Contract
for the Joint Venture of
Yantai Gold Electronic Co., Ltd.
Sept. 10, 1993
Muping, Shandong, China
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Total Pages: 20
Contents
Chapter 1 General Provisions
Chapter 2 Parties to the Joint Venture
Chapter 3 Establishment of the Joint Venture Company
Chapter 4 Purpose, Scope and Scale of Production and Business
Chapter 5 Total Amount of Investment and
Registered Capital
Chapter 6 Responsibilities of Each Party to the Joint Venture
Chapter 7 Selling of Products
Chapter 8 The Board of Directors
Chapter 9 Business Management Office
Chapter 10 Purchasing of Equipment
Chapter 11 Technology
Chapter 12 Labor management
Chapter 13 Taxes, Finance and Audit
Chapter 14 Force Majeure
Chapter 15 Duration of the Joint Venture
Chapter 16 The Disposal of Assets after Expiration of the
Duration
Chapter 17 Insurance
Chapter 18 The Amendment, Alteration and Discharge
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of the Contract
Chapter 19 Liabilities for Breach of Contract
Chapter 20 Applicable Law
Chapter 21 Language
Chapter 22 Settlement of Disputes
Chapter 23 Effectiveness of the Contract and Miscellany
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Chapter 1 General Provisions
In accordance with "The Law of People's Republic of China on Joint Ventures
Using Chinese and Foreign Investment" and other relevant Chinese laws and
regulations, Muping Gold Industry Company, Xianyang Pianzhuan Group Corp. and
Tomei Trading Co., Ltd. adhering to the principle of equality and mutual benefit
and through friendly consultations, agree to jointly invest to set up a joint
venture enterprise in Muping County, Shandong Province, the People's Republic of
China. The contract is worked out thereunder.
Chapter 2 Parties to the Joint Venture
Article one
Parties of this Contract are as follows:
Muping Gold Industry Company (herein after referred to as Party A) registered
with Muping County of Yantai City in Shandong Province in China and its legal
address is at Xx 00 Xxxxxxxxxx Xxxxxx, Xxxxxx Xxxxxx, Xxxxxxxx Xxxxxxxx, Xxxxx.
Legal Representative: Name: Xxx, Xx Xxxx
Position: General Manager
Nationality: P.R. China
Xianyang Pianzhuan Group Corp. (herein after referred to as Party B) registered
with Yantai in China and its legal address is at )Xianyang City, China.
Legal Representative: Name: Xx, Xxxx Song
Position: President
Nationality: P.R. China
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Tomei Trading Co., Ltd. (herein after referred to as Party C) registered in
Japan. Its legal address is at 0-0-0 Xxxxxxx Xxxx., Xxxxxxxxxx Xxxxxx, Xxxxxxx
Xxxx, Xxxxx.
Legal Representative: Name: Xxx, Xxxxx Xx
Position: President
Nationality: Japan
Chapter 3 Establishment of the Joint Venture Company
Article Two
In accordance with "the Law of the People's Republic of China on Joint Ventures
Using Chinese and Foreign Investment" and other relevant Chinese Laws and
regulations, the Parties to the joint venture agree to joint venture limit
liability company. (herein after referred to as the Joint Venture Company.)
Article Three
The name of the joint venture company is Yantai Gold Electronic Co., Ltd.
The legal address of the joint venture company is at West Street of Beiguan,
Muping, Shandong, China.
Article Four
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.
Article Five
The organization of the joint venture company is a limited liability company.
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 contribution to the registered
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capital.
Chapter 4 Purpose, Scope and Scale of Production and Business
Article Six
The purpose of the parties to the joint venture is in conformity with wish of
enhancing the economic cooperation and technical exchange to improve the product
quality, develop new products and gain competitive position in the world market
in quality and price by adopting advanced and appropriate managing methods, and
ensure satisfactory economic benefits for each investor.
Article Seven
The productive and business scope of the joint venture company is to produce and
sell deflection yokes and other electronic products; provide maintenance service
after the sales of the products; and study and develop new electronic products.
The production scale of the joint venture company put into operation is one
million deflection yokes per year, including 400,000 pieces of 14", 400,000
pieces of 20" and 200,000 pieces of 21" deflection yokes. The capacity should be
increased to 2,600,000 pieces from the year of 1995.
Article Eight
Quality of the products of the joint venture should accord with the standard
provided by Party B as attached for the exporting deflection yokes to Korea.
Chapter 5 Total Amount of Investment and Registered Capital
Article Nine
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The total amount of investment of the joint venture company is RMB28,528,000
(equals US$4,961,400). The contribution to the joint venture by the Parties is
RMB21,860,000 (equals US$3,801,700), which will be the registered capital of the
joint venture company, of which each party shall respectively contribute:
Party A: RMB6,550,000 (equals US$1,139,100), accounting for thirty
percent;
Party B: RMB9,850,000 (equals US$1,713,000), accounting for forty-five
percent;
Party C: US$949,600, accounting for twenty-five percent.
Article Ten
Both Party B and Party C will contribute the following as their investment:
The cash RMB6,550,000 contributed by Party A will be used on purchasing and
leasing land, working place, power facilities, assistant apparatus and as part
of the working capital.
The total contribution of Party B will be RMB9,850,000 composed of technical
know-how and RMB9,170,000 cash which will be used on purchasing equipment.
Party C will contribute the imported equipment and cash, which altogether
amounts to US$949,600.
Article Eleven
Each Party will contribute its complete investment to the joint venture company
according to their share proportion within 3 months since the date of issuing of
the Business License of the joint venture company. An accountancy registered in
China shall be invited by the joint venture to verify the contribution and issue
a capital verification report, according to which the joint venture company will
provide each party with the Investment Certificate with the signature of both
the chairman and vice-chairman of the Board of the Directors.
Article Twelve
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The registered capital of the joint venture company shall not be reduced within
the term of the joint venture.
In case either Party to the joint venture intends to increase or assign his
investment subscribed to a third party, consent shall be obtained from the other
party to the joint venture in advance, approval from the examination and
approval authority is required.
Article Thirteen
When one party to the joint venture assigns his investment, the other party has
preemptive right on it. If the other parties presents no written reply within 30
days, the right will be automatically abolished and the Party will have the
right to transfer its interests without giving any more favorable conditions to
the forth party, otherwise, the transfer will be regarded invalid.
Chapter 6 Responsibilities of Each Party to the Joint Venture
Article Fourteen
Each Party shall be respectively responsible for the following matters:
Responsibilities of Party A:
1. Handling of applications as per agreed by the Parties for approval,
registration, business license and other matters concerning the establishment of
the joint venture company from relevant departments in charge in China;
2. Handling of applications to the land administration authorities for the right
to use the land.
3. Assisting the joint venture company in contacting and settling the
fundamental facilities such as water, electricity, transportation, etc.;
4. Assisting the joint venture company in importing equipment, transportation
means and office facilities;
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5. Handling the application and construction of the utilities including water,
power, fuel and communication devices;
6. Assisting the joint venture in recruiting local personnel, technical
personnel, workers, and other personnel needed;
7. Handling other affairs entrusted by the joint venture company.
Party B:
1. Contributing cash cash as agreed in article 9, 10 and 11.
2. Handling installation and technical commissioning of equipment and technical
training in production to guarantee the quality of the product of the joint
venture company as stipulated in article 8;
3. Providing the joint venture company with the market and technical information
in domestic and abroad and assisting the Company in product design, development
and sale.
4. Training the technicians and operators of the Company;
5. Other affairs entrusted by the joint venture company.
Party C:
1. Providing cash with the stipulations in article 9, 10 and 11;
2. Providing with market and technical information from abroad;
3. Assisting the joint-venture company in importing equipment, materials and
spare parts and other affairs entrusted by the Company;
4. Exporting 80% of the total production of the joint venture company.
5. Handling other matters entrusted by the joint venture company.
Chapter 7 Selling of products
Article Fifteen
The product of the joint venture company will be sold both on domestic market
and overseas markets, among which the types of 14"
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and 20" accounting for 80% of the total will be sold only to foreign market and
the type of 21" will be partially supplied to domestic market.
Article Sixteen
The export of the joint venture will be conducted by Party C and Party B will
aid the joint venture company in domestic sales. The type of 21" can be supplied
to foreign market subject to the benefit of the joint venture company. In order
to guarantee the export of its product, the joint venture company will commit
with Party C an Agreement each year defining the types, specifications,
quantity, price, quality, property, package, transportation and means of
delivery, etc. The agreement will become effective upon notary by the Chinese
notarying office.
The price of the products to be sold is to be decided by the general manager and
deputy general manager within the limit settled by the Board of Directors
according to the market price and the quality of the product. The joint venture
as well as Party A and Party B has the right to agent the selling of the product
in case the above parties offer better prices than Party C.
Article Seventeen
If the Price Administration Bureau of China has not settled the price for the
products of the joint venture company for domestic sales, the joint venture has
the right to decide the price by its self and present to the Bureau for
registration, otherwise the provisions shall be followed without any breach.
Article Eighteen
The trade mark of the joint venture's products is decided by the board of
directors.
Chapter 8 The Board of Directors
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Article Nineteen
The date of registration of the joint venture company shall be the date of the
establishment of the board of the joint venture company.
Article Twenty
The Board of Directors are composed of 5 directors, of which 2 shall be
appointed by Party A, 2 shall be appointed by Party B and 1 shall be appointed
by Party C. The chairman of the Board shall be appointed by Party B, and its
vice-chairman of 2 will be appointed by Party B and Party C respectively. The
term of office for the directors, chairman and vice-chairman is 4 years. Their
term of office may be renewed if continuously appointed by the relevant Party.
Article Twenty-one
The highest authority of the joint venture company shall be its board of
directors. It shall decide all major issues concerning the joint venture
company. Unanimous approval shall be required before any decisions are made
concerning major issues, in details: 1. Amendment to the Contract and Articles
of Association of the joint venture company; 2. Termination of the joint
venture; 3. Increase or transfer of capital; 4. Merge of the joint venture to
other economic organizations; 5. Import of equipment of the joint venture
company; 6. Price policy of the product of the joint venture; 7. Other matters
requiring unanimous approval according to the Board of Directors.
As for other matters approval by majority or a simple majority shall be
required.
Article Twenty-two
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
reasons, he shall authorize the vice-chairman or any other director to represent
the joint venture company temporarily.
Article Twenty-three
The board of directors shall convene at least one meeting every year.
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The meeting shall be called and presided over by the chairman of the board. The
chairman may convene an interim meeting based on a proposal made by more than
one-third of the total number of directors. Minutes of the meetings written in
Chinese shall be placed on file.
Chapter 9 Business Management Office
Article Twenty-four
The joint venture company shall establish a management office which shall be
responsible for its daily management. The management office shall have a general
manager, appointed by Party A and a deputy manager recommended by party B. The
general manager and his deputy general manager, whose term of office is 4 years,
shall be invited by the board of directors.
Article Twenty-five
The responsibility of the general manager is to carry out the decisions of the
board meeting and to organize and conduct the daily management of the joint
venture company. The deputy general managers shall assist the general manager in
his work. Several department managers may be appointed by the management office,
who shall be responsible for the works in various department respectively,
handle the matters handed over by the general manager, and shall be responsible
to them.
Article Twenty-six
The general manager and deputy general manager shall not participate in any
activities of other economic organizations concerning commercial competition to
the joint venture company.
Article Twenty-seven
In case of graft or serious dereliction of duty on the part of the general
manager and deputy general managers, the board of directors shall have the power
to dismiss them at any time.
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Chapter 10 Purchasing of Equipment
Article Twenty-eight
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 if quality and price are suitable.
Article Twenty-nine
Each Party shall provide the joint venture company with the equipment required
as in the appendix. The premises invested by Party C shall be new and
practicable for the joint venture company and will be valued according to the
estimation of the Commodity Inspection Bureau of China.
Article Thirty
In case of the required goods for the joint venture company are not available in
China on time, the joint venture company may entrust Party C to purchase
equipment in overseas markets, but the model, price and quality of the goods to
be purchased shall gain approval from Party A and Party B in advance.
Chapter 11 Technology
Article Thirty-one
In order to obtain the advanced technology to achieve the goal and scale of the
joint venture company as stipulated in article 4, the parties agreed agreed as
follows concerning the design, production process, testing method, quality
standard and training of personnel of the joint venture company:
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1. Party B shall guarantee the technology including process, testing method,
inspection and sales system provided by it is complete, accurate and reliable,
which can realize the production capacity and quality of the product required in
the Contract to achieve the goal of the joint venture.
2. Party B shall guarantee that the technology provided was the advanced one
introduced from Toshiba and improved, the choice of equipment will match the
requirement of the operating process.
3. Party B shall guarantee to send its technicians, engineers, skillful
operators and management officers as well as the technical data and other
detailed information to the joint venture company in the agreed period.
4. In the term of the Contract, Party B shall keep the joint venture company
informed of every improvement and change of its technology and have the
operators and engineers of the joint venture company master the technology.
5. Party B shall guarantee the technology provided is in his legally possession
to offer with the price without offending any right of the others.
Chapter 12 Labor Management
Article Thirty-two
Labor contract covering the recruitment, employment, dismissal and resignation,
wages, labor insurance, welfare, rewards of the joint venture company shall be
drawn up between the joint venture company as a whole or individual employees
accordance with the "Regulations of the People's Republic of China on Labor
Management in Joint Ventures Using Chinese and Foreign Investment" and its
implementation rules.
The labor contracts shall, after being signed, be filed with the local labor
management department.
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Article Thirty-three
The appointment of high ranking administrative personnel recommended by all
parties, their salaries, social insurance, welfare and the standard of traveling
expenses, etc. shall be decided by the meeting of the Board of Directors.
Article Thirty-four
The salaries, social insurance, welfare standard shall be decided by the Board
of Directors according to the relevant laws of the People's Republic of China
and subject to the economic situation of the joint venture company.
Chapter 13 Taxes, Finance and Audit
Article Thirty-five
The joint venture company shall pay taxes in accordance with the stipulations of
Chinese laws and other relevant regulations.
Article Thirty-six
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 Republic
of China"
Article Thirty-seven
Allocations for reserve funds, expansion funds of the joint venture company and
welfare funds and bonuses for staff and workers shall be set aside in accordance
with the stipulations in "The Law of People's Republic of China on Joint
Ventures Using Chinese and Foreign Investment". The annual proportion of
allocations shall be decided by the board of directors according to the business
situations of the joint venture company.
Article Thirty-eight
In the first three months of each fiscal year, the manager shall prepare
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previous year's balance sheet, profit and loss statement and proposal regarding
the share of profits, and submit them to the board of directors for examination
and approval.
Article Thirty-nine
The fiscal year of the joint venture company shall be from January 1 to December
31. All vouchers, receipts, statistic statements and reports, account books
shall be written in Chinese. (English language will be used concurrently for
main documents.)
Article Forty
The joint venture company will use RMB Yuan as the basic accounting unit. The
exchange rate of RMB to other monetary units will accord with the exchange rate
promulgated on the day of actual conversion by the State Foreign Exchange
Administration Bureau.
Article Forty-one
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.
In case any Party considers it necessary to employ a foreign auditor registered
in another country to undertake annual financial checking and examination, the
other parties shall give their consent. All the expenses thereof shall be borne
by the Requesting Party.
Chapter 14 Force Majeure
Article Forty-two
Should either of the parties to the contract be prevented from executing the
contract by force majeure, such as earthquake, typhoon, flood, fire and war and
other unforeseen events, and their happening and consequences are unpreventable
and unavoidable, the prevented party shall notify the other party by cable
without any delay, and within 15 days thereafter provide the detailed
information of the
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events and a valid document for evidence issued by the relevant public notary
organization for explaining the reason of its inability to execute or delay the
execution of all or part of the contract. Both parties shall, through
consultations, decide whether to terminate the contract or whether to delay the
execution of the contract according to the effects of the events on the
performance of the contract.
Chapter 15 Duration of the Joint Venture
Article Forty-three
The duration of the joint venture company is 10 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.
Article Forty-four
An application for the extension of the duration, proposed by all three parties
and unanimously approved by the board of directors, shall be submitted to the
Ministry of Foreign trade and Economic Cooperation of the People's Republic of
China (or the examination and approval authority entrusted by it) six months
prior to the expiry date of the joint venture.
Chapter 16 The Disposal of Assets After Expiration of the Duration
Article Forty-five
Upon the expiration of the duration termination before the date of expiration of
the joint venture, liquidation shall be carried out in accordance with the
proportion of investment contributed by Party B and Party C.
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Chapter 17 Insurance
Article Forty-six
Insurance policies of the joint venture company on various kinds of risks shall
be under written with the insurance company of China. Types, value and duration
of insurance shall be decided by the board of directors in accordance with the
stipulations of the People's Republic of China.
Chapter 18 The Amendment, Alteration and Discharge of the Contract
Article Forty-seven
The amendment of the contract or other appendixes shall come into force only
after the written agreement is signed by Party A, Party B and Party C and
approved by the original examination and approval authority.
Article Forty-eight
In case of inability to fulfill contract or to continue operation due to heavy
losses in successive years as a result of force majeure, the duration of the
joint venture company and the contract shall be terminated before the time of
expiration after being unanimously agreed upon by the board of directors and
approved by the original examination and approval authority.
Article Forty-nine
Should the joint venture company be unable to continue its operations or achieve
the business purpose stipulated in the contract due to the fact that one of the
contracting parties fails to fulfill the obligations prescribed by the contract
and articles of association, that party shall be deemed as unilaterally
terminating the contract. The other party shall have the right to terminate the
contract in accordance with the provisions of the contract after being approved
by the original
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examination and approval authority as well as to claim damages. In case Party B
and Party C agree to continue the operation, the party who fails to fulfill the
obligations shall cover the losses thus caused to the joint venture company.
Chapter 19 Liabilities for Breach of Contract
Article Fifty
Should either Party A, Party B or Party C fail to pay on schedule the
contributions in accordance with the provisions defined in Chapter 5 of this
contract, the breaching party shall pay to the other party 5% of the
contribution starting from the first month after exceeding the time limit.
Should the breaching party fail to pay after 3 months, 5% of the contribution
shall be paid to the other party, who shall have the right to terminate the
contract and to claim damages to the breaching party.
Article Fifty-one
Should all or part of the contract and its appendixes be unable to be fulfilled
owing to the fault of one party, the breaching party shall bear the
responsibilities thus caused. Should it be the fault of the parties, they shall
bear their respective responsibilities according to actual situations.
Chapter 20 Applicable Law
Article Fifty-two
The formation of this contract, its validity, interpretation, execution and
settlement of the disputes shall be governed by the related laws of the People's
Republic of China.
Chapter 21 Language
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Article Fifty-three
The contract shall be written in Chinese version and in English version. Both
languages are equally authentic. In the event of any discrepancy between the two
afore-mentioned versions, the Chinese version shall prevail.
Chapter 22 Settlement of Disputes
Article Fifty-four
Any disputes arising from the execution of, or in connection with the contract
shall be settled amicably through negotiation. In case no settlement can be
reached through negotiation, the case shall be submitted to the China
International Economic and Trade Arbitration Commission, Beijing, China, for
arbitration in accordance with its rules of procedure. The arbitral award is
final and binding on the parties.
Article Fifty-five
During the arbitration, the contract shall be executed
continuously by the parties except for matters in dispute.
Chapter 23 Effectiveness of the Contract and Miscellany
Article Fifty-six
The appendixes drawn up in accordance with the principles of this contract are
integral part of this contract, including the Articles of Association.
Article Fifty-seven
The contract and its appendixes shall be approved by the legal person
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representative of the parties and come into force beginning from the date of
approval by the Ministry of Foreign Trade and Economic Cooperation of the
People's Republic of China ( or its entrusted examination and approval
authority).
Article Fifty-eight
Should notices in connection with any party's rights and obligations be sent by
either Party B or Party C by telegram or telex, etc., the written letter notices
shall be also required afterwards. The legal addresses of Party B and Party C
listed in this contract shall be the posting addresses.
Article Fifty-nine
The contract is signed in Muping County, Shandong Province, P. R. China by the
authorized representatives of the parties on Sept. 10, 1993.
Party A: Muping Gold Industry Company
(Signature): ...........................................................
Party B: Xianyang Pianzhuan Group Corp.
(Signature): ...........................................................
Party C: Tomei Trading Co., Ltd.
(Signature): ...........................................................
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