printer-friendly

Sample Business Contracts

Joint Venture Contract - Nan'ao Shaohe Pearl Seawater Culture Co. Ltd., Man Sang Jewellery Co. Ltd. and Chung Yuen Co.

Sponsored Links

             SHANTOU CITY SHAOHE PEARL SEAWATER CULTURED CO., LTD.





                                    CONTRACT


<PAGE>   2


                             CONTRACT


                     CHAPTER 1 - GENERAL PROVISIONS

Art. 1  In accordance with the China-Foreign Cooperative Joint Venture Law of
        the People's Republic of China and other laws and regulations of China
        on foreign-related matters, in adherence to the principles of equality
        and mutual benefit and after friendly negotiations, Nan'ao Shaohe Pearl
        Seawater Culture Co., Ltd. of Guangdong Province, Man Sang Jewellery
        Co., Ltd. of Hong Kong and Chung Yuen Company o/b Golden Wheel
        Jewellery Mfr. Ltd. of Hong Kong agree to jointly establish a
        cooperative joint venture in Nan'ao County, Guangdong Province, the
        People's Republic of China and therefore, have reached the following
        terms and conditions for mutual observance.


                 CHAPTER 2 - COOPERATIVE JOINT VENTURE PARTIES

Art. 2  The parties to the cooperative joint venture shall be:

        Party A: Nan'ao Shaohe Pearl Seawater Culture Co.,
                 Ltd. of Guangdong Province, registered with the Administration
                 for Industry and Commerce of Nan'ao County, Guangdong Province

        Legal address:  Zei'ao Bay, Shen'ao, Nan'ao County, Guangdong Province

        Legal representative:  Xie Shaohe, Chairman of Board, of Chinese
                               nationality

        Banker:  Industrial and Commercial Bank of China, Nan'ao Sub-branch

        Bank account no.:  02450122-279

        Telephone:  0754-5713588

        Party B: Man Sang Jewellery Co., Ltd., registered in
                 Hong Kong, China

        Legal address: 21/F, Railway Plaza, 39 Chatham Road South, Tsim Sha
                       Tsui, Kowloon, Hong Kong

        Banker: The Hongkong and Shanghai Banking Corporation Limited, at
                673 Nathan Road, Mongkok, Kowloon, Hong Kong

        Bank account no:  580-077790-001

        Telephone:  00852-23175300



                                     - 1 -
<PAGE>   3


        Legal representative: Cheng Tai Po, Vice-Chairman of
                              Board, of Hong Kong, China nationality

        Party C: Chung Yuen Company o/b Golden Wheel Jewellery
                 Mfr. Ltd., registered in Hong Kong, China

        Legal representative: Cheung Pui Hung, Managing Director,
                              of Hong Kong, China nationality

        Legal address: 16E, Alpha House, 27-33 Nathan Road, Tsim Sha Tsui,
                       Kowloon, Hong Kong

        Banker: The Hongkong and Shanghai Banking Corporation Limited,
                Kowloon Hotel Branch

        Bank account no.: 508-035607-001

        Telephone: 00852-23683122


             CHAPTER 3 - ESTABLISHMENT OF COOPERATIVE JOINT VENTURE

Art. 3  Party A, Party B and Party C hereby agree to establish Shantou City
        Shaohe Pearl Seawater Cultured Co., Ltd. (hereinafter referred to as the
        "Company") as a cooperative joint venture in China according to the
        Chinese-Foreign Cooperative Joint Venture Law of the People's Republic
        of China and other laws and regulations of China on foreign-related
        matters.

            The Chinese name of the Company shall be: [ ]

            The English name of the Company shall be:  Shantou City Shaohe
            Pearl Seawater Cultured Co., Ltd.

            The legal address of the Company shall be Zei'ao Bay, Shen'ao,
            Nan'ao County, Guangdong Province.

Art. 4  All activities of the Company shall comply with the laws, regulations
        and decrees of the People's Republic of China.

Art. 5  The Company shall be a limited liability company.  Party A, Party B and
        Party C shall bear the liabilities of the Company to the extent of
        their respective capital contributions to the Company and shall share
        any profits, risks or losses of the Company in the ratio determined
        hereunder.




                                     - 2 -
<PAGE>   4

Art. 6  Objective: Adhering to the principles of equality, mutual
        benefit and sincere cooperation, the Parties shall employ advanced and
        appropriate techniques and scientific operation and management skills
        to cultivate and process quality seawater pearls and endeavor to
        achieve high competitiveness of the products in the international
        market in respect of quality and price, in order that each of the
        Parties can obtain satisfactory economic results.

Art. 7  Scope and scale of business of the Company: -


        Scope of business:  to produce and sell seawater cultured pearls and
        other seawater cultivated products which are not subject to the export
        quota and licensing by the State.

        Scale of production:  starting from the year 2002, to cultivate 5
        million oysters and produce 1,000 kg of pearls per year, in order to
        achieve an annual production value of RMBY.25 million.


              CHAPTER 4 - TOTAL INVESTMENT AND REGISTERED CAPITAL


Art. 8  The total investment and registered capital of the Company shall be
        RMBY.26.16 million, including fixed assets of RMBY.6.82 million, current
        assets of RMBY.12.80 million and working capital of RMBY.6.54 million.
        A China-registered accountant shall be appointed to verify the capital
        contributed by each of the Parties and issue a capital verification
        report.

Art. 9  The registered capital of the Company shall not be decreased during the
        term of the Company.  Any increase or transfer of the registered capital
        of the Company shall  be subject to the unanimous approval of the Board
        of Directors and shall be reported to the original approval authority
        for its approval.  Upon such approval, the relevant registration change
        procedures shall be completed with the administrative authority for
        industry and commerce.


                    CHAPTER 5 - CONDITIONS FOR COOPERATION

Art. 10 The conditions for cooperation among the three Parties shall be as
        follows:

        Party A shall provide land use rights, leased sea area, buildings,
        cultivation facilities, oysters under cultivation and other assets (as
        more particularly described in the Capital Verification Report no. Shan
        Qi Wei (1997) 45 of the Shantou City Qixin Auditors' Firm), which have a
        total value of RMBY.19.62 million.



                                     - 3 -
<PAGE>   5


         Party B shall provide foreign exchange in cash with a value equivalent
         to RMBY.5.10 million (as converted by taking the mean of the buying
         rates and selling rates prevailing during the month of actual
         contribution).

         Party C shall provide foreign exchange in cash with a value equivalent
         to RMBY.1.44 million (as converted by taking the mean of the buying
         rates and selling rates prevailing during the month of actual
         contribution).

Art. 11  Each Party shall pay their capital contribution in full within one
         month after the date of issue of the Business License of the Company.

Art. 12  If additional capital contribution to the Company is necessary for its
         production, such additional capital contribution shall be paid by
         Party A, Party B and Party C in the ratio of 75 : 19.5 : 5.5
         respectively after the unanimous approval of the Board of Directors
         for such additional capital contribution has been obtained.  Any
         mortgage of the Company's assets for obtaining a loan or other
         financing from overseas or a domestic financial institution shall be
         valid only with the authorization of the Board of Directors of the
         Company.  The interest and other fees so incurred shall be deemed
         expenditure of the Company and the risks so incurred shall be borne by
         the Company.

         Any transfer by a Party of all or part of its rights or obligations
         hereunder shall be subject to the unanimous consent of the other
         Parties and the approval of the original approval authority.  Under the
         same conditions, the other Parties shall have the right of first
         refusal to such transfer.


                  CHAPTER 6 - RESPONSIBILITIES OF THE PARTIES

Art. 13  The parties shall perform the following responsibilities:

         Party A: 1.   to make registration for the Company with the relevant
                       governmental authorities of China and obtain the Approval
                       Certificate and the Business License;

                  2.   to provide the land use rights, leased sea area,
                       buildings, cultivation facilities and oysters under
                       cultivation for the use of the Company as provided for
                       under Articles 10 and 11 hereof;

                  3.   to recruit qualified management personnel, production
                       workers and other necessary personnel for the Company;

                  4.   to assist the Company in purchasing (or leasing)
                       facilities, materials, office supplies, means of
                       transportation and telecommunications equipment in China;



                                     - 4 -
<PAGE>   6


                   5.  to second certain personnel to be responsible for the
                       daily production and operation of the Company; and

                   6.  to be responsible for other matters as may be entrusted
                       by the Company.

          Party B: 1.  to pay its capital contribution in full
                       for the use of the Company as provided for under
                       Articles 10 and 11 hereof;

                   2.  to assist the Company in seeking loans from financial
                       institutions in China or overseas;

                   3.  to purchase products of the Company on a priority basis
                       under the same price condition;

                   4.  to be responsible for technical learning and advertising
                       for the Company in China and abroad, and to provide the
                       Company with relevant economic information; and

                   5.  to be responsible for other matters as may be entrusted
                       by the Company.

          Party C: 1.  to pay its capital contribution in full
                       for the use of the Company as provided for under
                       Articles 10 and 11 hereof; and

                   2.  to be responsible for other matters as may be entrusted
                       by the Company.


                          CHAPTER 7 - SALE OF PRODUCTS

Art. 14  Products of the Company shall be sold in Mainland China, Hong Kong,
         Macao and overseas markets.  90% of its products shall be for sale
         overseas and 10% for sale in Mainland China.

         Price of the products:  total cost + reasonable profit = ex-factory
         price


                         CHAPTER 8 - BOARD OF DIRECTORS


Art. 15  The Company shall establish its Board of Directors according to the
         law.  The date of registration of the Company shall be deemed the date
         of establishment of its Board of Directors.  The Board shall consist
         of five Directors, three of whom shall be appointed by Party A, one by
         Party B and one by Party C.  The Chairman of Board shall be one of the
         Directors appointed by Party A and the Vice Chairman shall be the
         Director appointed by Party B.



                                     - 5 -
<PAGE>   7


Art. 16     The Board of Directors shall be the highest authority of the Company
            and shall decide all important matters of the Company.  A decision
            on any of the following important matters may be made only with the
            consensus of the Board:


            1.   amendment of the Articles of Association of the
                 Company;

            2.   increase or transfer of the registered capital of
                 the Company;

            3.   termination or dissolution of the Company;

            4.   amalgamation of the Company with other economic
                 organizations;

            5.   other important matters which consensus of the
                 Board on a decision is required.

            A decision on any other matters shall be made only with the consent
            of more than half of the number of the Directors.

Art. 17     Each Director shall have a term of office for three years and shall
            be eligible for another term upon reappointment.  Each Party shall
            have the right to appoint or replace a Director, subject to the
            number of Directors which such Party shall have the right to
            appoint, provided that the Board of Directors shall be notified in
            writing of such appointment or replacement.

Art. 18     The Chairman of Board shall be the legal representative of the
            Company.  The Vice Chairman of Board shall assist the Chairman in
            his work.  In case the Chairman fails to perform his duties, the
            Vice Chairman shall perform his duties on his behalf.

Art. 19     The Board of Directors shall meet at least once a year.  The Board
            meetings shall be convened and presided by the Chairman.  Upon
            request by more than one-third of the Directors, the Chairman may
            convene an extraordinary Board meeting.  Minutes of the Board
            meetings shall be properly kept.


                CHAPTER 9 - OPERATIONAL AND MANAGERIAL STRUCTURE

Art. 20     The Company shall have one General Manager, who shall be under the
            leadership of Board.  The post of the General Manager shall also
            be taken up by the Chairman of Board.  Functional departments
            shall be set up to meet the needs of the Company in respect of
            cultivation, processing and business.

Art. 21     The General Manager shall be directly responsible to the Board of
            Directors, carry out the resolutions of the Board and organize the
            daily operation and management of the Company in respect of
            research and application of production techniques, and
            cultivations, processing and sale of products.



                                     - 6 -
<PAGE>   8
Art. 22     Any senior management personnel of the Company intending to resign
            shall apply in writing to the Board one month in advance.  In case
            any of such senior management personnel has committed graft or
            serious dereliction of duties, the Board may terminate his
            appointment or dismiss him.


       CHAPTER 10 - ACCOUNTING, TAXATION, FOREIGN EXCHANGE AND INSURANCE

Art. 23     Specific plans shall be formulated for the accounting system of the
            Company in accordance with the relevant laws and regulations of
            China, statutes on accounting system of foreign-invested enterprises
            and the actual management requirements of the Company and shall be
            submitted to the Board for its approval.

Art. 24     The calendar year shall be taken as the fiscal year of the Company.
            In other words, the fiscal year of the Company shall begin on
            January 1 and end on December 31 of the same year.  The accounting
            system of the Company shall adopt the internationally used accrual
            basis and debit and credit accounting system.  Renminbi shall be
            taken as the base bookkeeping currency.  Any transactions in a
            foreign currency shall be recorded in such foreign currency and the
            base bookkeeping currency as converted in the exchange rate at the
            time the transaction is actually made.

Art. 25     The Company shall establish a bookkeeping system in accordance with
            the relevant rules.  All vouchers shall be recorded in Chinese. The
            accounting department shall prepare accounting statements
            periodically.  The annual accounts shall be audited by a
            China-registered accountant, who shall then issue an auditor's
            report.  The auditor's report, annual account and profits
            distribution plan of each year shall be submitted to the Board of
            Directors.

Art. 26     The Company shall open and maintain a relevant foreign currency
            account and a Renminbi account with a bank approved to conduct
            foreign exchange business by the administration for foreign exchange
            in the place of registration of the Company.  Except only
            transactions which may be settled in cash, all transactions of the
            Company shall be settled through the bank.

Art. 27     The Company shall pay taxes according to the taxation laws.  Upon
            application to and approval by the taxation authority according to
            the taxation laws, the Company may enjoy exemption for or reduction
            of enterprise income tax and/or other preferential treatments.

Art. 28     Insurance shall be obtained for the property of the Company from an
            property insurance company in China.  Matters relating to the
            insurance for property shall be decided by the Board.




                                     - 7 -
<PAGE>   9

           CHAPTER 11 - DISTRIBUTION OF PROFITS AND SHARING OF RISKS

Art. 29     The Three Funds shall be appropriated in the required proportion
            from the annual profits of the Company after income tax has been
            paid in the tax period according to the law.  Any profits or losses
            shall be shared among Party A, Party B and Party C in the ratio
            75% : 19.5% : 5.5%.


                 CHAPTER 12 - LABOR MANAGEMENT AND TRADE UNION

Art. 30     The Company shall establish a trade union organization according to
            the Constitution of a Trade Union in China, provide convenience for
            its necessary activities and appropriate 2% of the total salary
            actually paid, as funds for the trade union.

Art. 31     Recruitment, resignation, wages, welfare, labor insurance, labor
            protection and labor discipline of staff and workers of the Company
            shall be dealt with according to the Provisions on Labor Management
            in Enterprises with Foreign Investment and shall be reported to the
            labor authority in the place of registration of the Company.


                CHAPTER 13 - TERM OF JOINT VENTURE AND DISPOSAL
                         OF ASSETS UPON ITS EXPIRATION

Art. 32     The term of the Company shall be 11 years and shall begin from the
            date of issue of the Business License of the Company.

Art. 33     If Party A, Party B and Party C unanimously consent to an
            extension of the term of the Company, an application for such
            extension shall be made in writing to the original approval
            authority six months prior to the expiration of the original term
            after the Board of Directors has passed the relevant resolution. 
            The term shall become extended upon approval by the original
            approval authority.

Art. 34     Upon expiration or earlier termination of the term of the Company,
            the Company shall be liquidated according to the law.  Net assets
            of the Company after its liquidation shall be distributed among
            Party A, Party B and Party C according to the ratio in which any
            profits of the Company are distributed among the Parties.





                                     - 8 -
<PAGE>   10

         CHAPTER 14 - AMENDMENT, VARIATION AND TERMINATION OF CONTRACT

Art. 35     Any amendment or variation of this Contract shall be subject to
            the signing of an agreement to such effect in writing by Party A,
            Party B and Party C and the approval of the original approval
            authority.

Art. 36     In the event that this Contract fails to be performed because of
            earthquakes, natural disasters, wars or other force majeure, or
            operation of the Company fails to continue because of continual
            losses, the term of the Company and this Contract may be terminated
            earlier upon unanimous consent of the Board of Directors and the
            approval of the original approval authority.

Art. 37     In the event that non-performance or serious breach by any Party
            hereto of the obligations provided in this Contract or the Articles
            of Association of the Company causes failure of the operation of
            the Company to be continued, such Party shall be deemed to have
            terminated this Contract unilaterally.  The non-breaching Parties
            shall have the right to claim damages from the breaching Party and
            to apply to the original approval authority for earlier termination
            of the term of the Company and this Contract, as provided in this
            Contract.  If Party A, Party B and Party C agree to continue the
            operation of the Company, the breaching Party shall compensate the
            financial losses caused to the non-breaching Parties.


                       CHAPTER 15 - LIABILITY FOR BREACH

Art. 38     If Party A, Party B or Party C fails to promptly and fully pay the
            capital contribution as required by Articles 10 and 11 hereof, the
            breaching Party shall pay the non-breaching Parties a breach
            penalty equivalent to 5% of the capital contribution originally
            payable, for each overdue month starting from the first month
            after the original due date.  If any capital contribution is overdue
            for three months, the non-breaching Parties shall have the right to
            terminate this Contract according to Article 37 hereof and claim
            damages from the breaching Party for losses caused in addition to
            the accumulative breach penalties as required above.


                          CHAPTER 16 - APPLICABLE LAW

Art. 39     The formation, validity, interpretation and performance of this
            Contract or settlement of disputes relating to this Contract shall
            be governed by the laws of the People's Republic of China.





                                     - 9 -
<PAGE>   11

                      CHAPTER 17 - SETTLEMENT OF DISPUTES

Art. 40     Any disputes caused by or relating to the performance of this
            Contract shall be settled by Party A, Party B and Party C through
            friendly consultation.  If any dispute fails to be settled through
            friendly consultation, the dispute shall be submitted to the
            Foreign Economic and Trade Arbitration Commission of the China
            Council for the Promotion of International Trade for arbitration in
            accordance with its arbitration rules.  The award of such
            arbitration shall be final and binding on each of the Parties. 
            The cost for arbitration shall be borne by the losing Party.


                           CHAPTER 18 - MISCELLANEOUS

Art. 41     This Contract shall become effective upon signing by the legal
            representatives of Party A, Party B and Party C and then approval
            by the approval authority.  Any amendment or supplemental contract
            shall have the same effect as this Contract.

Art. 42     This Contract shall be written in Chinese in four originals.  Party
            A, Party B and Party C shall each hold one of the originals and
            the remaining original shall be filed with the approval authority. 
            Several copies of this Contract shall be made and they shall have
            the same effect as the originals.


Party A:    [Seal of Nan'ao Shaohe Pearl Seawater Culture Co., Ltd.]
Legal representative:  Xie Shaohe

Party B:    [Seal of Man Sang Jewellery Co., Ltd.]
Legal representative:  Cheng Tai Po

Party C:    [Seal of Chung Yuen Company o/b Golden Wheel Jewellery Mfr. Ltd.]
Legal representative:  Cheung Pui Hung


                Date of signing:  November 8, 1997

                Place of signing:  Chenghai City, Guangdong Province, China


                                     - 10 -