Articles of Association - Weifang Neo-Luck (Group) Corp., Jimswood Investment and Development Inc. and Weicheng International Inc.
ARTICLES OF ASSOCIATION
WEIFANG FUHUA AMUSEMENT PARK CO., LTD.
CHAPTER 1 -- GENERAL PRINCIPLES
Article 1 In accordance with the Foreign Equity Joint Venture Law of the
People's Republic of China (the "PRC") and pursuant to the
Agreement signed by China Weifang Neo-Luck (Group) Company of
Shandong Province ("Party A"), Jimswood Investment and
Development Inc. of the United States ("Party B") and Weicheng
International Inc. of the United States ("Party C") on August 17,
1996 in Weifang, China for the purpose of establishing Weifang
Fuhua Amusement Park Co., Ltd. (the "Joint Venture Company"),
these Articles of Association ("Articles") are hereby
established.
Article 2 The name of the Joint Venture Company shall be Weifang Fuhua
Amusement Park Co., Ltd. Its English name is: WEI FANG FUHUA
ENTERTAINMENT GARDEN CO., LTD. The legal address of the Joint
Venture Company shall be East End of Dong Feng Street, Weifang,
Shandong Province, PRC.
Article 3 The names, legal addresses and legal representatives of Parties
A, B, and C of the Joint Venture Company:
Party A:
Name: Weifang Neo-Luck (Group) Corporation of
Shandong Province
Legal Address: 189 Dong Feng Street, Weifang
Legal Representative: Jun Yin
Party B:
Name: Jimswood Investment and Development Inc. of
the United States
Legal Address: Los Angeles, California, U.S.A.
Legal Representative: Stanley Wu
Party C:
Name: Weicheng International Inc.
Legal Address: 3079 Shabo Boulevard, Santa Ana,
California, U.S.A.
Legal Representative: Aiping Wang
Article 4 The Joint Venture Company shall be a limited liability company.
Article 5 The Joint Venture Company is a Chinese corporation and shall be
governed and protected by Chinese law. All activities of the
Joint Venture Company shall be in compliance with Chinese laws,
statutes and other relevant rules and regulations.
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CHAPTER 2 -- PURPOSE AND SCOPE OF BUSINESS
Article 6 The objectives of the Joint Venture Company are facilitating the
further development of tourism in Weifang City, making full use
of the abundant local tourism resources, adopting scientific
management practices, expanding and improving tourist-hosting
capabilities, and achieving economic benefits satisfactory to
Parties A, B and C, pursuant to the principles of enhanced
cooperation and mutual benefit.
Article 7 The scope of operations of the Joint Venture Company shall
include: golf courses, tennis courts, swimming pools, sauna
rooms, gymnasiums, disco halls, guest rooms, bowling alleys,
recreation rooms, tourist merchandise stores, restaurants, and
beverage shops.
Article 8 The scale of operations of the Joint Venture Company shall be as
follows: Construction shall be over a one-year period. Following
completion of construction and the subsequent test period, a
normal annual operating revenue of RMB 57,900,000 and a profit of
RMB 14,160,000 are to be realized.
CHAPTER 3 -- TOTAL INVESTMENT AND REGISTERED CAPITAL
Article 9 Total investment in the Joint Venture Company shall be USD
$29,500,000. The registered capital of the Joint Venture Company
shall be USD $20,700,000, of which Party A shall contribute USD
$9,315,000, comprising 45% of the total registered capital, Party
B shall contribute USD $5,175,000, comprising 25% of the total
registered capital, and Party C shall contribute USD $6,210,000,
comprising 30% of the total registered capital.
Article 10 Method of capital contribution: The capital contribution of Party
A shall be in RMB and some cash in foreign currency, which shall
be used mainly for acquisition of land, construction of
supporting facilities, and the purchase of materials from within
the PRC; Party B and Party C shall contribute capital in United
States currency, which shall be used mainly for acquisition of
technically advanced equipment, a portion of the materials used
for decoration, a portion of the office supplies, etc.
Article 11 Parties A, B and C shall make their respective capital
contributions in full according to the time limit stipulated in
the Agreement.
Article 12 After Parties A, B and C have made their respective capital
contributions, the Joint Venture Company shall invite an
accountant registered in China to verify the contributions and
issue a verification report, on the basis of which the Joint
Venture Company shall then issue investment certificates. The
investment certificates shall include the name of the Joint
Venture Company, date of establishment of the Joint Venture
Company, names of the Parties, the amounts
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and dates of their respective capital contributions, and the date
of issuance of investment certificates.
Article 13 During the term of the Joint Venture, the amount of the Joint
Venture Company's registered capital shall not be reduced.
Article 14 Should any Party to the Joint Venture Company wish to transfer
all or part of its investment to any third party, consent shall
be obtained in advance from the other two Parties. Should one
Party wish to transfer its investment, the other two Parties
shall have first right of refusal.
Article 15 Unanimous approval by the Board of Directors is required for any
increase or transfer of the Joint Venture Company's registered
capital. Subsequently, such increase or transfer shall be
submitted to the original examination and approval authority for
approval. Then the registration shall be changed at the State
Administration of Industry and Commerce.
CHAPTER 4 -- BOARD OF DIRECTORS
Article 16 The Joint Venture Company shall establish a Board of Directors,
which shall be the highest authority of the Joint Venture
Company.
Article 17 The Board of Directors shall make decisions on all major issues
concerning the Joint Venture Company. Its powers shall include
the following: to decide on and approve recommendations made by
the General Manager with regard to appointment and removal of
personnel and major reports (on matters such as the volume of
operating revenues and expenditures and the annual profit
distribution plan); to pass the Joint Venture Company's important
rules and policies; to decide on the termination of the Joint
Venture or a merger with another commercial entity; to decide the
hiring of the General Manager, Assistant General Managers, Chief
Engineer, Chief Accountant, Chief Economist and other top
officers; to be in charge of the liquidation process upon
termination of the Joint Venture or expiration of its term.
Article 18 The Board of Directors shall consist of six (6) members, among
whom three (3) shall be appointed by Party A, two (2) by Party B
and one (1) by Party C. The term of office for each Director
shall be four (4) years and each Director shall be eligible for
consecutive terms.
Article 19 The Chairman of the Board of Directors shall be appointed by
Party A and the Vice-Chairman shall be appointed by Party B.
Article 20 When Parties A, B and C intend to appoint or replace any
Directors, a written notice shall be submitted to the Board of
Directors one (1) month in advance.
Article 21 The Board of Directors shall convene two regular meetings each
year. Interim meetings may be convened under important
circumstances and upon motion of a
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Director. In principle, Board meetings shall be held in the area
of the Joint Venture Company. If necessary, Board meetings can be
held in the U.S. or other locations away from the Joint Venture
Company.
Article 22 Board meetings shall be called and presided over by the Chairman
of the Board. Should the Chairman be absent, Board meetings shall
be called and presided over by the Vice-Chairman.
Article 23 The Chairman shall provide each Director with a written notice at
least thirty (30) days before the date of a Board meeting. The
notice shall contain the agenda, time and location of the
meeting. Should a Director, with cause, be unable to attend a
meeting, the Director may appoint, in writing, a proxy to attend
the meeting.
Article 24 Detailed minutes of every Board meeting shall be recorded and
signed by all of attending Directors and proxies. The minutes
shall be written in the Chinese language and kept in the files of
the Joint Venture Company.
Article 25 Unanimous approval by the Board of Directors shall be required
for the following matters: any changes to the Articles of
Association; re-organization, termination or dissolution of the
Joint Venture Company; increase, transfer or mortgaging of the
registered capital of the Joint Venture Company; merger of the
Joint Venture Company with another commercial entity; other
important matters.
CHAPTER 5 -- MANAGEMENT STRUCTURE
Article 26 The Joint Venture Company shall establish within itself such
departments as trade, technology, finance, food and beverage, and
general affairs.
Article 27 The Joint Venture Company shall have one (1) General Manager and
two (2) Assistant General Managers. A Director may serve
concurrently as the General Manager or one of the Assistant
General Managers, who shall be recommended by Party A and
appointed by the Board of Directors.
Article 28 The General Manager shall be directly accountable to the Board of
Directors. The General Manager shall carry out the Board's
resolutions as well as organize and conduct the daily operations
and management of the Joint Venture Company. Assistant General
Managers shall assist the General Manager. At such times as the
General Manager expects to be absent from the Company's
operations, one of the Assistant General Managers shall be
designated to exercise the powers and discharge the
responsibilities of the General Manager during the absence of the
General Manager.
Article 29 Decisions on major issues in the daily operations of the Joint
Venture Company shall take effect only when signed jointly by the
General Manager and Assistant General Managers. Issues needing
co-signatures shall be specified by the Board of Directors.
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Article 30 The General Manager and Assistant General Managers shall serve a
term of three (3) years and may be re-appointed to consecutive
terms by the Board.
Article 31 The Joint Venture Company shall have one Chief Engineer, one
Chief Accountant and one Chief Economist, who shall be appointed
by the Board and shall be led by the General Manager.
Article 32 The General Manager, Assistant General Managers, Chief Engineer,
Chief Accountant, Chief Economist and other top officers who wish
to resign their post shall submit a written report to the Board
of Directors two (2) months in advance. In case of graft or
serious dereliction of duty by any one of the above officers,
such persons may be removed at any time through a resolution by
the Board of Directors. Any such person who commits a criminal
offense shall be subject to criminal investigation and
prosecution.
CHAPTER 6 -- FINANCE AND ACCOUNTING
Article 33 The finance and accounting of the Joint Venture Company shall
conform to rules under the Finance and Accounting System for
Sino-Foreign Joint Ventures established by the Ministry of
Finance of the People's Republic of China.
Article 34 The Joint Venture Company's fiscal year shall coincide with the
calendar year, beginning on January 1 and ending on December 31.
Article 35 All accounting vouchers, documents, accounting books and
financial statements shall be written in the Chinese language.
The RMB shall be the standard accounting currency. The conversion
of RMB into other currencies shall be based upon the exchange
rate published on the date of such conversion by the State
Administration of Foreign Exchange of the PRC.
Article 36 The Joint Venture Company shall adopt the internationally
prevalent accrual method and debit-credit system in its
accounting.
Article 37 The Joint Venture Company's accounting books shall record the
following items: A. All cash income and expense amounts of the
Joint Venture Company; B. All sales and purchases of goods by the
Joint Venture Company; C. The Joint Venture Company's registered
capital and liabilities; D. Pay in dates of registered capital of
the Joint Venture Company as well as increases and transfers of
same.
Article 38 Within the first three months of each fiscal year, the Joint
Venture Company's finance department shall compile the previous
fiscal year's balance sheet and income statement which, after
they have been examined and signed by an accountant registered in
China, shall be submitted to the Board of Directors for approval.
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Article 39 The Joint Venture Company shall decide the number of years over
which its fixed assets shall be depreciated, pursuant to the
Enforcement Provisions of the Income Tax Law for Sino-Foreign
Joint Ventures of the PRC.
Article 40 All foreign exchange-related issues of the Joint Venture Company
shall be resolved pursuant to the Interim Foreign Exchange Rules
of the PRC, other related regulations, and provisions under the
Joint Venture Agreement.
CHAPTER 7 -- PROFIT DISTRIBUTION
Article 41 The Joint Venture Company shall allocate certain amounts from its
after-tax profits to a reserve fund, an enterprise development
fund, and an employees benefit fund and bonus fund, the annual
allocation rate of which shall be determined by the Board of
Directors
Article 42 After paying income taxes and allocating the various funds in
accordance with law, the remaining profits shall be distributed
in proportion to Parties A, B and C's contributions to registered
capital.
Article 43 The Joint Venture Company's profits shall be distributed
annually. The profit distribution plan and amount of profit
distributed to each Party for each fiscal year shall be published
within the first three months following that fiscal year.
Article 44 The Joint Venture Company shall not distribute profits unless the
losses of the previous fiscal year have been covered.
Undistributed profits from the previous fiscal year may be
distributed together with that of the current fiscal year.
CHAPTER 8 -- EMPLOYEES
Article 45 The handling of the recruitment, appointment, dismissal of and
resignation by employees of the Joint Venture Company and such
matters as their salaries, benefits, labor insurance, labor
protection and labor discipline shall be in compliance with the
PRC's Labor Management Regulations for Sino-Foreign Equity Joint
Ventures and the Enforcement Regulations for same.
Article 46 Employees needed by the Joint Venture Company may be recruited
locally through a competitive selection process. The Joint
Venture Company has the right to take proper disciplinary action
against any employee who violates the regulations and labor
discipline of the Joint Venture Company. The most serious
offenders may be dismissed.
Article 47 Employees' salaries shall be determined by the Board of Directors
according to the particular circumstances of the Joint Venture
Company and with reference to applicable regulations in China,
and shall be specified in labor contracts.
Employees' salaries shall be raised as is appropriate in the
light of expanded production and operations and improved employee
skills and technical abilities.
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Article 48 Such matters as employee benefits, bonuses, labor protection and
labor insurance shall be addressed in various policies of the
Joint Venture Company so as to ensure a normal production and
working environment for employees.
CHAPTER 9 -- TRADE UNION
Article 49 The Joint Venture Company shall have the right to establish a
trade union and carry out union activities in accordance with
Trade Union Law of the PRC and applicable regulations.
Article 50 The Joint Venture Company trade union represents the interest of
employees. Its obligations are: to uphold the democratic rights
and material interests of employees in accordance with the law;
to assist the Joint Venture Company in arranging and properly
utilizing benefit and bonus funds; to organize political,
professional and technical studies by employees; to organize
literary, artistic and sports activities; and to educate
employees about observing labor discipline and striving to
fulfill the commercial objectives of the Joint Venture.
Article 51 The Joint Venture Company trade union shall sign labor contracts
with the Joint Venture Company on behalf of employees and shall
monitor compliance with the contracts.
Article 52 The Joint Venture Company trade union shall take part in the
mediation of disputes arising between employees and the Joint
Venture Company.
Article 53 The Joint Venture Company shall each month contribute funds equal
to 2% of actual total employee salaries to the trade union. The
Joint Venture Company trade union shall use the funds in
accordance with the Rules for the Management of Trade Union Funds
established by the China National Federation of Trade Unions.
CHAPTER 10 -- TERM, TERMINATION, AND LIQUIDATION
Article 54 The term of the Joint Venture Company shall be fifteen (15)
years, which shall begin on the date of issuance of its business
license.
Article 55 When Parties A, B and C all agree on an extension of the term of
the Joint Venture, and when such extension has been approved by a
resolution of the Board of Directors, the Joint Venture Company
shall submit a written application to the original examination
and approval authorities six (6) months prior to the expiration
of the term of the Joint Venture. Only upon approval may the term
be extended. At that time the Joint Venture Company shall go
through necessary formalities to change the registration at the
State Administration of Industry and Commerce.
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Article 56 The Joint Venture Company may be terminated before the expiration
of its term if Parties A, B and C are in unanimous agreement that
such early termination of the Joint Venture shall be in the best
interest of all Parties. The Board must convene a general meeting
to decide in favor of early termination, and such decision must
be submitted to the original examination and approval authorities
for approval.
Article 57 In the event of material losses caused by one Party's failure to
perform its obligations under the Agreement and the Articles of
Association, or such Party commits a serious breach of the
Agreement, the other two Parties may claim for compensation.
Article 58 Upon expiration or early termination of the term of the Joint
Venture, the Board of Directors shall establish procedures and
principles for its liquidation, shall nominate candidates for a
liquidation committee, and shall form the liquidation committee
so as to liquidate the assets of the Joint Venture Company.
Article 59 Liquidation expenses shall receive priority in payments from the
existing assets of the Joint Venture Company. Any remaining
assets, after the payment of all debts of the Joint Venture
Company, shall be distributed among Parties A, B and C in
proportion to each Party's contribution to the registered
capital.
Article 60 After the liquidation has been completed, the Joint Venture
Company shall file a report with the original examination and
approval authorities, cancel its registration with the State
Administration of Industry and Commerce, return its business
license and make an announcement to the public.
Article 61 After the termination of the Joint Venture Company, its
accounting books shall be left in the care of Party A.
CHAPTER 11 -- RULES AND REGULATIONS
Article 62 The Joint Venture Company establishes, through the Board of
Directors, the following rules and regulations:
1. Management regulations;
2. Employee regulations;
3. Wage policies;
4. Rules on employee attendance, promotion, and rewards and
penalties;
5. Employee benefits rules;
6. Financial regulations;
7. Liquidation procedures upon dissolution of the Company;
8. Other necessary rules and regulations.
CHAPTER 12 -- SUPPLEMENTARY ARTICLES
Article 63 Any amendment to these Articles of Association shall require
unanimous agreement by the Board of Directors and shall be
submitted to the original examination and approval authority for
approval.
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Article 64 These Articles of Association shall be written in the Chinese
language.
Article 65 These Articles of Association shall enter into effect only upon
approval by the Foreign Economic Relations and Trade Commission
of Weifang City, Shandong Province, the PRC.
Article 66 These Articles of Association are signed on October 8, 1996 by
authorized representatives of Parties A, B and C in Weifang,
China.
Party A: Weifang Neo-Luck (Group) Co. Ltd. of Shandong Province
Representative: (Signature illegible)
Party B: Jimswood Investment and Development (US) Inc.
Representative: (Signature illegible)
Party C: Weicheng International (US) Inc.
Representative: Aiping Wang
Date: January 8, 1997