EXHIBIT 10.4
CONTRACT FOR ESTABLISHMENT
OF SINO-AMERICA JOINT VENTURE CORPORATION TO PRODUCE
ELEVATOR PRODUCTS AND AUTO STAIRS
Chapter One General
China Shaanxi Elevator Corporation and ESCO Elevator Corporation based on the
principle of equality and mutual benefit, through friendly discussions, agree to
establish a Joint Venture corporation capitalized by both parties to produce
elevator products and auto stairs in Weinan City, Shaanxi Province of People's
Republic of China in accordance with "China-Foreign Country Joint Venture
Enterprise Law of the People's Republic of China" and other laws concerned, and
for which this contract is concluded.
Chapter Two The Parties Involved in the Joint Venture
Clause 1. The following parties are involved in this contract:
China Shaanxi Elevator Corporation (hereinafter called Party A),
registered in Shaanxi Province of China, its lawful address: 00
Xxxx Xxx Xxxx Xx. 0, Xxx Xxx Xxxxxxxx, Xxxxxx Xxxx,
Xxxxxxx Xxxxxxxx of the People's Republic of China. Legal
representative: Xx Xxxxxx, President, citizen of China. ESCO
Elevator Corporation of the USA(hereinafter called Party B),
incorporated in Colorado, United States of America, its lawful
address: 0000 Xxxx Xxxxx, Xxxx Xxxxx, Xxxxx 00000 XXX.
Legal representative: Xxxx Xxxxx, Chairman/CEO
Chapter Three Establishment of the Joint Venture
Corporation
Clause 2. Party A and Party B agreed to establish a Joint Venture to
manufacture and market elevators and auto stairs (hereinafter
called the Joint Venture) in China based on "China-Foreign
Country Joint Venture Enterprise Law of the People's Republic
of China" and other laws concerned.
Clause 3. The name of the Joint Venture is "China Shaanxi-ESCO Elevator
Corporation, Ltd." The English name: China Shaanxi-ESCO Elevator
Corporation Ltd. The lawful address of the Joint Venture: 00
Xxxx Xxx Xxxx Xx. 0, Xxx Xxx Xxxxxxxx, Xxxxxx Xxxx, Xxxxxxx
Xxxxxxxx.
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Clause 4. All the activities of the Joint Venture should be conducted in
accordance with the laws and decree and concerned rules of the
People's Republic of China.
Clause 5. The organization form of the Joint Venture is a Limited Liability
Corporation. Each party shall share the profits, risks and
losses according to the percentage of outstanding shares owned
by all xownership parties.
Chapter Four Target, Scope and Production Scale
Clause 6. The target of the Joint Venture is described as the following:
based on the desire for enhancement of economic co-operation
and technical exchange, adopting advanced and proper techniques
and scientific management methods, improving product quality,
developing new products and obtaining the competitive ability in
the international markets relating to quality, price and so on,
and raising the economic benefits so that both of the investors
would obtain the satisfied interest.
Clause 7. The production and business scope of the Joint Venture are as
follows: production, sales and assembling of hydraulic elevators,
electrically controlled traction elevators and auto stairs and
conducting after-sale service to the said elevators and auto
stairs.
Clause 8. The production of elevators and autostairs when the Joint Venture
has gone into operation shall have the capacity to produce
products valued at at least USD $100,000,000. (SAY ONE HUNDRED
MILLION US DOLLARS) annually. Said capacity will be achieved by
infusing capital in three stages on as needed basis to satisfy
the cash needs for the growth and as outlined in clause 10.
Chapter Five Ownership, Registered Capital and
Investment
Clause 9. The percentage of ownership for Party A and Party B are as
follows:
Party A: Forty (40%) percent
Party B: Sixty (60%) percent
Clause 10. Party A and Party B shall respectively invest cash registered
capital as follows:
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Stage 1.(Production Capacity USD $30,000,000.):
Party A: Cash of USD $680,000.
Party B: Cash of USD $1,020,000.
Stage 2. (Production Capacity USD $60,000,000.):
Party A: Cash of USD $1,320,000.
Party B: Cash of USD $1,980,000.
Stage 3. (Production Capacity USD $100,000,000.):
Party A: Cash of USD $2,000.000.
Party B: Cash of USD $3,000,000.
Note: Both parties agree to provide additional cash,
proportionate to their respective ownership on as needed basis,
to satisfy additional growth.
Clause 10.1 Non-Cash contribution by:
Party A: Domestic marketing network, electrically controlled
traction elevators and auto stairs technology, future revenue
relating to electrically controlled traction elevator and
autostair technology which includes current purchase orders from
Party A's clients that is not manufactured, and right to use
land.
Party B: Hydraulic elevator technology, technicians and other
US based personnel, international marketing network.
Clause 11. The investment of the Joint Venture shall be handed over in
three stages. Both parties shall hand over the total amount for
Stage 1 of their respective investment within 60 days after this
contract is signed.
Clause 12. When either of the parties wants to transfer all or part of his
investment shares to a third party, he should get the consent of
the other party and then submit a report to the authoritative
office for approval. When one party transfers all or part of his
investment shares, the other party shall enjoy priority to buy
the shares.
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Clause 12.1. The sole exception to Clause 12 shall be that Party B may sell up
to eight (8%) percent shares of the Joint Venture owned by Party
B to Xxx Xxxx Co. Inc. or its designee without regard to
Clause 12.
Chapter Six Responsibilities for the Parties Involved in
the Joint Venture
Clause 13. Party A and Party B shall be responsible for handling the
following matters respectively:
Responsibilities for Party A:
to submit application to the higher levels of China for approval
of the establishment of the Joint Venture;
to submit application to the land control department to get the
use of land;
to have personnel engage in the design, construction of the
workshops and other engineering projects for the Joint Venture;
to supply cash, mechanical facilities, workshops, office building,
special railway and so on to the Joint Venture as defined in
Clause 10;
to give assistance to Party B to apply to the customs and supply
and to provide transportation for the imported machinery and
equipment that Party B will purchase and deliver on behalf the
Joint Venture; to help the Joint Venture to buy raw materials, \
office apparatus, traffic means, communication equipment and so
on;
to help the Joint Venture to make contacts and fix basic
installations such as water supply, traffic and so on;
to help the Joint Venture to conduct the recruitment of
management personnel, technical personnel, workers and other
personnel's needed, in the locality, who are Chinese citizens;
to hire employees to work for the Joint Venture pursuant to the
operating plans, approved by the Board of Directors;
to help the staff of American citizen to conduct visas and working
permits;
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to contribute Party A's marketing network to the Joint
Venture and;
to handle other matters entrusted by the Joint Venture.
Responsibility for Party B:
to supply cash and so on to the Joint Venture as defined in
Clause 10;
to ship the said machinery and equipment delivered on behalf of
the joint venture from foreign countries to China sea port;
to handle such matters as selecting, buying the machinery and
equipment in foreign countries as entrusted by the Joint Venture;
to grant the right to use patented technology for a period of no
less than 20 years;
to supply the necessary machine installation and adjustment, as
well as send technical personnel's and inspector for the
test-running for hydraulic elevators; living expenses for the said
technical personnel will be paid by Joint Venture;
to give technical training to the technicians and workers of the
joint venture;
to provide a floor supervisor to monitor the hydraulic elevator
manufacturing process and the quality of out going hydraulic
elevators from the Joint Venture; living expenses for the said
technical personnel will be paid by Joint Venture;
Party A agrees for Party B to control and monitor quality,
production process and designed production capacity of joint
venture products;
to handle other matter entrusted by the Joint Venture;
to contribute Party B's marketing network to the Joint Venture,
and;
to cooperate with Party A in providing information and documents
required for the approval for the Joint Venture.
Clause 13.1. Party A and Party B agree that the Joint Venture shall employ
number of employees at any time, as required by the operating plan
approved by the Board of Directors excluding the technical
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personnel and floor supervisor provided by Party B. All Joint
Venture employees shall be compensated by the Joint Venture.
Clause 13.2. Party A and Party B agree that the Joint Venture will purchase
all necessary equipment needed for operation and administration
of the Joint Venture and the manufacturing of Joint Venture
products. Party A agrees to sell to the Joint Venture the
equipment currently used by Party A to manufacture electrically
controlled elevators and autostairs for a total price not to
exceed USD $365,000.
Clause 13.3. Party A agrees that the Joint Venture shall have the right to
rent 15,000 square meters of workshops and office buildings
(workshops 13,000 square meters and office 2,000 square meters
including the right to use land) for the following amount:
First Year: USD $ 80,000 per year
Second Year: USD $ 100,000 per year
Third thru Fifth Year: USD $ 120,000 per year
All rents shall be paid in equal monthly installments. During
this period and because of increased production, the Joint Venture
may require additional space which shall be made available by
Party A at a mutually negotiated rate per square meter. In the
event that the Parties do not agree to the per square meter rent
demanded by Party A, the Joint Venture shall have the right to
move additional production in a different province of China to
achieve better per square meter rent.
Party A agrees that within the first three years of rental terms,
the joint Venture shall have the option to purchase and Party A
shall sell to the Joint Venture the space being rented for a total
purchase price of 8,400,000. RMB.
Chapter Seven Technology Transfer
Clause 14. Both parties agree that the Joint Venture shall sign a right to
use technology agreements respectively with Party A and Party B,
so that the advanced production technology, including production
design, process technology, testing methods, controlling
standards for raw materials and components, and the personnel
training, etc., could be obtained to reach the target and
production scale as defined in Chapter Four of this contract.
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Clause 15. Party A and Party B shall offer the following warranty to the
right to use technology agreement:
Clause 15.1. Party A shall guaranty that the electrically controlled VVVF
traction type passenger elevator, ACVV Passenger elevator,
cargo elevator, patient-bed elevator, and auto stairs will be
supplied to the Joint Venture with complete technology relating
to the design, process, technology, procedures, testing and
inspection, etc., and the said technology shall be complete,
precise and reliable, which conforms to the target of the Joint
Venture, and be sure to reach the product quality and production
scale as defined in this contract.
Clause 15.2. Party B shall guaranty that the hydraulic elevator (7 patents)
should be supplied to the Joint Venture with complete
technology relating to the design, process technology,
procedures, testing and inspection, etc., and the technology
should be complete, precise and reliable, which conforms to
the target of the Joint Venture, and be sure to reach the
product quality and production scale as defined in this
contract.
Clause 15.3. Both Parties shall guaranty that the technology as defined in
this contract and the right to use technology agreements may
be used by the Joint Venture and the technology supplied must
be the most advanced technology among Party A and Party B's
similar technology, the selected facilities should have good
quality and performance which can satisfy the demands of
technological process and practical operations.
Clause 15.4. Both Parties shall make a list of technology and technical
service for each stage as defined in the right to use
technology agreements, this list shall be an annex of the
agreements mentioned above, and shall guarantee to put into
effect.
Clause 15.5. The drawing, technical conditions and other detailed
information shall be a component part of the said right to use
technology and shall be delivered as scheduled.
Clause 15.6. Within the valid period of the right to use technology
agreements, if any improvements has been done to the
technology, Party A or Party B shall supply the intelligence
and technical information to the Joint Venture promptly
relating to the improvements without extra charges.
Clause 15.7. Both Parties guarantee that they shall make the technical
personnel and workers of the Joint Venture be proficient on
the technology
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within the period as regulated in the right to
use technology agreements.
Clause 16. If either of the Parties fail to deliver the facilities and
technology as defined in this contract and the right to use
technology agreements, or deceit/concealment to be found, the
side of responsibility shall be held responsible to compensate
for the direct loss of the Joint Venture.
Clause 17. The right to use technology agreement signed between the Joint
Venture and Party A and Party B respectively shall be
effective for a period of twenty (20) years from the Joint
Venture approval date.
Chapter Eight Marketing of the Products
Clause 18. The products produced in the Joint Venture shall be sold
worldwide. The Joint Venture will appoint Party B as its
exclusive distributor for its products in North, Central and
South America.
The selling price from the Joint Venture to Party B shall be
Joint Venture's domestic selling price less 5% discount.
Party B shall open a letter of credit through an
internationally recognized bank with the purchase order
totaling ninety (90%) percent of the invoice amount. Said
Letter of Credit shall be settled within sixty (60) days of
receipt of bill of lading. The remaining ten (10%) percent
of the payment shall be reserved for six months as a quality
warranty. The said ten (10%) per cent payment shall be
remitted via wire transfer to the Joint Venture at the end
of the six month period. During this period, Party B shall
send Party B's personnel to the Joint Venture's facilities
for training in products, installation and technical
specifications. The salaries and expenses for such personnel
shall be paid by Party B.
Clause 19. The products of the Joint Venture to be sold in the domestic
market could be sold through the goods & materials departments
and commercial departments (distributing agent for the Joint
Venture) of China on the exclusive agent or commission basis,
or directly by the Joint Venture to the end user.
Clause 20. In order to open the markets and carry out after-sale service
in and outside China, the Joint Venture could set up sale and
service branches in and outside China with the approval by the
concerned authoritative office.
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Clause 21. The products of the Joint Venture shall use ESCO as its
trademark, and the identification pattern shall be:
[LOGO]
Chapter Nine Board of Directors
Clause 22. The Board of Directors shall be founded on the day when the Joint
Venture gets registered.
Clause 23. The Board of Directors shall consist of 5 directors, 2
designated by Party A and 3 designated by Party B. The
Chairman shall be designated by Party B, Vice Presidents shall
be designated by Party A. The term of office for the Chairman,
Vice Presidents and directors shall be 4 years. They could
renew their term of office when re-appointed by the designators.
Clause 24. The Board of Directors shall be the highest authoritative
organization of the Joint Venture, which shall decide all
important matters of the Joint Venture: a) amendment of the
rules of the Joint Venture; b) termination and dissolution of
the Joint Venture; c) increase and transfer of the registered
capital of the Joint Venture; d) the Joint Venture merge into
another economic organization. The decision to the above
mentioned matters could only be made by unanimous adoption.
The decisions to other matters could be made by adoption of
simple majority.
Clause 25. The Chairman of the Board is the legal representative of the
Joint Venture. When he is not able to carry out the duty for
certain reasons, he could authorize a vice president or other
director to be his representative.
Clause 26. The board meeting shall be held at least once a year. The
said meeting shall be called and presided over by the
Chairman. The Chairman can call for a special board meeting
with the approval of one-third of the directors. All board
meeting minutes of such meeting shall be kept in file.
Chapter Ten Management Organization
Clause 27. The Joint Venture shall set up organizations for management to
be in charge of routine management work, such management
organization shall have one personnel as general manager
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recommended by Party A, four persons as vice general managers;
two recommended by Party A and two persons recommended by
Party B. The term of office of such managers shall be four
years.
Clause 28. The responsibility of the general manager is to execute all
the decision made by the meeting of the Board of Directors,
organize and lead the routine management of the Joint Venture.
The vice general manager shall assist the said general
manager to conduct the management.
The management organization could appoint a certain number of
department managers, such managers shall be respectively in
charge of management of each department, handle the matter
assigned by the general and vice general managers, and hold
responsible to the general and vice general managers.
Clause 29. If the said general and vice general managers are found to
engage in malpractice for selfish ends or serious dereliction
of their duties, they should be dismissed and replaced with
the decision made by the board meeting.
Chapter Eleven Facilities Purchase
Clause 30. The raw materials, fuels, accessories, means of transport and
office products, etc., shall be, in case the conditions are
the same as in other countries, purchased in China.
Clause 31. When Party B is entrusted to buy facilities in the market abroad,
Party A's representative shall be invited to take part in the
inquiries and the execution of the transactions by the
international market prices.
Chapter Twelve Preparations and Constructions
Clause 32. During the preparation and construction period of the Joint
Venture, a preparation and construction office shall be set up
under the Board of Directors. Such office consists of five
(5) persons, four from Party A and one from Party B. The
office director shall be recommended by Party A, vice director
shall be recommended by Party X. Xxxx director and vice
director of the said preparation and construction office shall
be appointed by the Board of Directors.
Clause 33. The said preparation and construction office shall be responsible
to check the design of engineering projects, to sign project
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construction contracts, to have necessary facilities, goods
materials purchased and accepted, to work out general
schedules for project construction, to work out plans for
expenditures, to control the financial expenditure and final
accounts for engineering projects, to make out management
methods that are concerned, and to best keep and arrange the
documents, drawings, files and information occurred during the
project constructions.
Clause 34. Party A and Party B shall respectively designate a certain
number of technical personnel to set up a technical group,
such group shall work under the leadership of the said
preparation and construction office to check, control,
inspect, accept and test the design, project quality,
materials of facilities and the introduced technology.
Clause 35. The number payments and expenses of the staff members in the
preparation and construction office shall be, when agreed by
both Parties, listed in the engineering project budget.
Clause 36. With the approval of the Board of Directors, the said preparation
and construction office shall be dissolved after the factory
construction are completed and turned over.
Chapter Thirteen Labor Management
Clause 37. The recruitment, invitation, dismissal, salaries, labor
insurance, welfare and rewards and punishments of the staff
and workers of the Joint Venture shall be carried our
according to "the Labour Management Rules for China-Foreign
Country Joint Venture Enterprises of the People's Republic of
China" and its implementing methods, a plan shall be worked
out through discussion by the Board of Directors, and the said
items shall be written as regulations into the labor contracts
signed between the Joint Venture and the Worker's Union of the
Joint Venture collectively orpersonally. The labor contract,
when signed, shall be submitted to the local labor management
department for record.
Clause 38. The invitation, salaries, social insurance, welfare and standards
for business traveling costs, etc., for the high ranking
managerial personnel recommended respectively by Party A and
Party B shall be decided through the discussion of the board
meeting.
Chapter Fourteen Taxes, Financial Affairs and Audit
Clause 39. The Joint Venture shall pay all taxes in accordance with the
regulations of the related laws and rules of China.
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Clause 40. The staff and members of the Joint Venture shall pay the personal
income tax according to "the Personal Income Tax Law of the
People's Republic of China".
Clause 41. The Joint Venture shall draw reserve fund, enterprise development
fund and staff and member welfare and reward fund in
accordance with the regulation of "the China-Foreign Country
Joint Venture Enterprise Laws of the People's Republic of
China". The percentage drawn for the said funds shall be
decided by the board meeting based on the running situation of
the Joint Venture.
Clause 42. The financial year of the Joint Venture shall start from January
1st and end December 31st. All vouchers, invoices, report forms
and account books shall be written in Chinese and an English
translation shall be made available to Party B. The accounting
systems used by the Joint Venture will meet Generally Accepted
Accounting Practice.
Clause 43. The financial audit of the Joint Venture shall be conducted by
an independent accountant chartered in China, and a audit
report shall be submitted to the Board of Directors and
General Manager after checking and examination is finished.
All costs shall be borne by the Joint Venture.
Clause 43.1. Party B may install a financial manager to monitor the financial
activities of the Joint Venture. This financial manager will
be granted full access to all financial records of the Joint
Venture and will report directly to the management of Party B.
This financial manager may add all staff as deemed necessary.
All the cost of the financial manager shall be borne by Party B.
Clause 44. During the first three months of each business year, the general
manager shall have personnel to work out the statement of asset
and liabilities, profit and loss statement and profit
distribution schedule, which are to be submitted to the board
meeting for check and adoption.
Chapter Fifteen Disbursement of Annual Profits
Clause 45. Net profits earned by the Joint Venture shall be distributed
semi-annually according to the percentage of outstanding
shares owned by all ownership parties.
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Clause 45.1. A distribution shall be made on the 180th day of each fiscal
year of the net profits from the 4th quarter of the previous
fiscal year and the net profits from the first quarter of the
current fiscal year. A distribution shall be made on the
360th day of each fiscal year of the net profits from the 2nd
and 3rd quarter of the current fiscal year.
Clause 45.2. The Joint Venture shall retain no more than 20% of net annual
profits earned, or more if determined by the Board of
Directors or the applicable minimum percentage as governed by
the rules and regulations of the People's Republic of China.
Chapter Sixteen The Limit for the Joint Venture
Clause 46. The time limit for the Joint Venture shall be twenty (20)
years. The Joint Venture shall be founded on the day when the
business license for the Joint Venture is issued. On the
motion of either Parties and the unanimous adoption of the
board meeting, a written application shall be submitted to
"the China Foreign Economic & Trade Commission" (or its
entrusted office for examination and approval) six months
before the expiration of the Joint Venture time limit for
extension of such Joint Venture time limit.
Chapter Seventeen The Treatment of Property at Expiration of
the Joint Venture Term
Clause 47. At expiration of the Joint Venture term or early termination
of the Joint Venture, the accounts of the Joint Venture should
be cleared, the property after clearing shall be distributed
in accordance with the percentage of outstanding shares owned
by all ownership parties.
Chapter Eighteen Insurance
Clause 48. All insurance of the Joint Venture shall be effected to the
People's Insurance Company of China, the risks, insurance
value and period, etc., shall be decided through discussions
of the board meeting in accordance with the regulations of the
People's Insurance Company of China.
Chapter Nineteen Amendment, Change and
Termination of This Contract
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Clause 49. Any amendment to this contract and its annexes could only become
effective after a written agreement signed by both Parties
hereto.
Clause 50. If this contract could not be performed because of force majeure,
or the business is not able to go on because of continuos loss
for years, the joint venture term could be ended and this
contract be terminated before the due time with the approval
for the original authoritative organization and the unanimous
adoption of the Board of Directors.
Clause 51. If the Joint Venture could not run or could not reach the
business target as defined in this contract because either of
the Parties failed to perform his obligations in this contract
unilaterally. The other Party shall have the right to claim
against the Party out of contract, also have right to submit a
report to the original authoritative organization for approval
to terminate this contract. If both parties hereto agree to
continue the business, the Party out of contract shall
be obliged to compensate the economic loss of the Joint Venture.
Chapter Twenty Obligations for Violation
of This Contract
Clause 52. If either of the Parties failed to completely hand over total
amount of capital as defined in Chapter Five of this contract
at due time, such Party of contract shall pay to the other
Party who comply with contract a penalty amounting to 10% of
the total amount of investment with each month passed. In
case such Party fails to hand over the said capital 3 months
beyond the due time, he should pay to the other Party a
penalty cumulatively amounting to 30% of the total amount of
investment Capital. The said other Party shall have right to
terminate this contract in accordance with the regulations in
Clause 51 of this contract.
Clause 53. If this contract and its annexes could not be performed or
performed in whole because either of the Parties broke this
contract, the responsibilities shall be laid on such Party out
of contract. If both Parties broke this contract, each Party
shall bear his own responsibilities according to the actual
situation.
Chapter Twenty One Force Majeure
Clause 54. If either of the Parties hereto is unable to perform this
contract in the defined conditions by an event of force
majeure, such as
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earthquake, typhoon, flood, fire or war, or
any other unforseeable event beyond such Party's control, the
prevented Party shall notify the other Party of the occurrence
or such event of force majeure and within fifteen(15) days
thereafter shall send to the other Party a valid certificate
giving detailed information and the causes that prevent
performing this contract in whole or in part or in extension
of term. Such certificate should be issued by the notary
office of the district where the said force majeure occurred.
The termination of this contract or partly performance of this
contract or delay of performance of this contract shall be
decided through discussions of both Parties in accordance with
the extent to which the performance of this contract is
affected thereby.
Chapter Twenty Two Applicable Law
Clause 55. This contract is governed in accordance with the laws of the
People's Republic of China, relating to the conclusion,
authentication, construction and arbitration.
Chapter Twenty Three Arbitration
Clause 56. If any dispute arise in implementation of this contract or in
connection with this contract, the Parties hereto shall
resolve such dispute through friendly consultation. If within
two (2) months of the date on which one party sends to the
other a letter describing the dispute no resolution of the
dispute has been reached, either Party may request that such
dispute be resolved in accordance with the Arbitration Rules
then in effect of the International Chamber of Commerce. Such
arbitration shall take place in China or the nearest country
in China and shall be conducted by three arbitrators, one of
which will be selected by each Party and the third one will be
selected by the other two arbitrators within the time limits
established in accordance with the then existing Rules of the
International Chamber of Commerce. The decision rendered by
arbitrators shall be final and binding and may be enforced in
any Court having jurisdiction over the Parties assets. The
arbitrators shall decide all disputes in accordance with the
equity and good commercial practice and shall not be bound by
the laws of any jurisdiction of process.
Clause 57. During the said arbitration, the performance of this contract
shall go on with the exception of the portion in dispute and
being arbitrated.
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Chapter Twenty Four Languages
Clause 58. This contract is written in both Chinese and English
languages, both texts are equally authenticated and shall be
made constant.
Chapter Twenty Five The Effectiveness and the
Other Terms of This Contract
Clause 59. The following annexes shall be made in accordance with the
principles as defined in this contract: Agreement for
Engineering Projects, Right to Use Technology Agreement, Sale
Agreement, Agreement for Facilities Purchasement, the said
agreements shall be the composite parts of this parts of this
contract.
Clause 60. This contract and its annexes shall be submitted for approval
to the "Foreign Economic & Trade Commission of the People's
Republic of China" (or its entrusted officers), and become
effective on the day when approved.
Clause 61. When either Party sends notice to the other Party by such means
as cable and fax, in case the content of such notice is in
connection with the right and obligations of both Parties, a
written letter of such notice shall be sent thereafter. The
legal addresses of both Parties as defined in this contract
shall be the addresses to which mails should be sent.
Clause 62. During the preparation & construction period of the Joint
Venture, Party A shall advertise in multiple ways for Party B's
products. All advertising activities undertaken by Party A on
behalf of Party B shall be approved by Party B before they are
undertaken by Party A. Party A shall work out a plan and
budget, when approved by Party B, Party B shall furnish the
related information for advertisements. Party B shall bear the
costs occurred from the said advertising.
Clause 63. During the preparation & construction period of the Joint
Venture, Party A shall sell, assemble and repair the Party B's
products in China market as exclusive agent of Party B in
order to open the China market as soon as possible, Party B
shall sell Party A 250-400 semi-knockdown hydraulic elevators
at Party B's domestic selling price less 5% discount. The
products shall be assembled by Party A. During this period,
Party A shall send Party A's personnel to Party B's facilities
for training in products, installation and technical
specifications. The salaries and expenses for such personnel
shall be paid by Party A.
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Clause 64. During the preparation & construction period of the Joint
Venture, when approved by Party B, certain parts produced by
Party A shall be directly assembled to Party B's products in
place of imported ones to lower the selling price and increase
the market share. The price shall be fixed through further
discussions of the two Parties hereto.
Clause 65. During the preparation & construction period of the Joint
Venture when Party A works as agent of Party B, the payment
for the products sold to Party A shall be settled as follows:
Party A shall open a letter of credit through an
internationally recognized bank with the purchase order
totaling ninety (90%) percent of the invoice amount. Said
Letter of Credit shall be settled within sixty (60) days of
receipt of bill of lading. The remaining ten (10%) percent
of the payment shall be reserved for six months as a quality
warranty. The said ten (10%) per cent payment shall be
remitted via wire transfer to Party B at the end of the six
month period.
Clause 66. During the preparation & construction period of the Joint
Venture, any receipts and disbursement occurred within China
from conduction of selling, assembling and maintenance of
Party B's products, shall be received and paid by Party A,
those occurred in America shall be received and paid by Party B.
Clause 67. This contract is signed on 16th day of January 1997 by
authorized representatives of both Parties at Shaanxi Province
of China.
China Shaanxi Elevator Corporation ESCO Elevator Corporation
By: /s/ Xx Xxxxxxx By: /s/ Xxxx Xxxxx
________________________________ _____________________________
Xx Xxxxxxx Xxxx Xxxxx
President Chairman/CEO
JV Contract - Page 17 of 17
