Supplementary Materials for Second Semester MBA

English of

Wuhan University

By Prof. Gui Guoping

2010-12-25

Chapter 12

Advanced International Business Contract

Text A A Contract for Incorporation of a Dumper-making

Sino-US Joint Venture (first half)

Chapter 1, General Provisions

This contract is made by and concluded between the Chinese Hubei Yangtze Mining Works Co. Ltd and the US Carcell Drilling Co., Inc. in accordance with the “ Law of the People’s Republic of China on Joint Ventures Using Chinese and Foreign Investment “ and other relevant Chinese laws and regulations, adhering to the principle of equality and mutual benefit and through friendly consultations. Both parties agree to jointly invest to set up a joint venture enterprise in Wuhan, Hubei Province of the People’s Republic of China. The terms and conditions both parties agreed

upon are as follows.

Chapter 2 Parties to the Joint Venture

Article 1

Parties to this contract are as follows: the Chinese Hubei Yangtze Mining Works Co., Ltd (hereinafter referred to as Party A ), registered with the Business Administration of Wuhan, Hubei Province of the People’s Republic of China, Its legal address is at Liberty Road, District of Wuchang ,Wuhan, China.

Legal representative: Name: Xuhua

Position: President of the board of directors

Nationality: the People’s Republic of China

The US Carcell Drilling Co., Inc. ( hereinafter referred to as Party B ), registered with the Florida State Business Administration of the USA. Its legal address is at the 10th, Avenue of West Palm Beach, State of Florida, of the USA.

Legal representative:

Name: Adam Smith

Position: President of the board of directors

Nationality: the USA

Chapter 3 Incorporation of the Joint Venture Company

Article 2

In accordance with the “ Law of the People’s Republic of China on Joint Ventures Using Chinese and Foreign Investment “ and other relevant Chinese laws and regulations, both parties to the joint venture agree to set up a mining machinery joint venture limited liability company (hereinafter referred to as the venture company).

Article 3

The name of the joint venture is Nancell Mining Machinery Joint Venture Limited Liability Company. The name in English is Nancell Mining Machinery Joint venture Limited Liability Company.

The legal address of the joint venture company is at Liberty Road, District of Wuchang ,Wuhan, China.

Article 4

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 5

The organization form of the joint venture company is a limited liability company. Each party to the joint venture company is liable to the joint venture company within the limit of the capital subscribed by it. The profits, risks and losses of the joint venture company shall be shared by both parties to the joint venture in proportion to their contributions of the registered capital.

Chapter 4 The Purpose, Scope and Scale of the Production and Business

Article 6

The purpose of the parties to the joint venture is in conformity with the wish of intensifying the economic cooperation and technical exchanges, to enhance business performance and ensure satisfactory benefits for each investor by improving the product quality, developing new products, and gaining competitive

edge over the competition in the world market in quality and price through advanced and appropriate technology and scientific management.

Article 7

The productive and business scope of the joint venture company is to manufacture mining machineries, to provide maintenance service after the sale of the products, to research and develop new mining machinery.

Article 8

The production scale of the joint venture company are as follows:

1. The production capacity is 50-ton dumpers eight thousand annually after the joint venture is put into operation.

2. The production scale shall be increased up to ten thousand annually with the joint venture’s business expansion. The product varieties may be developed into 55-ton and 60-ton dumpers after the market study is conducted by the professionals of the both parties in due time.

Chapter 5 The Amount of Investment and the

Registered Capital

Article 9

The total amount of investment of the joint venture company is RMB two hundred million yuan only. Article 10

Investment contributed by the parties is Chinese RMB yuan which will be the registered capital of the joint venture.

Of which, Party A shall contribute one hundred and twenty million RMB, accounting for sixty percent; Party B shall contribute eighty million RMB yuan, accounting for forty percent.

Article 11

Both parties will contribute the following as their investment:

Party A: Cash: forty million yuan;

Machinery and equipment: fifteen million yuan;

Premises: forty million yuan;

Right to the use of the site: fifteen million yuan;

Industrial property : five million yuan;

Miscellaneous: five million yuan; totaling one hundred and twenty million yuan in all. Party B: Cash: fifty million yuan;

Machinery and equipment: twenty million yuan;

Industrial property: six million yuan; Miscellaneous: four million yuan, totaling eighty million yuan in all.

Party B’s contribution shall be translated in accordance with the exchange rate between the US dollar and the Chinese RMB to be quoted on the date of the signing of this contract. The values of the assets other than cash shall come form the appraisal reports by recognized certified public accountants. Separate contracts shall be concluded with regard to the use of the industrial property rights contributed by the both parties as investment in the future joint venture company.

Article 12

The registered capital of the joint venture company shall be paid in four installments by both parties in proportion to the total of their investment.

Each installments shall be in place on the same date, with percentage specified as follows:

The first installment: sixty percent;

The second installment: twenty percent; The third installment: ten percent;

The fourth installment: ten percent.

Article 13

In case where any party to the joint venture intends to assign all or part of his investment to a third party, consent shall be obtained from the other party to the joint venture, and the approval from the examination and approval authority shall be required, too.

Should one party to the joint venture assigns all or part of his investment, the other party shall have the first refusal.

Chapter 6 Responsibilities of Each Parties to the Joint Venture Company

Article 14

Party A and Party B shall be respectively responsible for the following matters:

Responsibilities of the Party A:

Handling applications for approval, registration,

business license and other matters concerning the incorporation of the joint venture company form relevant competent department in charge in China: Processing for applying the right to the use of a site to the authority in charge of land;

Organizing the design and construction of the premises and other engineering facilities of the joint venture company;

Providing cash, machinery and equipment and premises in accordance with the stipulations in Article 11;

Assisting Party B for processing import Customs declaration for the machinery and equipment contributed by Party B as investment and arranging the transportation within the Chinese territory;

Assisting the joint venture company in purchasing or leasing equipment, materials, raw materials, articles for office use, means of transportation and communication facilities, etc.;

Assisting the joint venture company in contacting and settling the access to such fundamental facilities as water, gas, electricity, roads, telecommunication, etc.;

Assisting foreign employees in applying for the entry visa, work licenses and processing their traveling matters;

Responsible for handling other matters entrusted by the joint venture company.

Responsibilities of the Party B

Providing cash, machinery and equipment, industrial property in accordance with the stipulations in Article 11, and responsible for shipping capital goods such as machines and equipment outside China, etc.;

Training needed technical personnel for installing, testing and trial production of the equipment, as well as the technical personnel for production and inspection;

Training the technical personnel and workers of the joint venture company;

In case where Party B is the licenser, he should be responsible for the stable production of qualified products of the joint venture company in accordance with the designed capacity within the stipulated period;

Responsible for other matters entrusted by the joint venture company.

Chapter 7 Transfer of Technology

Article 15

Both parties agree that a technology transfer agreement shall be entered into between the joint venture company and Party B ( or a third party ) so as to obtain advanced production technology needed for achieving the production and operation objectives and the production scale stipulated in Chapter 4 of the contract, including product design, technology of manufacturing, means of testing, material ingredient prescription, standard of quality and training of personnel, etc.

Article 16

Party B offers the following guarantees on the transfer of technology in manufacturing the diesel engine for the prospective mining dumpers.

1. Party B guarantees that the overall technology such as the design, technology of manufacturing, technological process, testing and inspection of the products provided to the joint venture company must

be full, precise and reliable to meet the requirement of the joint venture’s operation objectives and be able to attain the standard of production quality and production capacity stipulated in the contract;

2. Party B guarantees that the technology stipulated in this contract and technology transfer agreement shall be fully transferred to the joint venture company, and pledge that the provided technology should be truly advanced among the same type of technology of Party B, the model, specifications and quality of the equipment are excellent;

3. Party B shall work out a detailed list of the provided technology and technological services at various stages as stipulated in the technology transfer agreement to be an appendix to the contract, and furthermore, guarantee its performance;

4. The drawings, technological specifications and other detailed information constitutes an integral part of the transferred technology, and shall be offered on time;

5. Within the validity period of the technology transfer agreement, Party B shall provide the joint

venture company with the improvement of the technology and technological materials in time, and shall not charge separate fees;

6. Party B shall guarantee that the technological personnel and the workers in the joint venture company master all the technology transferred within the period stipulated in the technology transfer agreement.

Article 17

In case where Party B fails to provide equipment and technology in accordance with the stipulations in this contract or in the technology transfer agreement or in case where any deceiving or concealing actions are discovered, Party B shall be responsible for compensating the direct losses to the joint venture company.

Article 18

The technology transfer fee shall be paid in royalties. The royalty rate shall be 3.5% of the net sales value of the products to be turned out.

The term for royalty payment is the same as the term of the technology transfer agreement stipulated

in Article 19 of this contract.

Article 19

The term of the technology transfer agreement between the joint venture company and Party B is eight years. Upon the expiration of the technology transfer agreement, the joint venture shall be in the position to use, research and develop the imported technology continuously.

Chapter 8 Selling of Products

Article 20

The products of the joint venture company will be sold both on the Chinese market and overseas markets, the export part accounting for 50%, 50% for domestic market.

Article 21

Products may be sold on overseas markets through the following channels;

The joint venture company may directly sell its products on the international market, which accounts for 60%.

The joint venture company may sign sales contract with Chinese foreign trade companies, entrusting them

to be the sales agencies or exclusive agencies, which accounts for 40%. The joint venture company may entrust Party B to sell its products, which accounts for 20%.

Article 22

The joint venture’s product to be sold in China may be handled by the Chinese materials and commercial departments by means of agency or exclusive dealers, or may be sold by the joint venture company directly. Article 23

In order to provide maintenance service to the products sold both in China and abroad, the joint venture company may set up sales branches for maintenance service both in China and abroad subject to the ratification by the relevant competent departments in charge.

Article 24

The trade mark of the joint venture’s product is “Nancell”.

Chapter 9 The Board of Directors

Article 25

The date of registration of the joint venture

company shall be the date of the establishment of the board of directors of the joint venture company. Article 26

The board of directors is composed of eleven directors, of which seven shall be appointed by Party A, five by Party B. The chairman of the board shall be appointed by Party A, and vice-chairman by Party B. The term of office for directors, chairman, vice-chairman is four years, whose term of office may be renewed where continuously appointed by the relevant party.

Article 27

The highest authority of the joint venture company shall be its board of directors. It shall decide all major issues ( Note: The main contents shall be listed in light of the Article 36 of the Regulations for Implementation of the Joint Venture Law ) concerning the joint venture company. Unanimous approval shall be required before any decisions are made concerning substantial issues. As for other matters, approval by majority or simple majority shall be required. Article 28

Chairman of the board is the legal representative of the joint venture company. Should chairman be unable to exercise his power and responsibilities for some reasons, he would authorize a vice-chairman or any other directors to represent the joint venture company temporarily.

Article 29

The board of directors shall convene at least one meeting once a year. The meeting shall be called and presided over by chairman of the board. Chairman may convene an interim meeting based on a proposal made by more than one third of the total number of directors. Minutes of the meetings shall be filed. ( To be continued in Text A )

New Words, Phrases and Expressions Incorporation n 公司的成立

adhere to v. 遵照，根据

mutual a. 相互的

friendly consultation . 友好协商

parties to this contract . 合同的双方，各方

as follows 如下

be registered with 在 ... 注册

hereinafter referred to as 以下简称为

limited liability company 有限责任公司

be governed by 受 ... 的约束

decrees and pertinent rules and regulations n. 法令和相关的条令与条例

Each party to the joint venture is liable to the joint venture within the limit of the capital subscribed by it. 合资企业的各方在自己认缴的资本范围内对合资企业承担责任。

in proportion to 按……比例

registered 注册资本 in conformity 与 ... 一致，遵照 appropriate capital

with

technology

适用技术 business 经营范围 maintenance 维修保养服务 production 产能、产量 put 投入运营，投入生产production 生产规模 product 产品品种 contribute （此处）出资 account

占到、达到

into scope service capacity operation scale varieties vt. for

Premises n. （运作目的的）不动产、经营场地

right to the use of the site 场地使用权

industrial property 工业产权

conclude a separate contract 单独（另行）签订合同

in ... installments 分… 期付款 (或到账)

in case where （正规用法，相当于“If”）如果、一旦

assign . vt. （股份、投资、产权、所有权、合同等的）转让

investment subscribed 认缴的投资

examination and approval authority 审批机构

the first refusal 优先购买权

business license 营业执照

relevant department in charge 有关主管部门

process vt. 处理，办理

engineering facilities 工程设施

customs declaration 海关报关

purchase and lease 采购和租赁

article for office use 办公用品

means of transportation and communications facilities 交通工具和通讯设备

entry visa 入境签证

work license 工作许可证

capital goods 资本货物（装备）

In case where Party B is the licenser, he will be responsible for the stable production of qualified

products of the joint venture in light of design capacity within the stipulated period

如果乙方是知识产权的出让方，他有责任在规定的时间内按设计能力使合资企业能稳定地生产出合格的产品。 means 测试手段 material 材料配方 transfer 技术转让 technology 制造技术 technological 工艺

specifications 技术规范 an sth.（文件的）的附件validity 有效期 deceiving of of of appendix or testing prescription technology manufacturing process n. to sth period concealing

欺骗与隐瞒 compensate 补偿，赔偿 royalty vt.

n.

知识或工业产权使用费 upon expiration of the 一旦协议到期 sales

销售代理，代销商 exclusive sales 专营商 board of 董事会 the term of 任期

substantial 重大事情 unanimous 一致地，全票 authorize 授权 convene

... agreement agency agency directors office issue a. vt. vt.

（正式用法）召集会议

preside over a meeting 主持会议

interim meeting 临时的会议

minutes n. （会议或谈判）记录、记要

Text B A Contract for Incorporation of a Dumper-making

Sino-US Joint Venture (second half)

(Continued from Text A ) Chapter 10 Business Management Office

Article 30

The joint venture company shall establish a management. The management office shall have a general manager, appointed by Party A; two deputy general managers, appointed by both Party A and Party B respectively. The appointments shall be

subject to the ratification of the board directors. The general managers and deputy general managers’ terms of office is three years.

Article 31

The responsibility of the general manager is to carry out the decisions of the board of directors, to organize and conduct the daily management of the joint venture company. The deputy general managers shall be accountable to general manager..

Several functional department managers may be appointed by the management respectively, they shall handle the matters assigned by the general manager and deputy managers and shall be accountable to them.

Chapter 11 Purchase of Equipment

Article 33

In purchasing required raw materials, fuel, parts, means of transportation and articles for office use, etc., the joint venture company shall give priority to purchasing in China where conditions are the same.

Article 34

When the joint venture company entrusts Party B to purchase equipment on overseas markets, persons appointed by Party A shall be invited to take part in the purchasing.

Chapter 12 Preparation and Construction

Article 35

During the period of preparation and construction, a preparation and construction office shall be set up under the board of directors. The preparation and construction office shall consist of nine persons, among whom five persons will be from Party A, four from Party B. The office shall have a director recommended by Party B. The director and deputy director shall be appointed by the board of directors.

Article 36

During the construction period of the project, the preparation and construction office is responsible for the following activities: examining the design of the project, signing project construction contract, organizing the purchasing and inspecting of relevant equipment and materials, etc., working out the general

schedule of project construction, compiling the budget plans, controlling interim payments and final accounts of the project, drawing up managerial methods and keeping and filing documents, drawings, files and materials, etc.

Article 37

A technical group with several technical personnel appointed by Party A and Party B shall be organized under the preparation and construction office. The group is in charge of examining, supervising, inspecting, testing, checking and accepting, evaluating the project design, the project quality, the equipment and materials and the imported technology. Article 38

The establishment, remuneration and the expenses of the staff of the preparation and construction office, when by both parties, shall be converted in the project budget.

Article 39

After completing the project and the turn-over procedures, the preparation and construction office shall be dissolved upon the approval of the board of

directors.

Chapter 13 Labor Management

Article 40

Labor contracts shall be drawn up between the joint venture company and the Trade Union of the joint venture company as a whole or separately in accordance with relevant laws and rules to address the recruiting, employment, dismissal and resignation, wages, labor insurance, welfare, rewards, penalty and other matters concerning employees of the joint venture company. Such contract shall, after being signed, shall be filed with the local labor management department.

Article 41

The appointment of senior staff by both parties, their salaries, social insurance , welfare and the standard of traveling expenses, etc., shall be decided by the board of directors.

Chapter 14 Taxes, Finance and Audit

Article 42

The joint venture company shall pay taxes in accordance with the stipulations of Chinese laws and

other relevant regulations.

Article 43

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 ”.

Article 44

Allocations for reserve funds, expansion funds of the joint venture company and welfare funds and bonuses for employees shall be set aside in accordance with the stipulations in the “ Law f the People’s republic of China on Joint Ventures Using Chinese and foreign Investment ”. The annual proportion of allocation shall be decided by the board of directors in light of business performance of the joint venture company. Article 45

The fiscal year of the joint venture company shall be from January 1 to December 31. All vouchers, receipts, statistics statements and reports, accounts books shall be written in Chinese. English can be used concurrently in case where Party B insists , but Party

B shall bear the expenses thus incurs.

Article 46

Financial review 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.

In event where Party B considers it necessary to engage a foreign auditor registered in other country to undertake annual financial review, Party A shall give his consent, but all expenses thereof shall be borne by Party B.

Article 47

In the first three month of each fiscal year, the manager shall prepare previous year’s balance sheet, profit and loss statement and proposal for disposal of profits, and submit them to the board of directors for examination and approval.

Chapter 15 Duration of the Joint Venture

Article 48

The duration of the joint venture company is thirty years. The incorporation of the joint venture company shall start from the date on which the business license of the joint venture company is issued.

An application for the extension of the duration, proposed by one party and unanimously approved by the board of directors, shall be submitted to the Ministry of Foreign Economic Relations and Trade six months prior to the expiration date of the joint venture.

Chapter 16 The Disposal of Assets after the Expiration of the Duration

Article 49

Upon termination of the joint venture before contracted expiry date of the joint venture, liquidation shall be carried out in accordance with to relevant laws and rules. The liquidated assets shall be distributed in proportion to investment contributed by both parties.

Chapter 17 Insurance

Article 50

The amendment of the contract or other appendices shall come into force only after the written agreement signed by both parties and approved by the original examination and approval authorities.

Article 52

In case of inability to perform the contract or to continue operation due to heavy losses in successive years as a result of force majeure, the duration of the joint venture and the contract shall be terminated before the contracted expiry date after unanimously agreed upon by the board of directors and approved by the original examination and approval authorities. Article 53

Should the joint venture company be unable to continue its operations or achieve the business purpose stipulated in the contract due to the fact that one of the contracting parties fails to fulfill the obligations specified by the contract and articles of associations, or seriously violate the stipulations of the contract, the other party, apart from claiming damages, shall be in the position to terminate the contract in accordance with the provisions of the contract after it is approved by the original examination and approval authority. In case where both parties to the joint venture agree to continue the operation, the party that fails to fulfill the obligations shall be liable for the economic losses thus caused to the joint venture company.

Article 54

Should all or part of the contract and its appendices be unable to be performed owing to the fault of one party, the breaching party shall bear the responsibilities thus caused. Should it be the fault of both parties, they shall bear their respective responsibilities in light of actual circumstances. Article 55

In order to guarantee the performance of the contract and its appendices, both Party A and Party B shall provide each other with bank guarantees for the performance of the contract.

Chapter 20 Force Majeure

Article 56

Should either of the parties to the joint venture contract be prevented from performing 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, and within fifteen days thereafter provide the detailed information of the

events and a valid document for testimony issued by the relevant public notary organization for explaining the reason of the party’s inability to perform or delay the performance of all or part of the contract. Both parties shall, through consultations decide whether to terminate the contract or to exempt the prevented party from part of obligations for performing the contract or whether to delay the performance of the contract in light of the effects of the events on the performance of the contract.

Chapter 21 Applicable Law

Article 57

The making of this contract, its validity, interpretation, performance and settlement of the disputes shall be governed by related laws of the People’s Republic of China.

Chapter Settlement of Disputes

Article 58

Any dispute arising from the performance of, or in connection with the contract shall be settled through friendly consultations between both parties. In case where no settlement is reached through consultations,

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 its rules and procedures. The arbitral award is final and binding upon both parties.

Article 59

During the arbitration, the contract shall be performed continuously by both parties except for matters in dispute.

Chapter 23 Language

Article 60

The contract shall be written in both Chinese and in English. Both languages are equally authoritative. In event of any discrepancy between the two aforementioned versions, the Chinese version shall prevail.

Chapter 24 Effectiveness of the Contract and Miscellaneous

Article 61

The appendices drawn up in accordance with the principles of this contract are integral part of this

contract, including: the project agreement, the technology transfer agreement, the sales agreement.. Article 62

The contract and its appendices shall come into force beginning form the date of approval by the Dept. of Foreign Relations and Trade of Hubei Province of the People’s Republic of China.

Article 63

Should notices in connection with any party’s rights and obligations be sent by either of the two parties by telegram or telex, etc., the written letter notices shall be also required afterwards. The legal addresses of both parties listed previously in this contract shall be posting addresses.

Article 64

The contract is signed in Wuhan, China by the authorized representatives of both parties on May 1, 2010.

For Party A For Party B

Xuhua Adam Smith

New Words, Phrases and Expressions

management n. 企业管理层，决策层

functional departments 职能部门

shall give priority to purchasing in China where conditions are the same.

在条件同等情况下应优先在华采购 （注意 where 在此的用法）

preparation and construction office 筹建处

general schedule of project construction 项目建设的总进度表

compile vt. 编制， 编撰

draw up v. 起草

supervise vt.

监理 interim

项目的进度款 remuneration payments

n.

劳酬，报酬 dissolve 解散

recruitment 人员的招聘 dismissal 辞退与辞职 penalty 罚款 the 工会 the

执行条例 be

在 ... 备案 standard 旅差费标准 allocation

and and

trade Implementation

filed of

traveling

v. employment resignation n. union Rules with expenses n.

分配，配置

reserve funds 储备金

expansion funds 企业的发展基金

welfare funds and bonuses 福利与奖励基金

proportion of allocation 分配的比例

statistic statements 统计报表

concurrently adv. 同时地

All the expenses thereof shall be borne by Party B 由此产生的所有费用应由乙方承担。

disposal of sth. 对于... 的处理

duration of the joint venture company 合资企业的期限

the Ministry of Foreign Economic Relations and Trade 外经贸部

expiry date

到期日

termination n. 终止

liquidate vt. 财产清算

appendix to the contract 合同的附件

come into force 生效

in successive years 连续数年

force majeure 不可抗力

contracting parties 缔约各方

articles of association 公司章程

damages n. 损害的赔偿

pay on schedule the contributions in accordance with the provisions defined in Chapter 5 of this contract, 按本合同第五章的规定准时地缴纳出资。

the breaching party 违约方

performance of the contract 履约

notify ... sb of sth. vt. 就 ... 正式通知某人

valid document for testimony 用于作证的有效文件

public notary organization 公证组织

interpretation n. 对 ... 的解释，理解

consultation n. 协商

the Foreign Economic and Trade Arbitration Commission of the China Council for the Promotion of International Trade. 中国国际贸易促进委员会外经贸仲裁委员会

rules of procedure （仲裁）程序的规定

arbitral award 仲裁的结论

be final and binding

是终局的，对 ... 有约束力

matters in

争议中的事情

are equally upon sb. dispute authoritative 据有同等的效力

discrepancy

有不吻合之处，出入，歧义

effectiveness of

合同的有效性

miscellaneous

杂项，其它

n. the contract n.