EXHIBIT 10.5
WEIFANG FUHUA AMUSEMENT PARK CO., LTD.
JOINT VENTURE AGREEMENT
CHAPTER 1 -- GENERAL PRINCIPLES
Pursuant to the principles of equality, mutual benefit and joint
development, and through friendly negotiations, this agreement is made under the
"Sino-Foreign Equity Joint Venture Law of the People's Republic of China (the
"PRC")" and other applicable PRC laws and regulations ("PRC Law") by and among
Weifang Neo-Luck (Group) Corporation, a corporation based in Shandong Province,
PRC, and Jimswood Investment and Development Corp., a corporation based in the
United States, and Weicheng International Inc., a corporation based in the
United States, for the purpose of establishing a joint venture in the City of
Weifang, Shandong Province, PRC.
CHAPTER 2 -- PARTIES TO THE JOINT VENTURE
Article 1. The Parties to this Agreement are as follows:
Party A: Weifang Neo-Luck (Group) Corporation,
based in the PRC
Legal address: 000 Xxxx Xxxx Xxxx Xxxxxx, Xxxxxxx Xxxx,
Xxxxxxxx Xxxxxxxx, PRC
Legal representative: Xxx Xxx
Title: General Manager
Citizenship: PRC
Party B: Jimswood Investment and Development Corp.,
incorporated in California, USA
Legal address: Los Angeles, California.
Legal representative: Xxxxxxx Xx
Title: Chairman
Citizenship: United States
Party C: Weicheng International Inc.,
incorporated in California, USA
Legal address: 0000 Xxxxx Xxxxxxxxx, Xxxxx Xxx,
Xxxxxxxxxx, XXX.
Legal representative: Xxxxxx Xxxx
Title: General Manager
Citizenship: United States
CHAPTER 3 -- ESTABLISHMENT OF JOINT VENTURE COMPANY
Article 2. Parties A, B and C, in accordance with the
"Sino-Foreign Equity Joint Venture Law of the People's Republic
of China" and other applicable PRC statutes,
hereby agree to establish Weifang Fuhua Amusement Park Co., Ltd.,
a joint venture company (the "Joint Venture Company") in the PRC.
Article 3. The Joint Venture Company is to be called "Weifang Fuhua
Amusement Park Co., Ltd." in Chinese and "Weifang Fuhua
Entertainment Garden Co., Ltd." in English. The legal address of
the Joint Venture Company is: East End of Xxxx Xxxx Street,
Weifang City, PRC.
Article 4. All activities of the joint venture company must comply with the
laws, decrees, and applicable regulations of the PRC.
Article 5. The Joint Venture Company shall be a limited liability company.
Parties A, B and C shall be liable for the debts and obligations
of the Joint Venture Company through their respective equity
investment and shall share the profits and risks and losses in
proportion to their equity investment in the registered capital
of the Joint Venture Company.
CHAPTER 4 -- OBJECTIVES, SCOPE AND SCALE OF
OPERATIONS OF THE JOINT VENTURE COMPANY
Article 6. The objectives of the three-party Joint Venture Company are the
improvement of the tourism capabilities in Weifang City and the
achievement of economic benefit satisfactory to the Parties by
pursuing the principles of enhanced economic cooperation and
mutual benefit, by adopting modern management practices, and by
jointly developing and utilizing abundant and various cultural
and entertainment resources among the people.
Article 7. The scope of operations of the Joint Venture Company: Golf
courses, tennis courts, swimming pools, recreation rooms,
gymnasiums, guest rooms, sauna rooms, disco halls, bowling
alleys, tourist merchandise stores, dining halls, and beverage
shops.
Article 8. The scale of operations of the Joint Venture Company shall be as
follows:
1. Construction of the Joint Venture Company's facilities shall
be over a one-year period. Upon completion of construction of
the facilities and the test period for such facilities, a
normal annual operating revenue of RMB 57,900,000 and a profit
of RMB 14,160,000 are to be realized.
2. With growth of the operations, a gradual expansion over a
period of years is to be achieved, at an annual growth rate of
8%. A profit of RMB 163,214,700 over a period of fifteen years
is expected to be realized (including the construction period
and the period of actual operation).
CHAPTER 5 -- TOTAL INVESTMENT AND REGISTERED CAPITAL
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Article 9. Total investment in the Joint Venture Company is USD $29,500,000.
The registered capital of the Joint Venture Company shall be USD
$20,700,000 (exchange rate shall be calculated according to the
exchange rate quoted by the Administration of Foreign Exchange of
China on the date of the actual capital contribution), of which
Party A shall contribute USD $9,315,000, comprising 45% of the
Joint Venture Company's registered capital, Party B shall
contribute USD $5,175,000, comprising 25% of the Joint Venture
Company's registered capital, and Party C shall contribute USD
$6,210,000, comprising 30% of the Joint Venture Company's
registered capital.
Article 10. Method of capital contribution: The capital contribution of Party
A shall be in RMB, which will be used mainly for acquisitions of
land, construction of support facilities and the purchase of
materials from within the PRC. Party B and Party C shall
contribute capital in the form of United States currency and of
some equipment, which will be mainly for technically advanced
equipment, some materials used for building decoration, some
office supplies, etc.
Article 11. The three Parties shall make their respective capital
contributions in full within four (4) months after obtaining the
business license and their funds shall be deposited in a bank
where the Joint Venture Company shall have opened accounts.
Article 12. To transfer its capital investment, in whole or in part, in the
Joint Venture Company to a third party, a Party must obtain the
written consent of the other two parties and the approval of the
original examination and approval authorities.
Article 13. When any one of Parties proposes transfer of its full or partial
interest in the Joint Venture Company, the other two Parties
shall have right of first refusal with respect to such interest
within six (6) months of such proposal; after the six (6) months,
such interest may be transferred to another party.
CHAPTER 6 -- RESPONSIBILITIES OF THE PARTIES TO THE JOINT VENTURE
Article 14. Parties A, B and C shall be responsible for accomplishing the
following:
Responsibilities of Party A:
Transacting matters necessary for the establishment of the Joint
Venture Company, such as applying to the relevant competent
authorities of PRC for approval, registration, and the issuance
of a business license;
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Assisting Party B and Party C in handling import customs
declarations and domestic transportation of the equipment and
materials which are Party B's and Party C's capital contribution
to the Joint Venture Company;
Assisting the Joint Venture Company in making purchases within
the PRC of some auxiliary equipment and materials, office
supplies, means of transportation, telecommunication facilities,
etc.;
Assisting the Joint Venture Company in making contacts in order
to put into effect the basic infrastructure, such as water,
electricity and transportation;
Assisting the Joint Venture Company in recruiting local PRC
personnel, such as managerial and technical staff, as well as
workers and other necessary personnel;
Assisting in arranging for work permits and travel formalities
needed by foreign personnel; and
Arranging other matters as entrusted by the Joint Venture
Company.
Responsibilities of Party B and Party C:
Pursuant to Articles 10 and 11 herein, making capital
contributions and transporting the equipment, office articles and
other articles that serve as contributions to a port of the PRC
in a timely manner;
Purchasing equipment and materials and arranging other matters
outside the PRC as entrusted by the Joint Venture Company;
Assisting in making arrangements for the relevant personnel of
the Joint Venture Company to go abroad in order to carry out
technical fact-gathering visits and business training and other
matters;
Being responsible for providing reliable and accurate market and
business information to the Joint Venture Company; and
Arranging other matters as entrusted by the Joint Venture
Company.
CHAPTER 7 -- BOARD OF DIRECTORS
Article 15. The Board of Directors shall be formed as of the effective date
of the registration of the Joint Venture Company.
Article 16. The Board of Directors shall be composed of six (6) directors, of
whom three (3) directors shall be appointed by Party A, two (2)
directors shall be appointed by Party B and one (1) director
shall be appointed by Party C. The Chairman of the Board shall be
appointed by Party A and the Vice Chairman of the Board shall be
appointed by Party B. The terms of the Chairman of the Board, the
Vice
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Chairman of the Board and the Directors shall be four (4) years,
renewable upon reappointment by their respective appointing
Parties.
CHAPTER 8 -- OPERATIONS AND MANAGEMENT OFFICE
Article 17. The Joint Venture Company shall establish an Operations and
Management Office to be responsible for the Joint Venture
Company's daily operation and management. The Operations and
Management Office shall have one General Manager and two
Assistant General Managers nominated by Party A. The General
Manager and the Assistant General Managers shall be appointed by
the Board.
Article 18. The duties of the General Manager shall be to implement the
various resolutions of the Board of Directors and to organize and
to lead the day-to-day operations and management of the Joint
Venture Company. The Assistant General Managers shall assist the
General Manager in his work.
Article 19. Several departments may be established under the Operations and
Management Office. Departmental managers shall be appointed
directly by the General Manager and shall be responsible for the
work of their respective departments. The departmental managers
handle matters delegated to them by the General Manager and are
accountable to the General Manager.
Article 20. In the event of graft or serious dereliction of duty by the
General Manager or the Assistant General Managers, such persons
may be removed and replaced at any time upon resolution of the
Board of Directors.
CHAPTER 9 -- PURCHASES OF EQUIPMENT
Article 21. The equipment, materials, means of transportation and office
supplies needed by the Joint Venture Company shall be purchased,
other conditions being equal, as much as possible within the PRC.
Article 22. When Party B and Party C are entrusted by the Joint Venture
Company to select and purchase equipment outside the PRC, they
shall invite Party A to send someone to participate in such
purchases (see details in the import equipment table (1), (2)).
CHAPTER 10 -- PREPARATION AND CONSTRUCTION
Article 23. During the period of preparation and construction, the Joint
Venture Company shall establish a Preparation and Construction
Office under the direction of the Board of Directors. The
Director and the Deputy Directors of the Construction Office
shall be appointed by the Board of Directors.
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Article 24. The Preparation and Construction Office shall be specifically
responsible for examining the project design, entering agreements
to subcontract the construction project, organizing the purchase,
inspection and acceptance of the relevant equipment and
materials, setting the general schedule of the construction
project, preparing budgets for the use of funds, controlling
financial disbursements and final accounts of the project,
establishing relevant management procedures, and ensuring the
safekeeping and proper organization of documents, drawings, files
and information in the course of the project's construction.
Article 25. Parties A, B and C shall designate technical personnel to form a
technical team to be responsible, under the leadership of the
Preparation and Construction Office, for such work as
examination, supervision, inspection, and performance checks of
design, project quality, equipment, and materials.
Article 26. Upon agreement by Parties A, B and C, the staffing, remuneration
and expenses of the Preparation and Construction Office shall be
included in the project budget.
Article 27. After completion of construction and handing-over procedures, and
after approval by the Board of Directors, the Preparation and
Construction Office shall be dissolved.
CHAPTER 11 -- LABOR MANAGEMENT
Article 28. A labor contract covering the recruitment, employment, dismissal
and resignation, wages, labor insurance, benefits, bonuses and
other matters concerning the staff and workers of the Joint
Venture Company shall be made, after the Board of Directors has
researched and drawn up a plan, between the Joint Venture Company
and the Trade Union of the Joint Venture Company, either
collectively or individually, in accordance with the "Regulations
of the People's Republic of China on Labor Management in
Sino-Foreign Equity Joint Ventures" and its implementation
procedures. The labor contract shall, after being concluded, be
filed with the Weifang City Labor Administration. Wages, social
insurance, benefits, and business travel expense standards shall
be discussed and determined by a meeting of the Board of
Directors.
CHAPTER 12 -- TAXATION, FINANCE AND AUDITING
Article 29. The Joint Venture Company shall pay various taxes in accordance
with the relevant PRC laws and regulations.
Article 30. The employees of the Joint Venture Company shall pay their
respective personal income tax in accordance with the "Personal
Income Tax Law of the People's Republic of China".
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Article 31. The Joint Venture Company shall, pursuant to the provisions of
the "Sino-Foreign Equity Joint Venture Law of the People's
Republic of China", allocate certain amounts to a reserve fund,
enterprise development fund, and staff and workers' welfare fund
and bonus fund, the annual allocation rates of which shall be
determined by the Board of Directors based on the Joint Venture
Company's operating results.
Article 32. The fiscal year of the Joint Venture Company shall begin on
January 1 and end on December 31 of each year. All the accounting
records, documents, books and statements shall be written in
Chinese.
Article 33. The Joint Venture Company shall retain an accounting firm
registered in the PRC for the inspection and audit of the Joint
Venture Company's year-end financial accounts, and the results
thereof shall be reported to the Board of Directors and General
Manager.
Article 34. Within the first quarter of every operational year, the General
Manager shall compile the last year's balance sheet, income
statement and a profit distribution plan, which shall be
submitted to the Board of Directors for examination.
CHAPTER 13 -- TERM OF THE JOINT VENTURE
Article 35. The term of existence of the Joint Venture Company shall be
fifteen (15) years. The date of the Joint Venture Company's
establishment shall be the date of the issuance of its business
license.
Article 36. Upon any Party's motion and the unanimous resolution of the Board
of Directors, the Joint Venture Company may apply for extending
the term of the Joint Venture Company by application to the
original examination and approval authorities within six (6)
months prior to the expiration of the term of the Joint Venture
Company.
CHAPTER 14 -- DISPOSITION OF PROPERTY AFTER EXPIRATION OF THE TERM
OF THE JOINT VENTURE
Article 37. The Joint Venture Company shall be liquidated according to law
upon the expiration of its original term or upon earlier
termination of the Joint Venture Company for other reasons. The
net assets or liabilities resulting from the liquidation shall be
allocated to Parties A, B and C in proportion to their respective
investments.
CHAPTER 15 -- INSURANCE
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Article 38. All insurance for the Joint Venture Company shall be purchased
from the Chinese People's Insurance Company; the types of
insurance and the values and terms thereof shall be discussed and
determined at a meeting of the Board of Directors in accordance
with the regulations of the Chinese People's Insurance Company.
CHAPTER 16 -- AMENDMENT, MODIFICATION AND TERMINATION OF THE AGREEMENT
Article 39. Amendments to this Agreement shall be effective only upon written
agreement by Parties A, B and C and approval from the original
examination and approval authorities.
Article 40. If this Agreement can not be performed as a result of force
majeure, or the Joint Venture Company is not able to continue to
operate because of continuing losses, then the term of the Joint
Venture Company may, following the unanimous approval of the
Board of Directors, be ended and this Agreement terminated prior
to expiration.
Article 41. If one Party fails to perform its obligations provided by this
Agreement and the Articles of Association, or materially breaches
the provisions of this Agreement or of the Articles of
Association with the result that the Joint Venture Company is
incapable of operating or of achieving the Joint Venture
Company's operation goals, such Party shall be deemed as
unilaterally terminating this Agreement. The other Parties have
the right to claim damages against the breaching party and have
the right to apply to the original examination and approval
authorities for approval of termination of this Agreement.
However, if Parties A, B and C wish to continue the operation of
the Joint Venture Company, the breaching party shall indemnify
the loss suffered by the Joint Venture Company.
CHAPTER 17 -- BREACH OF CONTRACT LIABILITIES
Article 42. If any of the three Parties violates any provision of this
Agreement or attachment hereto with the result that this
Agreement or any attachment hereto cannot be performed, the
breaching Party shall assume all the liabilities of breach of
contract in accordance with the law.
CHAPTER 18 -- FORCE MAJEURE
Article 43. When a Party cannot fully perform this Agreement as a result of
force majeure, such as natural disaster, war, etc., such affected
Party shall immediately inform the other Parities and shall
provide detailed information within five (5) days with a valid
certificate issued by a local notarial office where the force
majeure occurred. In accordance with the extent of the effect
caused by force majeure on
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this Agreement, Parties A, B and C shall negotiate and determine
the future performance of this Agreement.
CHAPTER 19 -- GOVERNING LAW
Article 44. The formation, validity, interpretation, and performance of
contracts and the settlement of disputes shall all be governed by
PRC law.
CHAPTER 20 -- RESOLUTION OF DISPUTES
Article 45. Any and all disputes arising out of or relating to performance
under this Agreement shall be resolved through friendly mutual
consultation between Parties A, B and C. If a dispute cannot be
resolved through negotiation, the dispute shall be submitted to
the Foreign Economic Affairs and Arbitration Commission of the
China Council for the Promotion of International Trade for
arbitration, and the arbitration decision shall be final and
binding on Parties A, B and C. In the course of any arbitration
proceeding, this Agreement shall be performed and remain in full
force and effect, except for the portion under dispute and which
is in arbitration.
CHAPTER 21 -- LANGUAGE
Article 46. This Agreement shall be written in Chinese and each party shall
retain one copy thereof.
CHAPTER 22 -- EFFECTIVENESS OF THE AGREEMENT AND MISCELLANEOUS
Article 47. This Agreement shall be approved by the Ministry of Foreign
Economics and Trade of the PRC (or other examination and approval
agency authorized thereby) and shall be effective on the date of
such approval.
Article 48. This Agreement is signed by the authorized representatives of
Parties A, B and C on August 18, 1996 in Weifang, China.
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Party A: WEIFANG NEO-LUCK (GROUP) CORPORATION
By: ___[illegible signature]_______________, its Representative
Party B: JIMSWOOD INTERNATIONAL INC.
By: ___[illegible signature]_______________, its Representative
Party C: WEICHENG INTERNATIONAL INC.
By:___Aiping Wang___________, its Representative
Date: August 17, 1996
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