of the Contract.
As
to the
Sub-clause 3 herein, the observant party, apart from being entitled to claim
to
the party in breach, is also entitled to declare to the arbitration authority
described hereinafter for termination of the cooperation and dissolution
of the
Contract.
Article
56. In
the
case that the Cooperative Venture is terminated, the board of directors shall
immediately propose a procedure and principle for liquidation and the
composition of liquidation committee, and shall submit to the competent
authority for examination.
Article
57. During
the liquidation, the liquidation committee shall act for the Cooperative
Venture
to prosecute and respond to any prosecution.
Article
58. The
liquidating expenses and the compensation to the members of liquidation
committee shall be paid in priority from the existing financial account of
the
Cooperative Venture. Upon all the debts of the Cooperative Venture are
discharged by the liquidation assets, the residual assets shall be allocated
in
proportion to the amount of capital both parties described. In the case that
the
Contract is terminated prematurely, all the properties of Cooperative Venture
shall be liquidated as per the value on the date of termination, and shall
be
allocated in proportion to the amount of capital both parties described after
all the debts of Cooperative Venture are discharged.
9
Chapter
XVIII Liabilities
for Breach the Contract
Article
59. Should
Party A fail to execute his duties under Chapter V and Chapter VI of this
Contract, the observant party shall be entitled to claim indemnity from the
party in breach and may terminate the Contract as per Article 55 hereof.
Should
Party B fail to pay Guangzhou World Trade Center on the date for endowment
the
Cooperative Venture solely with the name of "Guangzhou World Trade Center
Club",
Party A shall be entitled to withdraw the endowment, then the Cooperative
Venture must change name immediately.
Article
60. Should
Party B fail to subscribe the capital on the date and in the amount described
in
Chapter V hereof, a penalty of 0.03 percent of the total payable capital
shall
be paid by the party in breach to Party A for each day’s delay. Should such
delay exceed three (3) months, then apart from the total penalty, the observant
party is also entitled to terminate the Contract as per Article 55 hereof
and to
claim indemnity from the party in breach.
Chapter
XIX Force
Majeure
Article
61. Should
any force majeure circumstance arise preventing any party to fulfill his
respective obligations under the Contract or under any other stipulations,
including but not limited to, earthquake, typhoon, flood, war and/or any
other
matters beyond the prevision and control of the parties, the party who suffered
from these circumstances shall immediately inform the other party by telex,
and
shall render the valid certificates issued by the notary body where such
circumstance arisen with fifteen (15) days, testifying such circumstance
in
detail and the reason impossible to execute part or all the Contract, or
the
reason delaying the execution of the Contract. According to the severity,
both
parties shall decide either to terminate the Contract, or to exempt part
obligations under the Contract, or to delay the execution of the
Contract.
Chapter
XX Insurance
Article
62. Any
or
all the insurance of Cooperative Venture shall be procured within the People’s
Republic of China. The insuring method, type of risks, value of insurance
and
period of insurance shall be decided by the board of directors in accordance
with the relevant regulations of PRC.
Chapter
XXI Modification,
Alteration and Termination of the Contract
Article
63. No
modification to this Contract and its attachment shall be valid unless in
writing and signed by both parties and approved by the original approval
authority.
Article
64. During
the period of validity, should the Contract can not be executed due to force
majeure hereof, or should the Cooperative Venture sustain successive losses
and
disable to continue the operation, the Contract may be terminated or cancelled
upon the approval of all the members of board of directors and original approval
authority.
Article
65. Should
the Cooperative Venture can not continue the operation or can not meet its
business purpose due to any party fails to execute his duties under the Contract
and/or the Articles of Association, or due to his breach against the Contract
and/or the Articles of Association hereof, the Contract may be deemed as
terminated by the party in breach unilaterally. In this case, the observant
party shall be entitled to lodge a claim against the party in breach and
shall
be entitled to terminate the Contract upon approval of the original approval
authority. If both parties agree to continue the operation hereinafter, the
party in breach shall indemnify any or all the losses imposed on the Cooperative
Venture.
10
Chapter
XXII Governing
Laws
Article
66. This
Contract shall be governed by and constructed in accordance with the laws
of the
People’s Republic of China. Its effectiveness, interpretation and settlement of
disputes shall also be governed by the laws of the People’s Republic of China.
Chapter
XXIII Settlement
of Disputes
Article
67. Any
dispute which arise out or in connection with the Contract or its execution
shall be settled by means of amicably negotiations. If the parties cannot
reach
a settlement amicably within a period of sixty (60) days, then such dispute
shall be submitted for settlement to Guangzhou Arbitration Commission, in
accordance with its arbitration rules hereof. The awards of Guangzhou
Arbitration Commission are final and binding up both parties
During
the arbitration proceedings, performance of other parts out of disputes of
the
Contract shall continue.
Chapter
XXIV Language
of the Contract
Article
68. This
Contract shall be made both in Chinese and in English, in the case where
there
is any discord in both versions, the version in Chinese shall
prevail.
Chapter
XXV Coming
into Force and Miscellaneous
Article
69. The
Articles of Association of Cooperative Venture, formulated in accordance
with
the principles and requirements of this Contract, shall be as attached to
this
Contract as its attachment.
Article
70. This
Contract, together with its attachment, shall come into force as of the date
approved by Guangzhou Foreign Trade and Economics Committee.
Article
71. Any
notice sent by either party to the other party by telex or fax, if it involves
any rights and liabilities of any party, shall be sent subsequently in the
form
of writing letter. The addresses for notice shall be the legal addresses
of both
parties set forth in this Contract.
Article
72. This
Contract is made in quadruplication, both in Chinese and in English. Party
A and
Party B shall hold each two in Chinese and in English with equal force
therewith.
Article
73. In
witness whereof, both parties have caused this Contract to be executed by
their
respective legal representative or authorized representative on November
2001 in
Guangzhou, Guangdong Province, China.
Guangzhou
City International Exhibition Co. Ltd.
Legal
Representative: Ms. Xx Xxxxxx
Virtual
Edge LTD.
Legal
Representative: Joxx Xxx
November
11, 2001
11
