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CHAPTER 17 JOINT VENTURE AGREEMENT
This agreement is made on ¡K¡K¡K¡K¡K¡K¡K¡K¡K.by ¡K¡K¡K¡K¡K¡K¡K¡K, (Hereafter called Party A) a Cambodian corporation having its registered office at ¡K¡K¡K¡K¡K¡K¡K¡K¡K¡K¡K¡K¡K¡K¡K¡K¡K¡K¡K¡K¡K, and ¡K¡K¡K¡K¡K¡K¡K¡K¡K¡K¡K¡K¡K. (Hereafter called Party B), an American Corporation having its registered office at ¡K¡K¡K¡K¡K¡K¡K¡K¡K¡K¡K ¡K¡K¡K¡K..
WITNESSETH
WHEREAS Party A is engaged in manufacturing and selling Cigarettes in Cambodia;
And
WHEREAS Party B is engaged in manufacturing and selling Instant Noodle (hereinafter called ¡§Licensed Product¡¨) and has American patent rights to licensed Product (hereinafter called ¡§Patent¡¨ and registered Trademark No A500 320 (hereinafter called ¡§Trademark¡§); and WHEREAS the Parties consider it is mutually advantageous to organize a jointly owned corporation (hereinafter called ¡§Joint Venture¡¨) under the law of Kingdom of Cambodia to engage in manufacture, sale and development of Licensed Product in Cambodia.
NOW THEREFORE, in consideration of the premises and convenance described hereinafter Party A and Party B agree as follows:
Article1: Definition
In the agreement, the following terms have the following meanings unless the context clearly dictates.
1- ¡§Joint Venture¡¨ means the corporation is organized pursuant to the provisions of article 2 hereto.
2- ¡§Cambodia¡¨ means the Kingdom of Cambodia.
3- ¡§Company¡¨ means the limited liability company is established in Cambodia in accordance with Cambodian law pursuant to this agreement.
4- C.D.C means that Council for Development of Cambodia, being the government body responsible for all investments in Cambodia.
5- ¡§Party¡¨ means a signatory to this agreement.
6- ¡§Article¡¨ means the articles of association which are attached hereto.
Article 2: Formation of Joint Venture 1- Party A and Party B shall spare no efforts for the organization of Joint Venture under the law of Kingdom of Cambodia.
2- The name of Joint Venture is called KT Food Industrial Co., Ltd. with its legal address at #43, Street Preah Monireth, Sangkat Veal Vong Khan 7 Makara, Phnom Penh, Kingdom of Cambodia.
3- All activities of Joint Venture shall comply with the provision of laws; decrees and pertinent regulations of Kingdom of Cambodia.
4- Joint Venture shall take the form of a limited liability company. The profits, risks and losses of Joint Venture shall be borne by both Party A and Party B in proportion to the contributions to the registered capital.
5- The expenses of organizing Joint Venture shall be responsible by Party A and Party B in accordance with the proportion of shares.
Article3: Purpose, Scope and Size of Business 1- In line with the spirit of strengthening economic cooperation and technical exchange, Joint Venture is to produce Instant Noodle with the capacity of 300,000 cartons per year. Joint Venture shall do its best to improve product and management so as to be able to meet nationwide and worldwide competition.
2- If possible, Joint Venture shall develop the new varieties of products in order to keep up with market developments in Cambodia and U.S.A..
Article 4: Capital:
1- The registered capital of Joint Venture shall be USD 2,000,000.00 (Two Million United States Dollars Only). At the effective date, the participating interest of each Party will be as follows:
- The foreign Party = 40%
- The Cambodian Party = 60%
It is the intention of the Parties that the participating interest should remain as stated above. However, the Parties¡¦ respective participating interests may be altered during the term of this agreement in the manner provided for in this Agreement.
The initial legal capital of the company shall be contributed by the Parties as follow;
A- The Cambodian Party¡¦s legal capital contribution shall be US$1,200,000 (One Million Two Hundred Thousand United States Dollars Only).
B- The Foreign Party¡¦s legal capital contribution shall be US$800,000 (Eight Hundred Thousand United States Dollars Only).
2- Each Party to Joint Venture shall pay in its contributions before 45 days after signing this Joint Venture agreement. Any delay in payment will be subject to a payment of interest or a compensation for the loss occurred therein.
3- The transfer of one¡¦s Party share in the registered capital shall be effected with the prior consent of other party and approval of its government shall have the priority to buy it.
Article 5: Patent Licensing Agreement
1- Party B agrees to grant Joint Venture the following exclusive licenses:
A- An exclusive license is to use trademark in the marketing product according to the terms and conditions of Trademark License Agreement.
B- An exclusive license to practice Party B¡¦ s know-how for manufacturing and marketing product according to the terms and conditions of the Technical Assistant Agreement.
2- Party A and Party B agree that simultaneously with the execution of this agreement, they will carry out the above-two agreements, the Trademark License and the Technical Assistant Agreement.
Article 6: Marketing
1- Party A shall be responsible for the sale of licensed product in Cambodia¡¦ s market.
2- Party B shall be seeking for the market in U.S.A and European countries.
Article 7: Responsibilities of Parties In addition to the general responsibilities of the Parties set out in this agreement, the Parties shall have the following specific responsibilities:
1- Cambodian Party:
A- To ensure the land is available to the company, that all necessary approvals and registration related to ownership of land under the name of company are in place. B- To assist the Foreign Party as its best endeavors to obtain all necessary approvals that might be required before or during operation of the company.
C- To ensure that the Investment License Application is lodged with C.D.C and liaison with C.D.C at its best endeavors for maximum possible advantage to be given to the company.
D- To assist the Foreign Party in the company in meeting its foreign currency requirements to convert Cambodian Riel into foreign currency in accordance with the Cambodian Law.
E- To assist the company in sourcing all require materials and labors;
2- The Foreign Party:
A- To assist jointly with the Cambodian Party in the company procurement of all required plant, equipment, materials for the company on competitive prices as agreed with the Parties.
B- To provide to the company, Instant Noodle technology, know-how training.
C- To assist jointly with the Cambodian Party in the company to provide management advice and to ensure suitably qualified foreign personnel including all required technicians which are seconded to the company, subject to the approval of the Board of Directors.
D- To assist the company jointly with the Cambodian Party in reviewing all labor applications and provide vetting procedures so as to ensure the employment of the necessary standard of persons and so as to implement the required level of training for those persons.
E- To assist the company in sourcing all required materials and labors.
Article 8: Banking
1- The company shall maintain bank accounts in United States Dollars and Cambodian Riels with a bank or banks in accordance with the decision of the Board of Management.
2- In addition to the bank accounts referred to in Article 8.1, the company may, subject to any restrictions under the Cambodian Law, put in place such as arrangements as the Board of management sees fit to deposit funds on behalf of the company with any account of branch of a Cambodian bank or any other bank, located outside of Cambodia if such need arises.
Article 9: Insurance
1- Any insurance covers for the company required by the Cambodian Law shall be arranged and decided by the Board of Directors.
2- The company shall obtain appropriate insurance cover for personal accident covering employees, consultants, contractors and third Parties, loss or damage to property of the company either in transit or on site, and general public liability insurance and such other insurance as the Board of Directors may determine in accordance with the Cambodian Law.
3- Wherever possible the company shall obtain such insurance cover in United States Dollars, where deemed suitable by the Board of Directors provided that such cover and policy terms are competitive with those offered by overseas insurance companies with international reputation. In the event the Board of Directors does not consider the current insurance policies to be suitable or competitive, the Board of Directors shall agree on an alternate insurer.
Article 10: Board of Directors:
1- The Board of Directors consists of 5 Directors of whom 3 Directors including the Chairman shall be appointed by Party A, and 2 Directors including the Deputy Chairman shall be appointed by Party B. The term for Directors is 3 years, which can be renewed with the consent of Board of Directors.
2- Board meeting will be held at the location of Joint Venture legal address twice per year. A quorum for a meeting shall consist of not fewer than two thirds (2/3) of the Directors. The Director who can¡¦t attend the meeting can authorize a representative to be present at the meeting and vote for him.
3- If a Director dies or resigns before his term, the vacancy can be nominated and replaced under the consent of Board of Directors.
4- Amendment to the article, dissolution of Joint Venture and increase of the registered capital shall be decided by a simple majority vote of the Directors at the Board of meeting.
Article 11: Management
Joint Venture Company shall establish a management office which shall be responsible for the daily management of Joint Venture.
The management office shall have a General Manager and two Deputy General Managers, whose term is 3 years. The General Manager nominated by Party A is responsible for the implementation of the decisions of the Board of Directors and daily operation. The Deputy General Managers, one of whom is nominated by each Party, shall assist the General Manager in his or her duties. Article 12: Financial Affairs and Accounting
1- The Parties hereto are fully aware that the Joint Venture will be served by taking all reasonable measures to ensure the increase in production, and the Parties consent to retain sufficient earnings in Joint Venture for the expansion of the production and other requirements such as bonus and welfare. The annual proportion of the earnings to be retained shall be determined by Board of Directors.
2- Joint Venture shall hire the competent auditor to keep all books of account, which are accessible at any time to each Party hereto.
3- The fiscal year of Joint Venture shall begin on January 1st and ended on December 31st. After the deduction of the reserved fund for bonus and expansion of equipment, the remaining net profit shall be distributed to the shareholders in accordance with the shares.
Article13: Tax
1- Joint Venture shall pay taxes in accordance with the regulations of Kingdom of Cambodia.
2- The staffs and workers employed by the company shall pay individual income tax according to the Individual Income Tax Law of Kingdom of Cambodia.
Article 14: Duration of Joint Venture
1- The duration of Joint Venture is 10 years, which begins on the date when the business permit is approved.
2- When both Parties agree to extend the duration, Joint Venture shall file an application for expansion to Council for Development of Cambodia (C.D.C) and Ministry of Commerce (MOC) 6 months before its expiration date. Article 15: Dissolution and Liquidation Upon announcement of the dissolution of J/V, its Board of directors shall work out procedures and principles for liquidation.
Article 16: Arbitration All disputes which may arise out of or in connection with this Agreement or its performance, including the existence and validity of this Agreement shall be settled amicably by negotiation and discussion between the Parties, and to the effect the Parties shall consult and negotiate with each other in good faith and understanding of their mutual interests, to attempt to reach a solution within 60 days of the date on which either Party has in writing submitted the matter to the other Party, then the attempt to arrive at a settlement shall be deemed to have failed as soon thereafter as one of the disputing Parties so notifies the other in writing and the said matters shall be finally settled under UNICITRAL rules by arbitration through two arbitrators where each arbitrators shall be appointed by individual Party.
Should the arbitrators fail to reach an agreement, then the dispute shall be referred to an umpire nominated by the arbitrators. The venue of arbitration shall be republic in Singapore, and the language to be used in the arbitrated proceeding shall be English.
Article17: Amendment
This agreement may be amended during the duration of this agreement by the Parties. If the amendment shall be in writing and signed by both Parties and shall be approved by Council for Development of Cambodia (C.D.C).
Article 18: Force Majeure Any failure or delay in the performance by either Party hereto of its obligations under this agreement shall not constitute a breach hereof or give rise to any claims for damages if it is caused by the following happening beyond the control of the Party: earthquakes, fire, flood and accident¡K etc.
The Party effected by Force Majeure shall immediately inform each other about the event. The two Parties shall settle the problem in a friendly and reasonable way.
The address of Party A: #43, Street Preah Monireth, Veal Vong District, Prampy Makara Precinct, Phnom Penh, Kingdom of Cambodia. The address of Party B: 420N, Marguerita Alhambra Ca. 91801 United States of America.
Article 19: Sole Agreement This agreement constitutes the entire and only agreement between the Parties hereto and supersedes and multiplies all prior agreements, commitments expressed between the Parties hereto.
Article 20: Governing Law The formation, validation, interpretation and performance of this agreement are governed by the laws of kingdom of Cambodia.
Article 21: Languages This agreement shall be executed by the Parties hereto in both Cambodian and English versions, each of which shall be binding upon prevail in the event of any discrepancy between the two said versions
IN WITNESS WHEREOF: The Parties have executed this agreement in duplicate by their authorized representatives as of the date first above written.
KT Pacific Group Ltd. SWIRRITI Ltd.
By __________________ By ___________________
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