Exhibit 10.1
CONTRACT OF TIENS YIHAI CO., LTD.
CHAPTER 1
General Provisions
In accordance with the " Law of the People's Republic of China on
Chinese-Foreign Equity Joint Venture", its implementing statute and relevant
Chinese laws and regulations, Tianshi Pharmaceutical Co., Ltd. and Tianshi
International Holding Group Ltd. , adhering to the principle of equity and
mutual benefit through friendly consultation, agree to lease a piece of land to
jointly invest and set up a joint venture enterprise named Tiens Yihai Co. Ltd.
in Xxx Xxx Jiao Industrial Park, Qingpu District, Shanghai, P. R. C. The
contract hereunder is worked out.
Chapter 2
PARTIES OF THE JOINT VENTURE
Article 1
Parties of the contract are as follows: Tianshi Pharmaceutical Co., Ltd.
(hereinafter referred to as " party A"),
Legal address: Xx. 0, Xxxxxxxx Xxxx, Wuqing development area, Tianjin New Tech
Industrial Park, China
Legal representative: Li Jinyuan
Position: Chairman of the Board of Directors
Nationality: P. R. C.
Tianshi International Holding Group Ltd. (hereinafter referred to as "party B")
Legal address: British Virginia Island
Legal representative: Li Jinyuan
Position: board member
Nationality: P. R. C.
CHAPTER 3
ESTABLISHMENT OF THE JOINT VENTURE COMPANY
Article 2
In accordance with the "Law of the People's Republic of China on Chinese-Foreign
Equity Joint Venture", its implementing statute and relevant Chinese laws and
regulations, both parties of the joint venture agree to set up a joint venture
enterprise named Tiens Yihai Co. Ltd. in Xxx Xxx Jiao Industrial Park, Qingpu
District, Shanghai, P. R. C. (hereinafter referred to as the "the Joint Venture
Company").
Article 3
The name of the Joint Venture Company is Tiens Yihai Co., Ltd.
Article 4
The legal address of the joint venture is at Xx. 000 Xxxxxxx Xx., Xxxxxxxxxx
Xxxx , Xxxxxx Xxxxxxxx, Xxxxxxxx, Xxxxx.
Article 5
The organization form of the Company is a limited liability company which is a
Chinese legal person. Each party of the Company is liable to the company within
the limit of the capital subscribed by it. The profits, risks and losses and
debt liabilities of the Company shall be shared by the parties in proportion to
their contributions to the registered capital.
CHAPTER 4
THE PURPOSE, SCOPE AND SCALE OF PRODUCTION AND BUSINESS
Article 6
The purpose of the parties to the Joint venture is in conformity with the wish
of enhancing the economic corporation and technical exchanges to improve the
product quality and price by adopting advanced foreign technology and scientific
management methods so as to raise economic results and ensure satisfactory
economic benefits for each investor.
Article 7
The productive and business scope of the Company is the R&D, production, and
marketing of functional food, home care and personal care products as well as
providing technology services, products training program etc. among which the
total sales amounts for home and personal care products shall not more than 5%.
The production value of the Company yearly amounts to RMB20 billion of which
functional foods RMB19 billion, accounting for 95% of the total and home &
personal care products RMB1 billion , accounting for 5% of the total investment.
The Company balances its income and expenses of the foreign exchange.
CHAPTER 5
TOTAL AMOUNT OF INVESTMENT AND REGISTERED CAPITAL
Article 8
The total amount of investment of the Company is US $400million. Investment
contributed by the parties is US $200million which will be the registered
capital of the company.
Article 9
Both parties A and B will contribute the following as their investment: Party A:
Cash US $ 1,200,000.00 (RMB 10,000,000.00), accounting for 0.6%. Party B: US
$198,800,000.00, accounting for 99.4%, with US $174,600,000.00 contributing in
cash and the rest will be paid by the profit gained by B's domestic company in
China. The difference between the total amount of investment and the registered
capital will be settled by self-financing of the Company.
Article 10
15% of the registered capital contributed by both parties shall be in place
within three months after the issuance of the business license. The rest shall
be in place within three years.
Article 11
In case any party to the joint venture intends to assign all or part of his
investment subscribed to a third party, consent shall be obtained from the other
party to the joint venture, and approval from the examination and approval
authority is required. When one party to the joint venture assigns all or part
of his investment, the other party shall have pre-emptive right.
Article 12
The joint venture's registered capital shall not decrease during term of its
operation. Decreases that are truly warranted by the change of the total
investment and the operation scope and other changes shall be approved by the
examination and approval authority.
CHAPTER 6
RESPONSIBILITY OF EACH PARTY TO THE JOINT VENTURE
Article 13
Party A and Party B shall be respectively responsible for the following matters;
Responsibility of Party A:
1. Responsible for leasing office premises, purchasing communication facilities
and office equipments so as to provide essential working conditions.
2. Handling of application for approval, registration, business license and
other matters concerning the establishment of the Company and liaison with the
relevant departments in charge of the said matters in China. The costs arisen
from the application procedure shall be borne by the Company.
3. Inputting its exact share of registered capital timely.
4. Responsible for other matters entrusted by the Company.
Responsibility of Party B:
1. Responsible for introducing modern management mode and advanced technology.
2. Responsible for training the management personnel.
3. Inputting its exact share of registered capital timely.
4. Responsible for other matters entrusted by the Company.
CHAPTER 7
THE BOARD OF DIRECTORS
Article 14
The Company shall establish the Board of Directors which is the highest
authority of the Company. The date of registration of the Company shall be the
date of the establishment of the Board of Directors of the Company.
Article 15
The Board of Directors is composed of three directors, of which two shall be
appointed by Party A, one by Party B. The chairman of the Board shall be
appointed by Party B. The term of office for the directors and Chairman is four
years; their term of office may be renewed if continuously appointed by the
relevant Party.
Article 16
The board of directors shall decide all major issues concerning the Company. The
following items can only be approved with the unanimous agreement of the
members:
1. The revision of the joint venture's article of association;
2. The dismissal of the joint venture;
3. The mortgage of the joint venture with other economic organizations;
4. The increase or decrease of the joint venture's registered capital; assets;
Article 17
As for other matters approval by majority or a simple majority shall be
required.
Article 18
The chairman of the board is the representative of the Company. Should the
Chairman be unable to exercise his responsibility for some reasons, he shall
authorize the Vice-Chairman or any other director to represent the Company
temporarily.
Article 19
The board of Directors shall convene at least one meeting every year. The
meeting shall be called and presided by the chairman of the Board. The chairman
may convene an interim meeting based on a proposal made by more than one third
of the total number of Directors and the board meeting shall only be convened
under the condition of two thirds of the total number of directors' presence
(including directors from the two parties). The board meeting shall draft the
minutes signed by the directors present at the meeting and shall be placed on
file.
CHAPTER 8
BUSINESS MANAGEMENT OFFICE
Article 20
The Company shall establish a Management Office which shall be operated under
the leadership of the general manager. The Management Office shall have a
General Manager, appointed by the Board of Directors. The first general manager
shall be assigned by Party B whose term of office is four years. When he/she's
term ends and he/she is again designated, he/she can hold the position for
another term.
Article 21
The responsibility of the General Manager is to carry out the decisions of the
Board Meeting and organize and conduct the daily management of the Company.
Several department managers may be appointed by the Management Office who shall
be responsible for work in various departments respectively; handling matters
handed over by the General Manager and shall be responsible to him.
Article 22
In case of graft or serious dereliction of duty on the part of the General
Manger and other senior management the board of directors shall have the power
to dismiss them at any time.
CHAPTER 9
PURCHASE OF EQUIPMENT
Article 23
In its purchase of means of transportation and articles for office use, etc. the
Company priority to purchase in China where conditions are the same.
CHAPTER 10
LABOUR MANAGEMENT
Article 24
Labor contract covering the recruitment, employment, dismissal ,resignation,
wages, labor insurance, labor dispute ,rewards and other matters concerning all
staff and workers of the Company shall be drawn up between the Company and the
labor union of the Company as a whole, or the individual employees in the
Company as a whole, or individual employees in accordance with the " Regulations
of the PRC on Labor Management in the Joint Venture Using Chinese and Foreign
Investment and its implementing Rules" as well as the relevant rules and
regulations of shanghai city. The labor contract shall be filed on the local
labor management authority.
Article 25
The appointment of senior administrative personnel recommended by both parties,
their salaries, social insurance, welfare and the standards of traveling
expenses etc. shall be decided by the Board of Directors. The salaries are only
for the directors' term of office at the Board of the Company.
CHAPTER 11
TAXES, FINANCE, AUDIT AND PROFIT DISTRIBUTION
Article 26
The Company shall establish its accounting policies in accordance with the
stipulation of Chinese laws, other relative regulations and meanwhile, combining
the Company's present situation.
Article 27
Staff members and workers of the Company shall pay individual income tax
accordance to the "Individual Income Tax Law of the P.R.C."
Article 28
Reserve funds, bonus and welfare funds for workers and staff members after
payment out of its gross profit of the Joint Venture income tax shall be set
aside pursuant to the provisions of the tax laws of the PRC. The Company shall
draw at least 10% of the profit after tax as the reserve funds and when the
total reserve funds mounts to 50% in aggregate the Company shall be free of this
duty. The allocation for the bonus and welfare funds shall be determined by the
Company.
Article 29
The fiscal year of the Company shall be from January 1 to December 31. All
vouchers, receipts, statistics statement and reports shall be written in
Chinese.
Article 30
The Chinese RMB shall be the money of account and the rate that RMB converts
into other currencies shall comply with the exchange rate of the State
Administration of Foreign Exchange on the day.
Article 31
Financial checking and examination of the Company shall be conducted by an
auditor registered in China and reports shall be submitted to the Board of
Directors and the General Manager. Each party of the Company shall have the
right to hire auditor to check and examine its account books.
Article 32
In the first three months of each fiscal year, the General Manager shall prepare
previous year's balance sheet, profit and loss statement as well as profit
distribution proposal regarding the disposal of profits, and submit them to the
Board of Directors for examination and approval.
Article 33
The Company shall allocate its profits once a year which shall be squared before
January 31 from the date of the issuance of the business license.
Article 34
All issues concerning foreign exchange shall comply with "Regulations of the
People's Republic of China on the Administration of The Foreign Exchange".
Article 35
The Company shall open a foreign exchange and a RMB account with a bank in China
which is permitted by the state agency for foreign exchange control to handle
foreign exchange transactions. All foreign exchange earnings and expenditures
shall be put into or taken from the foreign exchange account.
Article 36
The Company shall balance the income and expenses of its foreign exchange and
guarantee the surplus meanwhile. The foreign exchange profit is mainly for the
following two purposes:
1. Pay the deserved foreign exchange profit.
2. Expenditures for business trip to the overseas, salaries for the foreign
personnel and other necessary expenses.
CHAPTER 12
THE DISPOSAL OF ASSETS AFTER EXPIRATION OF THE DURATION
Article 37
The duration of the Company shall be 50 years (hereafter the "duration") from
the date the business license of the Company is issued. An application for the
extension of the duration unanimously approved by the Board of Directors shall
be submitted to the examination and approval authority six months prior to the
expiry date of the Joint Venture.
Article 38
Upon the unanimously agreement the Joint Venture contract may be terminated
prior to the expiry when both parties consider that the termination satisfy the
superior benefits of both.
The termination of the contract prior to the expiry shall be approved by the
examination and approval authority upon the unanimous decision made by all
present at the Board Meeting.
Article 39
Upon the expiration of the duration, or termination before the date of
expiration of the joint venture, liquidation shall be carried out according to
the relevant law. The liquidation assets shall be distributed in accordance with
the proportion of investment contributed by Party A and Party B.
CHAPTER 13
force majeure and insurance
Article 40
Should either Parties to the contract be prevented from executing the contract
due to force majeure, such as earthquake, typhoon, flood, fire, and war and
other unforeseen events and their happening and consequence are unpreventable
and unavoidable, the prevented Party shall notify the other Party by cable
without delay, and within fifteen days thereafter provide detailed information
of the events and a valid document for evidence issued by relevant Public Notary
organization for explaining the reason of its inability to execute or delay the
execution of all or part of the contract. Both parties shall through
consultation, decide whether to terminate the contract or to exempt part of the
obligations for implementation of the contract or whether to delay the execution
of the contract according to the effects of the events on the performance of the
contract.
Article 41
Either Party shall not ask for compensation for losses resulting from the force
majeure.
Article 42
The Company shall insure in the insurance company registered in China. Types,
the value, duration of insurance shall be decided by the Board of Directors in
accordance with the stipulation of the insurance company in China.
CHAPTER 14
the amendment, alteration and discharge of the contract
Article 43
The amendment of the contract shall come into force only after the written
agreement signed by Party A and Party B and approved by the original examination
and approval authority.
Article 44
Incase of inability to fulfill the contract or continue operation due to heavy
losses in successive years as a result of force majeure the duration of the
joint venture and the contract shall be terminated before the time of expiration
after unanimously agreed upon by the Board of Directors and approved by the
original examination and approval authority.
Article 45
Should the Company be unable to continue its operation or achieve the business
purposes stipulated in the contract due to the fact that either of the
contracting party fails to fulfill the obligations prescribed by the contract
and articles of association, that party shall be deemed as having unilaterally
terminated the contract. The other party shall have the right to terminate the
contract in accordance with the provisions of the contract after approved by the
original examination and approval authority as well as to claim damages. In case
either party of the Company agrees to continue the operation the Party who fails
to fulfill the obligations shall be liable for the economic losses causing to
the Company.
CHAPTER 15
LIABILITIES FOR BREACH OF THE CONTRACT
Article 46
Should all or part of the contract be unable to be fulfilled owing to the fault
of one Party, the breaching Party shall bear the responsibilities thus caused.
Should it be the fault of both parties, they shall bear their responsibilities
according to actual situation.
Article 47
Should either Party A or Party B fail to pay on schedule the contribution in
accordance with the provisions defined in Chapter five of this contract, the
breaching party shall pay to the other party1% of the contribution as the
penalties starting from the first month after exceeding the time limit. Should
the breaching party fail to pay after three months, 3% of the contribution as
the penalties shall be paid to the other party, who shall have the right to
terminate the contract and to claim damages from the breaching party who shall
have the right to terminate the contract and to claim damages from the breaching
party in according with the stipulations in Article 45 of this contract.
CHAPTER 16
APPLICABLE LAW
Article 48
The formation, validity, interpretation, execution and settlement of disputes of
this contract, shall be governed by the related laws of the PRC.
CHAPTER 17
SETTLEMENT OF DISPUTE
Article 49
Any dispute arising from the execution of, or in connection with, this contract
shall be settled through friendly consultations between both parties. In the
case no settlement can be reached through consultations the dispute shall be
submitted to Shanghai Arbitration Organization in accordance with the rules of
the Foreign Economic and Trade Arbitration Commission of the China Council. The
arbitrate verdict is final and binding upon both parties.
Article 50
During the course of arbitration, the contract shall be executed continually by
both parties except for matters in dispute.
Article 51
The contract shall be written in Chinese.
CHAPTER 18
EFFECTIVENESS OF THE CONTRACT AND MISCELLANEOUS ITEMS
Article 52
The contract shall come into force beginning from the date of approval of the
Shanghai government after signing by authorized representatives of both parties.
The revision of the contract shall conform to the same rule.
Article 53
The appendices drawn up in accordance with the principles of this contract are
integral parts of this contract and shall have the same legal validity with this
contract after the approval.
Article 54
Should notice in connection with any party's rights and obligations be sent by
either party by telegram or telex, etc; the written letter notices shall be
required afterwards. The legal address of Party A and Party B listed in this
contract shall be the posting address.
Article 55
The contract is signed in Shanghai on April 20, 2004
Tianshi Pharmaceutical Co., Ltd. Tianshi International Holding Group Ltd.
By: By:
-------------------------------- -------------------------------------
Xxxxxxx Xx Xxxxxxx Xx
Legal Representative Legal Representative
