Joint Venture Contract

JOINT VENTURE CONTRACT


Based on the Foreign Investment Law of Vietnam and relevant legal documents, the parties mentioned hereinafter have signed a Joint Venture Contract to establish in the Socialist Republic of Vietnam, a Joint Venture Company as follows:


A. PARTICIPATING MEMBER OF VIETNAMESE PARTY:


1. NAME OF THE COMPANY : CENTRAL FOOD CORPORATION II o Transaction name : VINAFOOD II


2. Delegated representative : Mrs. DUONG THI NGOC TRIEU o Title : General Director


3. Head Office : 42 Chu Manh Trinh, District 1,
Ho Chi Minh City o Telephone : 292342-230243 o Fax :


4. Main business line: Production and business of food


5. Certificate of Incorporation: o Registered number : No. 357/GP-UB o Date : January 18, 1990 o Registered capital : o Account opened at the Bank : o Account number :


B. PARTICIPATING MEMBER OF THE FOREIGN PARTY:


1. NAME OF THE COMPANY : AMERICAN RICE, INC.


2. Delegated representative : MR. GERALD D. MURPHY o Titles : Chairman o Nationality : American


1 2 3. Head Office: 16825 Northchase Drive, Houston, Texas 77060,
P.O. Box 2567
Houston, Texas 77252


o Telephone: (713) 873-8800 o Telex: 166211 (ARIHO-UT) o Fax: (713) 872-2823


4. Main business line:


o Production and business of rice and all kinds of agricultural products.


5. Certificate of Incorporation:


o Registered number :No. 76-0231626 o Registered at :State of Texas o Date :October 9, 1987 o Registered capital :USD 40,299,000 o Account opened at the Bank :CHASE MANHATTAN BANK o Account number :Multiple Accounts


ARTICLE 1: PURPOSE


1. The Parties agree to establish the Joint Venture Company in the Socialist
Republic of Vietnam with purposes of:


o Constructing and managing the mill for producing parboil rice, upgrading
the mill which process white rice currently existing at Tra Noc, Can Tho
Province in order to raise its output and quality of export rice of
Vietnam.


o Marketing Vietnamese Rice and rice related products internationally and
domestically in Vietnam.


2. The name of the Joint Venture Company:


o Vietnamese name: CONG TY LIEN DOANH SAN XUAT GAO XUAT KHAU VIET-MY


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o Foreign name :AMERICAN RICE-VINAFOOD CO., LTD. o Transaction name :AMERICAN RICE-VINAFOOD o Other Transaction name :COMET-VINAFOOD


3. Status of Joint Venture Company:


The Joint Venture Company will be a limited liability company having a legal capital established under the Law on Foreign Investment in Vietnam and enjoying the status of a juridical person upon the State Committee for Cooperation and Investment (SCCI) issuing an investment licence.


ARTICLE 2: PLACE OF BUSINESS


1. Address of the Joint Venture Company:


o Head Office :Tra Noc, Can Tho province, Vietnam. o Address of the mill :Tra Noc Rice Mill, Can Tho province, Vietnam. o Transaction Office : will be determined after getting the Investment
Licence.


2. Products of the Joint Venture Company:


o Parboil Rice o Upgraded White Rice o Other rice related products


3. Production capabilities approximately:


o Parboil Rice : 60,000 tons/year o Upgraded White Rice :200,000 tons/year
------------------ Total :260,000 tons/year


ARTICLE 3: INVESTED CAPITAL


1. Total invested capital of Joint Venture is :USD 17,930,000


2. Legal capital of the Joint Venture is :USD 5,380,000


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of which:


A) The Vietnamese Party contributes USD 2,420,000, equals to 45% of the legal capital, consisting of five (5) years of land use right.


B) The Foreign Party contributes an amount of USD 2,960,000, equals to 55% of the legal capital, consisting of cash, machinery and equipment.


3. Loan capital:


In addition to the legal capital, Joint Venture company may borrow USD 12,550,000 from the domestic and/or foreign Banks with the annual interest rate to be approved by Ministry of Finance of Vietnam. The Vietnamese Party and the Foreign Party are responsible for arranging and negotiating these loans. This sum is used for construction of the parboil mill, purchase and installation of equipment and purchase of rice and rough rice.


ARTICLE 4: SCHEDULE OF CAPITAL CONTRIBUTIONS


The parties undertake to contribute their respective capital fully according to the schedule of capital contribution as soon as receipt of the Investment License.


SCHEDULE OF CAPITAL CONTRIBUTION


Currency Unit: x 1000 USD - ----------------------------------------------------- YEAR 1 2 3 4 5 TOTAL - ----------------------------------------------------- ARI 1,500 500 500 460 2,960 - ----------------------------------------------------- VF2 484 484 484 484 484 2,420 - ----------------------------------------------------- Total 1,984 984 984 944 484 5,380 - -----------------------------------------------------


o At the time when the actual financial contribution is made, if the project
values shown at the Article 3 are differ when compared with the actual
contributed values, the parties must agree to these differences and report
same to the State Committee for Cooperation and Investment (SCCI) for
consideration and approval.


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o Within forty five (45) days since the date of issuance of the Investment
License, VINAFOOD II Party shall complete the legal procedures to transfer
the land use right to the Joint Venture Company.


o Within sixty (60) days since the date of issuance of the Investment
License, AMERICAN RICE Party shall contribute all equipment and machinery,
and install them, these items valued about 500,000 USD and contribute
100,000 USD in cash for operation. Within ninety (90) successional days,
AMERICAN RICE shall contribute additional equipment and machinery, and
install them, valued at 250,000 USD and contribute an additional 150,000 USD
in cash. The rest of the first year contribution will be completed by the
end of the year by AMERICAN RICE.


o All machinery, equipment, expenses for installation and the land use rights
used for contribution of capital shall be agreed in advance by the Joint
Venture Parties on the price, quality, type and put under control and
evaluation of the relevant Authorities according to the regulations of
Government of Vietnam.


ARTICLE 5: FAIL TO MAKE THE CAPITAL CONTRIBUTION


Any party is unable to complete the payment schedule as agreed upon above, shall have to inform the other party stating the reasons for not being able to contribute and measures to be taken by this defaulting party, in order to resolve the situation. Notice shall be given to the non defaulting party no less than 30 days before the schedule time for the respective contribution of capital. The defaulting party agrees to provide compensation to the other party for losses (if any).


ARTICLE 6: SHARING OF LOSS AND PROFIT


o The rate of capital contribution of the Vietnamese Party is 45% and of the
Foreign Party is 55% of the legal capital.


o The rate of profit and loss and any risk of the Company is also shared
between the Joint Venture Company's Parties at the above rates.


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ARTICLE 7: DURATION OF THE JOINT VENTURE


The term of this Joint Venture Contract is twenty (20) years, commencing from the date of the issuance of the Joint Venture Investment License.


The above term shall continue for 20 years, with two additional options to renew for 20 years each option. Such options shall be decided by Board of Management and shall be subject to approval of the State Committee for Cooperation and Investment (SCCI).


ARTICLE 8: SCHEDULE FOR IMPLEMENTING THE PROJECT


The Parties agreed that immediately after the date on which the Investment License by SCCI has been issued, the Joint Venture Company shall manage and upgrade the existing equipment and machiney of VINAFOOD II at the Tra Noc Rice, Mill, Can Tho province.


Two Parties agree to borrow the necessary loans and complete the construction of the parboil mill and put it into commercial operation no later than the fourth quarter of 1995.


ARTICLE 9: RESPONSIBILITIES OF THE PARTIES


A. Responsibilities of the Joint Venture Company:


- - To pay fully VINAFOOD II for the rental of the mill, equipment and
facilities according to the signed lease contract.


- - To pay fully to the Vietnam Government for the land rental commencing the
sixth year.


- - During the entire term of the Joint Venture, to pay AMERICAN RICE for
Marketing and sales of products, a sum equal to 3.5% of annual export sales
revenue of the Joint Venture Company.


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B. Responsibilities of the Joint Venture Parties are stipulated as follows:


1) VINAFOOD II PARTY:


o Ensure that the Joint Venture Company has the land use right for its
duration of operation. Complete all legal procedures to contribute the
land use right for the first five years as the respective contributed
capital of VINAFOOD II, and then complete all legal procedures for the
Joint Venture Company to rent such the land from the sixth year on.


o Rent all of the rice facilities currently existing at Tra Noc to the Joint
Venture for the duration of the Joint Venture (including the option
periods) as defined in Article 8 for USD465,000 per year. After every five
years the Joint Venture will confirm this price and can not increase the
facility use fee more than 15% from the previous year. During rent period,
the Joint Venture shall pay any expenses for repair and maintenace.


o Assist the Joint Venture to purchase the rough rice at cost or competitive
market price to the Joint Venture of adequate quality and quantity as
determined by the Joint Venture for producing parboil rice.


o Assist the Joint Venture to purchase the rough rice or white milled rice at
their cost or competitive market price to the Joint Venture of adequate
quality and quantity as determined by the Joint Venture for producing
upgraded white rice.


o To be responsible for obtaining all necessary Vietnamese Government
licensing for the operation of this Joint Venture. Propose Vietnam
Government to apply for the privileged treatments for all taxes as
mentioned in the Application and the Feasibility Study.


o Obtain the necessary permits or licenses from the Ministry of Trade for the
export quota equal to the Joint Venture's production capacity, about
300,000 tons of white rice and 85,000 tons of parboil rice annually.


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o Assist the Joint Venture Company to market, manage, operate and purchase
equipment, machinery on the domestic and overseas markets.


o Assume responsibility for the Joint Venture Company to get the necessary
permits, and licenses, for energy use, and resource energy requirements
such as propane, natural gas, electricity, water, etc. . . . at the
stipulated price of Vietnamese Government.


o Arrange to borrow USD 5,647,500 (equal to 45% of the total proposed loan
capital) from Vietnamese State by the Joint Venture to construct the
Parboil Rice Mill. This loan will have an annual interest rate of 8% for
the term of ten years. The Joint Venture will borrow 250,000 USD from above
loan capital to buy equipment and machinery for white rice upgrading.
Interest and principal on the loan will be paid by the Joint Venture
Company in equal amounts over 10 years.


2) AMERICAN PARTY:


o Contribute fully its capital. Arrange with domestic and/or foreign banks
for borrowing 6,902,000 USD (equal to 55% of the total proposed loan
capital) for the Joint Venture Company for operating cash flow and to
purchase rough and milled rice. Such loan will be at an annual interest
rate of LIBOR plus 2% or the best available commercial interest rate at the
time of the loan. Interest and principal loan will be paid by the Joint
Venture Company.


o Provide assistance, advice, expertise and information related to the
construction, development and management of the Joint Venture Company.


o Assist the Joint Venture to increase the percentage of output of whole rice
particle from 40.5% to between 45% and 55% after upgrading Tra Noc White
Rice Process Area.


o Assist the Joint Venture to increase the sale price of the best quality
export white 5% rice of the Joint Venture to equal the sale price of 100% B
Rice of Thailand based on improvement in the quality of rice and consistent
with the objectives for turnover.


o Organize and train Vietnamese workers of the Joint Venture Company.


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o To sell annually 200,000 tons of white rice, 60,000 tons of parboil rice and
the other rice products of Tra Noc mill, Can Tho Province; and assist the
Joint Venture to control the loading and shipping of the sold rice, and the
exclusive use of its desired ocean vessels.


o As the largest parboiler in the world, Foreign Party shall share with the
Vietnam Party and Joint Venture Company its worldwide market experiences,
and know-how in the related field of Parboil Rice as well as its knowledge
in the white rice.


o Assist the Joint Venture Company to purchase the necessary manufacturing
equipment and manage installations as required by the Joint Venture to
produce the parboil rice and upgraded white rice.


o Be granted the right to designate the type and quality of rice to be
provided by Vietnamese farmers.


o Contribute the use of some branded tradenames and small packaging technology
to the Joint Venture for exclusive use within Vietnam.


o Provide the services and consultants or personnel to the Joint Venture.
These expenses shall be paid by the Joint Venture from a separate management
and marketing agreement between Joint Venture and Foreign Party.


o Assist the Joint Venture Company to market, manage, operate and purchase
equipment, machinery on the domestic and overseas markets.


ARTICLE 10: BOARD OF MANAGEMENT


The Board of Management is the highest authority of the Joint Venture Company, consists of five (5) Board members. The number of the Board members shall be appointed by each Party as follows:


o Vietnamese Party: two (2) members; o Foreign Party: three (3) members.


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Within two (2) weeks from the date of issuance of the Investment License, the Parties shall have a meeting to set up the Board of Management of the Joint Venture Company.


The Functions, responsibilities and rights of the Board of Management as stipulated in the Joint Venture Charter.


ARTICLE 11: ESTABLISHING THE FUNDS


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