EXHIBIT 10.11A
Sino-Foreign Joint Venture Contract
Part I General Rules and Definitions
The Nanjing Medical Group Company Limited (hereafter abbreviated to Party A) and
Allwin Newtech Ltd. of the British Virgin Islands (hereafter abbreviated to
Party B), in accordance with "the Law of the People's Republic of China
Governing Sino-Foreign Joint Ventures in Operations of Enterprises" and other
relevant regulations of China and the principle of equality and mutual benefits,
have agreed through cordial negotiations to jointly invest, set up and operate a
Sino-Foreign joint-venture enterprise in Nanjing City, Jiangsu Province, the
People's Republic of China Therefore the parties agree as follows.
The phrases and terminology below shall be interpreted in accordance with the
definitions as follows:
"Approving Authority": The Nanjing City Committee for External Economic Trade;
"Commencing Operating Date": refers to the date that the Board of Directors has
decided for the Joint-Venture Company to commence operation;
"The Date of Contract": refers to the date of signing the Contract by all
Parties;
"Employees": refers to all employees other than the high-ranking management
personnel of the Company;
"The Incorporation Date of the Joint-Venture Company": refers to the date of
issuance of the business licence by the Nanjing City Industrial and Commercial
Administration Board after the Joint-Venture Parties have submitted application
and made registration in accordance with Clause 11 of the "Enforced Detailed
Rules Pertaining to the Law of the People's Republic of China Governing
Sino-Foreign Joint Ventures in Operations of Enterprises" and the Administration
Rules on Registration of Sino-Foreign Joint Ventures. On the day of the
Joint-Venture company is incorporated, it shall be organised in accordance with
Clause 2 of the Contract.
"High-ranking Management Personnel": refers to the Joint-Venture Company's
Chairman, Vice Chairman and other high-ranking management personnel recognised
by the Board of Directors;
"Government": the overall reference to the central and provincial district
governments that include all departments and authorised organisations of every
level of the governments;
"The Laws of China": refers to the collective reference to the relevant laws,
regulations, ordinances, enforced detailed rules and other supplementary
regulations published by the "Government" of the People's Republic of China.
Part II Joint-Venture Parties
1. The Parties to the Contract are:
Party A: The Nanjing Medical Group Company Limited
Place of Registration: 000 Xxxxxxxxx Xxxx Xxxx, Xxxxxx Xxxxxxxx, Xxxxxxx City
Registered Address: 000 Xxxxxxxxx Xxxx Xxxx, Xxxxxx Xxxxxxxx, Xxxxxxx Xxxx
Legal Representative: Name: Xx, Xxxxxxxxxx, Position: General Manager,
Nationality: Chinese
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Party B: Allwin Newtech Ltd.
Place of Incorporation: British Virgin Islands
Registered Address: Arawak Xxxxxxxx, P. O. Box 000, Xxxx Xxxx
Xxxxxxx, Xxxxxxx Xxxxxx Islands
Legal Representative: Name: Xxx, Xxxxxxx, Position: President
Nationality: Canadian
Part III Incorporation of the Joint-Venture Company
2. In accordance with "the Law of the People's Republic of China Governing
Sino-Foreign Joint Ventures in Operations of Enterprises" and other relevant
regulations, Party A and Party B agree to set up in China the Nanjing Huaxin
Biotech Co. Limited (hereafter abbreviated as Joint-Venture Company).
3. The name and registered address of the Joint-Venture Company:
Name in Chinese: Nanjing Huaxin Biotech Co. Limited
Registered Address: 000 Xxxxxxxxx Xxxx Xxxx, Xxxxxx Xxxxxxxx, Xxxxxxx Xxxx
Postal Code: 210005
4. The Joint-Venture Company shall abide by the "Laws of China" in respect of
all its activities and shall be protected by the "Laws of China".
5. The Joint-Venture Company is a limited company in terms of structure. Under
the "Laws of China" the Joint-Venture Company shall be a Sino-Foreign
joint-venture enterprise with the entity as an independent legal person. In
accordance with the proportion of their capital contributions in the register of
capital, the Joint-Venture Parties shall share their rights and profits and
undertake responsibilities, risks and losses. In accordance with the "Law of the
People's Republic of China Governing Sino-Foreign Joint Ventures in Operations
of Enterprises" and the published detailed rules under this law, all Parties
shall draw up the Contract and the Articles of Association for submission to the
"Approving Authority" for their approval and these shall become binding on all
Parties on the approval date.
Part IV The Objective, Scope and Capacity of the Production and Operation
6. The purpose of the co-operation between Party A and Party B are to utilize
biological engineering technology, to research and to manufacture new medicines
as to cure patients and to enhance health standards, level, and to have social
and economic effects, based on the principle of mutual benefits.
This investment falls under the encouraged category of the Industrial Guide for
Foreign Investment promulgated by the State Council of China:
(13) pharmaceutical industry
(11) new medicine manufactured by using bio-engineering technology
7. The business scope of the Joint-Venture Company shall be: production,
research, development of a series of biological and chemical medicines and
drugs, and the same of the products of the Joint-Venture Company.
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Part V The Total Investment and the Registered Capital
8. The total investment in the Joint-Venture Company is 14 million US dollars
(about the equivalent of 116.2 million yuan in Renminbi)
9. The Joint-Venture Company's registered capital is 5.6 million US dollars
(about the equivalent of 46.48 yuan in Renminbi) in which
Party A shall contribute 1.4 million US dollars or 25% of the registered
capital; and Party B shall contribute 4.2 million US dollars or 75% of
the registered capital.
The exchange rate used to calculate the contribution amount of each party shall
be based on the exchange rates published by China's National Foreign Exchange on
the day such a contribution is made.
The mode and time of contribution by each Party are:
(1) Party A shall contribute its capital to the Joint-Venture Company in
accordance with twenty-five per cent (25%) of the shares held in Nanjing Huaxin
Biotech Co. Limited.
Party A shall, in accordance with its proportional share of 25% in the
registered capital, contribute the equivalent of 1.4 million US dollars
calculated in Renminbi of 116.2 million yuan and shall pay up the whole sum
before 31 August 1999.
Schedule for Payment of Registered Capital
Unit: 10,000 Renminbi/dollars
Particulars
Country Date Amount Purpose Total Amount % of Registered
-------- ------- --------- -------------- ------------- ----------------
Renminbi US$ Renminbi US$ Capital
---------- --------- --------- --------- ----------------
Foreign 99.10.31 2021.25 243.52 buying 51.25% of 2021.25 243.52 43.49%
the rights in shares
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99.12.31 453.75 54.67 buying 75% of 2737.5 329.82 58.90%
the rights in shares
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99.12.31 262.5 31.63 payment of capital
in cash
-------------------------------------------------------------------------------------------------------------------
2000.1.31 748.5 90.18 payment of capital 3486.00 420 75.00%
in cash
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China 1999.8 1162 140 payment of capital 25.00%
by rights in shares
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Note: Before 31 October 1999 both parties' paid-up capital has reached 31.83
million yuan or68.49% of the registered capital of 5.6 million US dollars
(equivalent to 46.48 million Renminbi yuan @ 1:8.3).
From six months after the business licence was pre-issued until 31 January 2000,
Party B's registered capital was paid up.
(2) Using two modes of contributing its capital to the Joint-Venture Company,
Party B shall pay cash to purchase seventy-five per cent (75%) of the rights
in shares being held by Party A in Nanjing Huaxin Biotech Co. Limited and
shall pay cash for the capital. These include the capital contribution for
the rights in shares: the equivalent of 24.75 million Renminbi yuan in US
dollars (about 2.9819 million US dollars) and the capital contribution in
cash: the equivalent of 10.11 million Renminbi yuan in US dollars (about
1.2181 million US dollars), making a total of the equivalent of 34.86
million Renminbi yuan in US dollars (about 4.20 million dollars).
(i) Before 31 October 1999 the payment for the transfer of rights in shares
shall amount to the equivalent of 20.2125 million Renminbi in US dollars
(of which 12 million Renminbi yuan being paid in cash for capital
contribution).
(ii) Before 31 December 1999 there shall be paid the equivalent of 7.1625
million Renminbi yuan, including the sum in US dollars which are
equivalent to 4.5375 million Renminbi yuan for the completion of the
purchase of 75% of the rights in shares, leaving a sum in US dollars
equivalent to 2.625 million Renminbi yuan to be paid in cash for the
contribution of capital.
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(iii) In accordance with its proportional share of 75% of the registered
capital, Party B shall contribute a capital of 4.2 million US dollars,
any shortfall to be made good with a sight draft in US dollars within
half a year of the business licence of being issued. That is to say:
before 31 January 2000 Party B shall contribute a capital in US dollars
equivalent to 7.485 million Renminbi yuan. By then Party B shall have
completed the investment in the registered capital in US dollars
equivalent to 34.86 million Renminbi yuan.
Party B shall use the amount it has actually paid for the rights in the shares
transferred as a proportion of the rights in shares of the Joint-Venture Company
to exercise its rights as an investor in the Joint-Venture Company and to enjoy
its share of income.
10. Where either Party A or Party B transfers wholly or partially its share of
capital to a party other than the either Party, consent shall be obtained from
the other Party and application submitted to the authority for approval. Where
one Party transfers all or part of its rights in the shares, the other Party
shall have the preferential purchase right. However, the following transfers do
not fall into the transfers being stipulated in the Contract and the other Party
shall have no preferential purchase right in the transfers preferential purchase
right:
(1) a transfer that arises from the requirement of a Joint-Venture Party's
shares being listed in the stock market;
(2) a transfer by a Joint-Venture Party to its subsidiary or parent company;
(3) a transfer agreed upon by all Parties.
Unless otherwise being specially stipulated, all obligations or liabilities
specified in the Contract shall not be assigned without the consent of both
Joint-Venture Parties.
Where as a result of the Joint-Venture Company borrowing from others and the
lender requires property as a collateral, either of the Joint-Venture Parties
may use all or part of its investment as such a collateral but in doing so a
unanimous consent shall be obtained from both Parties.
Part VI Responsibilities of the Joint-Venture Parties
11. The Joint-Venture Parties shall be responsible to complete the following
matters:
Both Parties' joint responsibilities
(1) Both Parties shall contribute the capital in accordance with what is
stipulated in Part V in terms of the amounts of capital, the modes of
payment and the date of payment.
(2) Both Parties shall designate the personnel concerned to take part in the
management, research and development, production, sale and operation of the
Joint-Venture Company.
Party A's responsibilities
In accordance with the Joint-Venture Company's requirements and its provision of
technological specifications, Party A shall provide the following services to
the Joint-Venture Company:
(1) To assist securing the Chinese government's approval for the Joint-Venture
Company;
(2) To assist the Joint-Venture Company in obtaining the necessary facilities
or land-use right through rental or purchase.
(3) To assist, in respect the items below under feasible circumstances, the
Joint-Venture Company to select and purchase in China property and
equipment, facilities, fuel, raw materials, etc., the expenditure to be
borne by the Joint-Venture Company.
Party B's Responsibilities
In accordance with the Joint-Venture Company's requirements and its provision of
technological specifications, Party B shall provide the following services to
the Joint-Venture Company:
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(1) On establishing the Joint-Venture Company's facilities, to assist the
Joint-Venture Company by providing technological and management support;
(2) To assist the Joint-Venture Company, whether in or outside China, to select
and purchase in China building and equipment, facilities, fuel, raw
materials, etc.;
(3) To assist the Joint-Venture Company to train the Joint-Venture Company's
personnel, such training including the application of business management
and production technology in order to achieve the objectives of the
Contract;
(4) To assist the Joint-Venture Company to obtain the necessary property and
equipment;
(5) To assist the Joint-Venture Company in taking necessary measures to keep
the Joint-Venture Company's foreign exchange in balance;
(6) In order to materialise the objectives in the Contract, to perform other
reasonable obligations that it has accepted.
If reasonable expenses are incurred in the course of carrying out the
responsibilities above, both Party A and Party B may have these reimbursed by
the Joint-Venture Company after the other Party's consent is obtained.
Part VII Sale of Products
12. Both Parties agree that the sale policy of the Joint-Venture Company's
products shall be determined by the Company's Board of Directors in the best
interests of the Joint-Venture Company. The best interests of the Joint-Venture
Company shall be its best interests as an entity and not the best interests of
one single party.
13. When the Joint-Venture Company sells its products in China and overseas, the
Chinese Drugs and Health Department and commercial departments may become the
wholesalers or agents in respect of sales in China or the Company may make
direct sales, and Party B shall provide the necessary guidance and assistance.
When its products are sold in international markets, Party A shall provide the
necessary guidance and assistance.
14. The Joint-Venture Company's products shall use the trademark of
"Ninghongxin".
Part VIII Board of Directors
15. The date when the business licence is obtained by the Joint-Venture Company
shall be the date when the Board of Directors of the Joint-Venture Company is
formed.
16. The Board of Directors shall consist of five directors of whom Party A may
appoint two members and Party B three members. The Chairman shall be appointed
by Party B and Vice Chairman by Party A. The Chairman and the directors shall
serve a term of four years and may, if further being appointed, continue in
office. Either Party shall have the right to change its appointed directors but
shall have to inform the other Party of the Joint-Venture Company.
17. The Board of Directors shall be the highest authority structure of the
Joint-Venture Company and shall decide on all important matters. The following
matters shall be only be resolved after being passed unanimously by all
attending directors at a directors' meeting:
(1) amendments to the Joint-Venture Company's Articles of Association;
(2) liquidation of the Joint-Venture Company;
(3) increases or decreases in or transfers of the Joint-Venture Company's
registered capital;
(4) mortgage of the Joint-Venture Company's assets;
(5) the Joint-Venture Company's merging with other economic bodies, division or
changes in the organisational form.
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Other matters than those mentioned above shall be passed and determined with a
simple majority at the directors' meetings.
18. The Chairman is the legal representative of the Joint-Venture Company. Where
the Chairman is unable to perform duties, another director may be temporarily
authorised as the representative.
The duties and obligations of the directors and high-ranking management
personnel shall be:
(1) To abide by the Company's Articles of Association and to faithfully carry
out duties and to protect the interests of the Company;
(2) Not to use the positions and authority in the Company to make personal
gains;
(3) Not to make use of the authority to accept bribes or other illegitimate
incomes;
(4) Not to encroach upon the Company's assets;
(5) Not to use the Company's funds or lend the Company's funds to others;
(6) Not to use the Company's assets to open deposit accounts in own name or in
other people's names;
(7) Not to use the Company's assets as a security for the debts of the
Company's Joint-Venture Parties or other people;
(8) Not to operate similar business of the Company for self or for others or
engage in activities detrimental to the Company's benefits. All incomes
arising from the business or activities above shall become the Company's.
(9) Unless permitted by the Company's Articles or agreed by the Board of
Directors, not to enter into any Contract or transact with the Company;
(10) Unless being in accordance with the laws or consented by the Board of
Directors, not to leak out the secrets of the Company;
(11) Where the directors and high-ranking management personnel violate laws,
administration regulations or the Company's Articles in the course of
carrying out the Company's duties and cause the Company to suffer losses,
to bear the responsibility for making compensations.
19. The Board of Directors shall hold meetings at least once a year. This shall
be called and held by the Chairman. Subject to a motion carried by two-fifths of
the directors, the Chairman may call an extraordinary meeting. The minutes of
meetings shall be filed and kept. In principle the meetings shall be held at the
place where the Joint-Venture Company is but may be decided by the Board of
Directors to be held elsewhere. The quorum for a director's meeting shall be
three-fifths of all the directors including two directors appointed by Party A
and one director appointed by Party B. The resolutions of the Board of Directors
shall come in the written form. The resolutions of the Board of Directors shall
have binding forces. Those directors who are unable to attend a directors'
meeting may sign proxies to appoint other directors to carry out their duties.
A directors' meeting may be called by mail. With the exception of the
special resolutions specified in Clause 17 above, after written notices of the
agendas of the meeting are served on all the directors and subject to the
collective opinions of the directors, written resolutions signed by more than
half of the directors and resolutions passed in a directors' meeting held
formally shall carry the same force. The written resolutions may contain several
documents of the same contents with each document being signed by one or more
directors. The directors may confirm the original copies of the documents
formally signed by them by using faxes or other written forms and return the
signed original copies of the documents within fourteen days of signing the
Joint-Venture Company's registered address.
Part IX Operation Management Hierarchy
20. The Joint-Venture Company shall set up an operation management hierarchy to
take charge of the Company's day-to-day production and operation work. The
operating and managing hierarchy consists of the Chairman and the Vice Chairman
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who are selected and appointed by the Board of Directors. Other high-ranking
management staff members for a four-year term shall be recommended by the
Chairman and submitted to the Board of Directors for approve.
21. The Chairman's duties shall be to implement the resolved matters at
directors' meetings and to organise and lead the Joint-Venture Company in its
daily tasks of production, operation and management. The Vice Chairman shall
assist the Chairman and be responsible to the Chairman. During the absence of
the Chairman, the Vice Chairman shall help carry out the duties.
The operating and management hierarchy may consist of several departmental
managers to be separately responsible for departmental tasks.
22. The Chairman, the Vice Chairman and other high-ranking employees who engage
in corruption or seriously fail in their duties shall be immediately replaced
after the Board of Directors hold a meeting and determine so. In accordance with
China's relevant laws, the Joint-Venture Company shall sign employment contracts
with every high-ranking employee.
Part X Purchase of Materials
23. Raw materials, fuel, assemblages, transportation equipment and office
supplies, etc. that are needed by the Joint-Venture Company shall, where
everything being equal under the circumstances, be preferably purchased in
China.
24. Where the Joint-Venture Company asks Party B to buy equipment from the
overseas markets, the prices and quality shall be agreed upon by Party A. Where
it is deemed necessary, Party A may send its own people to take part in the
process.
Part XI Labour Management
25. The Joint-Venture Company's matters on employees' recruitment, engagement,
dismissal, wages, work insurance, benefits and award/punishment shall be in
compliance with "the Labour Law of the People's Republic of China", "the
Regulations on Labour Management in Sino-Foreign Operated Enterprises in the
People's Republic of China" and " the Methods of Implementing the Regulations on
Labour Management in Sino-Foreign Operated Enterprises, studied and formulated
by the Board of Directors and determined in labour contracts to be drawn up
between the Joint-Venture Company and the Joint-Venture Company's labour union
or individual employees. After being drawn up, the labour contracts shall be
submitted to the Labour Management Department of the "Government" .
26. The directors' meetings shall discuss and determine the engagement,
salaries, social insurance, benefits, travel expenses, etc. in respect of
high-ranking management personnel being recommended by Party A and Party B.
Part XII Taxes, Finances and Audits
27. The Joint-Venture Company shall, in accordance with "the Income Tax Law on
Foreign Business Investment Enterprises and Overseas Enterprises in the People's
Republic of China",
"the Detailed Rules on the Income Tax of Foreign Business Investment Enterprises
and Overseas Enterprises in the People's Republic of China" and the relevant
laws and regulations, pay the various taxes. The Joint-Venture Company shall
have the right to enjoy preferential treatment policy laid down by the
governments country and the Nanjing City.
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28. The Joint-Venture Company shall pay individuals' income tax and income
regulatory tax in accordance with "the Income Tax Law on Individuals in the
People's Republic of China", "the Implemented Regulations Pertaining to the
Income Tax Law on Individuals in the People's Republic of China" and other
relevant rules.
29. The accounting year of the Joint-Venture Company shall commence from 1
January and end 31 December every year. All accounting evidence, bills and
invoices, financial statements and books of account shall be written in both
Chinese and English.
30. With regard to the financial audit of the Joint-Venture Company, accountants
registered in China or foreign accountants in a branch office in China shall be
engaged to check, audit and report the results to the Board of Directors and the
Chairman.
If one Party thinks there is a need to engage another country's auditor to check
the annual financial affairs, the other Party shall have to give its consent and
all necessary expenses shall be borne by the Party suggesting it.
31. Within the first three months of every accounting year, the Chairman shall
prepare the previous year's balance sheet, profit and loss account and the
profit appropriation account and submit these to the Board of Directors for
adoption in their meeting.
The Joint-Venture Company shall use the following ways to balance the foreign
exchange it requires:
(1) On applying for the incorporation of the Joint-Venture Company, Party A
shall apply to China's foreign exchange management authority for a foreign
exchange quota for the following matters: advanced technology and equipment
required to be used by the Joint-Venture Company, scientific research
materials that cannot be satisfied internally and raw materials needed in
production.
(2) The Joint-Venture Company shall apply to the Foreign Exchange Regulatory
Centre in Nanjing or Jiangsu Province to become a member in order that the
Joint-Venture Company may use any excess Renminbi to exchange for hard
currency in accordance with the rules on national foreign exchange
management.
(3) The Joint-Venture Company shall apply to become "the cutting edge
enterprise" in order that it may receive a preferential treatment from
China's foreign exchange management authority in terms of maintaining a
balance in foreign exchange.
(4) Through the Contract it signs with Party B for it to be the sole agent for
the external export sales of the Joint-Venture Company's products, the
Joint-Venture Company shall use the foreign exchange it receives to satisfy
the requirement for balancing its foreign exchange.
(5) Other problems pertaining to balancing the foreign exchange shall be dealt
with in accordance with the regulations on management of foreign exchange
in the People's Republic of China.
Part XIII Term of the Joint Venture
32. The Joint-Venture Company's operating term shall be for thirty years. The
issuance date of the Joint-Venture Company's business licence shall be the
incorporation date of the joint-Venture Company.
33. On the proposal being made by one Party and passed unanimously by the Board
of Directors at the meeting, an application may be made six months prior to the
expiry of the joint-venture term to the Nanjing City Committee for External
Economic Trade (or its appointed approving authority) for an extension of the
joint-venture term.
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Part XIV Disposal of Assets, Liquidation and
Settlement on Expiry of Joint-Venture Term
34. Where the joint-venture term expires or is prematurely terminated, the
Joint-Venture Company shall settle its accounts in accordance with the laws. The
assets remaining after such a settlement shall be divided between Party A and
Party B in the ratio of their registration.
After the term of the Joint Venture has expired, both Parties may negotiate and
mutually agree to extend the Joint-venture term. If the Contract is prematurely
terminated for any reason, the Joint-Venture Company's assets shall be divided
in accordance with the ratio of the Joint-Venture Parties' shareholdings at the
time.
The Joint-Venture Company shall be liquidated or dissolved in the following
circumstances:
(1) The Joint-Venture Company has already operated for thirty years and the
Board of Directors has decided not to extend its term.
(2) the Joint-Venture Company's objectives cannot be or are difficult to be
achieved as in instances of major natural disasters.
(3) As a result of Force Majeure, the Joint-Venture Company has been unable to
continue its operation and has suffered major losses.
(4) If the Joint-Venture Company's accumulated losses have reached 40% of its
registered capital and these losses have made it unable to function
normally, the Joint-Venture Parties may, after negotiations, jointly agree
to terminate the operation of the Joint-Venture Company.
(5) the Joint-Venture Company's losses have reached 80% of the registered
capital and one of the Joint-Venture Parties has requested for the
Joint-Venture Company to be dissolved.
(6) Where one of the Joint-Venture Parties has not performed its
responsibilities as stipulated in this Contract or where the
responsibilities performed have not reached standard specified in the
Contract and where these non-performances of responsibilities have caused
major damages to other parties, the Party suffering the damages shall
demand to have the Joint-Venture Company liquidated or dissolved.
(7) The Joint-Venture Company has violated laws in its operation and the
licensing authority has struck it off.
(8) All Parties have agreed to liquidate the Joint-Venture Company.
The Board of Directors shall, in accordance with the stipulations in this
Contract, set up a liquidation committee based on the ratio of each Party's
shareholdings. The duties of the liquidation committee shall be to carry out a
total settlement of the Joint-Venture Company's assets and liabilities, to
prepare a balance sheet, to lay down a settlement plan and to submit it to the
Board of Directors for approval of implementation. The settlement procedures and
principles shall be determined by the Board of Directors. The Board of Directors
shall determine the composition of the members in the liquidation party. During
the liquidation period, the liquidation committee shall represent the
Joint-Venture Company in commencing and defending lawsuits.
The Joint-Venture Company shall use all of its assets to meet its obligations of
liabilities. The assets that remain after paying for the debts shall be
distributed in accordance of the ratio of the Joint-Venture Parties'
shareholdings.
After being approved by the Chinese "Government", the liquidation committee
shall have the right to sell the Joint-Venture Company. The Board of Directors
shall, after negotiating with the liquidation committee, determine the sale
price. The Joint-Venture Parties shall divide the sale proceeds in accordance
with the ratio of their respective shareholdings in the Joint-Venture Company.
The liquidation committee shall try its best to sell the Company's non-cash
assets at their best possible prices. Either Joint-Venture Party may, by
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agreement and subject to the approval of the authority concerned, buy the whole
or part of these assets at market prices. (If there has been no written
agreement within 30 days, then the purchase price shall be determined by an
independent appraiser). The sum of money may be used to offset what the company
owes the Joint-Venture Company in respect of the unpaid sum for the shares.
These clauses shall continue to remain in effect beyond the Contract's legal
term of operation or during the period when the Joint Venture's operation is
prematurely terminated.
Part XV Insurance
35. The Joint-Venture Company's various types of insurance coverage shall be
taken out with insurance companies in China. The types of coverage, the insured
sums and term of the insurance shall be determined by the Joint-Venture Company
and the insurance companies and shall be discussed and decided on in meetings by
the Board of Directors.
Part XVI The Effective Date, Amendments, Changes and Annulment of the Contract
36. The legal effect of the Contract shall, by virtue of China's laws and
regulations, be lawful, binding and enforceable. Either Party shall not breach
the terms and the spirit of the Contract.
The incorporation date of the Joint-Venture Company shall be the date of the
business licence issued by the Chinese "Government". This Contract shall come
into force on the date when it receives approval from the Chinese "Government".
Any amendment to the Contract and its attached documents shall become effective
only after both Party A and Party B have signed a written agreement and after
receiving the approval of the original authority.
37. As a result of Force Majeure that makes it impossible for the Contract to be
performed and as a result of the Joint-Venture Company being unable to carry on
the operation because losses for a number of years, it may be possible to
prematurely terminate the term of the Joint Venture and to annul the Contract
after being approved by the Board of Directors in unanimity and by the original
authority.
38. As a result of one Party not performing in accordance with the Contract, the
Articles of Association in terms of responsibilities and obligations or having
seriously breached the terms of the Contract or the Articles of Association,
hence making the Joint-Venture Company unable to achieve the operation
objectives specified by the Contract, the breaching Party shall be deemed to
have unilaterally terminated the Contract.
If one Party has not discharged its responsibilities and obligations stipulated
in the Contract or has seriously breached the Contract until the Joint-Venture
Company is unable to operate or achieve its objectives stipulated in the
Contract, the Party suffering the damages shall treat the Contract as having
been terminated and shall have the right to seek compensations from the
breaching Party. The abiding Party may also ask the authority concerned to
terminate the Contract.
Part XVII Liabilities for Breach of Contract
39. In accordance with clause 9 of the Contract that specifies the date of
payment for the capital, if Party B fails to pay by the deadline, then that
portion of late payment shall be subject to an amount for breach of Contract to
be calculated at 4/10,000 per day and to be made payable to Party A.
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If the sum payable to Party A for the transfer of its right in shares and the US
dollars sight draft in respect of the cash payment for the capital contribution,
which is the equivalent of 7.1625 million Renminbi yuan have not been paid up
Party B on 31 December 1999, this shall be treated as a penalty for breach of
the Contract and Party B's holding of the shares in the Joint-Venture Company
shall entirely go back to Party A without any compensation. In this connection
with regard to its shareholdings in Huaxin Company (the Joint-Venture Company
after reorganisation) that it has obtained after making the initial payment to
Party A for the latter's transfer of the shareholdings, Party B agrees to allow
such shares to be held as a security for the unpaid sum owing to Party A for the
shares transferred. The formalisation procedures shall be dealt with by Party A
and Party B in accordance the laws and regulations concerned.
Party XVIII Force Majeure
40. Where either Party or the Joint-Venture Company, being impacted by the Force
Majeure, has not completed the obligations stipulated in this Contract,
including any obligations of plans and projections, the Party shall not be held
to be in breach of the Contract. If the Force Majeure has caused a delay in the
performance of any obligations in the Contract by either Party or the
Joint-Venture Company, then the performance of the obligations in the Contract
and the deadlines on the obligations concerning the Contract may be extended.
The extended time shall include the time restoration work delayed by the Force
Majeure and the time required for putting the operation back on track.
The Force Majeure mentioned in the previous clause shall include the following
situations: any law, regulation, order or directive in the form of laws or other
forms that issued by the "Government" or the country, destructive activities
carried out by public enemies, risks at sea, fires, rain storms, typhoons,
earthquakes, epidemics, incidents, hostile actions, wars (both declared and
undeclared), blockades, unforeseen embargoes or other enemies' actions, strikes
and other labour disputes, riots, insurrections and other mistakes or failures
to perform duties that are not caused but are uncontrollable by the Party
claiming circumstances of Force Majeure.
The Party claiming Force Majeure shall immediately notify all other Parties,
explaining the cause of Force Majeure and its starting date and providing
evidence thereof. Thereafter, each Party shall take whatever possible and
necessary measures to eliminate or reduce the impact of the Force Majeure. If
the Force Majeure cannot be eliminated within a year and has caused serious
impacts, then all Parties shall conduct amicable discussions on whether the
Contract should continue. As soon as the Force Majeure has disappeared, the
Party claiming the Force Majeure shall immediately inform the other Party.
Part XIX The Governing Laws
41. The drawing up, effect, interpretation, performance and settlement of
disputes pertaining to the Contract shall be governed by the laws of the
People's Republic of China.
The laws of the People's Republic of China that are legislated after this
Contract has come into force shall, unless otherwise specified, not be
retroactive on the performance of the Contract.
Where "the Laws of China" conflict with the international treaties or
conventions that China has endorsed, then the governing laws shall be the
international treaties or conventions concerned. However, any reservations
announced by the Chinese "Government" in endorsing these treaties or conventions
shall be excepted.
If certain matters concerning the Joint-Venture Company have not been regulated
by "the Chinese Laws" and there are no corresponding international treaties or
conventions endorsed by China, then the Contract shall be governed by
international customs.
Part XX Settlement of Disputes
42. All disputes arising from the performance of the Contract or concerning the
Contract shall be resolved through amicable negotiations. If no solution arises
from negotiations, the disputes shall be submitted to China International
Economic Trade Arbitration Committee in Beijing for an arbitration to be
conducted in accordance with its arbitration rules. The arbitration shall be
final and binding on all Parties. The arbitration fee shall be borne by the
losing Party.
43. In the course of arbitration, with the exception of those sections being
disputed by the Parties, the Contract shall remain in force.
Both Parties shall discuss the developments of the Contract on fixed dates and
shall try their best to resolve through friendly negotiations that arise from
the implementation of the Contract.
In the circumstances below, any dispute shall have the final arbitration to be
conducted by China International Economic Trade Arbitration Committee in Beijing
in accordance with its arbitration rules:
(1) Both Parties have not been able to resolve the dispute through friendly
negotiations within ninety (90) days of the written notice being issued in
respect of the dispute.
(2) Both Parties have not requested a mediation within thirty (30) days.
(3) Both Parties have failed to have a unanimous opinion on the mediator named.
The arbitration languages used shall be Chinese and English. The materials,
statement of hearing, statement of claim, statement of defence, decision and the
supporting reasons of the arbitration shall be in Chinese and English.
In the course of the arbitration, the arbitrator shall refer to and fully
consider the clauses in the Contract and these clauses in the Contract to
determine the intentions of each Party on the signing of the Contract.
The arbitrator's decision shall be final and shall be binding on both Parties
without any further appeal.
Part XXI The Written Languages
44. The Contract shall be written in both Chinese and English. Both written
languages shall carry the same force.
Part XXII General
45. If the Contract is in conflict with the Company's Articles of Association or
any other documents, the Contract shall prevail.
If any time limitation causes any matter to come into force or to become invalid
on a non-working day, then the next first working day shall become the day when
the matter comes into force or becomes invalid.
The time clauses in the Contract carry important meanings and shall be strictly
adhered to or any adverse consequences shall be borne.
13
All Parties to the Contract shall endeavour to perform every obligation to
achieve the laid-down objectives of the Company through xxxxxxx co-operation,
honesty, trustworthiness, full discharge of duties and great efforts.
All Parties to the Contract shall from time to time try their best to ensure the
Joint-Venture Company and the Parties enjoy favourable policy of the
"Government".
46. The methods of notification used by both Party A and Party B are by telegram
or telex. If it involves the Parties' rights and obligations, then notification
shall be in writing by mail. The registered addresses of all Parities listed in
the Contract shall be the addresses of the Parties for receiving the mail.
Any notification and correspondences shall be in the written form and shall:
(1) be delivered to all Parties' registered address by express courier service
or by telex or by fax. In such cases, these notices and other
correspondence shall be deemed to have been delivered to the addresses
listed below on the day of delivery or the next working day (if delivered
on a non-working day).
(2) The telex and fax shall be transmitted to all Parties' registered
addresses. If these are received before 3.00 p.m. local time, then it shall
be deemed to have been received on that day. If these are received after
3.00 p.m. local time, then it shall be deemed to have been received on the
next working day. If the next day is a non-working day, then it shall be
deemed to have been received on the following working day. If one Party
changes its working address, it shall use the foregoing methods to notify
the other Party and this shall take effect immediately.
The Contract is drawn up on 27 July 1999 and is signed in Nanjing, China by the
authorised representatives of both Party A and Party B.
Party A: The Nanjing Medical Group Company Limited (with company stamp)
Representative: /s/ Xxxx Xxx Xx
---------------------------------------------
Position: General Manager
Party B: Allwin Newtech Ltd.
Representatuve: /s/ Xxxxxxx Xxx
---------------------------------------------
Position: President
27 July 1999
EXHIBIT 10.11B
AMENDMENT TO SINO-FOREIGN JOINT VENTURE AGREEMENT DATED NOVEMBER 24, 2000
Amendment to the China-Foreign Joint Venture Agreement (the "Agreement")
Dated 27 July 1999
BETWEEN:
The Nanjing Yiyao Group Company Limited (Party A)
AND:
Allwin Newtech Ltd. (Party B)
Article 19 of the Agreement is hereby amended to read as follows:
"The Board of Directors shall hold meetings at least once a year. This shall be
called and held by the Managing Director. Subject to a motion carried by
two-fifths of the directors, the Managing Director may call an extraordinary
meeting. The minutes of the meetings shall be filed and kept. In principal, the
meetings shall be held at the place where the Joint-Venture Company is but may
be decided by the Board of Directors to be held elsewhere. The quorum for a
directors meeting shall be three-fifths of all the directors. The resolutions of
the Board of Directors shall come in the written form. The resolutions of the
Board of Directors shall have binding force. Those directors who are unable to
attend a directors meeting may sign proxies to appoint other directors to carry
out their duties."
All other articles shall remain as written in the original Agremeent dated 27
July 1999.
The Amendment is drawn up on 24 November 2000 and is signed by the authorized
representatives of both Party A and Party B.
Party A: The Nanjing Yiyao Group Company Limited
[seal]
/s/ Xxxx Xxx Xx
Authorized Signature
Party B: Allwin Newtech Ltd.
[seal]
/s/ Xxxxxxx Xxx
Authorized Signature
EXHIBIT 10.11C
AMENDMENT TO SINO-FOREIGN JOINT VENTURE AGREEMENT DATED DECEMBER 16, 2000
Amendment to the China-Foreign Joint Venture Agreement
(the "Agreement")
Dated 27 July 1999
Article 17 of the Agreement is hereby amended to read as follows:
"The Board of Directors shall have the highest authority of the Joint-Venture
Company and shall decide on all important matters. The following matters shall
be only be resolved after being passed unanimously by all directors:
(1) amendments to the Joint-Venture Company's Articles of Association;
(2) Liquidation of the Joint-Venture Company;
(3) Increases or decreases in or transfers of the Joint-Venture Company's
registered capital; (4) Mortgage of the Joint-Venture Company's assets; (5) The
Joint-Venture Company's merging with other economic bodies, division or changes
in the organizational form;
Other matters than those mentioned above shall be passed and determined with a
simple majority at the directors' meetings."
Articles 19 of the Agreement is hereby amended to read as follows:
"The Board of Directors shall hold meetings at least once a year. This shall be
called and held by the Managing Director. Subject to a motion carried by
two-fifths of the directors, the Managing Directors may call an extraordinary
meeting. The minutes of the meetings shall be filed and kept. In principal, the
meetings shall be held at the place where the Joint-Venture Company is but may
be decided by the Board of Directors to be held elsewhere. The quorum for a
directors meeting shall be three-fifths of all the directors. The board
resolutions should be in writing. The resolutions of the Board of Directors
shall have binding force. Those directors who are unable to attend a directors
meeting may sign proxies to appoint other directors to carry out their duties."
After written notice of the proposed action to be taken is served on all
directors, Board action may be taken by written consent signed by more the
majority of the directors, except for board action specified in Clause 17 which
consent must be signed by all directors. Resolutions passed by written consent
shall have the save force and effect as the resolutions passed on a board
meeting. The written consent may contain several documents of the same content
with each consent being signed by one or more directors. The directors may
confirm the original copies of the consents formally signed by themselves by fax
or other written forms and return the signed original copies of the consent
within fourteen days of the signing to the Joint-Venture Company's registered
address.
All other articles shall remain as written in the original agreement dated 27
July 1999.
Party A and Party B agree that the amendment to the China-Foreign Joint Venture
Agreement signed between two parties on November 24th 2000 hereby canceled and
be invalid.
The Amendment is drawn up on 16 December 2000 and is signed by the authorized
representa tives of both Party A and Party B.
Party A: The Nanjing Yiyao Group Company Limited
/s/ Xxx Xxxx Xx
Authorized Signature
Party B: Allwin Newtech Ltd.
/s/ Xxxxxxx Xxx
Authorized Signature
EXHIBIT 10.11D
CONFIRMATION LETTER OF CONTROL FROM THE NANJING MEDICAL GROUP COMPANY LIMITED TO
ALLWIN NEWTECH DATED DECEMBER 16, 2000
The Nanjing Medical Group Company Limited
000 Xxxxxxxxx Xxxx Xxxx, Xxxxx Xxxxxxxx
Xxxxxx'x Xxxxxxxx xx Xxxxx
December 16, 2000
Dr. Xxxxxx Xxx, President
Dragon Pharmaceutical, Inc.
Suite 0000 - 000 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx
X0X 0X0
Xx. Xxxxxxx Xxx, President
Allwin Newtech Ltd. (Allwin Newtech)
Xxxxxx Xxxxxxxx,
P.O. Box 000, Xxxx Xxxx
Xxxxxxx, Xxxxxxx Xxxxxx Islands
Dear Xx. Xxx:
This letter will confirm to you Allwin Newtech's power, as majority
shareholder, to control, since its inception and in the ordinary course of
business, Nanjing Huaxin Biotech Co. Limited, a joint venture ("Joint Venture")
formed pursuant to the Sino-Foreign Joint Venture Contract dated July 29, 1999,
as amended, between Allwin Newtech and The Nanjing Medical Group Company
Limited. This letter is issued in connection with questions raised by the staff
of the United States Securities and Exchange Commission and may be used by you
in connection with Dragon Pharmaceutical Inc.'s registration statement and
representations made to the staff.
The purpose of Article 19 of the Sino-Foreign Joint Venture Contract (the
"Joint Venture Agreement") was to provide the Joint Venture's board of directors
with alternative methods of taking action by physical meeting or by written
resolution without physical meeting. Under either alternative, except for the
decisions specified in Article 17 of the Joint Venture Agreement, action could
be taken by simple majority of the directors.
Under Article 19 (before the amendment), a quorum for a directors' physical
meeting shall be three-fifths of all the directors including two directors
appointed by us and one director appointed by Allwin Newtech. As discussed
below, because board action, other than the actions provided in Article 17, in
the ordinary course of business could have be taken by written consent signed by
more than half of the directors, which could consist of the three directors
representing Allwin Newtech, the quorum provision of Article 19 of the Joint
Venture Agreement did not provide us with the power to prevent Allwin Newtech
from taking action by the board of directors through written consent, setting
the agenda for such action, or taking action in the ordinary course of business
without our consent.
The second paragraph of Article 19 of the Joint Venture Agreement allowed
for the Joint Venture's board of directors to take action in the ordinary course
of business by written consent signed by more than half of the directors. This
provision granted Allwin Newtech the power to control the Joint Venture in the
ordinary course of business notwithstanding the quorum requirement for physical
meetings stated in the first paragraph of Article 19.
The phrase "after written notices of the agendas of the meeting are served
on all the directors and subject to the collective opinions of the directors"
meant that all directors shall be given written notice of the items for which
written consent is sought and subject to the collective opinions of the majority
of the directors signing the resolution, except for the resolutions specified in
Article 17 of the Joint Venture Agreement. The second paragraph of Article 19
which required notice of agenda and collective opinions of the directors did not
provide us with the power to prevent Allwin Newtech from taking action by
written consent of the majority of directors, setting forth items to be approved
by written consent of the majority of directors, or taking action in the
ordinary course of business without our consent, because Allwin Newtech could
take action by written consent signed by the three Allwin Newtech directors who
represented more than half of the directors.
There are no provisions, whether in the Joint Venture Agreement or
otherwise, that provides us with the power to prevent Allwin Newtech from
controlling the Joint Venture.
Very truly yours,
The Nanjing Medical Group Company Limited
/s/ Xxx Xxxx Xx
Xxx Xxxx Xx
Chairman & President
