EXHIBIT 10.2
Subcontracting Contract
Party A: Shandong Longfeng Flour Company
Party B: New Dragon Asia Flour (Yantai) Company Limited
Shandong Longfeng Flour Company ("Party A") has invested 10% of the registered
capital in New Dragon Asia Flour (Yantai) Company Limited ("Party B"). Based on
the actual production condition and the consideration of obligations, power,
profits of the shareholder, Party A and Party B agreed to sign this Contract
after consultation.
1. Subcontract Period
Subcontracting period is 50 years, i.e. from June 26, 1999 to June 25, 2049
2. Subcontract Fee
Party B shall paid RMB300,000 as Subcontract Fee to Party A for each
financial year within the Subcontract Period.
3. Both parties' responsibilities
(i) Party A :
Party A shall advise, provide services and monitor on major
decisions and production management to Party B. Party A shall
also audit the operation condition and economic
responsibilities of Party B within and at the end of the
Subcontract Period.
(ii) After Party A received the Subcontract Fee, it does not
entitled to receive the undistributed profits according to the
actual proportion of investment in registered capital after
deducting the Subcontract Fee.
(iii) Party B:
(1) Party B must obey the PRC laws and regulations,
operate the business according to the approved
business areas and use its operation power correctly.
(2) Party B should improve its decision-making and
management ability, enhance its operation capacity
and profitability, expand the market and increase the
incomes.
(3) Party B shall strictly execute the policies of the
company and ensure every target can be successfully
achieved.
(4) Party B shall improve the equipment maintenance,
quality management, market expansion and
self-development based on the long-term business
view.
4. If Party B encounters earthquake, fire, typhoon, etc such
unforeseeable or unavoidable natural accidents which directly
affect the completion of economic targets during Party B's
operation period, then Party A and Party B can negotiate to
reduce the Subcontract Fee. Normal change in market conditions
and changes in competitive environments shall not be an excuse
to change the Subcontract Fee.
5. Party A and Party B can negotiate to adjust the Subcontract
Period.
6. Any other matters not stated in this Contract shall be
negotiated by both Parties. Supplemental agreement can be
signed if necessary.
7. This Contract has 3 copies and is effective after signing with
company chop.
Party A's legal representative:
Party B's representative:
June 26, 1999
