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FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
For the month of February 28 , 1997
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Dransfield China Paper Corporation
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(Translation of registrant's name into English)
36-42 Pok Man Street, 1st & 2nd Fls., Mongkok, Kowloon, Hong Kong
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(Address of principal executive offices)
[Indicate by check mark whether the registrant files or will file
annual reports under cover Form 20-F or Form 40-F.
Form 20-F X Form 40-F
----- -----
[Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the information
to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act
of 1934.
Yes No X
----- -----
[If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): 82-__________
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1. MERGER EFFECTED BETWEEN THE REGISTRANT AND DRANSFIELD PAPER
HOLDINGS LIMITED. On February 26, 1997 the Registrant merged with Dransfield
Paper Holdings Limited, a British Virgin Islands company, on the terms set
forth in an Agreement of Merger, which is Appendix A to Amendment No. 3 to Form
S-1 Registration Statement filed with the Commission and made effective on
February 12, 1997 (SEC File No. 333-11637), which "Appendix A - Agreement of
Merger" is incorporated herein by reference. Prior to this merger, the
Registrant was a development-stage company, had no business or significant
assets, and was organized for the purpose of entering into the merger with
Dransfield Paper Holdings Limited. Because of the merger, the Registrant is no
longer a development-stage company, does have a business and does have
significant assets. A description of the post-merger Registrant appears under
"Information about Dransfield Paper" contained in the Prospectus in Amendment
No. 3 to Form S-1 Registration Statement (SEC File No. 333-11637) and is
incorporated herein by reference.
2. CHANGE IN CONTROL OF THE REGISTRANT. Because of the
before-described merger with Dransfield Paper Holdings Limited, a change in
control of the Registrant has occurred. A single shareholder, Dransfield
Holdings Limited, a Cayman corporation, owns of record 9,300,000 of the
9,800,000 shares of voting Common Stock outstanding after the merger and all
2,300,000 voting Series A Convertible Preferred Stock outstanding after the
merger.
This change in control is also evidenced by the replacement of the
former sole director and officer of the Registrant by the persons who were the
directors and officers, before the merger, of Dransfield Paper Holdings
Limited. Information concerning the new directors, executive officers and
significant employees is set forth under "Management Information - Directors,
Executive Officers and Significant Employees" in the Prospectus contained in
Amendment No. 3 to Form S-1 Registration Statement (SEC File No. 333-11637),
which is incorporated herein by reference.
Further, two additional directors have been added, which directors are
not part of the management of the Registrant. These two directors are Thomas
J. Kenan, 65, and William L. Peterson, Jr., 66, both of whom are practicing
attorneys in Oklahoma City, Oklahoma, U.S.A. Mr. Kenan received a bachelor of
laws degree in 1958 from the University of Oklahoma and a master of laws in
1959 from New York University. Mr. Peterson received a bachelor of laws degree
in 1954 from the University of Oklahoma. Mr. Kenan's spouse, Marilyn C. Kenan,
is the trustee and sole beneficiary of the Marilyn C. Kenan Trust, which owns
26,786 shares of Common Stock of the Registrant and 20,000 Callable Common
Stock Purchase Warrants of the Registrant. See "Management Information -
Security Ownership of Certain Beneficial Owners and Management" in Amendment
No. 3 to Form S-1 Registration Statement (SEC File No. 333-11637), which is
incorporated herein by reference. Mr. Peterson's spouse, Suzanne Peterson,
owns 18,572 shares of Common Stock of the Registrant.
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3. CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT. Solely by
reason of the above-described merger, upon the effectiveness of the merger the
certifying accountant of the Registrant was changed from Hogan & Slovacek of
Oklahoma City, Oklahoma to Ernst & Young of Hong Kong. This change in
certifying accountant is not due to any disagreement of accounting matters but
was made because Ernst & Young of Hong Kong has been the certifying accountant
historically for Dransfield Paper Holdings Limited, whose business becomes the
business of the Registrant by reason of the merger.
4. CHANGE OF REGISTRANT'S STATUS TO A FOREIGN PRIVATE ISSUER. By
reason of the above-described merger, the Registrant is now a "Foreign Private
Issuer" as defined in SEC Regulation 230.405 and shall file periodic reports
with the Commission on Form 20-F and Form 6-K. The Registrant is a Foreign
Private Issuer, because less than 50% of the outstanding voting securities of
the Registrant are held of record by residents of the United States, the
majority of its executive officers and directors are not U.S. citizens or
residents, less than 50% of its assets are located in the United States, and
the business of the Registrant is now administered principally outside the
United States.
5. EXHIBITS. Filed herewith are the following exhibits:
2.1 Certificate of Merger issued on February 26, 1997, by the
Registrar of Companies of the British Virgin Islands, evidencing the merger
between Dransfield China Paper Corporation (the Registrant), as the surviving
company, and Dransfield Paper Holdings Limited, as the discontinuing company.
10.5 Chinese-Foreign Equity Joint Venture - Jiang Ying Dransfield
Paper Co., Ltd. - Articles of Association - China Jiangsu Huaxi Holdings
Company - Dransfield Broadsino Paper Holdings Co. Ltd.
10.6 Document of Conghua County Foreign Economic Relations & Trade
Committee - No.(1993) 334 under characters Cong Wai Jing Mao Yin - Official
Reply regarding the Co-operative Venture - Dransfield Paper (Guangzhou) Ltd.
10.7 Document of Conghua City Foreign Economic Relations & Trade
Committee - No.(1995) 018 under characters Cong Wai Jing Mao Yin - Official
Reply regarding the Second Supplementary Agreement of the Co-operative Venture
Contract for Dransfield Paper (Guangzhou) Ltd.
10.8 Document of Conghua City Foreign Economic Relations & Trade
Committee - No.(1995) 097 under characters Cong Wai Jing Mao Yin - Official
Reply regarding the Third Supplementary Agreement of the Co-operative Venture
Contract for Dransfield Paper (Guangzhou) Ltd.
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10.9 Document of Conghua City Foreign Economic Relations & Trade
Committee - No.(1995) 131 under characters Cong Wai Jing Mao Yin - Official
Reply regarding the Fourth Supplementary Agreement of the Co-operative Venture
Contract for Dransfield Paper (Guangzhou) Ltd.
10.10 Document of Conghua City Foreign Economic Relations & Trade
Committee - No.(1995) 161 under characters Cong Wai Jing Mao Yin - Official
Reply regarding the Fifth Supplementary Agreement of the Co-operative Venture
Contract for Dransfield Paper (Guangzhou) Ltd.
10.11 Document of Conghua City Foreign Economic Relations & Trade
Committee - No.(1995) 178 under characters Cong Wai Jing Mao Yin - Official
Reply regarding the Sixth Supplementary Agreement of the Co-operative Venture
Contract for Dransfield Paper (Guangzhou) Ltd.
10.12 Distributor's Agreement - By and between Procter & Gamble AG
and Grandom Dransfield Int'l and Co.
10.13 Contract on Transfer of Land - Transferor: Xinhui City Sanjiang
Town Industry Overall Company - Transferee: Guangzhou Dransfield Paper Ltd.
16 Letter dated March 6, 1997, from Hogan & Slovacek regarding
its concurrence with the statements made by the Registrant concerning the
resignation of the Registrant's principal accountant.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
DRANSFIELD CHINA PAPER CORPORATION
Date: March 5, 1997 By: /s/ Horace Yao
--------------------------
Horace Yao, Director
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EXHIBIT INDEX (FORM 6-K)
Exhibit Item
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2.1 - Certificate of Merger issued on February 26, 1997, by
the Registrar of Companies of the British Virgin
Islands, evidencing the merger between Dransfield
China Paper Corporation (the Registrant), as the
surviving company, and Dransfield Paper Holdings
Limited, as the disappearing company
10.5 - Chinese-Foreign Equity Joint Venture - Jiang Ying
Dransfield Paper Co., Ltd. - Articles of Association
- China Jiangsu Huaxi Holdings Company - Dransfield
Broadsino Paper Holdings Co. Ltd.
10.6 - Document of Conghua County Foreign Economic Relations
& Trade Committee - No.(1993) 334 under characters
Cong Wai Jing Mao Yin - Official Reply regarding the
Co-operative Venture - Dransfield Paper (Guangzhou)
Ltd.
10.7 - Document of Conghua City Foreign Economic Relations &
Trade Committee - No.(1995) 018 under characters Cong
Wai Jing Mao Yin - Official Reply regarding the
Second Supplementary Agreement of the Co-operative
Venture Contract for Dransfield Paper (Guangzhou)
Ltd.
10.8 - Document of Conghua City Foreign Economic Relations &
Trade Committee - No.(1995) 097 under characters Cong
Wai Jing Mao Yin - Official Reply regarding the Third
Supplementary Agreement of the Co-operative Venture
Contract for Dransfield Paper (Guangzhou) Ltd.
10.9 - Document of Conghua City Foreign Economic Relations &
Trade Committee - No.(1995) 131 under characters Cong
Wai Jing Mao Yin - Official Reply regarding the
Fourth Supplementary Agreement of the Co-operative
Venture Contract for Dransfield Paper (Guangzhou)
Ltd.
10.10 - Document of Conghua City Foreign Economic Relations &
Trade Committee - No.(1995) 161 under characters Cong
Wai Jing Mao Yin - Official Reply regarding the Fifth
Supplementary Agreement of the Co-operative Venture
Contract for Dransfield Paper (Guangzhou) Ltd.
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10.11 - Document of Conghua City Foreign Economic Relations &
Trade Committee - No.(1995) 178 under characters Cong
Wai Jing Mao Yin - Official Reply regarding the Sixth
Supplementary Agreement of the Co-operative Venture
Contract for Dransfield Paper (Guangzhou) Ltd.
10.12 - Distributor's Agreement - By and between Procter &
Gamble AG and Grandom Dransfield Int'l and Co.
10.13 - Contract on Transfer of Land - Transferor: Xinhui
City Sanjiang Town Industry Overall Company -
Transferee: Guangzhou Dransfield Paper Ltd.
16 - Letter dated March 6, 1997, from Hogan & Slovacek
regarding its concurrence with the statements made
by the Registrant concerning the resignation of the
Registrant's principal accountant.
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EXHIBIT 2.1
TERRITORY OF THE BRITISH VIRGIN ISLANDS
THE INTERNATIONAL BUSINESS COMPANIES ACT
(CAP. 291)
(SECTION 76)
CERTIFICATE OF MERGER
No. of surviving company 189457
The Registrar of Companies of the British Virgin Islands HEREBY CERTIFIES
pursuant to the International Business Companies Act, Cap. 291 that Articles of
Merger between DRANSFIELD CHINA PAPER CORPORATION, and DRANSFIELD PAPER
HOLDINGS LIMITED have this 26th day of February, 1997 been registered and that
upon the 26th day of February, 1997
DRANSFIELD CHINA PAPER CORPORATION
shall be the surviving company of the merger.
Given under my hand and seal at Road
Town, in the Territory of the
British Virgin Islands
[SEAL]
/s/
CRTI003C ASSISTANT REGISTRAR OF COMPANIES
Page 1 of 1 Page
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EXHIBIT 10.5
Chinese-Foreign Equity Joint Venture
Jiang Ying Dransfield Paper Co., Ltd.
Articles of Association
China Jiangsu Huaxi Holdings Company
Dransfield Broadsino Paper Holdings Co. Ltd.
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Content
Chapter 1 General Provisions
Chapter 2 Purpose, Scope and Scale of Business
Chapter 3 Total Amount of Investment and Registered Capital
Chapter 4 Board of Directors
Chapter 5 Business Management Organization
Chapter 6 Financial Accounting, Foreign Exchange Management
Chapter 7 Profits Sharing
Chapter 8 Staff and Workers
Chapter 9 Trade Union Organization
Chapter 10 Term, Termination and Liquidation
Chapter 11 Rules and Regulations
Chapter 12 Supplementary Articles
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Chapter 1 General Provisions
Article 1 In accordance with the "Law of the People's Republic of
China on Chinese-Foreign Equity Joint Ventures" and the contract signed by
China Jiangsu Huaxi Holdings Ltd. (hereinafter referred to as Party A) and
Dransfield Broadsino Paper Holdings Co. Ltd. (hereinafter referred to as Party
B) to jointly establish and operate "Jiang Ying Dransfield Paper Co., Ltd.
(hereinafter referred to as the Joint Venture), the articles of association is
hereby formulated.
Article 2 The name of the Joint Venture is [UNTRANSLATED CHINESE
CHARACTERS], and in English, Jiang Ying Dransfield Paper Co. Ltd.
The legal address of the Joint Venture: Huaxi Village, Jiangyin City,
Jiangsu Province.
Article 3 The names and legal addresses of Party A and Party B are
as follows:
Party A: Name: China Jiangsu Huaxi Holdings Company
[UNTRANSLATED CHINESE CHARACTERS]
Legal address: (Huaxi Village, Jiangyin City, Jiangsu,
China
Party B: Name: Dransfield Broadsino Paper Holdings Co. Ltd.
[UNTRANSLATED CHINESE CHARACTERS]
Legal address: P.O. Box 71, Craigmuir Chambers,
Road Town, Tortola, British Virgin
Islands
Correspondence address: 1st and 2nd floors, 36-42 Pok
Man Street, Mongkok,
Kowloon, Hong Kong
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Article 4 The Joint Venture is a limited liability company.
Article 5 The Joint Venture is a legal person in China and is subject
to the jurisdiction and protection of the laws of China. All its activities
shall be governed by Chinese laws, decrees and other relevant regulations.
Chapter 2 Purpose, Scope and Scale of Business
Article 6 The purpose of the Joint Venture is: basing on the wish to
strengthen economic co-operation and technical exchanges, to improve product
quality, develop new products and raise its competitiveness in quality and
price by adopting advanced and suitable technology and scientific management
method, in order to enhance the economic efficiency and ensure satisfactory
economic benefits for both investing parties.
Article 7 The scope of business of the Joint Venture is to
manufacture and sell various types of toilet paper and paper products, as well
as electricity.
Chapter 3 Total Amount of Investment and Registered Capital
Article 8 The total amount of investment of the Joint Venture is
USD18.24 million. Its registered capital is USD15.43 million.
Article 9 The capital contributions by Party A and Party B are as
follows:
Party A: USD6.17 million, which accounts for 40% of the registered
capitals;
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Party B: USD 9.26 million, which accounts for 60% of the registered
capital.
Article 10 Party A and Party B shall pay up the amount of capital
contribution within the time period stipulated in the contract.
Article 11 After the investment is paid by both Party A and Party B, a
Chinese registered accountant invited by the Joint Venture shall verify and
make a verification report. According to this report, the Joint Venture shall
issue and investment certificate which includes the following items: name of
the Joint Venture; date of the establishment of the Joint Venture; names of the
parties and the investment contributed; date of the contribution of the
investment, and the date of issuance of the investment certificate.
Article 12 Within the term of the Joint Venture, the Joint Venture
shall not reduce its registered capital.
Article 13 Should one party assign all or part of its investment
subscribed, consent shall be obtained from the other party of the Joint Venture.
When one party assigns its investment, the other party has pre-emptive right.
Article 14 Any increase, assignment of the registered capital of the
Joint Venture shall be unanimously approved by the board of directors and
submitted to the original examination and approval authority for approval. The
registration procedures for changes shall be dealt with at the original
registration and administration office.
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Chapter 4 Board of Directors
Article 15 The Joint Venture shall establish a board of directors
which is the highest authority of the Joint Venture.
Article 16 The board of directors shall decide all major issues
concerning the Joint Venture. Its functions and powers are as follows:
1. deciding and approving the important reports submitted by the
general manager (for instance: production plan, annual business report, funds,
loans, etc);
2. approving annual financial reports, budget of incomes and
expenditures, annual plans of profit appropriation;
3. adopting major rules and regulations of the company;
4. amending the rules of the company;
5. discussing and deciding the termination of production, termination
of the Joint Venture or merging with another economic entity;
6. deciding the engagement of high-rank officials such as the general
manager, deputy general manager, managing director, chief engineer, chief
accountant, auditor, etc;
7. being responsible for the liquidation work upon the expiration or
termination of the Joint Venture;
8. being responsible for other major issues which shall be decided by
the board of directors.
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Article 17 The board of directors shall consist of five directors, of
which two shall be appointed by Party A and three by Party B. The term of
office for the chairman, vice chairman and directors is four years and may be
renewed if re-appointed by the appointing party.
Article 18 Chairman of the board shall be appointed by Party B and
vice chairman of the board by Party A.
Article 19 When appointing and replacing directors, a written notice
shall be submitted to the board.
Article 20 Board meetings shall be convened at least once a year and
interim board meetings may be convened at the request of more than one-third of
the directors.
Article 21 Board meetings shall in principle be held in the location
of the Joint Venture and may, if necessary, be held outside China.
Article 22 Board meetings shall be called and presided by the
chairman. Should the chairman be absent, the vice chairman shall call and
preside the meeting.
Article 23 The chairman shall notify all directors 30 days before the
board meeting, stating expressly the agenda, time and place of the meeting.
Article 24 Should any director be unable to attend a board meeting,
he may appoint another person in writing to attend and vote on his behalf at the
meeting. If the director neither attends nor appoints another person to attend
the meeting, he shall be deemed to have waived his rights.
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Article 25 The quorum for any board meeting shall be three directors.
Any resolution passed in a board meeting without the required quorum is invalid.
Article 26 Detailed written records shall be made for each board
meeting and signed by all the attended directors or proxies. The record shall
be made in Chinese and shall be filed with the Joint Venture. All resolutions
of the Board shall be submitted to the relevant departments for record.
Article 27 The following matters shall be unanimously approved by the
board of directors before a resolution is made:
l. amendments to the articles of association of the Joint Venture;
2. termination and liquidation of the Joint Venture;
3. increase or assignment of the registered capital of the joint
venture;
4. merger of the Joint Venture with other economic entities;
5. determination of the operating policy and financial arrangement
of the Joint Venture;
6. appointment and removal of important personnel.
Article 28 Except for matter specified in Article 27, other matters to
be decided upon by the board of directors may be resolved by a majority of
directors constituting a quorum.
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Chapter 5 Business Management Organization
Article 29 The Joint Venture shall establish a business management
organization, which shall be responsible for the daily management of the Joint
Venture. The management organization shall have one general manager and
several deputy general managers assisting the general manager in his work. The
general manager and deputy general managers shall be engaged by the board of
directors with a term of office of four years. Party B shall appoint one
managing director, who shall assist the chairman and vice chairman in directly
the general manager in respect of his work.
Article 30 The general manager is directly responsible to the board of
directors. He shall implement the resolutions of board meetings, organize the
daily production, technology, operation and management of the Joint Venture.
Within the scope of authorization, the general manager, regarding external
matters, is the representative of the Joint Venture and, regarding internal
matters, is responsible for appointing and dismissing the personnel under him.
Article 31 The management organization shall have several departmental
managers who shall be responsible for the work in their respective departments
of the Joint Venture, handle matters handed over by the general manager and be
responsible to the general manager.
Article 32 The general manager shall consult other deputy general
manager when dealing with major issues. Decisions on major issues of the Joint
Venture shall be signed jointly by the general manager and other deputy general
managers before any action is taken to deal with the issues. Issues which
require joint signatures shall be stipulated by the board of directors.
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Article 33 The general manager shall have a term of office of four
years and may be reappointed at the appointment by the board of directors.
Article 34 At the appointment of the board of directors, the chairman,
vice-chairman or directors of the board may concurrently be the general manager
or other high-ranking personnel of the Joint Venture.
Article 35 The general manager, deputy general managers and other
high-ranking shall, in principle, not hold posts concurrently of other economic
entities in commercial competition with the Joint Venture. Anyone who takes up
a part-time job in another economic entity shall explain the situation and
submit a report to the board of directors for record .
Article 36 The Joint Venture may, if necessary, appoint one chief
engineer and one chief accountant, who are engaged by the board of directors.
The chief engineer and the chief accountant shall be led by the general
manager.
Article 37 Should the general manager, deputy general manager, chief
engineer, chief accountant or other high-ranking management personnel request
for resignation, they shall submit written reports to the board of directors in
advance.
In case of graft or serious dereliction of duty on the part of the
above personnel, the board of directors shall have the power to resolve and
dismiss them at any time. Those who violate the criminal law shall face
criminal prosecution.
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Chapter 6 Financial Accounting and Foreign Exchange Management
Article 38 The financial accounting of the Joint Venture shall be
handled in accordance with the "Accounting System of Chinese-Foreign Equity
Joint Ventures" formulated by the Ministry of Finance of the People's Republic
of China.
Article 39 The accounting year of the Joint Venture shall coincide
with the calendar year, which is from 1st January to 31st December on the
Gregorian calendar.
Article 40 All vouchers, books of account and statements of the Joint
Venture shall be written in Chinese. All self-made financial statements shall
be submitted to local finance and tax authorities for record.
Article 41 The Joint Venture shall adopt Renminbi as its accounts
keeping unit. Bank deposits and other currency amounts different from the
accounts keeping unit shall be recorded in the books in the currency in which
receipt and payment is actually made, and accounting reports shall be prepared
in both foreign currency and Renminbi translated from it. The translation
between Renminbi and other currencies shall be made at the swap rate quoted by
the Bank of China at the date of translation.
Article 42 The Joint Venture adopts the internationally used accrual
basis and debit and credit accounting system in keeping its accounts.
Article 43 The Joint Venture shall open Renminbi and foreign currency
accounts with banks authorized to deal with foreign exchange business in China.
All foreign exchange received by the Joint Venture shall be deposited into the
Joint Venture's foreign exchange account, and all foreign exchange paid by the
Joint Venture shall be paid out from the Joint Venture's foreign exchange
account.
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Article 44 The financial accounting books of the Joint Venture shall
contain the following:
l . The amount of overall cash receipts and payments of the Joint
Venture;
2. All material purchasing and selling of the Joint Venture;
3. The registered capital and liabilities of the Joint Venture;
4. The time of payment, increase and assignment of the registered
capital of the Joint Venture;
5. Other requirements stated in the "Accounting System for Foreign
Investment Enterprises in the People's Republic of China".
Article 45 The Joint Venture shall prepare the balance sheet and
profit and loss account for the past year in the first month of each accounting
year, and submit to the board meeting for discussion and approval after examined
and signed by the general manager.
Article 46 Either party to the Joint Venture has the right to engage
at its own expense an auditor to check and examine the accounts of the Joint
Venture. The Joint Venture should provide assistance during the checking and
examination.
Article 47 The depreciation period for the fixed assets of the Joint
Venture shall be decided by the board of directors in accordance with the
"Rules for the Implementation of the Income Tax Law of the People's
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Republic of China Concerning Chinese-Foreign Equity Joint Ventures" and all
taxes shall be paid in accordance with relevant laws and regulations of China.
Article 48 All matters concerning foreign exchange of the Joint
Venture shall be handled in accordance with the "Interim Regulations on Foreign
Exchange Control of the People's Republic of China" and other relevant
provisions.
The foreign exchange receipts and payments of the Joint Venture should
be balanced. In case of a lack of foreign exchange, the Joint Venture may defer
distributing profits or distribute profits to Party B in Renminbi.
Chapter 7 Profits Sharing
Article 49 The Joint Venture shall make appropriations to the surplus
common reserve and provident fund from the profits after income tax. The
proportion of allocation made to the two funds each year shall be discussed and
decided by the board of directors in accordance with the operating conditions
of the Joint Venture and relevant laws and regulations of China.
Article 50 The Joint Venture's profits after the payment of income tax
and the appropriations to the above two funds shall be distributed according to
Party A and Party B's ratio of contribution to the registered capital.
Article 51 The Joint Venture shall distribute its profits once every
year. Within two months after each accounting year, the general manager shall
submit the profit distribution plan and the amounts of profits attributable to
each party to the board of directors for discussion and approval.
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Article 52 The Joint Venture shall not distribute any profits before
making up for the losses of the previous accounting year. The retained profits
of the previous accounting year may be combined with the profits of the current
year for distribution.
Chapter 8 Staff and Workers
Article 53 The Joint Venture's employment, recruitment and dismissal
of the staff and their resignation, wages, welfare, labour insurance, labour
protection, labour discipline and reward and punishment, etc. shall be handled
according to the "Provisions of the People's Republic of China on Labour
Management in Chinese-Foreign Equity Joint Ventures" and its implementation
rules. The Joint Venture shall sign directly with its employees labour
contracts which shall then be submitted to the local labour management
department for record.
Article 54 The Joint Venture shall recruit its required staff publicly
through examination and employ those who are qualified.
Article 55 The wages and other terms of employment of the staff shall
be determined by the board of directors according to the Joint Venture's
specific conditions with reference to relevant provisions of China, and shall
be set down clearly in the labour contract.
Article 56 The Joint Venture shall implement the principles of
distribution according to work, more pay for more work and rewarding the
diligent and punishing the lazy by giving rewards to, promoting and increasing
the wages of those staff who have great contributions to the Joint Venture
while giving warning to, recording a demerit against,
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reducing the wages of or even dismissing those staff who have violated the Joint
Venture's rules and regulations and labour discipline according to the
seriousness of the case. Dismissal of staff shall be submitted to the local
labour department for record.
Chapter 9 Trade Union Organization
Article 57 The staff of the Joint Venture has the right to establish
basic trade union organization and promote trade union activities in accordance
with the "Trade Union Law of the People's Republic of China" and the "Articles
of Association of Trade Unions in China".
Article 58 The Joint Venture's trade union represents the interests of
the staff. Its function is to protect the staff's democratic rights and material
interests according to the laws; to assist the Joint Venture in arranging and
using the welfare and bonus funds reasonably; to educate the staff to observe
the labour discipline and to strive to accomplish various economic activities
of the Joint Venture.
Article 59 The Joint Venture's trade union shall take part in the
mediation of disputes between the staff and the Joint Venture.
Article 60 The Joint Venture shall in each month allocate to the
trade union a sum equivalent to 2% of the total amount of wages of the Joint
Venture's staff. The Joint Venture shall use the trade union's funds in
accordance with the "Measures for the Management of Trade Union Funds"
formulated by China National Federation of Trade Unions.
Chapter 10 Term, Termination and Liquidation
Article 61 The Joint Venture shall have a term of thirty years from
the date of issue of its business licence.
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Article 62 Should both Party A and Party B agree to extend the term of
the Joint Venture, an application for the proposal, after resolved at a board
meeting, shall be submitted to the original examination and approval authority
six months before the expiry of the Joint Venture. The term shall only be
extended upon approval and the Joint Venture shall go through the formalities
for registration of amendments at the original registration authority.
Article 63 The two parties to the Joint Venture may terminate the
Joint Venture early if they think that is in the best interest of all the
parties concerned. Early termination of the Joint Venture shall be resolved by
all the directors at a board meeting and an application therefor shall be
submitted to the original examination and approval authority for approval.
Article 64 Either Party A or Party B shall be entitled to terminate
the Joint Venture upon the occurrence of any of the following:
1. the expiry of the term of the Joint Venture;
2. the Joint Venture incurring losses for three consecutive years and
being incapable of continuous operation with no source of funds;
3. the Joint Venture incurring significant losses by virtue of such
force majeure as natural disasters so that it is incapable of continuous
operation;
4. the Joint Venture's failure to achieve its objects and has no
prospects of development.
Article 65 Upon the expiry or early termination of the Joint Venture,
the board of directors shall propose the procedures and principles of
liquidation and nominees for the constituting members of the
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Liquidation Committee for the purpose of liquidating the assets of the Joint
Venture. The nominated members of the Liquidation Committee, the principles and
the appointment of registered accountants in China and the procedures of
liquidation shall all be submitted to the competent department of the Joint
Venture for its supervision and implementation.
Article 66 The duty of the Liquidation Committee is to fully examine
the property, creditors' rights and debt of the Joint Venture, prepare a
balance sheet and a financial index, and formulate a liquidation plan for
submission to the board of directors for approval and implementation.
Article 67 During the liquidation, the Liquidation Committee shall
act on behalf of the Joint Venture in litigations made by or against it. After
full repayment of the Joint Venture's debt by the Liquidation Committee, any
remaining property shall be handled in accordance with the "Accounting System of
the Chinese-Foreign Equity Joint Ventures of the People's Republic of China" and
be appropriated in accordance with the ratio of contributions to the registered
capital of the Joint Venture.
Article 68 Costs of liquidation and the remuneration of the
Liquidation Committee members shall be paid, on a preferential basis, out of
existing property of the Joint Venture.
Article 69 Upon the close of liquidation, the Joint Venture shall
report accordingly to the original examination and approval authority and go
through the formalities for registration of cancellation at the original
authority of registration and surrender its business licence. A notice thereof
shall also be made.
16
<PAGE> 18
Article 70 After the close of the Joint Venture, the party responsible
for the safekeeping of the books of accounts and documents shall be determined
by the board of directors.
Chapter 11 Rules and Regulations
Article 71 The rules and regulations formulated by the board of
directors of the Joint Venture are as follows:
1. operation management system, including the duty and powers and the
working procedures of each of the managing department concerned;
2. staff manuals;
3. system of wages & salaries;
4. system related to the attendance, promotion and award/punishment of
the staff;
5. staff welfare system;
6. finance system;
7. liquidation procedures for the dissolution of a company;
8. other necessary rules and regulations.
17
<PAGE> 19
Chapter 12 Supplementary Articles
Article 72 Any amendments to these articles shall be unanimously
resolved at board meetings and submitted to the original examination and
approval authority for approval.
Article 73 These articles are written in Chinese.
Article 74 These articles shall only be valid with the approval
granted by the examination and approval authority. [amendment of time?]
Article 75 These articles were signed by the authorized
representatives of Party A and Party B in _______ on 8th May, 1995.
Party A: China Jiangsu Huaxi Party B: Dransfield Broadsino Paper
Holdings Company Holdings Co. Ltd.
Representative: Wu Xiedong Representative: Ma Guoxiong (signed)
18
<PAGE> 1
EXHIBIT 10.6
Document
of
Conghua County Foreign Economic Relations & Trade Committee
No.(1993) 334 under characters Cong Wai Jing Mao Yin
OFFICIAL REPLY REGARDING THE CO-OPERATIVE VENTURE
DRANSFIELD PAPER (GUANGZHOU) LIMITED
To: Conghua Taiping Economic Development Corporation:
The following is an official reply regarding the contract and articles
of association of Dransfield Paper (Guangzhou) Limited submitted by your
company:
1. The establishment of Dransfield Paper (Guangzhou) Limited in
Conghua County as a co-operative joint venture by Conghua Taiping Economic
Development Corporation ("Party A") and Holdsworth Investments Limited ("Party
B") has been agreed and the contract and articles of association for Dransfield
Paper (Guangzhou) Limited entered into on 16th October, 1993 in Hong Kong by
all the parties involved has been approved to become effective.
2. The total amount of investment of the project shall be US$10
million, with a registered capital of US$5 million. Party A shall go through
all the relevant formalities and co-ordinate such matters as related to the co-
operative venture as a condition of co-operation while Party B shall contribute
capital to the extent of US$10 million. Each party shall complete its share of
capital contribution within the time period provided by the contract and
provide its respective condition of co-operation.
1
<PAGE> 2
3. Profit of the co-operative venture shall be shared as provided
by the contract.
4. The scope of business of the co-operative venture is the
manufacture, sale and processing of toilet paper and related products,
stationery paper products (including heat-sensitive copying paper), skin-care
and hair-treatment products. Annual production amounts to US$25 million.
Products of the co-operative venture are sold both within and outside China. The
venture shall seek to maintain balance in terms of foreign exchange receipts
and payments and shall strive to earn more foreign exchanges through exports.
5. The term of the co-operative venture shall be thirty-five
years.
6. All the activities of the co-operative venture shall comply
with the provisions of the laws, regulations and ordinances of China.
13th February, 1995
(Official chop of Conghua City
Foreign Economic Relations
& Trade Committee affixed)
Report to: Municipal Foreign Economic Relations & Trade Committee,
Municipal Administration for Industry and Commerce, Guangzhou
Customs.
CC: County Planning Committee, Administration for Industry and
Commerce, Administration of Finance, Administration of
Taxation, Foreign Investment Management Bureau, Bank,
[untranslated Chinese characters], Taiping Industrial Zone
Management Committee.
2
<PAGE> 3
CONTRACT
FOR
THE CHINESE-FOREIGN CONTRACTUAL JOINT VENTURE
DRANSFIELD PAPER (GUANGZHOU) LIMITED
CHAPTER 1 GENERAL PROVISIONS
Conghua Taiping Economic Development Corporation, Guangzhou, China and
Holdsworth Investments Limited, a subsidiary of Dransfield Holdings Limited,
Hong Kong have, in accordance with the "Law of the People's Republic of China
on Chinese-Foreign Contractual Joint Ventures" and other relevant laws and
regulations of China, based on the principle of mutual benefit and through
friendly consultation, agreed to jointly invest in the establishment of a
contractual joint venture in Guangzhou City, Guangdong Province, the People's
Republic of China and this contract is hereby formulated.
CHAPTER 2 PARTIES TO THE CONTRACT
Article 1 The parties hereto are:
Conghua Taiping Economic Development Corporation, China ("Party A"),
an enterprise established under the laws of the People's Republic of China
(the "PRC") and registered in Conghua, the PRC with its legal address at
Taiping Industrial Zone, Conghua County, Guangzhou City, the PRC.
Legal Representative: Name: Hou Gang
Position: General Manager
Nationality: Chinese
3
<PAGE> 4
Holdsworth Investments Limited ("Party B"), a company registered in
British Virgin Islands with its legal address at P.O. Box 71, Craigmuir
Chambers, Road Town, Tortola, British Virgin Islands and correspondence address
at 1/F and 2/F, 36-42 Pok Man Street, Mongkok, Kowloon, Hong Kong.
Legal Representative: Name: Ma Guoxiong
Position: Director
Nationality: British
CHAPTER 3 ESTABLISHMENT OF THE CONTRACTUAL JOINT VENTURE
Article 2 In accordance with the "Law of the People's Republic of
China on Chinese-Foreign Contractual Joint Ventures" and other relevant laws
and regulations of the PRC, both parties agree to establish the contractual
joint venture Dransfield Paper (Guangzhou) Limited (hereinafter referred to as
the Contractual Joint Venture) in the territory of the PRC.
Article 3 The name of the Contractual Joint Venture is [untranslated
Chinese characters] and in English, Dransfield Paper (Guangzhou) Limited.
The legal address of the Contractual Joint Venture is Gong Ye Da Dao,
Taiping Industrial Zone, Conghua County, Guangzhou City.
Article 4 All the activities of the Contractual Joint Venture shall
be governed by the laws, regulations and other relevant ordinances of the
People's Republic of China.
Article 5 The Contractual Joint Venture is a limited liability
company with independent accounts' assuming the sole responsibility for its
profits or losses. The Contractual Joint Venture's liability to its debt
obligations is limited to all of its property. The liability of each party
4
<PAGE> 5
hereto is limited to its respective share of contribution to the registered
capital subscribed.
The Conghua Taiping Industrial Zone Management Committee is the
department responsible for the Contractual Joint Venture with regard to the
provision of guidance, assistance and supervision to the Contractual Joint
Venture.
CHAPTER 4 PURPOSE, SCOPE AND SCALE OF PRODUCTION OPERATION
Article 6 The purpose of the Contractual Joint Venture is: basing on
the wish to strengthen economic co-operation and technical exchanges, to
improve product quality, develop new products and raise its competitiveness in
quality and price by adopting advanced and suitable technology and scientific
management method, in order to enhance the economic efficiency and ensure
satisfactory economic benefits for all the parties hereto.
Article 7 The scope of production operation of the Contractual Joint
Venture is the manufacture, sale and processing of the following products:
1. toilet paper and related products, involving the domestic sale of
export license.
2. stationery paper products, including heat-sensitive copying paper,
etc.
3. skincare and hair-treatment products.
5
<PAGE> 6
Article 8 The scale of production of the Contractual Joint Venture
amounts approximately to an annual production of US$25 million worth of paper
products.
CHAPTER 5 TOTAL AMOUNT OF INVESTMENT AND REGISTERED CAPITAL
Article 9 The total amount of investment of the Contractual Joint
Venture is US$10 million, including investment in kind.
Article 10 The registered capital of the Contractual Joint Venture is
US$5 million, to be contributed wholly by Party B. Party A shall go through
all the formalities concerned and such matters as related to the Contractual
Joint Venture as a condition of co-operation. Party B may inject capital by
instalments according to actual needs, with the first payment of not less than
15% being made within three months from the date of collection of the business
licence, and the balance being settled within three years. All investment in
addition to the registered capital shall be procured by Party B. Investment in
kind shall be made according to the price stated in the original invoice and
be included with reference to the relevant international market prices and, if
necessary, shall be verified by certified public accountants of the People's
Republic of China.
Article 11 Any assignment of all or any part of conditions of
co-operation of either party hereto to third parties shall be agreed by the
other party and approved by the examination and approval authority. If either
party assigns all or any part of its conditions of co-operation, the other
party shall have pre-emptive right within 30 days.
CHAPTER 6 RESPONSIBILITIES OF THE PARTIES
Article 12 Unless provided elsewhere herein, parties hereto shall
perform the following responsibilities:
6
<PAGE> 7
Responsibilities of Party A:
- go through such formalities as submitting applications to the
relevant departments in the PRC for approval, registration and business licence
in relation to the establishment of the Contractual Joint Venture;
- apply to the land administrative departments to obtain the right to
the use of the land;
- go through such formalities as related to the town planning
departments and urban facilities administrative departments for the report of
various construction products for approval;
- assist in going through such formalities as related to the import of
machinery and equipment as required by the Contractual Joint Venture in its
preliminary stage and such matters as related to the transportation within the
territory of the PRC;
- assist the Contractual Joint Venture in purchasing or leasing
equipment, materials, raw materials, office equipment, means of transportation,
communication facilities, etc. in the PRC;
- assist the Contractual Joint Venture in contacting and settling such
fundamental facilities as water, electricity and transportation;
- assist the Contractual Joint Venture in recruiting locally
the management personnel, technical personnel, workers and other personnel
required;
- assist foreign staff in applying for the entry visa, work licence and
processing their travelling matters;
7
<PAGE> 8
- assist in the application to the relevant departments in the PRC for
registration and licensing in respect of trademark and other industrial or
intellectual property rights;
- handle such other matters as entrusted by the Contractual Joint
Venture.
Responsibilities of Party B:
- provide the following assets as registered capital: cash, machinery
and equipment, computer installations, transportation vehicles, office
equipment, articles for daily use and materials for construction and decoration
to fully equip the Contractual Joint Venture;
- provide the necessary technical staff for equipment installation,
testing and trial production and for production and inspection;
- provide training for the technical staff and workers of the
Contractual Joint Venture;
- responsible for the daily management work of the Contractual Joint
Venture;
- handle such other matters as entrusted by the Contractual Joint
Venture.
CHAPTER 7 SALE OF PRODUCTS
Article 13 Products of the Contractual Joint Venture will be sold both
in domestic and overseas markets.
8
<PAGE> 9
Article 14 Products may be entrusted by the Contractual Joint Venture
to Party B for export sales.
Article 15 The Contractual Joint Venture's products for domestic sale
may be sold directly by the Contractual Joint Venture or by entrusting other
distributors for sale.
Article 16 For the purposes of domestic sale and exports and providing
after-sale service for its products after their sale, the Contractual Joint
Venture may set up branches both within and outside the PRC as sales and
after-sale service centres.
Article 17 The trademarks used by the Contractual Joint Venture's
products shall, after confirmed by the board of directors, be submitted to the
departments concerned for approval.
CHAPTER 8 BOARD OF DIRECTORS
Article 18 The date of registration of the Contractual Joint Venture
shall be the due date of establishment of its board of directors.
Article 19 The board of directors shall consist of four directors, of
which one shall be appointed by Party A and three by Party B. Chairman of the
board shall be appointed by Party B and vice chairman of the board by Party A.
The term of office for the chairman is four years and may be renewed if
reappointed by the appointing party.
Article 20 The board of directors is the highest authority of the
Contractual Joint Venture, deciding all major issues concerning the Contractual
Joint Venture. Unanimous approval by the directors shall be required for such
major issues as amendments to the contract for the Contractual Joint Venture,
termination and liquidation of the Contractual
9
<PAGE> 10
Joint Venture, increase and assignment of its registered capital and merger
with other economic entities, etc. As for other matters, approval by majority
will be sufficient.
Article 21 The chairman of the board is the legal representative of the
Contractual Joint Venture. Should the chairman be unable to perform its
responsibilities for some reasons, he may authorize the vice chairman or any
other directors as his representative.
Article 22 Board meetings shall be convened at least once a year, and
shall be called and presided by the chairman. If proposed by more than two
directors, an interim meeting may be convened by the chairman. Minutes of
meetings shall be placed on file.
CHAPTER 9 BUSINESS MANAGEMENT ORGANIZATION
Article 23 The Contractual Joint Venture shall establish
a business management organization which shall be responsible for the daily
management of the Contractual Joint Venture. The management organization shall
have one general manager to be nominated by Party B and appointed by the board
of directors and who shall have a term of office of four years.
Article 24 The general manager is to implement the resolutions of board
meetings and organize the daily operation management of the Contractual Joint
Venture. Other managers shall assist the general manager in his work.
Article 25 In case of graft or serious dereliction of duty on the part
of the general manager, the board of directors shall have the power to resolve
and dismiss him at any time.
10
<PAGE> 11
CHAPTER 10 PURCHASE OF EQUIPMENT AND RAW MATERIALS
Article 26 In its purchase of necessary raw materials, parts, means of
transportation and office equipment, etc., the Contractual Joint Venture shall
endeavour to make its purchases in China where the conditions are the same.
Article 27 Acquisition of equipment made by Party B as entrusted by the
Contractual Joint Venture shall be based on the prices stated in the Original
invoices concerned.
CHAPTER 11 LABOUR MANAGEMENT
Article 28 Schemes concerning the employment, dismissal, wages &
salaries, labour insurance, welfare and rewards & punishment, etc. in respect
of the staff of the Contractual Joint Venture shall be drawn up by the board of
directors in accordance with the "Provisions of the People's Republic of China
on Labour Management in Chinese-Foreign Equity Joint Ventures" and its
implementation rules, and contracts shall be made between the Contractual Joint
Venture and each individual employee for specific provisions.
Signed labour contracts shall be submitted to the local administrative
department for record.
Article 29 The appointment of senior management recommended by the
parties hereto and their salaries, social insurance, welfare and the standard
of their travelling expenses, etc. shall be determined at board meetings or,
with the authorization by the board, by the general manager.
11
<PAGE> 12
CHAPTER 12 TAXATION, FINANCE AND ACCOUNTING
Article 30 The Contractual Joint Venture shall pay taxes as required by
the laws and other relevant regulations of the PRC.
Article 31 Expatriate staff of the Contractual Joint Venture shall pay
individual income tax according to the "Individual Income Tax Law of the
People's Republic of China". Chinese staff shall pay individual income
adjustment tax according to the "Provisional Regulations on Individual Income
Adjustment Tax of the People's Republic of China.
Article 32 The financial accounting system of the Contractual Joint
Venture shall be formulated in accordance with the provisions of the
"Accounting Law of the People's Republic of China" and with reference to the
"Accounting System of Chinese-Foreign Equity Joint Ventures in the People's
Republic of China" and the specific conditions of the Contractual Joint Venture
itself, and shall be filed with the finance department and tax authorities of
Conghua County for their record.
Article 33 The Contractual Joint Venture may, in accordance with the
provisions of the "Law of the People's Republic of China on Chinese-Foreign
Equity Joint Ventures", make provisions for its reserve fund, corporate
development fund and staff welfare incentive fund. The percentage of such
provisions shall be determined by the board of directors according to the
operation condition of the enterprise but, in principle, shall not exceed ten
percent of the profit after taxation.
Article 34 The accounting year of the Contractual Joint Venture
shall coincide with the calendar year, which is from 1st January to 31st
December on the Gregorian calendar. All vouchers, bills, statements and books
of account shall be written in Chinese.
12
<PAGE> 13
Article 35 The Contractual Joint Venture shall employ accountants
registered in the PRC to conduct financial reviews and have the reports thereon
submitted to the board of directors and the general manager.
Should either party thinks that it is necessary to employ other
accountants for the purpose of the annual financial review, the other party
shall give its consent. All costs incurred thereby shall be borne by the
appointing party.
Article 36 The general manager shall, within the first four months of
each accounting year, prepare the balance sheet, profit and loss account and
profit-sharing proposal for the preceding accounting year, which shall be
submitted to the board of directors for examination and approval and reported
to the relevant administrative departments for approval.
CHAPTER 13 FOREIGN EXCHANGE MANAGEMENT
Article 37 All matters concerning foreign exchange of the Contractual
Joint Venture shall be handled in accordance with the provisions of the "Interim
Regulations on Foreign Exchange Control of the People's Republic of China" and
other relevant management measures.
Article 38 The Contractual Joint Venture shall open separate accounts
in foreign exchange and Renminbi and shall be subject to the supervision of the
opening bank.
Article 39 All foreign exchange receipts of the Contractual Joint
Venture shall be deposited into the Bank of China or such other foreign banks
as approved by the Administration of Exchange Control. All foreign exchange
payments shall be made out of the Contractual Joint Venture's account of
foreign exchange deposits. It is the responsibility of the
13
<PAGE> 14
Contractual Joint Venture itself to maintain the balance between foreign
exchange receipts and payments.
Article 40 For staff from foreign countries and Hong Kong and Macau,
their salaries and other normal incomes, when properly taxed, are entitled to
be repatriated abroad. Party B's legal entitlements to the profit shall be paid
in foreign exchange and may be remitted overseas to the bank account designated
by Party B in accordance with the relevant laws of the PRC .
CHAPTER 14 PROFITS SHARING
Article 41 After the payment of taxes pursuant to laws and the
provisions for funds, the profit of the Contractual Joint Venture shall be
shared amongst the parties hereto as follows:
In the first year of the Contractual Joint Venture's commencement of
production, Party B shall pay Party A RMB10,000. Thereafter, Party B shall pay
Party A RMB40,000 a year for the second to the fourth years, RMB60,000 a year
for the fifth to the eighth years, RMB80,000 a year for the ninth and the tenth
years. Payments for the eleventh year and thereafter shall be agreed by both
parties according to the actual circumstances of the Contractual Joint Venture
at the time and shall be approved by the board of directors.
Under the premise that the Contractual Joint Venture shall be operated
and managed by Party B, profit after payments to Party A shall all belong to
Party B.
Article 42 After receiving payments from Party B, Party A shall no
longer participate in the sharing of profit nor bear any operation risks.
14
<PAGE> 15
CHAPTER 15 TERM
Article 43 The Contractual Joint Venture shall have a term of
thirty-five years. The date of establishment of the Contractual Joint Venture
is the date of issue of its business license.
If proposed by either party and approved at board meeting, applications
may be made to the original examination and approval authority six months
before the expiry of the term for an extension.
CHAPTER 16 TERMINATION AND LIQUIDATION
Article 44 The contract may be terminated early if
that is unanimously regarded by all the parties hereto as in their best
interest.
Early termination of the Contract shall be resolved by all the
directors at a board meeting and an application therefor shall be submitted to
the original approval authority for approval.
Article 45 Either party hereto shall be entitled to terminate the
contract upon the occurrence of any of the following:
1. expiry of the term of the Contractual Joint Venture;
2. any party hereto being in breach of the contract, rendering the
Contractual Joint Venture incapable of continuous operation;
3. the Contractual Joint Venture incurring significant losses so that
it is incapable of continuous operation;
4. such reasons as natural disasters and force majeure;
15
<PAGE> 16
5. the Contractual Joint Venture's failure to achieve its objects and
has no prospects of development;
6. during the term, if necessary and agreed by both parties through
consultation, an application may be made to the original examination and
approval authority six months in advance for early termination hereof.
Article 46 Upon the expiry of the term or early termination of the
contract, the board of directors shall employ accountants registered in the PRC
as the members of the Liquidation Committee for the purpose of liquidating the
property of the Contractual Joint Venture.
Article 47 The duty of the Liquidation Committee is to fully examine
the property, creditors' rights and debt of the Contractual Joint Venture,
prepare a balance sheet and a financial index, work out the valuations for the
property according to the contract and the basis of the calculations, so that a
liquidation plan can be formulated for submission to the board of directors for
approval and implementation.
Article 48 The Liquidation Committee shall act on behalf of the
Contractual Joint Venture in litigations made by or against it.
Article 49 Costs of liquidation and the remuneration of the Liquidation
Committee members shall be paid, on a preferential basis, out of existing
property of the Contractual Joint Venture.
Article 50 The property left after full settlement of the Contractual
Joint Venture's debt and losses shall become the property of Party B without
any consideration.
16
<PAGE> 17
CHAPTER 17 AMENDMENT, ALTERATION AND DISCHARGE OF CONTRACT
Article 51 To be valid, amendments hereto shall be agreed by both Party
A and Party B by way of a signed agreement in writing and reported to the
original examination and approval authority for approval.
CHAPTER 18 FORCE MAJEURE
Article 52 Should the execution hereof is affected or cannot be carried
out as specified herein by virtue of earthquake, typhoon, flood, fire, war and
such other force majeure that cannot be foreseen and whose occurrence and
consequences cannot be prevented nor avoided, the affected party shall inform
forthwith the other party the events by telephone, and provide within thirty
days the details of the events and documents for evidence issued by the local
notary authority concerned certifying the reasons for the incapability of the
contract's being executed or the need of delay in execution or partial
execution. It shall be the discretion of the two parties after consultation as
to whether to terminate the contract or waive part of the obligation to perform
the contract or delay its performance, depending on the extent to which the
performance of the contract is affected by the events. Once the force majeure
shall have disappeared, the affected party shall forthwith take measures to
proceed to perform the contract to be performed.
CHAPTER 19 APPLICABLE LAW
Article 53 The formation, validity, interpretation, performance and
disputes settlement hereof shall be governed by the laws of the People's
Republic of China.
17
<PAGE> 18
CHAPTER 20 SETTLEMENT OF DISPUTES
Article 54 In case of any disputes arising from the execution hereof or
in relation hereto, all parties hereto shall settle such disputes through
friendly consultation. If no settlement can be reached, the disputes shall be
submitted to the Arbitration Committee of the China Council for the Promotion
of International Trade for arbitration according to its procedures (or those of
its branch office). The arbitration award given thereby shall be final and
binding upon all the parties hereto.
Article 55 Save for those parts under arbitration, this Contract shall
be performed continuously during arbitration.
CHAPTER 21 LANGUAGE
Article 56 This Contract is written in Chinese.
CHAPTER 22 EFFECTIVENESS OF CONTRACT AND MISCELLANEOUS
Article 57 Ancillary agreements made in accordance with the principles
stipulated herein shall be the constituent parts hereof.
Article 58 This Contract and the appendices hereto shall be subject to
the approval of the examination and approval authorities of the People's
Republic of China and, if necessary, the examination and approval at the
general meeting of Dransfield Holdings Limited.
Article 59 As regards the method of giving notices, notices given with
regard to the rights and obligations of the parties hereto, if given by way of
cable and telex, shall be followed by written notice in the form of letters.
The legal addresses or correspondence address of the parties hereto as stated
herein shall be the correspondence address of such parties.
18
<PAGE> 19
Article 60 This Contract is signed by the authorized representatives of
the parties hereto on 18th December, 1993 in Hong Kong.
Party A: Conghua Taiping Economic Development Corporation, Guangzhou (official
seal affixed)
Representative: Hou Gang (signed)
Party B: Holdsworth Investments Limited (official seal affixed)
Representative: Ma Guoxiong (signed)
19
<PAGE> 20
Imported Equipment List
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Price Imports Actually Cleared by the
Approved Customs
-----------------------------------------------------------------
Description Quantity Unit Price Sub-total Date Quantity Date Quantity Remarks
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(A) Production Equipment HK$ HK$
1. Equipment for manufacturing 1 set 2,000,000 2,000,000
boxes of facial tissues, plus
accessories
2. Equipment for manufacturing 1 set 2,000,000 2,000,000
toilet paper, plus accessories
3. Equipment for manufacturing 2 sets 9,000,000 18,000,000
tissue handkerchief, plus
accessories
4. Equipment for manufacturing 1 set 700,000 700,000
paper napkins, plus accessories
5. Equipment for manufacturing 1 set 350,000 350,000
cosmetic cotton puffs, plus
accessories
</TABLE>
20
<PAGE> 21
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Price Imports Actually Cleared by the
Approved Customs
-----------------------------------------------------------------
Description Quantity Unit Price Sub-total Date Quantity Date Quantity Remarks
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
6. Stationery paper cutting machine, 1 set 300,000 300,000
plus accessories
7. Automatic fetching machine 15 20,000 300,000
8. Warehouse Alarm System 1 set 50,000 50,000
9. Crane (3-ton) 1 240,000 240,000
10. Fork lift truck (3-ton) 3 150,000 450,000
11. Squirt truck (3-ton) 4 4,000 16,000
12. Tape rolling machine 4 5,000 20,000
13. Ventilation system 1 set 300,000 300,000
14. Thin-film contractor 1 20,000 20,000
15. Electric installations and fixtures 1 120,000 120,000
----------
Total 24,866,000
----------
(B) Means of Transportation
1. Trucks (16-ton) 5 400,000 2,000,000
2. Container trailers (30-ton + racks) 5 500,000 2,500,000
3. Vehicles for agricultural uses 3 80,000 240,000
4. Small vehicles 3 300,000 900,000
---------
Total 5,640,000
---------
</TABLE>
21
<PAGE> 22
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Price Imports Actually Cleared by the
Approved Customs
-----------------------------------------------------------------
Description Quantity Unit Price Sub-total Date Quantity Date Quantity Remarks
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(C) Office Equipment
1. Facsimile machine 3 4,000 12,000
2. Laminator 1 2,400 2,400
3. Copying machine 2 5,500 11,000
4. Computer 5 sets 20,000 100,000
5. Laser printer 1 10,000 10,000
6. Computer printer 2 5,000 10,000
7. Typewriter 5 2,500 12,500
8. Telephone system (Intercom + 1 set 40,000 40,000
Outside lines) (6+16)
9. Slide projector 1 8,000 8,000
10. Video recorder 2 4,000 8,000
11. TV set 2 6,000 12,000
12. Air-conditioner 6 5,000 30,000
13. Refrigerator 1 5,000 5,000
14. Binding machine 1 4,000 4,000
15. Shredder 1 8,000 8,000
16. Humidifier 2 2,000 4,000
17. Coffee-maker 1 7,500 7,500
----------
Total 284,400
----------
Grand Total 30,790,400
==========
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
22
<PAGE> 23
CHINESE-FOREIGN CONTRACTUAL JOINT VENTURE
DRANSFIELD PAPER (GUANGZHOU) LIMITED
ARTICLES OF ASSOCIATION
CHAPTER 1 GENERAL PROVISIONS
Article 1: In accordance with the "Law of the People's Republic of
China on Chinese-Foreign Contractual Joint Ventures", Conghua Taiping Economic
Development Corporation, Guangzhou, China and Holdsworth Investments Limited, a
subsidiary incorporated in British Virgin Islands of Dransfield Holdings
Limited, Hong Kong entered into a contract for the establishment of the
contractual joint venture Dransfield Paper (Guangzhou) Limited on 16th October,
1993 in Hong Kong and the articles of association thereof is thereby
formulated.
Article 2: The name of the contractual joint venture is [UNTRANSLATED
CHINESE CHARACTERS] (Dransfield Paper (Guangzhou) Limited) (hereinafter
referred to as the "Contractual Joint Venture").
The legal address of the Contractual Joint Venture is Gong Ye Da Dao,
Taiping Industrial Zone, Conghua County, Guangzhou City.
Article 3: The names of the parties to the Contractual Joint Venture
are:
Conghua Taiping Economic Development Corporation, Guangzhou
(hereinafter referred to as "Party A") at Taiping Industrial Zone, Conghua
County, Guangzhou City.
Holdsworth Investments Limited (hereinafter referred to as "Party B"),
whose legal address is P.O. Box 71, Craigmuir Chambers, Road
23
<PAGE> 24
Town, Tortola, British Virgin Islands and whose correspondence address is
1/F and 2/F, 36-42 Pol Man Street, Mongkok, Kowloon.
Article 4: The Contractual Joint Venture is a limited liability company.
Article 5: The Contractual Joint Venture is a legal person in China
and is subject to the jurisdiction and protection of the laws of China. All
its activities shall be governed by Chinese laws, decrees and other relevant
regulations.
CHAPTER 2 PURPOSE AND SCOPE OF BUSINESS
Article 6: The purpose of the parties to the Contractual Joint Venture
is: basing on the wish to strengthen economic co-operation and technical
exchanges and by adopting advanced and suitable technology and scientific
management method, to enhance economic efficiency and ensure satisfactory
economic benefits for all the parties concerned.
Article 7: The scope of production operation of the Contractual Joint
Venture is the manufacture, sale and processing of the following products:
1. toilet paper and related products, involving the domestic sale of
export licence.
2. stationery paper products, including heat-sensitive copying paper,
etc.
3. skincare and hair-treatment products.
24
<PAGE> 25
CHAPTER 3 TOTAL AMOUNT OF INVESTMENT AND REGISTERED CAPITAL
Article 8: The total amount of investment of the Contractual Joint
Venture is US$10 million including investment in kind.
Article 9: The registered capital of the Contractual Joint Venture is
US$5 million, to be contributed wholly by Party B.
Article 10: Party B shall pay up the amount of capital contribution
within the time period stipulated in the contract.
Article 11: Party B shall be issued an investment certificate by the
Contractual Joint Venture upon payment of its capital contribution.
Article 12: Within the term of the Contractual Joint Venture, the
Contractual Joint Venture shall not reduce its registered capital.
Article 13: Should one party assign all or part of its investment
subscribed, consent shall be obtained from the other party of the Contractual
Joint Venture. When one party assigns its investment, the other party has
pre-emptive right within thirty days, save for intercompany assignment made
within the same group.
Article 14: Any increase, assignment of the registered capital of the
Contractual Joint Venture shall be unanimously approved by the board of
directors and submitted to the municipal examination and approval authority for
approval. The registration procedures for changes shall be dealt with at the
original registration and administration office.
25
<PAGE> 26
CHAPTER 4 BOARD OF DIRECTORS
Article 15: The Contractual Joint Venture shall establish a board of
directors which is the highest authority of the Contractual Joint Venture.
Article 16: The board of directors shall decide all major issues
concerning the Contractual Joint Venture. Its functions and powers are as
follows:
- deciding and approving the important reports submitted by the general
manager (for instance: production plan, annual business report, funds, loans,
etc);
- approving annual financial reports, budget of incomes and
expenditures, annual plans of profit appropriation;
- adopting major rules and regulations of the company;
- deciding the set-up of branches;
- amending the rules of the company;
- deciding the termination of production, termination of the
Contractual Joint Venture or merging with other economic entities;
- deciding the engagement of the general manager;
- being responsible for the liquidation work upon the termination or
expiration of the Contractual Joint Venture;
26
<PAGE> 27
- being responsible for other major issues which shall be decided by
the board of directors.
Article 17: The board of directors shall consist of four directors, of
which one shall be appointed by Party A and three by Party B. The term of
office for directors is four years and may be renewed.
Article 18: Chairman of the board shall be appointed by Party B and
vice chairman of the board by Party A.
Article 19: When appointing and replacing directors, a written notice
shall be submitted to the board.
Article 20: Board meetings shall be convened at least once a year and
interim board meetings may be convened at the request of any two directors.
Article 21: Board meetings shall in principle be held in the location
of the Contractual Joint Venture.
Article 22: Board meetings shall be called and presided by the chairman.
Article 23: The board shall notify all directors 30 days before the
board meeting, stating expressly the agenda, time and place of the meeting.
Article 24: Should any director be unable to attend a board meeting, he
may appoint another person in writing to attend and vote on his behalf at the
meeting. If the director neither attends nor appoints another person to attend
the meeting, he shall be deemed to have waived his rights.
27
<PAGE> 28
Article 25: The quorum for any board meeting shall be three directors.
Any resolution passed in a board meeting without the required quorum is
invalid.
Article 26: Detailed written records shall be made for each board
meeting and signed by all the attended directors or proxies. The record shall
be made in Chinese and shall be filed with the Contractual Joint Venture.
Article 27: The following matters shall be unanimously approved by the
board of directors before a resolution is made:
1. amendments to the articles of association of the Contractual Joint
Venture;
2. extension, termination and liquidation of the Contractual Joint
Venture;
3. increase or assignment of the registered capital of the Contractual
Joint Venture;
4. merger of the Contractual Joint Venture with other economic entities;
5. external borrowings by the Contractual Joint Venture.
CHAPTER 5 BUSINESS MANAGEMENT ORGANIZATION
Article 28: The Contractual Joint Venture shall establish a business
management organization under which departments responsible for production,
technology, sales, finance and administration shall be established.
28
<PAGE> 29
Article 29: The Contractual Joint Venture shall have a general manager
appointed by Party B.
Article 30: The general manager is directly responsible to the board of
directors. He shall implement the decisions of board meetings, organize the
daily production, technology, operation and management of the Contractual Joint
Venture.
Article 31: Decisions made in respect of major issues in the daily
routines of the Contractual Joint Venture shall only be valid with the
signature of the general manager. Matters to be signed by the general manager
shall be specifically determined by the board of directors.
Article 32: The general manager shall have a term of office of four
years and may be reappointed.
Article 33: At the appointment of the board of directors, the chairman
or directors of the board may concurrently be the general manager and other
high-ranking personnel of the Contractual Joint Venture .
Article 34: The general manager shall not concurrently be the general
manager or deputy general manager of other economic entities and shall not
participate in such activities of other economic entities in commercial
competition with the Contractual Joint Venture.
Article 35: The Contractual Joint Venture may, if necessary in
production operation, appoint a chief engineer, a chief accountant and an
auditor, all of whom shall be led by the general manager.
The chief accountant shall be responsible for directing the financial
accounting work of the Contractual Joint Venture, examining and auditing
29
<PAGE> 30
its financial receipts and payment and books of accounts and submitting reports
to the general manager and the board of directors.
Article 36: Should the general manager and other high-ranking
management personnel request for resignation, they should submit written
reports to the board of directors in advance.
In case of graft or serious dereliction of duty on the part of the
above personnel, the board of directors shall have the power to resolve and
dismiss them at any time. Those who violate the criminal law shall face
criminal prosecution.
CHAPTER 6 FINANCIAL ACCOUNTING
Article 37: The financial accounting system of the Contractual Joint
Venture shall be handled in accordance with the provisions of the "Accounting
System of the Foreign Investment Enterprises in the People's Republic of China"
and the "Financial Management System of the Foreign Investment Enterprises in
the People's Republic of China" formulated by the Ministry of Finance of the
People's Republic of China.
Article 38: The accounting year of the Contractual Joint Venture shall
coincide with the calendar year, which is from 1st January to 31st December on
the Gregorian calendar.
Article 39: All vouchers, books of accounts and statements of the
Contractual Joint Venture shall be written in Chinese.
Article 40: The Contractual Joint Venture shall adopt Renminbi as its
accounts keeping unit. The translation between Renminbi and other currencies
shall be made at the rate quoted by the State Administration of
30
<PAGE> 31
Exchange Control of the People's Republic of China at the date of translation.
Article 41: The Contractual Joint Venture shall open accounts in
Renminbi and foreign currencies with the Bank of China or other banks.
Article 42: The Contractual Joint Venture adopts the internationally
adopted accrual basis and debit and credit accounting system in keeping its
accounts.
Article 43: The financial books of the Contractual Joint Venture shall
contain the following:
1. the amount of overall cash receipts and payments of the Contractual
Joint Venture;
2. all materials sales and purchases of the Contractual Joint Venture;
3. the registered capital and liabilities of the Contractual Joint
Venture;
4. the time of payment, increase and assignment of the registered
capital of the Contractual Joint Venture.
Article 44: The financial department of the Contractual Joint Venture
shall prepare the balance sheet and profit and loss account for the past
accounting year in the first four months of each accounting year, and submit to
the board meeting for discussion and approval after the issue of an audit
report by an accountant registered in the PRC.
31
<PAGE> 32
Article 45: Either party to the Contractual Joint Venture has the right
to engage at its own expense an accountant to check and examine the accounts of
the Contractual Joint Venture. The Contractual Joint Venture should provide
assistance during the checking and examination.
Article 46: The depreciation for the fixed assets of the Contractual
Joint Venture shall be handled in accordance with the provisions of the "Rules
for the Implementation of the Law of the People's Republic of China on the
Income Tax of Foreign Investment Enterprises and Foreign Enterprises".
Article 47: All matters concerning foreign exchange of the Contractual
Joint Venture shall be handled in accordance with the "Interim Regulations on
Foreign Exchange Control of the People's Republic of China" and other relevant
provisions and the provisions of the contract for the Contractual Joint Venture.
CHAPTER 7 PROFITS SHARING
Article 48: The Contractual Joint Venture shall make appropriations to
the reserve fund, corporate development fund and staff incentive and welfare
fund from the profit after income tax. The proportion of appropriations shall
be determined by the board of directors and shall, in principle, not exceed 10%
of the profit after tax.
Article 49: After the payment of income tax pursuant to laws and the
provisions for funds, the profit of the Contractual Joint Venture shall be
shared as follows:
In the first year of the Contractual Joint Venture's commencement of
production, Party B shall pay Party A RMB10,000. Thereafter, Party B shall pay
Party A RMB40,000 a year for the second to the fourth years,
32
<PAGE> 33
RMB60,000 a year for the fifth to the eighth years, RMB80,000 a year for the
ninth and the tenth years. Payments for the eleventh year and thereafter shall
be agreed by both parties according to the actual circumstances of the
Contractual Joint Venture at the time and shall be approved by the board of
directors. Party B's entitlements to the profit shall be paid in foreign
exchange and may be remitted overseas to the bank account designated by Party B
in accordance with the relevant laws of the PRC.
Article 50: The profit distribution plan and the share of profits
attributable to each party shall be announced within four months after the end
of each convention year.
Article 51: The Contractual Joint Venture shall not distribute any
profits before making up for the losses of the previous accounting year. The
retained profits of the previous accounting year may be combined with the
profits of the current year for distribution.
CHAPTER 8 STAFF AND WORKERS
Article 52: The Contractual Joint Venture's employment, recruitment and
dismissal of the staff and their resignation, wages, welfare, labour insurance,
labour protection, labour discipline and reward and punishment, etc. shall be
handled according to the "Provisions of the People's Republic of China on Labour
Management in Chinese-Foreign Equity Joint Ventures" and its implementation
rules.
Article 53: The Contractual Joint Venture shall recruit its required
staff publicly through examination and employ those who are qualified.
Article 54: The Contractual Joint Venture shall be entitled to give
warnings to, record a demerit against or reduce the wages of those staff who
have violated the Contractual Joint Venture's rules and regulations
33
<PAGE> 34
and labour discipline. In case of significant defaults, dismissal may be
allowed. Dismissal of staff shall be submitted to the local labour department
for record.
Article 55: The wages and other terms of employment of the staff shall
be determined by the general manager under the authorization of the board of
directors according to the Contractual Joint Venture's specific conditions with
reference to the relevant provisions of China, and shall be set down clearly in
the labour contract.
CHAPTER 9 TRADE UNION ORGANIZATION
Article 56: The staff of the Contractual Joint Venture has the right to
establish trade union organization and promote trade union activities in
accordance with the "Trade Union Law of the People's Republic of China".
Article 57: The Contractual Joint Venture's trade union represents the
interests of the staff. Its function is to protect the staff's democratic
rights and material interests according to the laws; to assist the Contractual
Joint Venture in arranging and using the welfare and bonus funds reasonably; to
organize the staff and workers in learning politics, business, science,
technological know-how and carrying out cultural, artistic and sports
activities; to educate the staff to observe the labour discipline and to strive
to accomplish various economic activities of the Contractual Joint Venture.
Article 58: The Contractual Joint Venture's trade union shall take part
in the mediation of disputes between the staff and the Contractual Joint
Venture.
Article 59: The Contractual Joint Venture shall in each month allocate
to the trade union a sum equivalent to 2% of the total amount of
34
<PAGE> 35
wages of the Contractual Joint Venture's staff. The Contractual Joint Venture
shall use the trade union's funds in accordance with the "Measures for the
Management of Trade Union Funds" formulated by China National Federation of
Trade Unions.
CHAPTER 10 TERM, TERMINATION AND LIQUIDATION
Article 60: The Contractual Joint Venture shall have a term of 35 years
from the date of issue of its business licence.
Article 61: Should all the parties to the Contractual Joint Venture
agree to extend the term of the Contractual Joint Venture, an application for
the proposal, after resolved at a board meeting, shall be submitted to the
original examination and approval authority six months before the expiry of the
Contractual Joint Venture. The term shall only be extended upon approval and
the Contractual Joint Venture shall go through the formalities for registration
of amendments at the original registration authority.
Article 62: The parties to the Contractual Joint Venture may terminate
the Contractual Joint Venture early if they think unanimously that is in the
best interest of all the parties concerned.
Early termination of the Contractual Joint Venture shall be resolved by
all the directors at a board meeting and an application therefor shall be
submitted to the original examination and approval authority for approval.
Article 63: Either party to the Contractual Joint Venture shall be
entitled to terminate the Contractual Joint Venture upon the occurrence of any
of the following:
1. the expiry of the term of the Contractual Joint Venture;
35
<PAGE> 36
2. either party to the Contractual Joint Venture being in breach of the
contract, rendering the enterprise incapable of continuous operation;
3. the Contractual Joint Venture incurring significant losses so that
it is incapable of continuous operation;
4. such reasons as natural disasters and force majeure, etc.;
5. the Contractual Joint Venture's failure to achieve its objects and
has no prospects of development;
6. during the term, if necessary and agreed by both parties through
consultation, an application may be made to the original examination and
approval authority six months in advance for early termination of the contract.
Article 64: Upon the expiry of the term or early termination of the
Contractual Joint Venture, the board of directors shall employ accountants
registered in the PRC as the members of the Liquidation Committee for the
purpose of liquidating the property of the Contractual Joint Venture.
Article 65: The duty of the Liquidation Committee is to fully examine
the property, creditors' rights and debt of the Contractual Joint Venture,
prepare a balance sheet and a financial index, work out the valuations for the
property according to the contract and the basis of the calculations, so that a
liquidation plan can be formulated for submission to the board of directors for
approval and implementation.
Article 66: The Liquidation Committee shall act on behalf of the
Contractual Joint Venture in litigations made by or against it.
36
<PAGE> 37
Article 67: Costs of liquidation and the remuneration of the
Liquidation Committee members shall be paid, on a preferential basis, out of
existing property of the Contractual Joint Venture.
Article 68: The property left after full settlement of the Contractual
Joint Venture's debt and losses (and after deduction of income tax payable
pursuant to laws where the property remained exceeds the registered capital)
shall become the property of Party B without any consideration.
Article 69: Upon the close of the liquidation, the Contractual Joint
Venture shall submit a report to the examination and approval authority, go
through the formalities related to cancellation of registration at the original
registration authority, surrender its approval certificate and business licence
and make a public announcement.
Article 70: After liquidation, all of the books of accounts of the
Contractual Joint Venture shall be kept by Party B.
CHAPTER 11 RULES AND REGULATIONS
Article 71: The rules and regulations formulated by the board of directors
of the Joint Venture are as follows:
1. operation management system, including the duty and powers and the
working procedures of each of the managing department concerned;
2. staff manuals;
3. system of wages & salaries;
37
<PAGE> 38
4. system related to the attendance, promotion and award/punishment of
the staff;
5. staff welfare system;
6. finance system;
7. liquidation procedures for the dissolution of a company;
8. other necessary rules and regulations.
CHAPTER 12 SUPPLEMENTARY ARTICLES
Article 72: Any amendments to these articles shall be unanimously
resolved at board meetings and submitted to the examination and approval
authority for approval.
Article 73: These articles are written in Chinese.
Article 74: These articles shall only be valid with the approval
granted by the examination and approval authority.
Party A: Conghua Taiping Economic Development Corporation, Guangzhou
(official seal affixed)
Representative: Hou Gang (signed)
Party B: Holdsworth Investments Limited (official seal affixed)
Representative: Ma Guoxiong (signed)
38
<PAGE> 1
EXHIBIT 10.7
Document
of
Conghua City Foreign Economic Relations & Trade Committee
No. (1995) 018 under characters Cong Wai Jing Mao Yin
----------------------------------------------------------------------
OFFICIAL REPLY REGARDING THE SECOND SUPPLEMENTARY AGREEMENT
OF THE CO-OPERATIVE VENTURE CONTRACT FOR
DRANSFIELD PAPER (GUANGZHOU) LIMITED
To: Dransfield Paper (Guangzhou) Limited
The following is an official reply regarding the second supplementary
agreement of the co-operative venture contract for Dransfield Paper (Guangzhou)
Limited submitted by your company:
1. The second supplementary agreement of the contract for Dransfield
Paper (Guangzhou) Limited signed on 5th February, 1995 in Conghua City by both
parties has been approved to become effective.
2. The acquisition of an additional batch of imported equipment worth
HK$13,000 has been approved. The funds so required shall be accommodated within
the amount of investment specified in the original contract.
3. Save for the above-mentioned provisions, all other provisions in the
original contract shall remain unchanged.
Please go through the relevant formalities with the departments
concerned upon receipt of this document.
1
<PAGE> 2
l3th February, 1995
(Official chop of Conghua City Foreign
Economic Relations & Trade Committee affixed)
Report to: Guangzhou City Foreign Economic Relations & Trade
Committee, Guangzhou Customs.
CC: Conghua City Planning Committee, Administration of Finance,
Administration of Taxation, Bank, Taiping Industrial Zone
Management Committee.
2
<PAGE> 3
THE SECOND SUPPLEMENTARY AGREEMENT OF THE CONTRACT
FOR DRANSFIELD PAPER (GUANGZHOU) LIMITED
1. In view of the production need, an additional batch of imported
equipment worth HK$12,873.60 (see the Equipment List for details) shall be
acquired. The funds so required shall be accommodated within the total amount
of investment specified in the original contract.
2. Save for the above-mentioned provision, all other provisions in the
original contract shall remain unchanged.
3. This supplementary agreement shall go into effect upon approval by
the original approval authority.
4. This supplementary agreement of the contract was signed on 5th
February, 1995 in Conghua City by the representatives of both parties to the
co-operative venture.
Party A: Conghua Economic & Technology Development Zone
Development Corporation (Official chop affixed)
Representative: (Signed) Deng Weiqiang
Party B: Holdsworth Investments Limited
(Official chop affixed)
Representative: (Signed) Ma Guoxiong
3
<PAGE> 4
RESOLUTION OF THE BOARD OF DIRECTORS
On the general meeting of Dransfield Paper (Guangzhou) Limited held on
5th February, l995, it was passed that on the premise of unchanged total
amount of investment, an additional batch of imported equipment worth
HK$l2,873.60 shall be acquired to form a complete set in the production
workshop. Details are shown in the attached list.
Signed by the members of the Board:
Chairman: Ma Guoxiong
Vice-chairman: Deng Weiqiang
General Manager: Ma Guoxiong
Director: Yao Yichang
Director: Wu Guirong
4
<PAGE> 5
Imported Equipment List
Monetary Unit: HK Dollar
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Price
------------------------ Date of Quantity Date of Arrival Quantity
Description Quantity Unit Price Total Approval of Import at Customs of Clearance Remarks
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1. Production Equipment
(1)Time clock 1 set 3,273.60 3,273.60
(2)Time clock holder 4 400.00 1,600.00
(3)3T forklift 1 5,000.00 5,000.00
(4)Battery Forklift 1 3,000.00 3,000.00
- ------------------------------------------------------------------------------------------------------------------------------------
Grand Total 12,873.60
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE> 6
No. 40 under characters (94) Sui Nei He Zuo Mian (Bei)
12.12.94
Document
of
Conghua City Foreign Economic Relations & Trade Committee
No. (1994) 191 under characters Cong Wai Jing Mao Yin
----------------------------------------------------------------------
OFFICIAL REPLY REGARDING THE FIRST SUPPLEMENTARY AGREEMENT
OF THE CO-OPERATIVE VENTURE CONTRACT FOR
DRANSFIELD PAPER (GUANGZHOU) LIMITED
To: Dransfield Paper (Guangzhou) Limited
The following is an official reply regarding the first supplementary
agreement of the co-operative venture contract for Dransfield Paper (Guangzhou)
Limited submitted by your company:
1. The first supplementary agreement of the contract signed on 10th
November, 1994 by both parties has been approved to become effective.
2. The acquisition of an additional batch of imported equipment worth
HK$209,000 by the Company has been approved. The funds so required shall be
accommodated within the original amount of investment.
3. Save for the above-mentioned provisions, all other provisions in the
original contract and articles of association shall remain unchanged.
6
<PAGE> 7
Please go through the relevant formalities with the departments
concerned upon receipt of this document.
20th November, 1994
(Official chop of Conghua City Foreign
Economic Relations & Trade Committee affixed)
Report to: Guangzhou City Foreign Economic Relations & Trade
Committee, Guangzhou Customs.
CC: Conghua City Planning Committee, Foreign Investment
Management Bureau, Administration of Finance, Administration
of Taxation, Taiping Industrial Zone Management Committee.
7
<PAGE> 8
Sino-foreign Co-operative Venture
Dransfield Paper (Guangzhou) Limited
Agreement for Acquisition of Additional Imported Equipment
On the respective general meetings of China Guangzhou Conghua Taiping
Economic Development Corporation (hereinafter referred to as Party A) and
Holdsworth Investments Limited (hereinafter referred to as Party B) held on 3rd
November, 1994, it was passed that on the premise of unchanged total amount of
investment, additional imported equipment shall be acquired to form a complete
set in the production workshop. Details are shown in the attached list.
This agreement was signed by the authorized representatives of both
parties on 10th November, 1994.
Party A: Guangzhou Conghua Taiping Economic Development
Corporation
Representative: (Signed) Hou Gang
Party B: Holdsworth Investments Limited
Representative: (Signed) Ma Guoxiong
8
<PAGE> 9
Schedule of Additional Items to be Imported by the Production Workshop of
Dransfield Paper (Guangzhou) Limited
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Classes of Goods No. of Quantity Unit Price Total Price Total
Cases (HK$) (HK$) (HK$)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1. Beverage Supplier 16 16 2,000.00 32,000.00 32,000.00
2. Necessary Accessories 9 200
- Paper Cup 400 0.10 40.00
- Glass Bottle 34 1.00 34.00
- Freshness Packing 352 0.15 52.80
- Aluminium Can 366 0.20 73.20
3. Air-conditioner for 110 110 1,200.00 132,000.00 132,000.00
production workshop
4. Office machinery / 8 3,340.00
equipment
- transparency projector 2 300.00 600.00
- slide projector 2 300.00 600.00
- facsimile machine 1 540.00 540.00
- small closed-circuit 2 600.00 1,200.00
security monitor
- disc player 1 400.00 400.00
5. Apparatuses for use in 35 12,500.00
production workshop
- loudspeaker for factory 18 400.00 7,200.00
- walkie-talkie for factory 12 400.00 4,800.00
- data-recorder for 5 100.00 500.00
workshop
6. Broadcasting apparatuses 17 7,600.00
for factory
- loudspeaker for factory 7 400.00 2,800.00
office
- walkie-talkie for factory 12 400.00 4,800.00
office
7. Communication 20 8,400.00
Apparatuses
- Broadcasting receiver for 36 50.00 1,800.00
workshop
- Recording & playing 66 100.00 6,600.00
machine for factory
</TABLE>
9
<PAGE> 10
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Classes of Goods No. of Quantity Unit Price Total Price Total
Cases (HK$) (HK$) (HK$)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
8. Cooking utensils / 25 5,200.00
apparatuses
- ventilator 9 100.00 900.00
- micro-wave oven 6 150.00 900.00
- vacuum bottle 68 50.00 3,400.00
9. Cleansing/Sanitary Tools 27 7,555.00
- washing machine 5 600.00 3,000.00
- vacuum cleaner 11 200.00 2,200.00
- dehumidifier 1 195.00 195.00
- heater 3 200.00 600.00
- hair dryer 78 20.00 1,560.00
10. Cleansing items for 6 205.00
Production Staff
- toilet paper 148 0.20 29.60
- hand-towel tissue 658 0.20 131.60
- soap 142 0.15 21.30
- lotion 150 0.15 22.50
- ------------------------------------------------------------------------------------------------------------------------------------
209,000.00
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE> 1
EXHIBIT 10.8
Document
of
Conghua City Foreign Economic Relations & Trade Committee
No. (1995) 097 under characters Cong Wai Zing Mao Yin
----------------------------------------------------------------------
OFFICIAL REPLY REGARDING THE THIRD SUPPLEMENTARY AGREEMENT
OF THE CO-OPERATIVE VENTURE CONTRACT FOR
DRANSFIELD PAPER (GUANGZHOU) LIMITED
To: Dransfield Paper (Guangzhou) Limited
The following is an official reply regarding the third supplementary
agreement of the co-operative venture contract for Dransfield Paper (Guangzhou)
Limited submitted by your company:
l. The third supplementary agreement of the contract signed on 20th
May, 1995 in Conghua City by all parties has been approved to become effective.
2. The acquisition of an additional batch of imported equipment worth
HK$2,500,000 has been approved. The funds so required shall be accommodated
within the original amount of investment.
3. Save for the above-mentioned provisions, all other provisions in the
original contract shall remain unchanged.
Please go through the relevant formalities with the departments
concerned upon receipt of this document.
1
<PAGE> 2
29th May, 1995
Report to: Guangzhou City Foreign Economic Relations & Trade
Committee, Guangzhou Customs.
CC: Conghua City Planning Committee, Foreign Investment
Management Bureau, Administration of Finance, Administration
of Taxation, Development Zone Management Committee.
2
<PAGE> 3
THE THIRD SUPPLEMENTARY AGREEMENT OF THE CONTRACT
FOR DRANSFIELD PAPER (GUANGZHOU) LIMITED
l. In view of the production need, an additional set of imported
equipment manufacturing kitchen tissues (plus accessories) worth HK$2,500,000
(see the Equipment List for details) shall be acquired. The funds so required
shall be accommodated within the total amount of investment specified in the
original contract.
2. Save for the above-mentioned provision, all other provisions in the
original contract shall remain unchanged.
3. This supplementary agreement shall go into effect upon approval by
the original approval authority.
4. This supplementary agreement of the contract was signed on 20th May,
1995 in Conghua City by the representatives of both parties to the co-operative
venture.
Party A: Conghua Economic & Technology Development Zone
Development Corporation (Official chop affixed)
Representative: (Signed) Deng Weiqiang
Party B: Holdsworth Investments Limited
(Official chop affixed)
Representative: (Signed) Ma Guoxiong
3
<PAGE> 4
RESOLUTION OF THE BOARD OF DIRECTORS
On the general meeting of Dransfield Paper (Guangzhou) Limited held on
20th May, 1995, it was passed that on the premise of unchanged total amount of
investment, an additional set of imported equipment manufacturing kitchen
tissues (plus accessories) worth HK$2,500,000.00 shall be acquired for use in
the production workshop. Details are shown in the attached list.
Signed by the members of the Board:
Chairman: Ma Guoxiong
Vice-chairman: Deng Weiqiang
General Manager: Ma Guoxiong
Director: Yao Yichang
Director: Wu Guirong
4
<PAGE> 5
Imported Equipment List
Monetary Unit: HK Dollar
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Price
--------------------------- Date of Quantity Date of Arrival Quantity
Description Quantity Unit Price Total Approval of Import at Customs of Clearance Remarks
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1. Production Equipment
(1)Equipment for 1 set 2,500,000.00 2,500,000.00
manufacturing
kitchen tissues,
plus accessories
- ------------------------------------------------------------------------------------------------------------------------------------
Grand Total 2,500,000.00
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE> 1
EXHIBIT 10.9
Document
of
Conghua City Foreign Economic Relations & Trade Committee
No. (1995) 131 under characters Cong Wai Jing Mao Yin
----------------------------------------------------------------------
OFFICIAL REPLY REGARDING THE FOURTH SUPPLEMENTARY AGREEMENT
OF THE CO-OPERATIVE VENTURE CONTRACT FOR
DRANSFIELD PAPER (GUANGZHOU) LIMITED
To: Dransfield Paper (Guangzhou) Limited
The following is an official reply regarding the fourth supplementary
agreement of the co-operative venture contract for Dransfield Paper (Guangzhou)
Limited submitted by your company:
l. The fourth supplementary agreement of the co-operative venture
contract for Dransfield Paper (Guangzhou) Limited signed on 30th July, 1995 in
Conghua City by both parties has been approved to become effective.
2. The acquisition of an additional batch of imported equipment worth
HK$5,000,000 by the company has been approved. The funds so required shall be
accommodated within the original amount of investment.
3. Save for the above-mentioned provisions, all other provisions in the
original contract and articles of association shall remain unchanged.
1
<PAGE> 2
Please go through the relevant formalities with the departments concerned
upon receipt of this document.
31st July, 1995
Report to: Guangzhou City Foreign Economic Relations & Trade Committee,
Guangzhou Customs.
CC: Conghua City Planning Committee, Foreign Investment Management Bureau,
Administration of Finance, Administration of Taxation, Development Zone
Management Committee.
2
<PAGE> 3
THE FOURTH SUPPLEMENTARY AGREEMENT OF THE CONTRACT
FOR DRANSFIELD PAPER (GUANGZHOU) LIMITED
l. In view of the production need, an additional set of imported
equipment manufacturing toilet paper (plus accessories) worth HK$5,000,000 (see
the Equipment List for details) shall be acquired. The funds so required shall
be accommodated within the total amount of investment specified in the original
contract.
2. Save for the above-mentioned provision, all other provisions in the
original contract shall remain unchanged.
3. This supplementary agreement shall go into effect upon approval by
the original approval authority.
4. This supplementary agreement of the contract was signed on 30th
July, 1995 in Conghua City by the representatives of both parties to the
cooperative venture.
Party A: Conghua Economic & Technology Development Zone
Development Corporation (Official chop affixed)
Representative: (Signed) Deng Weiqiang
Party B: Holdsworth Investments Limited
(Official chop affixed)
Representative: (Signed) Ma Guoxiong
3
<PAGE> 4
RESOLUTION OF THE BOARD OF DIRECTORS
On the general meeting of Dransfield Paper (Guangzhou) Limited held on
30th July, 1995, it was passed that on the premise of unchanged total amount of
investment, an additional set of imported equipment manufacturing toilet paper
(plus accessories) worth HK$5,000,000.00 shall be acquired for use in the
production workshop. Details are shown in the attached list.
Signed by the members of the Board:
Chairman: Ma Guoxiong
Vice-chairman: Deng Weiqiang
General Manager: Ma Guoxiong
Director: Yao Yichang
Director: Wu Guirong
4
<PAGE> 5
Imported Equipment List
Monetary Unit: HK Dollar
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Price
--------------------------- Date of Quantity Date of Arrival Quantity
Description Quantity Unit Price Total Approval of Import at Customs of Clearance Remarks
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1. Production Equipment
(1)Equipment for 1 set 5,000,000.00 5,000,000.00
manufacturing toilet
paper, plus
accessories
- ------------------------------------------------------------------------------------------------------------------------------------
Grand Total 5,000,000.00
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE> 1
EXHIBIT 10.10
No. 11 under characters
(94) Sui Nei He Zuo Mian (Bei)
Document
of
Conghua City Foreign Economic Relations & Trade Committee
No. (1995) 161 under characters Cong Wai Jing Mao Yin
(Seal for Filing of the Customs of Guangzhou,
the People's Republic of China
dated 18th September, 1995 affixed)
----------------------------------------------------------------------
OFFICIAL REPLY REGARDING THE FIFTH SUPPLEMENTARY AGREEMENT
OF THE CO-OPERATIVE VENTURE CONTRACT FOR
DRANSFIELD PAPER (GUANGZHOU) LIMITED
To: Dransfield Paper (Guangzhou) Limited
The following is an official reply regarding the fifth supplementary
agreement of the co-operative venture contract for Dransfield Paper (Guangzhou)
Limited submitted by your company:
l. The fifth supplementary agreement of the co-operative venture
contract for Dransfield Paper (Guangzhou) Limited has been approved to become
effective.
2. The acquisition of an additional batch of imported equipment worth
HK$120,000 has been approved. The funds so required shall be accommodated
within the total amount of investment specified in the original contract.
1
<PAGE> 2
3. Save for the above-mentioned provisions, all other provisions in the
original contract and articles of association shall remain unchanged.
Please go through the relevant importation formalities with the
departments concerned upon receipt of this document.
15th September, 1995
Report to: Guangzhou City Foreign Economic Relations & Trade
Committee, Municipal Administration for Industry and
Commerce and Guangzhou Customs.
CC: Conghua City Planning Committee, Administration of Finance,
Administration for Industry and Commerce, Administration of
Taxation, Taiping Development Zone.
2
<PAGE> 3
THE FIFTH SUPPLEMENTARY AGREEMENT OF THE CONTRACT
FOR DRANSFIELD PAPER (GUANGZHOU) LIMITED
l. In view of the production need, two additional sets of imported
packaging machines and parts of packaging machines worth HK$120,000.00 (see the
Equipment List for details) shall be acquired. The funds so required shall be
accommodated within the total amount of investment specified in the original
contract.
2. Save for the above-mentioned provision, all other provisions in
the original contract shall remain unchanged.
3. This supplementary agreement shall go into effect upon approval by
the original approval authority.
4. This supplementary agreement of the contract was signed on 10th
September, 1995 in Conghua City by the representatives of both parties to the
co-operative venture.
Party A: Conghua Economic & Technology Development Zone
Development Corporation (Official chop affixed)
Representative: (Signed) Deng Weiqiang
Party B: Holdsworth Investments Limited
(Official chop affixed)
Representative: (Signed) Ma Guoxiong
3
<PAGE> 4
RESOLUTION OF THE BOARD OF DIRECTORS
On the general meeting of Dransfield Paper (Guangzhou) Limited held on
10th September, 1995, it was passed that on the premise of unchanged total
amount of investment, two additional sets of imported packaging machines and
parts of packaging machines worth HK$120,000.00 shall be acquired for use in
the production workshop. Details are shown in the attached list.
Signed by the members of the Board:
Chairman: Ma Guoxiong
Vice chairman: Deng Weiqiang
General Manager: Ma Guoxiong
Director: Yao Yichang
Director: Wu Guirong
4
<PAGE> 5
Imported Equipment List
Monetary Unit: HK Dollar
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Price
--------------------------- Date of Quantity Date of Arrival Quantity
Description Quantity Unit Price Total Approval of Import at Customs of Clearance Remarks
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1. Production Equipment
(1)Packaging machine 2 sets 4,500.00/set 90,000.00
(2)Parts of packaging 30,000.00
machine
- ------------------------------------------------------------------------------------------------------------------------------------
Grand Total 120,000.00
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE> 1
EXHIBIT 10.11
Document
of
Conghua City Foreign Economic Relations & Trade Committee
No. (1995) 178 under characters Cong Wai Jing Mao Yin
(Seal for Filing of the Customs of Guangzhou,
the People's Republic of China
dated 31st October, 1995 affixed)
----------------------------------------------------------
OFFICIAL REPLY REGARDING THE SIXTH SUPPLEMENTARY AGREEMENT
OF THE CO-OPERATIVE VENTURE CONTRACT FOR
DRANSFIELD PAPER (GUANGZHOU) LIMITED
To: Dransfield Paper (Guangzhou) Limited
The following is an official reply regarding the sixth supplementary agreement
of the co-operative venture contract for Dransfield Paper (Guangzhou) Limited
submitted by your company:
1. The sixth supplementary agreement of the co-operative venture
contract for Dransfield Paper (Guangzhou) Limited signed on 18th October, 1995
in Conghua City by both parties has been approved to become effective.
2. The acquisition of an additional batch of imported equipment worth
HK$310,000 by the company has been approved. The funds so required shall be
accommodated within the original amount of investment .
1
<PAGE> 2
3. Save for the above-mentioned provisions, all other provisions in
the original contract and articles of association shall remain unchanged.
Please go through the relevant formalities with the departments
concerned upon receipt of this document.
26th October, 1995
Report to: Guangzhou City Foreign Economic Relations & Trade Committee,
Guangzhou Customs.
CC: Conghua City Planning Committee, Foreign Investment Management Bureau,
Administration of Finance, Administration of Taxation, Development
Zone Management Committee.
2
<PAGE> 3
THE SIXTH SUPPLEMENTARY AGREEMENT OF THE CONTRACT
FOR DRANSFIELD PAPER (GUANGZHOU) LIMITED
1. In view of the production need, an additional batch of imported
parts of production equipment worth HK$310,000.00 (see the Equipment List for
details) shall be acquired. The funds so required shall be accommodated within
the total amount of investment specified in the original contract.
2. Save for the above-mentioned provision, all other provisions in the
original contract shall remain unchanged.
3. This supplementary agreement shall go into effect upon approval by
the original approval authority.
4. This supplementary agreement of the contract was signed on 18th
October, 1995 in Conghua City by the representatives of both parties to the
co-operative venture.
Party A: Conghua Economic & Technology Development Zone Development
Corporation (Official chop affixed)
Representative: (Signed) Deng Weiqiang
Party B: Holdsworth Investments Limited
(Official chop affixed)
Representative: (Signed) Ma Guoxiong
3
<PAGE> 4
RESOLUTION OF THE BOARD OF DIRECTORS
On the general meeting of Dransfield Paper (Guangzhou) Limited held on
18th October, 1995, it was passed that on the premise of unchanged total
amount of investment, an additional batch of imported parts of production
equipment worth HK$310,000.00 shall be acquired for use in the production
workshop. Details are shown in the attached list.
Signed by the members of the Board:
Chairman: Ma Guoxiong
Vice-chairman: Deng Weiqiang
General Manager: Ma Guoxiong
Director: Yao Yichang
Director: Wu Guirong
4
<PAGE> 5
Imported Equipment List
Monetary Unit: HK Dollar
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Price
----------------------------- Date of Quantity Date of Arrival Quantity
Description Quantity Unit Price Total Approval of Import at Customs of Clearance Remarks
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1. Parts of Production
Equipment including:
1. Blade 160 pcs 220.00/pcs 101,200.00
2. Belt 28 pcs 586.00/pcs 16,406.00
3. Lamp 20 pcs 28.00/pcs 560.00
4. Spring 89 pcs 1,340.00/pcs 119,260.00
5. Motor 1 pcs 3,130.00/pcs 3,130.00
6. Temperature inductor 1 set 35,000.00/set 35,000.00
7. Record reader 1 pcs 13,340.00/pcs 13,340.00
8. Bearing 1 pcs 1,500.00/pcs 1,500.00
9. Shaft 1 pcs 10,000.00/pcs 10,000.00
- ------------------------------------------------------------------------------------------------------------------------------------
Grand Total 300,396.00
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE> 1
EXHIBIT 10.12
DISTRIBUTOR'S AGREEMENT
By and between
PROCTER & GAMBLE AG of 1, rue du Pre-de-la Bichette,
Geneva, Switzerland (hereinafter called "P&G")
- and -
Grandom Dransfield (Int'L) & Co., Ltd. 36-42 Pok Man Street.
1-2/F, Mongkok, Kowloon, Hong Kong (hereinafter called
"DISTRIBUTOR"),
IT IS HEREBY AGREED AS FOLLOWS:
Article 1. Appointment.
1.1 P&G hereby appoints DISTRIBUTOR, who accepts this appointment,
distributor of the products listed on the attached Schedule
(hereinafter called "PRODUCTS") for such of the provinces, autonomous
regions and municipalities of the People's Republic of China as are
listed on the schedule hereto. (hereinafter called "the TERRITORY")
with effect from April 1, 1995.
1.2 This distributorship is exclusive in that P&G warrants that neither
P&G, its affiliated companies nor licensed manufacturers of the
PRODUCTS shall sell the PRODUCTS to anyone in the TERRITORY other than
DISTRIBUTOR, except as otherwise specifically provided in this
Agreement.
Article 2. Distribution.
2.1 DISTRIBUTOR shall secure, maintain and develop full distribution of
the PRODUCTS throughout the TERRITORY to wholesale and retail
establishments which can handle them, in quantities adequate to cover
requirements.
2.2 To ensure such distribution, DISTRIBUTOR shall carry at all times, and
provide suitable warehouse facilities for, adequate stocks of the
PRODUCTS, and in any event not less than the minimum stocks defined
herein.
2.3 DISTRIBUTOR shall make all necessary arrangements for delivery of the
PRODUCTS from its stocks to the trade in the TERRITORY.
<PAGE> 2
2.4 DISTRIBUTOR shall comply with such instructions as P&G may issue from
time to time with respect to distribution especially as regards
marketing, sales techniques and merchandising.
2.5 DISTRIBUTOR shall bear all risks of loss of or damage to the PRODUCTS
and the advertising and promotional materials delivered to its
possession.
2.6. DISTRIBUTOR assumes responsibility for ensuring that the PRODUCTS are
sold for ultimate consumption within the TERRITORY. To the extent
that P&G can establish that quantities of the PRODUCTS delivered under
the present Agreement have been resold for ultimate consumption in
Hong Kong or elsewhere outside the TERRITORY, DISTRIBUTOR agrees to
forego his margin on such PRODUCTS.
Article 3. Price Structures for Direct Sales.
3.1 From time to time P&G will forward to DISTRIBUTOR price structures for
each of the PRODUCTS which will show, as regards DISTRIBUTOR's direct
sales from its stocks to the trade:
a. DISTRIBUTOR's purchase price,
b. the resale price to the trade and a listing of all major
increments from DISTRIBUTOR's purchase price to the retail
price, and
c. DISTRIBUTOR's margin for each of the PRODUCTS calculated at
the rate shown in the attached Schedule or as otherwise
mutually agreed upon in writing.
3.2 DISTRIBUTOR agrees to operate in accordance with these price
structures.
Article 4. DISTRIBUTOR's Margin.
4.1 DISTRIBUTOR's margin covers DISTRIBUTOR's profit and fully compensates
it for all costs it will incur in the distribution of the
PRODUCTS from taking possession of them to their delivery to any
wholesale or retail establishments purchasing the PRODUCTS, including
but not limited to landing, handling, warehousing, transportation,
commission to sub-distributors if any, salesmen's salaries and
expenses, merchandising and key account management, cost of
administration, invoicing and collecting, financing charges, cash
discounts, quantity discounts, rebates, bad debts; duties and taxes.
4.2 Before any new product is added to the PRODUCTS originally listed on
the attached Schedule the rate of DISTRIBUTOR's margin on the new
PRODUCT shall first be mutually agreed.
<PAGE> 3
Article 5. Orders to P&G.
5.1 All orders are on condition that DISTRIBUTOR assumes responsibility
for ensuring that the PRODUCTS can be imported into, sold and
distributed in the TERRITORY.
5.2 All orders forwarded to P&G or to its affiliated companies shall be
subject to acceptance by P&G.
Article 6. Terms of Sale to DISTRIBUTOR.
6.1 Shipments will be invoiced to DISTRIBUTOR at prices prevailing at the
time of shipment. P&G shall have no obligation to give DISTRIBUTOR
notice of price changes prior to invoicing but will issue new price
structures promptly.
6.2 On shipments from the United States, FOB, FAS, C&F or CIF, when used,
are pricing terms only. Title to these shipments shall pass to the
DISTRIBUTOR upon endorsement and unconditional delivery of the ocean
bill of lading to the DISTRIBUTOR but only after arrival of the
shipment in the port of entry. Until such arrival, ownership of,
legal title to, right of possession, control over and risk of loss of
the PRODUCTS shall remain with P&G.
6.3 Terms of sale on shipments other than those from the United States
will be as shown on the invoice and/or order acknowledgement.
Article 7. Payments to P&G.
DISTRIBUTOR shall pay P&G in accordance with the terms of payment shown in the
attached Schedule or such revised terms as may from time to time be notified to
DISTRIBUTOR.
Article 8. Stocks.
8.1 For the first six months of sale of any PRODUCT or brand size, minimum
stocks in DISTRIBUTOR's central and provincial warehouses will be as
shown on the attached Schedule.
8.2 Thereafter, minimum stocks of any PRODUCT or brand size in
DISTRIBUTOR's central and provincial warehouses will be, for any given
month, the monthly average of DISTRIBUTOR's direct sales to the trade
during the preceding six months, multiplied by the index number shown
on the attached Schedule.
8.3 DISTRIBUTOR shall bear all costs relating to stocks whether or not in
excess of the minimum.
<PAGE> 4
8.4 DISTRIBUTOR's obligations as to hygiene standards, cleanliness and
manner of stocking shall be in accordance with the Guidelines for
Warehousing provided from time to time by P&G. P&G may make
suggestions regarding the warehousing procedures applicable to the
PRODUCTS or to the manner of use of the warehousing facilities. The
implementation of such suggestions shall not in any way relieve
DISTRIBUTOR of its responsibilities for the PRODUCTS whilst in
DISTRIBUTOR's possession.
Article 9. DISTRIBUTOR's Direct Sales to Trade.
9.1 DISTRIBUTOR shall invoice the customer to which it sells directly from
its stocks and bear all resulting credit and collection risks.
9.2 Unless requested by P&G to extend less favorable terms, DISTRIBUTOR
shall extend credit to the trade on terms at least as favorable to the
customer as the credit terms extended in the TERRITORY by the leading
brands competitive with the PRODUCTS.
Article 10. P&G's Indent Sales to the Trade.
10.1 P&G reserves the right, for itself and its affiliated companies, to
effect sales of the PRODUCTS, herein called indent sales, directly to
customers in the trade in the TERRITORY.
10.2 Indent sales shall be invoiced at prices which will result in landed
cost to the customer not lower than DISTRIBUTOR's lowest selling price
to the trade as shown on the price structures. P&G shall inform
DISTRIBUTOR of its acceptance of all indent orders giving the names of
the customers and the terms of sale.
10.3 On indent sales, whether or not made against orders forwarded to P&G
by DISTRIBUTOR, P&G shall allow DISTRIBUTOR a commission as shown on
the attached Schedule.
10.4 DISTRIBUTOR shall bear all credit and collection risks on indent sales
made against orders forwarded by DISTRIBUTOR to P&G.
Article 11. P&G Sales Outside the Trade.
P&G reserves the right, for itself and its affiliated companies, to fill orders
for the PRODUCTS received directly from governments, or from companies,
institutions or international organizations, which maintain commissaries in the
TERRITORY for supplying their own personnel, or from shipchandlers in the
TERRITORY, who re-sell for eventual consumption outside the TERRITORY. On such
sales DISTRIBUTOR shall not be entitled to any remuneration or compensation.
<PAGE> 5
Article 12. Sales Promotion and Advertising.
12.1 P&G will initiate at its discretion and control, sales promotion and
advertising of the PRODUCTS in the TERRITORY.
12.2 Upon P&G's request and instructions, DISTRIBUTOR shall arrange sales
promotion and advertising for P&G's account. DISTRIBUTOR shall not
bear any of the costs related thereto. P&G alone shall bear such
costs provided they have received P&G's prior approval in writing and
are fully substantiated.
12.3 DISTRIBUTOR shall refrain from promoting or advertising the PRODUCTS
in the TERRITORY at its own expense.
Article 13. Reporting.
13.1 As requested by P&G, DISTRIBUTOR shall make detailed reports on sales,
stocks, customer purchase and credit records, sales promotion and
advertising and DISTRIBUTOR's costs. Such reports shall be
substantiated by DISTRIBUTOR to the extent P&G deems necessary.
13.2 DISTRIBUTOR shall, at P&G's request, provide P&G with statistical and
economic data and with information on competitors' activity in the
TERRITORY.
Article 14. Competitive or Damaging Goods.
14.1 During the term of this Agreement, DISTRIBUTOR shall not, either
directly or indirectly, import or sell or promote the sale of any
goods which would compete with the PRODUCTS.
14.2 During the term of this Agreement, DISTRIBUTOR shall not in any way
store or handle, together with the PRODUCTS, goods which by their
nature would be likely to alter or damage the PRODUCTS.
14.3 In view of P&G's widespread interests, DISTRIBUTOR shall advise P&G
whenever it is about to accept new agencies or distributorships for
any type of goods, or where DISTRIBUTOR takes on new clients purely
for the warehousing and delivery of their goods.
<PAGE> 6
Article 15. Trademarks.
15.1 DISTRIBUTOR acknowledges that the ownership of and all rights in any
advertising or promotional material used with the PRODUCTS and the
trademarks used on or with the PRODUCTS, as well as all trademarks
registered by P&G or its affiliated companies, reside in and shall
remain exclusively in P&G or its affiliated companies. DISTRIBUTOR
agrees that it will acquire no right, title or interest over such
advertising or promotional material or in any of said trademarks by
reason of this Agreement.
15.2 DISTRIBUTOR shall take no action with respect to said advertising or
promotional material or trademarks or with respect to any third
party's attempt to use or appropriate the same or similar trademarks
without first obtaining P&G's approval in writing.
15.3 DISTRIBUTOR shall immediately notify P&G of any infringement or any
attempt to appropriate the same or similar advertising or promotional
material or trademarks in the TERRITORY which come to DISTRIBUTOR's
attention, and shall co-operate in taking such action as P&G may deem
necessary in connection with any such infringement or attempt to
appropriate P&G's above-described intellectual property.
Article 16. Regulations and Product Quality.
16.1 DISTRIBUTOR shall comply with all regulations and requirements of the
government or other authorities in the TERRITORY relating to the
importation, storage, distribution and sale of the PRODUCTS and shall
hold P&G harmless for any failure to do so. DISTRIBUTOR shall assist
P&G in obtaining registrations and further ensure that the
registration of each of the PRODUCTS with the appropriate authorities
is not allowed to lapse provided that any cost incurred by the
DISTRIBUTOR in initially obtaining and renewing such registrations
will be reimbursed by P&G.
16.2 DISTRIBUTOR shall promptly advise P&G of the practical implications of
the laws and regulations promulgated in the TERRITORY affecting the
PRODUCTS, including labelling. DISTRIBUTOR shall also advise P&G with
regard to the correctness of the translation into Chinese of the
labels for the PRODUCTS.
16.3 P&G shall take all reasonable steps to ensure that PRODUCTS shipped to
DISTRIBUTOR are in good and merchantable quality at the time of
shipment to DISTRIBUTOR. P&G shall indemnify DISTRIBUTOR for all
claims, demands or costs arising out of any breach by P&G of this
obligation.
<PAGE> 7
Article 17. Relations with Third Parties.
17.1 P&G and DISTRIBUTOR shall keep secret and shall not disclose to any
third party, even after termination of this Agreement, any information
on the business of the other acquired by reason of or in connection
with this Agreement. This shall include P&G's trade secrets, costs
and expenditures, methods, processes, techniques and plans particular
to P&G. DISTRIBUTOR will regard as trade secrets and maintain in the
strictest confidence all information, materials and plans given to it
in relation to the marketing of the PRODUCTS or developed by
DISTRIBUTOR specifically for the marketing of the PRODUCTS.
DISTRIBUTOR will only disclose such matters to those individuals,
whether inside or outside its organization, who must be aware of such
matters in order for DISTRIBUTOR to perform under this Agreement.
17.2 During the term of this Agreement, P&G shall be free to negotiate or
contract with third parties for the future distribution of the
PRODUCTS within the TERRITORY and DISTRIBUTOR shall be free to
negotiate or contract with third parties for the future distribution
of goods competitive with the PRODUCTS within the TERRITORY, provided
that in either case any such distribution is to take place only on
termination of this Agreement.
Article 18. Revision of Schedules and Price Structures.
18.1 The attached Schedule and any revisions thereof and the successive
Price Structures that P&G will from time to time send to DISTRIBUTOR
shall form part of the present Agreement and shall supersede versions
of the Schedules and of Price Structures bearing earlier dates and
shall be effective, from their dates, as integral parts of this
Agreement.
18.2 DISTRIBUTOR's approval of revised Schedules shall be required only as
regards any addition of new PRODUCTS to those listed on the attached
Schedules or any reduction of DISTRIBUTOR's margin on direct sales or
commission on indent sales.
18.3 As used in this Agreement the words "attached Schedule" mean the
Schedule attached to this Agreement at the date of its execution and
any supersedures thereof.
Article 19. Effect of Waiver.
No departure from the terms of this Agreement shall obligate any party to
permit any subsequent departure and no waiver of any of the provisions of this
Agreement shall be deemed to be a waiver thereafter of any such provision or of
any succeeding breach of any such provision.
<PAGE> 8
Article 20. Titles.
The several titles in this Agreement and in the attached Schedule are inserted
only for convenience of reference and shall not be deemed in any way to limit
or affect the provisions to which they relate. The same shall apply to the
titles in any supersedures of the said Agreement and Schedule and in any
supplemental contracts.
Article 21. Termination.
21.1 Within the first two years following the effective date mentioned in
Article 1.1 hereof this Agreement may be terminated at any time with
or without stating cause by either party giving the other 180 days
notice. Thereafter it may be terminated at any time by either party
giving to the other 60 days notice.
21.2 This Agreement may be terminated at once by either party giving notice
to the other, if the other is insolvent or has committed an act of
bankruptcy or has compounded with creditors or disposed of its
business or principal interests therein or if the bulk of its business
or property has been sequestrated, confiscated or nationalized or if
there has occurs a substantial change in ownership or administrative
control of the party.
21.3 P&G may at any time elect to terminate this Agreement at once, without
stating cause or by stating cause other than those mentioned in
Section 21.2, by giving DISTRIBUTOR notice of such election. P&G
shall then be obligated to compensate DISTRIBUTOR by granting it a
termination allowance equal to its margin on direct sales to the trade
on 180 days' average business and its commission on indent sales on
180 days average business during the first two years and thereafter 60
days average business for both direct and indent sales. A day's
average business shall for both direct sales and indent sales be
defined as the daily average of such sales of the PRODUCTS in the
TERRITORY during the six months immediately preceding the month of
termination.
21.4 If notice has been given by either party as provided in Section 21.1,
P&G may, at any time within the notice period. elect to terminate
this Agreement at once, without stating cause or by stating cause
other than those mentioned in Section 21.2, by giving DISTRIBUTOR
notice of such election. P&G shall then be obligated to compensate
DISTRIBUTOR by granting it the margin, as defined in Section 21.3, on
direct sales to the trade and its commission on indent sales on as
many days' average business as there are days to run between the date
of notice of election and the date set for termination in the first
notice of termination given pursuant to Section 21.1 but, in any
event, on not less than thirty (30) days' average business. A day's
average business shall be defined as in Section 21.3.
<PAGE> 9
21.5 All notices given pursuant to this Agreement shall be by registered
letter addressed to P&G or DISTRIBUTOR at their respective addresses
shown hereinabove. The period of notice shall count from the date of
posting of the letter.
Article 22. Settlements Following Termination.
22.1 Upon termination of this Agreement, DISTRIBUTOR shall fill orders
accepted by it prior to termination but shall otherwise cease to sell
the PRODUCTS, except at P&G's request as provided in this Section.
DISTRIBUTOR shall sell and P&G shall purchase or cause to be purchased
from DISTRIBUTOR within thirty (30) days after termination
DISTRIBUTOR's stocks of PRODUCTS that are in excellent saleable
condition at the original actual landed cost in DISTRIBUTOR's central
and provincial warehouses. DISTRIBUTOR shall assign and make
available such stocks to any purchaser designated by P&G within seven
(7) days of P&G's request to do so. Stocks not in excellent saleable
condition will be disposed of in a manner mutually agreed upon at
DISTRIBUTOR's expense.
22.2 P&G shall have no obligation to purchase the stocks of PRODUCTS or of
promotional materials held by the trade at any time.
22.3 DISTRIBUTOR shall assign, at P&G's request, to any individual or
company named by P&G all trading licenses or quotas and any rights or
privileges acquired by DISTRIBUTOR in connection with its
distributorship of the PRODUCTS which are necessary or useful for the
importation or handling of P&G goods in the TERRITORY. These
assignments shall be made by DISTRIBUTOR within seven (7) days of
P&G's request and no compensation shall be due to DISTRIBUTOR by
reason of these assignments.
22.4 Compensation payable to DISTRIBUTOR pursuant to Section 21.3 or to
Section 21.4 shall be credited by P&G to DISTRIBUTOR's account no
later than sixty (60) days after termination.
22.5 Any claim, the cause of which has arisen during the term of this
Agreement, which is not submitted and properly substantiated within
the sixty (60) days following termination shall be deemed waived and
shall be conclusively barred from assertion by the claimant unless the
delay in submission or substantiation is due to circumstances beyond
the claimant's control.
22.6 Except for compensation as provided in Section 21.3 and in Section
21.4 no indemnity, claim or compensation shall be due to either party
by reason solely of termination.
<PAGE> 10
Article 23. P&G's Policy on Payments.
P&G does not make any special payments whatsoever, in cash or in kind, either
directly or indirectly, to any third party with a view to influencing unduly
the decision of such third party in order to obtain any benefit or advantage
whatsoever. Nothing herein authorizes DISTRIBUTOR to make any such payment,
either directly or indirectly, in the performance of its obligations hereunder
nor shall P&G reimburse any such payments.
Article 24. Jurisdiction.
24.1 This Agreement supersedes and replaces all previous arrangements in
favour of DISTRIBUTOR for the sale of TEMPO in China.
24.2 This Agreement shall be governed by Swiss Law.
24.3 Any dispute arising directly or indirectly out of this Agreement shall
be settled by arbitration to take place in Geneva, Switzerland,
following the proceedings established by the Code of Civil Procedure
of the Canton of Geneva.
An arbitrator shall be chosen by each party and the two arbitrators
shall choose a third arbitrator. In the event of one party failing to
exercise its choice or in the event the two arbitrators fail to agree
on the choice of the third, the missing arbitrator shall be appointed
by the President of the Supreme Court of the Canton of Geneva at the
request of one of the parties.
GRANDOM DRANSFIELD (INT'L) & CO., LTD PROCTER & GAMBLE AG
By: /s/ ILLEGIBLE By: /s/ ILLEGIBLE
------------------------------------- ---------------------------------
Place: Hong Kong Place:
---------------------------------- ------------------------------
Date: Date:
---------------------------------- ------------------------------
<PAGE> 11
SCHEDULE ATTACHED TO THE DISTRIBUTOR'S AGREEMENT BETWEEN
PROCTER & GAMBLE AG
AND
Grandom Dransfield (Int'L) & Co., Ltd. 36-42 Pok Man Street. 1-2F, Mongkok,
Kowloon, Hong Kong.
This Schedule forms part of the Distributor's Agreement for the territory of
the People's Republic of China "PRC", which takes effect from April 1, 1995.
For the purpose of the above Agreement and this schedule the Peoples Republic
of China shall mean the following provinces, autonomous regions and
municipalities: Beijing, Tianjin, Hebei, Shanxi, Inner Mongolia, Liaoning,
Jilin, Heilongjiang, Shanghai, Jiangsu, Zheijiang, Anhui, Fujian, Jiangxi,
Shandong, Henan, Hubei, Hunan, Guangdong, Guangxi, Sichuan, Guizhou, Yunnan,
Tibet, Shaanxi, Gansu, Qinghai, Ningxia, Xinjiang, Hainan.
1. Products, margins, commissions, stocks
<TABLE>
<CAPTION>
Minimum Stocks
--------------
<S> <C> <C> <C> <C>
Products covered DISTRIBUTOR's DISTRIBUTOR's First 6 months; After 6 months:
by the Agreement Margin on Direct Commission on Number of Cases Index Number
Sales, as a Indent Sales, as at all times
percentage of a percentage of
price to the landed cost
China Trader
(Section 1.1) (Section 3.1c) (Section 10.2) (Section 8.1) (Section 8.2)
Physical cases In line with
('000) P&G's launch
plans
TEMPO up to 280 11%
DEMAK'UP 280-320 10% 5% 1
over 320 9%
</TABLE>
l. During the first year of this Agreement the DISTRIBUTOR shall be
entitled to a margin at the rate specified above on each successive
level of sales
2. During the second and subsequent years of this Agreement DISTRIBUTOR's
margin shall be at the single rate determined in accordance with the
above scale based on DISTRIBUTOR total sales to the trade in the
preceding year.
3. For the purpose of calculating the margin, price to China Trader shall
mean the price indicated under this heading in the price structure,
whether or not sales are made to the China Trader or other customers
of DISTRIBUTOR in the TERRITORY.
4. Any product or brand not listed above which Procter & Gamble may from
time to time sell to the Distributor shall be sold on a non-exclusive,
non agency, non commission basis and shall not be part of this
Agreement until such time as the parties agree to the inclusion of
such products/brands into a formal revision of this Schedule.
<PAGE> 12
2. Terms of Sale to DISTRIBUTOR:
Pricing Terms CIF Hong Kong Part.
3. Terms of Sale from Distributor to the Trade
In accordance with Article 9 of the Agreement.
4. Currency, Place and Terms of Payment
Payment in Hong Kong Dollars to the account of Procter & Gamble AG
with the Union Bank Switzerland, Lucerne, Switzerland to be received
not more than 45 days from the Bill of Lading date. Payment shall be
secured by an irrevocable Standby Letter of Credit in terms, and
confirmed by a Bank in Switzerland both acceptable to P&G.
5. Special Terms
a. In Derogation from Article 4.1 DISTRIBUTOR shall be entitled to
recover from his resale price, in addition to the margin:
- China Trader's Commission at PRC first port,
- financing
- landing and handling charges
- Freight and insurance from in Hong Kong to the first port in the
PRC, (as reflected in the price structures issued from time to time to
the DISTRIBUTOR).
b. In derogation of Article 14.1 DISTRIBUTOR may continue to distribute
the facial tissue KARE until such time as P&G makes available to
DISTRIBUTOR the facial tissue TEMPO at which time DISTRIBUTOR has
volunteered and agreed to relinquish the distribution of the facial
tissue KARE.
GRANDOM DRANSFIELD (INT'L) & CO., LTD PROCTER & GAMBLE AG
By: /s/ ILLEGIBLE By: /s/ ILLEGIBLE
------------------------------------- ---------------------------------
Place: Hong Kong Place:
---------------------------------- ------------------------------
Date: July 22, 1995 Date:
---------------------------------- -------------------------------
<PAGE> 1
EXHIBIT 10.13
Contract on Transfer of Land
Transferor: Xinhui City Sanjiang Town Industry Overall Co.
(hereinafter referred to as Party A)
Transferee: Guangzhou Dransfield Paper Ltd. (hereinafter referred to as
Party B)
In order to develop economy and through joint consultation of Party A
and Party B, Party A is willing to transfer the right of use of the self-owned
land located at the western side of Sanjiang Paper Factory within Baimiao
Industrial Zone, Sanjiang Town to Party B for use with compensation. For the
purpose of defining the transfer and the responsibilities of duties, rights and
benefits in the use of land, Party A and Party B have entered into the
following terms for joint performance.
I. Area and price of the transferred land, term of use and method
of payment of the transfer fee.
1. The area of the transferred land is approximately 85mu (red
line map attached. The area shall be subject to the actual measurement). The
transfer fee per mu is: a. present condition without land-filling: RMB33,000
yuan; b. land-filling from the present condition to the level with the cement
highway at either side by filling 30cm; RMB45,000 yuan.
2. The term of use by Party B of the transferred land is 50 years.
When the term expires, Party A and Party B shall deal with the case according
to the State policy then enforced.
3. The method of payment of the transfer fee: Party B shall pay an
amount of 20% of the total transfer fee (approximately 705,000
<PAGE> 2
yuan) to Party A in one lump-sum according to the taken-over area as the
initial cost for land-filling one week within the execution of the Contract,
and the remaining transfer fee shall be paid to Party A on a monthly basis
according to the progress of land-filling carried out by Party A. When the
land-filling work is completed, and is inspected and accepted by the two
parties, Party B shall pay all the payables to Party A within one month.
II. Responsibilities of Party A
1. After the Contract has come into effect, Party A shall complete
all the works on the transferred land according to the requirements of "three
connections and one levelling" by the end of January, 1997 (land-filling of
approximately 60mu, connection of water for daily living and electric power to
the said land; the subterranean work beneath the cement highway with water
absorption points).
2. Responsible to provide Party B with the certificate of land-use
right of the said transferred land and the expenses thereof shall be borne by
Party A.
III. Responsibilities of Party B
1. To use the land or transfer the same within the limit as
permitted by the policies, laws and regulations of the State, but the transfer
fee shall be borne by Party B.
2. Water, electric power and all facilities used for the purpose
of the enterprise production shall comply with the pertinent regulations of the
State. It shall solely responsible for all expenses incurred and
responsibilities.
2
<PAGE> 3
3. Responsible for the fee payment for the use of the same
pursuant to the pertinent provisions of the State province and city (county).
4. During the operating period, observe the disciplines and laws,
pay taxes pursuant to rules and regulations, responsible for its profits and
losses, and take up sole responsibility for all matters during the operation
period.
5. When Party B uses the said land to set up factory, it shall
consider to arrange jobs for Party A's staff in the locality in priority.
6. Party B shall be exempted from the comprehensive management
fee for three years. Annual payment of 25,000 yuan shall be paid to Party A
starting from 4th, 5th, and 6th year respectively. Thereafter the fee shall be
fixed separately (inclusive water resources fee, embankment maintenance, soldier
co-ordination, mobile population, labour, inflow population and public security
management).
IV. Liabilities for breach of contract:
1. After the Contract has come into effect, if Party A recovers
the transferred land before the expiration date, it shall be deemed as a breach
of contract. Party A shall indemnify Party B an amount of 20% (in RMB) of the
total transfer fee of the said land, and shall be liable to the compensation
for all the amount of investment injected by Party B.
2. After the Contract has come into effect, if Party B withdraws
before the expiration date, it shall be deemed as a breach of contract. Party B
shall indemnify Party A an amount of 20% (in RMB) of the total transfer fee of
the said land. It shall also be liable to
3
<PAGE> 4
compensate Party A for the expenses and losses thus incurred. In addition, the
payment made by Party B to Party A shall not be refunded.
V. Other provisions
1. During the performance of this Contract, should there be any
conflicts between the terms of this Contract and the policies, laws and
regulations of the State, Party A and Party B shall implement the policies,
laws and regulations of the State, and shall carry out further consultation for
the solution.
2. The two parties may carry out separate consultation related to
matters not covered in this Contract during its performance.
3. This Contract shall forthwith come into effect after it is signed
and affixed with seals by the two parties. The witness charges shall be
equally shared by Party A and Party B.
This Contract is in 4 original authentic copies. Party A, Party B, the
witnessing unit and the competent authorities of Party A shall each hold one
copy and all of them are equally valid.
Party A: Xinhui City Sanjiang Party B: Guangzhou Dransfield
Town Industry Overall Co. Paper Ltd. (Seal affixed)
(Seal affixed)
Legal representative: (Signed) Legal representative: (Signed)
Competent authorities of Party A: Witnessing unit:
Xinhui City Sanjiang Town
People's Government (Seal affixed)
Legal representative: (Signed) Person in charge:
Dated 6th November, 1996
4
<PAGE> 5
SUPPLEMENTARY AGREEMENT TO CONTRACT ON TRANSFER OF LAND
I. Party A shall deliver the land (approximately 20mu) used for
the storage of equipment before 5th December and Party B shall remit 20% of the
amount (RMB705,000 yuan) to the designated account of Party A before 12th
November, 1996. Otherwise, the economic responsibilities thus arising shall be
borne by the breaching party.
II. Party A shall allow Party B to temporarily keep the equipment
on the borderland to the west of the land used by Party B.
III. Party A agrees to reserve 40mu of land on the borderland to
the north of the land used by Party B for its development. The price shall be
separately fixed in the meantime. However, if Party B fails to use such land
after 5 years, Party A shall be entitled to make a separate arrangement.
IV. Party A shall be responsible to remove the original electric
power supply lines and cables (other than communication lines) on the land used
by Party B.
This Agreement is in 4 original authentic copies. Party A, Party B,
the witnessing unit and the competent authorities of Party A shall each hold
one copy and all of them are equally valid as the terms of the Contract for the
performance by the two parties.
5
<PAGE> 6
Party A: Xinhui City Sanjiang Party B: Guangzhou Dransfield
Town Industry Overall Co. Paper Ltd. (Seal affixed)
(Seal affixed)
Legal representative: (Signed) Legal representative: (Signed)
Competent authorities of Party A: Witnessing unit:
Xinhui City Sanjiang Town
People's Government (Seal affixed)
Legal representative: (Signed) Person in charge:
Dated 6th November, 1996
6
<PAGE> 1
EXHIBIT 16
Hogan & Slovacek
A Professional Corporation
Certified Public Accountants
Oklahoma City - Tulsa
301 Northwest 63rd, Suite 290
Oklahoma City, OK 73116
405-848-2020 - Fax (405) 848-7359
March 6, 1997
Dransfield China Paper Corporation
c/o Mr. Thomas J. Kenan
Fuller, Tubb & Pomeroy
201 Robert S. Kerr Avenue, Suite 800
Oklahoma City, Oklahoma 73102-4292
Gentlemen:
We agree with the filing of the 6K dated March 6, 1997 for Dransfield China
Paper Corporation.
Very truly yours,
/s/ Hogan & Slovacek
