EXHIBIT 21.2
SHANTOU VIBRO TECH INDUSTRIAL AND DEVELOPMENT CO. LTD.
AGREEMENT
In order to expedite the development of the Shantou Special Economic Zone,
expand the economic tie and technological exchange with the foreign countries,
attract the more advanced technologies from foreign countries, provide service
to the society, make contribution to the peoples, the Joint Venture Parties
have, after friendly negotiations, based on equal and mutual benefits, and
consensus principles, and in accordance with the Laws of the People's Republic
of China, the rules and regulations of the local government, reached and made
this Agreement.
Section 1.3 ARTICLE 1. ENERAL PROVISIONS
Section 1: The Parties of this Agreement are as follows:
Party A: CANSUN Pacific International Investment Corporation Canada
Legal address: 125 - ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇, ▇▇▇▇▇▇
Legal representative: ▇▇▇ ▇▇▇ Chow
Designation: Chairman of the Board of Directors
Nationality: Canadian
Party B: Head Office of Shantou Special Economic Zone ▇▇▇▇▇
Construction Development Company
Legal address: ▇▇. ▇ ▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇
Legal representative: Xie ▇▇▇ ▇▇▇
Designation: General Manager
Nationality: Chinese
Section 2: In accordance with the Laws of the People's Republic of China and
the stipulations of the "Regulations of the Economics in the
Guangdong Province Regarding the Foreign Companies", Party A and
Party B agree to establish a China-foreign joint venture
enterprise, "Shantou Vibro Tech Industrial and Development Co.
Ltd" (hereinafter called "the Company").
Section 3: The Company's name: (the Chinese translation of Shantou Vibro
Tech Industrial and Development Co. Ltd. The English name is:
Shantou Vibro Tech Industrial and Development Co. Ltd. The legal
address of the Company is: Long Gen Nan Road, next to ▇▇▇ ▇▇▇
Primary School 301, Shantou City.
Section 4: The Company is registered in the People's Republic of
China, and is ruled and protected by the Laws of China. All the
activities it performs in China have to be bind by the laws,
rules and regulations of China.
Section 5: The principles of the Company is: to fully utilize the
shareholders' influences, attract foreign investors, use the
advanced technology and management method, research on high-tech
production, so as to make contributions to the Special Economic
Zone, procure, develop and produce excellent social interest, and
at the same time, obtain mutual satisfaction and economic
benefits.
Section 6: The business scope of the Company is:
Primary: Rubber Bearing, research and develop the equipment of Rubber
Bearing, its Production, Processing and Sales.
Secondary: Rubber products, rubber bearing materials, rubber, plastic,
chemical and industrial raw materials, supporting materials an
packaging materials, building materials, the sales of the
building equipment, provide consultation on the technologies and
the use of Rubber Bearing products, design and scientific
research.
Section 7: The business of the Company shall be for a period of 12 years,
starting from the date of granting the business license.
1.3.1. ARTICLE 2. THE TOTAL INVESTMENT CAPITAL AND REGISTERED CAPITAL
Section 8: The total investment capital of the Company is Renminbi 12
million dollars, the registered capital is Renminbi 8.4 million
dollars.
Section 9: The contributions on the investment capital by Party A and Party
B are as follows:
1. The contribution ratios by Party A and Party B is 8:2, i.e.
Party A contributes Renminbi 6.72 million dollars (80%);
Party B contributes Renminbi 1.68 million dollars (20%).
2 According to the ratios on their investment contributions, both Parties will
inject the investment capital by the following installments.
3. Within one month after the execution of this Agreement, both Parties should
inject a portion of the required registered capital, i.e. Party A will inject
Renminbi 4 million dollars and Party B will inject Renminbi 1 million dollar.
(i) Within one year after the execution of this Agreement,
both Parties should inject the balance of the required
investment capital; i.e. Party A will inject Renminbi
5.6 million dollars and Party B will inject Renminbi
1.4 million dollars.
ARTICLE 3. THE MATTERS THAT BOTH PARTIES WILL ACCOMPLISH
Section 10: Party A will be responsible to accomplish the following:
1. In accordance with Article 2 of this Agreement, the Party
should pay the investment capital at the specified period.
2. To handle the Company's mandate with respect to the sales of
the product outside of China and also to introduce, select
advanced equipment and facilities, materials, technologies,
etc. from outside of China.
3. To handle other matters relating to the Company's mandate.
Section 11: Party B will be responsible to accomplish the following:
1. In accordance with Article 2 of this Agreement, the Party
should pay the investment capital at the specified period.
2. To handle the Company's mandate with respect to the
research, its production and processing, and the sales of
the product in China and also to introduce, select advanced
equipment and facilities, materials, technologies and other
matters.
3. To handle other matters relating to the Company's mandate.
Section 12: After negotiations, both Parties confirm that their technical
representatives will be responsible for the following:
1. Responsible to introduce both the technology on production
and the problem solving technology.
2. Assist and support the sales of products launched by both
Parties.
3. Handle other matters relating to the Company's mandate.
ARTICLE 4. DISTRIBUTION OF PROFITS
Section 13. The Company can handle the after tax profits in accordance with
the National Regulations of the Finance of the Joint Venture
Enterprises. The Board of Directors will decide the specific
terms and ratios of the withdrawal.
Section 14. The Company will distribute the after tax profits of related
capital and expenses in accordance with their respective
contribution ratios amount of the Joint Venture Partners, i.e.
Party A will have 80% and Party B will have 20%.
The Company may distribute the gross profits in proportion and in
accordance with the international practice and the Company's
operational and management circumstances, for the purpose of
management expenses and technical rewards.
If there is any loss of the Company, Party A and Party B will be
responsible to bear such loss in accordance with the ratios of
their investment.
At the end of the terms of this Agreement, the Company will
liquidate its assets, and the proceed will be distributed
according to the ratios of their investment after tax deduction.
Section 15. The profits of the Company will be distributed once a year. Such
distribution will be done in the first month of each following
year and only after the accounts for the past year have been
audited. If the accumulated loss for the prior years has not been
recovered, no distribution will be permitted.
ARTICLE 5. THE BOARD OF DIRECTORS
Section 16. The Board of Directors of the Company is the highest authority
and they will decide all the important issues of the Company.
Section 17. The Board of Directors consist of seven members, four of which
will be designated by Party A and two by Party B, and one
technical representative will be appointed by the consensus
approval of both Parties. The Directors will stay in the Board
for a period of four years and can continue their designation
thereafter.
Party A will appoint one Chairman of the Board of Directors and
Party B will appoint one Deputy Chairman.
The Chairman is the Company's legal representative. If the
Chairman is unable to perform his duties, he may temporarily
authorize the Deputy Chairman or other Directors to act on his
behalf.
Section 18. The First Meeting of the Board of Directors will be held within
one month after granting of the business license and thereafter,
the Directors' Meeting will be held at least once every six
months. If there are any discussions or important issues to be
decided, five Directors should be present in the Directors'
Meeting. If the Directors are unable to attend, they should
designate their representatives to be present at the meeting and
to vote on their behalf, failing which all the agendas and
resolutions will be void.
Section 19. The Board of Directors or their designated representatives should
have unanimous votes to pass resolutions on the following
matters:
1. Amendments on any Articles of the By-Law or Constitution of
the Company.
2. Any increase/decrease and transfer of the Company's
registered capital.
3. Any mergers, appraisal, dismissal or termination of the
Company/
4. Any important matters relating to joint development, plan,
budget and distribution.
ARTICLE 6. MANAGEMENT ORGANIZATION
Section 20. The management of the Company will be responsible for managing
the daily production, technology and sales. The General Manager
will, based on the practical conditions, submit the management
proposal to the Board of Directors for approval.
Section 21. The Company will have one General Manager and will be appointed
by the Board of Directors. There will be one or two Deputy
General Manager(s) who will be nominated by the General Manager
and the Board of Directors will decide his/her/their employment.
The employment will be for a four-year term and thereafter, they
may continue their designations.
Section 22. The Company enforces a system, which under the leadership of the
Board of Directors, the General Manager will have full
responsibilities to act on behalf of the Board of Directors.
Also, according to the Articles of the By-Law or Constitution of
the Company the General Manager will have to organize and
coordinate the Company's daily production, technologies,
operational and management work.
Section 23. All the expenses relating to the Company's facilities,
production, operation will be checked and approved by the Board
of Directors. Based on the schedules approved by the Board, the
General Manager will manage the budget accordingly. The General
Manager has the authority to approve the Company's administrative
and related business expenses.
Section 24. The General Manager must submit a monthly report to the Board of
Directors regarding the Company's production and operational
status (including the monthly financial report). A financial
summary will be submitted to the Board of Directors on a
half-yearly basis.
Section 25. The duties and authorities of the General Manager will be stated
in the Articles of the By-Law or Constitution of the Company
and/or any related documents.
SECTION 7. LABOR MANAGEMENT AND INSURANCE
Section 26. The hiring, termination and benefit schemes will be handled in
accordance with the "Labor Regulations of the Guangdong
Province Special Economic Zone" and "Management on Labor
and Salaries of the Shantou Special Economic Zone".
Section 27. After the approval of the Labor Department of the Special
Economic Zone, the Company will commence to hire, select and
employ its staff. After the employees are chosen, they have to
sign a labor contract with the Company prior to their employment.
Section 28. The employees' remuneration is in accordance with the related
regulations of the Special Economic Zone and also based on the
Company's related circumstances, will be decided by the Board of
Directors.
Section 29. All the insurance of the Company will be handled in the Shantou
City, Guangdong Province, and China.
ARTICLE 8. FINANCE AND TAXATION, ACCOUNTING AND FOREIGN EXCHANGE MANAGEMENT
Section 30. The financial and accounting system of the Company is based on
the related regulations of the People's Republic of China and the
Special Economic Zone, and the Company's practice, and will be
reported to the relevant department.
Section 31. The Company and its employees are required to pay all the
appropriate taxes according to the related regulations of the
People's Republic of China.
Section 32. In accordance with the related regulations, the Company's after
tax profits on the various funds may be withdrawn after the
approval of the Board of Directors, in order to ensure that the
Company expands its production and development.
Section 33. The Company will use the Calendar year as its fiscal year. The
Company will hire the certified public accountant in China as its
Accountant who will examine and verify all the related financial
reports.
Section 34. All of the foreign exchange matters will be handled in accordance
with the related regulations of the People's Republic of China.
ARTICLE 9. REVISIONS, AMENDMENTS, CHANGES AND TERMINATION OF THE AGREEMENT
Section 35. Any outstanding issues relating to this Agreement will be handled
in accordance with the Laws of the People's Republic of China and
any other related regulations. Party A and Party B, after
negotiations, may revise and amend the Agreement, or sign an
Amendment Agreement. Both the Amendment Agreement and the
original Amendment will have the same legal bindings.
Section 36. During the effectiveness of this Agreement, the "force majeure"
as set out in this Agreement, has caused the Company to be in
serious loss, or caused the Company to be in continuous loss,
which makes the Company unbind this Agreement. After the special
resolution approved by the Board of Directors and at the same
time, obtained the approval of the relevant governmental
authority, this Agreement will be subject to an early termination
or dismissal.
ARTICLE 10. VIOLATION OF THE AGREEMENT AND DUTIES, AND DISPUTE RESOLUTION
Section 37. If either Party is in breach of the Agreement, then the duties as
set out in the Articles of the By Law or Constitution of the
Company, has seriously violated the Agreement. Also, the rules of
the Articles of the By Law or Constitution of the Company have
caused the Company unable to operate the business which it intent
to operate. This will constitute the breach of the Agreement and
the Breaching Party will be responsible, in accordance with the
International Compensation Policies, to compensate to the other
party any financial losses (either directly or indirectly).
Besides obtaining the compensation, the Binding Party will have
the right to terminate this Agreement, in accordance with the
terms of this Agreement and report it to the relevant
governmental authority. If both Parties agree to continue their
business, the Breaching Party has to compensate any financial
losses to the Binding Party.
Section 38. If either Party, without the approval by the Board of Directors,
fails to provide any funding according to the terms set out in
the agreement upon the expiry date of the first month, then the
Breaching Party will have to pay a penalty of 15% surcharge to
the Binding Party, on a monthly basis. If the Breaching Party has
not made the payments after six months, then the Binding Party
has the right to terminate the Agreement, to receive the
accumulated breaching amount, and to seek compensation from the
Breaching Party for the funding amount plus a penalty of 15%
surcharge.
Section 39. Any disputes arising from the execution of this Agreement or any
other related matters, both Parties should first settle the
dispute through friendly negotiations. If they still cannot solve
the dispute, then the matter will be settled through the Beijing
China International Economic & Trade Arbitration Board for
arbitration, and the arbitration judgment will be final and has
the legal binding to both Parties.
Section 40. The writing, effectiveness, clarification, enforcement and
dispute resolution will be ruled and protected by the Laws of the
People's Republic of China.
ARTICLE 11. FORCE MAJEURE
Section 41. "Force Majeure" means that, after the effective date of this
Agreement, is occurred and hinders the enforcement, either in
full or in part, of this Agreement by either Party, e.g. typhoon,
flooding, fire disasters, earthquake, war, etc. which are neither
foreseeable, reasonably controlled. nor avoidable.
Section 42. During the term of this Agreement, if force majeure is occurred,
the relevant party should immediately report the circumstances to
the Board of Directors and other cooperating parties. In which
case, within fifteen (15) days of the occurrence of the incident,
a certified document should be obtained from the relevant
governmental authority. After discussions, both Parties will
decide the ways to handle this matter.
ARTICLE 12. THE EFFECTIVE DATE OF THIS AGREEMENT AND OTHERS
Section 43. This Agreement must be submitted to the governmental department
of the Shantou City for review and approval, and will be
effective from the date that such approval is granted.
Section 44. This Agreement is written in Chinese version.
Section 45. Any communications between Party A and Party B regarding their
rights and duties, can be done through telegrams or facsimiles,
followed by mail to be delivered to their respective legal
addresses, i.e. the Parties' receiving addresses.
Section 46. Any outstanding issues relating to this Agreement will be settled
by the execution of the Amendment Agreement and both Agreements
will have the same legal bindings.
Section 47. This Agreement has fifteen (15) sets. There are three originals,
one will be kept by Party A and one by Party B and the other
original will be kept by the Governmental Approval Authority.
Party A and Party B will each have six (6) copies. Both the
originals and copies have the same legal obligations.
Party A: CANSUN Pacific International Representative:
Investment Corp.
Canada
[the Company's chop]
Party B: Shantou Economic Zone ▇▇▇▇▇ Representative:
Construction Development
Headquarters
[the Company's chop]
Dated this 25th day of January, 1996.