EXHIBIT 10.7
Sino-foreign Joint Venture Contract for
Sanhe New Dragon Asia Food Company Limited
Article 1 Introduction
1.1 Shandong Longfeng Group Company(as "Party A") and Keen General Limited
(as "Party B"), based on the principal of equality, mutual benefits and
upon friendly consultation, agreed to jointly establish the Sanhe New
Dragon Asia Food Company Limited in Sanhe, Hebei, the P.R.C. according to
the "Sino-foreign Equity Joint Venture Law of the P.R.C.". The joint
venture is regulated by this contract.
Article 2 Joint Venture Parties
2.1 The joint venture parties of this contract are:
Party A: Shandong Longfeng Group Company, registered in
Yantai, Shandong, the P.R.C.
Legal address: ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ (▇), ▇▇▇▇▇▇▇, ▇▇▇▇▇▇,
Shandong, the P.R.C.
Legal representative: Xue ▇▇▇ ▇▇▇▇
Position: Chairman
Nationality: Chinese
Party B: Keen General Limited
Legal address: TrustNet ▇▇▇▇▇▇▇▇ ▇.▇. ▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Legal representative: Suk ▇▇▇▇▇ ▇▇
Position: Chairman
Nationality: American
Article 3 Joint Venture Company
3.1 Party A and Party B agreed to jointly establish the Sanhe New Dragon Asia
Food Company Limited (as "Joint Venture") according to the "Sino-foreign
Equity Joint Venture Law of the P.R.C." and other relevant regulations in
the P.R.C.
3.2 Name of the Joint Venture: ( )
English name: Sanhe New Dragon Asia Food Company
Limited
Address of the Joint Venture: ▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇, ▇▇▇▇▇, the P.R.C.
The Joint Venture is registered in Sanhe, Hebei, the P.R.C.
-1-
3.3 All activities of the Joint Venture must obey the laws, orders and
relevant regulations of the P.R.C.
3.4 The Joint Venture is a limited liability company. Party A and Party B, as
the Joint Venture's shareholders, bear limited liability according to
their respective registered capital. Party A and Party B share the
profits, the losses and the risks in proportion to their respective
registered capital.
Article 4 Operation Aims, Areas and Capacity
4.1 The joint venture of Party A and Party B aims at utilizing the funding
and technology from both parties to assist the Joint Venture to produce
instant noodle and other foods by employing advanced technology and
scientific management method. In addition, the Joint Venture will develop
new products and improve efficiency and quality of the products so as to
compete in the market and bring profits to the shareholders.
4.2 The operation areas of the Joint Venture are:
(i) Production and sales of instant noodles and other foods;
(ii) Research and development of instant noodles and other foods;
(iii) Provision of after-sales services for instant noodles and other
foods.
4.3 The production capacity of the Joint Venture in the first year shall be
552,750,000.00 units per annum. The expansion of production capacity and
the operation sizes in the future will be decided by the Board of
Directors
Article 5 Total Investment Amount and Registered Capital
5.1 The total investment amount of the Joint Venture is RMB 80,674,000.00 The
registered capital of the Joint Venture is RMB 51,191,400.00
Of which:
Party A will provide RMB 10,422,569.00 in form of cash, factory and
equipment as 20.36% of the registered capital of the Joint Venture. Party
B will provide foreign currency equivalent to RMB 40,768,831.00 as 79.64%
of the registered capital of the Joint Venture.
-2-
The difference between total investment amount and the registered capital
will be provided by the shareholders in form of shareholder loans. Of
which:
Party A will provide RMB 6,002,657.00 as Party A's shareholder loan to
the Joint Venture. The Joint Venture will repay Party A's shareholder
loan and interest in RMB. Party B will provide foreign currency or RMB
equivalent to RMB 23,479,943.00 as Party B's shareholder loan to the
Joint Venture. The Joint Venture will repay Party B's shareholder loan
and interest in original loan currency.
The timing of providing shareholder loan depends on the funding
requirement of the Joint Venture.
5.2 Party B will provide foreign currency as registered capital. The exchange
rate between foreign currency and RMB shall be the middle foreign
exchange rate quoted by the Bank of China at the capital payment day.
5.3 The shareholder loan interest and the loan maturity date shall be decided
by the Board of directors.
5.4 The Joint Venture will apply and register the relevant contracts and
Party B's shareholder loan so that Party B's dividends and shareholder
loan principal and interest can be remitted out of the P.R.C. legally.
5.5 The registered capital of the Joint Venture shall be paid according to
the following schedule:
(i) Party A will invest in form of cash, factory and equipment within
3 months after the Joint Venture obtained its business license;
(ii) Party B will invest in form of Hong Kong dollars, US dollars or
equivalent foreign currency within 3 months after the Joint
Venture obtained its business license.
5.6 The registered capital of both Parties will need the written confirmation
report from a certified practising accountant registered in the P.R.C.
The confirmation fee will be paid by the Joint Venture. After obtaining
the capital contribution confirmation report, the Board will issue the
certificate of investment.
5.7 The increment of registered capital of the Joint Venture will need the
Board approval. If one party cannot provide new capital according to the
board resolution, the other party can choose to provide the new capital
for the other party. The shareholdings will then be adjusted according to
the actual investment in registered capital of both Parties. The change
in shareholdings will need the approval of and registered in the relevant
authority.
-3-
5.8 The increment of shareholder loan of the Joint Venture will need the
approval of the Board. If it involved the increment of total investment
amount or registered capital, the approval from relevant authority will
be needed. Each party should provide his shareholder loan according to
their respective proportion in the registered capital of the Joint
Venture.
5.9 If any party transfers all or part of her registered capital to other
third party, other Party and relevant P.R.C. authority's approvals are
required.
5.10 When one party transfers all or part of its registered capital
("Vendor"), other shareholder shall have the first priority to purchase.
The other shareholder should reply whether agree to purchase the Vendor's
registered capital according to the selling price offered by the Vendor
within 60 days (including public holidays) after the Vendor sent out the
sales notice. If the other shareholder agrees to purchase the Vendor's
registered capital, the Vendor should perform the share transfer and bear
the related costs. If the other shareholder does not purchase the
Vendor's registered capital or does not reply within the said 60 days,
the Vendor can sell its registered capital to third party with the
selling price not lower than the price offered to other shareholder
beforehand. The Vendor shall apply the approval from and registered the
transfer at the relevant authority. Besides, the third party purchaser
must provide a written agreement to comply with the terms of this
contract and bear the responsibilities of the Vendor under this contract.
The Vendor shall give the certificate of investment back to the Joint
Venture during the transfer. The Joint Venture will then cancel it and
issue a new certificate to the purchaser and register the transfer with
the relevant authority.
5.11 Any party cannot mortgage, pledge or create lien on all or part of his
registered capital without the approval of the Board.
5.12 The total cash invested by both Parties shall be used to purchase all
assets and liabilities of Beijing Meilong Food Company Limited ("Seller")
existed on the date of obtaining Joint Venture's business license. The
Seller will responsible for filing the transfer application and handling
the approval requirement of the relevant authority. The selling costs
will be borne by the Seller.
5.13 After the Joint Venture purchase the assets and liabilities from the
Seller, the Board of the Joint Venture will appoint people to examine the
assets and liabilities. The Joint Venture and the Seller will then sign
the assets and liabilities transfer confirmation as evidence to prove the
Seller has transferred all assets and liabilities to the Joint Venture.
-4-
Article 6 Responsibilities of Each Party
6.1 Party A and Party B shall be individually responsible for the completion
of the following tasks:
Party A's responsibilities:
(i) process approval application and taxation and other registration
procedure, obtaining business license for the Joint Venture from
relevant Chinese authorities.
(ii) apply to the land administrative department for the Joint Venture
to obtain necessary land use right and arrange the land lease
contract.
(iii) assist the Joint Venture to notarize the land lease contract, the
land use right certificate and/or assets purchase agreement. The
costs shall be borne by the Joint Venture.
(iv) contribute registered capital and shareholder loan according to
provisions of Article 5. (v) arrange foreign currency registration
of the related contracts and Party B's shareholders loans so
that the dividend and shareholder loan and interest can legally
remit out of the P.R.C. in foreign currency.
-5-
(vi) assist the Joint Venture to lease or purchase equipment, parts,
raw materials, office utensils, transportation and communication
facilities, etc.
(vii) assist the Joint Venture to arrange any matters in relation to
infrastructure facilities such as water, electricity and
transportation, etc.
(viii) assist the Joint Venture to manage daily operation.
(ix) assist the Joint Venture to arrange local bank loans.
(x) assist Party B to handle necessary matters.
(xi) assist the Joint Venture to handle other matters.
Party B's Responsibilities:
(i) contribute registered capital and shareholder loan according to
provisions of Article 5.
(ii) responsible for the Joint Venture's quality control, product
development, management training and market development in the
P.R.C. and aboard.
(iii) responsible for set up, operation, control and computerization of
the finance department of the Joint Venture.
(iv) responsible for the daily operation management of the Joint
Venture.
(v) implement other matters being entrusted by the Joint Venture.
Article 7 Sales of Products
7.1 Products of the Joint Venture can be sold both in and out of Chinese
territory.
7.2 Products of the Joint Venture sold in domestic markets can be sold
through Chinese governmental departments, commercial departments or the
Joint Venture.
7.3 In order to sell products and provide after-sale service in and out of
Chinese territory, the Joint Venture can establish branches in and out of
Chinese territory for sale service after obtaining approval from relevant
authorities.
Articles 8 Board of Directors
8.1 The registration date of the Joint Venture is the setting up date for the
Board of Directors.
8.2 The Board of Directors consist of 9 directors, of which 1 director shall
be appointed by Party A and 8 directors shall be appointed by Party B.
The Chairman of the Board shall be appointed by Party B and the
Vice-chairman appointed by Party A. The office term of directors,
chairman and vice chairman shall be 4 years. The directors can continue
their positions upon reappointment by their respective parties.
8.3 The Board of Directors is the highest authority in the Joint Venture and
has the power to determine all important issues concerning the Joint
Venture. Its major powers are set as follows:
(i) amendment or supplement to the Articles of Association of the
Joint Venture.
(ii) termination and dissolution of the Joint Venture and selecting
members of the liquidity committee.
(iii) increase or transfer of the registered capital.
(iv) cooperation and merger with other economic organizations.
(v) mortgage, guarantee or transfer of assets of the Joint Venture.
(vi) appointment, division of responsibilities and employment
termination of General Managers, Assistant General Manager, Chief
Engineer, Chief Accountant and auditors.
(vii) preparing plans for the Joint Venture development and determining
plans for production, operation, sale and finance and profit.
-6-
(viii) reviewing annual operation report submitted by the general
manager.
(ix) deciding annual profit distribution scheme.
(x) approving Joint Venture's labor contract scheme and various
internal rules.
(xi) revising salary and welfare system of the Joint Venture.
(xii) determining organization structure of the Joint Venture,
establishing or canceling functional departments.
(xiii) Other major issues concerning the Joint Venture.
Abovementioned subsection (i), (ii)(except condition 18.2), (iii), (iv),
(v) shall be approved by unanimous consent of all directors present in
the board meeting. The other matters shall be approved by majority vote
in the board meeting.
8.4 Unless appointed as representative of other director, Chairman and
vice-chairman do not have an extra vote or casting vote on any board
meeting.
8.5 The board meeting shall be initiated and held by the Chairman. If the
Chairman cannot hold the meeting for any reason, the Vice-chairman or
other directors shall hold the meeting.
8.6 Chairman of the Board of Directors is the legal representative of Joint
Venture. Temporary authorization could be delegated to Vice-chairman or
other directors when Chairman is not able to perform his duty.
8.7 Board of Directors shall hold at least one meeting each year. Chairman of
the Board shall send written "effective notice" to each director 30 days
before the board meeting date. The effective notice shall be treated as
effective arrival after ten days from the sending date.
8.8 The Chairman should hold a temporary meeting upon the request of more
than 1/3 of all the directors. Chairman of the Board shall send
"effective notice" to each director 14 days before the board meeting
date. The effective notice shall be treated as effective arrival after
ten days from the sending date.
8.9 "Effective notice" much be in written form and send by registered air
mail to the correspondence address as stated in Articles 21. Effective
notice should mention the meeting agenda, time and place.
8.10 The Chairman can use fax to notify each director but this cannot be
treated as "effective notice".
-7-
8.11 The board meeting shall only be held with attendance of at least 7
directors from both Parties. Board meeting shall be postponed five
working days after the date of original meeting if directors of either
party are absent from it (based on working day in the P.R.C.). Such
deferred meeting may be held with the attendance of any 7 or more
directors.
8.12 Director can appoint a proxy to attend and vote in the board meeting if
he is unable to attend the meeting.
8.13 If a director's correspondence address changes, he should notify the
Joint Venture, each other directors and the Chairman. If the effective
notice cannot reach the director after two consecutive times and he or
proxy does not attend the board meeting, his absent will be treated as
forfeiting his voting right.
8.14 Joint Venture should bear each director or his representative's traveling
and accommodation expenditure incurred for attending the board meeting.
8.15 Each board meeting should have a detail written record and signed by all
attended director or his representative. Board resolution will be signed
by attending directors or his representative and keep by the Joint
Venture. A copy will be provided to each party.
Article 9 Management Organization
9.1 The Joint Venture sets up management organization, responsible for the
daily operation of the Joint Venture. The management organization shall
have one general manager and two assistant general managers who are
employed by the Board of Directors for a term of 3 years.
9.2 General manager is responsible for carrying out decisions made by the
Board and daily operation of the Joint Venture. Assistant general
managers shall assist general manager to perform his duty. General
manager can authorize an assistant general manager to perform his duty on
behalf of him under the condition that he is not able to perform his
duty.
9.3 Several senior executives of Joint Venture including a Chief Engineer and
a Chief Accountant shall be employed by Board of Directors to assist
General Manager and assistant general managers. They are responsible for
issues in relation to engineering technology, financial and accounting
management and other business management.
-8-
9.4 Members of the Board may be appointed as General Manager or assistant
general manager at the same time.
9.5 Board has the power to terminate the employment contract with General
Manager, assistant general managers or any employee in the Joint Venture.
Article 10 Labor Management
10.1 The Board shall, subject to the P.R.C. Regulations on Labor Management in
Sino-foreign Equity Joint Venture and relevant regulations, prepare plans
for labor recruitment, dismissal, salary, insurance, welfare, rewards and
punishments schemes. Employment contracts may be, based on the proposed
system, signed by an employee individually or labor union collectively
with the Joint Venture. Labor contracts shall be reported to the local
labor authority for records after being signed.
10.2 The employment, salary, insurance, welfare benefits and traveling
allowance of senior executives shall be decided by the Board.
Article 11 Taxes, Finance and Audit
11.1 The financial and accounting system of the Joint Venture shall be
established by the Joint Venture according to the Sino-foreign Equity
Joint Venture Financial Accounting Standard issued by the Ministry of
Finance and other relevant rules and regulations.
11.2 The accounting policies and standards of the Joint Venture shall be
initiated by Party A and to be approved by the Board. Such policies shall
be filed in the local government's financial department and tax
department.
11.3 The Joint Venture shall pay various taxes in accordance with the P.R.C.
laws and regulations.
11.4 Employees of the Joint Venture shall pay personal income tax in
accordance with the P.R.C. Law on Personal Income Taxes and other
relevant regulations.
11.5 The Joint Venture shall keep reserve funds, enterprise development funds
and employee welfare funds in accordance with the P.R.C. Law on
Sino-foreign Equity Joint Ventures. The ratio for provision of each fund
shall be determined by the Board based on operating results of the Joint
Venture.
-9-
11.6 The accounting year of the Joint Venture is from January 1 to December 31
of each year. All accounting receipts, bills, records and reports shall
be produced in Chinese.
11.7 Certified public accountants registered in the P.R.C. shall be appointed
to examine and audit the Joint Venture's financial and accounting
records. They shall report the results to the Board and the General
Manager.
11.8 If any Party requests to employ other auditors to examine the annual
accounts of the Joint Venture, the other Party shall give its consent.
The Joint Venture shall co-operate in full with this auditor.
11.9 During the first 3 months after the end of each business year, the
General Manager shall organize the preparation of the last year's balance
sheet, profit and loss statement and profit distribution plan and submit
the result to the Board for inspection and approval.
Article 12 Bank Accounts and Foreign Exchange
12.1 According to the managing requirement of the Joint Venture and the
relevant regulations, the Joint Venture can open RMB or foreign currency
bank accounts with financial institutions in the P.R.C. or aboard after
approval. The Board of the Joint Venture shall decide the signatories of
the cheques.
12.2 The foreign currency of the Joint Venture (e.g. investment by Party B,
overseas loan, foreign currency incomes or other foreign remittance)
shall be deposited into the Joint Venture's approved foreign currency
bank accounts in the P.R.C. or aboard according to the relevant foreign
exchange laws or regulations. All foreign currency expenses should be
paid through the above foreign currency bank accounts.
Article 13 Profit Distributions
13.1 The Joint Venture shall keep reserve funds, enterprise development funds
and employee welfare funds. The ratio for provision of each fund shall be
determined by the Board based on operating results of the Joint Venture.
13.2 Profit of the Joint Venture shall be distributed in proportion to the
actual payment of registered capital once a year. The distribution amount
shall be determined by the Board. The profit to both parties shall be
distributed within 1 month after announcement of profits distribution by
the Joint Venture.
-10-
Article 14 Shareholding Transfer
14.1 All assets shall be owned by the Joint Venture during the term of
cooperation. Any party shall not be allowed to transfer, sell or mortgage
any part or all of the assets without approval of the Board. Any transfer
made by a single party shall be void.
14.2 Any transfer of the shareholdings, contractual rights and
responsibilities in part or in whole made by a single party to a third
party must get the prior consent of the other party and approval of the
original approval authority. The other party to the Joint Venture shall
have the priority to purchase the transfer under the same conditions
comparable to a third party.
14.3 If approved by the original approval authority, any party (the
"Purchaser") can purchase the shareholding from other party (the
"Vendor"). Or he can suggest other purchasers (the "Replacement
Purchaser") to purchase the shareholding of the Vendor.
14.4 If both Parties cannot agreed a value of the Joint Venture within 30 days
after the Purchaser providing written notice the Vendor to purchase the
shareholdings, the value of the Joint Venture shall be determined by a
registered professional assets valuator based on the international
standard with the assumption that the Joint Venture will carry on its
business. The valuation costs shall be borne by the Vendor.
14.5 The selling price of the Vendors' shareholdings shall equal to the value
of the Joint Venture agreed by both Parties or determined by the
abovementioned valuator in the proportion of Vendor's total registered
capital in the Joint Venture.
14.6 Any party or Replacement Purchaser can refuse to sell or purchase the
proposed transfer shareholdings (where applicable) within 15 days after
receiving the notice of Joint Venture`s value from the abovementioned
valuator.
14.7 If the Purchaser or the Replacement Purchaser provides written notice in
agreeing to buy the Vendor's shareholdings in the Joint Venture, the
Vendors shall complete all transfer procedures within 30 days after the
date of such written notice. The Purchaser or Replacement Purchaser shall
pay all purchase consideration in Hong Kong dollars or US dollars (RMB if
local purchaser) within 10 days after the completion of transfer. If the
Vendor is Party B, the Purchaser or Replacement Purchaser shall remit the
purchase consideration to bank account designated by Party B after
completion of transfer and approved by the relevant authority. The Vendor
shall bear all the relevant tax payment and other costs (including the
valuation fee stated in clause 14.4) according to the relevant regulation
as a result of the Vendor's retreat.
-11-
14.8 The Joint Venture should manage its business according to normal
condition until the Vendor shareholding transfer procedures are all
completed.
Article 15 Duration of the Joint Venture
15.1 The duration of the Joint Venture is 50 years. The date of establishment
of the Joint Venture is the issuing date of the business license.
15.2 Under the suggestion by any party, the Joint Venture may apply to
approval authority for an extension of the Joint Venture's duration
within 6 months prior to the expiration upon a unanimous approval of the
Board.
Article 16 Insurance
16.1 All kinds of insurance of the Joint Venture shall be insured from
insurance companies registered in the P.R.C. The Board shall determine
all terms & conditions in insurance policies, including category,
insurance values and others.
16.2 Employment insurance, social insurance and other insurance shall be
insured for employees by the Joint Venture. Hence the Joint venture will
not be responsible for any accident compensation, welfare and expenses
after retirement of employees. Detailed insurance policies shall be
determined by the Board.
Article 17 Confidentiality
17.1 Each party of this contract undertakes that he and his appointed Joint
Venture directors or employees shall not disclosed any information
related to the Joint Venture to any other people, corporate or
organization without the board consent.
17.2 The right and responsibility of this confidentiality clause, except the
public information from other sources or information provided under the
request of any stock exchange or laws, shall be effective after the
termination of this contract by any reason.
Article 18 Amendment, Alternation and Termination of the Contract
-12-
18.1 Amendment to the Contract shall only be effective upon a written
agreement signed by both parties and approved by original approval
authority.
18.2 Under the following conditions, any party can terminate this contract
with "Effective Notice" and apply to the relevant authority for approval:
(i) The Joint Venture suffers losses and cannot be operated;
(ii) The Joint Venture cannot be operated because of force majeure;
(iii) The Joint Venture cannot meet its business target;
(iv) Any party breaches the contract or articles of the Joint Venture
and the other party reasonably believe that such breach will cause
the Joint Venture to fail to fulfill its economic objective or
cause the other party or Joint Venture to incur risk to lose or
have an unfavorable effect on the Joint Venture's operation.
(v) Unreasonably reject directors from one party to join the board
meeting or management of the Joint Venture.
(vi) The government confiscates or expropriates all or part of the
assets of the Joint Venture.
(vii) Any party's economic benefits seriously affected by the change of
the P.R.C. laws, regulations or
other requirements after the signing of this contract.
(viii) Other reasons which cause the Joint Venture cannot be normally
operated.
Article 19 Treatment of Assets after Maturity of the Joint Venture Duration
19.1 When Joint Venture period is expired or the Joint Venture terminated
before the approved period, if one party's share has not been sold
according to Article 14, the liquidated assets will be distributed
according to the shareholding ratio and relevant laws. The liquidation
committee or related matters will be regulated by the Articles of the
Joint Venture.
Article 20 Liabilities of Breach of Contract
20.1 Any party who has failed to contribute the registered capital in
accordance with the provisions of Article 5 of this contract shall be
liable to pay penalty charges equal to 1% per month of the registered
capital payable to the other party starting from 3 months after the
submission date. The other party shall have the right to terminate this
contract and claim for damage from the breaching party, in addition to
the accumulated penalty charges equal to 3% of the registered capital
payable, if capital contribution has been overdue for 6 months.
-13-
20.2 If any party does not perform or seriously default under this contract or
the Joint Venture's Articles which cause the Joint Venture to cease
operation, unable to achieve the targets stated in this contract,
bankruptcy or liquidation, the defaulting party shall be treated as
default and terminate this contract on his own. The other party shall
have the right to issue an "Effective Notice" to termination this
contract before the original approved duration, entitled to apply to the
original approval authority for termination of this contract and claim
for compensation from the default party. The defaulting party shall
compensate for damages suffered by the Joint Venture, if both parties
agree to continue the Joint Venture. If this contract was breach by one
party and cause this contacts or its appendix cannot be partly or wholly
be performed, the defaulting party shall bear all the responsibilities.
Article 21 Correspondence Address
21.1 All notices issued to any party under this contract shall be effectively
sent to all Joint Venture Parties. The correspondence addresses of each
party and his appoint directors are as follow:
Party A: Shandong Longfeng Group Company
Correspondence address: ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ (▇), ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, Shandong,
the P.R.C.
Contact person: Xue ▇▇▇ ▇▇▇▇
Phone no.: (▇▇) ▇▇▇ ▇▇▇▇▇▇▇
Fax no.: (▇▇) ▇▇▇ ▇▇▇▇▇▇▇
Party B: Keen General Limited
Correspondence address: 22/F New World Tower II, ▇▇ ▇▇▇▇▇'▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇
Contact person: Man ▇▇▇▇ Ki
Phone no.: (▇▇▇) ▇▇▇▇▇▇▇▇
Fax no.: (▇▇▇) ▇▇▇▇▇▇▇▇
Article 22 Force Majeure
22.1 In the case of force majeure such as earthquake, typhoon, fire, war or
other unforeseeable accidents which directly renders one party unable to
perform its duty under the terms and conditions of this contract, such
party shall inform the other party of such accidents, provide with
accident details and valid documentation for failure to fulfill this
contract in part or in whole or necessity for deferred performance within
15 days after the incident. Such documents shall be issued by the notary
office in the area where the accident occurs. Both parties may negotiate
the methods to reduce the effect and decide whether to terminate the
Contract, partly relieve the breaching party from contractual
liabilities, or delay the performance of this contract according to the
affecting level.
-14-
Article 23 Applicable Law
23.1 Conclusion, effectiveness, interpretation, performance and disputes
settlement related to the Contract are governed by the P.R.C. Law.
Article 24 Dispute Settlement
24.1 All disputes caused by or related to implementation of this Contract
shall be settled through negotiation between both parties. Disputes not
to be settled as such shall be submitted to China International Trade and
Economy Arbitration Commission for arbitration subject to the
Commission's arbitration rules after 30 days after sending the Effective
Notice. The arbitration award is final and shall be binding upon both
parties.
24.2 Any party can apply to the court for enforcing the arbitration award.
During the procedures of arbitration, enforcing the arbitration award or
enforcing this contracts and related matters, both party agree to forfeit
the right to allege by using the legal exemption right from the nation or
as a nation's organization.
24.3 During the process of arbitration, the Contract shall be continuously
executed except for the sections under arbitration.
Article 25 Language
25.1 This Contract shall be written and signed in Chinese.
Article 26 Effective and Miscellaneous
26.1 All Joint Venture's Land Lease Contract, land use right certificate,
building certificate or asset purchase contract shall be notarized by a
public notary. Such costs shall be borne by the Joint Venture.
26.2 All costs related to the assets transfer to the Joint Venture shall be
borne by Party A or the vendor.
-15-
26.3 Party B will responsible for the computerization for the Joint Venture
and suggest plans to purchase suitable software and equipment. All such
plans shall be decided by the Board.
26.4 All supplement agreements prepared under the principle of this contract
shall form part of the constitution documents of this contract.
26.5 Each Party of this contracts represents and undertakes that he has the
full power and right to sign this contract, perform the duties under this
contract and the authorized signatories of this contract has full
authorization to sign this contract.
26.6 Except clause 18.2, ineffectiveness of any clause of this contract will
not affect the effectiveness of other clauses of this contract.
26.7 This contract shall be approved by the relevant authority and be
effective in the approval date.
26.8 The contract is signed by a legal representative of Party A and a proxy
of Party B in Shenzhen, the P.R.C. on November 28, 1998
26.9 This contract has eleven original copies. Party A retains 3 copies. Party
B retains 3 copies. The Joint Venture retains 5 copies.
Party A: Shandong Longfeng Group Company
Legal representative:
Party B: Keen General Limited
Proxy:
November 28, 1998
-16-