Exhibit 10 (d)
Joint Venture Agreement of Kunming Xinmaou Petrochemical Company Limited
Chapter I. General Previsions
Article 1.1 In accordance with the 'law of the People's Republic
of China on Joint Venture Using Chinese and Foreign Investment"
and the other relevant laws and regulations, the parties to this
contract have fully negotiated on the issues in tern of
establishing the joint venture "Kunming Xinmao Petrochemical
Industry Company Limited", adhering to the principle of equality
and mutual benefit. The contract hereunder worked out
Chapter H. parties to the Joint Venture
Article 2.1 Parties of this contract are as follows:
Party k Kunming Fuel Company
Place of registration: Kumning, Yunnan. PR China
Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, Kunming
Telephone: ▇▇▇▇▇▇▇
Legal representative: Li Kaixin
Post: Manager
Nationality: Chinese
Party B: Hong Kong Dexiang Tuoyi Industrial Company
Place of registration: Hong Kong
Address: 3/fs, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇
Tel.: (▇▇▇▇▇) ▇▇▇▇▇▇▇
Legal representative: Tan Mau Tak
Post: Chairman of the board
Nationality: Taiwan patriot
Chapter III. Joint Venture Company
Article 3.1 The two parties have agreed to establish a joint
venture bearing the name of " Kunming Xinmao Petrochemical
Industry Co., LTD", in Chinese characters
", hereinafter referred to as the joint venture company.
The statuary address of the joint venture Company is on the 3rd
floor of Huahui Hotel. Xiaocaiyuan, Kunming, Yunnan, PR China. The
joint venture company shall establish its sub-offices and
subsidiary organizations in the China mainland, Hong Kong or
Other countries and regions, in line with the requirements of the
company, with the decision of the board of the directors and the
approval of the competent authorities.
Article 3.2 All activities of the joint venture Company shall be
governed by the laws, decrees and pertinent rules and regulations
of the People's Republic of China.
Article 3.3 The Joint Venture Company is established by the two
parties according to
The relevant laws of the People's Republic of China, and it
registered as a liability limited company in China. Each party to
the joint venture Company shall make contribution. Share the
profit and enjoy dividends and assume the risks and losses
accordingly according to the proportion in the registered capital.
Article 3.4 The Commercial Bureau of Kunming municipality is the
competent authority of the joint venture.
Chapter W Business Purpose and Scope of the Joint Venture Company
Article 4.1 The business purpose of the joint venture company is
to adopt the state-of-the art and applicable technology and
scientific management, to yield the top class products with world
standard.
Business scope of the joint venture company: Produce, process and
market civilian-use and industrial gases: steel bottles, burners,
heaters, gas lighter and the necessaries:
Conduct gas quality analysis and inspection and test on steel
bottle and burners, maintenance and consulting; authorized
processing of the domestic crude oil and market its by-products.
finished oil, ceresin wax, asphalt, heavy oil and the other
product series.
Business scale of the joint venture company: 1. Open 70.000 to
100,000 household for using liquefied oil gas, 2. Produce 50.000
sets of burners and 500.000 gas lighters annually; 3. Process
100,000 tons of crude oil on the domestic market with
authorization. About 50% of the second category product of the
joint venture shall be exported overseas and the rest 50% shall be
sold on the domestic market. The joint venture shall balance all
its foreign currency revenue and expenditure.
Chapter V. Total Investment and Registered Capital,
Proportion and Mode of Contribution
Article 5.1 The total investment contributed by the parties is US
2.75 million dollars, of which the registered capital is US 1.925
dollars, the insufficient par': shall be solved the joint venture
company through borrowing a bank loan. The contribution and
proportion of the two parries are as follows: Party A shall
contribute US 641,600 dollars (say six hundred forty-one thousand
and six hundred only), accounting for 33.33% of the total, in both
cash and complete facilities. Party B shall contribute US
1,283,400 dollars (say one million two hundred eighty-three
thousand and four hundred only), accounting for 66.67% of the
total registered capital, in cash, imported production plant,
transport means, office facilities.
The total investment shall be completed in two (2) years. The CNY
Renminbi and the foreign currency shall be convened according to
the foreign currency exchange rate announced by the State
Administration for Foreign Currency on that day.
Article 5.2 Each party shall make the agreed contribution to the
joint venture in line with the rules of the company. The
contributed cash and materials must be the actual properties of
the contributor without any secured property right.
Article 5.3 Any party of the joint venture shall not have the
right to procure any loan and lease equipment or any other
properties or the other properties other than the joint partner's
by using name of the joint venture, for the purpose of making
contribution to the joint venture. Any party shall also not have
the right to use the property or liability of the joint venture,
or the property of the other party as the guarantee of
contribution.
Article 5.4 The contribution of each party to the joint venture
shall be completed during the first three months of the first
investment period upon the signing of this contract and from the
date on which the business license of the joint venture is issued
by the competent administrative bureau for commerce and industry,
which shall not be less than 70% of the total contribution,
including 2.45 million CNY (about 445,900 US dollars) from Party A
and 4.9 million Yuan (about 891,100 US dollars) from Party
B. The remaining contributions of the two parties shall be
completed within 12 months after receiving the business license.
The Joint Venture Company shall establish its own bank account.
Should any party fall to complete the contribution exceeding the
said date, it should be asked to pay a breach penalty at the
amount of 5% on the total contribution monthly and bear all the
economic losses incurred thereafter.
Article 5.5 The contributions of the two parties shall only be
recognized with the verification of a China CPA attached with a
capital verification certificate. The Joint Venture Company shall
produce a contribution certificate upon accepting the capital
verification certificate.
Article 5.6 During the process of operation, if the joint venture
intends to increase the capital due to short of funds, the two
parties shall negotiate for the increasing number and shall only
add the increasing number into the capital upon the approval of
the original authority and shall only increase according to the
proportions of the two parties in the joint venture company.
Article 5.7 During the course of operation, the joint venture
company shall not have the right to reduce the registered capital.
Article 5.8 when one party to the joint venture Company assigns
all or part of his investment, the other party shall enjoy the
priority.
Article 5.9 when one party to the joint venture Company intends to
transfer the condition of contribution to a third parry with a
more preferential condition than the other partner. The transfer
shall be deemed vain.
Chapter VI. Responsibilities of each Party to the Joint Venture
Company
Article 6.1 the responsibilities of the two parties are as
follows:
Party A shall be responsible for the following matters: complete
the formalities concerning the establishment of the joint venture
company in China; assist the joint venture in selecting the work
Site, settling the construction conditions of the joint venture
company; participating in the equipment selection, goods order
conference, accept the equipment decided and handle the issues
concerning the customs; assist Party B in recruiting personnel and
training; assist Party B in acquiring visa and provide living
convenience for the residing staff, coordinate in domestic and
overseas marketing; and handle the other issues stipulated in the
contract and entrusted by the joint venture company.
Party B shall be responsible for the following matters: handle the
related issues entrusted by the joint venture company about
procurement of equipment and raw materials on the international
market; responsible for 50% export mission for the relevant
products of the joint venture company and providing necessary
market information; responsible for equipment installation, test
and technical training; dispatch necessary managerial staff, care
of the production and technical process and handle other matters
entrusted by the joint venture company.
Chapter VII. Board of Directors
Article 7.1 The highest authority of the joint venture company
shall be its board of directors. It shall decide all the major
issues. The date of registration of the joint venture company
shall be the date of the establishment of the board of the
directors of the joint venture Company.
Article 7.2 the board of directors is composed of five (5) people.
Two from Party A and three from Party B. The chairman of the board
shall be appointed by Party b and Party A shall appoint a vice
chairman of the board. The other directors who do not hold any
actual post in the joint venture Company shall not receive any
payment form the company. The office term of the chairman and the
vice chairman of the board shall be four (4) years and the term of
office can be renewed if continuously appointed by the concerned
party. When one party intends to replace a director, a written
notice is required.
Article 7.3 The chairman of the board is the legal representative
of the joint venture. Should the chairman fail to perform his
duty, he/she shall authorize the vice-chairman or the other
director in the joint venture Company to instead.
Article 7.4 the Joint Venture Company shall use the relevant laws,
decrees and regulations of the People's Republic of China in
conducting all its routine affairs. Including financial report.
Labor management. Profit distribution. Audit personnel arrangement
welfare treatment, and other major issues.
Article 7.5 the joint venture company shall always decide its
major issues with the presentation of the two parties. As for
general matters, it requires at least half directors at present
for decision (including the directors of the two parties).
Article 7.6 the following matters shall only be passed unanimously
through the board of directors;
1. Revision of the contract and constitution of the joint
venture company;
2. Termination and dismissal of the joint venture company;
3. Increase and transfer of the registered capital; and
4. Merging of the joint venture company with other economic
organizations.
Article 7.7 the board meeting shall be presided over by the
chairman of the bean at least once every half year. Should the
chairman enable to convene the meeting, he/she shall appoint the
vice-chairman of the ▇▇▇▇▇ of other directors to preside the
meeting instead. Chairman of the board shall hold an interim
meeting with the propose of more than two directors from both
parties. The board minutes shall be well kept by the joint venture
Company.
Chapter VIII. Business Management Office
Article 8.1 the joint venture company shall adopt the general
manager responsible system under the leadership of the chairman of
the board. It shall also have other departments set up to be in
charge of daily work. It shall have one general manager, one
deputy general manager. The board of directors shall appoint the
general manager and the deputy general manager.
Article 8.2 The responsibility of the general manager are to
implement the decisions of the board of directors.
Article 8.3 in line with the requirements of the joint venture
company the chairman shall have the right to adjust the
constitution of the joint venture.
Article 8.4 the general manager and deputy general manager shall
not hold any high posts, such as general manager and deputy
general manager in other economic entities. The board of directors
shall have the right to end up the appointment when they are found
of any illegal behaviors.
Chapter IX. Labor Management and Trade Union
Article 9.1 Wages. bonus, welfare treatment of the joint venture
Company shall be carried out according the standard of the same
trade in the same area. Issues concerning recruitment,
resignation, labor protection. Labor insurance. Labor discipline
shall be handled according to the relevant laws and regulation of
the People's Republic of China or the relevant rules of the local
labor administration. The high rank staff appointed the two
parties and the wage standard. As well as social insurance,
welfare, traffic expense shall be decided by the board of
directors.
Article 9.2 the staff members of the joint venture company shall
have the right to establish the trade union according to the
stipulations of the "Law of People's Republic of China on trade
Union" and the "Charter of the China trade Union." The trade union
shall organize necessary activities for the staff members.
Chapter X. Procurement of Equipment and
Materials and Commodity Inspection
Article 10.1 in purchasing the required production plant,
transport vehicles and other necessary raw materials, fuel and
office facilities. The Joint Venture Company shall give priority
to purchasing in China where conditions are the same.
Article 10.2 when the joint venture company entrusts Party' B to
purchase equipment from the overseas market, the principle of
selecting the best shall be taken into consideration and the price
shall be determined by the board of directors.
Article 10.3 the equipment and raw materials procured by the joint
venture or the invested equipment of Parry B shall submitted to
the China Commodity Inspection for inspection in line with the
regulations of the "Regulations of the People's Republic of China
on Commodity Inspection".
Chapter XI. Taxation, Finance and Profit Distribution
Article 11.1 the joint venture company shall pay taxes in
accordance with the stipulations of the Chinese laws and other
relevant regulations.
Article 11.2 Staff members and workers of the joint venture
Company shall pay individual income tax according to the
"Individual Income Tax Law of the People's Republic of China".
Foreign staff members can transfer the money abroad after paying
the tax.
Article 11.3 Allocation for reserve funds, expansion funds of the
joint venture company and welfare funds and bonuses for staff and
workers shall be set aside in accordance with the stipulations in
the Law of the People's Republic of China on Joint Venture Using
Chinese and Foreign Investment". The annual proportion of all
allocations shall be decided by the board of directors according
to the business situation of the joint venture Company.
Article 11.4 the fiscal year of the joint venture company shall
start from January ▇.▇▇ December 31. All the vouchers, receipts.
Statistic statements and reports account books shall be written in
Chinese.
Article 11.5 the accounting affairs and financial system of the
joint venture shall follow the rules of the relevant Chinese
financial regulations. And submit to the local competent authority
for filing.
Article 11.6 All the expenditure certificates of the joint venture
company shall only be valid with the signature of the general
manager or the signature of the authorized person. The vouchers
for both receiving and paying of the joint venture Company shall
use the set invoice issued by the taxation department. The
invoices acquired from overseas or Hong Kong Macao regions shall
only be deemed valid with entry manifest and the customs tariff of
the Chinese customs.
Article 11.7 financial checking and examination of the joint
venture Company shall be conducted by an auditor registered in
China and reports shall be submitted to the board of directors and
the general manager.
If Party B considered it necessary to employ a foreign auditor
registered in other country to undertake annual financial checking
and examination. Party A shall give consent. All the expenses
thereof shall be borne by Party B.
Article 11.8 the joint venture company is an independent entity
with an independent accounting system, assuming its own loss and
gain.
Article 11.9 the joint venture company shall distribute its annual
profit and share of deficits after paying taxes, deducting reserve
funds. Expansion fluids, welfare fluids and bonuses for staff and
workers. The profit and dividends. As well as the deficits and
losses shall be distributed and shared according to the proportion
of each parry in the registered capital.
Article 11.10 All the issues concerning foreign exchange currency
of the joint venture Company shall be handled according to the
Interim Regulations of the People's Republic of China on Foreign
Exchange Administration and other related rules concerned.
Article 11.11 The profit that Parry B is acquired from the joint
venture company shall be wired to the specified account of Party B
through bank by the joint venture company.
Chapter XII. Duration, Dismissal and
Liquidation of the Joint Venture Company
Article 12.1 the duration of the joint venture company is 20
years. The establishment
Of the joint venture Company shall start from the date on which
the business license of the joint venture Company is issued.
During the operation period. Any party to the joint venture
Company shall not enter into any contract with any domestic unit
or organization that shall harm the interest of the joint venture
Company.
Article 12.2 upon the expiration of the joint venture Company, the
duration of the company shall be either extended or terminated
according to the decisions of the two parties. If a decision of
dismissal is made, the joint venture Company shall organize a
liquidation group to handle the remaining properties of the joint
venture Company. The residual assets of the joint venture Company
shall be distributed to each party according to the proportion of
the investment in the registered capital.
Article 12.3 the Joint Venture Company shall dismiss upon any of
the following cases:
12.3.1 Upon the expiration, one party disagrees the extension
of the contract:
12.3.2 The Joint Venture Company encounters with serious
deficits and falls to continue operation;
12.3.3 The joint venture enables to operate due to serious
losses resulted from natural disaster, wars and force majeure; and
12.3.4 The Joint Venture Company suffers great losses due to
one party to the joint venture Company breaching of the contract.
The board of directors shall propose an application for dismissal
in cases of 1, 2, and 3 mentioned above and the application shall
come into force with the approval of the competent authority. When
the joint venture is dismissing, the regulation in 12.2. And the
other relevant laws and rules of the People's Republic of China
shall be adopted. This contract shall be terminated upon the
dismissal of the joint venture Company.
Chapter XIII. Insurance
Article 13.1 All-risks insurance policies of die joint venture
Company shall underwritten with the people's Republic of China.
The type. Value and duration of insurance shall be decided by the
board of directors in accordance with the stipulations of the
People' S Republic of China.
Chapter XIV. Liabilities of Breach of Contract
Article 14.1 Should either Parry A or Party B fall to pay on
schedule the contributions in accordance with the provisions
defined in Chapter V of this contract, the breaching party s~ pay
to the other party 5% of the contribution staring form the first
month after exceeding the time limit. Apart from the accumulated
payable breaching penalty, the observing party shall have the
right to ask the breaching party to compensate the economic losses
incurred and terminates the contract according to Article 15.2 of
this contract.
Article 14.2 should one party fail to perform the contract and
make the contribution to the joint venture according to the agreed
contract, it should be deemed as breach of contract. The observing
party shall urge the breaching party to pay off the contribution
within one month's tie. If the breaching party falls to pay the
contribution exceeding the limit, the breaching ▇▇▇▇▇ shall be
deemed as giving up all his rights in the joint venture Company
and quit from the joint venture Company automatically. Within one
month after the exceeding period, the observing party shall apply
to the original authority for terminating the joint venture
Company or apply for approval to find a third partner. The
observing party shall have the right to claim compensation from
the breaching party for the losses incurred. Should it be the
faults of the two parties, each party shall bear the liabilities
according to the actual situation.
Chapter AV. Force Majeure
Article 15.1 should either of the parties to the contract be
prevented from executing contract by force majeure, such as
earthquake typhoon, flood, fire and war and other unforeseen
events. And their happening and consequences are unpreventable and
unavoidable, the prevented party shall notify the other party by
cable without any delay, within 15 days thereafter provide the
detailed information of the events and a valid document for
evidence issued by the relevant public notary organization for
explaining the reason of inability to execute or delay the
execution of all or part of the contract. Or explaining the reason
for extending the contract.
Chapter XVI. Settlement of Disputes
Article 16.1 any disputes arising from the execution of. Or in
connection with, the contract shall be settled through friendly
consultations between both parties. In case no settlement can be
reached through consultation, the disputes 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 the rules of procedure. The arbitral award is
final and binding upon both parties.
The arbitration expense shall be borne by the losing party, during
the period of arbitration the joint venture Company shall continue
its operation without affecting the arbitration matters, as well
as the other parts in the company's constitution.
Chapter XVII. Applicable Laws
Article 17.1 The formation of this contract, its validity,
interpretation, execution and settlement of the disputes shall be
in line with the Laws of the People's Republic of China
Chapter XVIH. Effectiveness of the Contract and Miscellaneous
Article 18.1 this contract shall come into force upon the
signatures of the two parties
And the approval of the competent authority. So does the Revised
Version.
Article 18.2 this contract shall have statuary power with the
signing of the two parties and the approval of the competent
authority. Each party to the joint venture shall strictly observe
the contract. Any party shall not terminate the contract without
the permit of the other party. Should one party propose for
terminate the contract or transfer the share right and the joint
conditions, the proposal should be put forward three months in
advance. A careful consideration shall be given. And the
consequent issues should be discussed thereafter.
Article 18.3 if there are any unforeseen issues concerning this
contract arising, the joint venture Company shall negotiate for
solution. The revised part shall be regarded as the supplementary
of this contract and carry the equal statuary power.
Article 18.4 Should notice in connection with any party's rights
and obligations be sent by either Party A or Party B by telegram
or telex, etc. the written letter notices shall be also required
afterwards. The legal address of Party A and Party B listed in
this contract shall be the posting addresses.
Article 18.5 this contract is written in Chinese and in
quadruplicate. The Chinese text has the statuary power. The two
parties to the joint venture Company shall have one copy each, the
joint venture Company shall have one copy. It has several
duplicated copies and a copy kept in the competent authority for
filing.
Article 18.6 this contract is signed on the date of August 8,
representatives of the two parties in Chunking, Yunnan, PR China.
Signed by Party A:
Signed by Party B:
Li Kaixin (signature) Tan Mau Tak (Signature)
Representative of Kunnung Fuel Company Representative of Hong Kong
(Affixed with the official stamps) Dexiang Tuoyi Industrial
Company)
