Execution Copy Wanxiang EV Co., Ltd. And Ener1, Inc. Sino-Foreign Equity Joint Venture Contract January 2011
Exhibit
10.1
Execution
Copy
Wanxiang
EV Co., Ltd.
And
Ener1,
Inc.
January
2011
- 1
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Content
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Chapter
1 General Provisions
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3
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Chapter
2 Parties to the Joint Venture
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3
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Chapter
3 Establishment of the Joint Venture
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4
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Chapter
4 The Purpose, Scope and Scale of Production and Operation
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4
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Chapter
5 Total Amount of Investment and Registered Capital
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5
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Chapter
6 Responsibilities of Each Party to the Joint Venture
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10
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Chapter
7 Intellectual Property Rights
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13
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Chapter
8 Board of Directors
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18
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Chapter
9 Business Management Office
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23
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Chapter
10 Facilities and Equipment
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23
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Chapter
11 Labor Management
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24
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Chapter
12 Finance, Audit and Taxation
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24
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Chapter
13 Duration of the Joint Venture
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26
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Chapter
14 Liquidation and Dissolution of the Joint Venture
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26
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Chapter
15 Amendment and Termination of the Joint Venture and This
Contract
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27
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Chapter
16 Liability for Breach of Contract
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28
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Chapter
17 Confidentiality
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28
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Chapter
18 Force Majeure
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30
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Chapter
19 Applicable Law
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30
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Chapter
20 Settlement of Disputes
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30
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Chapter
21 Effectiveness of This Contract and Miscellaneous
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31
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Appendix
1: Form of the Assets Contribution Agreement
Appendix
2: Form of the Lease and Service Agreement
Appendix
3: Form of the Technology License Agreement
2
The
Joint Venture Contract for Zhejiang Wanxiang Ener1 Power System Co.,
Ltd.
Chapter 1
General Provisions
In
accordance with the Sino-Foreign Equity Joint Venture Law of the People’s
Republic of China (the “Equity Joint Venture Law”), its Implementation Rules and
other Chinese laws and regulations, Wanxiang EV Co., Ltd. (hereinafter referred
to as “Party A”) and Ener1, Inc. (hereinafter referred to as “Party B”), in
accordance with the principle of equality and mutual benefit and through
friendly consultations, agree to enter into this Contract to jointly invest and
establish a Sino-foreign equity joint venture company in Xiaoshan Economic &
Technology Development Zone, Hangzhou City, Zhejiang Province of the People’s
Republic of China (“PRC” or “China”).
Chapter 2
Parties to the Joint Venture
Article 1
The Parties to this Sino-foreign equity joint venture contract (hereinafter
referred to as this “Contract”) are as follows:
Party A:
Wanxiang EV Co., Ltd.
Legal
address: Jianshe 3 Road, Xiaoshan Economic & Technology Development Zone,
Hangzhou City, Zhejiang Province, PRC.
Legal
representative: Xx Xxxxxxx
Nationality:
China
Postal
address: Xx.000 Xxxxxxx 0 Xxxx, Xxxxxxxx Economic & Technology Development
Zone, Hangzhou City, Zhejiang Province, PRC.
Postal
code: 311215
Party B:
Ener1, Inc.
Legal
address: 0000 Xxxxxxxx Xxxxx 00, Xxx Xxxx, XX 00000, the United States of
America.
Legal
representative: Xxxxxxx Xxxxxxxxxxxx
Title:
Chairman of the Board of Directors and Chief Executive Officer of Ener1,
Inc.
Nationality:
The United States of America
Party A
and Party B are hereinafter collectively referred to as the “Parties”, and
individually as a “Party”.
3
Chapter 3
Establishment of the Joint Venture
Article 2
In accordance with the Equity Joint Venture Law, its Implementation Rules and
other relevant Chinese laws and regulations, the Parties hereby agree to
establish a Sino-foreign equity joint venture company (the “Joint Venture”) in
Xiaoshan Economic & Technology Development Zone, Hangzhou City, Zhejiang
Province, PRC.
Article 3
The name of the Joint Venture shall be “浙江万向亿能动力电池有限公司” in
Chinese and “Zhejiang Wanxiang Ener1 Power System Co., Ltd.” in English.
Party A shall cause Wanxiang Group Corporation Ltd. (“Wanxiang Group”), the
owner of the trade name and trademark“万向” and “Wanxiang”,
to grant a royalty free license to the Joint Venture to use “万向” and “Wanxiang”
in its name, trade name and logo as long as Party A or any of its Affiliate
remains a shareholder to the Joint Venture. Party B shall grant a royalty
free license to the Joint Venture to use “Ener1” and “亿能” in its company
name, trade name and logo as long as Party B or any of its Affiliate remains a
shareholder to the Joint Venture.
The legal
address of the Joint Venture is Jianshe 3 Road, Xiaoshan Economic &
Technology Development Zone, Hangzhou City, Zhejiang Province, PRC.
Article 4
All activities of the Joint Venture shall be governed by the laws, decrees and
pertinent rules and regulations of PRC.
Article 5
The Joint Venture is a limited liability company established under the laws of
PRC. Each Party’s liability to the Joint Venture shall be limited to the
registered capital of the Joint Venture subscribed by such Party. The
profits, risks and losses of the Joint Venture shall be assumed by each Party in
proportion to their respective contribution to registered capital of the Joint
Venture.
Article 6
The Joint Venture may, upon the unanimous approval of the Board of Directors of
the Joint Venture (hereinafter referred to as the “Board”) and after obtaining
all requisite governmental approvals, open offices and facilities outside the
Territory. For the purpose of this Contract, the term “Territory” means
PRC and all of its territories, including Hong Kong, Macau and
Taiwan.
Chapter 4
The Purpose, Scope and Scale of Production and Operation
Article 7
The purpose of the Parties with respect to the Joint Venture is to obtain direct
and indirect economic, competitive, technological, manufacturing, distributing,
pricing and other advantages in their business by cooperating and sharing
technologies with the other Party.
4
Article 8
The business scope of the Joint Venture is to design, manufacture, sell,
distribute, provide service and make improvements in relation to the lithium-ion
battery cells (hereinafter referred to as the “Cells”) and lithium-ion battery
packs incorporating the Cells (hereinafter referred to as the “Packs”, together
with Cells, the “Products”) subject to approval by the competent administration
of industry and commerce (“Registration Authority”). Subject to any approvals
and filing requirements provided by the competent governmental authorities, the
Joint Venture may, in accordance with its operation requirements, engage in any
such other businesses that the Board may unanimously decide to
pursue.
Article 9
Each Party agrees that, subject to actual and reasonably anticipated demand, the
target annual production capacity of the Joint Venture is to produce Cells and
Packs having an aggregate charge up to 300 million ampere-hours.
After
completion of investment in the 300 million ampere-hours capacity and taking
into full consideration of the market demands and the circumstances of the Joint
Venture (including the output, sale and profits of the Joint Venture), upon a
simple majority approval of the Directors present at the Board meeting, the
Joint Venture may make further investment to expand its production
capacity.
The Joint
Venture shall use its own funds or finance through its own channel for the
production capacity expansion. If the foregoing methods are not able to
satisfy the funding requirements of the Joint Venture’s production capacity
expansion, upon unanimous approval by the Board, the Parties shall increase the
registered capital of the Joint Venture.
Chapter 5 Total
Amount of Investment and Registered Capital
Article
10 The Parties agree that the Joint Venture’s total amount of investment will be
Xxx Xxxxxxx xxx Xxxxxx-xxxx Xxxxxxx Xxxxxx Xxxxxx Dollars
(USD295,000,000).
Article
11 The registered capital of the Joint Venture shall be Xxx Xxxxxxx xxx Xxxxxx
Xxxxxxx Xxxxxx Xxxxxx Dollars (USD120,000,000). Party A shall contribute
Seventy-two Million United States Dollars (USD72,000,000), representing sixty
percent (60%) of the registered capital of the Joint Venture, and Party B shall
contribute Forty-eight Million United States Dollars (USD48,000,000),
representing forty percent (40%) of the registered capital of the Joint
Venture.
Article
12 Methods and Conditions of Capital Contribution
12.1 Subject
to the provisions of Article 12.2, the Parties shall make their respective
contributions to the registered capital in the following manner:
Party A
will contribute in kind and in RMB in cash, the exchange rate of which shall be
the central parity of USD against RMB quoted by the People’s Bank of China on
the date of the relevant contribution. Party B will contribute in USD in
cash.
12.2 Conditions
to Contributions
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12.2.1 Neither
Party shall be obliged to make any capital contribution to the Joint Venture
pursuant to Article 12.1 until each of the following conditions has been
fulfilled (or otherwise waived by the relevant Party):
12.2.1.1 This
Contract and the articles of association of the Joint Venture (“Articles of
Association”) shall have been approved by the Ministry of Commerce or other
local foreign investment examination and approval authorities duly authorized by
the Ministry of Commerce (the “Approval Authority”), without any material
variation of the terms hereof or imposing any additional obligations on a Party
or the Joint Venture except as may have been agreed in writing by both
Parties;
12.2.1.2 The
Joint Venture shall have obtained the Business License issued by the
Registration Authority with a scope of business identical or substantially same
as stipulated in Article 8;
12.2.1.3 The
Joint Venture shall have been registered with the competent foreign exchange
administration authority, received the foreign exchange registration
certificate, and opened foreign exchange bank accounts and RMB bank accounts in
banks which have been approved by the Board;
12.2.1.4 The
Assets Contribution Agreement, the Lease and Service Agreement, and the
Technology License Agreement (jointly as “Related Agreements”, and the form of
which are attached hereto as Appendix 1, 2 and 3), shall have been duly executed
by the Parties thereto and have become legally effective and binding upon the
Parties;
12.2.1.5 The
representations and warranties contained in this Contract and the Related
Agreements have been true and correct in all material respects as of the
relevant dates on which the capital contributions are to be made (“Contribution
Dates”), the covenants and undertakings contained in this Contract and the
Related Agreements have been substantially complied with by the relevant parties
as of the Contribution Dates;
12.2.1.6
The approval from the in-charge customs on the capital contribution by Party A
in the form of equipment imported with duty exemption shall have been
received.
12.2.2 If
any of the foregoing conditions have not been fulfilled (or otherwise waived by
the related Party), either Party may, within ninety (90) days as of the date of
issuance of the Business License of the Joint Venture (the “Establishment
Date”), have the right to terminate this Contract pursuant to Article
51.1. Except as stipulated in Article 13.2, neither Party shall be liable
to the other Party if this Contract is terminated due to a reason not
attributable to any Party. Each Party shall bear its own costs and
expenses in relation to the negotiation and execution of this Contract and the
establishment of the Joint Venture.
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Article
13 Schedule of Capital Contribution
13.1
Subject to the provisions of Article 12.2, each Party shall make its required
contribution to the registered capital in two installments:
The first
installment which amounts to fifty percent (50%) of each Party’s subscribed
contribution shall be made within sixty (60) days as of the Establishment Date.
Party A will make the first installment of contribution in kind in accordance
with the Assets Contribution Agreement, and the contribution will be appraised
by a PRC appraisal institution acceptable to both Parties. The deficiency
between the valuation and the first installment will be contributed by Party A
in cash; any surplus will be purchased by the Joint Venture. Party B will
make the contribution in USD in cash.
The
second installment which amounts to the remaining fifty percent (50%) of each
Party’s subscribed contribution shall be made within two (2) years from the
Establishment Date. Party A will make the contribution in RMB in cash and
Party B will make the contribution in USD in cash. The contribution date
of the second installment of the Parties will be determined at any time by the
unanimous approval of the Board.
13.2 Each
Party’s contribution to the registered capital shall be made
simultaneously. In the event that a Party fails to make its capital
contribution on the due date, the other Party shall have the right to claim
liquidated damages from such Party in such amount calculated at the rate of zero
point zero three percent (0.03%) per day with a maximum of three percent (3%) of
the overdue amount for such period from the due date to the actual date of
contribution. If a Party fails to make its capital contribution in
accordance with this Article 13 for more than ninety (90) days, then the other
Party shall be entitled to terminate this Contract and request return of any
contribution it has made to the Joint Venture without prejudice of its right to
claim for the liquidated damages.
Article
14 After each Party’s contribution to any of the installments of the registered
capital, a Chinese certified public accountant mutually acceptable to the
Parties shall be retained by the Joint Venture to verify the amount of
contributions and issue a capital verification report. The Joint Venture
shall issue an investment certificate to each Party within thirty (30) days of
its receipt of such capital verification report.
Article
15 Change of Equity
15.1 Any
increase or decrease of the registered capital and total investment of the Joint
Venture shall be resolved unanimously by the Board and approved by the Approval
Authority. Each Party shall have the right to subscribe the increased
registered capital in proportion to its original equity interest ratio so as to
maintain its original percentage of shares in the registered capital as
increased. If a Party foregoes such right, the other Party may subscribe
the increased registered capital foregone by such Party.
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In
principle, the Joint Venture shall not reduce its registered capital during its
term, unless such reduction is unanimously approved by the Board due to changes
to the total investment and the scale of the production. Any such
reduction shall be approved by the Approval Authority and filed with the
Registration Authority according to the applicable laws and
regulations.
15.2 No
Party shall pledge or otherwise encumber all or any part of its contribution to
the Joint Venture’s registered capital without the prior written consent of the
other Party.
15.3
Transfer of Equity Interest
15.3.1
Subject to the provision of this Article 15.3, either Party may assign, sell or
otherwise dispose of all or part of its equity interest in the Joint Venture to
a third party, provided, however, that it shall first obtain the consent from
the other Party and the approval from the Approval Authority.
15.3.2
When a Party (“Transferring Party”) wishes to assign, sell or otherwise dispose
of all or part of its equity interest in the Joint Venture (“Transfer”) to a
third party (“Proposed Purchaser”), it shall notify the other Party in writing
(“Notice of Third Party Offer”) of: (i) its wish to make the Transfer, (ii) the
share of equity interest it wishes to transfer, (iii) the terms and conditions
of the Transfer; and (iv) the identity of the Proposed Purchaser (“Third Party
Offer”).
15.3.3
The non-transferring Party may exercise a right of first refusal (“Right of
First Refusal”) by, within thirty (30) days upon receipt of the Notice of Third
Party Offer (“Notice Period”), delivering to the Transferring Party a written
notice (a “First Refusal Notice”) specifying that it will purchase the whole or
part of the equity interest to be transferred at the terms set out in the Third
Party Offer. If the other Party fails to notify the Transferring Party
within such Notice Period that it will purchase such equity interest, subject to
Article 15.3.4 it shall be deemed to have agreed to the Transfer to the Proposed
Purchaser specified in the Notice of Third Party Offer, and the Transferring
Party may assign, sell or otherwise dispose of such interest to such Proposed
Purchaser, at the price or on the terms and conditions not more favorable than
those set out in the Notice of Third Party Offer. The Parties shall cause
the Directors to unanimously agree to such Transfer. The Transferring
Party shall provide the other Party with a duplicate of the executed share
transfer agreement with respect to such Transfer within fifteen (15) days upon
execution of such agreement.
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15.3.4 In
case of Party B receiving a Notice of Third Party Offer served by Party A
specifying that Party A wishes to transfer all but not part of its equity
interest in the Joint Venture, Party B shall, in addition to the Right of First
Refusal, have a right to assign its entire equity interests in the Joint Venture
on the same terms and conditions as stipulated in the Notice of Third Party
Offer to the Proposed Purchaser (“Tag-along Right”). If Party B exercises
the Tag-along right by delivering to Party A written notice to such effect (a
“Tag-Along Acceptance Notice”) within the Notice Period, Party A shall cause the
Proposed Purchaser to buy Party B’ equity interests in the Joint Venture on the
same terms and conditions as specified in the Notice of Third Party
Offer.
15.3.5
Notwithstanding any provision contained herein to the contrary, either Party may
assign at any time all or part of its equity interest in the Joint Venture to
any of its Affiliates, and the other Party hereby gives its consent on such
transfer and waives any Right of First Refusal, Tag-Along Right, or similar
rights it may have under applicable law or hereunder with respect to such
transfer, and shall cause its Directors in the Board to vote in favor of and
sign any resolution on any such transfers. Affiliate means any company or
entity which, directly or indirectly, controls, or is controlled by a Party or
is under common control of a third party, the term “control” means ownership of
more than fifty percent (50%) of the registered capital and/or assets or the
power to appoint or direct the other entity to appoint or elect the majority
directors of a company.
15.3.6
Notwithstanding the provisions set forth in Article 15.3.1 through Article
15.3.4, neither Party to this Contract may transfer its equity interest in the
Joint Venture to any third party within three (3) years from the Establishment
Date.
Any
Transfer of the equity interest in the Joint Venture under the preceding
paragraphs shall become effective immediately upon the approval of such transfer
by the Approval Authority.
Article
16 The balance between the total investment and the registered capital shall be
raised by the Joint Venture through financing. If the Parties agree to
provide collateral for the Joint Venture as required by a financing institution
to secure such financing, both Parties will provide collateral pro rata to their
shareholding percentage provided that Party B will only provide collateral in
the form of the equity interest in the Joint Venture. If the collateral is
provided by one Party or its Affiliate (“Securing Party”) to the financing
institution, the other Party shall pledge its equity interest in the Joint
Venture to the Securing Party corresponding to its share of the total secured
loan.
9
Chapter 6
Responsibilities of each Party to the Joint Venture
Article
17 Party A and Party B shall have the following
responsibilities with respect to the Joint Venture:
The
Responsibilities of both Parties
17.1 Each
Party shall use all of its reasonable efforts to present the Joint Venture with
all opportunities and relationships that could reasonably be expected to further
the Joint Venture’s business objectives, to the extent such opportunities and
relationships are reasonably available to such Party. Such opportunities
and relationships may include, without limitation, those presented by
governmental incentives designed to encourage the manufacture and sale of
electric vehicles.
To better
take advantage of the national preferential policies on electric vehicle as well
as the influential position of the parent company of Party A (Wanxiang Group),
both Parties agree that the Joint Venture will be incorporated into the uniform
operation and management system of Wanxiang Group, which includes but not only
limited to consolidated financial statements, application for national
preferential policies, provided that both Parties shall comply with this
Contract and the Articles of Association and the independence of the Joint
Venture in respect of finance, management, manpower, operation, etc shall not be
affected. The Joint Venture is entitled to the benefits of the
preferential treatments related to the Joint Venture obtained in the name of
Wanxiang Group, the relevant expense of which shall be borne by the Joint
Venture.
17.2 If
the Board unanimously resolves that the Joint Venture require
additional financing and such additional financing require increase in the
registered capital, then each Party shall make the contribution to the increased
registered capital on a pro rata basis upon the decision of the Board. If
a Party fails to make such capital contribution to the increased registered
capital as and when required, the other Party may, upon ten (10) days prior
notice to the non-contributing Party, make all or part of the capital
contribution on behalf of the non-contributing Party, and upon such capital
contribution, the shareholding percentage of the Parties in the Joint Venture
will be proportionately adjusted to reflect their respective share of equity
value in the Joint Venture after such capital increase. Specifically the
equity value of the contributing Party shall be the aggregate of the newly
contributed capital plus its share in the Joint Venture’s net asset book value
as of the end of the preceding month before the capital increase, and the equity
share of the non-contributing party shall be its share in the Joint Venture’s
net asset book value as of the end of the preceding month before the capital
increase.
17.3 One
or more additional partners may join the Joint Venture upon the written consent
of each Party. Each additional partner may become an additional equity
holder of the Joint Venture by making a capital contribution to the Joint
Venture or through an assignment of interests in the Joint Venture by either or
both Parties.
17.4
Notwithstanding anything in this Contract to the contrary, no capital
contribution will be accepted by the Joint Venture or assignment of equity
interest in the Joint Venture will be permitted if and to the extent such
capital contribution or assignment would result in Party A and its Affiliates
owning less than fifty-one percent (51%) of the equity interest in the Joint
Venture, unless otherwise agreed in writing by the Parties.
10
17.5 Each
Party covenants to the other Party that, except for the Joint Venture, during
the period that it is a shareholder to the Joint Venture and within six (6)
months after it ceases to be a shareholder to the Joint Venture for reasons
other than the other Party’s breach of this Contract, it and its Affiliates will
not manufacture or sell products and services within the current or future
business scope of the Joint Venture alone or with any other third party in the
Territory (including by way of direct or indirect investment or sales business
cooperation or technology license or transfer), unless otherwise approved by the
other Party. Notwithstanding the above, the Parties acknowledge that Party
B is not prohibited by the preceding clause from directly or indirectly selling
Products and providing related services to its existing customers in Taiwan. In
consideration of factors such as reducing manufacturing cost, a solely-funded
assembly plant or one jointly founded with a third party will be established in
the area which is close to the customer by the Joint Venture.
17.6 The
initial target market of the Joint Venture shall be the Territory; however,
neither Party shall be averse to expanding the market scope of the Joint Venture
during its development subject to the provisions hereunder.
The
Parties agree that, unless otherwise unanimously approved by the Board, the
Joint Venture shall not engage in any sales and business development of the
Products outside the Territory that will conflict with the business of the
Parties and their Affiliates. Each of the Parties and the Joint Venture
shall have meetings on a regular basis to review the sales and business
development of the Joint Venture outside the Territory and coordinate activities
that may have potential conflict.
17.7
Each Party understands and supports that to rapidly develop the Joint Venture’s
business, the Joint Venture may, upon the Board’s unanimous approval, seek
finance from the capital markets, including, but not limited to, an initial
public offering, reverse merger and private equity financing, in compliance with
all applicable laws and regulations of China. If the Joint Venture finance
overseas, it shall also comply with the related local laws and
regulations.
17.8 All
related-party transactions between the Joint Venture and any Party (or any
Affiliate of a Party) shall be on arm’s-length terms, unless otherwise consented
by the Director appointed by the non-interested Party. All related-party
transactions shall be conducted in accordance with the pricing principle and
major terms unanimously approved by the Board. Under the same conditions,
priority shall be given to the Parties or their respective Affiliates for the
procurement of the products therefrom or the supply of the Products
thereto.
17.9
Responsibilities of Party A
11
Party A’s
responsibilities shall include all of its responsibilities specified in this
Contract, including:
17.9.1 Making
the capital contributions in accordance with Article 12, Article 13 and
complying with the obligations provided under the Assets Contribution
Agreement;
17.9.2 Assisting
the Joint Venture in applying for and obtaining all approvals, registrations,
licenses, permits and consents necessary for the establishment of the Joint
Venture and its facilities, and the conducting of the Joint Venture’s business,
to the extent such applications are required by any governmental or other
competent authorities in China.
17.9.3
Granting a license to the Joint Venture to use the trademark “e能”
on the Product of the Joint Venture free of charge; the Joint Venture may also
develop and use its own trademarks.
17.9.4
Using its best efforts to cause the employees to sign labor contracts with the
Joint Venture. With the consent from the employees, Party A shall transfer to
the Joint Venture the employees and management personnel currently working in
the battery business unit of Party A who have qualifications and capability
required by the Joint Venture (a list of the transferred employees shall be
confirmed by Party B in advance). Such transferred employees shall enter
into new employment contracts with the Joint Venture.
17.9.5 Assisting
the Joint Venture in applying for and obtaining the most preferential tax
reductions and exemptions and other investment incentives and subsidies
available under State and local laws and regulations;
17.9.6 Assisting
the Joint Venture in obtaining necessary bank finance in the form of long-term
loans and/or working capital loans on the most advantageous terms;
17.9.7 Assisting
the Joint Venture in acquiring appropriate land use rights that required for its
future expansion from the competent land authorities at the most favorable
terms;
17.9.8 Assisting
the Joint Venture in communication with the relevant governmental authorities
including state, provincial, municipal and local government, as requested by the
Joint Venture;
17.9.9 Handling
other matters entrusted by the Joint Venture and agreed by Party A.
17.10 Responsibilities
of Party B
Party B’s
responsibilities shall include all of its responsibilities specified in this
Contract, including:
17.10.1 Making
the capital contributions in accordance with Article12 and Article
13.
12
17.10.2
Assisting Joint Venture in purchasing machinery and equipments outside of China,
and overseeing the training of the Joint Venture employees and
staff.
17.10.3
Handling other matters entrusted by the Joint Venture and agreed by Party
B.
Chapter 7
Intellectual Property Rights
Article
18 Intellectual Property Rights
Party A
and Party B agree that:
18.1 Definitions.
As used in this Article 18, the following terms shall have the respective
definitions as defined hereinafter:
“Field”
means the technology field related to the Cells and Packs.
“Incoming
Confidential Information” means any information that the disclosing party
designates as confidential or proprietary including, but not limited to, any
information disclosed pursuant to the licenses granted under Article 18.2 or
18.3.3 or disclosed pursuant to Articles 18.4.2 and 18.4.3 that is not contained
in a patent or published patent application.
“Improvement”
means any improvement within the Field that relies on or utilizes a substantial
part of the Intellectual Property Rights and/or Technology.
“New
Technology” means any Technology developed after the Establishment Date that
does not rely on or utilize a substantial part of the Intellectual Property
Rights and/or Technology.
“Intellectual
Property Rights” means patents and pending patent applications as well as all
originals, continuations, divisions, reissues, extensions and reexamined patents
and patent applications claiming priority from them (“Patent Rights”), and
design registrations, utility models, trade secrets, know-how and show-how,
registered and unregistered copyrights only to the extent that any of the
foregoing is within the Field and recognized legal protections that are embodied
in the Technology.
“Technology”
means products, ideas, discoveries, inventions, techniques and equipment,
tooling, materials of construction, processes and operating conditions, raw
materials, requirements, engineering information, computers software and
programs, process control systems, methods, practices, strategies, data, works
of authorship, designs, diagrams, schematics, charts, drawings, blue-prints and
similar CAD type drawings, protocols, reports, analyses, specifications,
technical information, supplier lists, and all other proprietary information, to
the extent the foregoing are in the Field.
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18.2 Grant
of License. The licenses contemplated in this Article 18.2 shall become
effective upon the satisfaction of each of the conditions to contribution
specified in Article 12.2 hereof. Unless prohibited by the applicable
laws, regulations, government body, or contractual obligations of a Party as of
the date hereof, each Party hereby grants to the Joint Venture an exclusive,
royalty-free license, only within the Field and only in the Territory of all
current and future Intellectual Property Rights owned by such Party and its
Affiliates or licensable by such Party and its Affiliates to make, use, sell,
copy, import, modify and further develop any material, or object or practice,
modify and further develop any method or process that is within one or more
claim of the Patent Rights or otherwise embodies the Intellectual Property
Rights to the extent that such Patent Rights and Intellectual Property Rights
are owned or licensable by that Party and its Affiliates, and only within the
scope of the Joint Venture as described in Article 8 hereof. Further, each
Party hereby grants to the Joint Venture a non-exclusive, royalty-free license
only within the Field but outside the Territory of all current and future
Intellectual Property Rights owned by that Party and its Affiliates or
licensable by that Party and its Affiliates to sell, import and repair any
material or object that is within one or more claim of the Patent Rights or
otherwise embodies the Intellectual Property Rights to the extent that such
Patent Rights and Intellectual Property Rights are owned or licensable by that
Party and its Affiliates, and only within the scope of the Joint Venture as
described in Article 8 hereof . Each Party represents and warrants that to
the best of its knowledge, as of the date hereof, the practicing of the
Intellectual Property Rights it licenses pursuant to this Article 18.2 does not
infringe upon the Patent Rights，Intellectual
Property Rights of any third party.
18.3 Improvements
18.3.1 In
the event that any Party makes an Improvement without any inventor who is an
employee of the other Party or the Joint Venture (“Separate Improvement(s)”),
all Intellectual Property Rights in such Separate Improvement(s), shall be owned
by the Party making such Separate Improvement(s) and shall deemed to be included
in the license granted by that Party pursuant to Article 18.2. Each Party shall
promptly disclose to the Joint Venture any Separate Improvements it makes but
having had an opportunity to seek such patent protection as it deems
appropriate. An inventor shall be the person who conceived of the invention,
regardless of who reduced the invention to practice.
18.3.2 In
the event that the Joint Venture independently makes any Improvement or any New
Technology (i.e. the inventor(s) is (are) employed by or contracted by the Joint
Venture, “Self Improvements”), or a Party makes any Improvement or any New
Technology jointly with the other Party or the Joint Venture (i.e. there are at
least two inventors, one of whom is an employee or contractor of either Party
and the other is an employee or contractor of the Joint Venture or the other
Party, “Joint Improvement(s)”), all Intellectual Property Rights in such Self
Improvement(s) and Joint Improvement(s) shall be owned by the Joint
Venture. An inventor shall be the person who conceived of the invention,
regardless of who reduced the invention to practice. Each Party shall
promptly disclose to the Joint Venture and the other Party its component of any
Joint Improvement(s) it makes.
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18.3.3
Each Party shall have an irrevocable, royalty-free and permanent license of the
Joint Improvement(s) and the Self Improvements outside the Territory to make,
use, sell, copy, import, modify and further develop any material, or object or
practice, modify and further develop any method or process that is within the
scope of such Joint Improvement(s) and Self Improvements, subject to the license
granted pursuant to Article 18.2 and subject to the Patent Rights and
Intellectual Property Rights of the other Party and any third party. The
foregoing shall not be interpreted as granting to either Party any rights
outside the Territory, the Field or the scope of the Joint Venture in any
Intellectual Property Rights which is the subject of the licenses granted
pursuant to Article 18.2. The Joint Venture shall not grant any licenses
to third parties with respect to such Joint Improvement(s) or Self
Improvement(s) without the unanimous approval of the Board. Except as may
be necessary to sell Products embodying such Joint Improvement(s) or Self
Improvement(s) or subcontract the manufacture or development of Products or
processes embodying such Joint Improvement(s) or Self Improvement(s), and then
subject to the confidentiality provisions of Article 18.6 and 53, the license
granted pursuant to this Article 18.3.3 shall not include the right to
sublicense without the unanimous approval of the Board.
18.3.4 Except
as otherwise agreed in writing (because for example trade secrecy is
a preferred form of protection), the Joint Venture shall seek, obtain and
maintain patent protection for such Joint Improvement(s) or Self Improvement(s)
worldwide and shall bear the cost of doing so. In the event that the Joint
Venture notifies the Parties that it does not require or want patent protection
for a particular Joint Improvement or Self Improvement in any particular
jurisdiction, either Party shall have the right to assume the costs of seeking,
obtaining and maintaining patent protection in that jurisdiction. If any
Party assumes such costs, then with regard to that particular Joint Improvement
or Self Improvement only, the license granted pursuant to Article 18.3.3 to
that Party, shall become exclusive to that Party in that jurisdiction and
the license granted to the other Party pursuant to Article 18.3.3 shall
terminate in that jurisdiction. If the Parties agree in writing that
patent protection is not required or desired by the Joint Venture or by
both Parties or if neither Party assumes the costs of patent protection, then
the licenses granted pursuant to Article 18.3.3 shall be
unaffected.
18.4
Activities relating to the Intellectual Property Rights
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18.4.1
Each Party shall provide to the Joint Venture complete and accurate information
regarding the Intellectual Property Rights and Technology in a timely manner, as
well as all necessary drawings, design documents, formulae, data, process flow,
specifications and other information to as may be to enable the Joint Venture to
utilize the Intellectual Property Rights and Technology to the extent that it is
licensed pursuant to Article 18.2.
18.4.2
Each Party shall provide such training for the technicians and workers of the
Joint Venture as may be reasonably necessary to enable the Joint Venture to
utilize the Intellectual Property Rights to the extent that it is licensed
pursuant to Article 18.2. The transportation, lodging and subsistence expenses,
of the trainers and trainees (including different engineers) incurred pursuant
to such training shall be borne by the Joint Venture. The salaries and
benefits of the trainers shall be borne by the Party providing the
training.
18.4.3
During the term of the Joint Venture, the Joint Venture may from time to time
(but at least once every year) organize an engineering team to study and
understand the Technology and the Intellectual Property Rights of both Parties,
and discuss any Improvement(s) or New Technology. Subject to the right to
apply for patent protection prior to disclosure as set forth in Article 18.3,
both parties shall provide their Improvements to the Joint Venture pursuant to
Article 18.3, in accordance with any and all targeted milestones that the Joint
Venture may propose from time to time. The Joint Venture may establish a
technician team to make Improvement(s) or develop New Technology.
18.5 Termination
Provisions Specific to Intellectual Property Rights
18.5.1 Upon
the termination of the Joint Venture’s business (whether as a result of the
expiration of the scheduled term of the Joint Venture or upon its earlier
Termination or otherwise), the licenses granted pursuant to Article 18.2
including the licenses of any Separate Improvement(s) shall immediately and
automatically be terminated and the Joint Venture shall cease exercising any and
all of the rights granted pursuant to Article 18.2 and 18.3.1 and shall return
to the licensor all Intellectual Property Rights, Technology and tangible
objects embodying such Intellectual Property Rights and Technology (including
but not limited to computer software, drawings, machinery, computers, computer
storage media, chemicals, cells, batteries and battery packs).
18.5.2 Upon
the termination of the Joint Venture’s business (whether as a result of the
expiration of the scheduled term of the Joint Venture or upon its earlier
Termination or otherwise), the Intellectual Property Rights in all Joint
Improvement(s) and Self Improvement(s) shall be jointly owned by the Parties in
undivided equal shares. Except as may be necessary to sell Products
embodying such Joint Improvement(s) or Self Improvement(s), or subcontract the
manufacture or developments of Products or processes embodying such Joint
Improvements or Self Improvement(s), and then subject to the
confidentiality provisions of Article 53, neither Party will grant any license
to any third party with respect to Joint Improvement(s) or Self Improvement(s)
without the prior written consent of the other Party, denial of which shall be
within the other Party’s absolute discretion.
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18.5.3
Upon the termination of the Joint Venture’s business (whether as a result of the
expiration of the scheduled term of the Joint Venture or upon its earlier
Termination or otherwise), Article 18.5.2 shall not apply to any patents and
patent applications in respect of which the license has become exclusive
pursuant to Article 18.3.4. Upon such termination, such patents and patent
applications shall be irrevocably assigned to the Party to whom they
were exclusively licensed without further consideration being
due.
18.5.4 If
any Party terminates or exits the Joint Venture (“Exiting Party”) due to the
breach by the other Party, it may terminate the license it granted to the Joint
Venture under Article 18.2. Upon termination of the license by the Exiting
Party, the Joint Venture shall immediately cease exercising of the rights in
relation to the Intellectual Property Rights which the Exiting Party licensed to
the Joint Venture pursuant to Article 18.2 and return to the Exiting Party all
Technology and tangible objects embodying such Intellectual Property Rights
(including but not limited to computer software, drawings, machinery, computers,
computer storage media, chemicals, cells, batteries and battery packs). If the
Joint Venture requests to continue the license after the termination or exit by
the Exiting Party, the Parties may enter into good faith discussions on the
commercial terms for continual of the license on arm length basis. For the
avoidance of doubt, each Party shall, at its sole and absolute discretion,
decide, but not under any obligation, to enter into such license agreement with
the Joint Venture.
18.5.5 If
any Party exits the Joint Venture by transferring or otherwise disposing of its
equity in the Joint Venture (excluding transfer its equity to any Affiliates),
the license granted by the Exiting Party to the Joint Venture pursuant to
Article 18.2 shall continue on a royalty-free basis, but the license granted
pursuant to Article 18.2 will become non-exclusive for the Territory. Any
Separate Improvements that the Exiting Party may make after such exit shall be
excluded from the license granted pursuant to Article 18.2 and the Exiting Party
shall have no obligation to disclose such Separate Improvements to the Joint
Venture. Any Self Improvements that may be made after such exit shall be
excluded from the license granted pursuant to Article 18.3.3 and the Joint
Venture shall have no obligation to disclose such Self Improvements to the
Exiting Party.
18.6
Confidentiality
18.6.1 Each
Party and the Joint Venture will keep strictly confidential all Incoming
Confidential Information that the other Party discloses to it or the Joint
Venture and will refrain from using such Incoming Confidential Information for
any purpose other than furtherance of the objectives of the Joint Venture.
The foregoing shall not apply to any information that is in or enters the public
domain other than due to the actions of the receiving party or the Joint
Venture.
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18.6.2 To
the extent that the Parties agree pursuant to Article 18.3.4 that patent
protection for Joint Improvement(s) or Self Improvement(s) is not required or
desired and that such Joint Improvements or Self Improvement(s) are to be kept
confidential, each Party will keep strictly confidential all such Joint
Improvement(s) or Self Improvement(s).
18.6.3
The provisions of this Article 18.6 are in addition to, and are not intended to
limit, the restrictions and exclusions contained in Article 53.
Chapter 8
Board of Directors
Article
19 The Board will be established on the Establishment Date. Any actions of the
Joint Venture prior to the establishment of the Board shall be made jointly by
the Parties.
Article
20
20.1 The
Board shall initially be composed of five (5) directors, of which three (3)
shall be appointed by Party A, and two (2) shall be appointed by Party B.
The Chairman of the Board shall be appointed by Party A, and the Vice-Chairman
of the Board shall be appointed by Party B. The term of office for the
Directors, Chairman and Vice-Chairman shall be three (3) years; their term of
office may be renewed if continuously appointed by the relevant Party, provided
that each of them may be removed and replaced at any time for any reason by the
Party that appointed them.
If
a Party wishes to appoint or remove a Director, then such Party shall notify the
other Party and the Joint Venture in writing. The appointment or removal shall
be filed with the Approval Authority and the Registration
Authority.
20.2 Indemnification
No
Director or Senior Officer shall bear any personal liability for normal business
actions performed as a Director or Senior Officer and the claims and liability
that have arisen therefrom shall be indemnified by the Joint Venture, except
that any action or inaction on the part of such Director or Senior Officer that
triggered the aforementioned indemnification or liability which caused by
willful misconduct, gross negligence or breach of PRC criminal law.
Article
21
21.1 The
Board shall be the highest authority of the Joint Venture and the Board shall
have the right to make all material decisions of the Joint Venture.
21.2 The
following matters shall require unanimous approval of the Directors present at
the Board meeting:
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21.2.1 the
amendment to the Articles of Association of the Joint Venture;
21.2.2 the
termination and dissolution of the Joint Venture; in the case of termination by
any Party according to Article 51, both Parties shall cause the Directors
appointed by them to vote for and pass the resolution to terminate and dissolve
the Joint Venture;
21.2.3 any
increase or decrease the registered capital of the Joint Venture;
21.2.4
the merger with any other business or entity or division of the Joint
Venture;
21.2.5
(i) any acquisition or sale of the Joint Venture’s equity investment,
or (ii) any acquisition or sale of fixed assets of the Joint Venture not
contemplated in the approved Annual Business Plan, the fair market value of
which exceeds fifteen percent (15%) of the capital expenditure approved in the
Annual Business Plan, or (iii) any acquisition, sale, transfer, license or
sublicense of intellectual property or any other intangible asset of any value,
or (iv) entering into any material contract with a third party out of the normal
course of business of the Joint Venture (for purposes of this Article 21, the
term “material contract” shall mean a contract in which the Joint Venture could
reasonably be expected to give, earn, receive, pay or be liable for, during the
term of such contract, in excess of Xxx Xxxxxxx Xxxxxxxx Xxxxxx Xxxxxx Dollars
(USD100,000), whether monetarily and/or in products and services);
21.2.6 any
assignment by a Party of its equity interest in the Joint Venture to any other
party;
21.2.7 any pledge of equity interests in the Joint
Venture by one Party or both Parties；
21.2.8 any
incurrence of any bank finance, guarantees, mortgages, capital lease
obligations, lending to others, issuing bonds, donation or effectuation of any
equity or equity-linked financings of any amount beyond the approved Annual
Business Plan;
21.2.9 the
relocation or material modification of any material facility owned or used by
the Joint Venture;
21.2.10 the
appointment or removal of the Senior Officers in accordance with the Articles of
Association. “Senior Officers” shall mean management personnel as defined in
Article 28 hereunder;
21.2.11
Engaging in a business other than as specified in Article 8, or engaging in any
sales activities and business development outside the Territory that will
constitute a material transaction or conflict with the business of a
Party. For the purpose of this clause, any transaction or series of
transactions with a single customer within any twelve-month period whose value
exceeds or anticipates to exceed Twenty-five Million United States Dollars (USD
25,000,000) or five percent (5%) of the annual sales revenue of the Joint
Venture in the preceding year, whichever is lower, shall constitute a material
transaction. The Board may unanimously decide to increase the threshold
for materiality from time to time. The Board shall approve a material
transaction not conflicting with the business of a Party if such transaction is
in the best interests of the Joint Venture;
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21.2.12 The
mid-long term development plan, the Annual Business Plan (which shall include
monthly revenue plan by customer, capital expenditure associated with revenue
plan, and operating budget, including forecast income statement, balance sheet
and cash flow statement), the financial and accounting rules (including
delegation of authority to management and pricing guidelines for products), and
human resources rules of the Joint Venture;
21.2.13 the
retention and/or replacement of the independent auditor;
21.2.14
the pursuit, defense and entering settlement of any material litigation (for
purposes of this clause “material litigation” means any action or claim by or
against the Joint Venture in which the liability of the Joint Venture could
reasonably be expected to exceed One Million United States Dollars
(USD1,000,000);
21.2.15 the
distribution of profits or dividends to the equity holders of the Joint
Venture;
21.2.16
the pricing principle and major terms of the related-party transactions between
the Joint Venture and a Party (or any Affiliate of such Party);
21.2.17 any
other matters stated elsewhere in this Contract or the Articles of Association
of the Joint Venture that expressly requires unanimous approval of the
Board.
21.3
Matters that shall be decided by the Board, other than the above which require
unanimous approval of the Board, shall require the approval by a simple majority
of the Directors present at the Board meeting.
21.4 A
deadlock of the Board (the “Deadlock”) shall be deemed to have arisen upon any
the occurrence of any of the following: (1) the failure of the Joint Venture to
hold Board meetings for one (1) year continuously, and either Party has
requested in writing that a Board meeting be held; (2) the Directors of the
Joint Venture have been in prolonged conflict which cannot be resolved by
representatives of the Parties and causes severe difficulties in the operation
and management of the Joint Venture; or (3) the Parties suffer from severe
losses due to the continuing existence of the Joint Venture which has other
severe difficulties in the operation and management. In the event of a
Deadlock, the Chairman and Vice Chairman shall jointly refer the matter to two
(2) representatives, each designated by the highest executive officer of Party A
and Party B respectively, within fifteen (15) days from the Deadlock. The
aforesaid representatives shall use their best efforts to reach a settlement
proposal in good faith within sixty (60) days after the Chairman and the
Vice-Chairman refer the relevant item to them. If the Deadlock still
cannot be settled, then either Party shall have the right to terminate this
Contract in accordance with Article 51 provided that in the case of the scenario
set forth in item (1) in this paragraph, the Party whose Director(s) fails to
attend the Board meeting or otherwise unreasonably delays the Board meeting
shall not have the right to terminate this Contract.
20
Article
22 The Chairman of the Board shall be the legal representative of the Joint
Venture. Should the Chairman be unable to exercise his responsibilities
for any reason, he shall authorize the Vice Chairman to represent the Joint
Venture until he is again able to exercise his responsibilities as
Chairman. The Chairman shall exercise his authority within the limits
prescribed by the Board, in accordance with this Contract, the Articles of
Association and any Board resolutions.
Article
23 The Board shall convene at least twice a year. The meeting shall
be called and presided over by the Chairman. The Chairman shall convene
and preside over an interim meeting within fifteen (15) days based on a proposal
made by more than one third of the total number of the Directors. If the
Chairman fails to convene an interim meeting within the time limit, then any
other director may convene such meeting. Minutes of the meetings shall be
placed on file.
Decisions
of the Board shall be made either:
(i) by a
vote of the Directors taken at a meeting duly called, whether such meeting is in
person, through tele-, video- or internet-conferencing, or a combination of the
foregoing; or
(ii) by
written consent signed by all of the Directors on the Board (even if such action
does not require the unanimous approval of the Board as set forth in Article
21.2).
All
decisions of the Board made at a valid Board meeting shall be summarized into
“minutes” promptly after such meeting and signed by all of the Directors present
at such meeting. All minutes and written resolutions shall be delivered to
the Directors after being executed by the requisite Directors. Each Party
shall be permitted to have up to two additional representatives present at each
Board meeting as observers, provided that such representatives shall have no
right to vote on any matter presented to the Board.
The
Chairman or any other Director (in the case of an interim Board meeting) shall
give each Director not less than fifteen (15) days written notice for such
meeting, provided that if all Directors attend the said meeting (whether in
person or via tele-, video or internet-conferencing) without such fifteen-day
notice, such notice requirement shall be deemed waived by each Director.
Such meeting notice shall state the agenda, subject, time and place of such
meeting.
Article
24 Any meeting of the Board shall be deemed to be official and valid with a
quorum of at least two-thirds of the Directors (at least one Director from each
Party) present in person or by proxy. Each Director shall have one
vote.
21
Article
25 Each Party shall endeavor to cause its appointed Directors to attend all
Board meetings that have been duly called, whether in person or via tele-,
video- or internet-conferencing. Should any other Director be unable to
attend a meeting, such Director shall have the right to present a power of
attorney to a representative (which may but does not need to be a Director) and
authorize such representative to represent and vote for him at such
meeting.
Article
26 No Director shall be involved in the day to day operation and management of
the Joint Venture, except to the extent such Director is also an officer or
employee of or consultant to the Joint Venture. No Director shall receive
remuneration from the Joint Venture for his services as a Director, provided
that all travel, lodging and other expenses incurred by a Director in connection
with attending a Board meeting and carrying out his duties as a Director shall
be borne by the Joint Venture.
Article
27 Supervisor
27.1 Each
Party shall appoint one supervisor by giving written notice of the names of its
appointees to the Joint Venture and the other Party. The Supervisor shall
be appointed for a term of three (3) years and may serve consecutive terms if
reappointed by the appointing Party. The Supervisor may be removed at any time
by the Party who originally appoints such Supervisor. The position of the
Supervisor shall not be concurrently held by any Director or member of the
Management Office.
27.2 Each
supervisor shall exercise the following powers:
27.2.1 to
inspect the financial affairs of the Joint Venture;
27.2.2 to
supervise the actions of Directors and the Senior Officer during the performance
of their duties, and to propose the removal of Directors or Senior Officers who
have violated the laws, administrative rules and regulations, or the Articles of
Association;
27.2.3 to
demand that Directors and the Senior Officers make corrections if any of their
actions is found to have harmed the interests of the Joint Venture;
27.2.4 to
propose the convening of interim Board meetings;
27.2.5 to
submit proposals to the Board meeting;
27.2.6 any
other functions or powers as conferred by the PRC Company Law and the Articles
of Association.
27.3 Supervisors
shall serve without remuneration from the Joint Venture but all reasonable costs
to assume such duties of the Supervisors shall be borne by the Joint
Venture.
22
Chapter 9
Business Management Office
Article
28 The Joint Venture shall establish a business management office which shall be
responsible for its daily management. The management office shall have a general
manager (Chief Executive Officer “CEO”) and a deputy operating manager (Chief
Operating Officer “COO”) recommended by Party A; a deputy financial manager
(Chief Financial Officer “CFO”) and a deputy technical manager (Chief Technology
Officer “CTO”) recommended by party B.
The
general manager and deputy general managers shall be appointed by the Board and
the term of office is three (3) years and eligible for reappointment for further
terms.
Article
29 The responsibility of the general manager is to carry out the decisions
of the Board and organize and conduct the daily management of the Joint Venture.
The general manager may authorize a deputy general manager to conduct daily
management in the normal course of business on his behalf during his
absence.
The power
scope of general manager and deputy general managers should be decided by the
Board.
Several
department managers may be appointed by the management office, they shall be
responsible for the work in various departments respectively, handle the matters
handed over by the general manager and deputy general managers and shall be
responsible to the general manager.
Article
30 Unless approved by the Board unanimously, no Senior Officers of the Joint
Venture may be engaged or employed in any business which could be or become
directly or indirectly in competition with that of the Joint
Venture.
Chapter
10 Facilities and Equipment
Article
31 Party A shall provide, or cause its Affiliates to provide, to the Joint
Venture such land, facilities and ancillary services in accordance with the
Lease and Service Agreement to be mutually agreed by the Parties and entered
into between Party A (or its relevant Affiliate) and the Joint
Venture.
31.1 The
Parties acknowledge that as the expansion of the production and operation of the
Joint Venture require, it will need to expand the plant and production
facilities to satisfy its business requirements. Party A shall provide
support and assistance to the Joint Venture in obtaining the required land use
rights in the most favorable terms and conditions and other governmental support
and incentives for such expansion.
Article 32 The Joint
Venture may freely purchase required raw materials, fuel, auxiliary equipment
parts, transportation vehicles and office supplies, etc from domestic or
international markets on the basis of pricing, quality and other relevant terms
and conditions.
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Article
33 Party B shall actively assist the Joint Venture in connection with the
purchase of equipment, services and other items from offshore
vendors.
Chapter
11 Labor Management
Article
34 Labor contract covering the recruitment, employment, dismissal and
resignation, wages, labor insurance, welfare, rewards, penalties and other
matters concerning the staff and workers of the Joint Venture shall be entered
into between the Joint Venture and the individual employees of the Joint Venture
in accordance with the Labor Law of PRC and other relevant labor rules and
regulations.
If any
staff and workers (including management personnel) of Party A meet with the
Joint Venture’s requirements in qualifications and capabilities, such staff and
workers shall sign a new labor contract with the Joint Venture.
Party A
undertakes to assume all liabilities to the employees during the time when such
employees work for Party A in accordance with the relevant PRC labor regulations
and the Joint Venture shall not assume any liabilities arising from such
employment between the employees and Party A.
Article
35 The appointment of Senior Officers recommended by both Parties, their
salaries, social insurance, welfare and the standard of traveling expenses etc.
shall be decided by the Board in accordance with related regulations, provided
that the principle of equal pay for equal position shall be followed. The
compensation of the Senior Officers shall be decided by the Board based on the
contribution made by such personnel to the Joint Venture and the Board will give
favorable welfare treatments to the expatriate Senior Officer(s) in view of the
circumstances.
Article
36 Employees of the Joint Venture may join trade union organization in
accordance with the Trade Union Law of the People’s Republic of China. The Joint
Venture shall provide the trade union organization with facilities for its
activities as appropriate and allot union fund to the trade union organization
in accordance with the applicable laws.
Chapter
12 Finance, Audit and Taxation
Article 37 The Joint
Venture shall establish a financial and accounting system (the “Financial and
Accounting System”) in accordance with the Enterprise Accounting Systems (2006),
other relevant laws and regulations, the particular circumstances of the Joint
Venture and, to the extent permitted by applicable law, those methods and
principles that are consistent with generally accepted international accounting
principles. All accounting matters relating to the Joint Venture and its
business shall be overseen by the CFO and conducted in compliance with
applicable laws.
24
Article
38 The Joint Venture adopts Renminbi (RMB) as its standard bookkeeping
currency.
Article 39 The fiscal year
of the Joint Venture shall be from January 1 to December 31. All vouchers,
receipts, statistic statements and books shall be written in Chinese and
important financial statements shall be written in both Chinese and
English.
Article
40 Allocations for reserve fund, enterprise expansion fund, and welfare and
bonuses fund for the employees of the Joint Venture (jointly, “Three Funds”)
shall be drawn from the after-tax net profits of the Joint Venture in accordance
with the provisions of the Equity Joint Venture Law. The allocations to the
Three Funds shall be determined by the Board on an annual basis based on the
financial condition of the Joint Venture and such other factors as the Board may
deem appropriate.
Article
41 The financial audit of the Joint Venture’s business shall be conducted
on an annual basis by an auditor that is mutually accepted to both
Parties. The fees and expenses of such auditor shall be borne by the Joint
Venture. All audit reports shall be submitted to the Board and the
management office.
Each
Party may, at its own expense, appoint a certified public accountant registered
in China or other countries to audit the accounts of the Joint Venture on its
behalf. Reasonable cooperation and access to the accounting books and
records shall be given to such accountant by the Joint Venture, and such
accountant shall maintain the confidentiality of all information disclosed
during the course of this audit (except for disclosure to the relevant Party and
its Affiliates). All expenses for such audit shall be borne by the Party
which appoints its own auditor.
In the
event that there is any major problem discovered in the audit, both Parties
shall mutually agree to appoint a third party auditor to conduct audit of the
Joint Venture at the cost of the Joint Venture.
Article
42 Within ninety (90) days from the end of each fiscal year, the Joint Venture
shall prepare cash flow statement, balance sheet, profit and loss statement for
the previous year and preliminary proposal regarding the distribution of profits
and submit such statements to the Board for review and approval.
Article
43 The Joint Venture shall open one or more bank accounts in RMB, USD and any
other foreign currencies within the scope of authorization by the
Board.
Article
44 Unless the Board unanimously decides that the Joint Venture shall not
distribute the profits due to difficulties of the Joint Venture, the Joint
Venture shall distribute the maximum profits allowable of the Joint Venture and
both Parties shall cause their appointed Director to pass the relevant
resolution. All such distributions shall be made in proportion to each
Party’s shareholding ratio in the Joint Venture as of the time such distribution
is made. All such distributions shall be made in accordance with
applicable laws.
25
Article
45 All employees of the Joint Venture shall, pursuant to the Individual Income
Tax Law of the PRC, pay individual income taxes. The Joint Venture shall
withhold and collect such income taxes from amounts payable to its employees to
the extent required under applicable laws.
Article
46 The Joint Venture shall pay all taxes required to be paid by it under the
laws and regulations of PRC. The Joint Venture shall use its best efforts to
procure the “High-New Tech Enterprise” qualification and obtain related
preferential treatments.
Article
47 The Board shall determine the types and amount of insurance coverage that the
Joint Venture will have, provided that the types and amount of coverage shall
not be less than what is customary for businesses similar in type and size to
the Joint Venture’s business.
Chapter
13 Duration of the Joint Venture
Article
48 The term of the Joint Venture shall be thirty (30) years from the
Establishment Date. An application for the extension of the term of the
Joint Venture, if unanimously approved by the Board, shall be submitted to the
Approval Authority within six (6) months prior to the end of the term of the
Joint Venture.
Chapter
14 Liquidation and Dissolution of the Joint Venture
Article
49 Upon the expiration of the Joint Venture’s term (whether upon the expiration
of the agreed term of the Joint Venture or upon early termination), the Board
shall appoint a liquidation committee composed of five (5) members, three (3) of
which shall be nominated by Party A and two (2) by Party B. The
liquidation committee shall prepare and implement the liquidation plan subject
to the approval by the Board. After all the debts of the Joint Venture
have been cleared (or an adequate reserve has been set aside therefore), the
remaining assets of the Joint Venture shall be distributed to the Parties in
proportion to their respective contribution to the registered capital of the
Joint Venture.
26
Chapter
15 Amendment and Termination of the Joint Venture and This Contract
Article
50 Any amendment to this Contract and its appendices shall become effective upon
the execution of written agreement and approval of the Approval
Authority.
Article
51 Termination
51.1 This
Contract shall be terminated upon the expiration of the term provided in Article
48 unless such term is extended. This Contract may also be terminated by
written agreement by the Parties and approval by the Approval Authority.
In addition, if any of the following events occurs prior to the expiration of
the agreed term as stipulated in Article 48, this Contract may be terminated by
one Party unilaterally:
51.1.1
Either Party may terminate this Contract where a Party is
unable to fulfill its obligations under this Contract due to a Force Majeure
event set forth in Chapter 18 of this Contract.
51.1.2
A Party may terminate this Contract where the other Party
substantially breaches any of the material obligations under this Contract and
the Assets Contribution Agreements and such breaching Party fails to cure such
breach within thirty (30) days of receiving written notice of such breach from
the other Party;
51.1.3
Either Party may terminate this Contract where the Joint
Venture sustains significant losses in three (3) consecutive years which causes
the Joint Venture’ inability to continue its operation;
51.1.4
A Party may terminate this Contract if the other Party is
declared bankrupt or becomes the subject of proceedings for bankruptcy,
dissolution or liquidation;
51.1.5
Either Party may terminate this Contract, where the
conditions precedent set forth in Article 12.2 hereof are not satisfied within
ninety (90) days after the Establishment Date and the time period is not
extended by mutual agreement between the Parties;
51.1.6
Either Party may terminate this Contract if a Deadlock
occurs and cannot be resolved within the time limit specified in Article 21.4,
provided that in the case of Article 21.4 (1), if the Director(s) of a Party
fails to attend the Board meeting or otherwise unreasonably delays the Board
meeting, such Party shall not have the right to terminate this
Contract.
51.2 A
termination of this Contract made and/or requested in accordance with this
Article 51 is referred to in this Contract as a “Termination”.
Upon a
valid Termination of this Contract, the Board shall promptly submit all
applications to the Approval Authority to terminate and dissolve the Joint
Venture.
27
Chapter
16 Liability for Breach of Contract
Article
52 Should all or part of the Contract and its appendices be unable to be
performed due to the breach by one Party, the Party in breach shall assume the
liability therefor. If both Parties breach the Contract, they shall assume
their respective liabilities according to the actual situation.
Chapter
17 Confidentiality
Article
53 Confidentiality obligation
As used
in this Chapter, “Confidential Information” means all nonpublic information that
(i) is furnished by a Party (the “Disclosing Party”) to the other Party or the
Joint Venture (as applicable, the “Recipient”), including all Incoming
Confidential Information (as defined in Article 18.1), or (ii) that, under the
circumstances surrounding disclosure, should be reasonably known by the
Recipient to be confidential. Without limiting the generality of the
foregoing, Confidential Information includes, without limitation, (A)
information relating to the Disclosing Party’s products, product plans, trade
secrets, technology, research (including past and/or ongoing research in the
field of vehicle battery), specifications (including, without limitation, for
vehicles, vehicle batteries or parts), plans, designs, drawings, concepts,
algorithms, data, laboratories, discoveries, prototypes, research, developments,
processes, methods, procedures, ideas, improvements, “know-how”, published
patent applications (including patent application status information), finances,
computer systems, software, hardware, advertising or marketing strategies,
techniques or plans, business plans, strategies or practices, employee names,
data and other employee information, customer names and other customer
information, pricing lists and policies and other financial, business or
technical information received from others that the Disclosing Party is
obligated to treat as confidential; and (B) the fact that discussions or
negotiations are taking place concerning the Joint Venture and its contemplated
projects, including the status or termination thereof.
Confidential
Information shall include all of the information described above, whether such
information is disclosed (i) in writing, orally, electronically, or by any other
media; and (ii) to the Recipient by any Affiliates and/or agents or employees of
the Disclosing Party.
Confidential
Information shall not include any information that (i) is or subsequently
becomes publicly available without the Recipient’s breach of any obligation owed
to the Disclosing Party; or (ii) became known to the Recipient prior to the
Disclosing Party’s disclosure of such information to the Recipient.
28
The
Recipient shall not disclose any Confidential Information to any other person or
entity, except to the Recipient’s employees, employees of its Affiliates and
independent contractors (collectively, the “Representatives”). If the
Recipient or any of its Representatives is requested or required (by
interrogatories, requests for information or documents, subpoena, civil
investigative demand, or similar legal process) to disclose any Confidential
Information or to make any other disclosure prohibited by this Contract, it
agrees to provide the Disclosing Party with prompt notice of each such request,
so that such Disclosing Party may seek an appropriate protective order or other
appropriate remedy to prevent or limit such disclosure.
The
Recipient shall use its best efforts to protect such Confidential Information
from disclosure to third parties.
The
Recipient may disclose Confidential Information only to the Recipient’s
Representatives who have a business-related need-to-know and who are bound by
confidentiality provisions consistent with this Agreement.
Confidential
Information may be used by the Recipient only in connection with the
effectuation of the business objectives of the Joint Venture, and may not be
used for any other purpose, including, without limitation, the furtherance of
the business of the Recipient’s business other than its ownership interest in
the Joint Venture.
No
Recipient shall make any copies of Confidential Information except as necessary
for use in accordance with the terms hereof, and any copies which are made shall
be considered Confidential Information.
The
Recipient shall notify the Disclosing Party immediately upon discovery of any
unauthorized use or disclosure of Confidential Information or any other breach
of this Article by the Recipient or any of its Representatives, and will
cooperate with the Disclosing Party in every reasonable way to help the
Disclosing Party regain possession of the Confidential Information and prevent
its further unauthorized use.
Unless
otherwise agreed by the Parties, upon the termination of the Joint Venture
(whether as a result of the expiration of the scheduled term of the Joint
Venture or upon its earlier Termination or otherwise), the Recipient shall
promptly cease using and, at its own expense, promptly return and cause its
Representatives to return to the Disclosing Party all Confidential Information
together with any (A) tangible copies which it may have made, (B) writings
descriptions and summaries involving or based on such Confidential Information
and (C) copies stored in any computer memory or other storage medium. If
any Confidential Information has been destroyed, an adequate response to a
return request therefor by the Disclosing Party will be written notice, executed
by the Recipient, certifying that such Confidential Information has been
destroyed.
The
Recipient acknowledges that monetary damages may not be a sufficient remedy for
unauthorized disclosure of Confidential Information and that the Disclosing
Party shall be entitled, without waiving any other rights or remedies, to such
relief as may be deemed proper by a court of competent jurisdiction. The
Recipient shall be liable for any disclosure of Confidential Information made by
its Representatives in breach of this Article.
29
Chapter
18 Force Majeure
Article
54 Should either Party be unable to perform its obligations under this Contract
as a result of a force majeure (a “force majeure” being any event or set of
circumstances that (i) was not caused by such Party’s act or omission and (ii)
such Party cannot reasonably foresee, cure and avoid of its happening and
consequence, such as earthquake, typhoon, flood, fire, war or major change of
laws.), such Party affected by a force majeure shall notify the other Party
thereof in writing as promptly as practicable (but in no event later than three
(3) business days from the date on which such Party becomes aware of its
inability to perform under this Contract), and such notice shall provide
detailed information of the events and an explanation of the reasons for such
Party’s inability to perform under this Contract. Both Parties shall in
good faith attempt to determine whether the business objectives of the Parties
may still be satisfied in light of the force majeure, including by way of
amending the terms of this Contract. If such force majeure event
preventing the performance of this Contract for more than three (3) months,
either Party in good faith determines that the Joint Venture shall be terminated
in light of such force majeure, such Party may terminate the Joint Venture in
accordance with Article 51.
Chapter
19 Applicable Law
Article
55 The formation of the Joint Venture, validity of all corporation activities of
the Joint Venture, interpretation and execution of this Contract, and the
settlement of disputes arising from this Contract shall be governed by the
relevant laws of the PRC.
Chapter
20 Settlement of Disputes
Article
56 Any disputes arising from this Contract shall be settled through friendly
negotiations between both Parties. If either Party reasonably believes,
after friendly negotiations with the other Party, that a mutually satisfactory
settlement with respect to such dispute will not be reached, then such dispute
may be submitted by either Party to the Hong Kong International Arbitration
Center under the then valid UNCITRAL Arbitration Rules by three (3) arbitrators.
Each Party shall appoint one (1) arbitrator and these two (2) arbitrators shall
jointly appoint a third arbitrator as the chairman of the arbitration panel. The
arbitral award of such commission shall be final and binding upon both
Parties.
30
Article
57 During any arbitration proceeding conducted pursuant to Article
56, this Contract shall continue to be observed and enforced by both Parties,
except to the extent such arbitration proceeding and/or the dispute giving rise
to such proceeding makes the observance and enforcement of this Contract
impracticable.
Chapter
21 Effectiveness of This Contract and Miscellaneous
Article
58 This Contract shall be written in both Chinese and English, and both
languages shall be equally valid. Each Party acknowledges that it has
reviewed both language texts and that they are substantially the same in all
material respects.
Article
59 This Contract along with any appendices hereto constitute the entire
agreement of the Parties, and supersede all previous understandings and
agreements to the subject herein between the Parties, whether oral or
written.
Article 60 This Contract
shall become effective immediately upon the approval of the Approval
Authority.
This
Contract shall be executed in six originals, with each of Party A, Party B, the
Approval Authority and the Registration Authority holding one original of this
Contract. Additional originals shall be kept by the Joint
Venture.
Article
61 Any notice, demand or request required or permitted to be given by
a Party pursuant to the terms of this Contract shall be in writing and shall be
deemed delivered (i) when delivered personally or by verifiable facsimile
receipt, unless such delivery is made on a day that is not a business day, in
which case such delivery will be deemed to be made on the next succeeding
business day, or (ii) if sent by an internationally recognized overnight
courier, upon receipt from such courier; in each case, addressed as
follows:
If to
Party A:
Wanxiang
EV Co., Ltd.
Xx.000
Xxxxxxx 0 Xxxx
XxxxXxxx
Economic & Technology Developing Zone
Hang Zhou
City, Zhejiang Province
PRC
Attn:
Xxxx Xxx
Tel:
00-0000-00000000
Fax:
00-0000-00000000
31
If to
Party B:
Ener1,
Inc.
0000
Xxxxxxxx, Xxxxx 00X
Xxx Xxxx,
XX 00000
Attn: General
Counsel
Tel:
0-000-000-0000
Fax:
0-000-000-0000
or as
otherwise designated by a Party in writing to the other Party in accordance with
this Article 61.
Article
62 The Parties shall cause the Board to establish compliance system and policies
to ensure compliance of the requirements in applicable U.S. export control laws
and regulations (specifically including, but not limited to, the requirements of
the Arms Export Control Act, the International Traffic in Arms Regulation, the
Export Administration Act, and the Export Administration Regulations and all
requirements for obtaining export licenses or agreements) and the United States
Foreign Corrupt Practices Act, 15 U.S.C. 78, and any amendments
thereto.
Nothing
in this Contract shall require either Party or the Joint Venture to export,
license, sell or otherwise transfer any intellectual property or other assets of
such Party if such transaction is prohibited by applicable law or any
governmental body of the home country of such Party.
Article
63 This Contract is signed in Indiana, United States of America by duly
authorized representatives of both Parties on January 17, 2011.
|
Party
A: Wanxiang EV CO., LTD.
|
Party
B: Ener1, Inc.
|
|
Authorized
Representative:
|
Authorized
Representative:
|
| Xxxxxx Xx | Xxxxxxx Xxxxxxxxxxxx |
|
Signature:
/s/ Xxxxxx
Xx
|
Signature:
/s/ Xxxxxxx
Xxxxxxxxxxxx
|
January
17, 2011
32
Appendix
1: Form of Assets Contribution Agreement
33
Appendix
2: Form of Lease and Service Agreement
34
Appendix
3: Form of Technology License Agreement
35
