EXHIBIT 10.3
[ENGLISH TRANSLATION]
Execution Copy
DATED AUGUST 25, 2006
BAODING TIANWEI BAOBIAN ELECTRIC CO., LTD.
AND
YINGLI GREEN ENERGY HOLDING COMPANY LIMITED
JOINT VENTURE CONTRACT
CONTENTS
SECTION PAGE
------- ----
1. DEFINITIONS.......................................................... 3
2. PARTIES TO THE CONTRACT.............................................. 5
3. ESTABLISHMENT OF THE JV COMPANY...................................... 6
4. PURPOSES AND SCOPE OF BUSINESS....................................... 7
5. TOTAL INVESTMENT AND REGISTERED CAPITAL.............................. 8
6. TRANSFER AND INCREASE OF REGISTERED CAPITAL AND SUBSCRIPTION RIGHT... 8
7. RESPONSIBILITIES OF THE PARTIES...................................... 13
8. BOARD OF DIRECTORS................................................... 14
9. SUPERVISORS.......................................................... 16
10. OPERATION AND MANAGEMENT ORGANIZATIONS............................... 17
11. LABOR MANAGEMENT..................................................... 18
12. FINANCIAL AFFAIRS AND ACCOUNTING..................................... 19
13. INSURANCE............................................................ 21
14. CONFIDENTIALITY...................................................... 21
15. JOINT VENTURE TERM................................................... 22
16. TERMINATION AND DISSOLUTION.......................................... 23
17. FORCE MAJEURE........................................................ 25
18. DISPUTES RESOLUTION.................................................. 25
19. APPLICABLE LAW....................................................... 26
20. MISCELLANEOUS PROVISIONS............................................. 26
-2-
This Joint Venture Contract (the "CONTRACT") is signed on ▇▇▇▇▇▇ ▇▇, ▇▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇'▇ ▇▇▇▇▇▇▇▇ of China
BY AND BETWEEN
(1) BAODING TIANWEI BAOBIAN ELECTRIC CO., LTD. ("PARTY A"), a company limited
by shares duly established and validly existing under the laws of the
People's Republic of China (the "PRC") and having its legal address at ▇▇.
▇▇, ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇, and its mailing address at ▇▇. ▇▇▇▇,
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇; Tel: ▇▇▇▇-▇▇▇▇▇▇▇; Fax: ▇▇▇▇-▇▇▇▇▇▇▇;
AND
(2) YINGLI GREEN ENERGY HOLDING COMPANY LIMITED ("PARTY B"), a legal person
duly established and validly existing under the laws of the Cayman Islands
and having its legal address at Century Yard, Cricket Square, ▇▇▇▇▇▇▇▇
Drive, PO Box 2681 GT, ▇▇▇▇▇▇ Town Cayman, British West Indies, and its
mailing address at No. 3055, Middle Fuxing Road, National High-tech Zone,
Baoding, Hebei, PRC.
(Party A and Party B are hereinafter collectively referred to as the "PARTIES"
and individually, a "PARTY".)
WHEREAS
(1) Baoding Tianwei Yingli New Energy Resources Co., Ltd. (the "COMPANY")
is a limited liability company duly established and validly existing
under the laws of the PRC and having its legal address at No. 3055,
Middle Fuxing Road, Baoding, with the registered capital of RMB
100,000,000;
(2) Baoding Yingli Group Co., Ltd. ("YINGLI GROUP") has entered into an
Equity Purchase Agreement with Party B on the same date hereof (the
"EPA"). According to the EPA, Yingli Group has agreed to sell to Party
B, and Party B has agreed to purchase from Yingli Group, the 51%
equity interest Yingli Group holds in the Company;
(3) In connection with the sale and purchase of the equity interest
pursuant to the EPA, the Parties agree to convert the Company into a
Sino-foreign equity joint venture company (the "JV COMPANY").
NOW, THEREFORE
In consideration of the foregoing premises, in accordance with the Company Law
of the People's Republic of China, the Law of the People's Republic of China on
Sino-Foreign Equity Joint Venture Enterprises and its implementing regulations
and other relevant PRC laws and regulations, adhering to the principles of
equality and mutual benefit and through friendly consultations, the Parties
hereby agree as follows:
1. DEFINITIONS
-3-
Unless the provisions of this Contract provide otherwise, the following
terms shall have the meanings set forth below:
"AFFILIATE" means, in relation to either of the Parties, a company,
individual or any other entity directly or indirectly controlling,
controlled by, or under common control with, such a Party. For the purpose
of this definition, "CONTROL", when used with respect to any entity, means
the power to control, or cause others to control, the operation or
management of such an entity, whether through the ownership of registered
capital, by contract or otherwise, or the power to appoint the manager or
majority of the members of the board of directors, management committee or
equivalent decision making body of such an entity.
"APPROVAL AUTHORITY" means the Ministry of Commerce of the PRC or its local
counterpart in Hebei Province which is authorized by the Ministry of
Commerce to examine and approve this Contract, the Articles of Association
and any amendments or supplements hereto and thereto.
"ARTICLES OF ASSOCIATION" means the articles of association of the JV
Company entered into by the Parties together with this Contract on the date
hereof.
"BOARD" means the board of directors of the JV Company.
"BUSINESS LICENCE" means the JV Company's business licence issued by the
Registration Authority in connection with the conversion of the Company
into the JV Company.
"EXERCISE NOTICE" shall have the meaning provided in Section 6.3.1.
"SWAPPED EQUITIES" shall have the meaning provided in Section 6.3.1.
"CHINA" or "PRC" means the People's Republic of China.
"DATE OF ESTABLISHMENT" shall have the meaning provided in Section 3.1.
"JV COMPANY" means the Sino-foreign joint venture limited liability company
converted from the Company by Party A and Party B pursuant to this
Contract.
"JOINT VENTURE TERM" means the term of the JV Company set forth in Section
14.1.
"MANAGEMENT PERSONNEL" means the Chief Executive Officer, the Chief
Financial Officer, the departmental managers and other personnel designated
by the Board as Management Personnel.
"QUALIFIED STOCK EXCHANGE" means (i) New York Stock Exchange; (ii) Shanghai
Stock Exchange, and (iii) any other international recognized stock exchange
or automated quotation system outside the PRC.
"REGISTRATION AUTHORITY" means the State Administration for Industry and
Commerce of the PRC or its authorized local counterpart in Hebei Province
in charge of the registration of the JV Company.
-4-
"RENMINBI" or "RMB" means the official currency of the PRC.
"U.S. DOLLARS" or "US$" means the official currency of the United States of
America.
2. PARTIES TO THE CONTRACT
5.1 THE PARTIES
The Parties to this Contract are as follows:
(a) Party A
Name: BAODING TIANWEI BAOBIAN ELECTRIC CO., LTD.
Country of registration: China
Legal address: ▇▇. ▇▇, ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇
Mailing address: ▇▇. ▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇
Legal representative: Name: Ding Qiang
Title: Chairman
Nationality: Chinese
(b) Party B
Name: YINGLI GREEN ENERGY HOLDING COMPANY LIMITED
Country of registration: Cayman Islands
Legal address: Century Yard, Cricket Square, ▇▇▇▇▇▇▇▇ Drive,
PO Box 2681 GT, ▇▇▇▇▇▇ Town Cayman, British West Indies
Mailing address: ▇▇. ▇▇▇▇, ▇▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇
Legal representative: Name: ▇▇▇▇ ▇▇▇▇ Sheng
Title: Director
Nationality: Chinese
5.2 REPRESENTATIONS AND WARRANTIES
2.2.1 Party A hereby represents and warrants that:
(a) it is a company limited by shares duly established and validly
existing under the laws of the PRC in good standing and has the full
powers and authority to conduct the business within the scope of its
business licence;
-5-
(b) it has the authority to enter into and perform this Contract and the
transaction contemplated by this Contract;
(c) it has taken the requisite corporate actions to authorize the signing
of this Contract and, the authorization and performance of this
Contract and the transaction contemplated hereby do not and will not
require any other company procedures of Party A unless otherwise
provided in relevant laws, regulations and administrative rules of the
PRC or the rules of Qualified Stock Exchanges. Upon approval by the
Approval Authority, its obligations hereunder shall become valid and
binding, and Party B shall have the right to require it to perform
this Contract according to the terms hereof; and
(d) the execution and performance of this Contract will not violate its
articles of association, any of its outstanding commitments or
obligations, contractual or otherwise, or any of the currently
effective laws, regulations, decrees or policies of the PRC.
2.2.2 Party B hereby represents and warrants that:
(a) it is a company duly established and validly existing under the laws
of the Cayman Islands;
(b) it has the authority to enter into and perform this Contract and the
transaction contemplated by this Contract; and
(c) it has taken the requisite corporate actions to authorize the signing
of this Contract and, the authorization and performance of this
Contract and the transaction contemplated hereby does not and will not
require any other company procedures of Party B unless otherwise
provided in relevant laws and regulations of the Cayman Islands or the
Qualified Stock Exchanges. Upon approval by the Approval Authority,
its obligations hereunder shall be valid and binding, and Party A
shall have the right to require it to perform this Contract according
to the terms hereof; and
(d) the execution and performance of this Contract will not violate its
articles of association, any of its outstanding commitments or
obligations, contractual or otherwise, or any of the currently
effective laws, regulations, decrees or policies of the Cayman
Islands.
2.2.3 Each Party shall indemnify the other Party and the JV Company against any
and all losses that arise from any representations or warranties made by
such Party in this Section that are proven to be untrue, incomplete,
misleading or inaccurate in any material respect.
3. ESTABLISHMENT OF THE JV COMPANY
5.1 ESTABLISHMENT
3.1.1 The issuance date of the Business Licence shall be the date of
establishment of the JV Company ("DATE OF ESTABLISHMENT").
-6-
5.2 NAME, ADDRESS AND BRANCHES
3.2.1 The name of the JV Company shall be Baoding Tianwei Yingli New Energy
Resources Co., Ltd. in English and (Chinese Characters) in Chinese.
3.2.2 The legal address of the JV Company shall be No. 3055, Middle Fuxing Road,
National High-tech Zone, Baoding, Hebei, PRC.
3.2.3 The JV Company may, in accordance with its needs and upon approval by the
Board and the Approval Authority, establish subsidiaries, branch offices or
representative offices inside or outside the PRC.
5.3 LIMITED LIABILITY COMPANY
The organizational form of the JV Company shall be a limited liability
company. Unless otherwise agreed in writing, once a Party has paid in full
its contribution to the registered capital of the JV Company, it shall not
be required to provide any further funds to the JV Company, or on behalf of
the JV Company to any third party, by way of contribution, loan, advance,
guarantee or otherwise. If the Parties have fully paid in their subscribed
capital contribution to the JV Company, creditors of the JV Company shall
have recourse only to the assets of the JV Company and shall not seek
repayment from either of the Parties.
5.4 LAWS AND DECREES
The JV Company shall be a legal person established under the laws of the
PRC. The activities of the JV Company shall be governed and protected by
the relevant published laws and regulations of the PRC.
4. PURPOSES AND SCOPE OF BUSINESS
5.1 PURPOSES OF BUSINESS
The business purposes of the JV Company are as follows:
(a) The objective of the Parties in converting the Company into the JV
Company is to improve the efficiency of production and operation of
the Company and to actively participate in the development of the PRC
new energy resource industry to a greater extent;
(b) The Parties also desire that the JV Company improve the competitive
position of its products on the domestic and international markets by
improving product quality, continuously developing products that
satisfy the needs of the JV Company's customers and improving economic
efficiency and thereby maximize economic returns to the Parties.
5.2 SCOPE OF BUSINESS
The business scope of the JV Company is as follows:
-7-
Development, production and sale of silicon solar cells and related
products or accessories; exportation of self-produced products and
technologies; importation of raw materials, instrument, mechanical
equipment, components and accessories and technologies that are necessary
for the JV Company's operation (except goods that the state designates
specific companies to deal with or prohibits import or export); processing
with imported materials, processing and assembly with supplied materials
and parts, and compensation trade; design, installation and construction of
solar energy photovoltaic electricity plants. (Operation of any business
within the business scope that the law or administrative regulations
require relevant approvals shall not start before such approvals are
obtained in accordance with the law.)
5. TOTAL INVESTMENT AND REGISTERED CAPITAL
5.1 TOTAL INVESTMENT
The amount of the total investment of the JV Company is three hundred
million Renminbi (RMB300,000,000).
5.2 REGISTERED CAPITAL
The amount of the registered capital of the JV Company is one hundred
million Renminbi (RMB100,000,000).
5.3 CONTRIBUTIONS TO REGISTERED CAPITAL
The registered capital of the JV Company has been fully paid up. Of the
total amount of the registered capital, the subscribed amount and
percentage (the "CONTRIBUTION PERCENTAGE") of capital contribution of each
Party are as follows:
(a) Party A subscribed for forty-nine million Renminbi (RMB49,000,000),
corresponding to 49% of the equity interest in the JV Company.
(b) Party B subscribed for fifty-one million Renminbi (RMB51,000,000) in
equivalent U.S. Dollars, corresponding to 51% of the equity interest
in the JV Company.
As agreed upon by both Parties, if Party B fails to complete its initial
pubic offering and list its shares on a Qualified Stock Exchange, the
Parties shall re-negotiate the percentages of equity interest they hold in
the JV Company.
6. TRANSFER AND INCREASE OF REGISTERED CAPITAL AND SUBSCRIPTION RIGHT
5.1 TRANSFER OF REGISTERED CAPITAL
6.1.1
(a) If either Party (the "TRANSFERRING PARTY") desires to transfer all or
part of its registered capital in the JV Company to any third party,
the Transferring Party shall give the Board and the other Party (the
"NON-TRANSFERRING PARTIES") a written notice (the "TRANSFER NOTICE")
of its intent to do so;
-8-
(b) The Transfer Notice shall:
(i) specify the percentage of the registered capital of the JV
Company that the Transferring Party intends to transfer (the
"OFFERED SHARE PERCENTAGE"); and
(ii) specify the price at which the Transferring Party intends to
transfer the Offered Share Percentage (the "OFFERED SHARE
PERCENTAGE PRICE"), the third party who desires to purchase the
Offered Share Percentage (the "PROPOSED TRANSFEREE"), the method
of payment, the terms and conditions of the payment, and other
principal terms.
(c) The Non-Transferring Party shall have a pre-emptive right to purchase
the Offered Share Percentage. The Non-Transferring Party shall inform
the Transferring Party in writing within thirty (30) days of receipt
of the Transfer Notice whether it desires to purchase the Offered
Share Percentage. If the Non-Transferring Party accepts the proposed
sale offer of the Offered Share Percentage (the "OFFER"), such
Non-Transferring Party shall purchase all of the Offered Share
Percentage.
(d) If the Non-Transferring Party accepts the Offer in writing ("WRITTEN
ACCEPTANCE") within the thirty (30) day period in sub-paragraph (c)
above, the Parties shall use their best endeavors to procure the
approval of the Approval Authority for the transfer of the Offered
Share Percentage to the Non-Transferring Party and shall use their
respective best endeavors to effect such transfer.
(e) If the Transferring Party has not received any written acceptance of
the Offer from the Non-Transferring Party by the end of the thirty
(30) day period in sub-paragraph (c) above, the Non-Transferring Party
shall be deemed to have given its consent to the transfer of the
Offered Share Percentage by the Transferring Party to the Proposed
Transferee and the Transferring Party may transfer the Offered Share
Percentage to the Proposed Transferee within sixty (60) days after the
expiration date of the thirty (30) day period in sub-paragraph (c)
above.
(f) If the Non-Transferring Party is deemed to have consented to the
transfer by the Transferring Party to the Proposed Transferee pursuant
to Section 6.1.1 (e), the Non-Transferring Party shall:
(i) sign a statement consenting to the transfer and waiving its
pre-emptive right of purchase;
(ii) procure each of the directors it appoints to the Board to vote in
favour of the board resolutions proposing the transfer, the
amendments of the Articles of Association and the relevant
ancillary agreements;
(g) Any transfer by the Transferring Party to the Proposed Transferee
pursuant to Section 6.1.1 (e) shall not be at a price lower than, or
on terms more favourable than, those offered in the Transfer Notice.
-9-
(h) Details of any purchase/transfer made in accordance with Section 6.1.1
(e) (and any amendment to this Contract (if any) required as a result
thereof) shall be submitted by the JV Company to the Approval
Authority for examination and approval. The Parties agree to use their
respective best endeavors to procure the relevant approvals as soon as
practicable. Upon receipt of the approval of the Approval Authority,
the Parties shall procure the JV Company to register the change in
ownership of the registered capital with the Registration Authority
and issue new investment certificates to the Parties to reflect the
adjusted shareholdings, upon cancellation of the existing investment
certificates.
6.1.2 The Parties agree that the Transferring Party may transfer all or part of
its shares in the registered capital of the JV Company to any of its
Affiliates, and the Non-Transferring Party shall consent to such transfers.
In such an event, the Transferring Party shall notify the Non-Transferring
Party in written form of the proposed transfer. The Non-Transferring Party
shall take all actions as may be necessary to effect such a transfer,
including but not limited to signing the letters or contracts consenting to
such a transfer and waiving any pre-emptive right of purchase as required
by the Transferring Party, and shall procure that all of the directors it
appoints to the Board vote affirmatively in favour of a Board resolution
approving such a transfer.
Notwithstanding the above, neither Party may implement any transfer
pursuant to this Section 6.1.2 before the completion of Party B's initial
pubic offering and listing of Party B's shares on a Qualified Stock
Exchange, unless otherwise agreed upon by the other Party in writing.
6.1.3 Neither Party shall mortgage, pledge, charge or otherwise encumber all or
part of its shares in the registered capital of the JV Company without the
prior written consent of the other Party.
5.2 INCREASE OF REGISTERED CAPITAL
6.2.1 During the term of the JV Company, upon approval by the Board and the
Approval Authority, the registered capital of the JV Company may be
increased or decreased in accordance with the capital requirements of the
JV Company's business scale. Any increase or decrease of the registered
capital of the JV Company shall be resolved unanimously by all the
directors present at a meeting of the Board.
6.2.2 As further agreed upon by both Parties, if Party B subscribes for
additional capital of the JV Company with proceeds from private placements
prior to Party B's initial public offering or with proceeds from Party B's
public offerings, both Parties shall cause all the directors they appoint
to the Board to vote in favour of the relevant Board resolutions proposing
the increase of the registered capital, sign all the necessary legal
documents (including but not limited to any amendments to the joint venture
contracts and the Articles of Association concerning the increase of the
registered capital) and take all necessary actions (including but not
limited to procure the JV Company to carry out the approval and
registration procedures concerning the increase of the registered capital).
-10-
Under the above circumstances, the Board shall have the JV Company valued
by an independent asset valuer in accordance with the internationally
accepted valuation method and the relevant laws and regulations of the PRC.
Both Parties agree that the percentage of the equity interest held by Party
B in the JV Company following the capital increase shall be calculated
according to the following formula:
Percentage of Party B's equity interest in the JV Company immediately after
the capital increase = Percentage of Party B's equity interest in the JV
Company immediately before the capital increase + Amount of Party B's
contribution x (1 - Percentage of Party B's equity interest in the JV
Company immediately before the capital increase) / Fair market value of the
JV Company.
The Parties hereby confirm that, upon the completion of the private
placements by Party B, the "fair market value of the JV Company" in the
above formula shall be the expected total value of the JV Company
immediately following Party B's contribution to the increased registered
capital of the JV Company with the proceeds of private placements; and upon
the completion of the public offerings by Party B, the "fair market value
of the JV Company" in the above formula shall be the expected total value
of the JV Company immediately following Party B's contribution to the
increased registered capital of the JV Company with the proceeds of public
offerings.
For the avoidance of doubt, the Parties hereby further confirm that the
dilution of Party A's equity interest in the JV Company as a result of
Party B's contribution to the increased registered capital in accordance
with the above formula shall be proportional to the dilution of the equity
interest in the JV Company held by Party B before the registered capital
increase. Party B agrees to timely communicate with Party A and jointly
implement the private placements prior to its initial public offering.
6.2.3 Unless otherwise agreed upon in writing, both Parties shall have the right
to subscribe for the increased registered capital of the JV Company (the
"INCREASED REGISTERED CAPITAL") in proportion to their respective equity
interests in the JV Company as of the date of the Board resolution. Each
Party shall pay up its contribution to the Increased Registered Capital
within thirty (30) days upon the issuance of the approval by the Approval
Authority.
If either Party (the "WAIVING PARTY ") (i) waives its right to subscribe
for all or part of the Increased Registered Capital it is entitled to by
written notice to the Board, or (ii) fails to duly contribute its
proportion of any part of the Increased Registered Capital within thirty
(30) days upon the approval by the Approval Authority, the other party (the
"SOLE CONTRIBUTING PARTY") shall have the right (but not the obligation) to
fully subscribe for all or part of the Increased Registered Capital waived
or failed to be contributed by the Waiving Party. Under such circumstances,
the Board shall have the JV Company valued by an independent asset valuer,
in accordance with internationally accepted valuation method and the
relevant laws and regulations of the PRC. Both parties agree that the
percentage of the equity interest held by the Sole Contributing Party in
the JV Company following the capital increase shall be calculated according
to the following formula:
-11-
Percentage of the Sole Contributing Party's equity interest in the JV
Company immediately after the capital increase = Percentage of the Sole
Contributing Party's equity interest in the JV Company immediately before
the capital increase +Amount of capital contribution made by the Sole
Contributing Party x (1 - Percentage of the Sole Contributing Party's
equity interest in the JV Company immediately before the capital increase)
/ Fair market value of the JV Company
The Parties hereby confirm that the "fair market value of the JV Company"
in the above formula shall be the expected total value of the JV Company
immediately after the Sole Contributing Party's contribution to the
increased registered capital of the JV Company.
Both Parties undertake to sign all necessary legal documents (including but
not limited to the amendments to the joint venture contracts and the
Articles of Association concerning the registered capital increase) and
take all necessary actions to complete the increase of the registered
capital under Section 6.2.3 (including but not limited to procure the JV
Company to carry out the approval and registration procedures concerning
the registered capital increase)
5.3 SUBSCRIPTION RIGHT
6.3.1 Both Parties agree that, subject to the conditions that (i) Party A or its
Affiliate (the same applies below) obtains all necessary approvals from the
Chinese government, and (ii) Party B completes its initial public offering
and its shares are listed on a Qualified Stock Exchange, Party A shall have
the right to sell to Party B all the equity interest then held by Party A
in the JV Company (the "SWAPPED EQUITY") as consideration for, and in
exchange of, Party B's shares (the "SUBSCRIPTION RIGHT").
6.3.2 Subject to the provision of this Section 6.3, relevant PRC laws, laws of
the jurisdiction where Party B is located, laws of the jurisdiction where
Party B's shares are listed, laws of the jurisdiction where the Qualified
Stock Exchange is located and the rules of such Qualified Stock Exchange,
Party A may, within one month of the first date on which all of the
conditions provided in Section 6.3.1 are satisfied, send to Party B a
written notice (the "EXERCISE NOTICE") requesting sale of the Swapped
Equity as consideration for, and in exchange of, Party B's shares. The
Exercise Notice issued by Party B shall be accompanied by copies of all
necessary approvals of the Chinese government for Party A to exercise the
Subscription Right that have been obtained, legal opinions of Party A's PRC
counsel confirming that all necessary approvals of the Chinese government
for Party A to exercise the Subscription Right have been obtained, and all
other necessary documents.
6.3.3 Party A shall have the Swapped Equity held by Party A valued by an asset
valuer reasonably accepted by Party B in accordance with the
internationally accepted valuation methods and relevant laws and
regulations of the PRC. The asset valuation result shall be acknowledged by
both Parties and undergo the procedures required by the laws of the PRC (if
any). Party A shall consult with Party B to determine the value of the
Swapped Equity on the basis of the asset valuation result.
-12-
6.3.4 Concurrent with transfer of Swapped Equity by Party A to Party B in
accordance with the Exercise Notice, Party B shall issue to Party A new
common shares of Party B according to the following formula. The number of
new common shares to be issued to Party A by Party B shall be:
Number of shares to be issued to Party A by Party B = the total number of
shares of Party B at the time x (Percentage of the Swapped Equity in the JV
Company / Percentage of the equity interest held by Party B in the JV
Company)
For the avoidance of doubt, the Parties hereby further confirm that the
percentage of equity interest held indirectly by Party A in the JV Company
through Party B after Party A exercises the Subscription Right in
accordance with this Section 6.3 is equal to the percentage of equity
interest held directly by Party A in the JV Company immediately before the
exercise of the Subscription Right.
6.3.5 After Party A issues the Exercise Notice, both Parties shall sign all the
necessary documents (including but not limited to an equity purchase
agreement between both Parties regarding the equity interest of the JV
Company and a share subscription agreement between both Parties regarding
issuance of new common shares), take all necessary actions and procure all
necessary approvals from, consents of, registrations and filings with
governmental and regulatory authorities, to make Party A the legal and
beneficial owner of the shares issued by Party B and to make Party B the
legal and beneficial owner of the Swapped Equity. Both Parties agree that
exercise of the Subscription Right shall be governed by the equity purchase
agreement and share subscription agreement to be signed by the Parties at
the time, but the share subscription agreement shall be consistent with the
principles set forth in Section 6.3 hereof.
6.3.6 Upon execution of the agreements provided in Section 6.3.5 above, Party A
shall work in cooperation with Party B to take all necessary procedures
required by the laws of the PRC, including procedures for the conversion of
the JV Company into a wholly foreign owned enterprise.
6.3.7 Both Parties agree that if Party A fails to exercise the Subscription
Right within three hundred (300) days from the date of the completion of
Party B's initial public offering and listing of its shares on a Qualified
Stock Exchange, Party A may request Party B to purchase all equity interest
held by Party A in the JV Company at the time. Party B will undertake to
use its best efforts to assist Party A in completing the transfer of such
equity interest held by Party A in the JV Company. The specific manner and
price of the transfer shall be negotiated by both Parties based on the fair
market value and in accordance with applicable laws and regulations of the
PRC.
7. RESPONSIBILITIES OF THE PARTIES
5.1 RESPONSIBILITIES OF PARTY A AND PARTY B
7.1.1 In addition to its other obligations under this Contract, Party A shall:
-13-
(a) assist the JV Company in obtaining the approvals, permits and licences
necessary for the establishment and operation of the JV Company;
(b) assist the JV Company in procuring Renminbi by way of loans or
otherwise as and when requested by the Board;
(c) assist the JV Company with the procedures for the import of necessary
machinery and equipment, materials and supplies, and arrange the
inland transportation thereof;
(d) assist the JV Company in exploring the domestic market and procuring
information to promote sales of the products of the JV Company in the
domestic market;
(e) assist the employees of the JV Company recruited outside China in
obtaining entry visas and work permits and assist the personnel of the
JV Company travelling abroad for training to go through the necessary
procedures in China; and
(f) assist the JV Company in opening Renminbi and foreign exchange bank
accounts in China.
7.1.2 In addition to its other obligations under this Contract, Party B shall:
(a) assist the JV Company in obtaining the approvals, permits and licences
necessary for the establishment and operation of the JV Company; and
(b) assist the JV Company in exploring the international market and
procuring information to promote sales of the products of the JV
Company in the international market.
8. BOARD OF DIRECTORS
5.1 DIRECTORS AND CHAIRMAN
8.1.1 The Board shall consist of seven (7) directors, three (3) of whom shall be
appointed by Party A, and four (4) of which shall be appointed by Party B.
Each Party shall promptly notify the Board if it replaces its appointee(s)
to the Board. During the term of this Contract, if the capital contribution
percentages of the Parties change, the Parties shall amend this Contract
accordingly, including, without limitation, making appropriate changes to
the composition of the Board and the number of directors to be appointed by
each Party as agreed upon by the Parties at that time.
8.1.2 Each director shall be appointed for a term of three (3) years and may
serve consecutive terms if reappointed by the Party that originally
appointed her or him. A director may be removed by her or his appointing
Party. The term of appointment of the members of the initial Board shall
commence on the issuance date of the Business Licence. If a seat on the
Board is vacated due to retirement, resignation, illness, disability or
death of a director or his removal by the Party that originally appointed
her or him, the Party that originally appointed her or him shall appoint a
successor to serve the term of such director.
-14-
All the directors of the JV Company shall act in accordance with the
resolutions of the Board, and shall not engage in any action to jeopardize
the interest of the JV Company.
8.1.3 A director appointed by Party A shall serve as the chairman of the Board
and a director appointed by Party B shall serve as the vice chairman of the
Board. The chairman shall be the legal representative of the JV Company.
5.2 POWERS OF THE BOARD
The Board shall be the highest authority of the JV Company, deciding all
important matters of the JV Company.
5.3 MEETINGS OF THE BOARD
8.3.1 Each director shall have one vote and the chairman of the Board shall have
no casting vote. Meetings can be convened by directors through telephone or
video, so long as the attendance of directors satisfies the quorum
requirements and each director could be clearly heard during the meeting.
8.3.2 Each Board meeting requires a quorum of two-thirds (2/3) or more of all
the directors of the JV Company attending the meeting in person (including
attending via telephone or videoconference) or by proxy. Resolutions
adopted at any Board meeting where the quorum is not satisfied are invalid.
If the quorum is not satisfied at a duly convened Board meeting, the
director presiding over the meeting shall postpone the meeting to a working
day within seven (7) working days from the originally scheduled meeting
date, and notify in writing all the directors of the postponement. If any
director fails to attend or appoint a proxy to attend the postponed Board
meeting, such director shall be deemed to be present at the meeting (but
deemed to have waived his or her voting rights) and shall be included in
calculating the quorum.
8.3.3 The Board shall convene at least one (1) meeting every quarter. The Board
meetings shall be convened and presided over by the chairman of the Board
or, in his absence, by the vice chairman or, in the absence of the vice
chairman, by a director elected by half or more of the directors. A prior
written notice of no less than five (5) days (which shall include
notification as to time, place and the agenda of the meeting) shall be sent
by telex, fax or registered mail to each director. Minutes of each Board
meeting shall be sent to all the members of the Board and shall be signed
by all the directors who have attended such a meeting
8.3.4 If a director is unable to attend a Board meeting, she or he shall appoint
another person in writing to attend and vote at the meeting as her/his
proxy.
8.3.5 Upon the written request of no less than one third (1/3) of all the
directors of the JV Company, specifying the matters to be discussed, the
chairman or, in his absence, the vice chairman or a director authorized by
the chairman, shall convene an interim Board meeting at a convenient time
and location. Such interim Board meeting shall be convened by no less than
five (5) days' prior written notice (which shall include notification as to
time, place and
-15-
the agenda of the meeting) sent by fax or registered mail to each director.
8.3.6 The minutes of the Board meetings and the resolutions adopted by the Board
shall be recorded in the minute-book of the Board meetings of the JV
Company which shall be kept at the JV Company's legal address.
8.3.7 Resolutions in respect of the following matters shall only be adopted by a
duly convened Board meeting, upon the unanimous affirmative vote of each
and every director voting in person or by proxy at such meeting:
(a) amendment to the Articles of Association;
(b) merger with another entity or division of the JV Company;
(c) without prejudice to the power of either of the Parties to dissolve
the JV Company in accordance with Section 16, termination or
dissolution of the JV Company; and
(d) increase, reduction or transfer of the registered capital of the JV
Company.
8.3.8 Matters other than those referred to in Section 8.3.7 shall be adopted by
the affirmative votes of a simple majority of the directors present at a
duly convened Board meeting in person or by proxy.
8.3.9 Notwithstanding any other provisions of this Contract, a written
resolution may be adopted by the Board in lieu of a Board meeting provided
that such resolution to be adopted is delivered to all the directors of the
JV Company and affirmatively signed and adopted by each of them.
8.3.10 Directors shall serve without any remuneration for the performance of
their duties, except that directors shall be reimbursed by the JV Company
for their expenses incurred in attending Board meetings (including but not
limited to costs relating to travel, food and lodging).
9. SUPERVISORS
5.1 The Company shall have two (2) Supervisors. Each Party shall appoint one
supervisor. The directors and the management personnel shall not be
appointed as Supervisors.
5.2 Each supervisor shall be appointed for a term of three (3) years and may
serve consecutive terms upon reappointment.
5.3 Powers of the Supervisors include:
9.3.1 inspecting financial affairs of the Company;
9.3.2 supervising acts of directors and senior management personnel in the
performance of their duties to the Company, and proposing to remove
directors and senior management personnel who have violated laws,
regulations, the Articles of Association or resolutions of the Board;
-16-
9.3.3 demanding directors and senior management personnel to correct any acts
that harm the interests of the Company;
9.3.4 proposing to convene an interim Board meeting; and
9.3.5 other powers provided in the Articles of Association.
5.4 The supervisors may attend Board meetings and make inquiries and
suggestions concerning matters being resolved by the Board.
10. OPERATION AND MANAGEMENT ORGANIZATIONS
5.1 OPERATION AND MANAGEMENT ORGANIZATIONS
10.1.1 The JV Company shall have one (1) Chief Executive Officer who shall have
overall responsibility for the daily operation and management of the JV
Company. The Chief Executive Officer shall be nominated by Party B and
appointed by the Board and shall report to and be under the supervision of
the Board. The term of office of the Chief Executive Officer shall be three
(3) years, and if re-nominated by Party B and re-appointed by the Board,
the Chief Executive Officer may serve consecutive terms.
10.1.2 The JV Company shall also have one (1) Chief Financial Officer and
several departmental managers. The Chief Financial Officer shall be
nominated by the Chief Executive Officer and appointed by the Board. The
departmental managers shall be appointed by the Chief Executive Officer.
10.1.3 The Chief Financial Officer shall be responsible for the financial
matters of the JV Company and shall report to the Chief Executive Officer.
The departmental managers shall be responsible for the operation of their
respective departments, handle the matters delegated by the Chief Executive
Officer, and shall report to the Chief Executive Officer from time to time.
10.1.4 A director of the JV Company may concurrently serve the office of the
Chief Executive Officer or hold another senior management position of the
JV Company.
5.2 RESPONSIBILITIES OF THE CHIEF EXECUTIVE OFFICER
10.2.1 The Chief Executive Officer of the JV Company shall have the following
responsibilities:
(a) to take charge of the operation and management of the JV Company and
report to the Board;
(b) to organize the implementation of the JV Company's plans and the
resolutions of the Board;
(c) to prepare proposals for the establishment of the internal management
organizations of the JV Company;
-17-
(d) to formulate the rules and regulations for the operation and
management of the JV Company;
(e) to propose to the Board for the appointment or dismissal of the Chief
Financial Officer;
(f) to appoint or dismiss the Management Personnel other than those who
should be appointed or dismissed by the Board;
(g) to determine the wages, welfare and benefits and rewards and
disciplines of the working personnel and decide on their employment
and dismissal; and
(h) other duties and powers conferred upon him by the PRC laws and
regulations, the Articles of Association and the Board.
10.2.2 The Chief Executive Officer shall submit to the Board for discussion and
approval of:
(a) the annual management report and accounts of the JV Company;
(b) the annual budget and long term plans of the JV Company; and
(c) other matters as may be required by the Board.
11. LABOR MANAGEMENT
5.1 PRINCIPLES
Matters relating to the recruitment, employment, dismissal, resignation,
wages, welfare and other matters concerning the employees of the JV Company
shall be handled in accordance with relevant PRC laws and regulations.
5.2 EMPLOYEES
11.2.1 The JV Company shall hire employees based upon the qualities of the
candidates and in accordance with the demands of its operation and
development. If the JV Company hires new employees through examinations or
tests, only those candidates who make superior achievements in the
examinations or tests will be hired. New employees hired by the JV Company
shall undergo a probation period not exceeding six (6) months. During the
probation period, the JV Company may terminate, at any time, the labor
contracts with any employees who do not satisfy the relevant requirements,
and do not need to pay any economic compensation to such employees upon
such termination.
11.2.2 The Chief Executive Officer shall determine the number of employees based
on the operational need of the JV Company.
5.3 DISCIPLINE
11.3.1 The Chief Executive Officer shall have the right to take disciplinary
actions, including giving a warning to, recording a demerit against, and
reducing the wages of, those employees who violate the rules, regulations
and labor discipline of the JV Company. Where a case is
-18-
serious, the Chief Executive Officer may dismiss such an employee. The
Chief Executive Officer shall also have the right to dismiss those of the
employees who are found incompetent or unsuitable for their jobs.
11.3.2 Dismissal of employees by the JV Company shall be carried out in
accordance with the provisions of the labor contracts, the rules and
regulations of the JV Company and relevant PRC laws and regulations.
5.4 ANNUAL REVIEW
The annual adjustment of salaries and other related matters of the JV
Company's employees shall be decided by the Board and executed by the Chief
Executive Officer.
5.5 TRADE UNION
11.5.1 The employees of the JV Company shall have the right to establish a trade
union and to participate in the activities of the trade union in accordance
with the Trade Union Law of the People's Republic of China. The trade union
of the JV Company shall represent the interests of the JV Company's
employees.
11.5.2 The trade union shall operate in accordance with the laws of the PRC and
support the operation of the JV Company. The trade union activities shall
be held during hours other than the working time of the JV Company;
otherwise, approvals of the Chief Executive Officer shall be obtained
before conducting such activities.
12. FINANCIAL AFFAIRS AND ACCOUNTING
5.1 ACCOUNTING SYSTEM
12.1.1 The JV Company shall adopt the internationally accepted accrual basis and
debit and credit accounting system in the preparation of its accounts.
12.1.2 The JV Company shall establish accounting systems and procedures in
accordance with the applicable PRC accounting principles. The JV Company
shall also ensure that it prepares and produces accounts in accordance with
the generally accepted accounting principles as applied by Party B in its
own accounts (including but not limited to the US GAAP) so as to satisfy
Party B's reporting and management requirements.
12.1.3 The JV Company shall adopt Renminbi as its standard book-keeping base
currency, but may also use U.S. dollar or other foreign currencies as
supplementary book-keeping currencies.
12.1.4 Routine accounting records, vouchers, books and statements of the JV
Company shall be made and kept in Chinese. At Party B's request, English
versions shall be provided.
5.2 ACCOUNTING YEAR
The accounting year of the JV Company shall begin on January 1 of each
calendar year and end on December 31 of the same year. The first accounting
period of the JV Company shall
-19-
commence on the issuance date of the Business Licence and end on December
31 of the same calendar year.
5.3 ACCOUNTING REPORTS
The Chief Executive Officer shall procure the preparation of an annual
balance sheet, an annual profit and loss account and an annual statement of
cash flow of the JV Company during the first three (3) months of each
accounting year, for the immediately preceding accounting year. The Chief
Executive Officer shall submit the balance sheet and the annual profit and
loss account to the Board for approval after the same have been examined
and audited by the auditors appointed by the Board.
5.4 AUDITING
12.4.1 The Board shall appoint a joint venture accounting firm registered in
China (whose foreign party is an internationally reputable independent
accounting firm) as the independent auditors of the JV Company. Such firm
will perform the annual examination and audit of the financial statements
of the JV Company, produce the relevant certificates and reports and assist
in the production and counter-signing of the annual accounting statements
and other documents, certificates or statements required by the PRC laws to
be examined and certified by an accountant registered in China. The cost of
employing the auditors shall be borne by the JV Company.
12.4.2 Each Party shall have the right to inspect the books of accounts and
other financial records of the JV Company at any time during normal
business hours and to take such copies thereof as it may require. Any such
inspection shall be carried out at the cost of the Party requiring the same
and without unnecessary disturbance to the business of the JV Company.
12.4.3 Each Party shall have the right to appoint accountants registered inside
or outside China to undertake financial audit or examination of the JV
Company's financial statements at any time, and the other Party and the JV
Company shall co-operate with such accountants. All expenses of such
financial audit or examination shall be borne by the appointing Party.
5.5 BANK ACCOUNTS AND FOREIGN EXCHANGE
The JV Company shall open Renminbi bank accounts and foreign exchange
accounts in currencies used by the JV Company. The JV Company's foreign
exchange transactions shall be handled in accordance with the regulations
of the PRC relating to foreign exchange control.
5.6 BALANCING FOREIGN EXCHANGE
The Parties agree that the JV Company shall balance its foreign exchange
income and expenditure by itself, using means permissible under the PRC
laws.
5.7 PROFIT DISTRIBUTION
12.7.1 The JV Company shall, after accumulated losses of previous years have
been fully made up and after payment of taxes in accordance with the
relevant laws and regulations of the PRC,
-20-
allocate a percentage of its annual after tax profits for contribution
towards the reserve fund, enterprise development fund and employee bonus
and welfare fund for staff and workers.
12.7.2 In any particular accounting year, the percentages of the JV Company's
annual after tax profits to be contributed to the above mentioned funds
shall be decided by the Board.
12.7.3 Unless otherwise determined by the Board, after paying taxes in
accordance with the laws and regulations and making contributions to the
above mentioned funds, the remaining profits of the JV Company shall be
distributed in proportion to the Parties' respective actual contributions
to the registered capital of the JV Company.
The risks and losses of each Party associated with the JV Company shall be
limited to the Contribution Percentage of each Party in the registered
capital of the JV Company.
12.7.4 The JV Company shall not distribute profits unless the accumulated losses
of previous accounting year(s) have been fully made up. Remaining
undistributed profits from previous years can be distributed together with
those of the current year.
12.7.5 All payments under this Section shall, at the request of the receiving
Party, be remitted electronically or by telegraphic transfer to a bank
account designated in advance by the receiving Party.
13. INSURANCE
5.1 The JV Company shall purchase all necessary insurance services at its own
cost and expense during the term of the JV Company.
5.2 The types, amounts and currencies of insurance coverage shall be determined
by the Chief Executive Officer of the JV Company.
5.3 All items of insurance of the JV Company shall be taken out with an
insurance company registered in China or, to the extent permitted under the
PRC law, overseas.
14. CONFIDENTIALITY
5.1 During the term of this Contract and for a period of five (5) years from
the date of termination or expiration of this Contract for any reason
whatsoever, the Receiving Party of any Confidential Information shall:
(a) keep the Confidential Information confidential;
(b) not disclose the Confidential Information to any person without the
prior written consent of the Disclosing Party; and
(c) not use the Confidential Information for any purpose other than for
the performance of its obligations under this Contract.
5.2 The obligations contained in Section 5.1 shall not apply to any
Confidential Information which:
-21-
(a) at the date of this Contract, is in, or at any time after the date of
this Contract, comes into, the public domain other than through breach
of this Contract by the Receiving Party;
(b) can be shown by the Receiving Party to the reasonable satisfaction of
the Disclosing Party to have been known by the Receiving Party before
disclosure by the Disclosing Party to the Receiving Party; or
(c) after the date of this Contract, comes lawfully into the possession of
the Receiving Party from a third party.
5.3 For the purposes of this Section, "CONFIDENTIAL INFORMATION" means any
information of a confidential nature disclosed (whether in writing,
verbally or by any other means and whether directly or indirectly) by one
Party (the "DISCLOSING PARTY") to the other Party (the "RECEIVING PARTY")
whether before or after the date of this Contract, including but not
limited to any information relating to the Disclosing Party's operations,
plans or intentions, know-how (including management know-how), trade
secrets, market opportunities and business affairs.
5.4 The provisions of this Section shall survive the termination of this
Contract and the dissolution or liquidation of the JV Company for a period
of five (5) years.
5.5 The obligations contained in this Section shall not apply to:
(a) disclosures made in accordance with relevant legal procedures,
subpoenas, or requirements of laws and regulations or rules of a
Qualified Stock Exchange;
(b) for the purposes of this Contract, within the reasonable scope of
disclosure, the Receiving Party's disclosures of information to its
employees, directors, consultants, lawyers, auditors, accountants or
other staffs appointed by the JV Company in writing; and
(c) other disclosures permitted in accordance with this Section.
15. JOINT VENTURE TERM
5.1 The Joint Venture Term shall commence on the issuance date of the Business
Licence and expire on the date fifty (50) years after the issuance of the
Business Licence unless extended pursuant to the provisions of Section
15.2.
5.2 Notwithstanding the provisions of Section 15.1, either Party to this
Contract may propose an extension of the Joint Venture Term no later than
twelve (12) months before expiration of the Joint Venture Term. If such
proposal is accepted by the other Party and approved by the Board, then an
application for approval to extend the Joint Venture Term shall be
submitted to the Approval Authority one hundred and eighty (180) days prior
to the expiration date of the Joint Venture Term. Upon such approval being
granted, the JV Company shall proceed with registration formalities to
extend the Joint Venture Term.
5.3 If the Joint Venture Term is not extended pursuant to this Section, the
Parties shall procure that
-22-
the Board unanimously agree to dissolve the JV Company.
16. TERMINATION AND DISSOLUTION
5.1 TERMINATION
Subject to other provisions of this Section, this Contract shall be
terminated upon the expiration of the Joint Venture Term, unless extended
pursuant to Section 15.2, or terminated in advance according to a written
agreement between the Parties or Section 16.2.
5.2 EARLY TERMINATION
Either Party shall have the right to give written notice to the other Party
of its desire to terminate this Contract prior to the expiration of the
Joint Venture Term under the following circumstances:
(a) if the JV Company or the other Party becomes bankrupt, or is the
subject of proceedings for liquidation or dissolution, or ceases to
carry on business or becomes unable to pay its debts as they come due;
(b) if the conditions or consequences of Force Majeure as defined in
Section 17 prevail for a period in excess of six (6) consecutive
complete calendar months and the Parties are unable to find an
equitable solution pursuant to Section 17;
(c) if the Business Licence or any extension or substitution thereof is
terminated, cancelled or revoked; or
(d) for any other reason provided in this Contract.
5.3 NOTIFICATION PROCEDURE
Within one (1) month after a Party gives the notice pursuant to Section
16.2, the Parties shall commence negotiations and endeavor to resolve the
matter leading to such notice. In the event that the matter is not resolved
to the satisfaction of the Parties within one (1) month after commencement
of negotiations or either of the Parties refuses to commence negotiations
within the period stated above, the notifying Party may give a written
notice (the "DISSOLUTION NOTICE") to the other Party of its desire to
dissolve the JV Company.
5.4 LIQUIDATION PROCEDURES
16.4.1 The Parties shall procure that the Board unanimously agree to dissolve
the JV Company and submit a dissolution application for approval by the
Approval Authority if:
(a) a Dissolution Notice is issued and no resolution is agreed upon by the
Parties within thirty (30) days after the issuance of the Dissolution
Notice; or
(b) the Joint Venture Term expires and no extension of the term is agreed
upon by the Parties.
-23-
16.4.2 The Board shall appoint a committee (the "LIQUIDATION COMMITTEE") which
shall have the power to represent the JV Company in all legal matters. The
Liquidation Committee shall value and liquidate the JV Company's assets in
accordance with applicable published PRC laws and regulations and the
principles set forth therein.
16.4.3 Each Party may appoint directors of the JV Company or professional
advisers, such as accountants and lawyers qualified either in China or
overseas, to be members of the Liquidation Committee. The number of members
of the Liquidation Committee shall be the same as the Board members and the
respective right to appoint members of the Liquidation Committee by each
Party shall correspond to the respective right of such Party to nominate
directors as set forth in Section 8.1.1. One of the members of the
Liquidation Committee appointed by Party B shall be its chairman. The Board
shall report the formation of the Liquidation Committee to the Approval
Authority. The Liquidation Committee may appoint professional advisers to
assist in the liquidation. The Liquidation Committee shall make decisions
based on unanimous consent.
16.4.4 The Liquidation Committee shall conduct a thorough examination of the JV
Company's assets and liabilities, on the basis of which it shall develop a
liquidation plan which, if approved by the Board, shall be executed under
the Liquidation Committee's supervision.
16.4.5 In developing and executing the liquidation plan, the Liquidation
Committee shall use every effort to obtain the highest possible price for
the JV Company's assets. Considerations shall be given to sale of the JV
Company's assets by public auction open to domestic and foreign bidders
with a view towards sales at international market prices.
16.4.6 The liquidation expenses, including remuneration to members of the
Liquidation Committee, shall be paid out of the JV Company's assets in
priority to the claims of other creditors.
16.4.7 After the liquidation of the JV Company's assets and the settlement of
all its outstanding debts, the balance of its assets shall be paid over to
the Parties in proportion to their respective contributions to the
registered capital of the JV Company.
16.4.8 Following the completion of all liquidation procedures, the Liquidation
Committee shall submit a final report approved by the Board to the Approval
Authority for approval, submit the Business Licence to the Registration
Authority and complete all other formalities for nullifying the JV
Company's registration, whereupon this Contract shall be terminated.
5.5 FOREIGN EXCHANGE
Any and all amounts payable to Party B by the Liquidation Committee
pursuant to Section 16.4.7 shall be paid promptly to Party B in foreign
exchange which shall be freely remitted out of China. Any expenses related
to the conversion of Renminbi to foreign exchange shall be borne by Party
B.
5.6 SPECIAL LIQUIDATION
If the Parties are unable to carry out the above ordinary liquidation
procedures, the JV Company
-24-
shall undertake the special liquidation procedures in accordance with the
Procedures for Liquidation of Foreign-Investment Enterprises and other
relevant laws and regulations.
17. FORCE MAJEURE
5.1 "FORCE MAJEURE" means all events that are beyond the control of the Parties
to this Contract, and which are unforeseen, or if foreseen, unavoidable,
and which prevent either Party from performing all or a material part of
its obligations. Such events shall include but are not limited to
explosions, shipwrecks, acts of nature or fires, floods, sabotage,
accidents and any other similar contingency.
5.2 If an event of Force Majeure occurs, to the extent that any contractual
obligation of either of the Parties cannot be performed as a result of such
an event, such contractual obligation shall be suspended while the Force
Majeure subsists and the due date for performance thereof shall be
automatically extended, without penalty, for a period equal to such
suspension.
5.3 The Party encountering Force Majeure shall promptly inform the other Party
in writing and shall furnish appropriate proof of the occurrence and
duration of such Force Majeure. The Party encountering Force Majeure shall
also use all reasonable endeavors to terminate the Force Majeure.
5.4 In the event of Force Majeure, the Parties shall immediately consult with
each other to find an equitable solution and shall use all reasonable
endeavors to minimize the consequences of such Force Majeure.
18. DISPUTES RESOLUTION
5.1 Any dispute or disagreement arising out of or in connection with this
Contract, including any issue regarding the existence, interpretation,
validity, termination or performance of this Contract, shall be submitted
to and settled by the Hong Kong International Arbitration Centre (the
"CENTRE"), applying the UNCITRAL Arbitration Rules then effective. Such
Arbitration Rules (including any amendment thereto) shall be deemed as a
part of this Contract. The arbitration venue shall be Hong Kong.
5.2 Any award made by the arbitral tribunal of the Centre shall be final and
binding on the Parties. Both parties shall execute the award. The refusal
of one Party to execute the award authorizes the other Party to apply for
enforcement to the courts that have jurisdiction over the issue in
accordance with the provisions of applicable laws.
5.3 No arbitration of any dispute or disagreement shall commence unless the
Parties have attempted genuinely to settle the same amicably within a
period of ninety (90) days after the issuance of a written arbitration
notice by one Party to the other, which notice shall describe generally the
nature of the dispute.
5.4 The costs of arbitration shall be borne by the losing Party, unless
otherwise determined by the arbitration award.
-25-
5.5 When any dispute occurs and when any dispute is under arbitration, except
for the matters under dispute, the Parties shall continue to fulfil their
respective obligations and shall be entitled to exercise their rights under
this Contract.
19. GOVERNING LAW
The execution, validity, interpretation and performance of this Contract
and the resolution of any of the dispute thereunder shall be governed by
the PRC law but, in the event that there is no applicable PRC law governing
a particular matter relating to this Contract, generally accepted standards
and principles of international law and general international commercial
practices shall be applied.
20. MISCELLANEOUS PROVISIONS
5.1 The failure to exercise or delay in exercising a right or remedy under this
Contract shall not constitute a waiver of the right or remedy or a waiver
of any other rights or remedies and no single or partial exercise of any
right or remedy under this Contract shall prevent any further exercise of
such a right or remedy or the exercise of any other right or remedy.
5.2 This Contract shall become effective when it is approved by the Approval
Authority.
5.3 This Contract is written and executed in Chinese.
5.4 The invalidity of any provision of this Contract shall not affect the
validity of any other provision of this Contract.
5.5 Any notice or other communication provided in this Contract shall be
delivered personally or sent by fax as follows:
(a) if to Party A, to:
Address: ▇▇. ▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇
Fax number: 0312--3230382
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
(b) if to Party B, to:
Address: ▇▇.▇▇▇▇, ▇▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇
Fax number: 0312--3151881
Attention: Liu Conghui
or to any other address, fax number or person as either of the Parties may
specify by notice in writing to the other.
5.6 In the absence of evidence of earlier receipt, any notice or other
communication shall be
-26-
deemed to have been duly given:
(a) if delivered personally, when delivered to the address referred to in
Section 20.5;
(b) if sent by fax, when a confirmation report of transmission is recorded
by the sender's facsimile machine;
(c) if sent by air mail, ten (10) business days after posting it.
5.7 This Contract constitutes the entire agreement between the Parties relating
to the subject matters of this Contract and supersedes all previous
agreements.
5.8 If there is any conflict or inconsistency between the provisions of this
Contract and the Articles of Association, this Contract shall prevail.
5.9 No variation to this Contract shall be valid unless it is in writing and
signed by both Parties or their representatives and approved by the
Approval Authority.
5.10 Except as expressly provided in this Contract, the rights and remedies
contained in this Contract are cumulative and not exclusive of any rights
or remedies provided by law.
5.11 Nothing in this Contract shall be construed as creating a partnership
between the Parties or constituting either Party as the agent of the other
for any purpose whatsoever and neither of the Parties shall have the
authority or power to bind the other or to contract in the name of or
create a liability against the other in any way or for any purpose.
5.12 This Contract shall be executed in four (4) originals.
-27-
IN WITNESS WHEREOF each of the parties hereto has caused this Contract to be
executed by its duly authorized representative on the date first set forth
above.
BAODING TIANWEI BAOBIAN ELECRTIC CO., LTD
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇
Title: General Manager
Nationality: Chinese
YINGLI GREEN ENERGY HOLDING COMPANY LIMITED
/s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
Title: Chairman and Chief Executive Officer
Nationality: Chinese
-28-
SUPPLEMENTAL CONTRACT TO THE JOINT VENTURE CONTRACT OF
BAODING TIANWEI YINGLI NEW ENERGY RESOURCES CO., LTD.
This Contract is signed on October 10, 2006 in Baoding, Hebei, People's Republic
of China
BY AND BETWEEN
(1) BAODING TIANWEI BAOBIAN ELECTRIC CO., LTD. ("PARTY A"), a company limited
by shares duly established and validly existing under the laws of the
People's Republic of China (the "PRC") and having its legal address at ▇▇.
▇▇, ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇, and its mailing address at ▇▇. ▇▇▇▇,
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇; Tel: ▇▇▇▇-▇▇▇▇▇▇▇; Fax: ▇▇▇▇-▇▇▇▇▇▇▇;
and
(2) YINGLI GREEN ENERGY HOLDING COMPANY LIMITED ("PARTY B"), a legal person
duly established and validly existing under the laws of the Cayman Islands
and having its legal address at Century Yard, Cricket Square, ▇▇▇▇▇▇▇▇
Drive, PO Box 2681 GT, ▇▇▇▇▇▇ Town Cayman, British West Indies, and its
mailing address at No. 3055, Middle Fuxing Road, National High-tech Zone,
Baoding, Hebei, PRC.
(Party A and Party B are hereinafter collectively referred to as the "PARTIES"
and individually, a "PARTY".)
WHEREAS, as required by its expansion of business capacity, Baoding Tianwei
Yingli New Energy Resources Co., Ltd. proposes to increase its registered
capital. In accordance with the Law of the People's Republic of China on
Sino-Foreign Equity Joint Venture Enterprises and other relevant PRC laws and
regulations, adhering to the principles of equality and mutual benefit and
through friendly consultations, the Parties hereby amend the Joint Venture
Contract (the "JV CONTRACT") signed by the Parties on August 25, 2006 to reflect
the change of the registered capital.
Unless otherwise defined or specified herein, the terms used in this Contract
shall have the same meanings as ascribed to them under the JV Contract.
I. Section 5 of the JV Contract is amended as follows:
The original Section 5 was:
5.1 Total Investment
The amount of the total investment of the JV Company is three hundred
million Renminbi (RMB300,000,000).
5.2 REGISTERED CAPITAL
The amount of the registered capital of the JV Company is one hundred
million Renminbi (RMB100,000,000).
5.3 CONTRIBUTIONS TO REGISTERED CAPITAL
The registered capital of the JV Company has been fully paid up. Of the
total amount of the registered capital, the subscribed amount and
percentage (the "CONTRIBUTION PERCENTAGE") of capital contribution of each
Party are as follows:
(c) Party A subscribed for forty-nine million Renminbi (RMB49,000,000),
corresponding to 49% of the equity interest in the JV Company.
(d) Party B subscribed for fifty-one million Renminbi (RMB51,000,000) in
equivalent U.S. Dollars, corresponding to 51% of the equity interest
in the JV Company.
As agreed upon by both Parties, if Party B fails to complete its initial
pubic offering and list its shares on a Qualified Stock Exchange, the
Parties shall re-negotiate the percentages of equity interest they hold in
the JV Company.
NOW IT IS AMENDED AS FOLLOWS:
5.4 TOTAL INVESTMENT
The amount of the total investment of the JV Company is six hundred million
Renminbi (RMB600,000,000).
5.5 REGISTERED CAPITAL
The amount of the registered capital of the JV Company is two hundred and
thirty million nine hundred and forty thousand Renminbi (RMB230,940,000).
5.6 CONTRIBUTIONS TO REGISTERED CAPITAL
The registered capital of the JV Company has been fully paid up. Of the
total amount of the registered capital, the subscribed amount and
percentage (the "CONTRIBUTION PERCENTAGE") of capital contribution of each
Party are as follows:
(e) Party A subscribed for forty-nine million Renminbi (RMB49,000,000),
corresponding to 46.02% of the equity interest in the JV Company.
(f) Party B subscribed for one hundred and eighty-one million nine hundred
and forty thousand Renminbi (RMB181,940,000) in equivalent U.S.
Dollars, corresponding to 53.98% of the equity interest in the JV
Company.
As agreed upon by both Parties, if Party B fails to complete its initial
pubic offering and list its shares on a Qualified Stock Exchange, the
Parties shall re-negotiate the percentages of equity interest they hold in
the JV Company.
II. The following provision is added to Section 6 of the JV Contract:
6.1.4 Notwithstanding the above provisions, the Parties agree that neither Party
shall transfer all or any part of the equity interest held by such Party in
the registered capital of the JV Company to any third party that is engaged
in a competing business with the JV Company.
III. This Contract shall become effective after it is signed by authorized
representatives of both
-2-
Parties and approved by the Approval Authority.
IV. This Contract shall be executed in four (4) originals.
[Space below is intentionally left blank]
-3-
IN WITNESS WHEREOF each of the parties hereto has caused this Contract to be
executed by its duly authorized representative on the date first set forth
above.
BAODING TIANWEI BAOBIAN ELECRTIC CO., LTD
/s/ ▇▇▇▇▇ ▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Chairman
Nationality: Chinese
YINGLI GREEN ENERGY HOLDING COMPANY LIMITED
/s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
Title: Chairman and Chief Executive Officer
Nationality: Chinese
-4-
SUPPLEMENTAL CONTRACT NO.2 TO THE JOINT VENTURE CONTRACT OF
BAODING TIANWEI YINGLI NEW ENERGY RESOURCES CO., LTD.
This Contract is signed on November 13, 2006 in Baoding, Hebei, People's
Republic of China
BY AND BETWEEN
(1) BAODING TIANWEI BAOBIAN ELECTRIC CO., LTD. ("PARTY A"), a company limited
by shares duly established and validly existing under the laws of the
People's Republic of China (the "PRC") and having its legal address at ▇▇.
▇▇, ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇, and its mailing address at ▇▇. ▇▇▇▇,
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇; Tel: ▇▇▇▇-▇▇▇▇▇▇▇; Fax: ▇▇▇▇-▇▇▇▇▇▇▇;
and
(2) YINGLI GREEN ENERGY HOLDING COMPANY LIMITED ("PARTY B"), a legal person
duly established and validly existing under the laws of the Cayman Islands
and having its legal address at Century Yard, Cricket Square, ▇▇▇▇▇▇▇▇
Drive, PO Box 2681 GT, ▇▇▇▇▇▇ Town Cayman, British West Indies, and its
mailing address at No. 3055, Middle Fuxing Road, National High-tech Zone,
Baoding, Hebei, PRC.
(Party A and Party B are hereinafter collectively referred to as the "PARTIES"
and individually, a "PARTY".)
WHEREAS, as required by its expansion of business capacity, Baoding Tianwei
Yingli New Energy Resources Co., Ltd. proposes to increase its registered
capital. In accordance with the Law of the People's Republic of China on
Sino-Foreign Equity Joint Venture Enterprises and other relevant PRC laws and
regulations, adhering to the principles of equality and mutual benefit and
through friendly consultations, the Parties hereby amend the Joint Venture
Contract and the Supplemental Contract to the Joint Venture Contract
(collectively, the "JV CONTRACT") signed by the Parties on August 25, 2006 and
October 10, 2006, respectively, to reflect the change of the registered capital.
WHEREAS, through further consultation, the Parties agree to terminate the
Supplemental Contract No. 2 to the Joint Venture Contract signed by the Parties
on October 25, 2006 and sign this Supplemental Contract No. 2 to the Joint
Venture Contract.
Unless otherwise defined or specified herein, the terms used in this Contract
shall have the same meanings as ascribed to them under the JV Contract.
I. Section 5 of the JV Contract is hereby amended as follows:
5.1 Total Investment
The amount of the total investment of the JV Company is one billion three
hundred and fifty million Renminbi (RMB1,350,000,000).
5.2 REGISTERED CAPITAL
The amount of the registered capital of the JV Company is seven hundred and
fifteen million seven hundred and eighty thousand Renminbi
(RMB715,780,000).
5.3 CONTRIBUTIONS TO REGISTERED CAPITAL
Of the total amount of the registered capital, the subscribed amount and
percentage (the "CONTRIBUTION PERCENTAGE") of capital contribution of each
Party are as follows:
(g) Party A subscribes for forty-nine million Renminbi (RMB49,000,000),
corresponding to 37.87% of the equity interest in the JV Company.
(h) Party B subscribes for six hundred and sixty-six million seven hundred
and eighty thousand Renminbi (RMB666,780,000) in equivalent U.S.
Dollars, corresponding to 62.13% of the equity interest in the JV
Company.
The Parties have contributed two hundred and thirty million nine hundred
and forty thousand Renminbi (RMB230,940,000) to the registered capital and
the remaining registered capital of four hundred and eighty-four million
eight hundred and forty thousand Renminbi (RMB484,840,000) shall be
contributed by Party B. Party B shall make full contribution to the above
registered capital that it is required to actually contribute to within
thirty (30) days after the approval of this Supplemental Contract by the
Approval Authority.
As agreed upon by both Parties, if Party B fails to complete its initial
pubic offering and list its shares on a Qualified Stock Exchange, the
Parties shall re-negotiate the percentages of equity interest they hold in
the JV Company.
II. This Contract shall replace the Supplemental Contract No.2 signed by the
Parties on October 25, 2006.
V. This Contract shall become effective after it is signed by authorized
representatives of both Parties and approved by the Approval Authority.
VI. This Contract shall be executed in four (4) originals.
[Space below is intentionally left blank]
-2-
IN WITNESS WHEREOF each of the parties hereto has caused this Contract to be
executed by its duly authorised representative on November 13, 2006.
BAODING TIANWEI BAOBIAN ELECRTIC CO., LTD
/s/ ▇▇▇▇▇ ▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Chairman
Nationality: Chinese
YINGLI GREEN ENERGY HOLDING COMPANY LIMITED
/s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
Title: Chairman and Chief Executive Officer
Nationality: Chinese
-3-
SUPPLEMENTAL CONTRACT NO. 3 TO THE JOINT VENTURE CONTRACT OF
BAODING TIANWEI YINGLI NEW ENERGY RESOURCES CO., LTD.
This Contract is signed on December 18, 2006 in Baoding, Hebei, People's
Republic of China
BY AND BETWEEN
(1) BAODING TIANWEI BAOBIAN ELECTRIC CO., LTD. ("PARTY A"), a company limited
by shares duly established and validly existing under the laws of the
People's Republic of China (the "PRC"), with its correspondence address at
▇▇. ▇▇, ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇, and its mailing address at ▇▇.
▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇; Tel: ▇▇▇▇-▇▇▇▇▇▇▇; Fax:
▇▇▇▇-▇▇▇▇▇▇▇.
(2) YINGLI GREEN ENERGY HOLDING COMPANY LIMITED ("PARTY B"), a legal person
duly established and validly existing under the laws of the Cayman Islands
and having its legal address at Century Yard, Cricket Square, ▇▇▇▇▇▇▇▇
Drive, PO Box 2681 GT, ▇▇▇▇▇▇ Town Cayman, British West Indies, with its
correspondence address at No. 3055, Middle Fuxing Road, National High-tech
Zone, Baoding, Hebei, PRC.
(Party A and Party B are hereinafter collectively referred to as the "PARTIES"
and individually, a "PARTY".)
WHEREAS, as required by the expansion of its business capacity, Baoding Tianwei
Yingli New Energy Resources Co., Ltd. (the "JV COMPANY") proposes to increase
its registered capital;
WHEREAS, Party B will enter into a Term Loan Agreement ("LOAN AGREEMENT") with
the JV Company pursuant to which Party B will extend a loan to the JV Company at
the amount of USD seventy eight million four hundred thousand (US$78,400,000)
and with a term of eighteen months;
In accordance with the Law of the People's Republic of China on Sino-Foreign
Equity Joint Venture Enterprises and other relevant PRC laws and regulations,
adhering to the principles of equality and mutual benefit and through friendly
consultations, the Parties hereby amend the Joint Venture Contract, the
Supplemental Contract to the Joint Venture Contract, and the Supplemental
Contract No.2 to the Joint Venture Contract (collectively, the "JV CONTRACT")
signed by the Parties on August 25, 2006, October 10, 2006, and November 13,
2006, respectively, to reflect the change of the registered capital.
Unless otherwise defined or specified herein, the terms used in this Contract
shall have the same meanings as ascribed to them under the JV Contract.
I. Section 5 of the JV Contract is hereby amended as follows:
5.1 TOTAL INVESTMENT
The amount of the total investment of the JV Company is four billion
seventy-five million eight hundred thousand Renminbi (RMB4,075,800,000).
5.2 REGISTERED CAPITAL
The amount of the registered capital of the JV Company is one billion six
hundred and twenty four million three hundred and eighty thousand Renminbi
(RMB1,624,380,000).
5.3 CONTRIBUTIONS TO REGISTERED CAPITAL
Of the total amount of the registered capital, the subscribed amount and
percentage (the "CONTRIBUTION PERCENTAGE") of capital contribution of each
Party are as follows:
(i) Party A subscribes for forty-nine million Renminbi (RMB49,000,000),
corresponding to 29.89% of the equity interest in the JV Company.
(j) Party B subscribes for one billion five hundred and seventy-five
million three hundred and eighty thousand Renminbi (RMB1,575,380,000)
in equivalent U.S. Dollars, corresponding to 70.11% of the equity
interest in the JV Company.
The Parties have contributed seven hundred and fifteen million seven
hundred and eighty thousand Renminbi (RMB715,780,000) to the registered
capital and the remaining registered capital of nine hundred and eight
million six hundred thousand Renminbi (RMB908,600,000) shall be contributed
by Party B.
Both Parties agree that Party B shall contribute to the JV Company nine
hundred and eight million six hundred thousand Renminbi in equivalent US
dollars (the "CAPITAL CONTRIBUTION") within thirty (30) days after the
approval of this Contract by the Approval Authority. Both Parties further
agree that, after the approval is obtained from the foreign exchange
administrative authority, all of the loan principal and its accrued
interests (if any) provided by Party B for the JV Company under the Loan
Agreement shall be converted in equivalent amount into the registered
capital of the
-2-
JV Company contributed by Party B, and shall be deemed as part of Party B's
Capital Contribution.
As agreed upon by both Parties, if Party B fails to complete its initial
pubic offering and list its shares on a Qualified Stock Exchange, the
Parties shall re-negotiate the percentages of equity interest they hold in
the JV Company.
II. Section 8.1.1 of the JV Contract is hereby amended as follows:
8.1.1 The Board of Director shall consist of nine (9) directors, of whom three
(3) shall be appointed by Party A and six (6) shall be appointed by Party
B, the Parties shall notify the Board promptly if any of their appointed
directors are being dismissed or changed.
III. All other articles and sections of the JV Contract shall remain unchanged.
IV. This Contract shall be executed in four (4) originals, and shall be after
they are signed by authorized representatives of both Parties and approved
by the Approval Authority.
[SPACE BELOW IS INTENTIONALLY LEFT BLANK]
-3-
IN WITNESS WHEREOF each of the parties hereto has caused this Contract to be
executed by its duly authorised representative on December 18, 2006.
BAODING TIANWEI BAOBIAN ELECRTIC CO., LTD
/s/ ▇▇▇▇▇ ▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Chairman
Nationality: Chinese
YINGLI GREEN ENERGY HOLDING COMPANY LIMITED
/s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
Title: Chairman and Chief Executive Officer
Nationality: Chinese
-4-
