Party A: ××Company
Party B: ××Co., Ltd. Hong Kong
Party A and Party B, according to the laws and policies of the People's Republic of China and the relevant regulations of the Special Economic Zones and the principles of equality and mutual benefit, have held discussions relation to the processing and as sembling of plastic toy products and have reached agreement on the following contractual clauses:
1．甲方责任： Responsibilities of Party A
1) Party A shall provide factory space consisting of two floors with a total space of 850 square metres, field of 500 square metres without covering, one factory management person and eighty workers for the first phase. The number of workers shall be increased to 200 twelve months after operation. (Employment of teenagers under 16 is prohibited). If the local labour is not sufficient, Party A can employ workers from other places with the approval of the relevant departments of Shenzhen Municipality. Within the contract term, Party A shall process the above products for Party B which shall be re-exported to Hong Kong.
2)The water supply and utility equipment required for processing shall be provided by Party A. If additional installations of water and electric facilities are required, the expenses thereof shall be
borne by Party B.
3) Party A shall arrange all the necessary import and export approvals required for processing and assembly and provide administration and accounting management for the processing plant. Party A cannot contract Party A's responsibilities to any other Party or individual in any way.
2．乙方责任： Responsibilities of Party B
1 ) To provide the equipment with the total value of 4. 15 million Hong Kong Dollars.
2 ) To provide the raw materials, indirect materials and packaging materials for processing the products. Quantities and specifications are to be specified in separate contracts.
3) In the event any personnel, including management shows substandard performance and makes no improvement after retraining, Party B shall have the right to request Party A to replace such persons. However, any physical search of the workers shall be regarded as illegal and prohibited.
二、加工数量 Quantity of Products
During the first year, the total processing fee shall amount to HK $ 432, 000. 00. From the second year, the quantity shall be increased. Details shall be specified in separate contracts.
三、作价原则和工缴费 Pricing &- Salary
(1) The trial production (including training) period shall be two months. During such period, the workers shall be paid HK $ 450. 00 per month on the basis of 25.5 working days per month and 8 working hours per day.
(2) After the trial production period, the workers' payment shall be calculated according to actual production specification, style and craftwork . On the basis of mutual benefit, both parties shall consider the processing fee, which shall be specification in separate contracts, according to different kinds of products, specifications, styles and engineering procedures. In order to ensure the reasonable income of the workers, the worker's monthly salary shall be maintained no lower than HK $ 550. 00. If overtime work is required, payment shall be calculated separately. However, overtime shall not exceed
three hours a day.
(3) Expenses for water and electricity in Party A's plant shall be borne by Party B.
(4) Every month Party B shall pay HK , 400. 00 to Party A for management expenses.
四、损耗率 Proportion o Products Damaged
(1) During the trial production period, Party B shall absorb the cost of products damaged.
(2) After the trial production period, the proportion of damaged products shall be mutually considered and decided by both parties and specified in separate contracts.
五、来料和交货期 Shipment of Raw Materials &- Finished Products
(1) Every month, Party B shall provide sufficient raw materials and packaging materials according to the contracted processing volume. To ensure the normal production of Party A's plant ,Party B shall ship such materials to the plant seven days before the production of each lot of products. Except for reason of force majeure, the plant shall operate for more than 21. 5 days. In case production is held up for more than four days due to insufficient supply of raw materials, Party B shall calculate the actual days when production is shut down and pay to Party A the workers' living expenses at the rate of HK $ 15. 00 per person per day.
(2) To ensure the normal operation of Party B's business activities, Party A shall deliver the finished products to Party B in accordance with the time of delivery, quality and quantity. Except
for reason of force majeure, in case losses to Party B are caused due to Party A's failure to make delivery as mentioned above, Party A shall be responsible for the compensation. Details of such compensation shall be mutually agreed upon in separate contracts.
(3) Both parties shall mutually inspect and document the equipment and materials provided by Party B, such as machinery, ventilation and lighting equipment and raw materials. After the finished products are inspected and shipped from the plant by Party B, Party A shall be free of any responsibility in regard to specifications, quality and quantity, etc.
六、结汇形式 Method of Payment
Payment of workers' salary and management fee shall be settled once a month by D/P, which shall be conducted through Bank of China Shenzhen Branch by Party B's bank in Hong Kong (______
Bank, Account NO. ___) in accordance with the invoices issued by Party A and the Shangbu District Foreign Economic &. Trade Company. In case Party B's payment is delayed for more than
five days, Party B shall be responsible for the interest according to the bank's interest rate ; in case payment is not settled for two consecutive months, Party A shall have the right to suspend delivery of the finished products or take other measures.
七、劳动保护及运输与保险. Labour Protection &. Insurance
(1) The plant shall take safety measures and protect the workers from dirt, smoke and poisonous materials. The factory shall be maintained ventilated and bright, and the surroundings clean and tidy.
(2) The transportation expenses for the machinery, ventilation and lighting equipment, raw materials, indirect materials, packaging materials and the finished products shall be paid for by Party B.
(3) All insurance for the transportation and storage of the above materials, machinery and equipment and coverage of the workers operating the machinery shall be arranged through the People's Insurance Company of China, Shenzhen Branch.
八、技术协作 Technical assistance
8. After the arrival of the equipment in the plant, Party B shall dispatch personnel to install such equipment, while Party A shall arrange personnel to assist the installation. When the trial production begins, Party B shall provide technical personnel to carry out the training until the workers have mastered the technology and the production operates normally. Party B shall be responsible for the technical personnel's salary and all related expenses, and Party A shall provide daily necessities.
九、合同期限 Contract Term
After this contract is signed and approved, Party B shall present to Party A its Commercial Registration and Bank Credit Certification for Party A to arrange business licence and Customs Registration. The term of this contract shall be three years, e. g. from Feb. 21, 1988 to Feb. 21 , 1991. If either party wishes to terminate in advance or extend the contract, the responsible party shall inform the other party three months in advance so that both parties can discuss and settle such a termination or extension. If either party terminates the contract before the term expires,the responsible party shall compensate the other party for the losses. Ins such case, the responsible party shall pay the other party as compensation the amount of two times the monthly processing fee. The fee will be based on the average monthly fee of the previous half year. After the contract term expires, the real estate such as the factory building and dormitory building shall return to Party A and the machinery and equipment delivered by Party B shall be returned to Party B. Customs clearance procedures shall be arranged according to relevant regulations. Both parties agree that, within ten days after the contract is signed and approved, Party B shall pay Party A the amount of HK $ 4, 000. 00 as its guarantee to carry out the contract. If, within two months after Party A's receipt of such amount, Party B still cannot arrange to start production, the amount shall be forfeited to Party A unconditionally and Party A shall have the right to cancel the contract. If Party B can start production on time, the amount will be deducted from the processing fee. This contract is made out in five copies for both parties, the Customs, Vehicle Authority and the business department. They shall have the same force. If there are other issues not covered in the contract, both parties can discuss to supplement or amend the contract and submit the results to relevant departments for approval.