EXHIBIT 10.3
AGREEMENT ASSOCIATED WITH AMENDING THE JOINT VENTURE AGREEMENT
AND ARTICLES OF ASSOCIATION
Meeting Venue: Wuhan Xxxx Xxxx Paper Company Limited
Meeting Time: February 26, 1998
Wuhan Xxxx Xxxx Paper Factory ("Party A") and Hong Kong Orient Packaging Limited
(originally known as Hong Kong Orient Financial Services Limited or "Party B")
have jointly agreed and signed the Joint Venture Agreement and Articles of
Association for establishing Wuhan Xxxx Xxxx Papers Co. Limited (the "JV") on
December 20, 1996. The JV's operations are satisfactory since its establishment
one year ago, however, both parties agreed that certain changes must be made to
improve the JV's operations that are vital to the JV's further development. On
this basis, Party A and Party B has reached the following agreements after
thorough and friendly discussions:
1. In JV agreement, Article 13, Party B's capital contribution of
Rmb10.638 million was to be completed by December 31, 1997. Up to now,
Party B has injected Rmb5,190,000. Party B is herein committed to an
additional Rmb5,450,000 before March 31, 1998 to complete Party B's
capital contribution.
Party B has loaned to the JV approximately Rmb2,000,000 in the past.
Party A herein agrees to allow the JV to payback this loan from Party B
for approximately Rmb2,000,000 immediately upon receiving this amount
from the capital injection from Party B.
2. In the JV agreement appendix, "JV registered capital expansion
agreement" Article 3.2, will be amended to, Party A and Party B agree
to complete the capital expansion by March 31, 1999. Party A will
contribute machinery and equipment valued in total at Rmb22.908
million. Party A's asset contribution must be approved by Party B.
Party B will contribute cash of total Rmb34.362 million. The total
registered capital of the JV will be expanded to Rmb75 million. Party
B's contribution will be as follows:
Date Amount
---- --------
Before June 30, 1998 Rmb5,000,000
Before September 30, 1998 Rmb5,000,000
Before December 31, 1998 Rmb10,000,000
Before March 31, 1999 Rmb14,362,000
-------------
Rmb34,362,000
Party A and Party B will amend the relevant articles associated with registered
capital increase in the Joint Venture Agreement and appendix agreement in
accordance with the above schedule.
3. The JV Agreement Article 30, General Manager will be appointed by Party
A will be amended. The Article 18 in the JV Agreement and Article 31 in
the Articles of Association; "General Manager will be nominated by
Party A" will be amended to allow
that Party B will appoint the Chairman of the Board and General
Manager. This will reflect Party B's controlling interest in the JV and
allows Party B's full management control of personnel, finance and
materials. Party A will appoint Deputy Chairman, First Deputy General
Manager and Deputy Accountant. Party A appointed employees in the JV
will monitor the management of personnel, finance, and materials and
will also be responsible for holding Party A's financial chop.
4. The JV Agreement Article 26 and Articles of Association Article 20 "The
Board of Directors" will be amended. The Board of Directors will have
10 members. Party A will be entitled to 4 director seats and Party B
will be entitled to 4 director seats and Party B will be entitled to 6
director seats on the JV's board.
5. The JV Agreement Article 38.1 and Article of Association Article 57.1
relates to "Retirement Insurance Scheme" and JV Agreement, Article 38.2
and Article of Association Article 57.2 relates to "Medical Collective
Fee" and the JV Agreement appendix 2 relates to "Land, Property use
right agreement" on the payment due date, the JV agrees to pay Party A,
before the 5th day of each month, all relevant fees of the previous
month according to the Joint Venture Agreement. Should the JV fail to
perform, the daily penalty of the delay is 0.1% of the unpaid amount.
6. Any other amendment needed in the Joint Venture Agreement should be
discussed and agreed by Party A and Party B and then submitted to
relevant authorities for approval.
There will be 4 copies of this agreement. Each party should hold 2 copies. This
agreement will become effective immediately after being signed and chopped by
authorized persons.
Party A: Wuhan Xxxx Xxxx Paper Factory
Party B: Orient Packaging Limited
Date: February 27, 1998
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