EXHIBIT 10.145
SHENZHEN JIADIANBAO ELECTRICAL PRODUCTS CO., LTD.
CONTRACT TO AMEND
COOPERATIVE JOINT VENTURE CONTRACT
THIS CONTRACT TO AMEND (the "Amendment") has been entered into this
18th day of October 1996 by and between Shenzhen Baoanqu Xxxx Industries Co.,
Ltd. ("Party A") and Go-Gro Industries, Ltd. ("Party B"), each of which is a
party to a Contract to Change Shenzhen Jiadianbao Electrical Products Co., Ltd.
an Equity Joint Venture Using Chinese and Foreign Investment to Shenzhen
Jiadianbao Electrical Products Co., Ltd. a Cooperative Joint Venture Company,
dated 12 September 1994 (the "Contract").
Pursuant to the provisions of Article 7 of the Law of the People's
Republic of China on Sino-foreign Co-operative Enterprises, the undersigned,
being all of the parties to Shenzhen Jiadianbao Electrical Products Co., Ltd., a
cooperative joint venture company with limited liability (the "Cooperative
Co."), the establishment of which was approved in September 1994 by the Shenzhen
Municipal Foreign Investment Office (the "Approving Authority"), do hereby agree
to amend the Contract as follows:
1. Article 5 of the Contract shall be amended by changing the words
"Article 10" in the second sentence to read "Article 9", and the words "Article
10" in the third sentence to read "Article 11".
2. Article 6 of the Contract shall be amended to read in full as
follows:
ARTICLE 6 - PURPOSE
The purposes of the Parties in establishing the Cooperative Co. are: to
fully utilize Party B's abundant capital resources, technical strength, advanced
management methods and broad sales network in the international market for
designing, manufacturing and distributing in the domestic and international
markets various types of lighting products, flashlights, cordless hand tools,
household electrical products and related components and parts (hereinafter
referred to as "Contract Products"); to further strengthen the economic
cooperation and technical exchanges between PRC and the international markets;
to import into the PRC advanced and applicable production technology, key
equipment and scientific management techniques; to build a modern household
electrical products production capability in order to further expand the scale
capacity and product quality of the Cooperative Co.; to facilitate the
development of new
products, so as to strengthen the competitiveness of Chinese lighting products
in the international market and increase exports from the PRC; and to further
improve the economic effectiveness and achieve a satisfactory economic profit
for the Parties.
3. Article 7 of the Contract shall be amended to read in full as
follows:
ARTICLE 7 - BUSINESS SCOPE
The business scope of the Cooperative Co. shall include the following:
(1) design and manufacture of various types of lighting products,
flashlights, cordless hand tools and related components and parts, and
after-sale maintenance and repair services therefor;
(2) construction, ownership and operation of plant and related
facilities needed for the administration of the Cooperative Co., production and
distribution of its Contract Products and operation of its business; and
(3) such other activities as may be necessary or advisable, as
permitted under the laws and regulations of the People's Republic of China
("PRC"), in furtherance of the purposes of the Cooperative Co. as set forth in
Article 6 of this Contract.
4. Chapter 5 of the Contract shall be amended to read in full as
follows:
CHAPTER 5. TOTAL INVESTMENT AND REGISTERED
CAPITAL; PAYMENT AND USE OF CAPITAL; ALLOCATION AND
DISTRIBUTION OF PROFITS AND LOSSES; TRANSFER OF INTERESTS
ARTICLE 9 - TOTAL AMOUNT OF INVESTMENT: REGISTERED CAPITAL: PAYMENT
OF REGISTERED CAPITAL: VERIFICATION AND CHANGE OF CAPITAL
9.1 The original total amount of investment in the Cooperative Co. was
RMB80,000,000. The additional amount of investment is RMB43,817,280.
9.2 The original registered capital of the Cooperative Co. was
RMB32,000,000, which has been subscribed in full by Party B and will be paid and
used solely for the Production Line.
The additional registered capital is RMB17,526,912, which shall be used
solely for the Construction Line for building production plant and related
facilities.
9.3 Payment of the additional registered capital shall be as follows:
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9.3.1 Of the additional registered capital of RMB17,526,912, thirty
percent (30%) or RMB5,258,074 is subscribed and shall be contributed in cash or
in kind by Party A, and seventy percent (70%) or RMB12,268,838 is subscribed and
shall be contributed in cash or in kind by Party B.
9.3.2 Payment of the additional registered capital of RMB17,526,912
shall be in three installments, of which 15% of the amount subscribed by each
Party shall be paid within three (3) months after the date of the approval of
the increase in the total amount of investment and increase in registered
capital, 50% of such amount within nine (9) months after such approval, and the
remaining 35% of such amount within twelve (12) months after such approval.
9.3.3 All capital payments in cash shall be made, if in RMB, to the RMB
account of the Cooperative Co. at the Bank of China's principal office in
Shenzhen or at such other authorized bank as the Board of Directors (the
"Board") may from time to time designate; or if in foreign currency, to the
respective foreign exchange account of the Cooperative Co. at the Bank of
China's principal office in Shenzhen or at such other authorized bank as the
Board may designate from time to time. All capital payments made in kind shall
be transferred to the Cooperative Co. by appropriate documents of transfer and
assignment. According to the PRC Regulations on the Subscription of Capital by
the Parties to Sino-Foreign Joint Venture Enterprises of December 30, 1987, any
and all capital contributed by the Parties to the Cooperative Co., regardless of
the form of the payment, shall be, when received by the Cooperative Co., free
and clear of all liens, claims and encumbrances whatsoever. All registered
capital received by the Cooperative Co. shall be for the exclusive use of the
Cooperative Co. for implementing the purposes set forth herein for the entire
term of this Contract.
9.3.4 The capital contributed to the Cooperative Co. shall be verified
by a Chinese registered accountant retained by the Cooperative Co. and such
accountant shall issue a capital verification report verifying the paid-in
capital contributions. Party B has the option to retain, at its own cost, an
international certified public accountant of its choice to assist in the capital
verification of any Party's contribution and in the issuance of any capital
verification report. Upon receipt of a satisfactory capital verification report,
the Cooperative Co. shall issue a certificate of capital contribution in the
verified amount to the Party making such contribution. Such certificate(s) of
capital contribution shall be conclusive evidence of such Party's capital
interest in the Cooperative Co.
9.3.5 Registered capital of the Cooperative Co. may be increased from
time to time but only following adoption of any such increase by unanimous
action by the Board of the Cooperative Co. and approval of the Shenzhen
Municipal Foreign Investment Office (the "Approving Authority") Approving
Authority. No Party shall be required to make any additional contribution of
registered capital except as expressly set forth in this Article, as the same
may be amended from time to time Registered capital shall not bear interest.
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ARTICLE 10 - USE OF CAPITAL
10.1 Capital received by the Cooperative Co. shall be allocated, as
prescribed in this Contract for the registered capital and otherwise as
determined by the Board, between the two primary segments of its business, the
Production Line and the Construction Line, which segments are defined as
follows:
10.1.1 The Production Line includes all personal property of the
Cooperative Co., including machinery and equipment, raw materials and
components, work-in-progress, finished goods inventory, receivables,
intellectual property, leases, licenses, contract rights and other intangibles,
tenant improvements to any real property leased or used by the Cooperative Co.
and deposits and premiums, used or usable in the production and distribution of
the Contract Products and not included in the Construction Line.
10.1.2 The Construction Line includes all land use rights owned or
used by the Cooperative Co. (other than under the provisions of a lease)
concerning land located in Feng Xxxxx Xxxx Village, Xin An Town, Bao An
District, Shenzhen, and all of the rights of the Cooperative Co. in all
improvements, both off-site and on-site, and all buildings and other structures,
and other rights related thereto, including contracts for the design,
construction and supervision of construction of buildings and other structures,
located or constructed on such land, and all easements and other rights related
to the foregoing.
10.2 The entire original registered capital in the amount of
RMB32,000,000 subscribed and paid by Party B shall be allocated to and used
solely for the Production Line. The additional registered capital in the amount
of RMB17,526,912 shall be allocated to and used solely for the Construction
Line.
ARTICLE 11- DETERMINATION AND ALLOCATION OF PROFITS AND LOSSES
11.1 Revenues and expenditures of the Cooperative Co. shall be recorded
under such bookkeeping and accounting procedures and standards as shall be
determined by the Board, but such procedures shall not permit expenditure of
registered capital received by the Cooperative Co. except as permitted by
Article 10.2 herein. Further, expenditures which shall be determined by the
Board to be capital expenditures relating to the Construction Line shall be so
recorded in the books and records of the Cooperative Co. that the amount of such
expenditures, including reasonable depreciation, shall be an appropriate
adjustment to the cost of the Construction Line. Revenues received from the
sale, lease (including any amounts allocated to the Construction Line pursuant
to Article 11.3 below), or condemnation of assets included in the Construction
Line, or insurance proceeds received under policies owned by the Cooperative Co.
insuring, assets in the Construction Line from the dangers of fire, explosion,
theft, earthquake or other natural disaster or like danger covered in similar
policies, shall be recorded as revenues received from the Construction Line.
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11.2 Notwithstanding the foregoing, expenditures for the payment of
compensation to production and assembly workers engaged in the Production Line,
together with payment of a procurement and supervision fee and management fee to
Party A of an aggregate amount to be determined from time to time by the Board
based on the then number of employees so engaged in production and assembly and
rent for the existing factory premises leased from Party A (which amount was
RMB3,300,000 per year as of 12 September 1994) shall be paid or accrued by the
Cooperative Co. and shall be a charge against the revenues from the Production
Line when so paid or accrued. Such payments to workers and to Party A are hereby
guaranteed by Party B.
11.3 The Board may determine a reasonable rental expense (said expense
shall not exceed the fair market rental at the time of determination for the
same or similar assets) of the assets included in the Construction Line and
allocate such amount on the books and records of the Cooperative Co. as an
expenditure of the Production Line and revenue to the Construction Line.
11.4 Net Profits and Net Losses shall be determined in accordance
with the accounting procedures and standards established by the Board from
time to time. Party B shall be allocated all net profits and losses from the
Production Line. Party A shall neither receive any profits nor bear any
losses, risks or liabilities on the Production Line. Party A shall be
allocated thirty percent (30%), and Party B shall be allocated seventy percent
(70%), of all net profits and losses from the Construction Line.
ARTICLE 12 - DISTRIBUTIONS AND RETENTION OF PROFITS
12.1 The Cooperative Co. shall at all times maintain a capital account
for each Party to this Contract, showing therein the amount of verified
registered capital and other capital which each such Party has paid in or
otherwise received by the Cooperative Co.
12.2 The Board shall have the discretion to retain all or a portion
of Net Profits from the Production Line or the Construction Line in the
Cooperative Co. or to distribute such Net Profits to the Parties. Should the
Board decide to distribute Net Profits to the Parties, the following
distribution principles shall be followed: Net Profits from the Production
Line shall be distributed to Party B; Net Profits from the Construction Line
shall be distributed thirty percent (30%) to Party A and seventy percent (70%)
to Party B as available.
ARTICLE 13 - TRANSFER OF INTERESTS
13.1 The effectiveness of any transfer or sale (collectively
"Transfer") of all or any part of its interests in the Cooperative Co. by any
Party shall be subject to the prior written consent of the other Party, which
consent shall not be unreasonably withheld, and approval of the Approving
Authority to the extent required by PRC law and regulations. Should either
Party desire to Transfer all or a portion of its interest, it shall first
offer in writing to Transfer such interest to the other Party at a price and
on
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terms and conditions set forth in such writing, which writing shall also set
forth the name of the person proposed to be the recipient of such Transfer.
Should the Party receiving such offer not elect to acquire such interest within
ninety (90) days after receiving such offer, the offering Party may within
sixty (60) days thereafter Transfer such interest to the person named in the
written offer at a price and on terms and conditions no more favorable to the
person named in the written offer than had been set forth in such written offer.
Any other Transfer hereunder shall be void.
13.2 Any Transfer of any Party's interest under this Article shall not
become effective until all necessary approvals have been obtained and until the
proposed transferee shall have agreed to be subject to the provisions of this
Contract and the Articles of Association of the Cooperative Co. by execution
hereof and of the Articles of Association, as amended to the date of such
Transfer. Upon the receipt of such approvals and signed documents, the
Cooperative Co. shall cancel the then outstanding Certificates of Capital
Contribution of the transferor Party and issue new Certificates of Capital
Contribution to the transferee to reflect the new ownership interests, and
commencing from that date the transferee shall become a Party to this Contract
and the Cooperative Co. Should Party B acquire all of the interests of Party A,
it shall be entitled to re-register the Cooperative Co. as a wholly
foreign-owned enterprise.
5. Article 14.1 shall be amended by deleting the word "and" after
subarticle (h), by adding thereto a revised subarticle (i) as follows, and by
amending the existing subarticle (i) to become subarticle (j):
(i) Contributing its subscribed registered capital under the terms and
conditions as provided in Article 9 of this Contract; and
6. Article 14.2 of the Contract shall be amended by changing the words
"Article 10" in subarticle (a) to Article 9.
7. Chapter 8 of the Contract shall be amended to read in full as
follows:
CHAPTER 8. BOARD OF DIRECTORS
ARTICLE 19 - FORMATION OF THE BOARD AND ITS POWERS
l9.1 The Board of the Cooperative Co. shall be established upon the
issuance of the business license by the Shenzhen Administration of Industry and
Commerce and shall hold its first meeting as soon as practicable thereafter.
19.2 The Board shall be comprised of five (5) Directors, two (2) of
which shall be appointed by Party A and three (3) of which shall be appointed by
Party B. The Chairman shall be appointed by Party B and the Vice Chairman shall
be appointed by Party A.
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ARTICLE 20 - QUORUM REQUIRED FOR BOARD MEETINGS
This Article intentionally left blank. Provisions relating to the
number of directors required to constitute a quorum for the conduct of meetings
of the Board, and the number of votes necessary to authorize action by the Board
are set forth in the Articles of Association of the Cooperative Co.
ARTICLE 21 - CHAIRMAN OF THE BOARD OF DIRECTORS
21.1 The Chairman of the Board of Directors shall be the legal
representative of the Cooperative Co., and shall have the authority to act for
the Cooperative Co. as provided by law, by this Contract and by the Articles of
Association of the Cooperative Co.
21.2 If the Chairman of the Board is absent, he may delegate his power
to the Vice Chairman or a Director of the Board to act on his behalf.
ARTICLE 22 - PARTICIPATION OF DIRECTORS
Provisions relating to the participation of directors are set forth in
the Articles of Association of the Cooperative Co.
ARTICLE 23
Intentionally left blank
8. Article 24 of the Contract shall be amended to read in full as
follows:
ARTICLE 24 - MANAGEMENT ORGANIZATION
The Cooperative Co. shall establish a Management Organization which,
subject to its overall responsibility to the Board (the highest management organ
of the Cooperative Co.), shall be responsible for day-to-day operations of the
business of the Cooperative Co. The Management Organization shall have such
departments as shall be determined by the Board from time to time.
9. Article 26 of the Contract shall be amended to read in full as
follows:
ARTICLE 26 - REMOVAL OF MANAGEMENT
Provisions for the removal and replacement of officers of the
Cooperative Co. are set forth in the Restated Articles of Association of the
Cooperative Co.
10. Article 33 of the Contract shall be amended to read in full as
follows:
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ARTICLE 33 - MANAGEMENT
Management personal shall be compensated as provided in the Articles of
Association and in resolutions of the Board adopted from time to time.
11. Article 38 of the Contract shall be amended to read in full as
follows:
ARTICLE 38 - ACCOUNTING AND AUDITING
The fiscal year of the Cooperative Co. shall commence on January 1 of
each calendar year and shall conclude on December 31 of such calendar year. The
details of the accounting and auditing system of the Cooperative Co. shall be
provided in the Restated Articles of Association.
12. Article 43 of the Contract shall be amended to read in full as
follows:
ARTICLE 43 - RESIDUAL ASSETS
43.1 After the Liquidation Committee has paid or otherwise provided for
all the legitimate debts of the Cooperative Co. and paid or provided for the
payment of all liquidation expenses, the remaining assets shall be distributed
to the Parties as follows:
43.1.1 Production Line: Remaining assets at the time of
liquidation comprising or included within the Production Line shall be returned
to Party B.
43.1.2 Construction Line: Remaining assets at the time of
liquidation comprising or included with the Construction Line shall be valued at
their then market value, and shall be apportioned between the Parties such that
thirty percent (30%) of such assets shall be apportioned and distributed to
Party A and seventy percent (70%) of such assets shall be apportioned and
distributed to Party B.
43.2 Party B shall have first priority with respect to any remaining
foreign exchange assets of the Cooperative Co. to the extent of its allocated
share of all remaining assets as provided in Article 43.1.
13. Article 49.5 of the Contract shall be amended as follows:
The reference in Article 49.5 to Article 10 of the Contract shall be
changed to refer to Article 9 of the Contract.
14. Provisions of the Contract not amended by this Amendment shall
continue in full force and effect. Should the provisions of any prior contract,
agreement, or memorandum of understanding conflict with the provisions of the
Contract, as amended, the provisions of the Contract, as amended, shall prevail.
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IN WITNESS WHEREOF, the Parties have caused this Amendment to be
executed by their duly authorized representatives as of the day and year first
above written.
Shenzhen Baoanqu Xxxx Industries Co., Ltd. Go-Gro Industries, Ltd.
For and on behalf of
GO-GRO INDUSTRIES, LTD.
/s/ [ILLEGIBLE]
------------------------
[SEAL] DIRECTOR
By: /s/ ZHANG FUTIAN By:
----------------------- --------------------
Zhang Futian Waicheck Xxx
Legal Representative Legal Representative
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