Exhibit 10.2
ARTICLES OF ASSOCIATION
of
"SHIJIAZHUANG - UNIGENE PHARMACEUTICAL
CORPORATION LIMITED"
June 15, 2000
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TABLE OF CONTENTS
Chapter I GENERAL PROVISIONS.............................................3
Chapter II PURPOSE AND SCOPE OF OPERATION................................3
Chapter III TOTAL INVESTMENT AND REGISTERED CAPITAL......................4
Chapter IV BOARD OF DIRECTORS............................................5
Chapter V MANAGEMENT ORGANIZATION........................................7
Chapter VI CONFIDENTIALITY...............................................9
Chapter VII FINANCE AND ACCOUNTING.......................................9
Chapter VIII PROFITS AND LOSSES.........................................10
Chapter IX STAFF AND WORKERS............................................11
Chapter X TRADE UNION...................................................11
Chapter XI TERM, TERMINATION AND LIQUIDATION............................12
Chapter XII RULES AND REGULATIONS.......................................13
Chapter XIII APPENDICES.................................................13
Exhibit A............................................................i
Exhibit B...........................................................ii
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Chapter I GENERAL PROVISIONS
Article 1. Pursuant to the Law of the People's Republic of China (the "PRC") on
Joint Ventures Using Chinese and Foreign Investment and other relevant Chinese
laws and regulations and the Joint Venture Contract (the "Contract") between
Shijiazhuang Pharmaceutical Group Company, Ltd. ("Party A") and Unigene
Laboratories, Inc. ("Party B") (each of Party A and Party B, a "JV Party") for
the establishment of "Shijiazhuang - Unigene Pharmaceutical Corporation Limited"
(the "JV") signed on the 15th day of June, 2000, these Articles of Association
for the JV are hereby adopted by Party A and Party B.
Article 2. The name of the JV in Chinese is:
and the name of the JV in English is:
"Shijiazhuang - Unigene Pharmaceutical Corporation Limited".
Article 3. The JV's address: High and New Technology Industrial Development
Zone, Shijiazhuang, Hebei Province.
Article 4. Parties to the JV:
Party A: Shijiazhuang Pharmaceutical Group Company, Ltd.
Legal Address: 276 Zhongshan West Road Shijiazhuang, Hebei Province, PRC
Legal Representative: Mr. Cai Dong Chen, Chairman and President
Telephone: 0086-311-7039508
Fax: 0086-311-7039608
Party B: Unigene Laboratories, Inc.
Legal Address: 110 Little Falls Road, Fairfield, New Jersey, 07004, USA
Legal Representative: Dr. Warren P. Levy, President
Telephone: 001-973-882-0860
Fax: 001-973-227-6088
Article 5. The JV takes the form of a Limited Liability Company.
Article 6. The JV is a legal person of the PRC under the jurisdiction and
protection of the laws of the PRC. All the activities of the JV shall conform to
the pertinent laws, decrees, rules and regulations of the PRC.
Chapter II PURPOSE AND SCOPE OF OPERATION
Article 7. The purpose of the JV is to use advanced technology and scientific
operational management expertise to carry out the manufacture of
pharmaceutical-grade recombinant salmon
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*omitted and filed separately with the United States Securities and Exchange
Commission pursuant to a request for confidential treatment.
calcitonin (the "Calcitonin") in injectable and nasal formulations (the "JV
Products") using the processes of Party B that include the use of an amidating
enzyme that the JV will purchase from Party B (the "AE") and the distribution
and sale of JV Products in the PRC and such other regions as decided by the
Board of Directors of the JV (the "Territory") in order to obtain a satisfactory
return on investment for all parties.
Article 8. The business scope of the JV is (a) to construct, equip, own, manage,
and operate a manufacturing facility in the PRC that has the capacity to
manufacture Calcitonin in accordance with the terms and conditions of the
Contract (the "JV Facility") and prepare, fill, label and package injectable and
nasal formulations thereof; and (b) to market, distribute and sell the JV
Products in the Territory.
Article 9. Scale of Production:
1. Upon completion of the JV Facility, the JV intends its scale of production to
be an annual output of * of bulk Calcitonin and JV Products in the following
quantities:
o *
o *
o *
2. Proper adjustment will be made to the intended scale of production to reflect
the development of operations and market changes.
Chapter III TOTAL INVESTMENT AND REGISTERED CAPITAL
Article 10. The total investment of the JV is *
Article 11. The registered capital of the JV is * The contributions from Party A
and Party B are as follows:
Party A shall contribute the Renminbi equivalent of *, in cash, to the capital
of the JV, for an equity share of 55%.
Party B shall contribute cash and technology valued, in the aggregate, at * for
an equity share of 45%.
Article 12. Both parties shall make their respective contributions at the time
and in the manner described in the Contract. After capital contribution has been
effected by a party, the amount of such contribution shall be recorded in the
JV's accounts and a certificate of capital contribution shall be issued to such
party by the JV (a "Certificate of Capital Contribution").
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*omitted and filed separately with the United States Securities and Exchange
Commission pursuant to a request for confidential treatment.
The Certificate of Capital Contribution will include the following items: the
name of the JV, the establishment date of the JV, the names of the joint venture
parties and their respective contributions to date, the date of the applicable
contribution, and the date of issuance of the Certificate of Capital
Contribution.
Article 13. Neither Party may sell, assign, transfer, convey, pledge, encumber
or liquidate, in whole or in part, its rights under the Contract, except as
provided for in Chapter XIII of the Contract.
Article 14. Any change in the registered capital shall be made only in
accordance with the Contract.
Chapter IV BOARD OF DIRECTORS
Article 15. The Board of Directors of the JV shall be the highest body of
authority of the JV.
Article 16. The Board of Directors of the JV shall decide all major issues
concerning the JV. Without limiting the generality of the foregoing, the major
authorities and responsibilities of the Board of Directors shall include the
following:
1. Approving on an annual basis the operating plan;
2. Investigating and approving any expenditures by the JV in excess of *;
3. Investigating and approving the obtainment by the JV of all third
party financing;
4. Selecting and approving any foreign country market regions for sale of
the JV Products and determining the ratio of export sales to domestic
sales;
5. Examining and approving the fiscal budget, financial statements and
balance sheets of the JV;
6. Approving any change to the profit allocation procedures set forth in
Article 58 of the JV Contract, approving any failure to make a
distribution of profits otherwise required by Article 58 of the JV
Contract, and determining and approving the loss offset plan for the
JV;
7. Approving any change in the registered capital for the JV;
8. Approving the transfer of the registered capital of the JV to a third
party;
9. Approving any merger, separation, acquisition, dissolution,
liquidation or alteration of the JV;
10. Amending the Articles of Association;
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11. Formulating and approving the major rules and regulations of the JV;
12. Formulating the management structure of the JV;
13. Determining the terms of employment, termination and treatment of the
general manager, deputy general manager, chief engineer, chief
accountant and chief auditor of the JV;
14. Approving the marketing and/or development of products by the JV other
than the JV Products, including without limitation the use of the
Marks (as defined in the JV Contract) in advertising and promotional
materials;
15. Approving the banks at which to open accounts for the JV;
16. Approving insurance carriers to provide insurance coverage to the JV;
17. Approving the accounting firm to provide accounting services to the
JV;
18. Approving the transfer, sale or licensing to a third party of any
improvements in technology that belong to the JV or contractually may
be transferred, sold or licensed by the JV;
19. Determining allocations to the Three Funds (as defined below); and
20. Other issues of importance so deemed by the Board of Directors.
Article 17. The Board of Directors shall be composed of five (5) directors.
Three (3) directors will be selected by Party A and two (2) directors will be
selected by Party B. Each director shall be appointed for a term of four (4)
years, subject to renewal, but may be replaced at any time during his term by
the party that appointed him, upon prior written notice to the other party.
Article 18. The Board of Directors of the JV shall have one (1) director who
shall serve as Chairman and one (1) director who shall serve as Vice-Chairman.
The Chairman shall be appointed by Party A, and the Vice-Chairman shall be
appointed by Party B. The Chairman of the Board of Directors is the legal
representative of the JV. When the Chairman is unable to perform his
responsibilities, the Vice-Chairman shall be authorized to represent the JV.
Article 19. A Board of Directors' meeting is to be convened at least once a
year. Four (4) directors present in person or by proxy shall constitute a quorum
for the transaction of business. No business shall be transacted in the absence
of a quorum. The Chairman of the Board shall convene interim Board meetings upon
proposal by two or more directors.
Article 20. Board meetings shall be called and presided over by the Chairman.
The Vice-Chairman will call and preside over the board meeting in the absence of
the Chairman. Each director (chairman and deputy chairman included) shall only
have one vote.
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Article 21. Written notice shall be provided by the Chairman or the
Vice-Chairman, as appropriate, to all Directors forty-five (45) days prior to
the date of each Board meeting, which notice shall state the time and place of
the meeting and the topics for discussion at such meeting. No topic that has not
been included in such notice shall be acted upon at a meeting without the
unanimous consent of all Directors. Board meetings may be conducted with the
assistance of modern communication facilities, including, without limitation, by
means of telephone conference or similar communications equipment by which all
persons participating in the meeting can hear, and make himself heard, to the
other participants, or in such other manner as unanimously agreed by the Board.
Article 22. When a director is unable to attend a Board of Directors meeting, he
may issue a proxy in writing entrusting another to represent him in attendance.
Without being present or issuing a duly appointed proxy for a meeting, a
director will be regarded as absent from the meeting.
Article 23. All Board meetings shall be conducted both in Chinese and English.
All topics for Board meeting discussion and all minutes and resolutions by the
Board shall be written in both English and Chinese which versions shall each
have equal force. Minutes of all decisions or other actions taken at any meeting
of the Board shall be circulated to all directors as soon as practicable after
such meeting. The minutes of each meeting shall be submitted for approval,
subject to appropriate amendment, at the next meeting of the Board. Once
approved, the minutes of any meeting shall be signed by the Chairman and
Vice-Chairman and entered into a minute-book that shall be kept at the JV's
principal place of business and shall be conclusive of the proceedings in
question. Such minute-book shall be available for inspection by any director or
his authorized representative at any reasonable time. A copy of the signed
minutes of each meeting shall be sent to each director.
ARTICLE 24. Any action required or permitted to be taken at any meeting of the
Board of Directors may be taken without a meeting if all members of the Board of
Directors consent thereto in writing and if such writing or writings are filed
with the minutes of proceedings of the Board of Directors. Such consent shall
have the same effect as a unanimous vote of the Board for all purposes.
ARTICLE 25. The vote of four of the five members of the Board of Directors (or
their duly appointed proxies) shall be sufficient to constitute action of the
Board on all matters except the matters set forth in sections 1-10, 14 and 18 of
Article 16, as to which the Board may take action only by unanimous decision of
the five (5) members (or their duly appointed proxies).
Chapter V MANAGEMENT ORGANIZATION
ARTICLE 26. The Board of Directors of the JV shall establish operation and
management organs for the JV, to be responsible for daily operational and
managerial work. Each organ shall have a department manager reporting to the
general manager. The structure of organization and responsibilities for each
position shall be proposed by the general manager and approved by the Board of
Directors.
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ARTICLE 27. The JV shall establish an Advisory Board that will provide business
development, marketing and technological assistance to the JV in accordance with
Exhibit A attached hereto.
ARTICLE 28. The JV shall have one general manager, who shall be selected by
Party B, and one deputy general manager, who shall be selected by Party A.
Article 29. The term of service of each of the general manager and the deputy
general manager is four (4) years, which term may be renewed by the Board of
Directors. The general manager and the deputy general manager may be removed for
cause by the vote of the Board of Directors and otherwise by the selecting
party. Upon removal of the general manager or the deputy general manager or
expiration of their respective terms without renewal, the party that selected
the general manager or deputy general manager, as the case may be, shall have
the right to select the replacement general manager or deputy general manager,
as the case may be.
Article 30. The qualifications of the general manager are described in Exhibit B
attached hereto. The qualifications and responsibilities of the deputy general
manager shall be established by the general manager and approved by the Board.
Article 31. The general manager shall report to the Board of Directors, and
shall be responsible for the daily management of the JV. Without limiting the
generality of the foregoing, the general manager shall be vested with the
following authorities and responsibilities:
1. Carrying out various resolutions of the Board of Directors and
organizing and leading the daily operation and management of the
JV;
2. Preparing the JV annual Business Plan;
3. Developing and proposing to the Board of Directors for approval
the internal management structure of the JV;
4. Developing the management systems of the JV;
5. Proposing the nomination and dismissal of the deputy general
manager and persons in charge of finance and accounting for the
JV;
6. Hiring and dismissing other managers or working staff not within
the retaining and dismissal responsibility of the Board of
Directors;
7. Implementing a confidentiality and security policy;
8. Performing Human Resource Management functions; and
9. Other responsibilities assigned to the general manager by the
Board of Directors.
Article 32. The Chairman, Vice-Chairman and directors of the Board of Directors
may not act concurrently in the capacity of the general manager, deputy general
manager or other high-level managerial positions of the JV.
Article 33. The general manager or the deputy general managers may not
concurrently act as general managers or deputy general managers of any other
economic organizations, and may not participate in activities in competition
with the JV.
Article 34. The JV shall establish the position of one chief accountant and one
chief auditor, each to be selected by the Board of Directors.
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Article 35. Both Parties agree that the JV shall operate as an independent
entity from the parent companies. Relationships between the JV and its parent
companies outside the responsibilities described by the Contract and the Article
of Association shall be conducted on an arms-length basis and shall be regarded
as normal business relationships.
Chapter VI CONFIDENTIALITY
Article 36. In order to keep confidentiality of the trade secrets of the JV, the
JV shall establish a Confidentiality Policy, which shall be substantially
similar to the Confidentiality Agreement entered into by and between Party A and
Party B on October 29,1998 and shall comply with Article 74 of the Contract.
Article 37. The JV shall require all directors, managers, employees, staff,
workers, independent contractors, agents and representatives of the JV to agree
to be subject to such Confidentiality Policy in writing, in accordance with the
terms of Article 74 of the Contract.
Chapter VII FINANCE AND ACCOUNTING
Article 38. The financial and accounting system of the JV shall be formulated
according to, and consistent with, the relevant laws and regulations of the PRC.
Article 39. The fiscal year of the JV shall be January 1 through December 31
(the Gregorian calendar year).
Article 40. All vouchers, accounts, books, and financial and reporting
statements shall be written in Chinese. All monthly and annual statements, and
quarterly reports shall be prepared both in Chinese and English with both
versions having equal force and effect. The JV shall render assistance to each
party for review of such documents by such party.
Article 41. The JV shall adopt Renminbi as the standard currency for the keeping
of accounts. Except as otherwise expressly provided herein, the conversion
between Renminbi and other foreign currencies shall be computed at the posted
exchange rate announced by the PRC Administration for Foreign Exchange Control
for the purchase of such currencies on the day payment is made.
Article 42. The JV shall open Renminbi and foreign exchange accounts with a bank
or banks approved to handle foreign currency business by the PRC national
administrative agencies for foreign exchange control, as determined by the Board
of Directors.
Article 43. The JV shall adopt the internationally used accrual system and debit
and credit method for the keeping of accounts.
Article 44. The JV shall keep full and accurate books of account showing all
revenues and disbursements and all assets and liabilities of the JV. Without
limiting the generality of the foregoing, such books of account shall include
the following items:
1. All cash receipts and expenses of the JV;
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*omitted and filed separately with the United States Securities and Exchange
Commission pursuant to a request for confidential treatment.
2. All records of sales, losses and purchases by the JV;
3. The registered capital and liability of the JV;
4. The timing of registered capital contributions, distributions, changes and
assignment.
Article 45. The JV shall provide accounting reports in both English and Chinese
to the Board of Directors and each of Party A and Party B on a quarterly and
annual basis, and shall include such information in the reports to each of Party
A and Party B. The JV's management shall provide the annual report of the JV to
the Board of Directors for approval within two (2) months following the end of
each fiscal year.
Article 46. An annual audit of the JV's accounts shall be carried out by an
internationally known and recognized accounting firm (registered in the PRC)
appointed by the Board of Directors. The auditor shall submit reports to the
Board of Directors and to the general manager. All costs and expenses incurred
in connection with such annual audit shall be borne by the JV. Party A and Party
B shall each have the right to procure a special audit of the JV's books and
records, provided that the external auditor is from an internationally known and
recognized accounting firm, whose reports shall likewise be submitted to the
Board of Directors and the general manager. The costs and expenses incurred in
connection with such additional audit shall be borne by the requesting party,
unless such audit shall disclose one or more errors in the regular audit
totaling at least one percent (1%) of the aggregate expenses of the JV for such
year, in which case the JV shall bear such costs and expenses. Party A and Party
B may designate duly authorized personnel to inspect, at reasonable business
hours, the books and records of the JV at the expense of such party.
Article 47. The period of the capital assets depreciation shall be determined by
the Board of Directors in accordance with the relevant laws and regulations of
PRC.
Article 48. All matters concerning foreign exchange of the JV shall be handled
in accordance with the "Provisional Regulations for Foreign Exchange of the PRC"
and other relevant regulations.
Chapter VIII PROFITS AND LOSSES
Article 49. The Board of Directors shall determine the amounts to be allocated
to the reserve fund, the enterprise expansion fund, and the staff and workers
welfare and incentive fund (collectively, the "Three Funds") before any
distribution of profits is made to Party A and Party B. The JV may not make
allocations to such funds (or any similar funds) if such allocations exceed, in
the aggregate * of the after-tax profits of the JV, without the unanimous prior
consent of the Board of Directors.
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Article 50. Profits of the JV (calculated after (a) repayment of any loans to
third parties (other than Party A or Party B); (b) payment of any and all taxes
owing by the JV; (c) satisfaction of losses for any previous years; and (d)
allocations to the Three Funds in accordance with Article 49)(the "JV Profit")
shall be distributed to Party A and Party B annually in accordance with Chapter
XV of the Contract, unless the Board of Directors unanimously determines that no
such distribution should be made. The distribution of the JV Profit shall be
made within three (3) months of the end of each fiscal year. All distributions
to Party B shall be made in US dollars and all distributions to Party A shall be
made in Renminbi.
Article 51. Neither Party A nor Party B shall have any liability of any sort for
the debts or obligations of the JV beyond their contributions to capital
pursuant to the Contract, except to the extent of any third-party financing
guaranteed by such party pursuant to Article 16 of the Contract.
Chapter IX STAFF AND WORKERS
Article 52. Matters relating to the staff and workers of the JV such as
recruitment, employment, dismissal, resignation, wages, labor insurance, welfare
benefits, incentive and penalty systems, and labor disciplines are to be dealt
with in accordance with "The PRC Labor Law" and other relevant regulations.
Article 53. All staff and workers for the JV shall be recruited through an open
and competitive process from the general public. Employment is to be on merit.
Article 54. The JV has the right to issue warnings, record demerits, and reduce
wages to those staff and workers who violate the rules, policies and disciplines
of the JV. The JV may dismiss those staff and workers who violate the rules,
policies and disciplines of the JV. Such dismissal shall be reported to the
local labor administrative department.
Article 55. The wage system for the staff and workers of the JV shall be decided
by the Board of Directors in accordance with the relevant PRC regulations and
the specific conditions of the JV, and shall be specified in the labor contract.
Matters relating to the recruitment, wage treatment, social insurance, welfare
benefits and standard of travel expenses of high level managerial personnel
shall be subject to approval of the Board of Directors.
Article 56. Matters relating to the welfare benefits, incentives, labor
protection and labor insurance shall be stipulated by the JV in clearly
specified internal policies in order to ensure production and work carried out
under normal conditions by the staff and workers.
Chapter X TRADE UNION
Article 57. Staff and workers of the JV have the right to establish trade unions
and conduct trade union activities in accordance with the "Trade Union Law of
the PRC."
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Article 58. The trade union of the JV, if any, is the representative of the
interests of the staff and workers. Its mission will be to protect the
democratic rights and material interests of the staff and workers, to assist the
JV with the arrangement and reasonable use of welfare and incentive funds, to
organize the staff and workers in the study of political, professional and
scientific and technical knowledge, and develop literary, recreational and
sports activities, and to educate the staff and workers to observe labor
discipline and strive to fulfill various economic tasks of the JV.
Article 59. No trade union activities shall intervene in the regular production
and business activities of the JV. All trade union members must participate in
regular production activities and perform their professional responsibilities.
By the decision of the general manager, the heads of trade union may be engaged
in other job responsibilities.
Article 60. Trade union representatives have the right to attend as nonvoting
delegates, making known the opinions and demands of the staff and workers, at
meetings of the Board of Directors at which such major matters as development
plans and production and operational activities of the JV are under discussion.
Article 61. The trade union of the JV shall participate in the meditation of the
disputes between staff and workers and the JV.
Article 62. In the event of the establishment of a trade union and to the extent
required by applicable law in the PRC, the JV shall each month allot two percent
(2%) out of the total amount of the real wages of the JV's staff and workers for
payment into the trade union fund, for the trade union to use in accordance with
the Regulations of the Trade Union Funds promulgated by the All-China Federation
of Trade Unions of the PRC.
Chapter XI TERM, TERMINATION AND LIQUIDATION
Article 63. These Articles of Association shall come into force and effect, and
the JV shall be deemed to have been established, as of the date of the issuance
of the JV's business license in accordance with the laws of the PRC. Subject to
Article 64, the term of the JV shall be thirty (30) years unless earlier
dissolved in accordance with these Articles of Association.
Article 64. Upon the proposal of one party and unanimous approval by the Board
of Directors, the JV may extend the term of the JV by filing an application for
extension of the JV term with the original examination and approval organ six
(6) months before the date of expiration of the JV term. The JV shall undertake
appropriate registration procedures with the original Administrative Bureau for
Industry and Commerce.
Article 65. The JV shall be dissolved (a) upon expiration of the term of the
Contract, unless extended by the parties thereto, and (b) upon termination of
the Contract, in accordance therewith.
Article 66. Upon the dissolution of the JV, the Board of Directors shall
formulate the procedures and principles for liquidation
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and shall select the members of the liquidation committee, which shall include
at least one representative from Party A and one representative from Party B.
Article 67. The tasks of the liquidation committee shall be to conduct a
complete check of the JV's property and its creditors' rights and debts, to
prepare a statement of assets and liabilities and a list of properties, to
submit a valuation of the property and the basis of calculation, to formulate a
liquidation plan, and to submit these to a meeting of the Board of Directors and
implement them after adoption by the Board of Directors.
Article 68. During the period of liquidation, the liquidation committee shall
represent the JV in suing and being sued. The liquidation expenses (which the
liquidation committee shall ensure are reasonable) and the remuneration of
members of the liquidation committee shall be paid from the existing resources
of the JV and shall be given priority over other obligations of the JV. The
remuneration of members of the liquidation committee shall be subject to
approval by the Board.
Article 69. The property remaining after discharge of all the debts of the JV
(including, without limitation, the payment of any liquidation expense) shall be
distributed in accordance with the respective Distribution Ratios (as defined in
the Contract) of Party A and Party B.
Article 70. Upon completion of the liquidation, the JV is to submit a report to
the original examination and approval organ. Cancellation of registration
procedures are to be undertaken with the Administrative Bureau for Industry and
Commerce and the business license handed in for cancellation. Public
announcement shall be made thereafter.
Chapter XII RULES AND REGULATIONS
Article 71. Regulations and rules to be adopted by the Board of Directors are as
follows:
1. Operation and management rules;
2. Policy for staff and workers;
3. Labor and wages system;
4. Welfare system for staff and workers;
5. Financial and accounting systems;
6. Internal confidentiality and security system;
7. Other necessary rules and regulations.
Chapter XIII APPENDICES
Article 72. Amendments to this Articles of Association shall be adopted by the
unanimous agreement by the Board of Directors and reported to the original
examination and approval organ for approval.
Article 73. These Articles of Association are written in both Chinese and
English, which versions shall each have equal force. The original is made in
eight copies.
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These Articles of Association are signed by representatives of Party A and Party
B in Parsippany, New Jersey, United States of America, on June (month) 15 (day),
2000.
/s/ Cai Dong Chen
-----------------
Legal Representative
SHIJIAZHUANG PHARMACEUTICAL GROUP COMPANY, LTD
/s/ Dr. Warren P. Levy
----------------------
Legal Representative
UNIGENE LABORATORIES, INC.
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Exhibit A.
Advisory Board
The Mission: The Advisory Board shall be a non-standing body of the JV,
established to assist the JV and the General Manager in bringing
advanced business expertise (e.g. marketing, management,
information technology, medical, etc) to the JV. The Advisory
Board shall operate in accordance with the following procedures
and such other procedures as may be established from time to time
by the General Manager or the Board. The membership of the
Advisory Board shall change on an as-needed basis.
1. The Advisory Board shall provide recommendations at the request of the
General Manager with respect to the operation of the JV, including without
limitation with respect to marketing, management, information technology
and medical issues. The General Manager shall determine whether, and the
manner in which, to implement any such recommendations. In the event of
any dispute regarding such matters between a Permanent Member (as defined
below) and the General Manager, such Permanent Member may bring such
dispute to the attention of the Board of Directors. Neither the Advisory
Board nor any of its members in their capacity as such shall have
authority to act for or represent the JV.
2. The General Manager may nominate members of the Advisory Board to the Board
of Directors, who shall have the right to approve or dismiss such members
(the "Permanent Members"). Each Permanent Member shall serve as such for a
term of two (2) years, unless earlier removed by the Board of Directors.
The General Manager may select, or a Permanent Member may nominate for
approval by the General Manager, additional members to serve on the
Advisory Board (in either case, a "Temporary Member"). The General Manager
may, in his discretion, dismiss any Temporary Member unless otherwise
provided by the Board of Directors or may recommend that a Permanent Member
be dismissed by the Board of Directors. The membership of the Advisory
Board may include third parties as well as employees of a JV Party;
provided, however, that no more than three (3) Permanent Members may be
employees of a JV Party and provided, further, that in no event shall an
employee of a JV Party be obligated to serve as a member of the Advisory
Board.
3. Members of the Advisory Board who are also employed by a JV Party shall not
receive additional compensation from the JV for their service as members of
the Advisory Board unless otherwise agreed by the Board of Directors. Other
members of the Advisory Board may be compensated for their services as
required by Chinese law and as otherwise agreed by the Board of Directors.
4. Any expenses resulting from or related to duties performed by members of
the Advisory Board, including but not limited to expenses for travel,
lodging and meals, will be paid by the JV as required by Chinese law and as
otherwise agreed by the Board of Directors, to the extent such expenses are
pre-approved by the General Manager.
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Exhibit B.
Qualifications of the General Manager
Statement of Purpose: The General Manager shall be responsible for meeting all
responsibilities and obligations of the JV as specified in the JV Contract
To ensure the above, the General Manager should have the following
qualifications:
1. Fluent knowledge of both Chinese and English, strong communication skills,
and considerable level of computer literacy.
2. Minimum 3 years experience in an upper management position in a foreign JV
in the PRC.
3. A Masters Degree from a reputable university (MBA highly preferred.)
4. Appropriate and proven educational and practical background providing for
knowledge and experience in both Chinese and Western (preferably American)
business practices.
5. Proven record of integrity (with a minimum of four references from upper
management required.)
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