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EXHIBIT 10.4
SINO-FOREIGN CONTRACTUAL JOINT VENTURE
DALIAN SONIC JET CO., LTD.
CONTRACT
DALIAN EVERHARVEST INDUSTRIAL COMPANY
SONIC JET PERFORMANCE, LLC. U.S.A.
AMERINA INVESTMENT GROUP (U.S.A.)
May 15, 1998
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CONTRACT FOR SINO-FOREIGN CONTRACTUAL
JOINT VENTURE OF NALIAN SONIC JET CO., LTD
CHAPTER 1 General Provision
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, DALIAN EVERHARVEST INDUSTRIAL COMPANY, AMERINA INVESTMENT
GROUP, U.S.A., 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 Dalian city,
Liaoning province, the People's Republic of China. The contract hereunder is
worked out.
CHAPTER 2 Parties of the Joint Venture
ARTICLE I
Parties of this contract are as follows:
DALIAN EVERHARVEST INDUSTRIAL COMPANY (hereinafter referred to as Party
A) registered with Dalian, Liaoning in China, and its legal address is ▇▇. ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇.
Legal representative: Name: Feng Kai
Position: President
Nationality: China
SONIC JET PERFORMANCE, LLC. U.S.A. (hereinafter referred to as Party B),
registered in America. Its legal address is ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇, ▇.▇.▇.
Legal representative: Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Position: President
Nationality: U.S.A.
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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, the three parties of the contractual joint venture agree to set
up a contractual limited liability company (hereinafter referred to as the
CJVC), in Dalian, Liaoning, China.
ARTICLE 3
The name of contractual joint venture company is Dalian Sonic Jet
Limited liability company.
The legal address of the CJVC is ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇.
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 organization form of the CJVC is a limited liability company.
ARTICLE 6
The benefits of CJVC shall be distributed on net profit as follows:
Party A will receive 45%
Party B will receive 45%
Party C will receive 10%
All Parties will also share all the risks and losses on a percentage
basis.
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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 technical exchanges, to use domestic
cheap raw material and labour resources, adopt advanced and appropriate
technology and scientific management method, produce and sell watercraft jet
products, so as to ensure satisfactory economic benefits for each investor.
ARTICLE 8
The scope of production and business of the CJVC is to produce series of
jet products.
ARTICLE 9
The production scale, the joint venture will make its best effort to
produce 2000 units or more of various products.
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 1 million USD.
ARTICLE 12
Two parties of the CJVC will provide the cooperation as follows:
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(1) Party A: To provide factory building, land and
supplementary facilities equivalent to 700,000 USD, and
base on production scale, will inject up to 2 million
USD [Initials added].
(2) Party B: To provide tooling, mould (2 set of each model)
and design of factory flow and initial training
expenses.
(3) Party C: To assist Party B to promote marketing and
guarantee to remit all sales occurred in oversea to
return to CJVC.
3 parties of CJVC should finish article 12 in 3 months since this
contract is signed.
ARTICLE 14
In case any party to the joint venture intends to assign all or part of
his investment subscribed to a fourth party except the other two parties,
consent shall be obtained from the other parties to the joint venture, and
approval from the board of director of Dalian Sonic Jet LTD is required.
When one party to the joint venture assigns all or part of his
investment, the other two parties have the first right of refusal.
CHAPTER 6 Responsibilities of Each Party to the CJVC
ARTICLE 15
Party A and Party B and Party C 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 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. In case if any relocation of the factory, party "A" has full
responsibility for the relocation.
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Providing the cooperation conditions in accordance with the stipulation
in Article 12 and Article 13.
Assisting Party B for processing import Customs declaration as
investment of moulds and toolings and arranging the transportation within the
Chinese territory, the fee of all the shipping of the moulds and tooling from
U.S.A. and Nanning.
Assisting the CJVC in purchase or leasing equipment, materials, raw
materials, articles for office use, means of transportation and communication
facilities., all charges shall be born by CJVC.
Assisting the CJVC in contracting and settling the fundamental
facilities such as water, electricity, transportation, all charges shall be born
by CJVC.
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
13, and responsible for shipping capital goods such as machines and equipment,
etc., contributed as 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, initial
training personnel who is sent by Party B will be born by Party B.
Responsible for other matters entrusted by the joint venture company.
Responsibilities of Party C:
As the same in Article 12
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CHAPTER 7 Selling of Products
ARTICLE 16
The products of the CJVC will be sold internationally including China.
2% of the sales profit for new design should be paid to the owner of
patent, ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ [Initial inserted].
ARTICLE 17
Products may be sold on overseas markets through the following channels:
The CJVC will assign Party B and C to sell its products internationally
and the sale price shall be submitted by Party B and C to the board of the
directors of approval.
CHAPTER 8 Board of Directors
ARTICLE 18
The date of registration of the CJVC shall be the date of the establish
of the board of directors of the CJVC.
ARTICLE 19
The board of directors are composed of 5 directors, of which 2 shall be
appointed by Party A, 2 by Party B, and 1 by Party C. The chairman of the board
shall be appointed by Party B, and the vice chairman and the president by Party
A.
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 required.
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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 vice chairman 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 under the board and the
president, responsible for its daily management, the term of the president is 3
years.
ARTICLE 24
The responsibility of the president 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 the general manager in his work.
Several department manager 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 President.
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, dismissed and
resignation, wages, labor insurance, welfare, rewards, penalty and other
matters concerning the staff and workers of the joint venture company as a whole
or individually 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 by
three parties, their salaries, social insurance, welfare and the standard of
traveling expenses, etc.
ARTICLE 29
The CJVC shall pay taxes in accordance with the stipulations of Chinese
laws and other relevant regulation.
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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 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 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 shall be born 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.
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CHAPTER 13 Duration of the Joint Venture
ARTICLE 35
The duration of the joint venture company is 50 years with additional of
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 licenses of the CJVC is issued. In case any
change of legal representative for three parties, the contract shall still be
valid.
CHAPTER 14 The Disposal of Assets after the
Expiration of the Duration
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 and Party C.
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.
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ARTICLE 38
The amendment of the contract or other appendices shall come into force
only after the written agreement signed by Party A and Party B and C and
approved by the original examination and approval authority.
ARTICLE 39
In ease of inability to fulfill the contract or to continue operation
due to heavy losses in successive years as a result of force majeore, 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 fulfill the obligations prescribed by the contract
and articles of association, or seriously violate the stipulations of the
contract and articles of association, that party shall be deemed as unilaterally
terminates the contract. The other two parties apart from claiming damages,
shall have the right to terminate the contract by the original examination and
approval authority. If Party A and Party B and Party C of the joint venture
company agree to continue the operation, the party who fails to fulfill the
obligation shall liable for the economic losses thus caused to the joint venture
company.
CHAPTER 17 Liabilities for Breach of Contract
ARTICLE 41
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
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caused. Should it be the fault of three parties, they shall bear their
respective responsibilities according to actual situations.
ARTICLE 42
In order to guarantee the performance of the contract and its
appendices, both Party A and Party B and Party C are obligated the guaranteer
the performance of this contract.
CHAPTER 19 Force Majeure
ARTICLE 43
Should either of the parties to the contract be prevented from executing
contract by force majeure, such as earthquake, typhoon, flood, fire and war and
other 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 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 44
The formation of this contract, its validity, interpretation, execution
and settlement of the disputes shall are governed by related laws of the
People's Republic of China.
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CHAPTER 20 Settlement of Disputes
ARTICLE 45
Any disputes arising from the execution of or in connection with the
contract shall be settled through friendly consultation between three parties.
In case no settlement can be reached through consultations, the disputes shall
be submitted to China council for the promotion of International Trade Foreign
Economic & Trade Arbitration Committee in Beijing for arbitration in accordance
with its rules of procedure. The arbitration award is final and binding upon
both parties.
ARTICLE 46
During the arbitration, the contract shall be executed continuously by
three parties except for matters in disputes.
ARTICLE 47
The contract shall be written in Chinese and English.
CHAPTER 22 Effectiveness of the Contract and Miscellaneous
ARTICLE 49
The appendices drawn up in accordance with the principles of the
contract are 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 Trade of the
People's Republic of China (or its entrusted examination and approval
authority).
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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 be also required afterwards. The legal addresses of Party A and
Party B and Party C listed in this contract shall be the posting addresses.
ARTICLE 52
The contract is signed in Dalian Liaoning., China by the authorized
representative of three parties on May 15, 1998.
This contract is English Translation on the base of the Chinese
contract.
For Party A For Party B For Party C
(signature) (signature) (signature)
Sign
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Print
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Title:
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Date 98-5-15 5/15/98 98-5-15
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