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EXHIBIT 10.9
SINO-FOREIGN JOINT VENTURE
FUJIAN HUALONG CARBURETOR CO. LTD.
JOINT VENTURE CONTRACT
CHAPTER I GENERAL PROVISIONS
ARTICLE 1
In accordance with "The Law of the People's Republic of China on
Sino-Foreign Joint Ventures" and other relevant Chinese laws and regulations,
adhering to the principle of equality and mutual benefit and through friendly
consultations, it is hereby agreed that Fujian Hualong Carburetor Co. Ltd., a
limited liability company (hereinafter referred to as the "Joint Venture
Company"), shall be set up in Fuding County, Fujian Province. The contract is
worked out hereunder.
CHAPTER II PARTIES TO THE JOINT VENTURE
ARTICLE 2 Parties to the joint venture:
FUJIAN FUDING CARBURETOR FACTORY (hereinafter referred to as
"Party A"), registered in Fuding County, with its legal address at Xx. 0,
Xxxxxxxx Xxxxxxxxxx Xxxxxxxx, Xxxxxx Xxxxxx.
Legal representative: Xxxx Xxxx, position: Chairman cum Factory
Manager, Nationality: Chinese.
TWIN WINNER TRADING CO., LTD. of Hong Kong (hereinafter referred to
as "Party B"), registered in Hong Kong, with its legal address at Shun Tak
Centre 00/X, Xx. 000, Xxxxxxxxx Xxxx, Xxxxxxx Xxxx Xxxx.
Legal representative: Xxxxx Xxx Xxx, Position: General Manager,
Nationality: Chinese.
WALBRO ENGINE MANAGEMENT CORPORATION (hereinafter referred to as "Party
C"), registered in United States of America, with its legal address at 0000
Xxxxxxxx Xxxxxx, Xxxx Xxxx, Xxxxxxxx 00000-0000 U.S.A.
Legal representative: Xxxxxx Xxxxxx, Nationality: American.
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CHAPTER III ORGANIZATION OF THE COMPANY AND SCOPE OF BUSINESS
ARTICLE 3
The name of the Joint Venture Company is Fujian Hualong Carburetor Co.
Ltd.
Its name in English is FUJIAN HUALONG CARBURETOR CO. LTD.
ARTICLE 4
The organization form of the Joint Venture Company is a limited
liability company.
ARTICLE 5
The legal address of the Joint Venture Company: Xx. 0, Xxxxxxxx
Xxxxxxxxxx Xxxx, Xxxxxx Xxxxxx, Xxxxxx Xxxxxxxx.
ARTICLE 6
The purpose of the Joint Venture Company shall be: to strengthen
economic cooperation and technological exchange; to import advanced technology,
equipment and methods of management; to develop carburetors for motorcycles, and
automobiles; to enhance the quality of products and raise the competitiveness of
the enterprise; to devote itself to domestic production of carburetors and at
the same time make its entry into the international market so as to create more
wealth and better economic benefit for the society, thereby achieving
satisfactory economic benefits for each investor.
ARTICLE 7
The business scope of the Joint Venture Company is to produce,
manufacture and develop various types of series of carburetors and other related
spare parts and accessories for motorcycles and automobiles for the domestic and
foreign markets.
ARTICLE 8
All activities of the Joint Venture Company shall be governed by the
laws, decrees and pertinent rules and regulations of the People's Republic of
China.
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CHAPTER IV TOTAL AMOUNT OF INVESTMENT AND REGISTERED CAPITAL
ARTICLE 9
The total amount of investment of the Joint Venture Company is
US$2,500,000, which shall be the registered capital of the Joint Venture
Company. Of the said amount:
Party A shall contribute US$750,000, accounting for 30%;
Party B shall contribute US$250,000, accounting for 10%
Party C shall contribute US$1,500,000, accounting for 80%
Party C shall contribute its investment in foreign exchange (calculated
at the foreign exchange swap rate of the Fujian Province Forax Swap Centre on
the date the payment is made).
ARTICLE 10
Each party to the Joint Venture Company is liable to the Joint Venture
Company within the limit of the capital subscribed by it. The profits, risks and
losses of the Joint Venture Company shall be shared by the parties in proportion
to their contributions to the registered capital.
ARTICLE 11
The parties shall contribute the following as their investment:
Party A and Party B: In the form of the existing assets of plant and
machinery, factory, buildings, inventory, etc., confirmed by a valuation agency
to be worth Renminbi 7,500,000 (deemed to be the equivalent of US$850,000), and
any deficit thereof shall be made good with Renminbi 1,320,000 (deemed to be the
equivalent of US$150,000) (calculated at the foreign exchange swap rate of the
Fujian Province Forax Swap Centre on the date the contribution is made).
Party C shall contribute its investment in foreign currency in the sum
of US$1,500,000.
ARTICLE 12
The registered capital of the Joint Venture Company shall be paid in
full into the Joint Venture Company's bank with which it operates an account by
the parties in proportion to their respective contributions within six months
after this Contract takes effect.
ARTICLE 13
The parties to the Joint Venture Company shall pay in full their
respective investments within the time stipulated in this Contract. In the event
of any party failing to make payment
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or failing to pay in full their share of the contribution, any profit made by
the Joint Venture Company shall be shared by the parties in proportion to the
actual investment made.
ARTICLE 14
In case any party intends to assign all or part of the investment
subscribed by it to a fourth party, consent shall be obtained from the other
parties and approval from the examination and approval authority is required.
When one party assigns all or part of its Investment, the other parties
have a preemptive right.
The terms and conditions of assignment by any part to a fourth party
shall not be more favorable than the terms of assignment to the other parties.
CHAPTER V BOARD OF DIRECTORS AND MANAGEMENT ORGANIZATION
ARTICLE 15
The Joint Venture Company shall establish a Board of Directors, which
shall be its highest authority and shall decide all major issues concerning the
Joint Venture Company.
ARTICLE 16
The Board of Directors shall comprise seven Directors. The number of
Directors shall be discussed between and determined by the parties by reference
to the proportion of their capital contribution. Two of the Directors shall be
appointed by Party A, one by Party B and four by Party C. The Chairman of the
Board shall be appointed by Party C, and the Vice-Chairman by Party A. The term
of office for the Chairman, Vice-Chairman and Directors is four years; their
term of office may be renewed if continuously appointed by the relevant party.
ARTICLE 17
The Board of Directors shall convene at least one meeting every year.
The meeting shall be called and presided over by the Chairman of the Board.
Should the Chairman be absent, the Vice-Chairman shall call and preside over the
Board meeting.
The Chairman may convene an interim meeting based on a proposal made by
more than one-third of the total number of Directors. The Board meeting requires
a quorum of over two-thirds of the total number of Directors. Should a Director
be unable to attend the Board meeting, he shall appoint a proxy in written form
to attend and vote on his behalf.
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If the Director of any party neither attends a Board meeting nor
appoints a proxy, and as a result the meeting does not have a sufficient quorum,
the meeting shall be adjourned for 30 days and the Director not in attendance
shall receive a written notice.
In the event that the number of Directors attending an adjourned
meeting shall be less than the quorum of two-thirds, such number in attendance
shall be deemed to be the quorum. And such Directors shall be entitled to pass
resolutions by majority vote on all matters except for the four set out in
Article 18.
ARTICLE 18
Resolutions with respect to the following matters shall require the
unanimous approval of the Directors present at a Board meeting:
(1) Amendment of the Articles of Association of the Joint Venture
Company;
(2) Termination or dissolution of the Joint Venture Company;
(3) Increase in or assignment of the registered capital of the
Joint Venture Company;
(4) Merger of the Joint Venture Company with another economic
organization.
ARTICLE 19
The Chairman of the Board is the legal representative of the Joint
Venture Company. Should the Chairman be unable to exercise his responsibilities
for some reason, he shall authorize the Vice-Chairman or any other Director to
represent the Joint Venture Company temporarily.
ARTICLE 20
The Joint Venture Company shall carry out the system where by the
General Manager assumes the responsibilities under the leadership of the Board
of Directors. He shall be responsible for the day-to-day management of the Joint
Venture Company. The Joint Venture Company shall have one General Manager.
ARTICLE 21
The responsibility of the General Manager is to carry out the decisions
of the Board meeting and organize and conduct the day-to-day management of the
Joint Venture Company. Within the scope authorized by the Board of Directors,
the General Manager shall represent the Joint Venture Company in external
matters and, within the company, appoint and dismiss subordinate personnel and
exercise the other powers conferred upon him by the Board of Directors.
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ARTICLE 22
The General Manager shall be appointed by the Board of Directors, and
his term of office shall be two years. At the invitation of the Board of
Directors, the Chairman, Vice-Chairman or Directors may concurrently be the
General Manager.
The General Manager shall not be involved in other economic
organizations which are in commercial competition with the Joint Venture
Company.
ARTICLE 23
In case of graft or serious dereliction of duty on the part of the
General Manager and other senior personnel, the Board of Directors shall have
the power to dismiss them at any time.
CHAPTER VI EQUIPMENT AND TECHNOLOGY
ARTICLE 24
Apart from the equipment contributed by Party A as its investment, the
main production equipment of the Joint Venture Company may be chosen and
purchased by the Joint Venture Company from the domestic or overseas markets
whenever there is a necessity to import advanced equipment.
ARTICLE 25
When the Joint Venture Company wants to import advanced production
technology, Party C shall be entrusted with the importation thereof. However,
the technology imported by the Joint Venture Company shall be appropriate and
advanced and enable the Joint Venture Company's products to have marked social
benefits domestically or to be competitive in the international market.
ARTICLE 26
Each of the parties agree that Party C shall have the option to license
any technology it owns to the Joint Venture Company subject to the approval of
the PRC Ministry of Foreign Trade and Economic Cooperation (including specifying
a royalty between 3 and 7%). The royalty for such technology shall be agreed by
the parties according to the nature of the technology and the relevant laws and
regulations of China.
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CHAPTER VII PURCHASE OF RAW MATERIALS AND SELLING OF PRODUCTS
ARTICLE 27
In its purchase of required raw materials, fuel, parts, means of
transportation and articles for office use, etc., the Joint Venture Company
shall give first priority to purchase in China where conditions are equal. With
regard to the raw and processed materials, fuels or parts that have to be
imported from abroad, Party B and Party C shall render assistance to the Joint
Venture Company. The purchase price and fees shall be borne by the Joint Venture
Company.
ARTICLE 28
The trademark to be used on the products of the Joint Venture Company
shall be separately studied and determined by the Board of Directors.
ARTICLE 29
The sale of the Joint Venture Company's products on the overseas market
may be entrusted to the sales organization of Party C or its subsidiaries.
CHAPTER VII TAXES, FINANCE AND AUDIT
ARTICLE 30
The Joint Venture Company shall pay taxes in accordance with the
stipulations of Chinese laws and other relevant regulations.
ARTICLE 31
Staff members and workers of the Joint Venture Company shall pay
individual income tax according to the "Individual Income Tax Law of the
People's Income Tax Law of the People's Republic of China."
ARTICLE 32
The Joint Venture Company shall formulate its system of financial
management and accounting in accordance with the relevant provisions of the
laws, decrees of China and provisions concerning systems of financial management
and accounting of foreign investment enterprises, with reference to the
circumstances of the Joint Venture Company.
ARTICLE 33
The fiscal year of the Joint Venture Company shall be the Gregorian
year, commencing on January 1 and ending on December 31.
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ARTICLE 34
The General Manager shall submit to the Board of Directors of the Joint
Venture Company within the first ten days of every month, the profit-loss amount
and balance sheet of the Joint Venture Company of the preceding month and, in
the first three months of each fiscal year, the General Manager shall prepare
the previous year's balance sheet, profit and loss statement and proposal
regarding the disposal of profits, and submit them to the Board of Directors for
examination and approval.
ARTICLE 35
The Joint Venture Company shall adopt the internationally used accrual
basis and debit and credit accounting systems for accounting. All vouchers,
accounts books, statements and financial reports prepared by the Joint Venture
Company must be written in Chinese. In addition, statements, annual balance
sheet and profit and loss statement shall be also written in English.
ARTICLE 36
After paying taxes in accordance with the "Income Tax Law of the
People's Republic of China Concerning Sino-Foreign Joint Ventures," the Joint
Venture Company shall distribute its profits in accordance with the following
principles:
(1) Allocations shall be made for the reserve fund, expansion fund,
bonus and welfare fund for staff and workers, with the ratio for
such allocations to be determined by the Board of Directors;
(2) As for the profits that may be distributed, after allocations of
the three funds as prescribed in paragraph (1) of this Article,
if the Board of Directors decides to make a distribution, it
shall be made according to the ratio of the respective
investments of the parties to the Joint Venture Company.
ARTICLE 37
The Joint Venture Company may not distribute profits until its losses
from previous years have been made up. Undistributed profits from previous years
may be included in the current year's profits for distribution.
ARTICLE 38
Financial checking and examination of the Joint Venture Company shall
be conducted by an auditor registered in China and reports shall be submitted to
the Board of Directors and the General Manager.
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In case Party B or Party C considers it necessary to employ a foreign
auditor registered in another country to undertake annual financial checking and
examination, the other two parties shall give its consent.
All the expenses thereof shall be borne by the party making the request.
CHAPTER IX LABOR MANAGEMENT AND WELFARE INSURANCE
ARTICLE 39
The recruitment, employment, dismissal and resignation, wages, labor
insurance, welfare, rewards, penalty and other matters concerning the staff and
workers of the Joint Venture Company shall be handled in accordance with the
Chinese laws, regulations and "Provisional Regulations of the Fujian Province on
Labor Management in Sino-Foreign Joint Ventures" and based on the circumstances
of the Company.
ARTICLE 40
The amount of salaries, social insurance, welfare and travelling
expenses, etc. of the General Manager and senior management staff shall be
decided by the Board of Directors.
ARTICLE 41
Insurance policies of the Joint Venture Company on various kinds of
risks shall be underwritten with the People's Insurance Company of China. Types,
value and duration of insurance shall be decided by the Board of Directors based
on the actual circumstances in accordance with the stipulations of the People's
Insurance Company of China.
CHAPTER X DURATION, TERMINATION AND LIQUIDATION
ARTICLE 42
The duration of the Joint Venture Company is 50 years. The
establishment of the Joint Venture Company shall start from the date on which
the business license of the Joint Venture Company is issued.
An application for the extension of the duration, proposed by one party
and unanimously approved by the Board of Directors, shall be submitted to the
examination and approval authority six months prior to the expiration date of
the Joint Venture.
After the Joint Venture Company has received approval to extend its
term, it shall carry out procedures for amending its registration in accordance
with the provisions of "the Procedures of the People's Republic of China for the
Registration and Administration of Sino-Foreign Joint Ventures."
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ARTICLE 43
The Joint Venture Company may be dissolved in the following situations:
(1) Expiration of the term of the Joint Venture Company;
(2) Inability to continue operations due to heavy losses of the Joint
Venture Company;
(3) Inability to continue operations due to the failure of one of the
parties to the Joint Venture to fulfill its obligations set forth
in the Contract and Articles of Association of the Joint Venture
Company and such nonfulfillment not having been remedied after
such party has received written notice thereof;
(4) Inability to continue operations due to serious losses arising
from a natural disaster, war or other event of force majeure;
(5) Failure of the Joint Venture Company to achieve its business
objective, coupled with no possibility of future development;
(6) The occurrence of any other event stipulated in this Contract or
Articles of Association of the Joint Venture Company to be
grounds for dissolution.
Should any of Items (2), (3), (4), and (5) of this Article occur, the
Board of Directors shall submit an application for dissolution to the original
examining and approval agency.
Upon occurrence of the situation described in (3) of this Article, the
party which fails to perform the obligations provided in the Contract or
Articles of Association of the Joint Venture Company shall bear the
responsibility for compensating the Joint Venture Company for losses arising
therefrom.
ARTICLE 44
Upon announcement of the Joint Venture Company's dissolution, the Board
of Directors shall propose liquidation procedures and principles and nominate
members for a liquidation committee.
ARTICLE 45
The Joint Venture Company shall apply all of its assets to the
satisfaction of its debts. After all of the Joint Venture Company's debts have
been discharged, any remaining property shall be distributed between the parties
to the Joint Venture Company in accordance with the ratio of their respective
investments.
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ARTICLE 46
After the liquidation of the Joint Venture Company is completed, the
Joint Venture Company shall submit a liquidation report to the original
examining and approval agency and carry out procedures for canceling the Joint
Venture Company's registration at the original agency for registration and
administration.
ARTICLE 47
Following the dissolution of the Joint Venture Company, all of its
account books and documents shall be retained by the original Chinese party.
However, the other parties may make copies of such account books and documents
for their records.
CHAPTER XI LIABILITIES FOR BREACH OF CONTRACT
ARTICLE 48
Should the Joint Venture Company suffer losses due to the failure of
one of the parties to fulfill its obligations under this Contract and the
Articles of Association, or serious breach of the stipulations of this Contract
and Articles of Association, that party shall be liable for the economic losses
thus caused to the Joint Venture Company.
ARTICLE 49
Should all or part of this Contract and its appendices be unable to be
fulfilled owing to the fault of any party, such party in breach shall bear the
responsibilities thus caused according to actual circumstances.
ARTICLE 50
Should any of Party A, Party B or Party C fail to pay on schedule the
contributions in accordance with the provisions defined in Chapter IV of this
Contract, the party in breach shall pay to the other parties not in breach 5% of
the contribution for every month during which the breach continues, starting
from the first month after the expiration of the time limit. Should the party in
breach fail to pay after 3 months after due date, 10% of the contribution shall
be paid by the party in breach to the other parties not in breach, who shall
also have the right to terminate this Contract and to claim damages from the
party in breach in accordance with the stipulation in Article 42 of this
Contract.
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CHAPTER XII SETTLEMENT OF DISPUTES
ARTICLE 51
Any disputes between the parties hereto arising from the explanation,
or implementation of, this Contract, the Articles of Association shall be
settled through friendly consultations between both parties. In case no
settlement can be reached through consultations, the disputes shall be submitted
to the China International Economic & Trade Arbitration Commission of the China
Council for the Promotion of International Trade for arbitration in accordance
with its rules of procedure. The arbitral award is final and binding upon both
parties.
ARTICLE 52
During arbitration, the provisions of this Contact and the Articles of
Association shall continue to be performed by both parties except for matters in
dispute.
CHAPTER XIII, EFFECTIVENESS OF THE CONTRACT AND MISCELLANEOUS
MATTERS
ARTICLE 53
This Contract shall be written in Chinese, with an English translation
for reference.
ARTICLE 54
This Contract and its appendices shall come into force after it has
been signed by the duly authorized representatives of the parties hereto and
approved by the examination and approval authority.
The appendices to this Contract (including the Article of Association)
drawn up in accordance with the principles of this Contract are an integral part
of this Contract.
ARTICLE 55
If any time in the duration of this joint venture there shall be any
changes to the existing Chinese laws, decrees, or regulations which may affect
the purpose of this Contract or that of the Joint Venture Company or the
economic interest of any party, then the parties shall consult together and make
the appropriate changes to this Contract. In the event that the parties are
unable to reach an agreement within 90 days of commencement of such
consultations, the party affected shall be entitled to request the Board for
termination.
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ARTICLE 56
The contents of this Contract and any appendices hereto and related
previous and future documentation and correspondence are to be treated in strict
confidence by the parties hereto. Information contained in such documents may be
disclosed only to persons legally entitled to such information and each party's
lawyers, accountants and other business advisors, and notice of such disclosure
shall first be given to the other parties unless such disclosure is legally
compelled and times does not permit notice to the other parties.
ARTICLE 57
In the event that any matter concerning the joint venture has not been
incorporated in this Contract, the parties hereto shall consult with each other
and execute the necessary supplemental agreements to this Contract.
ARTICLE 58
This Contract is to be signed in 10 copies; Party A, Party B and Party
C will each receive 2 copies and the rest will be retained by the Joint Venture
Company for record except for those copies required to be submitted to the
relevant authorities.
Party A: Legal representative:
FUDING FUJIAN CARBURETOR FACTORY /s/ Xxxx Xxx
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Party B: Legal representative:
TWIN WINNER TRADING CO., LTD. /s/Xxxxx Xxx Xxx
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Party C: Legal representative:
WALBRO ENGINE MANAGEMENT CORPORATION /s/Xxxxxx X. Xxxxxxx
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Signed on: 30th December 1993
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