Document:

exv4w1

 

EXHIBIT 4.1

Translated from Chinese

China Zhengtong Holdings Co., Ltd.

Equity Transfer Agreement

By and Between

Shenyang Xing Yuan Dong Automobile Components Co., Ltd.

(as Transferor)

and

Shenyang JinBei Automotive Industry Co., Ltd.

(as Transferee)

Dated: December 1, 2002

1

 

Translated from Chinese

This Agreement is entered into by the following parties on December 1, 2002:

Transferor: Shenyang Xing Yuan Dong Automobile Components Co., Ltd.

Transferee: Shenyang JinBei Automotive Industry Co., Ltd.

General Provisions

In order to enhance economic benefits, based on the principle of good faith and
mutual benefit, and in accordance with the relevant laws and regulations of the
People’s Republic of China, the parties to this Agreement have reached the
following agreement through friendly consultation:

Article OneParties to the Agreement

	1.1	 	 The Parties to this Agreement
are:

Transferor: Shenyang Xing Yuan Dong Automobile Components Co., Ltd.
	 
	 	 	Address: No. 55, Hunnan Industrial Zone, High-New District, Shenyang City
	 
	 	 	Legal Representative:Hong Xing
	 
	 	 	Transferee: Shenyang JinBei
Automotive Industry Co., Ltd.

Address: No. 38, Wangliutang Road, Shenhe District, Shenyang City

Legal Representative:He Guohua

Article Two of the Agreement

	2.1	 	 The subject of transfer under this Agreement shall be 47.06% equity held
by Shenyang Xing Yuan Dong Automobile Components Co., Ltd. in China
Zhengtong Holdings Co., Ltd..

Article Three Representations and Warranties

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Translated from Chinese

The Parties hereby represent and warrant to the other Party as follows:

	3.1	 	 The Parties to this Agreement are all enterprise legal persons registered
and legally existing under the PRC laws, and have full right to their
respective assets, and have the capability to independently conduct
economic activities and assume civil liabilities to other entities.
	 
	3.2	 	 The Parties to this Agreement both have full capacity for civil rights
and capacity for civil conduct. The undersigned of this Agreement are
representatives approved by the board of directors of the Transferor (or
the Transferee), who have the right to sign this Agreement on behalf the
Transferor (or the Transferee).
	 
	3.3	 	 The Transferor hereby warrants that it is a company registered in
Shenyang City, Liaoning Province, PRC, and has passed the 2002 industry
and commerce annual review.
	 
	3.4	 	 The Transferee hereby warrants that it is a company registered in
Shenyang City, Liaoning Province, PRC, and has passed the 2002 industry
and commerce annual review.
	 
	3.5	 	 The Transferor hereby warrants that the 47.06% equity it holds in China
Zhengtong Holdings Co., Ltd. is in compliance with the laws of the
People’s Republic of China, and is legal and valid.
	 
	3.6	 	 The Transferor hereby warrants that it has the right under the laws of
the People’s Republic of China to own, use, enjoy the benefits of and
dispose of the equity described in Article 2.1 of this Agreement, and that
no third party right has been created on such equity.
	 
	3.7 	 	The terms in this Agreement are reflections of the true intent of the
Parties, and shall be binding upon both Parties to this Agreement.
	 
	3.8	 	 The performance of this Agreement will not be in violence of the laws
that the Parties are required to abide by, and will not breach any other
agreements or obligations which the Parties shall abide by.
	 
	3.9	 	 As of the date of execution of this Agreement, the Parties to this
Agreement shall provide lawful and valid legal documents related to this
equity transfer in the form of annexes to this Agreement, including but
not limited to resolutions of the Board and business license.

Article Four Percentage of Equity Transfer

	4.1	 	 The percentage of the equity share to be transferred by the Transferor to
the Transferee shall be 47.06% equity that the Transferor holds in China
Zhengtong Holdings Co., Ltd.

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Translated from Chinese

	4.2	 	 The original shareholding structure of China Zhengtong Holdings Co., Ltd.
is:

	 	 	 	 	 
	Minsheng Credit Guarantee Co., Ltd.
	 	 	48.04	%
	Shenyang Xing Yuan Dong Automobile Components Co., Ltd.
	 	 	47.06	%
	China Development Research Foundation
	 	 	0.07	%
	China Golden Future Inc.
	 	 	4.83	%

The shareholding structure after this equity transfer shall be:

	 	 	 	 	 
	Minsheng Credit Guarantee Co., Ltd.
	 	 	48.04	%
	Shenyang JinBei Automotive Industry Co., Ltd.
	 	 	47.06	%
	China Development Research Foundation
	 	 	0.07	%
	China Golden Future Inc.
	 	 	4.83	%

Article Five Price of Equity Transfer

	5.1 	 	The Transferee agrees to receive the 47.06% equity held by the Transferor
in China Zhengtong Holdings Co., Ltd. by payment in cash.
	 
	5.2 	 	The equity transfer shall be deemed to have been closed after the
Transferee has completed the formalities of amendment of registration with
industry and commerce administration with the assistance of the
Transferor.
	 
	5.3 	 	The Transferee shall receive the above equity of the Transferor by
payment of an aggregate amount of RMB Four Hundred Eighty million (RMB
480,000,000).

Article Six Term of Payment

	6.1	 	 As agreed by the Parties, the Transferee shall receive the 47.06% equity
held by the Transferor in China Zhengtong Holdings Co., Ltd. by payment in
cash.

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Translated from Chinese

	6.2	 	 The Transferee shall make a single payment of RMB 480,000,000 provided in
Article 5.3 of this Agreement to the Transferor within the period between
the effective date of this Agreement and December 31, 2002.

Article Seven Relevant Obligations of the Parties

	7.1	 	 Obligations of the Transferor

	 	7.1.1 	 	Delivery of approval documents of the board of directors to
the Transferee within 3 days after the execution of this Agreement;
	 
	 	7.1.2	 	 Completion of formalities of equity transfer according to
the provisions of Article Five of this Agreement;
	 
	 	7.1.3 	 	Provision of all documents related to the equity transfer
and registration amendment to the Transferee.

	7.2	 	 Obligations of the Transferee

	 	7.2.1	 	 Delivery of approval documents of the board of directors to
the Transferor within 3 days after the execution of this Agreement;
	 
	 	7.2.2	 	 Payment according to the timing and requirements provided in
Article Six of this Agreement;
	 
	 	7.2.3 	 	Provision of all documents related to the equity transfer
and registration amendment to the Transferor.

Article Eight Liabilities of Breach of Agreement

	8.1	 	 In the event that the breach by any Party causes the other Party’s
failure to perform or partial failure to perform this Agreement, the
breaching party shall be held liable for losses thus incurred. If both
Parties breach this Agreement, the Parties shall be responsible for
liabilities caused by their respective misconduct.

Article Nine Force Majeure

	9.1	 	 Force majeure shall mean unforeseeable and inevitable events that are
beyond the control of the Parties, and that hamper either Party’s
performance or partial performance of this Agreement after the
effectiveness of this Agreement, e.g., earthquake, act of god, war and
other events that are considered as force majeure events according to
international commercial practice.

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Translated from Chinese

	9.2	 	 In the event of the occurrence of a force majeure event, the obligations
of the Party affected by such event shall be suspended during the
occurrence of the force majeure event, and shall automatically be
extended. The extension period shall be the same as the suspension
period. Such Party shall not be liable for breach of this Agreement.
	 
	9.3 	 	The Party that claims a force majeure event shall promptly notify the
other Party in writing after the occurrence of the event, and shall
provide sufficient certification issued by the local notary institution
with respect to the occurrence of the force majeure event and the period
in which such event persists. The Party claiming a force majeure event
shall use its best endeavors to minimize the effect of the force majeure.
	 
	9.4 	 	If a force majeure event occurs, the Parties shall promptly consult with
each other to seek a fair solution, and shall use their best efforts to
minimize the effect of the force majeure.

Article Ten Settlement of Dispute

	10.1	 	 Any dispute resulting from or in connection with this Agreement shall be
first settled by the Parties through friendly consultation, failing which,
either Party shall submit the dispute to China International Economic and
Trade Arbitration Commission for arbitration. The award of the
arbitration shall be final and binding upon both Parties.

Article Eleven Miscellaneous

	11.1 	 	This Agreement is signed in three originals. Each Party shall have one
original, and one original shall be filed with the administration of
industry and commerce.
	 
	11.2	 	 This Agreement shall become effective as of the date when the legal
representatives (or authorized representatives) of the Parties sign and
affix the company seal to this Agreement.
	 
	11.3	 	 Issues not covered in this Agreement may be provided in supplements to
this Agreement as annexes.

6

 

Translated from Chinese

Signature Page

(No Body Text on This Page)

	 	 	 
	Transferor:	 	
Transferee:
	Shenyang Xing Yuan Dong Automobile Components
Co., Ltd.	 	
Shenyang JinBei Automotive
Industry Co., Ltd.
	(Seal)	 	
(Seal)
	 
	By:/s/ Hong Xing	 	
By: /s/ He Guo Hua
	
	 	

	Legal Representative/Authorized Representative	 	
Legal Representative/Authorized Representative

Dated: December 1, 2002

7exv4w2

 

Exhibit 4.2

	 	 	 
	CHINA	 	
EQUITY JOINT VENTURE CONTRACT

EXECUTION COPY

Equity Joint Venture Contract

for the Establishment of

BMW BRILLIANCE AUTOMOTIVE LTD.

by and between

BMW Holding BV

Laan van Vredenoord 5

2289 DA Rijswijk ZH

Netherlands

and

Shenyang JinBei Automotive Industry Holdings Company Limited

6th Floor, Building B, No. 1 Shiji Road

Hunnan Industrial Zone, High-Tech District

Shenyang, Liaoning Province

People’s Republic of China

 

 

	 	 	 
	CHINA	 	
EQUITY JOINT VENTURE CONTRACT

Table of Contents

	 	 	 	 	 
	
EQUITY JOINT VENTURE CONTRACT
	 	1
	
Preliminary Statement
	 	1
	Article 1	 	
Definitions
	 	1
	Article 2	 	
Parties
	 	6
	Article 3	 	
Establishment and Legal Form of JV Company
	 	8
	Article 4	 	
Purpose and Scope of Business of JV Company
	 	10
	Article 5	 	
Total Investment and Registered Capital
	 	11
	Article 6	 	
Transfer of Interest in the Registered Capital of the JV Company
	 	14
	Article 7	 	
Board of Directors
	 	15
	Article 8	 	
Deadlock
	 	21
	Article 9	 	
Management Organization
	 	21
	Article 10	 	
Assistance by the Parties
	 	24
	Article 11	 	
Existing Equipment, Existing Building and Production Site
	 	26
	Article 12	 	
Technology Transfer
	 	29
	Article 13	 	
Quality Standards
	 	29
	Article 14	 	
Purchase of Materials and Services / Local Content
	 	30
	Article 15	 	
Sale of JV Products
	 	30
	Article 16	 	
Trademarks
	 	31
	Article 17	 	
Non-Competition
	 	31
	Article 18	 	
Labor Management
	 	33
	Article 19	 	
Trade Union
	 	35
	Article 20	 	
Finances, Taxes, Audit and Distribution of Profits
	 	35
	Article 21	 	
Bank Accounts and Foreign Exchange
	 	37
	Article 22	 	
Joint Venture Term
	 	38
	Article 23	 	
Termination
	 	39
	Article 24	 	
Consequences of Termination
	 	41
	Article 25	 	
Insurance
	 	46
	Article 26	 	
Confidentiality
	 	46
	Article 27	 	
Force Majeure
	 	47
	Article 28	 	
Applicable Law
	 	48
	Article 29	 	
Dispute Resolution
	 	48
	Article 30	 	
Miscellaneous
	 	49
	Annex 1	 	
Business Plan and Budget	 	 
	Annex 2	 	
Benchmarks, ROS Percentage	 	 

 

 

	 	 	 
	CHINA	 	
EQUITY JOINT VENTURE CONTRACT

EQUITY JOINT VENTURE CONTRACT

THIS EQUITY JOINT VENTURE CONTRACT (hereinafter the “Contract”) is entered into
in Beijing on this 27th day of March 2003, in accordance with the Law of the
People’s Republic of China on Sino-Foreign Equity Joint Ventures (the “Joint
Venture Law”), the implementing regulations issued thereunder (the “Joint
Venture Regulations”), and other applicable laws and regulations of the
People’s Republic of China, by and between Shenyang JinBei Automotive Industry
Holdings Company Limited (“BRILLIANCE”) and BMW Holding BV (“BMW”).

Preliminary Statement

The Parties hereby agree to jointly establish a Sino-foreign equity joint
venture company (the “JV Company”) in the province of Liaoning, People’s
Republic of China on the basis of the principles of equality and mutual benefit
in accordance with the terms and conditions set forth below and with applicable
laws and regulations.

Article 1           Definitions

Unless the terms or the context of this Contract otherwise provide, the
following terms in this Contract shall have the meanings set forth below:

	1.1	 	 “Affiliate” of a Party shall mean, any company or other entity or natural
person other than the JV Company that, through ownership or voting stock
or otherwise, Controls or is Controlled by, or under common Control with,
such Party. Within the PRC, the “company” as used in this Article 1.1
shall include any kind of business entity with legal person status under
PRC Laws. Notwithstanding the foregoing, Brilliance Automotive Group
Holdings Co., Ltd., Brilliance China Automotive Holdings Ltd., Shenyang
Brilliance JinBei Automotive Co., Ltd., Shenyang Aerospace Mitsubishi
Motors Engine Manufacturing Co., Ltd., China Aerospace Brilliance
Automotive Co., Ltd., JinBei General Motors Automotive Co., Ltd., Shenyang
Xin JinBei Investment and Development Co., Ltd., and Shenyang JinBei Auto
Industry Co., Ltd. shall be considered Affiliates of BRILLIANCE for the
purposes of this Contract.
	 
	1.2	 	 “Articles of Association” shall mean the Articles of Association of the
JV Company as executed by the Parties in Beijing of even date and amended
thereby from time to time.
	 
	1.3	 	 “Assets” shall mean collectively the Existing Buildings and the Existing
Equipment, which are owned by JinBei and which will be sold by JinBei to
the JV Company pursuant to the Building Purchase Agreement and the
Equipment Purchase Agreement.
	 
	1.4	 	 “BMW AG” shall mean Bayerische Motoren Werke Aktiengesellschaft, the
ultimate parent company of the BMW group of companies that directly owns
one hundred percent (100%) of the shares of BMW.
	 
	1.5	 	 “BMW Cars” shall mean any passenger cars that bear BMW trademarks.
	 
	1.6	 	 “BMW Group” shall mean BMW AG and its Affiliates.
	 
	1.7	 	 “BMW Holding BV” shall mean the Party to the Contract which is a wholly
owned Affiliate of BMW AG.

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	CHINA	 	
EQUITY JOINT VENTURE CONTRACT

	1.8	 	 “Board” or “Board of Directors” shall mean the Board of Directors of the
JV Company.
	 
	1.9	 	 “Brilliance Group” shall mean Brilliance China Automotive Holdings Ltd.
and its Affiliates.
	 
	1.10	 	 “Building Purchase Agreement” shall mean the agreement under which JinBei
shall sell the Existing Buildings to the JV Company.
	 
	1.11	 	 “Business License” shall mean the business license to be issued to the JV
Company by the PRC State Administration for Industry and Commerce.
	 
	1.12	 	 “Business Plan(s)” shall mean the business plan(s) of the JV Company that
are determined in accordance with Article 4.4.2 of this Contract.
	 
	1.13	 	 “Business Registration Authority” shall mean the PRC State Administration
for Industry and Commerce or its successor or local office in charge of
company registration.
	 
	1.14	 	 “Change of Law” shall mean any event or circumstance, as further
discussed in Article 3.5, where the PRC local or national government or
any other local or national public body or authority in the PRC that has
the power to make decisions or rules binding upon the JV Company,
undertakes any of the following: adopts any new law, regulation, decree or
rule, amends or repeals any provision of any existing law, regulation,
decree or rule, or adopts any different interpretation or method of
implementation of any law, regulation, decree or rule.
	 
	1.15	 	 “China” or the “PRC” shall, for purposes of this Contract, mean the
People’s Republic of China, exclusive of the province of Taiwan and the
Special Administrative Regions of Hong Kong and Macau.
	 
	1.16	 	 “Contract Execution Date” shall mean the date that both Parties have duly
executed this Contract.
	 
	1.17	 	 “Control(s)” or “is Controlled by” or any reference to “Control” in this
Contract shall mean the direct or indirect possession, by a company or
other entity or natural person, of the power to direct or cause the
direction of the management and policies of a Party, of Brilliance Group
or of BMW Group by means including, but not limited to, ownership of fifty
percent (50%) or more of the voting stock or registered capital, or the
power to appoint or elect a majority of the directors, or the power to
appoint the general manager or the principal person in charge of a
business entity.
	 
	1.18	 	 “Conversion Rate” shall mean the median of the official selling and
buying EUR-RMB exchange rate published by the People’s Bank of China on
the date on which the Parties shall make their respective contributions to
the registered capital of the JV Company in accordance with Article 5.4.
	 
	1.19	 	 “Directors” shall mean the persons appointed by the Parties to serve as
members of the Board of Directors.
	 
	1.20	 	 “Effective Date” shall mean the effective date of this Contract, which
shall be the date on which the Contract and the Articles of Association
are approved by the Examination and Approval Authority.
	 
	1.21	 	 “Equipment Purchase Agreement” shall mean the agreement under which
JinBei shall sell the Existing Equipment to the JV Company.

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	CHINA	 	
EQUITY JOINT VENTURE CONTRACT

	1.22	 	 “Establishment Date” shall mean the date described in Article 3.4 of this
Contract.
	 
	1.23	 	 “Euro” or “EUR” shall mean the lawful currency of the member States of
the European Currency Union.
	 
	1.24	 	 “Event of Force Majeure” shall mean any unforeseeable or unavoidable
event or circumstance beyond the control of a Party occurring after the
execution of this Contract including, without limitation, fire, storm,
typhoon, flood, earthquake, explosion, war and serious strikes or work
stoppages, which prevents the performance, in whole or in part, of this
Contract or any of its obligations by any Party or by the JV Company.
	 
	1.25	 	 “Examination and Approval Authority” shall mean the appropriate
government department with authority to approve this Contract and the
Articles of Association under applicable laws and regulations.
	 
	1.26	 	 “Existing Buildings” shall mean the existing factory buildings,
structures and fixtures located on the Site that shall be sold to the JV
Company under the Building Purchase Agreement.
	 
	1.27	 	 “Existing Equipment” shall mean the existing equipment located on the
Site that shall be sold to the JV Company under the Equipment Purchase
Agreement.
	 
	1.28	 	 “JinBei” shall mean Shenyang Brilliance JinBei Automotive Co., Ltd.,
which is a company established and existing under the laws of the PRC.
	 
	1.29	 	 “Joint Venture Term” shall mean the duration of the JV Company as
provided for in Article 22 of this Contract.
	 
	1.30	 	 “JV Products” shall mean those BMW Cars listed as follows (which list may
be modified by the Parties from time to time upon mutual consent) and all
parts and components that are used for production of such passenger cars
by the JV Company.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Car	 	Body	 	 	 	 	 	 	 	 	 	Engine	 	 	 	 	 	 	 	 	 	 	 	 
	line	 	variance	 	Model	 	Engine code	 	capacity	 	Cyl.	 	Gearbox	 	Designation
	
	 	
	 	
	 	
	 	
	 	
	 	
	 	

	E46
	 	4 door limousine	 	 	318i	 	 	 	N42B20	 	 	 	2,0 L.	 	 	 	4	 	 	Automatic	 	318i limousine
	E90
	 	4 door limousine	 	 	318i	 	 	 	N46B20	 	 	 	2,0 L.	 	 	 	4	 	 	Automatic	 	318i limousine
	E46
	 	4 door limousine	 	 	320i	 	 	 	M54B22	 	 	 	2,2 L.	 	 	 	6	 	 	Automatic	 	320i limousine
	E90
	 	4 door limousine	 	 	320i	 	 	 	N52B22	 	 	 	2,2 L.	 	 	 	6	 	 	Automatic	 	320i limousine
	E46
	 	4 door limousine	 	 	325i	 	 	 	M54B25	 	 	 	2,5 L.	 	 	 	6	 	 	Automatic	 	325i limousine
	E90
	 	4 door limousine	 	 	325i	 	 	 	N52B25	 	 	 	2,5 L.	 	 	 	6	 	 	Automatic	 	325i limousine
	E60
	 	4 door limousine	 	 	520i	 	 	 	M54B22	 	 	 	2,2 L.	 	 	 	6	 	 	Automatic	 	520i limousine
	E60
	 	4 door limousine	 	 	520i	 	 	 	N52B22	 	 	 	2,2 L.	 	 	 	6	 	 	Automatic	 	520i limousine
	E60
	 	4 door limousine	 	 	525i	 	 	 	M54B25	 	 	 	2,5 L.	 	 	 	6	 	 	Automatic	 	525i limousine
	E60
	 	4 door limousine	 	 	525i	 	 	 	N52B25	 	 	 	2,5 L.	 	 	 	6	 	 	Automatic	 	525i limousine
	E60
	 	4 door limousine	 	 	530i	 	 	 	M54B30	 	 	 	3,0 L.	 	 	 	6	 	 	Automatic	 	530i limousine
	E60
	 	4 door limousine	 	 	530i	 	 	 	N52B30	 	 	 	3,0 L.	 	 	 	6	 	 	Automatic	 	530i limousine

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	CHINA	 	
EQUITY JOINT VENTURE CONTRACT

	1.31	 	 “Land Use Rights Lease Contract” shall mean the contract under which the
JV Company will lease the land use rights to the Site from the relevant
government authority in Shenyang.
	 
	1.32	 	 “M1 Products” shall mean the JinBei passenger cars bearing the Zhonghua
brand and its succeeding models hereto.
	 
	1.33	 	 “Other Contracts” shall mean the Building Purchase Agreement, Equipment
Purchase Agreement, Plant Lease Agreement I, Plant Lease Agreement II,
Services Agreement I, Services Agreement II, and the Parts and Components
Supply Agreement, Land Use Rights Lease Contract. Unless otherwise
specified, “Other Contracts” denotes all of these agreements. The Other
Contracts shall not violate any mandatory provisions of applicable PRC
Laws.
	 
	1.34	 	 “Parties” shall mean BRILLIANCE and BMW, collectively; and, “Party” shall
mean each of BRILLIANCE or BMW, individually.
	 
	1.35	 	 “Parts and Components Supply Agreement” shall mean the contract under
which BMW AG supplies parts and components to the JV Company necessary for
production of the JV Products.
	 
	1.36	 	 “Plant Lease Agreement I” shall mean the agreement to be entered into by
the JV Company and JinBei in accordance with applicable PRC Laws under
which the JV Company will lease certain plant/office premises on the Site
to JinBei.
	 
	1.37	 	 “Plant Lease Agreement II” shall mean the agreement to be entered into by
the JV Company and JinBei in accordance with applicable PRC Laws under
which JinBei will lease certain plant/office premises to the JV Company.
	 
	1.38	 	 “PRC Holding Company” shall mean an investment company established by BMW
or its Affiliate in China in accordance with applicable PRC Laws.
	 
	1.39	 	 “PRC Laws” shall mean all laws, regulations, decrees or other acts of a
legally binding nature that are in force from time to time in the PRC
including any amendment or substitution thereof.
	 
	1.40	 	 “Premium Market Cars” shall mean those passenger cars of the brands in
the “premium” market segments of passenger cars, a non-exhaustive list of
which is set forth as follows:

	 	 	 
	Acura	 	
all models
	Alfa Romeo	 	
all models
	Audi	 	
all models
	Bentley	 	
all models
	Cadillac	 	
Catera, Cien, CTS, Escalade, Evoq, Sigma SUV, XLR
	Chrysler	 	
Jeep Gran Cherokee, 300M
	Ford	 	
Mondeo
	GM/Buick/Opel	 	
Omega,Vectra, Signum, GS (Regal)
	Honda	 	
Legend, NSX, S2000, Accord, Civic (City), All SUV’ s
	Infiniti	 	
all models
	Jaguar	 	
all models
	Lancia	 	
Kappa, Thesis, Zeta
	Land Rover	 	
all models
	Lexus	 	
all models

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	CHINA	 	
EQUITY JOINT VENTURE CONTRACT

	 	 	 
	Mercedes-
Benz	 	
all models
	MG Rover	 	
ZT, ZT-T
	Mitsubishi	 	
Galant, Pajero, Pajero Pinin
	Nissan	 	
Cima, Skyline
	Peugeot	 	
607, 407
	Porsche	 	
all models
	Renault	 	
Vel Satis, Avantime, Laguna, Megane
	Rover	 	
75
	Saab	 	
all models
	Toyota	 	
Aristo, Celsior, Crown, Century, Camry, Corolla, RAV 4,
	Toyota	 	
Landcruiser 100, Harrier
	Volvo	 	
all models
	VW	 	
Phaeton, Passat, Bora, Golf, all new SUVs

	1.41	 	 “Renminbi” or “RMB” shall mean the lawful currency of the PRC.
	 
	1.42	 	 “Return on Sales” or “ROS” shall mean a percentage equal to net pre-tax
income for a fiscal year divided by net sales for the same period.
	 
	1.43	 	 “Services Agreement I” shall mean the agreement to be entered into by the
JV Company and JinBei in accordance with applicable PRC Laws under which
the JV Company will provide certain services and facilities to JinBei.
	 
	1.44	 	 “Services Agreement II” shall mean the agreement to be entered into by
the JV Company and JinBei in accordance with applicable PRC Laws under
which JinBei will provide certain services and facilities to the JV
Company.
	 
	1.45	 	 “Shenyang JinBei Automotive Industry Holdings Company Limited” shall mean
the Party to the Contract which is ninety percent (90%) owned by Shenyang
Xin JinBei Investment and Development Company Limited and ten percent
(10%) owned by Shenyang JinBei Auto Industry Company Limited.
	 
	1.46	 	 “Site” shall mean that piece of land which is situated at Shanzuizi Road,
Dadong District, Shenyang City, Liaoning Province, PRC, the location,
layout, and boundaries of which are shown and detailed in the Building
Purchase Agreement. The Site has been used by JinBei before the
establishment of the JV Company and will be leased to the JV Company,
under the Land Use Rights Lease Contract .
	 
	1.47	 	 “Technology License Agreement” shall mean the Technology License
Agreement between BMW AG and the JV Company, pursuant to which BMW AG will
license to the JV Company the right to use certain technology and
operational know-how in connection with the production, sale and service
of the JV Products.
	 
	1.48	 	 “Trademark License Agreement” shall mean the Trademark License Agreement
between the JV Company and BMW AG, which is the registrator in the PRC of
the trademark “BMW” in English and “BAO MA (pin yin)
and  (Bao Ma in
Chinese script)” in Chinese, pursuant to which BMW AG will license to the
JV Company the right to use the trademark “BMW” in English and “BAO MA
(pin yin) and (Bao Ma in Chinese script)” in Chinese in connection with
the sale of the JV Products.
	 
	1.49	 	 “Transfer Price” shall mean the price for the transfer of the equity
interest as defined in Article 24.1.2.

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	CHINA	 	
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	1.50	 	 “United States Dollars” or “US Dollars” or “USD” shall mean the lawful
currency of the United States of America.
	 
	1.51	 	 “WTO” shall mean the World Trade Organization.

Unless otherwise stated, all references to numbered Articles and Annexes are to
Articles and Annexes of this Contract.

Article 2           Parties

	2.1	 	 Parties
	 
	 	 	The Parties to this Contract are:

	 	 	 	 	 	 	 
	BRILLIANCE:	 	Shenyang JinBei Automotive Industry Holdings

Company Limited, a company established and

existing under the laws of the PRC.
	 	 	 	 	 	 	 
	 	 	
Place of Registration:
	 	Shenyang, Liaoning Province, PRC
	 	 	 	 	 	 	 
	 	 	
Legal Address:
	 	6th Floor, Building B, No. 1 Shiji Road

Hunnan Industrial Zone, High-Tech District

Shenyang, Liaoning Province

People’s Republic of China
	 	 	 	 	 	 	 
	 	 	
Legal Representative:
	 	Name:
	 	Hong Xing
	 	 	 	 	Position:
	 	Chairman
	 	 	 	 	Nationality:
	 	Chinese
	 	 	 	 	 	 	 
	 	 	
Registered Number:
	 	2101321101009(2-2)
	 	 	 	 	 	 	 
	BMW:	 	BMW Holding BV, a company established and

existing under the laws of the Netherlands
	 	 	 	 	 	 	 
	 	 	
Place of Registration:
	 	S’-Gravenhage, Netherlands
	 	 	 	 	 	 	 
	 	 	
Legal Address:
	 	Laan van Vredenoord 5

2289 DA Rijswijk ZH

Netherlands
	 	 	 	 	 	 	 
	 	 	
Legal Representatives:
	 	Name:
	 	Arjen van Jong

Dr. Wolfgang Stofer,
	 	 	 	 	 	 	 
	 	 	 	 	Position:
	 	Directors
	 	 	 	 	 	 	 
	 	 	 	 	Nationality:
	 	Dutch, German
	 	 	 	 	 	 	 
	 	 	
Registered Number:
	 	 	 	108 701

	 	 	If a Party changes its legal representative, it shall promptly notify the
other Party of such change and the name, position, and nationality of its
new legal representative.

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	2.2	 	 Representations and Warranties

	 	2.2.1	 	 Each Party hereby represents and warrants to the other Party
that as of the date hereof and as of the Effective Date:

	(i)  	 	it is a legal person, duly organized, validly
existing and in good standing under the laws of the place of
its establishment or incorporation; its ownership and Control
has not changed in any way since the 23rd day of March, 2003.
A duly certified copy of the Articles of Association as
registered with the Business Registration Authority has been
presented to the other Party on or before the date of the
execution of this Contract;
	 
	(ii) 	 	its legal representative is duly and fully
authorized and empowered to sign, execute and give effect, on
its behalf, to this Contract, the Articles of Association, and
any agreements and documents referred to in this Contract and
to which it is a party;
	 
	(iii)	 	its execution, delivery and performance of this
Contract, the Articles of Association and any other agreements
and documents contemplated hereunder will not violate any of
its constitution documents, any other agreement or obligation
of such Party, any judgment or arbitral award binding such
Party, or any currently effective law, regulation or decree of
the jurisdiction in which it is organized or incorporated,
that may be applicable to any aspect of the transactions
contemplated hereunder;
	 
	(iv)	 	it has all requisite power, authority and
approval required to enter into this Contract and upon the
Effective Date will have all requisite power, authority and
approval to duly perform each of its obligations hereunder;
	 
	(v) 	 	upon the Effective Date, the provisions of this
Contract shall constitute its legal and binding obligations;
	 
	(vi)	 	it has disclosed, in writing, all material
information in its possession relating to the cooperation
between the Parties set out under this Contract, as well as
the establishment and operation of the JV Company which might
have a material adverse effect on its ability to fully perform
its obligations hereunder, or which if disclosed to the other
Party, could have a material effect on the other Party’s
willingness to enter into this Contract, and none of the
information provided by it to the other Party contains any
material statements which are false or misleading; and
	 
	(vii)	 	no lawsuit, arbitration, other legal or
administrative proceeding, or governmental investigation is
pending, or to the best of its knowledge, threatened, against
it that would affect in any way its ability to enter into or
perform this Contract;

	 	2.2.2	 	 Brilliance represents and warrants that it is not Controlled
directly or indirectly by any company, corporation or entity which
directly or indirectly produces, distributes or sells, inside or
outside China, passenger cars under any trademarks or brandnames
other than “JinBei” and “Zhonghua”.
	 
	 	2.2.3	 	 BMW represents and warrants that it is not Controlled
directly or indirectly by any company, corporation or entity which
directly or indirectly produces, distributes or sells, inside or
outside the Federal Republic of Germany,

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	 	 	 	passenger cars under any trademarks or brandnames other than
“BMW”, “MINI” and “Rolls-Royce”.
	 
	 	2.2.4	 	Each Party shall indemnify the other Party against all
direct losses, expenses and liabilities arising from a breach of any
of the foregoing representations and warranties. For the avoidance
of doubt, for the indemnification provided in this clause, each
Party shall not be responsible for the other Party’s indirect,
special, punitive or consequential losses, damages, costs or
expenses including loss of profit, loss of use, loss of contracts,
and loss of production.

Article 3        Establishment and Legal Form of JV Company

	3.1	 	Establishment of
Company
	 

	 	 	The Parties hereby agree to establish the JV Company promptly after the
Effective Date in accordance with the Joint Venture Law, the Joint
Venture Regulations, and other applicable PRC Laws. The JV Company shall
be an enterprise legal person under the laws of the PRC subject to the
protection and jurisdiction of PRC Laws. All of the activities of the JV
Company shall comply with applicable PRC Laws.

	3.2	 	Limited Liability Company
	 

	 	3.2.1	 	The JV Company shall be a limited liability company under
the laws of the PRC. For each of the Parties, the profits, losses,
risks, liabilities and any other obligations whatsoever of the JV
Company shall be limited and in proportion to the subscribed amount
of its respective contribution to the registered capital of the JV
Company. No Party shall have any liability to the JV Company or to
any third party in connection with the activities of the JV Company,
either jointly or severally, other than the requirement to make such
contribution, unless otherwise agreed to in writing by the Parties.

	 	3.2.2	 	Except as otherwise provided in this Contract, once a Party
has paid in full its contribution to the registered capital of the
JV Company, it shall not be required to provide further funds to or
on behalf of the JV Company by way of capital contribution, loan,
advance, guarantee or otherwise.
	 
	 	3.2.3	 	Unless otherwise agreed in writing by a Party, creditors of
the JV Company and other claimants against the JV Company shall have
recourse only to the assets of the JV Company and shall not seek
compensation, damages or other remedies from a Party.
	 
	 	3.2.4	 	In no event shall any Party be responsible for any losses,
risks, liabilities or obligations whatsoever resulting from any act
of the other Party.

	3.3	 	Name and Address of Company
	 

	 	 	The name of the JV Company shall be “BMW BRILLIANCE Automotive Ltd.” in
English and
“” in Chinese. The legal address of the
JV Company shall be Shanzuizi Road, Dadong District, Shenyang City,
Liaoning Province, PRC.

	 	3.3.1	 	The JV Company shall use the BMW name and logo as long as
BMW maintains at least a fifty percent (50 %) interest in the
registered capital of the JV Company, unless otherwise agreed by
BMW. At the expiry or termination of this Contract, the JV Company
immediately shall change its name by

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	 	 	 	removing therefrom the word “BMW” as well as stop using the BMW
name and logo without replacing them with any similar word,
expression, or symbol, as provided for in more detail in the
Trademark License Agreement.
	 
	 	3.3.2	 	Should BMW, against its own volition, partly or wholly lose
its equity participation in the JV Company or should BMW as a result
of any legal, judicial, official or other measure no longer be able
to use any of its material rights as provided for under this
Contract or should the powers of BMW’s representatives in the Board
or BMW’s right to nominate people to be the members of the
Management of the JV Company as provided for under this Contract or
under the PRC Laws be diluted, the JV Company immediately shall,
unless otherwise approved by BMW, change its name as well as stop
using the BMW name and logo without replacing them with any similar
word, expression, or symbol, as provided for in more detail in the
Trademark License Agreement. BRILLIANCE undertakes not to continue
or take over the JV Company’s business using the BMW name or logo or
any similar word, expression, or symbol.

	3.4	 	Date of Establishment
	 
	 	 	The date of the establishment of the JV Company shall be the date on
which the JV Company is issued its Business License.
	 
	3.5	 	Change of Law

	 	3.5.1	 	If, after the date of the execution of this Contract, a
Change of Law occurs and it will, upon application by the JV Company
and the Party concerned and upon approval by the relevant government
authorities, result in treatment to the JV Company or to any Party
substantially more favorable than the terms of this Contract
(without resulting in less favorable treatment to the other Party),
then the JV Company and the Party concerned shall promptly apply to
receive the benefits of such more favorable treatment and the other
Party shall use all reasonable efforts to facilitate such
application.
	 
	 	3.5.2	 	If, after the date of the execution of this Contract, a
Change of Law occurs and it directly or indirectly causes material
adverse consequences to the JV Company or to any Party’s benefits
under this Contract, then upon written notice thereof from the JV
Company (acting through its Board) to the Parties or by the affected
Party to the other Party, the Parties shall promptly consult with
each other and determine whether:
	 

	 	(i)	 	to continue to implement this
Contract in accordance with the original provisions
thereof; or
	 
	 	(ii)	 	to effectuate necessary
adjustments in order to preserve each Party’s benefits
under this Contract on a basis no less favorable than
the benefit it would otherwise receive had such a
Change of Law not occurred.
	 

	 	3.5.3	 	Article 3.5.2 shall not apply to any Change of Law that
takes effect after the date of the execution of this Contract if,
before that date, such Change of Law has been announced by the
relevant PRC authorities as a measure necessary to implement the
PRC’s accession to the WTO and the Parties were aware of or could
reasonably have been aware of that Change of Law and its
consequences.

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	3.6	 	Branches

	 	 	 	The JV Company may establish branch offices and subsidiaries
anywhere inside and outside of the PRC, subject to compliance with
PRC Laws and upon the approval of both the Board of Directors and
if required the Examination and Approval Authority. Subject to
receipt of all required approvals and licenses the JV Company shall
establish a distribution and sales branch in Beijing in which its
distribution, sales and marketing activities will be located.

Article 4        Purpose and Scope of Business of JV Company

	4.1	 	Purpose
	 
	 	 	The purpose of the JV Company is to use efficient and advanced technology
and management, production and distribution techniques to manufacture and
sell the JV Products, to secure the quality, the value and
competitiveness of such products, and to obtain satisfactory economic
benefits for the Parties.
	 
	4.2	 	Business Scope

	 	4.2.1	 	The business scope of the JV Company shall be to produce BMW
passenger cars, engines, parts and components, and accessories
therefore; to sell the products produced by itself; and to provide
after-sales services (including spare parts) in connection with its
products.
	 
	 	4.2.2	 	The JV Company also will conduct all business activities
necessary for or ancillary to the activities listed in Article 4.2.1
including, but not limited to, industrial, engineering, commercial,
financial, marketing, financial services, and training activities.
	 
	 	 	 	At the discretion of the Board of Directors and subject to
compliance with PRC Laws and the obtaining of approval from the
Examination and Approval Authority, additional products might be
manufactured, marketed, sold and serviced by the JV Company.

	4.3	 	Production Scale
	 
	 	 	The annual production scale of the JV Company is estimated to be 30,000
passenger cars when the JV Company is operating at full scale.
	 
	4.4	 	Initial Business Case / Business Plan / Budget

	 	4.4.1	 	The Parties have prepared on a best estimate basis an
initial business case which reflects their common understanding of
the estimated profitability of the JV Company (the “Initial Business
Case”). The Initial Business Case sets out the financial plan of the
JV Company for the years 2003 – 2010.
	 
	 	4.4.2	 	The Board of Directors shall annually approve a long-range
plan for the JV Company (the “Business Plan”) covering a six-year
period starting with the following calendar year. The creation of
Business Plans is a rolling process with each Business Plan
replacing the Business Plan that was approved for the preceding
year. The format of the Business Plans are stated in Annex 1 hereto.

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	 	4.4.3	 	The Board of Directors shall annually approve a budget for
the JV Company for the following calendar year (the “Budget”). The
Budget shall set forth the detailed financial planning of the JV
Company. The format of the Budget are stated in Annex 1 hereto. The
Budget shall be prepared together and in compliance with the
Business Plan and shall be in compliance with the cost positions of
the Business Plan that are applicable for the same calendar year.
	 
	 	4.4.4	 	The Board shall approve the Business Plans and the Budgets
prepared and submitted by the Management; provided that the
Management prepares the Business Plans and Budgets in accordance
with the requirements of Articles 4.4 and 4.5 of this Contract and
any internal rules and guidelines adopted by the Board.

	4.5	 	Benchmarks / ROS

	 	4.5.1	 	Based on the Initial Business Case the Parties have agreed
to calculate certain percentage figures that shall apply to the
following cost positions of the JV Company: (i) cost of production,
(ii) cost of wholesale and (iii) cost of retail. The percentage
figures indicate the percentages of the respective cost positions of
the adjusted turnover of the JV Company as provided in the Business
Plan approved in the current year. The single cost items covered by
these cost positions are defined in Annex 2.
	 
	 	4.5.2	 	In order to provide guidance to the Management of the JV
Company, the Parties have agreed on certain target percentage
figures for each of the cost positions mentioned in Article 4.5.1
(the “Benchmarks”). . The Initial Business Case also provides a
percentage for the Return on Sales of the JV Company on an annual
basis. The Benchmarks and the percentage for the Return on Sales
will be set forth in a separate agreement to be entered into between
the Parties.
	 
	 	4.5.3	 	Unless the Board of Directors has revised the Benchmarks in
accordance with Article 7.2.1(b)(viii), the Business Plan and the
Budget shall be prepared by the Management in compliance with the
Benchmarks and the ROS for the applicable calendar year.
	 
	 	4.5.4	 	When implementing the Budget during a calendar year, the
General Manager is, subject to internal rules and guidelines adopted
by the Board of Directors, authorized to deviate from each of the
Benchmarks and/or the ROS provided that such deviation shall at all
times satisfy both of the following conditions:
	 

	 	(i)	 	in case of a deviation from a Benchmark, the
deviation shall be within fifteen percent (15%) greater or
fifteen percent (15%) less of the relevant Benchmark; and
	 
	 	(ii)	 	in case of a deviation from the ROS, the
deviation shall be within five percent (5%) greater or five
percent (5%) less of the ROS.

Article 5        Total Investment and Registered Capital

	5.1	 	Total Amount of Investment
	 
	 	 	The total amount of investment of the JV Company shall be four hundred
fifty million Euro (€450,000,000).

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	5.2	 	Registered Capital
	 
	 	 	The registered capital of the JV Company shall be one hundred fifty
million Euro (€150,000,000).
	 
	5.3	 	Contribution to Registered Capital

	 	5.3.1	 	BRILLIANCE’s contribution to the registered capital of the
JV Company shall be seventy-five million Euro
(€75,000,000), and
shall represent fifty percent (50%) of the total registered capital
of the JV Company. BRILLIANCE’s registered capital contribution
shall be made in cash in RMB in an amount equivalent to
seventy-five million Euro
(€75,000,000) converted at the
Conversion Rate on the date on which the capital contribution is
due pursuant to the terms of Article 5.4 below.
	 
	 	5.3.2	 	BMW’s contribution to the registered capital of the JV
Company shall be seventy-five million Euro
(€75,000,000), which
shall represent fifty percent (50%) of the total registered capital
of the JV Company. BMW’s registered capital contribution shall be
made in cash in Euro. The amount shall be translated into RMB at
the Conversion Rate for recording purposes.

	5.4	 	Contribution Schedule

	 	5.4.1	 	Both Parties shall make their contributions to the
registered capital of the JV Company within ninety (90) calendar
days of the issuance of the Business License of the JV Company.
	 
	 	5.4.2	 	Notwithstanding the provisions of Article 5.4.1, a Party
shall not be obligated to make its contribution if it is clear that
the other Party will not be able to make its capital contribution as
provided in Article 5.4.1.
	 
	 	5.4.3	 	In the event that any Party fails to make its capital
contribution, in whole or in part, in accordance with the terms of
this Article 5, such Party shall pay simple interest to the JV
Company on the unpaid amount from the date due until the date the
contribution is made at the rate for short-term (6 months)
commercial loans offered by the Shenyang branch of Bank of China in
Renminbi on the due date plus two percent (2%), if the contribution
is to be made in Renminbi, and at the LIBOR for Euro rate, fixed on
the due date at 11:00 am (GMT) for commercial short term loans of
three months plus two percent (2 %), if the contribution is to be
made in Euro. If any Party does not make its capital contribution in
full within ninety (90) days of the due date, the other Party shall
have the right to terminate this Contract, and/or claim damages from
the breaching Party.

	5.5	 	Investment Certificates

	 	5.5.1	 	The JV Company shall retain, at its expense, an accountant,
certified and registered in China and acceptable to the Parties, who
promptly shall verify the capital contributions by the Parties and
issue a capital verification report to the JV Company. Any capital
contribution in the form of cash shall be deemed to have been made
on the date on which the relevant amount of cash has been deposited
into a bank account in the name of the JV Company.
	 
	 	5.5.2	 	Within thirty (30) days from receipt of the capital
verification report, the JV Company shall issue investment
certificates to each Party evidencing the contributions by each
Party on the basis of such report. The certificates shall

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	 	 	 	be signed by the Chairman and the Vice-Chairman of the Board and
sealed with the JV Company’s seal. Each investment certificate
shall indicate the following: the name of the JV Company; the
Establishment Date; the names of the Parties; amount of the capital
contribution and the date on which such contribution was made; the
certificate’s date of issue. A copy of the investment certificate
shall be submitted to the Examination and Approval Authority for
the record. The General Manager shall maintain a file of all
capital verification reports and copies of all investment
certificates that have been issued to the Parties.

	5.6	 	Financing

	 	5.6.1	 	The balance between the total amount of investment and
registered capital of the JV Company, pursuant to approval by the
Board and in accordance with the business needs of the JV Company,
may be raised by the JV Company through loans from domestic and/or
foreign banks or other financial institutions or, if permitted by
law, through loans from the Parties or their Affiliates. Such loans
provided by the Parties or their Affiliates shall be referred to as
“Shareholder Loans”.
	 
	 	5.6.2	 	The JV Company shall be responsible for obtaining any loans
or other financing that may be required by it to finance its
operations and capital expenditures. If and to the extent the JV
Company is unable to raise funds through loans from domestic and/or
foreign banks or other financial institutions at rates that the
Board determines to be competitive, each Party shall on a pro rata
basis in accordance with its share of the registered capital of the
JV Company, itself or through its Affiliates, provide Shareholder
Loans to the JV Company which shall not exceed the maximum amount of
loans as provided for in the Business Plan applicable for the
respective time period. In the event the financing needs of the JV
Company as proposed by the Board shall exceed the maximum amount of
loans as provided for in the Business Plan applicable for the
respective time period, both Parties shall seriously consider
whether to provide any additional Shareholder Loans in excess of
such maximum amount of loans.
	 
	 	 	 	If BRILLIANCE or its Affiliates registered in the
PRC are not permitted under PRC Laws to provide Shareholders
Loans, then BRILLIANCE shall be obliged to cause its
Affiliates registered outside of the PRC to provide
Shareholder Loans or guarantees to the JV Company. If
BRILLIANCE fails to do so, then BMW shall not have the
obligation to provide Shareholder Loans. If BMW or its
Affiliates are not permitted under the Dutch laws and
regulations to provide Shareholders Loans, then BMW shall be
obliged to cause its Affiliates to provide Shareholder Loans
or guarantees to the JV Company. If BMW fails to do so, then
BRILLIANCE shall not have the obligation to provide
Shareholder Loans.
	 
	 	5.6.3	 	If agreed between the Parties, the Parties may at their
discretion provide for other forms of financial assistance to the JV
Company. Unless otherwise agreed to by the Parties, any method of
financial assistance by either of the Parties as provided for under
this Article 5.6.3 shall be made only to the extent that the other
Party provides an equal amount of financial assistance on a pro rata
basis in accordance with its shareholding in the JV Company. If a
Party has provided the JV Company with other forms of financial
assistance under this Article, the Party’s obligation to provide for
Shareholder Loans as provided for under Article 5.6.2 shall be
reduced accordingly.

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	5.7	 	Increase of Registered Capital

	 	5.7.1	 	Any increase in the registered capital of the JV Company
shall be approved by a unanimous vote of all of the Directors of the
Board and, if required by PRC Laws, submitted to the Examination and
Approval Authority for approval. Upon receipt of such approval, the
JV Company shall register the increase in the registered capital
with the Business Registration Authority pursuant to PRC Laws.
	 
	 	5.7.2	 	Unless otherwise agreed to by the Parties and approved by
the Board, the Parties shall make any increase in the registered
capital in the same proportions as their originally-subscribed
contributions to the registered capital. The Parties may agree, in
writing, to adjust their registered capital proportions, subject to
PRC Laws and any required approval of the Examination and Approval
Authority.
	 
	 	5.7.3	 	If further registered capital is required for the business
of the JV Company the Parties will give serious consideration to
any information and proposals provided in this regard.

Article 6         Transfer of Interest in the Registered Capital of the JV Company

	6.1	 	Except as otherwise provided in this Contract, neither Party shall,
without the prior written consent of the other Party assign, pledge or
otherwise encumber any of its interest in the registered capital of the
JV Company.
	 
	6.2	 	Notwithstanding Article 6.1 above, either Party (the “Assigning Party”)
shall be entitled to transfer or assign all of its interest in the
registered capital of the JV Company to one of its wholly-owned
Affiliates, provided that the following occur (and that such provisions
shall apply to any further transfer from an Affiliate to another
Affiliate):

	 	6.2.1	 	the Assigning Party shall give to the other Party (the
“Non-assigning Party”) not less than one month’s prior written
notice of its intention to effect such transfer;
	 
	 	6.2.2	 	the transferee or assignee (collectively, the “Assignee”)
shall execute with the “Non-assigning Party”, a revised version of
this Contract and of the Articles of Association, which documents
shall, unless otherwise agreed between the Non-assigning Party and
the Assignee, be the same as the versions prior to the transfer or
assignment, except that the Assignee shall be substituted for the
Assigning Party as a Party to those documents;
	 
	 	6.2.3	 	the Assigning Party, by its execution of this Contract,
unconditionally and irrevocably guarantees as a separate liability
to the Non-Assigning Party that the Assignee will perform all of
its obligations under this Contract;
	 
	 	6.2.4	 	the Assigning Party shall procure that a legally binding
contract is executed with the Assignee that, at the option of the
Assigning Party, permits the re-transfer to the Assigning Party of
all such shares and/or, as the case may be, any such loan capital,
debentures or other securities previously so transferred, and that
the Assigning Party shall exercise that option prior to any such
permitted Assignee ceasing to be a wholly-owned Affiliate of the
Assigning Party;

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	 	6.2.5	 	all its interest shall be transferred, as a whole, by the
Assigning Party to the Affiliate in order to avoid further
partitioning of the equity interest;
	 
	 	6.2.6	 	the Affiliate is a duly incorporated, validly existing
entity that is acceptable to the Non-Assigning Party.

	6.3	 	Notwithstanding Article 6.1 above, BMW shall be entitled to transfer or
assign all or some of its interest in the registered capital of the JV
Company to a PRC holding company to be established as an Affiliate of BMW
Group under PRC Laws and subject to all necessary licenses and approvals,
provided that all conditions provided for under Article 6.2.1, 6.2.2,
6.2.3, 6.2.4 and 6.2.6 above are met.
	 
	6.4	 	Each Party hereby agrees that it shall consent and shall cause the
Director(s) appointed by it to consent to any proposed assignment of
registered capital by any Party pursuant to Article 6.2 or Article 6.3.
	 
	6.5	 	In addition to the conditions set out in Article 6.1 above, any
transfer, pledge or encumbrance of interest in the registered capital of
the JV Company shall be subject to the unanimous approval of the Board of
Directors, which approval shall not be unreasonably withheld or delayed.
	 
	6.6	 	All equity transfers shall be submitted to the Examination and Approval
Authority for approval. Upon receipt of the approval, the JV Company
shall register the change in equity with the Business Registration
Authority.
	 
	6.7	 	Each Party or its Affiliates shall remain the legal owner of all of its
or its Affiliates’ Shareholder Loans to the JV Company, and the legal
owner of all debentures and other securities issued or provided by the JV
Company to such a Party. Neither Party shall be entitled to dispose of,
transfer or assign to any third party its Shareholder Loans which it has
provided to the JV Company, or the debentures or other securities which
the JV Company has issued or provided to the Party, except in conjunction
with a transfer of the Party’s interest in the registered capital of the
JV Company, as permitted by this Contract, or except with the prior
written consent of the super majority of the Board of Directors.

Article 7        Board of Directors

	7.1	 	Formation of the Board

	 	7.1.1	 	The date of establishment of the Board of Directors shall
be deemed to be the Establishment Date.
	 
	 	7.1.2	 	The Board of Directors initially shall be composed of
thirteen (13) Directors of which six (6) shall be appointed by
BRILLIANCE, six (6) shall be appointed by BMW, and one (1) Director
shall be an independent Director first nominated by BMW and then
mutually appointed by the Parties. The Parties agree that three
(3) years after the Establishment Date the Board shall be reduced
to a total of seven (7) Directors, of which three (3) Directors
shall be appointed by BRILLIANCE, three (3) shall be appointed by
BMW, and one (1) Director shall be an independent Director first
nominated by BMW and then mutually appointed by the Parties. The
independent Director shall be independent of BMW to the extent that
the Director is not employed by BMW. If the ratio of the Parties’
contributions to the registered capital changes, the proportionate
number of Directors shall change accordingly in accordance with
applicable legal procedures.

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	 	7.1.3	 	The Chairman of the Board shall be appointed by BRILLIANCE
and the Vice-Chairman by BMW. The Directors, Chairman and
Vice-Chairman each shall have a term of office of three (3) years,
and each shall be eligible for consecutive terms of office upon
reappointment by the original appointing Party.
	 
	 	7.1.4	 	Any vacancy created in the Board of Directors shall be
immediately filled by the Party who originally appointed the absent
Director. Any Party at any time may remove any Director appointed
by such Party and appoint in lieu thereof any other person to serve
the remainder of the removed Director’s term. Each Party shall
notify the other Party, in writing, each time it appoints or
replaces a Director. Except as provided in Article 7.1.2, neither
Party shall be entitled to nominate any Director to the Board who
is not in a relationship of employment with it or with its
Affiliates.
	 
	 	7.1.5	 	The Chairman shall be the legal representative of the JV
Company but the Chairman may not unilaterally take any action
binding the JV Company without authorization of the Board. The
Chairman shall exercise the functions in accordance with the
provisions set forth in the Contract, the Articles of Association
and the resolutions of the Board. Whenever the Chairman of the
Board cannot exercise his/her functions for any reason, he/she
shall authorize the Vice Chairman of the Board or, in the event the
Vice-Chairman is not available, another Director, to represent the
Chairman until the Chairman resumes his/her right or functions, or
until a successor is appointed.
	 
	 	7.1.6	 	Each Party shall cause the Directors appointed by it to act
at all times lawfully and in good faith with respect to all matters
relating to the business of the JV Company and this Contract and to
any other contracts and agreements concluded pursuant to this
Contract. A Party immediately shall discharge a Director it has
appointed to Board, upon discovery by that Party that such Director
has: violated this Contract, the Articles of Association or
Articles 57 or 58 of the PRC Company Law or any other relevant PRC
Laws; acted in bad faith or with gross negligence to the detriment
of the JV Company; committed a crime; participated in corruption;
or committed any other act that would be sufficient for removal of
a director under PRC Laws.
	 
	 	7.1.7	 	The JV Company shall indemnify each Director against all
claims and liabilities incurred by reason of him/her being a
director of the JV Company, provided that the Director’s acts or
omissions giving rise to such claims or liabilities do not
constitute intentional misconduct or gross negligence or a
violation of criminal laws.

	7.2	 	Powers of Board

	 	7.2.1	 	The Board of Directors shall be the highest authority of
the JV Company and shall have the power to make decisions on all
major and important matters of the JV Company, including, without
limitation, the matters as follows:
	 

	 	(a)	 	unanimity decisions
	 

	 	(i)	 	amendment of the Articles of Association;
	 
	 	(ii)	 	increase, decrease, transfer,
assignment or pledge of the JV Company’s registered
capital and the adjustment of the

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	 	 	 	proportions of each Party’s contribution to the
registered capital;
	 
	 	(iii)	 	merger of the JV Company with any
other economic organization, or split or division of
the JV Company;
	 
	 	(iv)	 	suspension of the JV Company’s
operation, and/or termination, dissolution or
liquidation of the JV Company;
	 
	 	(v)	 	distribution and payment of the JV
Company’s profits;
	 

	 	(b)	 	super-majority decisions
	 

	 	(vi)	 	approval of the Business Plan and
the Budget of the JV Company (hereinafter together
referred to as the “Planning Documents”) as provided
for in Articles 4.4 and 4.5, such approval to include
the sales volume and the sales price (price to dealer)
of the JV Products as part of the Planning Documents;
	 
	 	(vii)	 	approval of retail prices (price
to customer) or recommended retail prices of the JV
Products as provided in Article 15.1;
	 
	 	(viii)	 	revisions of the Benchmarks as provided for in
Articles 4.5.3;
	 
	 	(ix)	 	establishment of or investment in
any company by the JV Company; sale, transfer,
assignment or disposal by the JV Company of any equity
interest in another company; establishment of a branch
by the JV Company in the PRC or outside of the PRC;
	 
	 	(x)	 	purchase, sale, transfer,
assignment, or disposal by the JV Company of any of
its fixed assets or real property with a value
exceeding two hundred fifty thousand Euro
(€250,000), or the Renminbi equivalent thereof
unless such activity was separately approved in the
Planning Documents;
	 
	 	(xi)	 	without limitation on the
authority of the General Manager under Article 4.5.4,
any connected transaction between the JV Company and
one Party (or any Affiliate of one Party), in which
the amount of that connected transaction or the
aggregate amount of that similar type of connected
transaction (e.g. procurement of kits, procurement of
technical services, procurement of IT-services etc.)
within one calendar year exceeds one million Euro
(€1,000,000) unless such transaction was separately
approved in the Planning Documents; for connected
transactions which are undertaken by the General
Manager pursuant to Article 4.5.4, the JV Company
shall not agree on any terms and conditions less
favorable to it than those for connected transactions
of a similar type that were approved as part of the
Planning Documents (e.g. purchase of kits from BMW AG)
governed by the Trademark License Agreement,
Technology License Agreement, or the Other Contracts
as applicable.

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	 	(xii)	 	without limitation on the
authority of the General Manager under Article 4.5.4,
the approval of any credit lines, structured
financing, or issuance of public and private
debentures by the JV Company in an aggregate amount
exceeding three million Euro (€3,000,000), unless
such transaction was separately approved in the
Planning Documents;
	 
	 	(xiii)	 	approval of any guarantee to be made by the JV
Company or of any mortgage, pledge, or creation of any
security interest in any material assets of the JV
Company, that is both outside of the JV Company’s
ordinary course of business and not included in the
Planning Documents;
	 
	 	(xiv)	 	approval of the accounting policy
or any change thereof;
	 
	 	(xv)	 	the final accounts and audited
financial statements;
	 
	 	(xvi)	 	the compensation of the General
Manager and other Senior Corporate Officers;
	 
	 	(xvii)	 	the selection of the JV Company’s principal
financial services provider – if any – for the
granting of loans and/or credits to end customers of
the JV Products;
	 
	 	(xviii)	 	any other matters requiring super-majority approval
by the Board of Directors as expressly provided for in
this Contract, the Articles of Association, or as
determined by the Parties from time to time.
	 

	 	(c)	 	simple majority decision
	 

	 	(xix)	 	without prejudice to the
provisions of Articles 9.1.1 and 9.2.4, approval of
any major change in management organization;
	 
	 	(xx)	 	approval of any fundamental
management rules and guidelines of the JV Company;
	 
	 	(xxi)	 	approval of labor and personnel policies;
	 
	 	(xxii)	 	employment of an independent auditor;
	 
	 	(xxiii)	 	annual insurance plan of the JV Company;
	 
	 	(xxiv)	 	exercise of the JV Company’s options to require
JinBei to buy back the Assets under the Equipment
Purchase Agreement and the Building Purchase
Agreement;
	 
	 	(xxv)	 	any other matters requiring
simple majority approval, by the Board as expressly
provided for in this Contract, the Articles of
Association, or as determined by the Board from time
to time.
	 

	 	7.2.2	 	Resolutions involving items in Article 7.2.1 shall be
adopted by the following numbers of votes of all Directors present
in person, by telephone or by proxy at duly convened Board meeting:

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	 	(a)	 	unanimous affirmative vote:
     
     
items listed under Article 7.2.1 (a)
	 
	 	(b)	 	super-majority vote (i.e., at
least three-fourths (3/4) of the Directors):
     
     
items listed under Article 7.2.1 (b)
	 
	 	(c)	 	simple majority vote:
     
     
items listed under Article 7.2.1 (c)
	 

	 	7.2.3	 	Unless otherwise specified in this Contract, all other
matters to be decided by the Board of Directors shall be resolved
by a simple majority vote of the Directors present in person, by
telephone or by proxy at a duly convened meeting of the Board.

	7.3	 	Meetings

	 	7.3.1	 	The first Board meeting shall be held within fifteen (15)
days from the Establishment Date.
	 
	 	7.3.2	 	The Board shall meet at least once a year. Board meetings
shall be held at the legal address of the JV Company, unless
otherwise determined by the Board of Directors.
	 
	 	7.3.3	 	Two-thirds of all of the Directors present in person or by
proxy shall constitute a quorum for any Board meeting.
	 
	 	7.3.4	 	If, at any properly convened meeting, no quorum is present,
then the Board shall reconvene at the same time and place within
ten (10) days following that convened meeting, as agreed between
the Chairman and the Vice-Chairman or, if no agreement is reached,
fourteen (14) days after that convened meeting. At such reconvened
meeting, any Director absent from such reconvened meeting without
having appointed a proxy shall be deemed to have abstained from
voting and further shall be deemed present for purposes of quorum
and for calculating the number of Directors attending the meeting.
At such reconvened meeting only the affirmative vote of each and
every Director of the Board present in person or by proxy shall be
taken into account for calculating the majority required by Article
7.2.2.
	 
	 	7.3.5	 	The Chairman shall preside over the Board meeting. The
Chairman and the Vice-Chairman together shall set the agenda of
Board meetings and shall be responsible for convening such meetings
and for the keeping of the minutes of the meetings. Each Director
and the General Manager may request to add to the agenda any items
relating to the operation and activities of the JV Company that
such Director or the General Manager deems necessary to be
discussed at such meeting and shall notify the Chairman and the
Vice-Chairman of such request in writing at least fourteen (14)
days prior to the date of the meeting. In order to facilitate the
smooth conduct of the Board’s business, the Chairman together with
the Vice Chairman may appoint a secretary for the purpose of any
Board meeting.
	 
	 	7.3.6	 	The Chairman together with the Vice-Chairman shall call an
interim meeting of the Board under a request thereof from no fewer
than one-third of the Directors specifying the matters to be
discussed, and shall notify all Directors in writing about the
agenda and the subject(s) of the meeting.

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	 	7.3.7	 	Except in urgent cases, in which a matter must be decided
within a shorter period in the interest of the JV Company the
Chairman in coordination with the Vice-Chairman shall send written
notice in both English and Chinese to all Directors at least
fourteen (14) days prior to any regular, or ten (10) days prior to
any interim meeting to be held, stating the agenda, time and place
of the meeting. Such notice may, however, be waived by the
unanimous consent of all Directors prior, after or at the meeting
in person, by telephone or by proxy. Such notice periods shall not
apply for any reconvened meeting as stated in Article 7.3.4 above.
	 
	 	7.3.8	 	Each Party has the obligation to ensure that the Directors
it appoints are present at the Board meeting in person or by proxy.
Should a Director be unable to attend a Board meeting for any
reason, she/he must appoint a proxy, in writing, by mail, facsimile
or hand-delivery, to be present and to vote at the meeting on
his/her behalf. A proxy may represent one or more Directors and
shall have the same rights and powers as the Director who appointed
him/her.
	 
	 	7.3.9	 	Board resolutions, if so agreed by all Directors, also may
be passed through a written circular vote via mail or facsimile
exchange. Such written resolutions shall be filed with the minutes
of the Board and shall have the same force and effect as a vote
taken by the Directors physically present at a meeting.
	 
	 	7.3.10	 	Board meetings may be held by telephone or other electronic audio
or video means such that everyone can hear each other at all times
and participation by a Director or his/her proxy in a meeting by
such means shall constitute presence of such Director or his proxy
in person at a meeting.
	 
	 	7.3.11	 	Directors shall serve as Directors without remuneration, unless
otherwise approved by the Board. All reasonable costs, including
round-trip airplane tickets and reasonable accommodation incurred
by any Director or his/her proxy for attending a Board meeting and
for performance of duties assigned by the Board, shall be borne by
the JV Company. Remuneration and other expenses of each Director
unrelated to the JV Company’s business shall not be borne by the JV
Company. If a Director also assumes a position as a manager or
staff employee in the JV Company, he/she shall be compensated by
the JV Company according to that position.
	 
	 	7.3.12	 	The General Manager is entitled to attend the meetings of the
Board of Directors, even if he or she is not a Director. The
General Manager, however, does not have the right to vote at the
Board of Directors’ meetings unless she/he also is a Director.

	7.4	 	Minutes
	 
	 	 	Unless a secretary is appointed, the minutes of meeting shall be
prepared by the Chairman together with the Vice-Chairman. This duty
shall include taking minutes of the meeting, and delivering the minutes
and other documents relating to the meeting to the Directors. Minutes of
Board meetings shall be signed by the Chairman and Vice-Chairman, unless
otherwise required under applicable PRC Laws. Copies of the minutes of
Board meetings shall be sent to each Party, shall be kept in English and
Chinese, and shall be placed on file at the JV Company’s head office.

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	7.5	 	Urgency
	 
	 	 	If, in the reasonable opinion of the General Manager, a decision which
would fall under the responsibility of the Board must be taken urgently
in order to save the JV Company or the JV Company’s interest from loss
or damages before a Board Meeting can be convened or a written
resolution by the Board can be obtained, the General Manager, upon
securing at least the prior consent of one Director appointed by
BRILLIANCE and one Director appointed by BMW, may make the respective
decision and submit the decision to the next meeting in which the
retroactive authorization of the Board shall be sought. However, the
General Manager immediately shall inform the Chairman and the
Vice-Chairman, in writing, about the situation of urgency and the
decision which is taken.

Article  8           Deadlock

	8.1	 	If for whatever reason the Board is unable to arrive at a decision on any
matter, where the lack of the decision would materially and adversely
affect the business operation of the JV Company and would cause serious
harm to either of the Parties’ material interests under this Contract,
then, within thirty (30) days after the matter is first raised at a
meeting of the Board, either Party shall be entitled to serve a notice (a
“Conciliation Notice”) on the other Party requiring the Parties to attempt
to promptly resolve the matter.
	 
	8.2	 	 The Party who issues a Conciliation Notice shall describe in the
Conciliation Notice the matter to be discussed, its position in respect of
that matter, and its evidence and arguments in support of its position.
The other Party shall within thirty (30) days of the service on it of a
Conciliation Notice give a written response to the Party who issued the
Conciliation Notice of its position and evidence and arguments in support
thereof.
	 
	8.3	 	 Upon receipt of the written response representatives of each of the
Parties shall meet with each other in person and discuss their respective
positions in respect of the matter described in the Conciliation Notice.
Within thirty (30) days from the receipt of the written response a meeting
of the Board shall be scheduled in which the Board shall finally decide on
the matter described in the Conciliation Notice. If, for whatever reason,
the Board in its meeting is unable to arrive at a decision on this matter
to the mutual satisfaction of each of the Parties, an event of deadlock
shall be deemed to exist and either Party shall be entitled to terminate
this Contract under Article 23.1.1(xiii). Each Party may refer the matter
constituting the deadlock, or the termination by a Party based on the
deadlock, to arbitration in accordance with the provisions of Article 29.

Article  9           Management Organization

	9.1	 	The Board of Directors shall establish a management organization
(hereinafter referred to as “Management”), which shall be responsible for
and in charge of the day-to-day operation and management of the JV
Company. The Management shall be made up of one General Manager, one or
more Deputy General Manager(s) and other senior corporate officers as
determined by the Board of Directors from time to time (collectively, the
“Senior Corporate Officers”). For the avoidance of doubt, Senior Corporate
Officers do not include department managers.

	 	9.1.1	 	The General Manager, the Deputy General Manager Sales and
the Deputy General Manager Manufacturing shall be nominated by BMW
and appointed by the Board. The Deputy General Manager Finance with
the function of chief

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	 	 	 	financial officer shall be nominated by BRILLIANCE and appointed by
the Board. The Deputy General Manager Human Resources shall be
nominated by both BMW and BRILLIANCE and appointed by the Board.
Other Senior Corporate Officers, if any, shall be appointed by the
Board of Directors. The remuneration and benefits of the Senior
Corporate Officers shall be approved by the Board. The Senior
Corporate Officers shall be individuals with excellent professional
qualifications or substantial experience in their respective fields
and shall have very good oral and working capability in the English
language.
	 
	 	9.1.2	 	The term of office for the Senior Corporate Officers shall
be three (3) years, which term may be renewed.
	 
	 	9.1.3	 	If any of the Senior Corporate Officers shall resign,
retire, become incapacitated, or be removed from office by the Board
of Directors, the Board shall appoint a replacement based on the
proposal of the initially-nominating Party as determined in Article
9.1.1 above.
	 
	 	9.1.4	 	The Board of Directors may remove any Senior Corporate
Officer at any time, subject to any employment or service contract
between the JV Company and that Senior Corporate Officer.

	9.2	 	Responsibilities and Powers of Senior Corporate Officers

	 	9.2.1	 	The Board of Directors shall have the power to determine,
qualify and change in any way the power, responsibility and
authority of the Senior Corporate Officers. The Senior Corporate
Officers shall implement the decisions of the Board of Directors
without any condition.
	 
	 	9.2.2	 	Subject to any qualifications and limitations as may be set
by the Board from time to time, the General Manager shall be
responsible for the daily management and operation of the JV
Company. Within the scope expressly authorized by the Board, the
General Manager shall have the authority to represent the JV Company
in external matters, execute contracts or agreements, and to bind
the JV Company in all matters other than those for which prior
approval by the Board is required pursuant to this Contract, the
Articles of Association or any resolutions of the Board.
	 
	 	9.2.3	 	The Deputy General Managers shall, under the leadership of
the General Manager, assist the General Manager in the daily
management and operation of the JV Company. All Deputy General
Managers must report to the General Manager on all important
accounts and the daily operations of the JV Company as requested by
the General Manager. The General Manager, however, shall consult
with the respective Deputy General Manager in charge of the matter
before making a key management decision.
	 
	 	9.2.4	 	The Deputy General Manager Finance shall be responsible for
the financial matters of the JV Company, such matters shall include
the treasury, accounting, and financial controlling operations of
the JV Company. This responsibility may not be altered pursuant to a
decision of the Board to change the management organization as
provided under Article 7.2.1(c)(xix). The Deputy General Manager
Finance and the General Manager shall jointly report to the Board on
the financial matters of the JV Company on a quarterly basis. If,
after thorough discussions between the Deputy General Manager
Finance and the General Manager, there remains disagreement on the
contents of the financial matters, each of them shall be entitled to
separately present their case to the Board.

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	 	9.2.5	 	The JV Company may establish various departments as proposed
by the General Manager and approved by the Board. The General
Manager may from time to time propose the creation or cancellation
of any departments within the organizational structure of the JV
Company to the Board of Directors. Any change of the organizational
structure of the JV Company, however, shall be implemented only
after review and approval of the Board of Directors.
	 
	 	9.2.6	 	The General Manager shall, in consultation with the Deputy
General Managers and in particular with the Deputy General Manager
Finance, prepare for Board approval the Business Plan and Budget for
each year as provided for in Articles 4.4 and 4.5. Unless the Board
decides otherwise, the General Manager shall submit each year’s
Business Plan and Budget to the Board for timely approval prior to
the commencement of the fiscal year.
	 
	 	9.2.7	 	In addition to any other matters as specified herein, the
General Manager shall bi-annually report to the Board of Directors,
or more frequently as the Board may decide or as the General Manager
deems appropriate, such matters as follows and as the Board may
decide from time to time:
	 

	 	(i)	 	performance of the JV Company’s business
operations;
	 
	 	(ii)	 	financial conditions and results of the JV
Company (unless contained in the joint reports of the Deputy
General Manager Finance);
	 
	 	(iii)	 	major dealings and transactions with any
domestic and foreign companies or other economic
organizations;
	 
	 	(iv)	 	existing problems which are material in nature
and measures proposed or carried out for the solution thereof;
	 
	 	(v)	 	other important matters materially affecting the
business and/or financial status of the JV Company; and
	 
	 	(vi)	 	the budget and final accounts of the JV Company
(yearly).
	 

	 	9.2.8	 	The JV Company shall indemnify the Senior Corporate Officers
against all claims and liabilities incurred by reason of them
undertaking their duties to the JV Company, provided that the acts
or omissions of these officers giving rise to such claims or
liabilities do not constitute intentional misconduct or gross
negligence or a violation of criminal laws.

	9.3	 	Non-competition

	 	9.3.1	 	No Senior Corporate Officer shall in any way serve for, or
act for the benefit or interest of, any other person, company, unit,
entity or organization or participate in any activity conducted by
such person, company, entity, unit or organization which may,
directly or indirectly, conflict or compete with the interest or
business of the JV Company.
	 
	 	9.3.2 	 	All other management personnel of the JV Company shall be
forbidden from concurrently serving for or working at any other
company, unit, entity or organization whatsoever, unless such
service or work is authorized by the General Manager and approved or
ratified by the Board. Any personnel in violation of this
prohibition shall be subject to immediate dismissal by the

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	 	 	 	General Manager after consultation with the Deputy General Manager
Finance, unless the Board shall decide otherwise.

	9.4	 	Dismissal
	 
	 	 	Any Senior Corporate Officer who misuses or abuses his/her position for
personal ends, engages in graft or bribery in connection with the JV
Company’s business, acts in violation of any Board decisions or PRC Laws,
acts in any way in competition with the JV Company, is seriously
negligent in his/her duties, or fails to perform any assigned tasks
without due cause shall be dismissed by the Board of Directors without
any compensation. Upon such dismissal, the Board shall immediately
appoint a replacement. Any other management personnel who engage in such
improper activities shall be immediately dismissed by the General Manager
after consultation with the Senior Corporate Officer in charge of labor
matters.
	 
	9.5	 	Signatures

	 	9.5.1 	 	In accordance with any further guidelines established by the
Board of Directors, the signatures of the General Manager and of the
Deputy General Manager Finance shall be required for all of the JV
Company’s expense reports and major financial transactions,
including the opening and closing of bank accounts, the undertaking
of wire transfers, and the issuance of checks for payment. However,
the General Manager and/or the Deputy General Manager Finance may,
by signing a letter of authorization, authorize any Deputy General
Manager or other officer of the JV Company to sign on his/her
behalf.
	 
	 	9.5.2 	 	Notwithstanding the above the signature policy, the JV
Company shall require each document of a binding nature to carry at
least two authorized signatures. Unless otherwise decided by the
Board, the person in charge of the respective matter or his/her
superior (if signature authority is granted) shall appear as
co-signatory to the General Manager or to the General Manager’s
delegate.

	9.6	 	Working Language

	 	9.6.1 	 	Subject to the laws of the PRC, the working language (oral
and written) of the Senior Corporate Officers and the department
managers of the JV Company shall be English. Within the sales
organization of the JV Company, the employees at the level below the
department managers must be able to use English as working language.
The General Manager, at any time, can grant exceptions to this
policy.
	 
	 	9.6.2 	 	All the important documents of the JV Company shall be made
available in English and this requirement shall be stated in the
employment contracts between the JV Company and the Senior Corporate
Officers and the department managers. However, in no event, shall
important documents of the JV Company be deemed invalid solely
because they are not in English.

Article  10            Assistance by the Parties

	10.1 	 	Assistance by BRILLIANCE
	 
	 	 	As reasonably required in writing by the JV Company, BRILLIANCE shall
during the Joint Venture Term do the following:

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	 	10.1.1 	 	assist the JV Company to apply for loans from local financial
institutions, where necessary;
	 
	 	10.1.2 	 	assist the JV Company in the localization of the JV Products;
	 
	 	10.1.3 	 	assist the JV Company to procure administrative, fiscal and other
services in relation to the JV Company’s activities;
	 
	 	10.1.4 	 	assist the JV Company to obtain all necessary approvals,
registrations, permits and licenses from the relevant PRC
authorities for the establishment and operation of the business of
the JV Company;
	 
	 	10.1.5 	 	assist the JV Company to apply for the most preferential tax and
customs duties reductions and exemptions and other investment
incentives available under PRC Laws applicable to the JV Company;
	 
	 	10.1.6 	 	assist the JV Company to liaise with the relevant authorities to
effectively procure the Site, water supply, power supply,
transportation, telecommunications, and such other utilities as
required for the JV Company’s operations; assist the JV Company to
enter into the Land Use Right Lease Contract with the relevant
government authority at the terms and conditions acceptable to both
Parties;
	 
	 	10.1.7	 	assist the JV Company to arrange for the transportation of
imported equipment between ports in the PRC and the Site at
reasonable cost;
	 
	 	10.1.8 	 	assist the expatriate employees of the JV Company to obtain all
necessary entry visas and work permits and help them to arrange for
lodging, medical care and travel formalities in China;
	 
	 	10.1.9 	 	assist the JV Company to open Renminbi and foreign exchange bank
accounts;
	 
	 	10.1.10 	 	assist the JV Company to carry out all import and customs
declaration formalities for the equipment and office appliances
imported by the JV Company;
	 
	 	10.1.11	 	 assist the JV Company to recruit qualified Chinese personnel in
accordance with the JV Company’s needs and criteria;
	 
	 	10.1.12	 	assist the JV Company to apply for any approvals necessary for
the JV Company to obtain foreign exchange, and to remit to BMW or
its Affiliates dividends, royalties and other amounts owed by the JV
Company to BMW or its Affiliates; and
	 
	 	10.1.13	 	handle other matters set forth in this Contract and as the JV
Company might entrust to BRILLIANCE from time to time.

	10.2 	 	Assistance by BMW:
	 
	 	 	As reasonably required, BMW shall during the Joint Venture Term do the
following:

	 	10.2.1 	 	assist the JV Company to select and purchase inside and outside of
the PRC, at competitive prices, materials, machinery and equipment
needed by the JV Company and to ship such items to designated
Chinese ports;

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	 	10.2.2 	 	assist the JV Company to train its PRC staff and workers;
	 
	 	10.2.3	 	dispatch qualified and experienced expatriate employees to the JV
Company, as needed, and assist in the recruitment of other
managerial, technical and operational personnel of the JV Company;
	 
	 	10.2.4 	 	assist the JV Company in research and development of LC Parts and
components; ensure the availability of the JV Products for the JV
Company, in line with BMW AG mainstream products;
	 
	 	10.2.5	 	assist the JV Company to export JV Products; provided the JV
Products manufactured by the JV Company meet BMW Quality Standards
as defined in Article 13.1 and if it is economically viable for both
BMW AG and the JV Company to export the JV Products;
	 
	 	10.2.6 	 	assist the JV Company to localize parts and components, if
necessary and commercially viable;
	 
	 	10.2.7 	 	assist the JV Company to apply for loans from local financial
institutions, where necessary; and
	 
	 	10.2.8 	 	handle other matters as set forth in this Contract and as the JV
Company might entrust to BMW AG from time to time.

	10.3 	 	Any assistance to be rendered by a Party under Articles 10.1 and 10.2
above shall be to a reasonable extent only and shall neither release the
JV Company from its own responsibilities nor the other Party from its
general responsibility to assist the JV Company if this is reasonably
required. If a Party will incur substantial costs in providing any
assistance to the JV Company under Articles 10.1 or 10.2, the Party shall
be required to do so only if the JV Company by a decision of its Board of
Directors has agreed to reimburse the Party for such costs.

Article  11            Existing Equipment, Existing Building and Production Site

	11.1	 	BRILLIANCE shall cause JinBei to transfer possession of the Assets to the
JV Company within ten (10) days from the date that each shall make its
respective contribution to the registered capital of the JV Company in
accordance with Article 5.4. BRILLIANCE shall cause JinBei to take all
actions necessary to carry out registration and all other procedures that
may be required by applicable PRC Laws or the relevant PRC government
authorities in respect of the transfer of the ownership of the Existing
Buildings to the JV Company pursuant to the Building Purchase Agreement
and in respect of the transfer of ownership of the Existing Equipment to
the JV Company pursuant to the Equipment Purchase Agreement.
	 
	11.2	 	The JV Company shall enter into the Land Use Rights Lease Contract with
the relevant government authority in Shenyang for the lease of the land
use lease rights for the Site. The term of the land use rights for the
Site acquired by the JV Company under the Land Use Rights Lease Contract
shall be at least fifteen (15) years commencing on the date on which the
relevant government authority issues the State-owned Land Use Certificate
for the Site in the name of the JV Company.
	 
	11.3 	 	BRILLIANCE shall ensure that JinBei be responsible for the payment of all
outgoings, taxes and fees in connection with the Site and the Existing
Buildings incurred prior to the date of the transfer of the Assets to the
JV Company. Except for the following tax

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	 	 	and fee which will be paid by the JV Company, BRILLIANCE further shall
ensure that JinBei be responsible for the payment of any other outgoings,
taxes and fees which may be imposed by the relevant government
authorities in connection with the transfer of the ownership of the
Existing Buildings from JinBei to the JV Company:
	 	 
	 	 	(i)	 	a deed tax and stamp duty imposed on the JV Company; and
	 	 
	 	 	(ii)	 	a registration handling charge and other miscellaneous fees.
	 	 
	11.4 	 	BRILLIANCE’s Representations and Warranties

	 	11.4.1 	 	BRILLIANCE hereby represents and warrants to BMW with respect to
the Site and Existing Buildings that prior to the date on which the
transfer of the Site and the Existing Buildings to the JV Company
becomes effective:
	 	 	 
	 	 	 	(i)	 	JinBei has obtained a land use certificate for
the Site;
	 	 	 
	 	 	 	(ii)	 	JinBei is the sole owner of the Existing
Buildings on the Site and has obtained a Building Ownership
Certificate for the Existing Buildings;
	 	 	 
	 	 	 	(iii)	 	JinBei is entitled under PRC Laws to sell to the
JV Company the ownership of the Existing Buildings to the JV
Company;
	 	 	 
	 	 	 	(iv)	 	the Site and the Existing Buildings may be used
by the JV Company during the entire Joint Venture Term for the
full scope of business as specified in Article 4.2;
	 	 	 
	 	 	 	(v)	 	the present design, construction and operation of
the Existing Buildings on the Site are in full compliance with
PRC Laws and the requirements of the relevant government
authorities including but not limited to land administration,
environmental, construction, work safety and fire prevention
rules and standards;
	 	 	 
	 	 	 	(vi)	 	JinBei has obtained all permits and other
authorizations which are required for the Site or the Existing
Buildings thereon under the Law of the People’s Republic of
China on Environmental Protection and other PRC Laws relating
to pollution or protection of the environment;
	 	 	 
	 	 	 	(vii)	 	the Site and Existing Buildings thereon are in
full compliance with all material terms and conditions of the
permits and authorizations referred to in item (vi) above;
	 	 	 
	 	 	 	(viii)	 	JinBei’s use of and operation of its business at the Site
and the Existing Buildings thereon have not caused any actual
or potential environmental pollution that could have a
substantial adverse effect on the normal operation of the JV
Company.
	 	 	 
	 	 	 	(ix)	 	the Existing Buildings are free of any material
defects. None of the land use rights over the Site or
ownership rights of the Existing Buildings is subject to (i)
any contract of sale, transfer or leasing, (ii) restriction on
sale, lease, or transfer, or (iii) any mortgage, lien, charge
or any encumbrances of any kind;
	 	 	 
	 	 	 	(x)	 	there exists no claim by any government or
administrative department, military unit, organization,
company, or any other entity in any form, or any individual,
that such party has the right to use, occupy, control the

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	 	 	 	Site or the Existing Buildings or any part thereof or that
otherwise may subject the JV Company’s right to use the Site
or the Existing Buildings thereon to any conditions except
for those specified herein;
	 
	 	(xi)	 	it is unaware of any current or anticipated
civil, criminal or administrative action or proceeding with
respect to the Site or the Existing Buildings; and
	 
	 	(xii)	 	the Site, the Existing Buildings and the
installations therein leased or sold to the JV Company will
permit an annual production capacity of 30,000 vehicles as
provided for in the Building Purchase Agreement and the
Equipment Purchase Agreement. If the JV Company require
further production capacity, the production of JV Products by
the JV Company at the Site shall have priority over the
production of any other products by Brilliance or any other
parties, provided that reasonable adjustments to the relevant
terms of the Plant Lease Agreement have been made.

	11.5 	 	BRILLIANCE hereby represents and warrants to BMW with respect to the
Existing Equipment that:
	 
	 	 	(i)	 	JinBei has good and marketable title to the Existing
Equipment;
	 
	 	 	(ii)	 	JinBei is entitled under applicable PRC Laws to transfer the
Existing Equipment to the JV Company and none of the Existing
Equipment is subject to (i) any contract of sale, (ii) restriction
of transfer, or (iii) any mortgage, pledge, lien, charge or any
encumbrances of any kind of character; and
	 
	 	 	(iii)	 	on the date that the Assets are transferred by JinBei to the
JV Company, the Existing Equipment are in good condition, fit for
its intended purpose and in a state of good repair and maintenance,
reasonable wear and tear excepted.
	 
	11.6	 	If any of the representations and warranties of BRILLIANCE made in
Article 11.4 or Article 11.5 are at any time found to be untrue,
misleading or incorrect, BRILLIANCE shall take all actions necessary to
cure such default at its costs and expenses as soon as practical and shall
indemnify the JV Company for all losses, damages and claims, including
without limitation any related interest, penalties and reasonable
attorney’s fees, in connection with such default. If BRILLIANCE fails to
cure such default within thirty (30) days after becoming aware of the
default or fails to indemnify the JV Company as provided in the preceding
sentence, BRILLIANCE and BMW shall promptly consult with each other in
good faith and use their best endeavors to find a solution acceptable to
both Parties. This duty however shall not oblige BMW to accept any
financial disadvantages. If the Parties fail to agree upon such a solution
within thirty (30) days from the commencement of the aforementioned
consultation, BMW may terminate this Contract by providing written notice
to BRILLIANCE without liability on its part and without prejudice to any
other rights it may have under applicable PRC Laws.
	 
	11.7 	 	The Parties agree that the JV Company, pursuant to the terms of the Plant
Lease Agreement I, will lease a part of the Site and certain portions of
the Existing Buildings to JinBei.

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Article  12            Technology Transfer

	12.1	 	 The Parties agree that simultaneously with the execution of this
Contract, BMW and Brilliance on behalf of the JV Company, and BMW AG shall
sign a Technology License Agreement under which BMW AG will license the JV
Company the right to use certain technology, management and operational
know-how, which may be required by the JV Company for the production,
sales and marketing, and service of the JV Products. The JV Company shall
pay BMW AG certain licensing fees and royalties as provided in the
Technology License Agreement. The term of the Technology License Agreement
is fifteen (15) years. At the first meeting of the Board, the Board shall
ratify the Technology License Agreement.
	 
	12.2	 	 Pursuant to the terms of the Technology License Agreement, BMW AG shall
make available to the JV Company a complete, correct, current version of
the Technical Documentation as defined in the Technology License Agreement
for each of the JV Products which the JV Company may produce in the PRC.
BMW AG shall provide the JV Company with technical assistance for the
start up of the production of the JV Products, procurement of necessary
tooling and equipment and training of the JV Company’s Chinese employees.
The purpose of the technical assistance and training is to assist the JV
Company to produce qualified JV Products.
	 
	12.3	 	 Except as otherwise provided in the Technology License Agreement, the JV
Company and the JV Company’s authorized third party suppliers shall
manufacture the JV Products in strict conformity with the Technical
Documentation and the BMW Quality Standards, both as defined in the
Technology License Agreement. If and only if the JV Company has applied to
BMW AG for approval and has obtained BMW AG’s prior written authorization,
the JV Company and the JV Company’s authorized third party suppliers may
effect changes, modifications, improvements or substitutions of the JV
Products to meet special requirements of the JV Company or special
conditions in the market of the PRC.
	 
	12.4	 	The Parties agree that the technology and know-how licensed by BMW AG to
the JV Company under the Technology License Agreement is provided only for
the use of the JV Company and its local parts and components suppliers as
authorized by BMW AG. Subject to the foregoing, BRILLIANCE hereby
undertakes to BMW that BRILLIANCE shall not use, and shall ensure that its
Affiliates shall not use, such technology and know-how in any way at any
time during the Joint Venture Term and after the expiration or early
termination of this Contract, unless otherwise agreed by BMW AG in
writing.
	 
	12.5	 	 As part of the technology transfer and quality management, BMW AG shall
make available to the JV Company the relevant BMW IT systems and software
covering production, logistics, finance, sales, warranty and parts
processes. The JV Company shall install and apply such BMW systems and
software at its own cost. The IT system will be customized by BMW AG for
the JV Company’s needs and local requirements. The terms and conditions
for the implementation and the use of the IT systems will be provided for
in the software license agreement to be entered into by BMW AG and the JV
Company.

Article  13            Quality Standards

	13.1	 	 The Parties recognize that the technology under which the JV Products are
manufactured by the JV Company is highly advanced and requires meeting
very high standards in order to produce premium class products. Therefore
the JV Products, the manufacturing processes of the JV Company and the
quality management of the

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	 	 	JV Company’s business operations shall fully comply with the quality
requirements as determined by BMW AG from time to time on a worldwide
basis (herein referred to as the “BMW Quality Standards”) and with
applicable PRC Laws.
	 
	13.2	 	The JV Company will ensure that its policies and practices relating to
the quality and safety of the JV Products and to environmental protection
shall meet the standards set by BMW AG, and applicable PRC Laws, whichever
are higher.
	 
	13.3	 	 When taking measures to meet the BMW Quality Standards, the JV Company
shall at all times ensure that it complies with PRC Laws.

Article  14            Purchase of Materials and Services / Local Content

	14.1	 	 The JV Company shall be entitled to purchase and obtain, either in China
or from the international markets, the raw materials, tools, machinery and
equipment, parts and components, office appliances and services necessary
for the operations of the JV Company. All raw materials, machinery and
equipment, parts and components shall meet the BMW Quality Standards and
requirements of PRC Laws.
	 
	14.2	 	 The JV Company may incorporate localized parts and components into the JV
Products, provided that such localized parts and components have been
tested and accepted pursuant to a separate agreement to be entered into by
BMW AG and the JV Company, and provided that such localized parts and
components are commercially acceptable to the JV Company in such terms as
price, warranty, and delivery schedules.
	 
	14.3	 	 The JV Company shall establish procedures for and carry out the testing
of localized parts and components pursuant to the agreement referred to in
Article 14.2.
	 
	14.4	 	 BMW AG shall support the JV Company in the localization process of parts
as provided for in the agreement referred to in Article 14.2.

Article  15            Sale of JV Products

	15.1	 	 The JV Products shall be sold by the JV Company in the PRC. The retail
prices (prices to customers) or the recommended retail prices of the JV
Products shall be proposed by the Management of the JV Company to the
Board of Directors in accordance with the policies and guidelines
promulgated by BMW AG from time to time and in consideration of the market
conditions in the PRC. The Board has the discretion to vary retail prices
or recommended retail prices by no more than five percent (5%) greater or
five percent (5%) less than the proposed retail prices or recommended
retail prices submitted by Management.
	 
	15.2	 	 Upon the decision of the Board of Directors, and subject to the approval
of the Examination and Approval Authority if required, the JV Company may
set up branch offices for marketing, sale and services within China.
	 
	15.3	 	 Sales, marketing, and service of the JV Products in the PRC shall be
handled by the JV Company through its authorized dealer network based on
standard dealer contracts. If the Board deems it appropriate to sell the
JV Products outside of the PRC, the JV Products may be sold in foreign
markets provided that all export sales shall be performed on a priority
basis by BMW AG and its worldwide distribution network. BMW AG will
oversee all aspects of the export sales including, but not limited to,
price quotations and other commercial terms.

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	15.4	 	Notwithstanding the JV Company’s own responsibilities for the activities
referred to hereinafter, the business operations, promotion and marketing
(including market analysis, price and product planning, sales forecasting
and reporting), sales, after-sales, distribution, and dealer management
activities undertaken by the JV Company shall comply with the relevant
procedures, schedules and quality requirements as are determined by BMW AG
from time to time on a worldwide basis and shall comply with the
applicable PRC Laws.
	 
	15.5	 	Without restricting the JV Company from conducting its own marketing and
promotional activities, the JV Company shall co-operate with BMW AG in
marketing and promotional activities that relate to the BMW brand in
China. Upon the invitation of BMW AG, selected sales personnel of the JV
Company shall participate in sales, marketing and/or PR conferences or
events.

Article 16           Trademarks

	16.1	 	Provided that the JV Products manufactured by the JV Company meet the BMW
Quality Standards, the JV Products shall bear the appropriate trademarks,
as determined by BMW, that are owned by BMW AG and duly licensed to the JV
Company under the Trademark License Agreement.
	 
	16.2	 	The JV Company shall use such trademarks strictly in accordance with the
Trademark License Agreement, which the JV Company, as licensee, shall file
or cause to be filed with PRC trademark administration authorities. All
licensed trademarks shall at all times remain the sole property of BMW AG.
Neither the JV Company nor BRILLIANCE shall at any time claim any right,
title or interest to such trademarks except for the limited use rights
granted to the JV Company pursuant to the Trademark License Agreement.
	 
	16.3	 	For maintaining and protecting the value and the strength of the BMW
trademark and for a uniform appearance of the BMW trademark worldwide the
JV Company will fully comply with the BMW trademark policies and specific
instructions for the use of the trademark, as provided in the Trademark
License Agreement.

Article 17           Non-Competition

	17.1	 	BRILLIANCE undertakes, and for its Affiliates it guarantees as a separate
liability, that during the Joint Venture Term, neither it nor any of its
Affiliates shall itself or through entering into any joint venture or
similar arrangement or through cooperation with an intermediary, unless
with the express prior written consent of BMW:

	 	(i)	 	produce, distribute or service Premium Market Cars in the
PRC; or
	 
	 	(ii)	 	market its own brands in competition with the JV Products or
participate in any activity or otherwise act in any way in
competition with any business of the JV Company in the PRC.

	 	 	For the avoidance of doubt, the Parties confirm that the provisions of
Article 17.1(i) shall be applicable regardless of whether the Premium
Market Cars are produced, distributed or serviced under their original
brands or different brands in China. The breach of any obligation under
this Article 17 by BRILLIANCE or any of its Affiliates or their
successors or assigns shall be referred to as a “BRILLIANCE Competition
Event.”

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	17.2	 	The production, distribution or the provision of services for
BRILLIANCE’s M-1 Products shall not constitute a BRILLIANCE Competition
Event, unless

	 	(i)	 	the design or appearance of a M-1 Product is similar to the
design or appearance of a JV Product; or
	 
	 	(ii)	 	a M-1 Product is marketed in comparison to or with reference
to a JV Product;
	 
	 	(iii)	 	a M-1 Product is marketed in reference to the Parties’
cooperation under this Contract except in line with a communication
strategy mutually agreed between the Parties on this subject matter.

	 	 	Notwithstanding the above, BRILLIANCE shall be entitled to make
improvements and upgrades to M-1 Products, provided that such improved or
upgraded M-1 Products shall not compete with the JV Products.
	 
	17.3	 	BMW undertakes, and for its Affiliates it guarantees as a separate
liability, that during the Joint Venture Term, neither it nor any of its
Affiliates shall itself or through entering into any joint venture or
similar arrangement or through cooperation with an intermediary, unless
with the express prior written consent of BRILLIANCE, produce in the PRC
the JV Products.
	 
	17.4	 	BMW undertakes, and for its Affiliates it guarantees as a separate
liability, that commencing from the JV Company’s first full year of
production and during any calendar year of the Joint Venture Term, neither
it nor any of its Affiliates shall, unless with the express prior written
consent of BRILLIANCE, import to and distribute within the PRC the JV
Products produced outside the PRC to the extent this exceeds five percent
(5%) of the volume produced by the JV Company in that calendar year.
	 
	 	 	This restriction shall not apply and BMW or its Affiliates shall
be allowed to import into and distribute within the PRC the JV
Products produced outside of the PRC if and to the extent that the
production capacity of the JV Company is unable to satisfy the
market demand for the JV Products. The production capacity shall be
determined either by the maximum production capacity of the JV
Company plant (being 30.000 units) or such lower volume if the
maximum production capacity can not be achieved for any reason other
than those within the reasonable control of BMW or any of its
Affiliates and market demand for the JV Products shall be the
forecasted sales volume for the JV Company as determined by the
Board of Directors for that year as part of the Planning Documents
as referred to in Article 7.2.1 (b) (vi). However if it is
anticipated that the production capacity of the JV Company will not
meet market demand, the JV Company shall take all reasonable and
available measures to optimise the production capacity of the plant
as per the decision of the Board of Directors.
	 
	 	 	If the satisfaction of market demand requires further investment
into the JV Company and if such investment is economically viable,
both Parties on a pro rata basis shall provide such finance to the
JV Company (either by way of equity capital, loans, or provision of
financial securities) as provided for in and subject to Articles 5.6
and 5.7 of this Contract.
	 
	17.5	 	The launch of any JV Product within the PRC which is scheduled to be
introduced after the Establishment Date shall firstly be conducted by the
JV Company, provided that the JV Company is able to manufacture these JV
Products with all necessary assistance and efforts to be contributed from
BMW and BMW AG.

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	17.6	 	BMW undertakes, and for its Affiliates it guarantees as a separate
liability, that during the Joint Venture Term, neither it nor any of its
Affiliates shall, unless with the express prior written consent of
BRILLIANCE, enter into any joint venture or similar
arrangement with a third party for the production and distribution of BMW
Cars other than the JV Products in China, unless it has offered, in
writing, the option to BRILLIANCE to enter into such an arrangement at
terms and conditions materially equal to those offered and negotiated by
BMW with such third party, and BRILLIANCE has not, by written notice to
BMW, exercised this option within six (6) weeks of receipt of the offer
from BMW. In case the terms and conditions offered to the third party
change in any material or substantial aspect, BMW shall offer such
changed terms and conditions in writing to BRILLIANCE, which shall then
have another three (3) weeks to exercise the option to enter into an
agreement with BMW on such changed terms and conditions.
	 
	17.7	 	For the avoidance of doubt, the Parties agree and acknowledge that BMW,
subject to PRC Laws, may establish a wholly-foreign owned enterprise in
China to produce and/or sell BMW vehicles other than the JV Products.
	 
	17.8	 	The breach of any obligation under this Article 17 by BMW or any of its
Affiliates or their successors or assigns shall be referred to as a “BMW
Competition Event.”

Article 18          Labor Management

	18.1	 	Governing Principle
	 
	 	 	The JV Company shall be entitled to the full enterprise autonomy granted
to foreign invested enterprises and shall have complete authority over
the hiring and dismissal of its employees. The recruitment, employment,
discipline, dismissal and resignation of the employees of the JV Company
and their wages, salaries, insurance, welfare benefits and other matters
shall be handled in accordance with the PRC Labor Law and other relevant
PRC Laws.
	 
	18.2	 	Employees of the Parties
	 
	 	 	Either Party may recommend any of its existing employees (whether
blue collar or white collar) to work for the JV Company. If the JV
Company upon its own discretion decides to employ any of these
employees, they shall terminate their employment relationship with
the relevant Party prior to or at the time when they enter into
employment contracts with the JV Company (except for any agreement
for reemployment or agreement for payment of additional compensation
or fringe benefits etc.). Thereupon they shall be deemed to be
employed by the JV Company from the labor market independently. The
JV Company shall not assume any obligations of any kind in respect of
such employees that are related to or arose during the period before
their respective dates of hire by the JV Company. Such obligations
shall be assumed by the relevant Party, which shall reimburse the JV
Company for any such costs incurred by the JV Company. The JV Company
shall be responsible for any obligations of any kind in respect of
its employees which are related to or arise after their respective
dates of hire by the JV Company.
	 
	18.3	 	Labor Contract
	 
	 	 	The JV Company may conclude individual employment contracts with staff
and workers directly or collectively with the trade union of the JV
Company on behalf of the staff and workers. The JV Company shall file
such contracts with the local labor department for the record.

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	18.4	 	Labor Plan
	 
	 	 	The labor plan, including the number of employees of the JV Company, the
salaries and benefits of employees and the job descriptions, shall be
prepared by the General Manager in consultation with the Senior Corporate
Officer in charge of labor matters and shall be subject to approval by
the Board. The employees of the JV Company shall be required to strictly
observe the rules and regulations of the JV Company. The JV Company shall
recruit and employ only such number of employees as is necessary for its
operations. Board approval shall be required if the JV Company increases
or decreases the total number of its employees due to such factors as
expansion or reduction of business or increased or decreased efficiency.
	 
	18.5	 	Labor and Personnel Policies

	 	(a)	 	The JV Company’s policies regarding employment matters such
as employment, dismissal, resignation, wages, insurance, welfare
benefits, reward and discipline of its staff and workers shall be
decided by the Board and shall be implemented by the General
Manager. The labor contracts between the JV Company and the
employees or the trade union on behalf of the employees shall be
formulated in accordance with the JV Company’s policies and the
applicable PRC Laws.
	 
	 	(b)	 	The initial labor and personnel policies of the JV Company
shall be prepared by the General Manager for approval by the Board.
These policies shall be consistent with applicable PRC Laws.
	 
	 	(c)	 	The General Manager shall implement hiring policies whereby
all PRC employees of the JV Company shall be selected on the basis
of examination, merits and qualifications. In this regard, upon the
receipt of necessary approvals, the JV Company may hire qualified
personnel from anywhere within China and, if necessary, from foreign
countries.
	 
	 	(d)	 	The General Manager and the Deputy General Manager Human
Resources shall consult with each other with respect to the
recruitment, employment, dismissal and remuneration of key personnel
of the JV Company including, but without limitation, department
managers.
	 
	 	(e)	 	The JV Company shall sign non-competition and confidentiality
agreements with its employees in accordance with the relevant terms
and conditions in this Contract.

	18.6	 	Training
	 
	 	 	The Parties recognize that the JV Company will conduct significant
training of management personnel and other employees.
	 
	18.7	 	Power of General Manager
	 
	 	 	Subject to any limitations the Board may set and to the provisions of the
labor contract between an employee and the JV Company, the General
Manager shall have the power, according to the degree of seriousness of
the case, to give warnings, record demerits, deduct wages, dismiss or
otherwise remove any staff member or worker appointed by him/her who has
violated the terms of his/her labor contract, the rules, regulations or
labor discipline of the JV Company or applicable PRC Laws.

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	18.8	 	Non-solicitation
	 
	 	 	Each Party undertakes to the other
Party, and for its Affiliates it
guarantees as a separate liability,
that for the duration of this
Contract and for one year after the
expiration thereof, neither it nor
its Affiliates shall, directly or
indirectly, solicit or entice away
any director, manager or other
employee and worker nor shall it or
its Affiliates cause any of those
personnel to resign or otherwise
leave the JV Company, unless prior
agreement between the Parties has
been reached.

Article 19           Trade Union

	 	 	The staff and workers of the JV Company may establish a trade union in
accordance with the Joint Venture Law and the Trade Union Law of the PRC.
Activities of the trade union shall be conducted after normal working
hours, shall not interfere with the normal operations of the JV Company,
and shall conform to the relevant regulations. If a trade union is
established by the staff and workers of the JV Company, the JV Company
shall pay two percent (2%) of the total amount of wages received by its
employees into the JV Company’s trade union fund, and such payment shall
be an expense of the JV Company.

Article 20           Finances, Taxes, Audit and Distribution of Profits

	20.1	 	Taxes

	 	20.1.1	 	The JV Company shall pay taxes, duties and other levies
(collectively “Taxes”) in accordance with relevant PRC Laws. If
Taxes are imposed on the Parties in connection with the activities
of the JV Company, the JV Company shall provide administrative
assistance to the Parties to meet their obligations (e.g.
preparation of returns, reports, and payments).
	 
	 	20.1.2	 	The JV Company is obliged to deduct or withhold from any payment
to the Parties any Tax (e.g., withholding tax on income, business
tax), then the JV Company shall withhold or deduct such amount and
pay it, on behalf of Parties, to the relevant PRC government
authorities. The JV Company shall endeavor to minimize such
deductions or withholdings as permitted by PRC Laws and relevant
double taxation treaties, and shall, if required, complete all
application procedures. Further, the JV Company shall provide the
Parties with all original certificates, documentation, and other
information that is necessary to enable the Parties to utilize or to
claim any tax credits or benefits that relate to such payments made
by the JV Company on behalf of the Parties.
	 
	 	20.1.3	 	The JV Company shall apply for every kind of preferential tax and
customs treatment (including subsidies) available to it under PRC
Laws. Furthermore, upon request of the Parties, the JV Company shall
assist the Parties to apply for all preferential tax treatment
available to them and their Affiliates, which are expressly provided
under PRC Laws and relevant to payments made by the JV Company.

	20.2	 	Finances

	 	20.2.1	 	The fiscal year of the JV Company shall start on January 1 of each
calendar year and end on December 31 of the same year. The first
fiscal year of the JV Company shall commence on the Establishment
Date and end on December

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	 	 	 	31 of the same year. The last fiscal year
of the JV Company shall start on
January 1 of the year of termination or expiration and end on the
date of termination or expiration of the Joint Venture Term.
	 
	 	20.2.2	 	The JV Company shall adopt an accounting system consistent with
applicable PRC Laws. All accounting records, books and statements of
the JV Company shall be prepared and kept both in Chinese and
English. The JV Company shall use Renminbi as the base bookkeeping
currency for its financial statements.
	 
	 	20.2.3	 	The JV Company shall as a policy require that contracts and other
important documents (e.g. invoices) from third parties be in both
Chinese and English. In the event that any third party does not
provide both the Chinese and the English versions as required by the
preceding sentence, all relevant details of the document shall be
translated by the JV Company into Chinese or English, as the case
may be, unless, in the case of invoices, the transaction amount is
below RMB 10,000 or as otherwise provided for in the JV Company
guidelines.
	 
	 	20.2.4	 	The annual, quarterly and if applicable other reports shall be
prepared and jointly signed by both the General Manager and the
Deputy General Manager Finance and shall be prepared and kept in
both Chinese and English. The Deputy General Manager Finance shall
be responsible for formulating the accounting and administrative
measures regarding the JV Company’s financial affairs, which shall
be submitted via the General Manager to the Board for approval.
	 
	 	20.2.5	 	The accounting system of the JV Company shall at the cost of BMW
AG be supplemented with the BMW AG accounting system based on
International Accounting Standards (IAS) and by the “BMW Controlling
Management Information System.” Upon request and at the cost of BMW
AG the JV Company shall for such periods relevant to BMW AG prepare
separate accounts in full compliance with the BMW AG accounting
system.
	 
	 	20.2.6	 	The JV Company shall adopt the procedures and the time targets
applied by BMW AG for Long Range Planning, the Annual Business Plan,
forecasting and reporting.

	20.3	 	Audit
	 
	 	 	Within three (3) months following the end of each fiscal year, the JV
Company shall engage an accounting/auditing firm registered in China as
its auditor to examine and verify the accounts and books of the JV
Company. The accounting/auditing firm shall be a joint venture accounting
firm registered in China in which any of the following is one of the
joint venture partners, unless decided otherwise by the Board: Price
WaterhouseCoopers, KPMG, Ernst & Young, or Deloitte & Touche.
	 
	 	 	The annual audit report issued by such firm shall be submitted to the
Board. Either Party shall also have the right, but not the duty, to
appoint, at its own costs, another accounting/auditing firm registered in
China or abroad to audit the accounts and books of the JV Company. That
audit shall be carried out during the normal business hours of the JV
Company and shall not unreasonably interrupt the conduct of the JV
Company’s business. The JV Company shall make available and accessible
all of its accounting books and records to such auditor.

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	 	 	Each Party shall at its own cost be allowed for its internal purposes at
any time upon reasonable prior notice to conduct a fully-fledged audit of
the JV Company’s financial
affairs and business operations. Each Party shall have full access to the
JV Company’s documents and the JV Company shall upon reasonable request
make available the relevant key personnel for discussion.
	 
	20.4	 	Allocation to Three Funds
	 
	 	 	After the offset of cumulative losses (if any) and the payment of income
tax and other applicable taxes by the JV Company each year, the Board
shall determine the amount from the after-tax net profits to be allocated
into the JV Company’s reserve fund, enterprise expansion fund, and the
employee bonus and welfare fund to be set up in accordance with PRC Laws.
The total annual allocation to the funds mentioned above shall not exceed
ten percent (10%) of the after-tax net profit of the respective year
unless otherwise decided by the Board in light of the business and
financial conditions of the JV Company or unless required otherwise by
PRC Laws.
	 
	20.5	 	Distribution of Profits

	 	20.5.1	 	After paying taxes in accordance with the relevant PRC Laws and
making allocations to the reserve funds, expansion funds, bonuses
and welfare funds for staff workers, the JV Company’s remaining
profits either shall be distributed between the Parties according to
the Parties’ ratio of contribution to the JV Company’s registered
capital or shall be retained or reinvested as decided by the Board
of Directors.
	 
	 	20.5.2	 	If the JV Company carries any loss from any previous year, the
profits of the current year shall first be used to cover such loss.
No profits shall be distributed or re-invested unless and until all
deficits from any previous years are fully made up. Any
distributable profits retained by the JV Company and carried over
from any previous years that are not re-invested may be distributed
together with the distributable profits of the current year.

Article 21          Bank Accounts and Foreign Exchange

	21.1	 	Accounts
	 
	 	 	The JV Company shall open separate Renminbi accounts and foreign exchange
accounts with banks or financial institutions in China. The JV Company
may also open foreign exchange accounts with foreign financial
institutions outside of China, as designated by the Board of Directors
and upon approval by the State Administration of Foreign Exchange or its
competent local bureau, if required.
	 
	21.2	 	Foreign Exchange

	 	21.2.1	 	The JV Company shall handle its foreign exchange matters in
accordance with applicable PRC Laws. It shall apply for and maintain
a Foreign Exchange Registration Certificate.
	 
	 	21.2.2	 	In order to balance its foreign exchange needs, the JV Company
may, subject to approval by the Board, adopt any measure and engage
in any activity permitted under PRC Law.
	 
	 	21.2.3	 	The JV Company shall pay its foreign exchange according to the
following order of priorities, unless otherwise determined by the
Board of Directors:

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	 	(i)	 	compensation to the JV Company’s expatriate
staff;
	 
	 	(ii)	 	purchase of materials, equipment and services
that the JV Company imports from abroad;
	 
	 	(iii)	 	administrative expenses that the JV Company
incurs which require foreign exchange payment;
	 
	 	(iv)	 	loan principal and interest, and related
obligations requiring foreign exchange payment;
	 
	 	(v)	 	profit and dividends to BMW; and
	 
	 	(vi)	 	payment to BMW of proceeds from liquidation of
assets pursuant to the provisions of Article 24.3.

	21.3	 	BMW’s Priority in Foreign Exchange

	 	21.3.1	 	Subject to PRC Laws, BMW is entitled to receive its dividends in
foreign exchange in accordance with Article 21.2.3. To this end the
JV Company shall use its best efforts to convert BMW’s dividends
from RMB into foreign currency as instructed by BMW. BMW shall
reimburse the JV Company for duly-documented third party costs
caused by the conversion.
	 
	 	21.3.2	 	Subject to PRC Laws, for the time period and to the extent that
the foreign exchange cannot be transmitted to BMW’s nominated
account the JV Company shall deposit BMW’s dividends or other
payments due to it in a separate interest-bearing bank account. Any
interest accrued on BMW’s dividends whether on a foreign currency
or RMB denominated bank account shall belong to and be paid to BMW.

Article 22          Joint Venture Term

	22.1	 	Joint Venture Term
	 
	 	 	The duration of the JV Company shall commence on the Establishment Date
and continue for a period of fifteen (15) years thereafter, unless
earlier terminated or further extended as provided herein.
	 
	22.2	 	Extension
	 
	 	 	The term of the JV Company may be extended upon mutual consent of the
Parties. The Parties shall commence negotiations on whether and for how
long to extend the Joint Venture Term no less than one (1) year prior to
the expiration of the Joint Venture Term (or any extension thereof). A
written application for the extension of duration as agreed to by both
Parties, shall be filed with the Examination and Approval Authority six
(6) months prior to the expiration date of the Joint Venture Term (or any
extension thereof).

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Article 23          Termination

	23.1	 	Events of Termination

	 	23.1.1	 	Subject to the approval of the Examination and Approval Authority,
either Party shall have the right to terminate this Contract prior
to the expiration of
the Joint Venture Term by written notice to the other Party, if any
of the following events occur:
	 

	 	(i)	 	the other Party materially breaches this Contract
or the Articles of Association, and such breach is not cured
within thirty (30) days of written notice to the breaching
Party;
	 
	 	(ii)	 	the JV Company, after a start-up period of three
(3) years from the Establishment Date, has sustained permanent
heavy losses exceeding twenty-five percent (25%) of the total
registered capital of the JV Company per annum for two (2)
consecutive years, or if three (3) years after the
Establishment Date the cumulative amount of losses has
exceeded fifty percent (50%) of the total registered capital
of the JV Company, whichever occurs first;
	 
	 	(iii)	 	the other Party assigns, pledges, or otherwise
encumbers any of its interest in the registered capital of the
JV Company in violation of this Contract or applicable PRC
Laws;
	 
	 	(iv)	 	a Change of Law (exclusive of situations as
provided in Article 3.5.3 hereof) has directly or indirectly
caused or is clearly foreseeable to cause material adverse
consequences to the JV Company or to any Party’s benefits
under this Contract and the Parties are unable to agree upon
necessary adjustments (as provided for in Article 3.5.2)
within three (3) months after the Change of Law has occurred;
	 
	 	(v)	 	unforeseen circumstances arise where it is likely
that the JV Company, will suffer an overall loss during the
entire Joint Venture Term;
	 
	 	(vi)	 	the other Party and/or its Affiliate(s)
materially breaches or it willfully causes the JV Company to
materially breach any of the Trademark License Agreement,
Technology License Agreement, the Parts and Components Supply
Agreement or the agreement referred to in Article 14.2 and
such breach is not cured within thirty (30) days after receipt
of written notice to that causing Party;
	 
	 	(vii)	 	total or partial performance of this Contract is
prevented by an Event of Force Majeure for more than one
hundred twenty (120) days, and such prevention materially and
adversely affects the operation of the JV Company, and the
Parties are unable to find an equitable solution;
	 
	 	(viii)	 	both Parties decide to terminate their joint venture
cooperation;
	 
	 	(ix)	 	the JV Company or the other Party becomes
insolvent for a consecutive period of three (3) months, or it
becomes bankrupt, or it dissolves;
	 
	 	(x)	 	the Technology License Agreement or the Trademark
License Agreement terminates or expires;

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	 	(xi)	 	the Business License is cancelled;
	 
	 	(xii)	 	the Business License is amended, or a license,
permit, or authorization which is required by the JV Company
is withdrawn, cancelled, or amended in whole or in part, and
such amendment, withdrawal or cancellation has directly or
indirectly caused or is clearly foreseeable
to cause material adverse consequences to the JV Company or
to any Party’s benefits under this Contract. If the
amendment, withdrawal, or cancellation is due to the fault
of a Party, such Party shall not have the right to terminate
this Contract under this clause;
	 
	 	(xiii)	 	an event of deadlock exists in accordance with Article 8;
	 
	 	(xiv)	 	if a Party loses its powers to appoint one or
more of its representatives on the Board or loses its powers
to nominate one or more of its representatives in the
Management as provided for in this Contract.
	 
	 	(xv)	 	there arises any other reason for termination
expressly provided for in this Contract or applicable PRC
Laws.
	 

	 	 	 	Notwithstanding the above, if a Party’s material breach of this
Contract, the Articles of Association, the Technology License
Agreement, the Trademark License Agreement, the Parts and
Components Supply Agreement or the agreement referred to in Article
14.2 cannot reasonably be cured within thirty (30) days, but the
breaching Party commences to cure the breach within the thirty-day
period and diligently continues to cure the breach, the
non-breaching Party shall not have the right to terminate this
Contract for the period of time during which the breaching Party is
diligently taking actions to cure the breach.
	 

	 	23.1.2	 	In addition to the provisions of Article 23.1.1, BRILLIANCE shall
have the right to terminate this Contract prior to the expiration of
the Joint Venture Term, by written notice to BMW, if any of the
following events occur:
	 

	 	(i)	 	BMW undergoes a change in Control or twenty-five
percent (25%) of its equity capital is directly or indirectly
acquired, or it has been directly or indirectly merged with or
into another entity, unless BMW has obtained the prior written
consent of BRILLIANCE for such change in Control, acquisition,
or merger; or if the representation and warranty set out in
Article 2.2.3 was incorrect or became incorrect after the
Effective Date.
	 
	 	(ii)	 	a BMW Competition Event occurs and it is not
cured within thirty (30) days of written notice from
BRILLIANCE.
	 

	 	23.1.3	 	BMW shall have the right to terminate this Contract prior to the
expiration of the Joint Venture Term by written notice to BRILLIANCE
if any of the following events occur:
	 

	 	(i)	 	BRILLIANCE is in breach of the production
capacity guarantee as provided for in Article 11.4.1(xii) of
this Contract and such a breach causes a material adverse
effect on the operation or the financial results of the JV
Company;

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	 	(ii)	 	BRILLIANCE undergoes a change in Control or
twenty-five percent (25%) of its equity capital is directly or
indirectly acquired, or it has been directly or indirectly
merged with or into another entity, unless BRILLIANCE has
obtained the prior written consent of BMW for such change in
Control, acquisition or merger; or if the representation and
warranty set out in Article 2.2.2 was incorrect or became
incorrect after the Effective Date.
	 
	 	(iii)	 	a BRILLIANCE Competition Event occurs and it is
not cured within thirty (30) days of written notice from BMW;
or
	 
	 	(iv)	 	the Parties fail to reach an agreement pursuant to Article
11.6.

	23.2	 	Termination Notice
	 
	 	 	If a Party chooses to terminate this Contract pursuant to Article 23.1,
it shall send a written notice of termination to the other Party and the
Parties shall endeavor, through negotiation and agreement, to resolve the
problem. Should the Party receiving the notice of termination dispute or
challenge the termination of this Contract, such Party shall have the
right to submit the dispute for arbitration, in accordance with the
provisions of Article 29, for determination of the issue of whether
termination of this Contract is valid.
	 
	23.3	 	Liabilities for Breach of Contract
	 
	 	 	Notwithstanding termination of this Contract, any
Party that breaches this Contract shall be liable to
compensate all losses, both actual and foreseeable
at the time of the execution of this Contract,
suffered by the other Party as the result of the
breach, including loss of profits.

Article 24           Consequences of Termination

	24.1	 	Buyout

	 	24.1.1	 	Buyout Option
	 
	 	(i)	 	If, within sixty (60) days of receipt of the notice of
termination served pursuant to Article 23, the Parties have not
agreed in writing to continue this Contract, then the Parties shall
agree to discuss one Party’s purchase of all of the other Party’s
interest in the registered capital of the JV Company (“Buyout”). If,
within sixty (60) days of receipt of the notice of termination, the
Parties reach an agreement on a Buyout, then the Parties will
proceed in accordance with the terms of that agreement.
	 
	 	(ii)	 	If, within sixty (60) days of receipt of the notice of
termination, the Parties have not agreed, in writing, to a Buyout,
then, BMW shall have the option to purchase BRILLIANCE’s interest in
the registered capital of the JV Company at a price as determined
pursuant to Article 24.1.2 below, multiplied by the percentage of
BRILLIANCE’s share of the registered capital at the time of the
Buyout. BMW shall have ninety (90) days to exercise its option,
starting from the date of receipt of the notice of termination. If
BMW exercises this option, BRILLIANCE shall not take any actions
that might adversely affect BMW’s ability to continue the operation
of the JV Company as a going concern.

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	 	(iii)	 	If BMW fails to exercise its option within ninety (90) days
of receipt of the notice of termination or it notifies BRILLIANCE in
writing that it will not exercise the option, BRILLIANCE shall have
the option to purchase BMW’s interest in the registered capital of
the JV Company at a price as determined pursuant to Article 24.1.2
below, multiplied by the percentage of BMW’s share of the registered
capital at the time of Buyout. Such option shall be exercised by
BRILLIANCE, in writing, not later than within thirty (30) days from
the date the option becomes available to BRILLIANCE.
	 
	 	(iv)	 	The ratio between BRILLIANCE’s shareholding in and BMW’s
shareholding in the registered capital of the JV Company following
the Buyout under this Article 24.1.1 shall be in compliance with
applicable PRC Laws.
	 

	 	24.1.2	 	Transfer Price
	 
	 	(i)	 	If the termination of this Contract is caused by a breach of
this Contract, the Technology License Agreement, the Trademark
License Agreement, the Parts and Components Supply Agreement, the
agreement referred to in Article 14.2 or the Articles of Association
(a “Breach of Contract”) by BMW and BMW exercises its Buyout Option
under Article 24.1.1, the Transfer Price shall be the higher of the
following two figures:
	 

	 	a)	 	the Net Asset Value of the JV
Company at the date when BMW exercises the Buyout
Option multiplied by the percentage of BRILLIANCE’s
share of the registered capital of the JV Company which
is to be purchased by BMW; or
	 
	 	b)	 	the
result of the formula:
         
          
          
            
	 
	 	 	 	where:
	 
	 	En	 	the amount of registered capital
held in the JV Company by BRILLIANCE in calendar year n
at the beginning of business year n
	 
	 	n	 	indicates each single business year
between the Establishment Date until the date when BMW
exercises its Buy Out Option (starts with 1)
	 
	 	m	 	indicates the business year when
BMW exercises its Buy Out Option
	 
	 	X	 	Agreed rate of Return for
BRILLIANCE to be twenty percent (20%) p.a. (first and
last year pro rata temporis if necessary);
	 
	 	Dn	 	Absolute amount of dividends paid
to BRILLIANCE in Business year n
	 
	 	S	 	BRILLIANCE’s share of the JV
Company that is purchased by BMW. S is initially
defined as 1.0, which represents BRILLIANCE’s fifty
percent (50%) share of the JV Company.

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	 	Em	 	the amount of registered capital
held in the JV Company by BRILLIANCE on the date when
BMW exercises its Buyout Option
	 

	 	(ii)	 	If the termination of this Contract is caused by a Breach of
Contract by BRILLIANCE and BRILLIANCE exercises its Buyout Option
under Article 24.1.1, the Transfer Price shall be determined in the
same manner as the determination of the Transfer Price according to
Article 24.1.2(i).
	 
	 	(iii)	 	If the termination of this Contract is caused by a Breach of
Contract by BRILLIANCE and BMW exercises its Buyout Option under
Article 24.1.1, the Transfer Price shall be equal to the total value
of the assets of the JV Company minus the total liabilities of the
JV Company (the “Net Asset Value”) multiplied by the percentage of
BRILLIANCE’s share of the registered capital.
	 
	 	(iv)	 	If the termination of this Contract is caused by a Breach of
Contract by BMW and BRILLIANCE exercises its Buyout Option under
Article 24.1.1, the Transfer Price shall be equal to the Net Asset
Value of the JV Company multiplied by the percentage of BMW’s share
of the registered capital.
	 
	 	(v)	 	In no event shall the receipt of the Transfer Price by a
Party prejudice any rights that Party may have to claim damages
under this Contract, the Trademark License Agreement, the Technology
License Agreement, the Other Contracts, or PRC Laws.
	 
	 	(vi)	 	If the termination of this Contract is not caused by a Breach
of Contract, the Parties shall mutually agree on a Transfer Price,
which shall not be greater than the price as calculated under
Article 24.1.2(i).
	 
	 	24.1.3	 	Calculation Proceedings
	 
	 	(i)	 	The Parties agree that the Net Asset Value of the JV Company
referred to in Article 24.1.2 (iii) and Article 24.1.2 (iv) shall be
determined on the basis of the financial statements audited by the
JV Company’s auditor in accordance with applicable PRC accounting
system.
	 
	 	(ii)	 	If the Parties fail to agree on the Transfer Price as
determined in Article 24.1.2 (ii) above within thirty (30) days from
the exercise of a Buyout Option, the Parties shall, unless otherwise
agreed, jointly conduct a valuation for the purpose of determining
the Transfer Price. For such valuation, each Party shall nominate an
independent and competent appraiser within thirty (30) days after
the exercise of the Buyout Option. Within thirty (30) days of the
date of their nomination, the appraisers shall make their
determination of the Transfer Price in a written report setting
forth detailed reasons for such determination.
	 
	 	 	 	If the two (2) appraisers cannot agree on a valuation and their
respective values differ by no more than ten percent (10%) of the
higher one, the average of the two (2) valuations shall be adopted.
If the two (2) valuations differ by more than ten percent (10%) of
the higher one, then the Parties shall proceed to liquidate the JV
Company pursuant to Article 24.2 of this Contract.
	 
	 	24.1.4	 	Under no circumstances, including, but not limited to a
disagreement over the existence over the validity of the grounds for
termination of this Contract, shall a Party object to or hinder the
procedure to determine the Transfer Price as provided in this
Article 24.1.3. In the event that the validity of the grounds for
termination of the Contract has been successfully challenged by the
non-

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	 	 	 	terminating Party, the terminating Party shall fully compensate
the non-terminating Party and the JV Company for all costs and
reasonable expenses incurred by them for the determination of the
Transfer Price.
	 
	 	24.1.5	 	After the Parties have agreed to a Buyout or a Party has exercised
its buyout option, the Parties shall enter into an agreement for
transfer of interest in the registered capital of the JV Company.
The selling Party shall assist in securing all necessary government
approvals. In the event that BMW is the selling Party, all payments
to BMW shall be made in foreign exchange. The
Parties shall complete the buyout transaction within six (6) months
following the Parties agreement on a Buyout or the exercise of the
Buyout Option by BMW or BRILLIANCE, as the case may be.
	 
	 	24.1.6	 	The termination of this Contract and the transfer of interest in
the JV Company’s registered capital as a result of any buyout
transaction shall be subject to the approval of the Examination and
Approval Authority pursuant to PRC Laws.
	 
	 	24.1.7	 	The Parties agree that in the event of a Buyout pursuant to this
Contract, the purchasing Party shall have the right to set off from
the Transfer Price any outstanding amount owed or payable by the
selling Party to the purchasing Party and/or withhold for and on
behalf of the JV Company from such Transfer Price any outstanding
amount owed or payable by the selling Party to the JV Company at the
time and to deliver such withheld amount to the JV Company.

	24.2	 	Liquidation

	 	24.1.1	 	In the event that: (a) the Parties fail to resolve their dispute
through the methods provided in Article 23.2; or (b) one Party is
not to buy out the other Party’s interest in the registered capital
of the JV Company as provided in Article 24.1.1, then each Party
shall agree and shall cause its appointed Directors to approve the
termination of this Contract and the liquidation of the JV Company.
	 
	 	 	 	The Board of Directors shall convene a meeting no later than
fifteen (15) days following notice of either of the circumstances
discussed in subparagraph (a) or (b) of this Article, and shall
adopt a unanimous resolution to terminate this Contract, liquidate
the JV Company, formulate liquidation procedures and establish a
liquidation committee. The JV Company then shall submit an
application to the Examination and Approval Authority for the
termination of this Contract and the liquidation of the JV Company.
	 
	 	24.2.2	 	If an event under subparagraph (a) or (b) of Article 24.2.1
occurs, and any Party fails to cause its Directors to vote in favor
of the termination of this Contract and the liquidation of the JV
Company, such failure shall constitute material breach of this
Contract.
	 
	 	 	 	Moreover, if no resolution is passed by the Board within ten (10)
days of the scheduled date for the Board meeting, any Party shall
be entitled to unilaterally apply to the Examination and Approval
Authority to terminate this Contract and to liquidate the JV
Company in accordance with the relevant provisions of the Measures
on the Liquidation of Foreign-Invested Enterprises or the
then-applicable PRC Laws on the liquidation of foreign-invested
enterprises.

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	 	24.2.3	 	The JV Company, upon commencement of its liquidation, immediately
shall cease and discontinue its operation, as well as the
manufacture and sale of the JV Products. In addition the JV Company
immediately shall cease the use of, all copies of Proprietary
Information and Technical Information and other materials provided
by BMW or BRILLIANCE in written form. Any and all property,
including all copies of Proprietary Information and Technical
Information, owned and/or created by BMW or BRILLIANCE which has
been loaned, licensed or otherwise provided to the JV Company shall
be returned to whichever of BMW or BRILLIANCE provided such
property.
	 
	 	 	 	For purposes of this Article 24.2.3, “Technical Information” shall
mean all technical and other specifically product-related
information which BMW or BRILLIANCE or their respective Affiliates
have disclosed to the JV Company regarding the JV Products and
their development, manufacture and use, including but not limited
to operating procedures, quality assurance procedures, formulas,
standards, specifications and all other information needed to
engage in the manufacturing, processing, and marketing of the JV
Products.
	 
	 	 	 	For purpose of this Article 24.2.3, “Proprietary Information” shall
mean all proprietary information other than Technical Information
that is disclosed by BMW or BRILLIANCE or their respective
Affiliates to the JV Company, and relates to the manufacture,
marketing and sale of JV Products, including but not limited to
financial data, customer lists, marketing strategies, and
distribution mechanisms.

	24.3	 	Liquidation Proceedings

	 	24.3.1	 	The liquidation of the JV Company shall be handled in accordance
with the applicable PRC Laws. The liquidation committee shall be
composed of three (3) persons. One (1) shall be appointed by
BRILLIANCE from the Directors it has appointed to the Board, one (1)
shall be appointed by BMW from the Directors it has appointed to the
Board, and the third shall be a person agreed upon by the first two
(2) nominees and shall be an accountant or a lawyer registered in
China. In case any Director so appointed cannot serve, a replacement
shall be appointed within ten (10) days (from the date of the
initial appointment) by the Party that originally appointed the
Director who cannot serve.
	 
	 	24.3.2	 	If the first two (2) members fail to agree as to the third member
within fifteen (15) days of their appointment, the third member
shall be appointed by the President of the Law Society of Hong Kong
and shall be a reputable lawyer. As soon as all three (3)
liquidation committee members are appointed, the Board of Directors
shall submit a list of their names to the Examination and Approval
Authority for examination and verification.
	 
	 	24.3.3	 	The Board of Directors shall within fifteen (15) days of receipt
of the report of the liquidation committee, approve the liquidation
plan of the liquidation committee. After the Board of Directors
approves the liquidation plan, the liquidation plan promptly shall
be filed with the Examination and Approval Authority.
	 
	 	24.3.4	 	The liquidation committee shall use its best efforts both to
obtain the highest possible prices for the assets of the JV Company
and to maximize foreign exchange proceeds. Unless otherwise agreed,
in writing, the Parties hereby

45

 

	 	 
	CHINA	EQUITY JOINT VENTURE CONTRACT

	 	 	 	agree that the JV Company’s assets will be sold to the Party, at
that time, offers the higher price for them.
	 
	 	24.3.5	 	The liquidation expenses, including remuneration to committee
members and to the lawyers and accountants retained by the
liquidation committee, shall be paid out of the JV Company’s assets
in priority to the claims of other creditors.
	 
	 	24.3.6	 	After the settlement of all outstanding debts and taxes, the
remaining proceeds of liquidation, if any, shall be paid over to the
Parties in proportion to their respective paid-in contributions to
the registered capital of the JV Company at the time of liquidation.
BMW shall have priority to receive all of its share of the proceeds
in foreign exchange.
	 
	 	24.3.7	 	Upon completion of the liquidation of the JV Company, the
liquidation committee shall submit a liquidation proceedings wind-up
report to the Board of Directors for approval and submission to the
Examination and Approval Authority for the record. In addition, the
committee shall carry out the necessary procedures to cancel the JV
Company’s tax registration, cancel its Approval Certificate and
business registration and return its Approval Certificate and
Business License, and de-register with the customs authorities.

Article 25          Insurance

	25.1	 	The JV Company shall, at all times during its operation, procure and
maintain full and adequate insurance coverage in a manner prudent and
advisable for such enterprises.
	 
	25.2	 	The relevant insurance policies may be obtained from any insurance
company authorized to provide such policies in the PRC. The types of
insurance and the value, duration and denomination of the currency of the
premiums and insurance proceeds shall be determined by the Board of
Directors based on the practices of BMW AG and its Affiliates in other
countries and/or on the actual circumstances in the PRC.

Article 26           Confidentiality

	26.1	 	Each of the Parties acknowledges and agrees that the discharge of its
obligations under this Contract will involve the disclosure of
confidential information (“Confidential Information”).
	 
	26.2	 	Each of the Parties, its Affiliates, and the JV Company shall at all
times use its best efforts to use Confidential Information only for the
purposes specified in this Contract, and shall not disclose any
Confidential Information to any third parties without the prior written
consent of the other Party. No entity other than the JV Company shall be
permitted to use, practice or exploit any Confidential Information
provided by any Party or by any Party’s Affiliates in any manner, without
the prior written consent of both Parties. Each of the Parties, its
Affiliates, and the JV Company shall not be entitled to make or permit or
authorize the making of any press release or other public statement or
disclosure concerning this Contract or any of the transactions
contemplated in it without the prior written consent of the other Party.
	 
	26.3	 	If a Party and/or the JV Company receives Confidential Information, then
the receiver shall cause its personnel with access thereto, to execute a
confidentiality agreement with respect to the Confidential Information, in
a form and substance satisfactory to the providing Party. The receiving Party, its Affiliates, and the JV
Company shall

46

 

	 	 
	CHINA	EQUITY JOINT VENTURE CONTRACT

	 	 	make Confidential Information available only to those of
their personnel whose duties necessitate access to or familiarity with
such Confidential Information.
	 
	26.4	 	The confidentiality obligations of the Parties set forth in this Article
26 shall be maintained during the term of this Contract and for an
additional period of three (3) years after either the expiration of the
Joint Venture Term or termination of this Contract.
	 
	26.5	 	The Party that provides the Confidential Information shall have the power
to determine what data, technologies, documents and information constitute
Confidential Information subject to this Article 26.
	 
	26.6	 	Notwithstanding the provisions of this Article 26, either Party may
disclose Confidential Information:

	 	(i)	 	to its legal and financial advisers requiring the
information for the purposes of this Contract; and
	 
	 	(ii)	 	to the extent required by law or by a stock
exchange.

	26.7	 	The provisions of this Article 26 do not apply to Confidential Information
that:

	 	(i)	 	can be shown to be known by the receiving party,
by written records made prior to disclosure by the disclosing
party;
	 
	 	(ii)	 	is or becomes public knowledge other than through
the receiving party’s breach of this Contract; or
	 
	 	(iii)	 	was obtained by the receiving party from a third
party having no obligation of confidentiality with respect to
such information.

Article 27           Force Majeure

	27.1	 	If any Party is prevented from performing any of its obligations under
this Contract due to an Event of Force Majeure, the time for performance
of the obligations under this Contract that were prevented from
performance by such Event of Force Majeure shall be extended by a period
equal to the period of delay caused by such Event of Force Majeure,
subject to Article 23.1 hereof; all other obligations under this Contract
and the time for performance thereof shall remain unaffected.
	 
	27.2	 	The prevented Party shall within ten (10) business days of the occurrence
of such Event of Force Majeure notify the other Party of the occurrence of
any Event of Force Majeure by cable, telex, facsimile or courier. Within
fifteen (15) days of the occurrence of such Event of Force Majeure, the
prevented Party shall provide the other Party a detailed description of
the Event of Force Majeure and, if the event takes place in the PRC, a
valid certificate notarized by a local notary or issued by a proper
governmental agency in the place where the Event of Force Majeure
occurred, confirming the occurrence of such Event of Force Majeure. The
prevented Party shall give clear answers in writing to any questions the
other Party might have regarding the Event of Force Majeure and the
prevented Party’s hindered performance of its obligations under this
Contract. The prevented Party shall use reasonable endeavors to mitigate
and circumvent the Event of Force Majeure.
	 
	27.3	 	Should the delay caused by any Event of Force Majeure continue for more
than ninety (90) consecutive days from the date of such notice, the other
Party may

47

 

	 	 
	CHINA	EQUITY JOINT VENTURE CONTRACT

	 	 	choose to either continue to perform its obligations under this
Contract or terminate this Contract in accordance with Article 23 hereof.

Article 28           Applicable Law

	 	 	 	This Contract shall be governed by the officially promulgated laws of the
PRC. In the event there is no published law in the PRC governing a
particular aspect of this Contract, reference shall be made to general
international practices. BRILLIANCE shall use its best efforts to inform
and continue to update the JV Company, BMW of all PRC Laws pertaining to
this Contract and to the Annexes hereto.

Article 29           Dispute Resolution

	29.1	 	Amicable Settlement
	 
	 	 	Subject to the Parties’ right to terminate this Contract as provided for
in Article 23, in the event that a dispute arises out of or in connection
with this Contract between the Parties, the Parties shall endeavor, in
good faith, to reach an amicable settlement of the dispute through
friendly negotiations.
	 
	29.2	 	Arbitration

	 	29.2.1	 	If no mutually acceptable settlement of the dispute is reached
within the sixty (60) days following the date of the commencement of
the settlement negotiation, or if any Party refuses to engage in any
settlement negotiation, any Party may submit the dispute for
arbitration to the Arbitration Institute of the Stockholm Chamber of
Commerce (“Stockholm Arbitration Institute”) in Stockholm, Sweden.
Any periods for discussion or agreement between the Parties as
mentioned under other provisions of this Contract shall be
calculated against the 60-day period.
	 
	 	29.2.2	 	Any arbitration of disputes arising out of or in connection with
this Contract shall be conducted at Stockholm in accordance with the
arbitration rules of the Stockholm Arbitration Institute in effect
at the time of arbitration. Arbitration shall be conducted as
follows:

	 	(i)	 	the arbitrators may refer to both the English and
Chinese versions of this Contract;
	 
	 	(ii)	 	all proceedings in any such arbitration shall be
conducted in English, and a daily transcript in English of
such proceedings shall be prepared; and
	 
	 	(iii)	 	there shall be three (3) arbitrators, all of
whom shall be fluent in English. The Parties shall each select
one (1) arbitrator. The third arbitrator shall be appointed by
the president of the Stockholm Arbitration Institute and shall
serve as chairman of the panel.
	 
	 	The award of the arbitrators shall be final and binding upon the
Parties. The Parties hereby agree to honor such award. Any
competent court may enforce such award. All arbitration costs,
including costs for the enforcement of any arbitration award, shall
be borne by the losing Party.

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	CHINA	EQUITY JOINT VENTURE CONTRACT

	 	29.2.3	 	The Parties agree that during the arbitration proceedings, they
shall continue to observe and perform their respective obligations
under this Contract, except for those arising from the provisions
subject to or involved in arbitration.

Article 30           Miscellaneous

	30.1	 	This Contract, including its Annexes, is written in the English and
Chinese languages, each in fifteen (15) originals: three (3) in each
language for each Party, four (4) in each language for the JV Company, and
five (5) in each language for the Examination and Approval Authority. Both
the Chinese language and the English language versions shall be equally
authentic.
	 
	30.2	 	This Contract , including its Annexes, constitutes the entire agreement
between BRILLIANCE and BMW with respect to the subject matter of this
Contract and supersedes all prior discussions, notes, memoranda,
negotiations, understandings and documents and agreements between them
thereon. All agreements, contracts and other documents executed by the
Parties on the subject matter before the execution of this Contract shall
become null and void automatically when this Contract enters into effect.
	 
	30.3	 	This Contract and its Annexes may be amended only by written agreement
executed by the duly authorized representatives of each Party. Such
amendments shall become effective upon the approval of the Examination and
Approval Authority pursuant to PRC Laws.
	 
	30.4	 	The rights and obligations of the Parties established by and under this
Contract shall continue to exist throughout the Joint Venture Term (and
any extension thereof) and shall not be prejudiced by the establishment of
the JV Company, the adoption of the Articles of Association, or the
execution of any of the Annexes hereto. In the event of any conflict or
inconsistency between this Contract and the Articles of Association or any
of the Annexes hereto, this Contract shall prevail and the conflicting
provisions shall be amended accordingly. Articles 26, 28 and 29 of this
Contract shall survive its termination.
	 
	30.5	 	All notices given by one Party to the other Party or by the JV Company to
any Party shall be made in English by personal delivery, facsimile or
registered airmail letter to the address indicated below or to such other
address notified in lieu thereof and all notices given by any Party to the
JV Company shall be sent to legal address of the JV Company.

	 	 	 
	BRILLIANCE: 	 	
Shenyang JinBei Automotive Industry Holdings Company, Ltd.
	Address: 	 	
6th Floor, Building B, No. 1 Shiji Road, Hunnan Industrial Zone,
High-Tech District
	Attention: 	 	
Company Secretary
	Telephone: 	 	
0086-24-88201183
	Facsimile: 	 	
0086-24-88201330

	 	 	 
	BMW:	 	
Bayerische Motoren Werke Aktiengesellschaft
	Address:	 	
Petuelring 130, 80788 Munich, Germany
	Attention:	 	
General Counsel
	Telephone:	 	
0049-89-38225410
	Facsimile:	 	
0049-89-38226470

	 	 	Unless otherwise specifically provided, the date of receipt of a notice
or communication hereunder shall be deemed to be whichever of the following
shall first 

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	CHINA	EQUITY JOINT VENTURE CONTRACT

	 	 	occur: the date of receipt, if delivered personally; ten (10)
days after its postmark, in the case of a registered airmail letter; and,
one (1) working day after dispatch, in the case of a facsimile. Any
Party may change its address for the purpose hereunder by written notice
to the other Parties.
	 
	30.6	 	Failure or delay on the part of any Party to exercise any right or
privilege under this Contract shall not operate as a waiver nor shall any
partial exercise of any right or privilege preclude any further exercise
thereof. Any waiver by a Party at any time of a breach of any term or
provision of this Contract shall not be construed as a waiver by such
Party of any subsequent breach of that term or provision, of its rights
under such term or provision, or of any of its other rights under this
Contract.
	 
	30.7	 	If any one or more of the provisions contained in this Contract or any
document executed in connection herewith shall be invalid, illegal or
unenforceable in any respect under any applicable law, then: (i) the
validity, legality and enforceability of the remaining provisions
contained herein or therein shall not in any way be affected or impaired
and shall remain in full force and effect; and (ii) the invalid, illegal
or unenforceable provision shall be replaced by the Parties immediately
with a term or provision that is valid, legal and enforceable and that
comes closest to expressing the intention of such invalid, illegal or
unenforceable term or provision.
	 
	30.8	 	The Annexes hereto shall become and be considered as, when duly executed
in accordance with this Contract, an integral part of this Contract.
	 
	30.9	 	The headings contained in this Contract are for reference only and shall
not be deemed to be a part of this Contract or to affect the meaning or
interpretation hereof.
	 
	30.10	 	This Contract shall become effective on the Effective Date.

IN WITNESS WHEREOF, the Parties hereto have caused this Contract to be executed
as of the date first above written by their duly authorized representatives.

Shenyang JinBei Automotive Industry Holdings Company Limited:

	 
	/s/ Mr. Wu Xiao An

Name:  Mr. Wu Xiao An

Title: Authorized Representative

Nationality: Chinese

BMW Holding BV:

	 
	/s/ Helmut Panke

Name: Dr. Helmut Panke

Title: Authorized Representative

Nationality: German

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	CHINA	EQUITY JOINT VENTURE CONTRACT

Annex 1: Structure of Business Plan and Budget

The JV business plan and budget consists of the following elements (A-H):

	A.	 	General Financial Planning Premises
	 
	1.	 	Exchange rate
	 
	2.	 	Interest rate
	 
	3.	 	Taxes (income, business tax, real-estate tax)

	 
	4.	 	

 Definition of JV cost center responsibilities
	 
	B.	 	Wholesale Planning:
	 
	1.	 	Volume and model mix plan
	 
	2.	 	Wholesale and retail price plan
	 
	3.	 	Headcount plan
	 
	4.	 	Investment plan
	 
	5.	 	Sales allowances
	 
	6.	 	Goodwill
	 
	7.	 	Direct freight expenses finished cars
	 
	8.	 	Marketing costs
	 
	9.	 	Fixed overheads (depreciation, office rent, insurance)
	 
	10.	 	Other overheads (travel & entertainment, IT, fax/phone,
repair/maintenance etc.)
	 
	11.	 	Budget per cost center (only required for budget first year)
	 
	C.	 	Manufacturing & Supply Logistic Planning:
	 
	1.	 	Production plan (SOPs, volume, ramp up curve, shift model)
	 
	2.	 	Material requirement – quantity and prices (CKD Kits, LC parts,
other direct materials, consumables)
	 
	3.	 	Freight and packaging – quantity and prices
	 
	4.	 	Headcount plan (direct and indirect labour)
	 
	5.	 	Investment plan
	 
	6.	 	Variable production cost (labour, direct materials)
	 
	7.	 	Fixed overheads (depreciation, rent, insurance, fixed cost
contribution)
	 
	8.	 	Other overheads (Consumables, utilities, maintenance, IT, cleaning
etc.)
	 
	9.	 	Launch support
	 
	10.	 	Budget per cost center (only required for budget first year)
	 
	D.	 	Model Costing (Input information from A, B and C):
	 
	1.	 	CIF imported CKD Kits
	 
	2.	 	Import duty
	 
	3.	 	Customs clearance and logistic expenses
	 
	4.	 	Cost of local content parts and components
	 
	5.	 	Royalty
	 
	6.	 	Variable assembly cost
	 
	7.	 	Consumption tax
	 
	8.	 	Total cost of sales
	 
	9.	 	Price to dealer
	 
	10.	 	Retail Price

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	CHINA	EQUITY JOINT VENTURE CONTRACT

	E.	 	Profit & Loss/Operating Statement:
	 
	1.	 	Revenue cars
	 
	2.	 	Revenue parts
	 
	3.	 	Cost of sales
	 
	4.	 	Gross profit 1
	 
	5.	 	Direct wholesale cost
	 
	6.	 	Gross profit 2
	 
	7.	 	Personnel cost
	 
	8.	 	Marketing cost
	 
	9.	 	Fixed overheads
	 
	10.	 	Other overheads
	 
	11.	 	Royalty & launch support
	 
	12.	 	Interest
	 
	13.	 	Profit before taxes

	 
	14.	 	
 Taxes
	 
	15.	 	Profit after taxes
	 
	F.	 	Balance Sheet:
	 
	1.	 	Bank/cash requirement
	 
	2.	 	Accounts receivables (payment terms vs. dealers)
	 
	3.	 	Inventories (kits in transit, parts in transit, kits & LC
inventory, kits in progress, local cars inventory, parts inventory)
	 
	4.	 	Fixed assets
	 
	5.	 	Accounts payable (payment terms vs. suppliers)
	 
	6.	 	Loans
	 
	7.	 	Provisions and reserve funds
	 
	8.	 	Equity
	 
	9.	 	Dividend distribution
	 
	G.	 	Liquidity and Cash Flow Plan
	 
	1.	 	Monthly cash flow and liquidity plan for current year
	 
	2.	 	Cash flow statement over LRP period
	 
	H.	 	Benchmarks/ROS
	 
	1.	 	Return on sales
	 
	2.	 	Benchmark cost of wholesale and cost of retail
	 
	3.	 	Benchmark cost of production

52

 

	 	 
	CHINA	EQUITY JOINT VENTURE CONTRACT

Annex 2: Benchmarks and ROS

Business Plan Planning

Titles

	 	 	 	 	 	 	 	 	 
	Gross Sales Cars and	 	Definition Cost of	 	 	 	 	 	Definition Return on Sales
	Parts	 	Wholesale	 	Definition Cost of Retail	 	Definition Cost of Production	 	(ROS)
	- Sales Allowances	 	
(% age figure)
	 	(% age figure)
	 	(Cost per unit figure)
	 	(% age figure)
	Net Sales	 	
Sum of
	 	Sum of
	 	Sum of	 	 
	 	 	
   Personnel Costs
	 	 	 	Fixed Personnel Costs	 	 
	- CIF	 	
Wholesale
	 	Dealer Margin and Bonus
	 	Production
	 	Profit/Loss before taxes JV
	- Import Duty, Customs	 	 	 	 	 	+ Variable Personnel Costs	 	 
	Clearance	 	
+ Marketing Costs
	 	+ Sales Allowances
	 	Production
	 	Divided by
	 	 	
+ Fixed Overheads
	 	+ Calculated interest from
	 	+ Variable Overhead Costs	 	 
	- Transport to factory	 	
Wholesale
	 	paym, terms
	 	Production
	 	Net Sales
	 	 	
+ Other Overheads	 	 	 	 	 	 
	- Bank Guarantee	 	
Wholesale
	 	 	 	+ Fixed Overheads Production	 	 
	- Variable Assembly Costs	 	 	 	 	 	+ Other Overheads Production	 	 
	- Local Content	 	
divided by
	 	divided by
	 	divided by	 	 
	 	 	 	 	Adjusted Net Retail Revenue
	 	Sum of produced units of all	 	 
	- Royalty	 	
Adjusted Net Sales (ANS)
	 	(ANRR)
	 	models	 	 
	- Consumption tax	 	 	 	 	 	 	 	 
	Gross Profit I	 	
ANS=
	 	ANRR=	 	 	 	 
	- Direct costs (transport
to dealer, good will for
cars and parts)	 	
Net Sales cars/parts
	 	Net Retail Revenue cars only	 	 	 	 
	Gross Profit II	 	
- Import Duty cars/parts
	 	- Import Duty cars only	 	 	 	 
	- Personnel Cost Wholesale	 	
- Consumption tax cars
and parts
	 	- Consumption Tax cars only	 	 	 	 
	- Marketing Costs	 	 	 	 	 	 	 	 
	- Fixed Overhead Wholesale	 	 	 	 	 	 	 	 
	- Other Overheads

Wholesale	 	 	 	 	 	 	 	 
	- Personnel Costs

Production	 	 	 	 	 	 	 	 
	- Fixed Overheads

Production	 	 	 	 	 	 	 	 
	- Other Overheads

Production	 	 	 	 	 	 	 	 
	- BMW Launch Support plus

Royalty	 	 	 	 	 	 	 	 
	- Interest	 	 	 	 	 	 	 	 
	Profit/Loss before taxes

JV	 	 	 	 	 	 	 	 
	- Taxes	 	 	 	 	 	 	 	 
	Profit/Loss after taxes JV	 	 	 	 	 	 	 	 
	Out of JV P&L Scope:	 	 	 	 	 	 	 	 
	Dealer Margin/Bonus	 	 	 	 	 	 	 	 
	Net Retail Revenue	 	 	 	 	 	 	 	 

53

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