EXHIBIT 10.1
b) 10.1 JOINT VENTURE BETWEEN GUANGDONG EV CO. LTD. AND AMERICAN ELECTRIC
AUTOMOBILE COMPANY (ASIA). INC.
ELECTRIC VEHICLE JOINT VENTURE COOPERATION LETTER OF INTENT
(the Chinese translation shall be used as the final interpretation of this
contract.) The Parties
GUANGDONG EV CO. LTD.
of China (hereinafter referred to as GDEV)
and
AMERICAN ELECTRIC AUTOMOBILE COMPANY (ASIA). INC.
of California, USA (hereinafter referred to as AEAC), a subsidiary of American
Electric Automobile Company Inc. of California, USA (hereinafter referred to
as AEAS).
After the completion of the Contract of Electric Vehicle Cooperation, the two
parties, at an appropriate time, shall sign the joint venture contract.
1. Signing of Joint Venture Agreement: If a decision is made to proceed
with the forming a joint venture company, a joint venture agreement shall be
signed by GDEV and AEAC within 90 days of completion of the testing and
evaluation.
2. Equity In Joint Venture: A joint venture company shall be formed
between the two parties. GDEV shall hold 70% to 30% equity and AEAC shall hold
30% to 70% equity in the joint venture company. Contributions for equity shall
consist of three types: cash, electric vehicle technology and expenses and
materials provided in Section 1.
The joint venture company shall have a total registered capital of not less
than RMB 2 million.
Upon completion of Section 1, the parties shall jointly agree upon a valuation
of AEAC's technology in terms of the percentage equity in the joint venture
company that the technology will be credited for. This valuation shall be
between 15% to 20%.
All costs and expenses incurred by each party in Section 1 shall be considered
as part of each part~s investment in the joint venture company.
3. Division of profits: Profits of the joint venture company shall be
distributed to the parties according to each party's respective share holdings
in the joint venture company.
4. Board of Directors: The Board of Directors shall consist of five
directors. Three shall be appointed by GDEV and two appointed by AEAC
5. New shares: The joint venture company shall not issue any new shares
without the unanimous consent of the Board of Directors.
6. Manaoement & Operations of Joint Venture Company: Management and
operation of the joint venture company shall be decided by GDEV and AEAC
according to the practical situation of the company.
7. Sales Rights: For products manufactured by the joint venture company,
exclusive sales and distribution rights shall be given to AEAC for North,
Central and South America, Europe. The joint venture company shall sell its
products to AEAC at cost plus a 6.5% profit margin.
8. Purchasing of Parts & Components: Parts and components purchased in
North America shall be purchased through AEAC. parts and components purchased
by the joint venture company from GDEV and AEAC shall be purchased at cost
plus a 3% service charge. The purchasing cost of parts and components supplied
by the two parties shall not be higher than international market purchasing
costs.
9. Ownership of Intellectual Property: Any inventions, patents and
trademarks resulting from the joint venture shall be the property of the joint
venture company.
10. Term of Joint Venture: The term of the joint venture shall be ten
years. At the end of the term, the parties shall mutually discuss further
cooperation.
11. Technology Transfer: The initial small batch of electric vehicles
produced by the joint venture company shall be used to transfer technology
from AEAC to the joint venture company. The joint venture company may also
send personnel to the USA for exchange of technical experience with AEAC.
12. Size of Initial Batch: Initial market feedback shall be collected
within Guangdong, Hong Kong, Macau and the USA, using the prototypes for
demonstration.
The number of vehicles to be produced in the first batch shall be between
three and ten of each type. The exact number shall be mutually agreed upon by
the parties and may vary depending on market feedback.
This contract shall have four copies, with each party given two copies. Each
copy shall have equal legal standing. This contract shall become effective
upon signing by the authorized representatives of both parties.
For and on behalf:
Guangdong EV Co. Ltd.
LIU ZHIGANG
------------
Mr. Liu Zhigang
General Manager
Date Feb. 25, 1997
For and on behalf of:
American Electric Automobile Company (Asia) Inc.
EDWARD F. MYRES
---------------
Edward F. Myers
Date Feb. 25, 1997
Chairman
