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EXHIBIT 10.5
CONTRACT FOR SINO-FOREIGN CONTRACTUAL
JOINT VENTURE OF NANNING SONIC JET CO., LTD.
In accordance with the "law of the People's Republic of China on Joint
Ventures Using Chinese and Foreign Investment" and other relevant Chinese laws,
and regulations, introduced by AMERINA INVESTMENT GROUP, U.S.A., China Guangxi
Nanning shipyard and SONIC JET PERFORMANCE, LLC, U.S.A., adhering to the
principle of equality and mutual benefit and through friendly consultation,
agree to jointly invest to set up a contractual joint venture enterprise in
Nanning city, Guangxi province, the People's Republic of China. The contract
hereunder is worked out.
CHAPTER 2 Parties of the Joint Venture
ARTICLE 1
Parties of this contract are as follows :
China Guangxi Nanning Shipyard (hereinafter referred to as Party A)
registered with Nanning, Guangxi in China, and its legal address is at ▇▇. ▇▇
▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇.
Legal representative: Name Zhou Min
Position: Director
Nationality: Chinese
SONIC JET PERFORMANCE, LLC, U.S.A. (hereinafter referred to as Party B),
registered in America. Its legal address is at 15662 Commerce Lane, Los Angeles,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, ▇.▇.▇.
Legal representative: Name ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Position: President
Nationality: Kingdom of Saudi Arabia
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CHAPTER 3 Establishment of the Contractive Joint Venture Company
ARTICLE 2
In accordance with the "law of the People's Republic of China on Joint
Venture Using Chinese and Foreign Investment", and other relevant Chinese laws,
and regulations, both parties of the contractual joint venture agree to set up a
contractual limited liability company (hereinafter referred to as the CJVC) in
Nanning, Guangxi, China.
ARTICLE 3
The name of the contractual joint venture company is Nanning Sonic a
limited liability company.
The legal address of the CJVC is at ▇▇. ▇▇ ▇▇▇▇▇▇ ▇▇▇. ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇.
ARTICLE 4
All activities of the joint venture company shall be governed by the
laws, decrees and relevant rules and regulations of the People's Republic of
China.
ARTICLE 5
The benefits of CJVC shall be distributed as follows:
For Party A: After deducting 2% of patent fee and certain proportion for
the ensurance fee, 15% of the whole price as the benefits shall be distributed
to Party A.
For Party B: Except 15% of benefit from wholesale amount distributed to
Party A, all rest profits shall belong to Party B. 15% of risks and losses for
the CJVC shall be shared by Party A, and of which 85% by Party B. The CJVC will
implement centralized management and operation, and independent accounting.
CHAPTER 4 Purpose, Scope, Scale of Production and Business
ARTICLE 7
The purpose of the parties to CJVC is conformity with the wish of
enhancing the economic cooperation and technic exchanges, to use domestic cheap
raw material and labor resources, adopt advanced and appropriate technology and
scientific management method, produce and sell watercraftjet products, so as to
ensure satisfactory economic benefits for each investor.
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ARTICLE 8
The scope of production and business of the CJVC is to produce a series
of jet products.
ARTICLE 9
1. The production scale of the joint venture is to produce 1,200
watercraft jets and accessories per year.
CHAPTER 5 Total Amount of Investment and the Registered Capital.
ARTICLE 10
The total amount of investment of the CJVC is 2 million USD.
ARTICLE 11
The registered capital of the CJVC is 2 million USD.
ARTICLE 12
Two parties of the CJVC will provide the cooperation as follows:
(1) Party A : To provide factory building, land and supplementary
facilities equivalent to Yen 500,000 USD.
(2) Party B: To provide tooling, mould and production line of 30,000.00
USD and $1,470,000.00 USD circulating funds in cash. The total investment amount
of Party B will be $1.5 million USD. CJVC will pay Saudi Mohamed Al Rashi
Company Yen500,000 (USD) toward marketing of the products.
ARTICLE 13
The following cooperation conditions shall be finished by two parties.
The production equipment provided by Party B shall be shipped from factory
Huntington Beach, California, within 20 days starting from the date on which the
business license is issued.
ARTICLE 14
In case any party to the joint venture intends to assign all or part of
his investment subscribed to a third party except SJP LLC to Amerina, consent
shall be obtained from the other party to the joint venture, and approval from
the board of directors of Sonic Jet of Nanning is required.
When one party to the joint venture assigns all or part of his
investment, the other party has the first right of refusal.
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CHAPTER 6 Responsibilities of Each Party to the CJVC.
ARTICLE 15
Party A and Party B shall be respectively responsible for the following
matters:
Responsibilities of Party A: Handling applications for approval,
registration, business license and other matters concerning the establishment of
the joint venture company from relevant department in charge in China.
Processing for applying the right to the use of a site to the authority
in charge of the land. The CJVC only has the right to use the land and it can't
own the land. The CJVC shall not be paid any fee to Party A during the
land-using period.
After receiving the B/L for the production equipment and mould, the
factory building shall be completed within 20 days.
Providing the cooperation conditions in accordance with the stipulation
in Article 11 and Article 12.
Assisting Party B for processing import Customs declaration as
investment and arranging the transportation within the Chinese territory, the
fee will be borne by Party B.
Assisting the CJVC in purchase or leasing equipment, materials, raw
materials, articles for office use, means of transportation and communication
facilities, etc., all charges shall be borne by CJVC.
Assisting the CJVC in contracting and settling the fundamental
facilities such as water, electricity, transportation, etc., all charges shall
be borne by Party B.
Assisting the CJVC in contracting and settling the fundamental
facilities such as water, electricity, transportation, etc., all charges shall
be borne by Party B.
Assisting the CJVC in recruiting Chinese management personnel, technical
personnel, workers and other personnel needed, their wage shall be decided by
the directors of the board of the CJVC.
Responsible for handling other matters entrusted by the joint venture
company.
Responsibilities of Party B:
Providing the conditions in accordance with the stipulation in
Article 11, 12, and responsible for shipping capital goods such as machines and
equipment, etc, contributed as
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investment to a Chinese port. Handling the matters entrusted by the CJVC,such as
selecting and purchasing machinery and equipment outside China, etc;
Providing needed technical personnel for installing, testing and trial
production of the equipment, as well as the technical personnel for production
and inspection products quality.
Training the technical personnel and workers of the CJVC.
Responsible for other matters entrusted by the joint venture company.
CHAPTER 7 Selling of Products.
ARTICLE 16
The products of CJVC will be sold international including China.
ARTICLE 17
Products may be sold on overseas markets through the following channels:
The CJVC may entrust Party B to sell its products and its sale price
shall be decided by the board of directors.
CHAPTER 8 The Board of Directors.
ARTICLE 18
The date of registration of the CJVC shall be the date of the establish
the board of directors of the CJVC.
ARTICLE 19
The board of directors are composed of 5 directors, of which 1 shall be
appointed by Party A, 4 by Party B. The chairman of the board shall be
appointed by Party B,and general manager by Party A. The term of office for the
directors, chairman is 3 year, whose term of office may be renewed if
continuously appointed by the relevant party.
ARTICLE 20
The highest authority of the CJVC shall be its board of directors. It
shall decide all major issues. Concerning the joint venture company majority
approval of the board of directors be required before any decisions are made
concerning major issues. As for other matters, approval by majority or a simple
majority shall be require.
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ARTICLE 21
The chairman of the board is the legal representative of the CJVC. The
chairman be unable to exercise his responsibilities for some reasons, he shall
authorize the general manager or any other directors to represent the CJVC
temporarily.
ARTICLE 22
The board of directors shall convene at least one meeting every year.
The meeting shall be called and presided over by the chairman of the board. The
chairman may convene an interim meeting based on a proposal made by more than
one third of the total number of directors. Minutes of the meetings shall be
filed.
CHAPTER 10 Business, Management Office
ARTICLE 23
The CJVC shall establish a management office which shall be responsible
for its daily management. The management office shall have a general manager,
recommended by Party A. The general manager shall be invited by the board of
directors, whose terms of office is 3 years.
ARTICLE 24
The responsibility of the president (board will elect) is to carry out
the decisions of the board meeting, organize and conduct the daily management of
the joint-venture company. The deputy general manager shall [assist] the general
manager in his work.
Several department managers may be appointed by the management office,
and being responsible for the work in each department respectively, they shall
handle the matter handed over by the general managers and deputy general manager
and shall be responsible to them.
ARTICLE 25
If the factory director dishonest while on duty, the board of directors
shall have the power to dismiss them at any time.
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CHAPTER 10 Purchase of Equipment and Utilities
ARTICLE 26
In purchasing required materials, fuel, parts, means of transportation
and articles for office use, etc. the joint venture company shall give priority
to purchasing in China where conditions are the same.
CHAPTER 11 Labor Management
ARTICLE 27
Labor contracts covering the recruitment, employment, dismissal and
resignation, wages, labour insurance, welfare, rewards, penalty and other
matters concerning the staff and workers of the joint venture company as a whole
or individually [sic] in accordance with the "Regulation of the People's
Republic of China on Labor Management in Joint Venture Using Chinese and Foreign
Investment and its Implementation Rules."
The labor contracts shall be filed with the labor management department,
after being signed.
ARTICLE 28
The appointment of high-ranking administrative personnel recommended
[sic] by both parties, their salaries, social insurance, welfare and the
standard of travelling expenses etc.
ARTICLE 29
The CJVC shall pay taxes in accordance with the stipulations of Chinese
laws and other relevant regulation.
ARTICLE 30.
Staff members and workers of the CJVC shall pay individual income tax
according to the"Individual Income Tax Law of the People's Republic of China"
ARTICLE 31
Allocations for reserve funds, expansion funds of the CJVC and welfare
funds, bonuses for staff and workers shall be set aside in accordance with the
stipulations in the "Law of the People's Republic of China on Joint Ventures
Using Chinese and Foreign Investment". The
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annual proportion of allocations shall be decided by the board of directors
according to the business situation of the CJVC.
ARTICLE 32
The fiscal year of the CJVC shall be CJVC [sic] from January 1 to
December 31. All vouchers, receipts, statistic statements and reports, account
books shall be written in Chinese and English.
ARTICLE 33
Financial checking and examination of the CJVC shall be conducted by an
auditor registered in China and reports shall be submitted to the board of
directors and the general manager.
If Party B considers it is necessary to employ a foreign auditor
registered in other country to undertake annual financial checking and
examination, Party A shall give its consent. All the expenses thereof shall be
borne by Party B.
ARTICLE 34
In the first three months of each fiscal year, the manager shall prepare
previous year's balance sheet, profit and loss statement and proposal regarding
the disposal of profits, and submit them to the board of directors for
examination and approval.
CHAPTER 13 Duration of the Joint Venture
ARTICLE 35
The duration of the joint venture company is 50 years with additional 50
years extension option approved by board of directors six months prior of ending
the lease. The establishment of the joint venture company shall start from the
date on which the business license of the CJVC is issued. In case any change of
legal representative for two parties, the contract shall still be valid.
CHAPTER 14 The Disposal of Assets after the Expiration of the Duration
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ARTICLE 36
Upon the expiration of the duration or termination before the date of
expiration of the joint venture, liquidation shall be carried out according to
relevant laws. The liquidated assets shall be distributed in accordance with the
proportion of investment contributed by Party A and Party B.
CHAPTER 15 Insurance
ARTICLE 37
All-risks insurance policies of the CJVC shall be underwritten with The
People's Insurance Company of China. The type, value and duration of insurance
shall be decided by the board of directors in accordance with the stipulations
of the People's Insurance Company of China.
CHAPTER 16 The Amendment, Alteration and Discharge of the Contract
ARTICLE 38
The amendment of the contract or other apperices shall come into force
only after the written agreement signed by Party A and Party B and approved by
the original examination and approval authority.
ARTICLE 39
In case of inability to fulfil the contract or to continue operation due
to heavy losses in successive years as a result of force majeure, the duration
of the joint venture and the contract shall be terminated before the time of
expiration after unanimously agreed upon by the board of directors and approved
by the original examination and approval authority.
ARTICLE 40
Should the CJVC be unable to continue its operation or achieve the
business purpose stipulated in the contract due to the fact that one of the
contracting parties fails to fulfil the obligations prescribed by the contract
and articles of association, or seriously violates the stipulations of the
contract and articles of association, that party shall be deemed as unilaterally
terminates the contract. The other party, apart from claiming damages, shall
have the right to terminate the contract in accordance with the provisions of
the contract after it is
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approved by the original examination and approval authority. If Party A and
Party B of the joint venture company agree to continue the operation, the party
who fails to fulfil the obligation shall be liable for the economic losses thus
caused to the joint venture company.
CHAPTER 17 Liabilities for Breach of Contract
ARTICLE 41
Should either Party A or Party B fail to pay the contributions as
scheduled in accordance with the provisions defined in Chapter 5 of this
contract, the breaching party shall pay to the other Party 5% of the
contribution starting from the first month after exceeding the time limit.
Should the breaching party fail to pay after 3 months, it shall pay 10% of the
contribution to the other party, who shall have the right to terminate the
contract and to claim damages to the breaching party.
ARTICLE 42
Should all or part of the contract and its appendices be unable to be
fulfilled owing to the fault of one party, the breaching party shall bear the
responsibilities thus caused. Should it be the fault of both parties, they shall
bear their respective responsibilities according to actual situations.
ARTICLE 43
In order to guarantee the performance of the contract and its
appendices, both Party A and Party B are obligated to guarantee the performance
of this contract.
Chapter 18 Force Majeure
ARTICLE 44
Should either of the parties to the contract be prevented from executing
the contract by force majeure, such as earthquake, typhoon, flood, fire and war
and other unforeseen events, and their happening and consequences are
unpreventable and unavoidable, the prevented party shall notify the other party
by cable without any delay, and within 15 days thereafter provide the detailed
information of the events and a valid document for evidence issued by the
relevant public notary organization for explaining the reason of its inability
to execute or delay the
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execution of all or part of the contract. Both parties shall, through
consultation, decide whether to terminate the contract or to exempt the part of
obligations for implementation of the contract or whether to delay the execution
of the contract according to the effect of the events on the performance of the
contract.
CHAPTER 19 Application Law
ARTICLE 45
The formation of this contract, its validity, interpretation, execution
and settlement of the disputes shall be governed by related laws of the People's
Republic of China.
CHAPTER Settlement of Disputes
ARTICLE 46
Any disputes arising from the execution of or in connection with the
contract shall be settled through friendly consultation between both parties. In
case no settlement can be reached through consultations, the disputes shall be
submitted to Chian Council for the promotion of International trade Foreign
Economic & Trade Arbitration Committee in Beijing for arbitration in accordance
with its rule of procedure. The arbitration award is final and binding upon both
parties.
ARTICLE 47
During the arbitration, the contract shall be executed continuously by
both parties except for matters in disputes.
CHAPTER 21 Language
ARTICLE 48
The contract shall be written in Chinese and English.
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CHAPTER 22 Effectiveness of the Contract and Miscellaneous
ARTICLE 49
The appendices drawn up in accordance with the principles of this
contract are an integral part of this contract, including: the project
agreement, the technology transfer agreement, the sales agreement.
ARTICLE 50
The contract and its appendices shall come into force beginning from the
date of approval of the Ministry of Foreign Economic Relations and trace of the
People's Republic of China. (or its entrusted examination and approval
authority.)
ARTICLE 51.
Should notices in connection with any party's rights and obligations be
sent by either Party A or Party B by teleg, telex or fax etc, the written letter
notice shall also be required afterwards. The legal addresses of Party A and
Party B listed in this contract shall be the posting addresses.
ARTICLE 52
The contract is signed in Nanning, Guangxi, China by the authorized
representative of both parties on August 8, 1997.
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This contract is true English translation of the Chinese contract.
FOR PARTY A FOR PARTY B
(SIGNATURE) (SIGNATURE)
SIGN /s/ /s/
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▇▇▇▇▇ ▇▇▇▇▇▇▇▇
PRINT 8/8/97
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TITLE: 97.8 President
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DATE 97.8.8 8/8/97
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