U.S. SECURITIES & EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL BUSINESS ISSUERS
UNDER SECTION 12(b) OR 12(g) OF THE SECURITIES ACT OF 1934
Commission File Number 000-28781
For the Period Ended December 31, 1999
Vibro-Tech Industries, Inc.
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(Exact name of Registrant as specified in its charter)
Delaware, United States APPLIED FOR, BUT NOT ISSUED
(State or Jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2000 Cathedral Place, 925 West Georgia Street
Vancouver, British Columbia, Canada, V6C 2C2
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(Address of Principal Executive Offices) (Zip Code)
Telephone number, including area code: (604) 609-3770
Securities to be registered pursuant to Section 12(b) of the Act: None
Securities to be registered pursuant to Section 12(g) of the Act:
All outstanding
Title of each class Name of each exchange on which registered
Common shares with a par value of OTC Bulletin Board-VBTH
$0.0001 each
The exhibit index commences on page 74 of this Statement.
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TABLE OF CONTENTS
Item and Description Page No.
1. Description of Business.................................................1
1A General Description of Business.......................................1
1B Glossary..............................................................1
1C Corporate Structure and History.......................................4
1D Development, Manufacture, Structure and Use of Bearings ..............8
1E Employees and Advisor.................................................11
1F Research, Development and Product Certification.......................13
1G Marketing and Sales...................................................15
1H Risk Factors..........................................................17
1I Doing Business in the PRC.............................................22
(i) General.......................................................22
(ii) Geography and Climate.........................................22
(iii History and Political System..................................23
(iv) Legal System, Contracts and Dispute Resolution ...............26
(v) Population, Social Patterns and Language......................27
(vi) Currency and Exchange.........................................28
(vii) Exchange Rates................................................28
(viii) Foreign Exchange Controls.....................................29
(ix) Banking.......................................................31
(x) Industrial Development and Areas Open for
Foreign Investment............................................32
(xi) Forms of Foreign Investment...................................34
(xii) Accounting....................................................40
(xiii) Patents.......................................................40
(xiv) Special Administrative Region of Hong Kong....................40
(xv) Taxation in the PRC...........................................41
(xvi) Shantou Special Economic Zone.................................43
2. Management's Discussion and Analysis or Plan of Operation ..............45
3. Description of Property ................................................48
4. Security Ownership of Certain Beneficial Owners
and Management ...................................................49
5. Directors, Executive Officers, Promoters
and Control Persons ..............................................50
6. Executive Compensation .................................................52
7. Certain Relationships and Related Transactions .........................55
8. Description of Securities ..............................................56
9. Market Price of and Dividends on the Registrant's
Common Equity ....................................................57
10. Legal Proceedings .....................................................57
11. Changes in, and Disagreements With, Accountants .......................57
12. Recent Sales of Unregistered Securities ...............................57
13. Indemnification of Directors and Officers .............................58
14. Financial Statements ..................................................59
15. Index to Exhibits .....................................................74
16. Signatures ............................................................76
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ITEM ONE - DESCRIPTION OF BUSINESS
The statements contained in this Form 10-SB that are not historical are
forward-looking statements within the meaning of section 27A of the Securities
Act of 1933 and section 21E of the Securities Exchange Act of 1934, including
statements regarding the Registrant's expectations, beliefs, intentions or
strategies regarding the future. Forward-looking statements in this Registration
Statement and risk factors in this Item One include, without limitation,
statements regarding the Registrant's industry, products, statements regarding
the extent and timing of product development, future revenues, customer demand,
competitive products, pricing pressure, future technological change and
statements regarding regulatory approvals and required governmental consents.
All forward-looking information in this statement is based on information
available to the Registrant at the date hereof and the Registrant assumes no
obligation to update any such forward-looking statements. It is important to
note that the Registrant's actual results could differ materially from those in
such forward-looking statements. Additional forward-looking statements and risk
factors include those discussed in Item 1H "Description of Business - Risk
Factors".
1A. General Description of Business
The Registrant is a Vancouver, British Columbia, Canada based corporation,
subsisting under the Delaware General Corporation Law, which manufactures,
through a partially-owned subsidiary, in the Shantou Special Economic Zone of
the People's Republic of China, and markets and sells in the People's Republic
of China, Japan and Russia basal laminated isolated seismic rubber bearings (the
"Bearings") for use in the construction of new structures and in retrofitting
existing structures.
The Bearings are a patented energy dissipation system that is used at the base,
or near the base, of a structure or, to a lesser extent, in the interior of a
structure to avoid completely, or to reduce substantially, the harmful effects
of ground movement caused by earthquakes, and the energy waves produced by
earthquakes, on the structure, attachments to the structure such as flooring,
walls, facing and windows and the contents of structures. Bearings may be
installed in buildings, bridges, water and electrical and water transport
systems, trains, subways and other structures.
Sales of the bearings have been in the PRC, Japan and Russia. Marketing of the
Registrant's Bearings has begun in Turkey, Mexico, Korea and Republic of China
(Taiwan) but there have been no sales in these jurisdictions. See Item 1G
"Marketing and Sales", Item 1H "Risk Factors" and Item 3 "Description of
Property". The Registrant has other offices in the HKSAR and in Shantou City,
Shantou Special Economic Zone, Guangdong Province, PRC and a manufacturing plant
in Shantou City.
1B. Glossary
In this Registration Statement, the following words and phrases are defined as
follows:
Bearings means the various models of basal laminated isolated seismic rubber
bearings manufactured by Shantou under license dated August 25, 1998 from the
Registrant to use the Patents as described under Item 3 "Description of
Property".
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B.C. means the province of British Columbia, Canada.
Cansun means Cansun Pacific International Investments Corp., a corporation
subsisting under the laws of B.C., with its registered and records offices at
Suite 600, 1090 West Pender Street, Vancouver, B.C. V6E 2N7 the majority
shareholders of which are Cheerlight (40%) and Vi-Tech (60%). See Item 1C
"Business of the Registrant - Corporate Structure and History".
Cheerlight means Cheerlight Development Ltd., a private corporation subsisting
under the laws of the HKSAR, owned by Mr. Peng Fee Cheng, HKSAR, which is a
minority shareholder of Cansun. See Item 1C "Business of the Registrant -
Corporate Structure and History".
Cimko means Cimko Technological Installations Engineering Consultancy Industry &
Trade Ltd., a corporation subsisting under the laws of Turkey, of Tophanelioglu
Cad. Petek Sit, No. 70A/4 Blok 4 Kosuyolu, Istanbul, Turkey 81190
(www.cimko.com.tr)
Enterprises means Vibro-Tech Enterprises Limited, a wholly-owned subsidiary of
the Registrant subsisting under the laws of the HKSAR with an office at Rooms
2001-4, Hang Seng Building, 77 Des Voeux Road Central, HKSAR. See Item 1C
"Business of the Registrant - Corporate Structure and History".
Fujita means Fujita Corp. of 4-6-15, Sendagaya, Shibuya-ku, Tokyo 151 Japan
(www.fujita.com).
GST means goods and services tax of seven percent of the value of the good sold
or service rendered, a value-added tax levied under the Excise Tax Act (Canada).
HKSAR means the Hong Kong Special Administrative Region of the PRC.
Industries means Vibro-Tech Industries Limited, a wholly-owned subsidiary of
Shantou subsisting under the laws of the HKSAR with an office at Rooms 2001-4,
Hang Seng Building, 77 Des Voeux Road Central, HKSAR. See Item 1C "Business of
the Registrant - Corporate Structure and History".
Nandou means Nandou Construction Development Company (Headquarters) of Shantou
Special Economic Zone owned in part by the People's Municipal Government of
Shantou . See Item 1C "Business of the Registrant - Corporate Structure and
History".
Patents means patent no. ZL 95 2 20019.8 issued to Dr. Fu Lin Zhou on August 20,
1995 for a liner rubber absorber cushion, application for patent no. 95 1
09348.7 accepted from Dr. Fu Lin Zhou on August 20, 1995 for a rubber shock
absorber cushion, application for patent no. 95 1 09347.8 accepted from Dr. Fu
Lin Zhou on August 20, 1995 for a liner rubber absorber cushion and application
for patent no. 95 2 20019.9 accepted from Dr. Fu Lin Zhou on August 20, 1995 for
a building addition shock reducing system, all under the Patent Law (PRC) and
all of which were sold to the Registrant by agreement dated August 25, 1998.
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PRC means the People's Republic of China, but does not include the HKSAR.
RMB means renminbi, a unit of currency in use in the PRC. See Item 1I
"Description of Business - Doing Business in the PRC - Currency and Foreign
Exchange".
Registrant means Vibro-Tech Industries, Inc., a corporation subsisting under the
General Corporate Law of Delaware with an office at 2000 Cathedral Place, 925
West Georgia Street, Vancouver, B.C. V6C 2C2 and its wholly-owned and
partially-owned subsidiaries. See Item 1C "Business of the Registrant -
Corporate Structure and History".
Royalty Agreements means the agreement dated August 25, 1998 between Shantou and
Dr. Fu Lin Zhou and the agreement dated January 1, 1999 between Industries and
Dr. Fu Lin Zhou, each providing for the payment of a royalty of five percent of
the gross sale price of Bearings sold by Shantou or Industries and the retainer
of Dr. Zhou as an adviser to each company. See Item 1E "Description of Business
- - Employees and Advisor".
Shantou means Shantou Vibro-Tech Industrial and Development Co Ltd., a joint
venture enterprise with limited liability formed on December 27, 1995 until
December 27, 2007 by issuance of a certificate under the Supplementary
Regulations of the Shantou Special Economic Zone for Encouragement of Foreign
Investment to Nandou (20%)and to Cansun (80%) with a place of business at Third
Floor, No. 11, Long Yan Nan Road, Shantou City, Guangdong Province, China
515041. See Item 1C "Business of the Registrant Corporate Structure and History"
and Item 1I - "Description of Business - Doing Business in the PRC."
Shantou Commission means the Shantou Commission for Foreign Economic Relations
and Trade established under the Supplementary Regulations of the Shantou Special
Economic Zone for Encouragement of Foreign Investment promulgated December 4,
1986 by the Shantou Municipal People's Government.
Shantou Wan Run means Shantou Wan Run Trade Development Ltd. a corporation
subsisting under the laws of the PRC owned by Mr. Zhen Ben Huei, the general
manager of Shantou.
Shareholders' Agreement means the agreement dated January 25, 1996 between
Cansun and Nandou providing, among other things, for the business of Shantou,
the total investment in Shantou, the distribution of profits, the constitution
of the board of directors of four representatives of Cansun, two of Nandou and
on technical representative, the appointment of the Chairman, who is Shantou's
legal representative, and the Deputy Chairman and the General Manager.
User Agreements means each of the three agreements between the Registrant and
Shantou dated August 25, 1997, between the Registrant and Industries dated
January 1, 1999 and between the Registrant and Enterprises dated December 15,
1999 granting to each the right use the Patents to manufacture, market and sell
the Bearings in the PRC, in the HKSAR and Japan and in all other jurisdictions
of the world respectively.
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Vi-Tech means Vi-Tech Holdings Ltd., a wholly-owned subsidiary of the Registrant
subsisting under the laws of B.C., with its registered and records offices at
Suite 600, 1090 West Pender Street, Vancouver, B.C. V6E 2N7. See Item 1C
"Business of the Registrant - Corporate Structure and History".
1C. Corporate Structure and History
The Registrant's operations are conducted by the Registrant and through wholly,
and partially, owned subsidiaries, as described below. The course of events
since 1989 leading to the corporate structure is described after the diagram. In
the table, the words in brackets following the name of a company indicate the
jurisdiction of incorporation.
Vibro-Tech Industries, Inc. (Delaware) (1)
100% 100%
Vi-Tech Holdings Ltd. (B.C.) (2) Vibro-Tech Enterprises
Limited (HKSAR)
60 shares=60% (3)
Cansun Pacific International
Investments Corp. (B.C.) (3)
60% (4)(5)(6) Nandou Shantou Wan Run
25% (4)(5)(6) 15% (4)(5)(6)
Shantou Vibro-Tech Industrial and Development Co Ltd. (PRC) (4)(5)(6)
100%
Vibro-Tech Industries Limited (HKSAR)
Notes to Corporate Structure Diagram:
(1) The Registrant has 5,965,500 shares outstanding and is quoted on the OTCBB
under the symbol VBTH. To date, there has been no market for the shares of the
Registrant. See Item 5 - "Directors, Senior Officers, Promoters and Control
Persons" and Item 9 - "Market Price of and Dividends on the Registrant's Common
Equity and Other Shareholder Matters".
(2) On November 6, 1997 the shareholders of Vi-Tech exchanged all outstanding
shares of Vi-Tech for 1,200,000 shares of the Registrant as described below.
(3) The other 40 percent of Cansun is owned by Cheerlight. The Registrant is
negotiating to acquire this interest in Cansun from Cheerlight, but there is no
assurance such negotiations will result in the acquisition by the Registrant of
Cheerlight's interest in Cansun. See Item 1H "Description of Business - Risk
Factors".
(4) On December 27, 1995 Shantou was constituted as a joint venture enterprise
with limited liability until December 27, 2007 by issuance of a certificate
under the Supplementary Regulations of the Shantou Special Economic Zone for
Encouragement of Foreign Investment to Nandou (20%)and Cansun (80%). See
"Description of Business - Description of Doing Business in China".
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(5) On July 27, 1997 by agreement among Cansun, Nandou and Shantou Wan Run, the
equity interests in Shantou were agreed to be Cansun (60%), Nandou (25%) and
Shantou Wan Run (15%) subject to receipt of approval of the board of directors
of Shantou under the Shareholders' Agreement and the Shantou Commission for
Foreign Economic Relations and Trade. The registered and required investment
capital of Cansun (80%) and Nandou (20%) remained unchanged. Approval of the
board of directors of Shantou was granted on January 23, 2000 and application
has been made for the approval of the Shanatou Commission for Foreign Economic
Relations and Trade.
(6) By an agreement dated June 8, 1999, subject to acceptance by the board of
directors of Shantou under the Shareholders' Agreement of the agreement
described in note (5), and the Shantou Commission for Foreign Economic Relations
and Trade, Shantou Wan Run agreed to sell the 15% of Shantou owned by Shantou
Wan Run to the Registrant for 300,000 shares of the Registrant at a deemed price
of $0.50 per share. This exchange will close after completion of the transaction
described in note (5) and on the receipt of the approval of the disposition of
such 15% from the board of directors of Shantou. Application for the approval of
the board of directors was granted on January 23, 2000 and application has been
made for the approval of the Shantou Commission for Foreign Economic Relations
and Trade.
The corporate structure of the Registrant evolved in a rather circuitous manner
from 1989. In about 1989, Dr. Fu Lin Zhou, vice-president and professor of civil
engineering and earthquake engineering at South China Construction University,
Guangzhou, Guangdong Province, PRC began work with the United Nations Industrial
Development Organization on ways to reduce or eliminate the destructive effects
of ground movement from earthquakes and the energy waves generated by
earthquakes on structures. Through the early 1990's Dr. Zhou made several
preliminary models of the Bearings now manufactured and sold by the Registrant
under the User Agreements. Dr. Zhou obtained the Patents in 1995 and on August
15, 1998 sold the Patents to the Registrant. See Item 1F "Description of
Business - Employees and Advisor", - Doing Business in China - Patents", Item 2
"Description of Property", Item 5 "Directors, Executive Officers, Promoters and
Control Persons" and Item 7 "Certain Relationships and Related Transactions" for
a description of the activities, qualifications, career and share ownership of
Dr. Fu Lin Zhou and matters relating to the Patents.
As work leading to the Patents progressed, Dr. Zhou commenced to discuss with
his brother, Mr. William Chow, Vancouver, B.C. how to finance, manufacture and
market the Bearings. In 1993, Cansun was incorporated as a private company to
raise money to form a foreign joint venture equity venture under the laws of the
PRC to pay for the work being conducted by Dr. Zhou. Cansun was at this time
owned by Messrs. William Chow and Rick Lui, both of whom are members of the
board of directors of the Registrant, and two other individuals.
The Patents were issued on August 20, 1995 to Dr. Zhou under the Patent Law
(PRC). To proceed further with funding from outside of the PRC, the formation of
a business entity under the Law of the PRC on Joint Ventures Using Chinese and
Foreign Investment, promulgated in 1973, as amended, that permitted foreign
investment was required. On December 27, 1995 Shantou was formed as an equity
joint venture with limited liability owned by Cansun (80%) and Nandou (20%). The
approval issued by the Shantou Commission permitted the formation of Shantou,
set the registered capital of Shantou at 8.4 million RMB (about $1,013,000) and
required Cansun to contribute 6.72 million RMB, and Nandou 1.68 million RMB, 15%
within three months of the issuance of a business license for Shantou and the
balance within a year and a half. A business license was issued December 29,
1995.
On January 25, 1996 Cansun and Nandou entered into the Shareholders' Agreement
which provides for the total investment in Shantou, the distribution of profits,
a board of directors of seven persons, a Chairman and a Deputy Chairman and the
General Manager. Transfers may be done with the approval of the board of
directors. The approval of the board of directors for the transfers noted above
is in progress.
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To meet the obligations of Cansun to fund Shantou, in August, 1996 Cansun was
reorganized. Cheerlight acquired 40% of Cansun and Mr. William Chow and others
incorporated and funded Vi-Tech., a private B.C. corporation. Vi-Tech (60%) and
Cheerlight (40%) contributed by way of loan to Cansun the capital required to be
advanced to Shantou by Cansun. Cansun and Nandou in turn made the required
capital contributions to Shantou. The capital contributions required to be made
as described above have been made.
The Registrant was incorporated on June 2, 1997 under the name Pacific Quilt
Design, Inc. by filing its Articles of Incorporation with the Secretary of State
(Delaware). By laws were adopted by the board of directors on June 2, 1997, and
amended October 6, 1999 and December 15, 1999. On November 6, 1997 control of
the Registrant was acquired by the shareholders of Vi-Tech by sale to the
Registrant of the outstanding shares of Vi-Tech for 1,200,000 shares of the
Registrant. The shareholders of Vi-Tech, and their respective holdings, at the
time of such acquisition of control of the Registrant were:
Name and Municipal Residence Number of Registrant's
Shares Acquired
William Chow 312,000
Richmond, B.C.
Rick Lui 240,000
Vancouver, B.C.
Ken Van 72,000
Vancouver, B.C.
David Lee 156,000
Quarry Bay, HKSAR
Ken Lee 72,000
Richmond, B.C.
Chu Siu Ling
New Territories, HKSAR 84,000
Dr. Fu Lin Zhou 108,000
Shantou City, PRC
David Shiuh-Lin Chou 156,000
Singapore
Total: 1,200,000
The Registrant changed its name to Vibro-Tech Industries, Inc. on November 14,
1997.
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The Registrant's shares became quoted through the facilities of the
Over-the-Counter Bulletin Board, United States under the symbol "VBTH" on April
15, 1998 but no market in the shares of the Registrant has been established.
By an agreement dated August 25, 1998 Dr. Fu Lin Zhou sold to the Registrant the
Patents for 2,000,0000 shares of the Registrant, directing that such shares be
registered in the name of Pioneer Wise Limited, a corporation subsisting under
the laws of the HKSAR owned by Dr. Zhou. This agreement provided for the further
issuance of 1,000,000 shares in each of 1999, 2000 and 2001. This obligation was
cancelled by agreement made between the Registrant and Dr. Zhou on September 3,
1999.
On July 1, 1999 the Registrant engaged its current president and chief executive
officer, Jock Chong, and began the organization necessary to prepare for the
filing of this Registration Statement and began marketing activities in Turkey,
the Republic of Mexico, Republic of China (Taiwan) and Korea.
At March 30, 2000 the authorized capital of the Registrant was 40,000,000 common
shares with a par value of $0.0001 each of which 5,965,500 shares are
outstanding (undiluted).
As noted, the Registrant owns 60 percent of Cansun, which in turn effectively
owns 80% of the capital contributed to, and 60% of the equity, of Shantou,
subject to the receipt of board of directors of Shantou to the agreement of July
27, 1997 among Cansun, Nandou and Shan Wun Ran. The Registrant has been in
negotiations to purchase the 40 percent of Cansun that it does not own, but no
agreement has been reached. Also, although agreements relating to the ownership
of Shantou have been made. The consent of the board of directors of Shantou to
such transfers was granted January 23, 2000 and application for approval has
been made to the Shantou Commission for Foreign Economic Relations and Trade.
See Item 1H "Description of Business - Risk Factors".
The licence granted by the Shantou Commission to Shantou is until December 27,
2007. The Registrant has been advised that it may apply before 2007 to the
Shantou Commission for any number of renewals for 12 year periods of the license
to continue the joint venture equity. There is no assurance that such a renewal
will be given. See Item 1H - "Description of Business - Risk Factors" and Item
1I - "Description of Doing Business in China - Equity Joint Ventures".
The Registrant has financed the conduct of its business by the issuance of
common shares and other securities by way of private placement, from the sale of
Bearings in the PRC, Japan and Russia and, to a lesser extent, from the loan of
monies from members of the board of directors of the Registrant and others.
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1D. Development, Manufacture, Structure and Use of Bearings
Earthquakes, caused by movements in the earth's tectonic plates along fault
lines, have historically caused much property damage and loss of life. There has
also been consequent economic loss and the cost of replacement, both of which
are difficult to determine and rarely measured or estimated. In the course of
history, events such as the Lisbon earthquake of 1783, the San Francisco
earthquake of 1903 and the Tokyo earthquake of 1923 caused the complete
destruction of such cities and much loss of life.
More recently, the Northridge, California earthquake in 1994 of magnitude 6.7
caused 51 deaths, thousands of injuries and great loss to infrastructure,
buildings, business and institutions. In this earthquake alone, direct and
indirect costs were estimated to be between $20 and $50 billion dollars, with a
replacement value on taxable property of about $800 billion. The Kobe, Japan
earthquake in 1995 of magnitude 7.6 caused 6,000 deaths, countless injuries and
extensive damage. Japan has the misfortune to be at the intersection of four
tectonic plates. See Item 1F "Description of Business - Research, Development
and Product Certification, Fujita Corp." In 1999 alone, earthquakes in Turkey of
magnitude 71. and 7.3 resulted in the death of over 70,000 people, homelessness
for about 300,000 people and immense property and infrastructure damage and
earthquakes in Taiwan were accompanied by the loss of about 30,000 lives and
property and infrastructure damage.
Traditionally, the construction industry has dealt with the possibility of
damage to, or collapse of, a structure, non-structural components attached to a
structure such as flooring, walls, facing or windows and facilities within a
structure due to ground movement or energy waves travelling through the ground
caused by an earthquake in a number of ways:
(a) making the structure sufficiently rigid or stiff that its motion during an
earthquake approximates, as nearly as possible, that of the ground on which the
structure is built, an expensive process due to the degree of extra design
safety that is required and a process that is often very expensive and has no
assurance of success due to the possible magnitude and unpredictability of
earthquakes;
(b) making a structure more flexible, but movement of the structure that has an
in-built flexibility has resulted in damage to non-structural components
attached to a structure such as flooring, facing or windows and to facilities
within a structure;
(c) making the structural columns of the first story of a building very soft and
flexible so the energy transmitted from the ground to the structure during an
earthquake is dissipated and not transmitted to the upper floors of a building;
however, this system has led to unpredictable collapse of structures due to the
removal of first floor support and is not a feasible remedy to minimize or avoid
earthquake damage; and
(d) what is called the traditional anti-seismic system of increasing structural
ductility by designing the structure of a building or infrastructure to work in
the inelastic range to dissipate the energy transmitted by earthquakes and
thereby reducing the structural response; however, the system is not safe due to
the difficulty of controlling the structural damage level due to inelastic
deformation, the system may not work in an earthquake of higher magnitude, and
the system is expensive because columns, beams, shear walls and other structural
elements must be made bigger or stronger.
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Given the failure of traditional construction methods to lessen or avoid
earthquake damage, academic and engineering attention has turned in the last 15
years to the concept of "seismic isolation", i.e., incorporating in a structure
or at, or near, the interface of a structure and the ground, which either moves
or transmits energy waves during an earthquake, a device which isolates and
dissipates the movement or energy transmission and does not permit the
transmission of the movement or energy to the structure which is resting on the
device. Devices developed incorporate sliding sand, layered graphite, and
layered rubber bearings. In the United States, firms such as Dynamic Isolation
Systems, Inc. (www.dis-inc.com) have developed in the United States market
systems which combine structural seismic isolation elements as steel beams and
concrete walls with basal seismic isolation bearings which are inserted between
the floor of a structure and the ground. Seismic isolation bearings are designed
to move during an earthquake, protecting the structure above the bearins, and
can be replaced with new bearings after an earthquake.
As described under Item 1C "Description of the Business - Corporate Structure
and History", Dr. Zhou developed through the use of computer design and stress
and endurance testing, and the Registrant purchased, the Patents. See Item 4
"Security Ownership of Certain Beneficial Owners and Management". The Registrant
has developed various models of Bearings. See Item 3 "Description of the
Property". The Registrant manufactures and sells, the Bearings. See Item 1G
"Description of Business - Marketing and Sales and Item 2 "Management's
Discussion and Analysis or Plan of Operations". Beginning in 1991 various model
types for the Bearings were tried. Dr. Zhou finally settled on a layered rubber
and steel bearing, using natural rubber, with a special adhesive between each
steel and rubber interface, and other patented components in the rubber layer,
with or without a lead core for additional ductility, for which the Patents were
obtained in 1995.
The use of basal laminated seismic isolation bearings to protect buildings,
infrastructure, non-structural elements such as flooring, walls, facing and
windows and contents has been proven by the Registrant and others. The
Registrant's laboratory and manufacturing building in Shantou City, PRC and
other structures in Shantou City, including the Shantou City Museum, which
houses numerous valuable pieces of Chinese art, are built on the Registrant's
Bearings. In September, 1994 Shantou City experienced an earthquake of 7.3
magnitude. The structures built with the Registrant's Bearings suffered little
or no damage and the persons in the structures were not aware that an earthquake
was occurring.
Similar anecdotes are recited from the Northridge, California earthquake. The
University of Southern California Hospital, supported by seismic isolators
manufactured by an American firm, suffered no physical damage or business
interruption while the Los Angeles County Medical Center, located about half a
mile away, suffered about $400 million in physical damage and the daily
functions of the Center were severely disrupted.
The use of basal laminated isolation seismic bearings has advantages in the
construction of structures other than avoiding or greatly diminishing damage
from earthquakes. If a basal seismic isolation device is used, consideration
does not have to be given to protecting a structure, non-structural components
and contents from the effects of earthquakes in a traditional manner. This
permits, depending on local building codes, use of less material to make a
structure hopefully withstand the stresses and strains imposed if an earthquake
should occur, lower construction costs, lower maintenance costs over the life of
a structure and greater design freedom for architects.
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One example of this is the construction in 1996 in Beijing, PRC of the teaching
laboratory in The Anti-Disaster College of the State Seismological Bureau which
used Bearings of the Registrant. The architects incorporated in the construction
of the five story, brick building of area 3,700 square meters 71 of the
Registrant's Bearings (model VP-300) under the building. The basic earthquake
intensity in the area is up to a magnitude of seven. Under local building codes,
it was not permitted for the distance between cross-walls of brick buildings to
exceed eleven meters. The use of the Registrant's Bearings permitted the
cross-wall distance to be increased to 13.5 meters, reducing the costs compared
to a frame structure without Bearings and increasing the safety of building,
contents and people should an earthquake occur.
The Bearings have been used in high-rise buildings of up to 20 stories in
height. A specific instance is the use in 1997 of 69 VP400, 31 VP500 and 10
VP600 Bearings in the construction of the No. 8 high-rise apartments in the
Yingzei residential district, Taiyuan City, PRC. The construction company was
the Taiyan Commercial Construction Development Company and architects were the
Shanxi Architectural Design Institute and South China Construction University.
With a floor area of 14,000 square meters, the Bearings were installed on the
top of the basement. Research is ongoing to permit the use of Bearings in taller
buildings.
Generally, basal laminated seismic isolation bearings of the types manufactured
by the Registrant have a layered rubber and steel structure and are manufactured
in generally the same way, although each firm has certain intellectual property
features which are unique to that firm. The Registrant begins by mixing natural
rubber, carbon black and other ingredients together to create the material for
the rubber layer. The mixture is made into sheets which are cut into the shape
of the bearing which is to be made. At the same time, circular steel sheeting is
acquired, inspected and surface treated by shot blasting to prepare it for the
application of a special coating adhesive. The rubber and steel are layered.
Depending on the specifications of an order, the bearing may or may not have a
lead core. A lead core contributes to the ductility of a bearing. See Item 3
"Description of Property". The bearing then goes through a curing process that
includes moulding, heat compression and vulcanization. In the case of the
Registrant, Bearings are trucked some 300 miles to South China Construction
University in Guangzhou for testing and certification. A certificate from the
South China Construction University with the results of the testing is issued
and accompanies the particular Bearing. After testing and certification, the
Bearings are returned to Shantou City where they are boxed for delivery. Local
delivery is by truck. Deliveries to Japan have been made by trucking Bearings to
the HKSAR and shipping by container. See Item 2 - "Management's Discussion and
Analysis or Plan of Operation".
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The capacity of the Registrant's plant in Shantou depends on the model type of
bearing being manufactured. Facilities are sufficient to produce up to 120 of
the 400 model type Bearing a day, but if a 1000 model type Bearing is required,
the plant can produce only one a day. See Item 2 - "Management's Discussion and
Analysis or Plan of Operation".
The Bearings are shipped with an installation and inspection manual in English.
Bearings are installed in most cases below, or near the bottom, of the elements
of a structure which bear the weight of the structure. Bearings are installed in
such a manner that they may over the years be inspected, and if faults are
found, removed and replaced. The Registrant warrants to purchasers that its
Bearings have a seventy year life. If an earthquake should occur, Bearings which
have experienced lateral movement due to the movement of ground or transmission
of energy waves through the ground may be removed and replaced with new Bearings
at a cost which is minimal when compared to the costs of structure and content
replacement, business interruption and loss of life.
In addition to sales in the PRC, the Registrant sells bearings to Fujita Corp.,
Tokyo, Japan (www.fujita.com). Fujita is a research, construction and consulting
firm founded in 1910 with over 6,000 employees in Japan and in its affiliates
around the world, including affiliates based in California. See Item 3
"Description of Property". In the course of determining whether or not the
Bearings of the Registrant were to be purchased over product available in Japan,
Fujita Corp. had the Registrant's Bearings tested by the Japan Seismic and
Structure Institute, Tokyo which determined that the Registrant's Bearings were
of "superior quality" and Fujita did extensive internal tests at its Tokyo
Technical Research Center. Fujita used the Registrant's Bearings in the
construction in 1996-7 of its new Technical Research Center building in Tokyo,
Japan. The agreement with Fujita terminates on March 18, 2000 and discussions
have commenced with a view to settling the conditions of a new contract. See
"Item 1F Description of Business - Research, Development and Product
Certification".
1E Employees and Advisor
See Item 5 Directors, Executive Officers, Promoters and Control Persons for a
discussion of the management of the Registrant.
The management of the Registrant is based primarily in Vancouver, B.C. and to a
lesser degree in the HKSAR and Shantou City, Guangdong Province, PRC. The
Registrant's has five persons employed or under contract in Vancouver, including
Mr. Boo Jock Chong, who is the president; Ms. Phaik Sim Tan, who is a board
member and treasurer; Mr. Gary MacDonald, who is secretary and regulatory and
contract consultant; a corporate communications person and a bookkeeper. Mr. Joe
Chung, vice-president and member of the board of directors, who supervises
production operations, is based in the HKSAR and in Shantou City.
In Shantou City, the Registrant has a 20,000 square foot manufacturing facility
and a 3,000 square foot administrative office. Under the supervision of Mr.
William Chow, chairman of the Registrant and Mr. Chung, the Shantou City plant
is managed by the general manager, Mr. Zhen Bin Huei. Under Mr. Zhen are three
assistant managers, one in charge of three persons in research, development and
product certification, another in charge of 45 people in all aspects of
production and a third in charge of five persons in marketing and sales. Some
marketing activities have begun to be conducted from Vancouver, B.C. See Item 1G
"Description of Business - Marketing and Sales".
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Dr. Fu Lin Zhou has by an agreement dated August 25, 1998 with Shantou, and by
an agreement dated January 1, 1999 with Industries been engaged as an advisor in
consideration that he is paid by Shantou a royalty of five percent of gross
sales before value added tax in the PRC and by Shantou a royalty of five percent
of gross sales made by Industries. Each agreement provides that Shantou or
Industries, as the case may be, has the right of first refusal to purchase the
royalty held by Zhou should Zhou wish to sell, or receives an offer from a third
party to purchase, either royalty. Each agreement terminates on the earlier of
December 31, 2050, if applicable, on the liquidation of Shantou or Industries
under the Foreign Investment Enterprises Liquidation Procedures of the PRC, six
months after delivery by DR. Zhou of a notice that the royalty payment has not
made, if Shantou or Industries should become insolvent, make under applicable
law an assignment for the benefit of creditors or petition a court in bankruptcy
for relief from creditors or the appointment of a receiver, trustee or other
such person to manage its affairs or liquidate its affairs for the benefit of
creditors or the time at which Shantou or Industries determines Dr. Zhou or his
legal representative is in breach of any condition in the particular agreement.
See Item 4 "Security Ownership of Certain Beneficial Owners and Management" and
see Item 7 "Certain Relationships and Related Transactions".
As an advisor, Dr. Zhou provides testing facilities for the Bearings until such
time as the Registrant is able to install its own testing facilities, assists
with the Registrant when determining technical specifications for sales, assists
in negotiating sales, establishes contact or association with third parties for
the marketing and sale of Bearings, continues research on the Bearings and
assists the Registrant in research programs with third parties. See Item 1G
"Description of Business - Marketing and Sales".
Dr. Zhou is an international expert in seismology. As vice-president and
professor of civil engineering and earthquake engineering at the South China
Construction University, Guangzhou, Guangdong Province, PRC, he is a member of
the International Association of Earthquake Engineering (IAEE) and the
International Association of Bridge Structure Engineering (IABSE). Moreover, Dr.
Zhou is a Senior Consultant to the China Association of Earthquake Engineering
and China Society of Seismic Control of Structure Association respectively. He
has published many articles about earthquakes and methods of their control.
Four-time winner of the PRC National Science and Technology Prize, Dr. Zhou is
also a consultant to the United Nations and is involved in international
research and design projects in earthquake engineering. In 1996, Dr. Zhou was
retained by the China Engineering Construction Standardization Association to
compile the technical regulations for laminated isolation bearings in the PRC,
effectively setting the standard for the country based on the work done by him
and utilized by the Registrant. Dr. Zhou is the brother of the chairman and
member of the board of directors of the Registrant, Mr. William Chow. Also see
Item 5 "Directors, Executive Officers, Promoters and Control Persons", Item 6
"Executive Compensation" and Item 7 "Certain Relationships and Related
Transactions".
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1F Research, Development and Product Certification
The Registrant employs in Shantou two rubber engineers, one structural engineer
and one assistant to deal with research, product development and product
certification. Their work has covered three main areas: (a) development of
different models of Bearing for production (see Item 3 - "Description of
Property"), (b) dealings with the application for ISO 9002 designation and (c)
dealing with Fujita under the research agreements with Fujita.
(a) The Registrant has developed and manufactures 14 different models of
Bearings, each model either with or without a lead core. For a description of
the types of models of Bearings developed and manufactured by the Registrant and
their specifications, see Item 3 - "Description of Property".
(b) Grant of International Organization for Standardization Designation for
ISO 9002
The ISO 9000 family of standards was developed by quality experts around the
world, under the auspices of the International Organization for Standardization
("ISO") Technical Committee 176. The ISO is a world wide federation of national
standards bodies ("ISO member bodies"). The work of preparing International
Standards is normally carried out through ISO technical committees. Each member
body interested in a subject for which a technical committee has been
established has the right to be represented on that committee. International
organizations, both governmental and non-governmental, in liaison with ISO, also
take part in the work.
ISO 9000 consists of the following standards. All standards are subject to
revision, and parties to agreements based on ISO 9000 are encouraged to
investigate the possibility of applying the most recent editions of the
standards indicated below. Members of International Electrotechnical Commission
and ISO maintain registers of currently valid International Standards.
ISO 8402: 1994, Quality management and quality assurance - vocabulary.
ISO 9001: 1994, Quality systems - Model for quality assurance in design,
development, production, installation and servicing.
ISO 9002: 1994, Quality systems - Model for quality assurance in production,
installation and servicing.
ISO 9003: 1994, Quality systems - Model for quality assurance in final
inspection and test.
ISO 9002 registration applies when a proven design is provided and requires no
modification to meet specific customer requirements. There are approximately 200
requirements to be met to become ISO 9002 compliant.
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ISO 9001 differs from ISO 9002 only by the addition on an element on design
control.
On April 16, 1999 the Registrant entered into an agreement with the Quality
Standard Test Department of Guangdong Province, the governmental agency
responsible for ISO 9002 audit and certification. Under the agreement, the
business of the Registrant examined was the design and production of the
Bearings, sales and service.
The premises and operations of the Registrant in Shantou City were examined by
ISO officials from the Quality Standard Test Department in October, 1999. On
March 6, 2000 the Registrant was granted ISO 9002 designation with registration
of the certification in Beijing, PRC.
There may be subsequent audits. Subsequent audits of Shanrtou may reveal
non-conformities which, if not properly corrected, will lead to the withdrawal
of the certificate.
The certification body, the Quality Standard Test Department of Guangdong
Province, will conduct periodic audits to verify that Shantou remains compliant
with ISO 9002. These audits establish only that Shantou has retained the
capability of meeting its customers' requirements and that the quality system is
being implemented effectively. The audits are not intended to address standards
other than the one against which Shantou was certified. Auditors may search for
evidence of improvement action.
There is no assurance the Registrant will maintain IOS 9002 certification. See
Item 1H "Description of Business - Risk Factors".
(c) Fujita Corp.
Fujita was founded in 1910 and employs about 6,000 persons in Japan and its
world-wide affiliates engaged in research and technical development, civil
engineering research, architecture, construction and environmental matters. See
www.fujita.com. In Japan, Fujita ranks fifth in construction companies and
employs about 150 persons in its Tokyo-based Technical Research Institute.
Before 1995, there was little use of basal seismic isolation bearings in Japan.
During the Kobe earthquake in January, 1995 there were two buildings in Kobe
with basal seismic isolators which survived the earthquake relatively unscathed,
and attracting much attention by standing up in surrounding devastation. This
visual demonstration of the benefits of the use of basal seismic isolation
prompted Fujita to seek out firms that made basal seismic isolators.
On March 14, 1996 Fujita and Shantou entered into a joint research agreement to
determine the suitability of the Bearings for use in Japan, the result of which
was that Fujita concluded that the Bearings would satisfy the requirements in
Japan. In 1996, however, a design code for seismic isolation buildings in Japan
did not exist and each building had to be individually examined by the Japan
Construction Center, a governmental body. After several meetings and examination
of the Registrant's Bearings, in September, 1996 the Minister of Construction,
Japan issued an import license for the Registrant's Bearings. In 1996-7, Fujita
used Shantou's Bearings in the construction of its new Technical Research
Institute in Tokyo.
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In 1997 further tests were done by Fujita on the Bearings to determine if any
modifications were required which would make the Bearings better suited to the
Japanese market. The test results were submitted to the Japan Construction
Center, a governmental body, and accepted in March, 1997. Further testing was
done by the installation by Fujita of the Bearings in a 33 story office building
in Tohoku, Japan which was tested for forced displacement. Fujita began the
purchase of Bearings for use in construction in Japan in 1997 and has continued
to make purchases in 1998 and 1999.
On March 18, 1998 Fujita and Shantou entered into an agreement of basic research
for the examination of the Bearings to determine if there were any modifications
which should be made for the Japanese market and to provide that until March 19,
2000 Bearings would only be sold in Japan by Fujita. During the course of
inspection work under this agreement, the Japan Seismic & Structure Institute
certified the Bearings to be of "superior quality". Fujita had a recommendation
regarding the constitution of the rubber layers in the Bearings which the
Registrant is adopting for Bearings to be sold to Fujita.
Fujita and the Registrant have started discussion concerning the terms and
conditions of an agreement to replace the agreement of March 18, 1998 which
expired on March 19, 2000.
1G Marketing and Sales
The business of the Registrant is in the early stage of manufacturing, marketing
and selling of the Bearings. See Item 1H "Description of Business - Risk
Factors" and Item 2 "Management's Discussion and Analysis or Plan of
Operations". To date, the Registrant's Bearings have been used in about 250
projects in the PRC and Japan and in one project in Russia ranging from
residential homes, 20 story office buildings, municipal museums, libraries, the
Guangzhou Seismic Center, the Guaungzhou subway, the Fujita Technical Research
Center and other buildings. See www.vibro-tech.com for a complete list of
projects and specifications relating to the projects.
Other than (a) advertising through its web site www.vibro-tech.com, (b)
referrals in the PRC to Shantou due in large part to the reputation of Dr. Fu
Lin Zhou, (c) the agreements made with Fujita, (d) participation in a seminar
convened in 1997 by the China Petroleum & Natural Gas General Company ("CPNGGC")
called Workshop on Seismic Isolation and Reduction Technique in Petroleum Trade
attended by some 60 persons from the Programming and Planning Bureau of the
CPNGGC, the Construction Committee of Shantou City and local professors and
experts and (e) holding in November, 1999 a seminar under the sponsorship of
Cimko in Istanbul, Turkey attended by some 300 persons connected with the
Ministries of Highways and Construction, academia and the architectural
profession in Turkey, the Registrant has not advertised or promoted its
Bearings. One reason is that to increase the current production of Bearings, the
capacity of the manufacturing plant in Shantou must be increased or additional
manufacturing plants built to meet an increased demand for Bearings. See Item 1H
"Description of Business - Risk Factors".
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The Registrant has divided marketing and sales into geographic areas among its
various subsidiaries. By an agreement dated as of August 25, 1998 Shantou was
granted the rights to manufacture, market and sell in the PRC. By an agreement
dated as of January 1, 1999 Industries was granted the right to manufacture,
market and sell in the HKSAR and Japan. As noted, the agreement with Fujita
expires on March 19, 2000 and will require re-negotiation on conditions that
cannot be currently determined by the Registrant. Industries currently purchases
Bearings from Shantou. By an agreement dated as of December 15, 1999 Enterprises
was granted by Industries the right to manufacture, market and sell Bearings in
all jurisdictions of the world except the PRC, the HKSAR and Japan.
The Registrant is increasing its activities in advertising and marketing its
Bearings. First, the Registrant's web site is in the process of being upgraded
to make it more market oriented. The Registrant anticipates this work will be
finished towards the end of February, 2000. Secondly, in January, 2000 the
Registrant will have a show booth at the Twelfth World Conference on Earthquake
Engineering in Auckland, New Zealand. Thirdly, the Registrant has agreed by
letter of intent dated November 5, 1999 with Cimko (www.cimko.com.tr) to form a
common enterprise with Cimko or nominees of Cimko to market and sell Bearings in
Turkey. The finalization of the details of the agreement with Cimko are under
negotiation. In the meantime, the Registrant has, with Cimko, submitted a bid
for the use of 300 Bearings in the reconstruction of a hospital devastated in
one of the 1999 earthquakes in Turkey.
Fourthly, by agreement dated October 25, 1999 the Registrant granted to Dr.
Miles Price, Vancouver, B.C. the non-exclusive right to qualify, market and sell
Bearings in the Republic of Mexico for a commission of five per cent of sales
made by Dr. Price and three percent of sales referred to Dr. Price until
December 31, 2003. After such date, the agreement is automatically renewed for
another year if either party does not give notice of termination at least 90
days before the expiry date.
Dr. Miles Price, 51, was born in London England and is married with one child.
He graduated from St. Georges Boys' school in Vancouver, B.C., took a Bachelor
of Science, Honors, Botany (Physiology) at the University of British Columbia
,Canada and a Ph.D. in Ecology at King's College, London University, England.
Dr. Price has founded and run several Canadian consulting and service companies
over the past 16 years specializing in environmental consulting for the mining
and land development industries in British Columbia and Alberta
DR. Price has lived and worked in Australia, Malaysia, Japan, Iran, Britain,
Canada and Latin America. Over the last two years Dr. Price has done extensive
marketing in several Latin American countries, including Mexico, Brazil and
Chile.
Finally, the Registrant is engaged in discussions with four separate parties
regarding the marketing and sale of Bearings in the Republic of China (Taiwan).
No agreement has been made and there is no assurance an agreement with any of
the parties currently engaged in discussions with the Registrant will be made.
See Item 1H "Description of Business - Risk Factors".
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1H Risk Factors
While the Registrant has obtained a degree of success in operations and
manufacturing, the shares of the Registrant are a speculative investment due to
a number of factors. No market has been established in the shares of the
Registrant. The purchase of shares involves a number of significant risk
factors. Purchasers of shares should consider the following:
1. History of Operations and Reliance on Expertise of Certain Persons
The Registrant has only a five year history of operations and is dependent on
the management by its president, directors, persons employed in the
manufacturing plant in Shantou City and on the advice given from time to time by
Dr. Fu Lin Zhou in the development, modification, marketing and sales of
Bearings. Should certain persons leave the Registrant, such as the president,
the vice-president or Dr. Fu Lin Zhou, the Registrant may have difficulty in
finding persons of comparable education and experience to manage the business of
the Registrant.
2. Limited Financial Resources
The Registrant has limited financial resources and, if the business is not
profitable, may not be able to raise sufficient funds to sustain, continue or
expand its business. If the business of the Registrant is to expand, capital is
required to increase the production capacity of its manufacturing facility or to
establish other manufacturing facilities.
The Registrant currently has limited revenues and relies principally on revenues
received from the sale of Bearings, the issuance of shares and other securities
and, to a lesser extent, loans from members of the board of directors and others
to raise funds to finance the business of the Registrant. There is no assurance
that market conditions will continue to permit the Registrant to raise funds if
required or that sales of Bearings will be profitable.
3. Competition with Other Companies
Although the market for basal seismic isolation bearings is a recent
development, other companies with greater financial resources or expertise are
in competition with the Registrant. The Registrant must compete with such
companies in bidding for the sale of product. For example, in December, 1999 the
president of the United States announced a program of support of one billion
dollars for the purchase from American firms by firms for installation in Turkey
of basal seismic isolation bearings. In such circumstances, the Registrant may
have little or no success in marketing of Bearings for sale in Turkey. However,
the Registrant believes that the quality of the Bearings and the price
differential when compared to the prices published by American firms for similar
products will permit the Registrant to effect sales in Turkey in spite of the
announced support for American firms by the executive of the United States
government.
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4. Qualification of Bearings Under Local Laws and Price Competition
There is no assurance that the Bearings will maintain ISO 9002 certification or
be qualified under local laws in jurisdictions where the Bearings are to be
marketed as of sufficient quality to be suitable for sale. Further, many
countries do not have established standards for the required quality of basal
seismic isolation bearings making the sale of Bearings difficult if not
impossible. For example, the PRC had no local standards until 1996 when Dr. Fu
Lin Zhou was commissioned by the China Engineering Construction Standardization
Association to compile the technical regulations for laminated isolation rubber
bearings in the PRC. In 1996, Japan had no published standards and currently
there are no governmental standards in Mexico, Turkey or Taiwan, countries where
the Registrant is making efforts to market Bearings. This may delay, or make
impossible, the sale of Bearings in such jurisdictions.
Prices for Bearings are a matter of negotiation and are subject to competition
from other manufacturers, interference by action of governments and general
economic conditions. For example, the Japanese economy has for several years
been in recession. The Registrant believes that sales to Fujita would have been
higher if general Japanese economic conditions were more favorable. There is no
assurance that economic conditions will not vary in countries where the
Registrant wishes to sell its Bearings to such an extent that sales are impaired
or completely reduced.
5. Governmental Laws and Local Conditions
There is no assurance that governmental regulation will not vary, including
regulations relating to prices, tariffs, building codes, import and export
prohibitions and other factors. The Registrant is subject to numerous foreign
governmental regulations that relate directly and indirectly to its operations
including title to the Patents, production, marketing and sale of Bearings,
taxation, engineering and building code standards and other factors. There is no
assurance that the laws relating to the ownership or use of the Patents and the
operation of the business of the Registrant in the jurisdiction in which it
currently operates will not change in a manner that may materially and adversely
affect the business of the Registrant. There is, however, no assurance that the
laws of any jurisdiction in which the Registrant carries on business may not
change in a manner that materially and adversely affects the business of the
Registrant.
The PRC is a socialist market economy evolving in a manner not previously
experienced in history. Although laws have been put in place protecting property
and the PRC is a party to most international conventions, there is no assurance
that internal changes in the PRC will not materially and adversely affect the
business of the Registrant.
6. Renewal of Corporate Existence of Shantou
The Registrant is currently dependent on the manufacturing capability of
Shantou. The certificate issued by the Shantou Commission that constituted
Shantou expires on December 27, 2007. The Registrant has been advised that such
certificate may, on application, be renewed for any number of twelve year
periods but there is no assurance that such a renewal will be issued. The
Registrant may be required to establish manufacturing facilities in another
jurisdiction to ensure the availability of Bearings for sale. There is no
assurance that the Registrant will be able to effect such a change due to lack
of financial resources or lack of adequately trained personnel.
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7. Possible Change of Governmental Laws and Policies
The establishment and growth to date of the Registrant's business has been due,
in part, to changes in governmental laws and policy in the PRC which have
permitted private ownership and foreign ownership and investment. There is no
assurance that these laws or policies will continue or be materially and
adversely changed. See Item 1I "Description of Business - Doing Business in the
PRC".
8. Possible Liability for Product Defects
The Bearings of the Registrant are tested before sale and the installation and
maintenance manual which accompanies the Bearings sets out procedures for
inspection and maintenance. The Registrant warrants that Bearings will perform
as warranted for 70 years. There is no assurance, however, that defects in
Bearings will not be detected. It is also possible that an earthquake of such
severity may occur or a displacement of the ground of such a degree occurs
during an earthquake that the Bearings do not function as intended. In such
instances, the Registrant may be subject to legal claims that, if successful,
exceed its ability to satisfy resulting in the insolvency of the Registrant.
The Bearings are not the subject of any policy of insurance. Even if the
Bearings were the subject of a policy of insurance, there is no assurance that
the terms and conditions of such a policy would permit recovery if a claim were
made under such policy.
9. Currency and Foreign Exchange Controls
Currently, most of the revenues of the Registrant are earned in the PRC. To the
extent that cash of the Registrant is held in RMB, RMB is not a freely
convertible currency. Also, regardless of the existence of tax treaties with the
PRC with each of the HKSAR, Canada and the United States regarding the avoidance
of double taxation of enterprises carrying on business in such jurisdictions,
there are restrictions on the conversion of RMB to a foreign currency and its
withdrawal from the PRC. To the extent that the Registrant has cash reserves in
the PRC, such cash reserves may not be able to be utilized for other aspects of
its business due to such restrictions. See Item 1I "Description of Business -
Doing Business in the PRC".
10. No Assurance of Earnings or Dividends and Taxation of Dividends
The Registrant has no history of earnings and there is no assurance that the
business of the Registrant will be profitable and, even if the business of the
Registrant is profitable, there is no assurance the board of directors will
declare dividends on shares.
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The register of members of the Registrant discloses that the majority of the
shares of the Registrant are held of record first by persons resident in the
HKSAR and secondly in Canada. If the Registrant should declare a dividend in the
PRC or the HKSAR to Canada or the United States there is no withholding tax
payable in the HKSAR or the Shantou Special Economic Zone of the PRC. There is
no assurance that laws relating to the payment of withholding taxes will not be
adversely changed. See Item 1I " Description of Business - Doing Business in the
PRC".
11. Manufacturing and Marketing of Bearings
The availability of products sold, or to be sold, by the Registrant may be
restricted or rendered unavailable due to factors beyond the control of the
Registrant, such as change in laws in the jurisdiction in which the property of
the Registrant is located, changes in the source of supply in foreign countries,
prohibition on use due to testing and licensing requirements, capacity of the
manufacturing plant in Shantou to produce Bearings and in certain areas of the
world civil disorder or governmental confiscation without compensation.
The Registrant is in the early stages of its business and does not yet have
developed, secure and established markets in which to sell Bearings. Sales to
date in Japan have been to Fujita which is renegotiating its contract with the
Registrant and there is no assurance such a contract will be made, or, if made,
result in a profit being made by the Registrant. The development of markets in
the PRC, Japan, Turkey, Russia, Mexico and Taiwan is in all case at an early
stage and there is no assurance the Registrant, although it has to date achieved
some success in the PRC and Japan, will continue to sell profitably Bearings in
such jurisdictions and to be able to establish and maintain markets in such
jurisdictions.
12. Activities of Management
The management of the Registrant and the growth of the Registrant's business
depends on certain key individuals who may not be easily replaced if they should
leave the Registrant, and persons in management have other business interests
which may result in them devoting, from time to time, some or all of their time
to such other interests.
13. Inadequacy of Public Market
Although the Registrant's shares became quoted on the Over-the-Counter Bulletin
Board, United States under the symbol "VBTH" on April 15, 1998, no market in the
shares of the Registrant has been established. There is no assurance that the
public market for the shares of the Registrant will be developed or, if
developed, maintained or that the holder of shares will be able in all
circumstances to sell such shares at all or in the quantity and at the price
desired by such holder.
14. Restrictions in Applicable Securities Laws
Applicable securities laws may restrict the transfer of shares and if an
exemption is not available to a holder wishing to sell, the shares may not be
transferred.
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14. Dilution
The Registrant may issue more shares at prices determined by the board of
directors, possibly resulting in dilution of the value of issued shares. Given
there is no preemptive right to purchase shares, if a shareholder does not
purchase additional shares, the percentage share ownership of the member in the
Registrant will be reduced or the amount paid for the purchase of such shares
may be diluted.
15. Loss of Investment
The business of the Registrant is at an early stage in the manufacturing,
marketing and selling of its Bearings. An investment in shares of the Registrant
should only be made by persons who can afford a complete loss of their
investment and there is no assurance that the shares of the Registrant will
increase in value from the amount at which a member acquired shares of the
Registrant or that a dividend or dividends will be paid on the shares of the
Registrant.
16. Infringement of Intellectual Property Rights
It is possible that third parties may infringe the intellectual property rights
of the Registrant and the Registrant may not have sufficient resources to
prevent or stop such infringement. In addition, the patent held by the
Registrant expires in August, 2006. After such time, the Registrant will have to
rely on its trade reputation and secrets to market and sell Bearings or obtain
other patents for the manufacture of Bearings. There is no assurance this will
occur.
17. Defeasance of Title
The possibility exists that title to one or more Patents of the Registrant may
be lost due to an omission in the claim of title or infringement of the
intellectual property rights of a third party. The Registrant is not aware of
any such infringement and no notice has been given to the Registrant of any such
infringement. The Registrant does not maintain title insurance.
18. Doing Business in the PRC
The PRC is establishing a socialist market economy and is currently undergoing
extensive social, economic and legal change, in some instances to a degree not
experienced before in history. For example, the current five year plan calls for
40 million farming jobs to be transferred to the industrial sector. Whether such
changes will continue in a manner favorable to the conduct of the business of
the Registrant is not possible to determine. The laws of the PRC, which is a
Communist style state, may adversely and materially change without notice and
without any recourse for compensation for loss, if any, suffered by the
Registrant.
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1I - Doing Business in the PRC
(i) General
As noted, the PRC is a socialist market economy. Many of the concepts which
underlie customs, laws and the manner of doing business in the PRC are not
familiar to those who carry on business in a Western fashion. In addition, the
PRC maintains foreign exchange and currency restrictions which make the conduct
of business less facile than in Western cultures. The following is a summary of
the salient features of carrying on business in the PRC and the manner in which
the Registrant is affected. In compiling this summary, thanks is given to
materials available from The Economist Intelligence Network, from
PricewaterhouseCoopers and from PeatMarwickThorne.
(ii) Geography and Climate
The Asia land mass of the PRC is as large as the whole continent of Europe. With
an area of 3,745,190 square miles (9,700,000 square kilometers), it is the
largest country in Asia and the third largest country on earth. The distance
from north to south is 3,400 miles (5,500 kilometers) and from east to west
3,100 miles (5,000 kilometers). Geographically, China can be classified into
five regions:
1. Western China
This area includes the Tibetan Highlands and the Xinjiang-Mongolia region. These
two areas make up almost 41 percent of China-s land mass and consist largely of
deserts and mountains. The area contains only about one percent of the
population, with nomadic subsistence farming of importance. Important oil
discoveries have been reported in this region.
2. Northeast China
This area contains most of the important industrial centers. Shenyang is a
center of heavy industry, drawing on the region's reserves of coal and iron
ores. In China over 70% of energy is generated by coal consumption. The Daqing
oil field and refinery are in this region, which also has important power
stations on the Yalu and Songhua Rivers. The area also has considerable forestry
resources and its agricultural areas produce soybeans and cereals.
3. North China
North China consists of the great loess plains that are intensively cultivated
to produce wheat, millet and other corps. The main industrial centers in this
region are Beijing, Tangshan and Tianjin. This region has coal, iron ore and
ample power supplies. Agricultural machinery, textiles and steel are among the
important products of the industrial cities.
4. South China
This area includes the basins of the Yang'tze River and of the West River in
Guangdong and Guangxi Provinces and the mountainous coastal provinces of Fujian
and Zhejiang. The river plain is intensively cultivated and has the highest
population density in the country. Wuhan, located on the middle reaches of the
Yang'tze, is an important industrial center, producing steel, engineering
products and light industrial goods. Further downstream at the coast is
Shanghai, China's largest commercial center, producer of its most sophisticated
light industrial products, and its most important port. South of the Yang'tze
River, three rivers merge to form the Canton Delta. This is a very densely
populated area, with Guangzhou as its main urban center. Shantou City, which is
the location of the Registrant's manufacturing facilities, is located about 300
miles (450 kilometers) from Guangzhou. Shantou City is a coastal city of some
3,000,000 persons, with a Westernized infrastructure and a sea port. See
"Special Economic Zones - Shantou City".
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5. Southwest China
This regions contains the Sichaun Basin, one of the most fertile areas of China.
Chongqing is the main city in the area. Coal and iron ore deposits have formed
the basis of some industrialization, but the fact that the region is separated
from the rest of China by difficult terrain has hindered its development.
The southern areas have a hot, wet monsoon climate and are subject to typhoons
when seasons change. The interior has very little rainfall and the north
relatively little. In winter, the Siberian anticyclone brings cold weather to
all of north and west China. In summer this anticyclone gives way to a low
pressure system centered on Lake Baikal to the north of Mongolia. Tropical air
reaches and covers the whole country Summer is the wettest season, but rain,
which is plentiful in the south, diminishes toward the north and inland.
Rainfall varies considerably from year to year. It may reach four time the
average figure in Beijing, for example. This causes enormous difficulties for
agriculture, which is at the mercy of fluctuation rainfall, typhoons in the
southeastern areas when seasons change and flood and erosion. One of the objects
of the construction of the massive Three Gorges Dam on the Yang'tze River is to
regulate the flow of water in the Yang'tze Basin where floods have with
regularity caused much loss of life and property damage.
There are 23 provinces, five autonomous regions and four municipalities in
China. The municipalities are Beijing, Shanghai, Tianjin and Chongqing. The
central government grant provincial governments the right to approve the
establishment of foreign-invested enterprises the investment of which is within
certain limits. If the total investment exceed the limit, approval must be
granted by the central government. The business of the Registrant was permitted
to be established in the Shantou Special Economic Zone on December 27, 1995 by
the Shantou Commission for Foreign Economic Relations and Trade as a joint
venture between Cansun International Pacific Investments Corp. and Nandou
Construction Development Company. See Item 1 "Description of Business".
(iii) History and Political System
Since the first Quin empire was formed in 221 B.C., China has had a series of
brilliant and technologically advanced periods of culture interspersed by
periods of civil disorder and warfare. Unlike Japan, which from the entry of
Colonel Perry's black ships into Tokyo Harbor in 1853 embraced Western culture
and changed during the ensuing Meiji Period from a feudal to an industrialized
society, the Ch'ing (Manchu) emperors of China tried to exclude, or limit the
incursions of, various Western nations. With the fall of the Ch'ing dynasty in
1911 and the establishment of the Chinese Republic, China entered a period of
civil disorder and internal and external warfare that ended in October, 1949
with the victory of the Chinese Communist Party and the establishment of the
PRC. Political issues relating to Hong Kong, which was returned as a Special
Administrative Region on July 1, 1997, and Macau, reverted to China in 1999,
have been resolved, but areas of contention remain regarding the status of
Taiwan to which the defeated Koumingtang government fled in 1949 and the extent
of Chinese jurisdiction in areas as the South China Sea.
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Until the early 1970's there was little contact with other countries. The first
actions taken by the government of the PRC were directed to founding new
institutions and restoring the economy, which had suffered terribly during the
period of internal and external strife. Agrarian reform in 1950 made possible a
better distribution of land and encouraged a revolutionary spirit in the
countryside. Various mass campaigns were carried out to change the structure of
Chinese society and the mentality of the Chinese people. In September, 1954 a
new Constitution was adopted, and the State Council, composed of the Premier,
the vice-premiers and the heads of ministries, commissions and the People's
Liberation Army, was established. Thus body is the supreme administrative body
for the day-to-day administration of the country. See "China-Political System".
Since 1953, China has set economic development goals for each five year period.
From 1953 to 1957 the PRC launched its first five-year plan, designed to build
up basic heavy industry. At the same time agriculture, industry and trade were
organized on a collective basis in socialist cooperatives. In 1958, the second
five-year plan, known as the "Great Leap Forward", was marked by a speeding up
of production and by the creation of People's Production Communes. The Great
Leap Forward continued into 1959 but through the misuse of resources, the
withdrawal of assistance by the Union of Soviet Socialist Republics and a
succession of natural disasters from 1959 to 1961, it culminated in
administrative confusion, extensive closure of factories and the collapse of
agricultural organization.
Fundamental changes of policy were introduced in 1960 to improve agriculture,
including radical changes in the communes. From 1962 to 1964, the economy slowly
improved. Central control was reasserted in many spheres, planning was cautious,
output rose, trade was restored and the standard of living began to regain the
level reached at the end of the first five-year plan. A third five-year plan was
launched in January, 1966. The revival of the economy led to the Cultural
Revolution, which was mainly a political and ideological struggle, without
risking disastrous economic consequences. It led, however, to some decline in
industrial output and halted a previous tentative revival of foreign trade.
In the early 1970's the Chinese economy revived after ten years of isolation. A
fourth five-year plan ran from 1971 to 1975. As with the third plan, no details
were published, but a successful completion was announced.
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In January, 1975 a new Constitution was adopted by the Fourth National People's
Congress, which established the leading role of the Chinese Communist Party in
all spheres of national life. Such institutions as the National People's
Congress, the State Council and the system of People's Congresses remain, but
their powers are less clearly defined or are curtailed under the new
Constitution. The post of State Chairman was abolished. National People's
Congresses are elected for periods of five years and meet once a year. The
Standing Committee of the National People's Congress appears to act as a
collective head of state. The functions of the National People's Congress are to
amend the Constitution, enact decrees, interpret laws, appoint ambassadors,
ratify treaties, approve economic plans and approve state budgets. The Standing
Committee is also empowered to appoint and remove the Premier, vice-premiers and
other members of the State Council on the recommendation of the Communist Party
Central Committee.
In effect, the State Council is the highest organ of state administration and
carries out its work through various ministries, commissions and other
governmental bureaus responsible for work in specialized fields. It is
responsible for drawing up and putting into effect the national economic plan
and the state budget. There are Local People's Congresses with standing
committees which assist with the implementation of policies at provincial,
regional and municipal levels.
The Communist Party of China is the key policy-making body in China and is run
by a Central Committee. The politburo of this Central Committee is the most
powerful political body in the country. One of its functions is to give advice
to the National People's Congress and its Standing Committee concerning the
appointment and removal of the country's Premier and vice-premiers.
In March, 1978 China announced a ten-year plan (1976 to 1985) for modernization
in agriculture, industry, national defense, science and technology designed to
propel China into the front rank of the industrialized countries of the world.
The drive towards modernization and reform led to the implementation of the
"open door" policy, an important result of which has been that foreign companies
were invited to participate in China's investment and trading opportunities.
Since the early 1980's, the creation of Special Economic Zones with considerable
autonomy have facilitated the process of further economic development. See
"Shantou Special Economic Zone". To meet the targets of its seventh five-year
plan (1986 to 1990) China focussed attention on accelerating activities in
certain areas. These included expanding the production of consumer goods and
housing construction, developing energy, transport and telecommunications and
expanding the raw and semi-finished goods industries. Existing enterprises were
to be renovated through the introduction of advanced technology. To aid the
modernization process, the plan called for the introduction of more foreign
investment and advanced technology and the generation of foreign exchange
earnings through exports.
After experiencing a period of national economic retrenchment, the major
objectives of the eighth five-year plan (1991 to 1995) were sustained and
balanced growth and continued improvement in living conditions. Priority sectors
for development included agriculture, technology, energy and transport. During
the eighth five-year plan, the average annual growth of the gross domestic
product was twelve percent. This five year period had the fastest growth and
least fluctuation since the founding of the PRC.
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China's ninth five-year plan (1996 to 2000) places sustained and stable growth
in agriculture and the rural economy at the top of the agenda. Significant
breakthroughs have been made in reform and the opening of China to the outside
world. China has taken major strides in reforming finance, taxation, banking,
foreign trade, foreign exchange, planning, investment, pricing, mobility,
housing and social security. Chinese government trade laws may be found at
www.moftec.com.
In 1998, China shipped $184 billion of goods and imported over $140 billion
dollars of goods. To the United States alone, it will ship in 1999 over $70
billion dollars of goods, up from just $324 million in 1978.
In November, 1999 the United States of America and China entered into an
agreement on the conditions agreed to by the United States under which China may
join the World Trade Organization. Congress must endorse the agreement. In later
November, 1999 such an agreement was made between China and Canada. At least 24
of the other 135 members of the World Trade Organization, most notably the
European Union, must agree to entry terms before admission of China, but the
execution of the agreement with the United States of America is a major step
toward World Trade Organization membership. Membership in the World Trade
Organization is expected to bring greater change to China. China has joined most
other international organizations.
(iv) Legal System, Contracts and Dispute Resolution
The National People's Congress and its Standing Committee are empowered to
exercise legislative power. The State Council is also authorized to adopt
administrative regulations and measures in accordance with the Constitution and
the statutes. At the local level the People's Congresses of the provinces and
municipalities directly under the control of the central government may also
adopt local regulations.
The People's Courts are the judicial organs of the State, and the judiciary is
able to exercise independent power in accordance with the law. The Supreme Court
is the highest court in the land and is responsible to the National People's
Congress and its Standing Committee. It supervises the administration of justice
by the local people's courts, which are established at different levels and are
responsible to the organ of state power that created them. There are also
special courts, such as those dealing with military and maritime matters.
Foreign economic contracts are mainly governed by the Foreign Economic Contract
Law published in 1985 and the Foreign Trade Law published in 1994. Chinese
business practice is to keep contractual documentation to a minimum and that all
business matters can be resolved if both parties adhere to the basic concepts of
equality and mutual benefit.
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A further generally held business view in the PRC is that all business decisions
should be the subject of prior discussion and agreement by both parties and that
all differences should be settled by a process of conciliation without recourse
to third party arbitration or to the courts of law.
Arbitration may be held in the PRC by the China International Economic and Trade
Arbitration Commission. Under the Arbitration Law, which became effective in
September, 1995, foreigners are allowed to act as arbitrators. The arbitration
provisions must provide that with the consent of the contracting parties, the
arbitration may take place in a third country. The Supplementary Regulations of
the Shantou Special Economic Zone for Encouragement of Foreign Investment
contain provisions for the resolution of disputes for enterprises in the Shantou
Special Economic Zone.
The PRC has made a determined effort over the last ten years to introduce a
framework of commercial law suitable to the conduct of business, the ownership
of private property and to encourage foreign investment. At provincial, regional
and municipal levels, regulations have also been introduced to meet the same
objectives. These laws are still evolving in line with the fundamental objective
that foreign investment is to be encouraged. The degree of change in the PRC is
such that uncertainty may be expected to be encountered in the application of
law.
Special provisions apply to the Shantou Special Economic Zone. See Below.
(v) Population, Social Patterns and Language
At the end of 1997, the population of China was 1.236 billion, the most
populated country in the world. The dominant ethnic group is Han (91.9%),
although 55 ethnic minority groups are growing rapidly. Due to complex
geographic factors, the population is unevenly distributed. Virtually the whole
of the western half of the country is lightly populated. The main population
concentrations are on the central plains, in southern China and on the eastern
seaboard. Of the total population, 369.89 million lived in urban areas,
accounting for some 30% of the total. Population and age structure projections
show that the age of the working population (15 to 64) will continue to exceed
50 percent of the total population until at least 2010. During the ninth
five-year plan, 40 million new jobs are to be created in urban areas and 40
million individuals in the employed agricultural labor force will be transferred
to nonagricultural industries before 2000. This represents the greatest
relocation of human beings in history.
Family planning is a basic national policy of the central government. The
government's goal is one child per family, with exceptions in rural areas and
for ethnic minorities. The aim is to maintain a natural population growth rate
of 1.083 percent.
Written Chinese consists of ideographic (as opposed to phonetic) characters.
Knowledge of several thousand characters is required to communicate effectively.
Spoken Chinese varies in dialect throughout the country. Puthonghua, or
Mandarin, based on the Beijing dialect, is the national language, spoken by 70
percent of the population. It is taught in all schools and is the medium of
government, although there are numerous other dialects. Other major dialects are
Cantonese (commonly used in Hong Kong and parts of Southern China),
Shanghainese, Fukinese and Hakka. Non-Chinese languages spoken widely by ethnic
minorities include Mongolian, Tibetan, Uighar and other Turkic languages in
Xinjiang.
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There are several alternate spellings for place names in China. In 1958, the
State Council adopted the Chinese Phonetic Alphabet system (pinyin) for
romanizing Chinese places and names. Since January 1, 1979 all translated texts
of Chinese diplomatic documents and Chinese magazines published in foreign
languages have used the Pinyin system. This is intended to end the confusion in
romanizing Chinese that has existed for centuries.
(vi) Currency and Exchange
The official currency of the PRC is the renminbi ("RMB"). The basic unit is the
yuan (Y), which is divided into ten jiao. The smallest subdivision is the fen,
or cent. One jiao equals ten fen and one yuan equals 100 fen.
The RMB is a nonconvertible currency and there is a limit on the amount of
currency that may be carried in and out of the PRC. The People's Bank of China
announces daily exchange rates between the RMB and other major currencies.
However, to obtain foreign currency, foreign invested enterprises can open one
current account and one or more capital accounts. The current account is used to
conduct foreign exchange transactions related to day-to-day operations. However,
there is a ceiling on the foreign currency that can be kept in this account.
Capital account transactions relate primarily to balance sheet activities such
as foreign loans and capital contributions and require government approval. No
maximum limit is set on the amount of foreign exchange that can be retained in
capital accounts. Foreign-invested enterprises are normally required to balance
foreign exchange.
Rates of exchange for United States dollars, renminbi, HKSAR dollars and
Canadian dollars are as follows:
(vii) Exchange Rates
Renminbi
On December 31, 1998 the buying rate as set by the Bank of China for renminbi,
which is not a freely convertible currency, was US$1.00: RMB 8.2789. See "Doing
Business in China, Currency and, Foreign Exchange Controls". The following table
sets out the buying rate for United States dollars for the period indicated.
Rates of exchange are obtained from the Bank of China.
1995 1996 1997 1998 1999
Year End 8.3174 8.2982 8.2796 8.2789 8.2800
Average 8.3505 8.3142 8.2898 8.2789 8.2775
High (1) 8.44620 8.3355 8.2983 8.2801 8.2778
Low (1) 8.2716 8.2966 8.2700 8.2740 8.27950
Note (1): The high and low buying rate figures are selected from daily high and
low figures.
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HKSAR Dollars
The dollar of the HKSAR is pegged to the United States dollar. HKSAR$7.80:
US$1.00.
Canadian Dollars
On December 31, 1998 the buying rate for Canadian dollars was US$1.00:
Cdn$l.5333. The following table sets out the buying rate for Canadian dollars
for the period indicated. Rates of exchange are obtained from the Bank of Canada
and believed by the Registrant to approximate closely the rates certified for
customs purposes by the Federal Reserve Bank in New York.
1995 1996 1997 1998 1999
Year End 1.3640 1.3706 1.4305 1.5333 1.5104
Average 1.3726 1.3636 1.3844 1.4836 1.4752
High (1) 1.4243 1.3855 1.4393 1.5795 1.4672
Low (1) 1.3303 1.3295 1.3365 1.4082 1.4519
Note (1): The high and low buying rate figures are selected from daily high and
low figures.
(viii) Foreign Exchange Controls
The official body charged with the management and control of foreign exchange is
the State Administration of Foreign Exchange ("SAFE") under the People's Bank of
China. All foreign exchange transactions must be cleared through approved
People's Republic of China banks. Since January 1, 1994 the People's Bank of
China has published a unified exchange rate on a daily basis based on market
supply and demand.
All enterprises with foreign investments operating in the PRC are required to
open foreign exchange accounts with approved banks. All receipts of foreign
currencies are required to be deposited in the foreign exchange accounts and
disbursements in foreign currencies can only be made from these accounts. In
general, foreign currency remittances out of the PRC for international current
account transactions do not require the approval of SAFE. However, remittances
for capital account transactions are subject to the approval of SAFE.
Foreign investments are translated into renminbi at the exchange rate prevailing
at the time the investment is made. Investments can be made in either cash or in
kind. The value of the investment must be certified by a certified Chinese
public accountant who issues a capital verification report relating to the
contribution. Cash contributions will be held in the capital accounts in foreign
currency and the conversion from foreign currency to renminbi is subject to SAFE
approval.
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Foreign capital and technology must be registered. Capital contributed to an
equity joint venture by a foreign investor is required to be at least 25 percent
of the total investment. All capital contributions to foreign-invested
enterprises must be registered with the appropriate authorities. Any increases,
assignment or other disposal of the registered capital of the foreign-invested
enterprise must be approved by the original examination and approval authority.
In March, 1987 rules were introduced on the ratios of registered capital to
total investment for equity joint ventures, cooperative ventures and wholly
foreign-owned enterprises. Registered capital represents the capital
contributions of the foreign and Chinese parties, while total amount of
investment includes the registered capital and loans borrowed by the enterprise.
In practice, these rules are strictly applied to equity joint ventures but used
only as guidelines for cooperative joint ventures and wholly foreign-owned
enterprises. The ratios are
Total Investment Ratios Minimum Registered Capital
Under US$3 million 0.7 - 1 70% of total investment
From US$3 million to 10 million 1:2 US$2.1 million
From US$10 million to 30 million 2:5 US$5 million
Over US$30 million 1:3 US$12 million
Loans may be applied for by foreign investment enterprises from designated
foreign exchange banks to borrow both foreign currency and renminbi. The bank
will require relevant documentation to substantiate the need for the loan.
Foreign investment enterprises are also permitted to take out foreign currency
loans with overseas banks. Foreign currency loans must be registered with SAFE
within a certain period of time after execution of the loan document to enable
the later loan repayment. Penalty provisions apply for failing to comply with
the debt registration requirements.
Technology agreements which cover the licensing of the use of patents and trade
marks and the provision of technical consulting services and technical know-how
require prior approval form MOFTEC. Limitations are placed on the amount of
technology that the foreign partner may contribute as part of the joint
venture's capital. The Registrant has not made such a contribution.
One of the major differences between an equity joint venture and a cooperative
joint venture relates to the repatriation of registered capital. In the case of
a cooperative venture, the foreign partners may recover and repatriate their
invested capital during the operating period of the venture if they have
obtained the agreement of all parties concerned and the approval of the relevant
authorities. In addition, it must be agreed in the joint venture contract that
the fixed assets of the venture will revert to the ownership of the Chinese
party after the venture's operating period has expired. The partners in an
equity joint venture, however, cannot obtain repayment of their registered
capital until the end of the venture period. This restriction also applies to
wholly foreign-owned enterprises. In all cases, the foreign investors must have
sufficient foreign capital exchange in the PRC to enable them to repatriate
their capital.
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Earnings of foreign investment enterprises may be repatriated from profits form
the PRC if: (i) profits may be repatriated through designated foreign exchange
banks only if they are in a foreign currency, (ii) all prior years' losses must
have been paid up, (iii) all relevant taxes must be paid, and (iv) the required
contributions must have been made to the "three funds", namely the staff bonus
and welfare fund, the enterprise expansion fund and the general reserve fund.
Profits earned by a foreign enterprise with a permanent establishment in the PRC
are subject to income tax. However, they will not be subject to withholding tax
when the profits are repatriated. While the withholding tax on profits remitted
abroad by foreign investment enterprises has been waived, foreign companies
without permanent establishments in the PRC are subject to a withholding tax of
20 percent on interest, rental, royalty and other income sources in the PRC
unless the rate of tax is reduced by a double taxation treaty. The United States
signed a tax treaty with the PRC on April 30, 1984 and it came into force on
January 1, 1987. Canada signed a tax treaty with the PRC on May 12, 1986 and it
came into force on January 1, 1987. The HKSAR signed a tax treaty with the PRC
on November 2, 1998 which came into force on July 1, 1998 in the PRC and on
April 1, 1998 in Hong Kong.
Withholding taxes on remittances from the PRC to corporations resident in the
United States are ten percent on dividends, ten percent on interest and
generally ten percent on royalties. Withholding taxes on remittances from the
PRC to corporations resident in Canada are fifteen percent on dividends (ten
percent if the beneficial owner of the dividend is a company that owns at least
ten percent of the voting stock of the payer company), ten percent on interest
and ten percent on royalties
(ix) Banking
The People's Bank of China has been the central bank of the PRC since 1983 and
reports directly to the State Council. It has ministry-level status and oversees
China's specialized banks and other domestic and foreign financial institutions.
Its main responsibilities include formulating national financial policies and
regulations, controlling the money supply, regulating interest and exchange
rates, handling foreign exchange reserves and overseeing the establishment and
operation of the specialized banks, financial institutions and financial
markets.
The role of specialized, domestic banks has changed and become more
commercialized because of the reforms introduced in 1993, which called for the
establishment of three policy lending banks-the State Development Bank, the
Import and Export Credit Bank and the Agriculture Development Bank-to take over
the policy lending operations from the specialized banks. Although the
specialized banks have become more commercialized, there continues to be a
distinct concentration of business activity as follows:
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1. The Bank of China is the country's largest foreign exchange bank and deals
with international transactions. Its functions are wide-ranging and include
commercial banking, settlement of accounts and deposits, extending loans to
foreign investment enterprises, dealing in foreign exchange and gold, loan
syndications, issuing foreign currency bonds, providing consulting services to
trusts and establishing overseas branches.
2. The Industrial and Commercial Bank of China issues industrial and commercial
loans and handles savings and deposits in urban areas.
3. The Agricultural Bank of China deals with banking matters in the rural areas.
4. The China Construction Bank deals mainly with investments for capital
construction projects. It is the first bank to grant individual mortgage loans
in the PRC.
The banking sector in the PRC is in a state of change as the economy evolves
from a communist, state-owned system to a system of private enterprise.
(x) Industrial Development and Areas Open for Foreign Investment
Industrial development in the PRC currently encompasses two main initiatives:
improving efficiency in state-owned industries, including corporisation and
privatisation proposals and developing new industries principally in the
country's five Special Economic Zones, the 14 Open Coastal Cities and other
Special Zones such as the Economic and Technological Development Zones, the High
and New Technology Development Zones, the Pudong New Area and the Bonded Zones.
1. Special Economic Zones
Since 1979, five Special Economic Zones have been established, all of which are
in southern China: Shenzen, Zhuhai, Xiamen, Shantou and Hainan. The Registrant's
facilities are in Shantou City.
Shenzen and Zhuhai, which border on Hong Kong and Macau respectively, are
designated multi-purpose zones, engaging in industry, farming animals,
agriculture, commerce, housing and tourism. Also in close proximity to Hong Kong
(300 miles, 450 kilometers), Xiamen's and Shantou's main industries are
processing for export and tourism. See "Shantou Special Economic Zone" below.
Hainan, an island of the south coast of China, is planned as an agricultural and
industrial base with an export orientation.
2. Open Coastal Cities
In 1984, the PRC designated 14 cities as Open Coastal Cities and allowed them
more autonomy in approving foreign investment projects and offering various
investment incentives to attract foreign business.
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The 14 cities are: Dalian, Qinhuangdao, Tianjin, Yantai, Qunigdao, Lianyunggang,
Nantong, Shanghai, Ningbo, Wenzhou, Fuzhou, Guangzhou, Beihai and Zhanjiang.
Most of these are on the eastern coast.
These cities have a wide range of discretionary powers, but they do not, as yet,
enjoy the autonomy or degree of preferential treatment granted to Special
Economic Zones.
3. Open Economic Zones
In 1985, the PRC classified the Yang'tze and Pearl River delta areas and
southern Fujian as Open Economic Zones. Similar status was later granted to
Shandong and the Liaoning peninsula. In 1992, five inland cities and all capital
cities of the provinces, except Lhasa, Tibet, were granted similar status.
The incentives granted to foreign investors in these Open Economic Zones
resemble those of the Open Coastal Cities. The primary objectives are to
encourage technology transfer, management reforms and production inputs between
the coastal and interior regions.
4. Economic and Technological Development Zones
At the end of 1994, the central government permitted more than 30 cities to set
up Economic and Technological Development Zones to encourage advanced industry
through foreign participation. The cities concerned are able to offer a range of
incentives aimed at attracting foreign investments. Production enterprises
established in the zones have an income tax rate of 15 percent and other
favorable operating conditions.
5. Pudong New Area
In 1990, preferential incentives similar to those offered by the Special
Economic Zones, were granted to the Pudong New Area in Shanghai. The New Area
covers 350 square kilometers across the Huangpu River across from the Bund. A
customs bonded zone, the Wai Gao Bonded Zone, was also established in the New
Area in 1990. There are a number of free trade zones in the New Area. These
zones aim to encourage foreign trade, high technology and export oriented
industries. As well as the favorable tax incentives, foreign investments in the
New Area are allowed to be involved in tertiary businesses such as banking,
insurance and retailing. Recently, foreign bank branches established in the
Pudong New Area have been permitted to conduct Renminbi business in certain
selected service categories.
6. New and High Technology Development Zones
Currently, there are over 50 New and High Technology Development Zones which
offer preferential incentives to foreign investment enterprises engaged in high
technology industry. The zones offer a reduced income tax rate of 15 percent.
Subject to approval, hi-tech industries established within the zones are allowed
tax holidays of three to six years. One of the aims for establishing the Zones
is to promote the industrialization of technologies owned by regional
universities and research institutes.
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(xi) Forms of Foreign Investment
The PRC has established a number of ways to facilitate foreign investment. The
eight principal types are described below. The Registrant is a joint venture
enterprise established by certificate issued by the Shantou Commission for
Foreign Economic Relations and Trade on December 27, 1995 between its 60% owned
subsidiary, Cansun, and Nandou effective until December 27, 2007. The Registrant
has been advised that the term of the certificate may be extended on application
to the Shantou Commission.
1. Processing and Assembly Agreements
The simplest form of arrangement is a processing and assembly agreement where
the foreign company concerned supplies raw materials or parts on a consignment
basis to a local entity in the PRC to process. A processing fee is paid to the
PRC entity for its work and the processed goods are returned to the foreign
company. In almost all cases, the foreign company will have to supply the
necessary production technology, equipment and supervision. A large proportion
of the Hong Kong business interests in southern China operate under such
agreements. The principal advantage to the foreign company is the comparatively
low processing cost in the PRC.
2. Compensation Trade Agreements
Compensation trade agreements enable a foreign company to provide a local entity
in the PRC with the entire plant, equipment, technology and training required
for successful operation. Orders are placed on the PRC entity by the foreign
company and the PRC is responsible for production. Finished products are shipped
to the foreign company on normal commercial terms but an amount is deducted from
the payment for each shipment to compensate the foreign company for its
investment in the plant, equipment, technology and training costs. The principal
benefit to the foreign company is the comparatively low production cost,
including, on occasion, lower costs for raw materials originating in the PRC.
Processing and assembly agreements and compensation trade agreements have lost
popularity with the PRC authorities who are now encouraging foreign investors to
make direct investments in such vehicles as equity owned ventures and
wholly-owned companies.
3. Equity Joint Ventures
Equity joint ventures are governed by the Law of the PRC on Joint Ventures Using
Chinese and Foreign Investment promulgated in 1973, as amended and are limited
liability companies with joint People's Republic of China and foreign ownership
set up for specific purposes, usually to establish a new manufacturing plant or
a new service organization such as a hotel or shopping complex. The foreign
company is typically required to provide the entire capital investment,
technical expertise and management skills and to arrange for technology
transfer. The PRC entity typically provides land and buildings and facilitates
the smooth operation of the joint venture. The local MOFTEC authorities
generally undertake the examination and approval procedures.
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The parties' equity contributions to the joint venture determine their share of
the results. Both parties benefit from the exploitation of new business
opportunities. The equity joint venture law requires the foreign partner to the
venture to contribute at least 25 percent of the registered capital. There is no
upper limit on the foreign partner's contribution. Provisions promulgated in
1998 require that all joint venture contracts contain a schedule for capital
contributions. During the life of an equity joint venture, the foreign partner's
equity contribution cannot be repaid. However, once the venture has been
liquidated, the assets are distributed according to the partners' shareholdings.
The Registrant has been advised that the term permitted for an equity joint
venture may on application be extended. The Registrant must make such an
application before December 27, 2007.
The partners to an equity joint venture have joint management of the venture.
The board of directors, which must have at least three members, has the
authority to make all major decisions concerning the financial position of the
venture. Although the joint venture law originally required that the chairman of
the board be appointed by the Chinese partner and the vice-chairman by the
foreign partner, an April, 1990 amendment provides that the chairman may be
elected by either party. If one side assumes the office of chairman, the other
will assume the office of vice-chairman. Board members are appointed for a
period of four years and their appointments can be extended with the agreement
of all parties to the venture.
A meeting of the board is required at least once a year. At the request of a
director, the chairman can call an interim meeting. A board meeting requires a
quorum of more than two-thirds of the directors. The board of directors is
required to engage a general manager and deputy managers. The general manager is
responsible for carrying out board decisions and is in charge of the daily
management of the venture.
The profits and losses of an equity joint venture are distributed according to
the ratio of each partner's investment. After the payment of taxes and before
the distribution of profits, the joint venture is required to make allocations
to three funds, a staff bonus and welfare fund, an enterprise expansion fund and
a general reserve fund. The amount contributed to the three funds by the venture
may be designated in the joint venture contract or decided by the board of
directors. All previous years' losses must be cleared before the current year's
profits can be distributed.
Books and records are to be maintained and there are requirements for audits.
Equity joint ventures were originally allowed to operate for a maximum of 30
years. A 1986 amendment to the law allows for an extension of the duration of
certain joint ventures to 50 years or longer with special approval of the
government. Since 1990, joint ventures engaged in certain lines of business may
choose whether the venture's term of operation is to be limited, subject to
examination and approval of the relevant authorities. However, ventures engaged
in certain trades or businesses are excluded from this option and are still
required to specify the term of operation in the joint venture contract. The
Registrant has been advised that the term permitted for an equity joint venture
may on application be extended. The Registrant must make such an application
before December 27, 2007. As of July, 1996 liquidation of an equity joint
venture must be conducted pursuant to the Foreign Investment Enterprises
Liquidation Procedures. Once dissolution has occurred, the board of directors
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must establish the liquidation procedures and principles and appoint a
liquidation committee. This is usually the directors, but local accountants and
lawyers may be invited to carry out the liquidation procedures. If the
examination and approval authority deems it necessary, it may appoint its own
personnel to supervise the process. The joint venture must settle all its debts,
including the cost of liquidation, before the remaining assets can be
distributed among the joint venture partners. These will be distributed
according to the investment ratio, unless other provisions are contained in the
contract and articles of association. If the foreign partner's remaining net
assets exceed its investment contribution, the foreign partner will be required
to pay income tax on the remaining portion.
4. Contractual Joint Ventures
Contractual joint ventures are similar in concept to equity joint ventures. The
relevant laws are the Law of the PRC on Chinese-Foreign Cooperative Joint
Ventures, promulgated in April, 1988 and the PRC Sino-Foreign Cooperation Joint
Venture Law Implementing Rules promulgated in September, 1995. However, their
form is different from an equity joint venture as the obligations of each party
are spelled out in the form of a contract.. These contracts typically specify
the minimum registered capital and capital contributions of each party at
various levels of investment and their respective share of the results of the
enterprise. Contractual joint ventures can be formed as limited liability
companies. As with equity joint ventures, the foreign company is typically
required to provide the entire capital investment, technical expertise and
management skills and to arrange for technology transfer while the PRC entity
typically provides land and buildings and facilitates the smooth operation of
the joint venture.
As with an equity joint venture, a cooperative joint venture operating as a
limited liability company is required to appoint a board of directors or a joint
managerial committee. Again, if the chairman of the board is from the Chinese
party, the foreign side would generally appoint the vice-chairman.
Books and records are to be maintained and there are requirements for audits.
Also, as with an equity joint venture, liquidation of a cooperative joint
venture must be conducted pursuant to the Foreign Investment Enterprises
Liquidation Procedures. If it agreed in the cooperative joint venture contract
that all of the venture's fixed assets will belong to the Chinese party after
the venture's operating period has expired, then the parties to the venture may
also state in the contract that the foreign party can recover its investment
during the contract period. Subject to examination and approval, the foreign
party may then recover its investment before the payment of income tax. Both the
Chinese and foreign parties are liable for the venture's debts.
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5. Wholly Foreign-Owned Enterprises
Similar to equity joint ventures, wholly foreign-owned enterprises are limited
liability companies governed by the Law of the PRC on Enterprises Operating
Exclusively with Foreign Capital.. The foreign investors provide the entire
capital investment and technical expertise. Approval to establish a wholly
foreign-owned enterprise is controlled by the authorities and normally the
enterprise must satisfy at least one of the following conditions:
(a) adopt advanced technology and equipment in developing of new products,
economize on the use of energy and raw materials, achieve product upgrading and
replace or produce import substitutes; or
(b) have a sufficiently high export of the value of its annual production (in
many cases, not less than 50 percent) and achieve a foreign exchange balance or
surplus.
The greatest advantage of a wholly-owned enterprise is that the foreign investor
will be able to enjoy full autonomy in managing the company. MOFTEC is
responsible for the examination and approval of wholly foreign-owned
enterprises. Local governments are also authorized to approve these enterprises
if certain conditions are met. The investor must apply for registration and
obtain a business license within 30 days of receiving approval, or the approval
certificate will become void. The date the business license is issued will be
the date of the establishment of the enterprise. Tax Registration must be
performed within 30 days of establishment.
The amount of registered capital off wholly foreign-owned enterprises must be
consistent with the scale of intended operations. The registered capital cannot
be reduced during the term of operation, and increases of transfers must receive
prior approval from the authorities.
Foreign investors may contribute capital in the form of freely convertible
foreign currencies or certified RMB profits from other foreign investment
enterprises. Subject to certain requirements set out in the regulations, such
items as machinery, equipment, industrial property and proprietary knowledge may
be capitalized according to their monetary value. The time lime for capital
contribution must be specified in the application and the articles of
association. Contributions may be made in installments, with the first being
within 90 days, and the last within three years of, the issuance of the business
licence.
Wholly Foreign-Owned enterprises are required to make allocations to a reserve
fund and a bonus and welfare fund for its employees from its after-tax profits.
The reserve fund allocations cannot be less than ten percent of the after-tax
profits. Profits may not be distributed until the prior years' losses have been
cleared.
Although the Chinese wholly foreign-owned enterprise and the United States
corporation are similar in many respects, the wholly foreign-owned enterprise
has a limited operating life. An enterprise engaging in a high technology
industry will have a life of around 20 years, although it may be extended to 50
years or more with the approval of MOFTEC. As with joint ventures, liquidation
must be conducted under the Foreign Investment Enterprises Liquidation
Procedures. See above.
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6. Entities Formed Under the Company Law
The Company Law of the PRC was promulgated on December 29, 1993 and became
effective July 1, 1994. It provides for the establishment of "limited liability
companies" and "companies limited by shares". However, if the laws relating to
foreign-invested enterprises have different provisions, these prevail. The
effect of the Company Law on foreign investment enterprises requires
clarification which may occur on the implementation regulations of the Company
Act, once issued.
The main requirements for a "limited liability company" are: (i) at least two
and not more than 50 shareholders, (ii) minimum registered capital from
RMB100,000 to RMB500,000, depending on the industry, (iii) capital contributions
may be in the form of cash, tangible assets, industrial property, nonpatented
technology or land-use rights, but industrial property and nonpatented
technology cannot exceed 20 percent of the registered capital unless permitted
by the State, (iv) consent of a majority of shareholders is required for
transfers to nonshareholders, (v) the board of directors is to be between three
and 13 persons, but in a small company the executive director may serve in place
of a board of directors, and (vi) reviews of the financial affairs and the
actions of directors must be made by a supervisory committee.
The main requirements for a "company limited by shares" are: (i) there must be
five promoters (initial shareholders) the majority of which are domiciled in
China. If the company is established by means of a share offer, the promoters
must subscribe for at least 35 percent of the shares with the remaining shares
offered to the public after approval from the securities administration
authorities of the State Council. (ii) the minimum registered capital is RMB10
million with any higher requirement to be provided for separately in legislation
or administrative regulations, (iii) capital contributions may be in the form of
cash, tangible assets, industrial property, nonpatented technology or land-use
rights, but industrial property and nonpatented technology cannot exceed 20
percent of the registered capital, (iv) the board of directors is to be five to
19 persons, and (v) reviews of the financial affairs and the actions of
directors must be made by a supervisory committee of not less than three
members.
7. PRC Holding Companies
Foreign investors have been recently permitted to establish holding companies in
the PRC on approval from the Ministry of Foreign Trade and Economic Cooperation
("MOFTEC"). The PRC holding company may be in the form of a joint venture or a
wholly foreign-owned enterprise. Approval to establish a holding company is
strictly controlled by the authorities. In addition to the minimum registered
capital requirement of US$30 million for the PRC holding company, the investors
must satisfy the following conditions:
(a) the foreign investor must (i) have total assets in excess of US$400 million,
(ii) have established foreign investment enterprises, including equity joint
ventures, contractual joint ventures and wholly foreign-owned enterprises, in
the PRC with paid-up capital of more than US$10 million, and (iii) have at least
three projects approved, or (iv) have already set up more than ten foreign
investment enterprises engaging in production or infrastructure construction,
with the foreign investor's capital contribution in these enterprises exceeding
US$30 million; and
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(b) if the holding company is a joint venture, the Chinese investor must have
total assets of not less than RMB100 million.
The holding company is allowed to carry on the following activities: act as
agent for the subsidiary companies on sales and purchases, balance the foreign
exchange surpluses and deficits between its subsidiary companies with the
authorities' approval, assist in training of personnel and marketing, assist in
obtaining loans and providing guarantees, provide financial support to its
subsidiary companies with the authorities' approval and provide consulting
services to its investors. The PRC holding company and its subsidiary companies
are taxed as separate entities and do not file a consolidated tax return.
8. Foreign Trade Joint Ventures
Since October, 1996 foreign investors have been allowed, in certain designated
cities and zones, and upon MOFTEC approval, to establish foreign trade companies
specializing in import and export trade in the PRC. The foreign trade company
must be a joint venture company with the Chinese partner holding 51 percent or
more of the equity interest. The minimum registered capital requirement of the
foreign trade company is RMB100 million. The investors in the foreign trade
company must satisfy the following conditions:
(a) thee foreign investor must (i) have an annual turnover of more than US$5
billion, (ii) have annual trade with the PRC of more than US$30 million in the
three preceding years, and (iii) have established a representative office in the
PRC for three years of have invested in the PRC more than US$30 million; and
(b) the Chinese partner must (i) already have the right to conduct foreign
trade, (ii) have an annual foreign trade volume of more than US$200 million of
which the export volume was more than US$100 million in the preceding three
years, and (iii) have established more than three branches and joint ventures
overseas with an average annual business volume of more than US$10 million in
the preceding three years.
Foreign trade ventures are currently restricted to the Pudong New Area in
Shanghai and the Shenzhen Special Economic Zone.
9. Corporisation of State-Owned Enterprises
Under the "socialist market economy" system, the PRC has implemented plans to
corporatise gradually China's better run, large and medium size state-owned
entities into companies with limited liabilities. In all cases, the State
remains the dominant shareholder in these companies. Large scale privatisation
is made possible through the sale of shares in these companies.
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Currently, the Shanghai Stock Exchange and the Shenzhen Stock Exchange are the
only stock exchanges in the PRC. The Shanghai Stock Exchange was opened in
December, 1990 and in 1997 about 350 companies had "A" shares and about 48
companies had "B" shares listed. The Shenzhen Stock Exchange was opened in July,
1991 and in 1997 about 330 companies had "A" shares and about 50 companies had
"B" shares listed. "A" shares are issued to, and traded by Chinese nationals in
Renminbi. "B" shares are issued to, and traded by, foreign investors in a
foreign currency denominated in Renminbi. Since 1992, the PRC selected and
approved over 70 state-owned enterprises for corporisation and the issue of "H"
shares to be listed on the Hong Kong Stock Exchange and other overseas stock
exchanges. In 1997, 34 companies had "H" shares listed on the Hong Kong Stock
Exchange. The PRC has indicated the process of corporisation will continue.
(xii) Accounting
The methods of accounting to be adopted by joint venture enterprises involving
foreign investors are specified in the Accounting Rules for Foreign Investment
Enterprises issued by the Ministry of Finance. Updated in 1992, the accounting
standards are similar to generally accepted accounting practices of western
countries. The PRC is in the process of drafting about 30 statements of standard
accounting practices which are applicable to all enterprises in the PRC. It is
expected that these new accounting standards will further reduce the number of
differences from the generally accepted accounting practices of western
countries. The financial statements of the Registrant are prepared in accordance
with United States generally accepted accounting principles.
(xiii) Patents
The PRC is a member of the main international intellectual property conventions,
including the World Intellectual Property Convention, the Paris Convention for
the Protection of Intellectual Property and the Berne Convention. The PRC Patent
Law came into effect in 1985 with amendments in 1993. Legislation identifies
three types of patents: inventions, utility models and designs. The period of
validity for inventions is 20 years and for utility models and designs 10 years.
The 1993 amendment extended patent rights to certain items and products that
were not afforded protection under the original patent law. The PRC became a
signatory to the Patent Cooperation Treaty on January 1, 1994.
Under Article 12 of the Patent Law (PRC) a foreigner may own a patent with
consent form the appropriate body of the State Council. The Registrant is in the
process of obtaining such consent.
(xiv) Special Administrative Region of Hong Kong
On July 1, 1997 the PRC resumed sovereignty over Hong Kong. It became a Special
Administrative Region of the PRC and was officially renamed Hong Kong, Special
Administrative Region.("HKSAR").
The basic principles underlying the existence and operation of HKSAR are set out
in the Sino-British Joint Declaration, an international treaty registered with
the United Nations, and in the Basic Law, which is the mini-constitution of the
HKSAR. The Joint Declaration, which was ratified in 1984, sets out the basic
rules relating to the existence and operation of HKSAR after the assumption of
Chinese sovereignty. A 13 year transition period was contemplated for
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establishing the way forward and during this period the more detailed provisions
of the Basic Law were compiled. The central concept of the Joint Declaration was
the principle of "one country, two systems". Even though the HKSAR is an
integral part of the PRC, the PRC's socialist system is not practiced and the
HKSAR's capitalist system and autonomy as an international business center and
open culture would remain unchanged for 50 years.
Specifically, this means: (i) the HKSAR maintains its free trade policy with an
open economy, independent finances and its own legal system and laws, (ii) the
HKSAR remains a separate customs territory with separate membership in trade
associations and is governed by the rules of international trade, (iii) there
are free flows of capital and no foreign exchange controls. The corporate rate
of income tax in the HKSAR is 16.5 percent on income earned in the HKSAR.
The Basic Law continues to be interpreted by the courts of the HKSAR, but
generally Hong Kong remains the window to the world for the PRC. Two
subsidiaries of the Registrant, Vibro-Tech Industries Limited and Vibro-Tech
Enterprises Limited, are based in the HKSAR and responsible for marketing. sales
and service of product in all jurisdictions of the world except the mainland of
the PRC. For example, the sales of the Registrant to Fujita Corp. of Tokyo,
Japan are through Vibro-Tech Industries Limited in the HKSAR. The Registrant is
developing markets other than the PRC and Japan through Enterprises.
The PRC holds a major stake in the HKSAR as its third largest investor after
Japan and the United Kingdom. An increasing number of mainland-backed
enterprises are registered in the HKSAR, including several state trading
companies, mainland provinces and mainland cities, which have an estimated
combined asset value in excess of US$40 billion.
The HKSAR is ranked as the second largest trading partner of the PRC and it is
estimated that about half of mainland China's exports are handled through the
HKSAR.
(xv) Taxation in the PRC
This discussion is confined to the tax laws which apply to the Registrant's
subsidiary, Shantou, an equity joint venture enterprise. Taxation of foreign
individuals, other forms of other foreign investment enterprises, foreign
corporations and local Chinese and domestic enterprises is not disclosed and is
not material. The discussion is only a summary of the material provisions
relating to the taxation of Shantou and is not intended to be a complete
exposition.. The PRC Income Tax Law for Foreign Investment Enterprises and
Foreign Enterprises came into effect July 1, 1991. Interpretation is the
responsibility of taxation authorities who have the power to require the
recalculation of taxable income on the basis of substance.
Foreign investment enterprises with their head offices in China are taxed on
their worldwide income. Others are subject to enterprise income tax only on
China-source income. The taxable income of an enterprise is the amount remaining
from the gross income in a tax year (January 1 to December 31) after the
deduction of costs, expenses and losses that year. Special tax incentives and
tax holidays are offered to enterprises operating in Special Economic Zones,
Economic and Technological Development Zones, the Old Urban Districts of the
Open Coastal Cities and other special open zones. Income tax returns and final
financial statements are required to be filed by April 30 in each year, together
with an audit certificate from a Chinese-registered CPA firm.
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The tax year is the calendar year. The accrual method of accounting is required
for all foreign investment enterprises. The enterprise's income may be stated in
renminbi or United States dollars. All accounting books, records and supporting
documents must be kept in China for at least 15 years.
Income tax is assessed on taxable income, which is defined in the tax law as the
amount remaining from an enterprise's gross income in a tax year after deduction
of costs, expenses and losses in that year. Losses may be carried forward for
five years. Business transactions between foreign investment enterprises and
their affiliated companies must be conducted at fair market prices. In 1998, the
State Administration of Taxation issued "Regulations and Procedures on Tax
Administration of Transaction Between Associated Enterprises". The Regulations
set out a comprehensive set of transfer pricing guidelines and administrative
procedures.
Withholding taxes are discussed under "Foreign Exchange Controls".
The tax rate is a 33 percent flat rate on all foreign investment enterprises
except as modified by the rules relating to a special economic zone.
Affiliated enterprises are not permitted to file consolidated tax returns
without the approval of local authorities. The Shantou Special Economic Zone has
special rules which apply to enterprises, including the Registrant, operating in
the Zone. See below. The income tax rate on Shantou was zero for its first two
years of operation ending December 31, 1998, 7.5 percent for the next three
years ending December 31, 2001 and 15 percent thereafter.
Foreign investment enterprises of a production nature that are scheduled to
operate for a period of more than ten years are entitled to tax exemption for
the first two profit-making years and to 50 percent reduction for the next three
years.
Dividends and capital gains received by Chinese shareholders of an enterprise
are taxed in accordance with the applicable domestic laws. Dividends paid by a
foreign investment enterprise to foreign shareholders, corporate or individual,
are specifically exempt from income tax in China.
There are a number of indirect taxes in the PRC. On January 1, 1994 the PRC
introduced a turnover tax system consisting of value added tax ("VAT"), business
tax and consumption tax (also known as excise tax). The sale of taxable goods
and the provision of labor services are subject to VAT. VAT is also levied on
the import of taxable goods unless specifically exempt. In general, exports are
generally exempt from VAT and related input VAT can be partially refunded.
Registration for VAT is required with the local authorities. VAT varies from
zero to 17 percent. The standard rate is 17 percent and it applies to most goods
and services.
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Business tax and VAT are mutually exclusive. Business tax applies to the
provision of services, excluding processing services and repair and replacement
services, which are taxed under VAT. It also applies to the transfer of
intangible assets such as goodwill, patents and the sale of real estate
properties in the PRC. The tax rates from three to 20 percent.
Consumption tax is levied on the importation, production and processing of
eleven categories of consumable goods at various rates.
Finally, stamp tax is levied on all taxable documents listed in the Stamp Tax
Regulations. Stamp tax is levied on the execution or receipt in the PRC of
certain documents, including contracts for the sale of goods, the undertaking of
processing work, the contracting of construction and engineering contracts,
leases, loans and agency and other nontrade contracts. Stamp tax is also levied
on documentation effecting the transfer of property, business account books and
certification in evidence of rights and licences. The rates of stamp tax vary.
The maximum rate is o.1 percent.
(xvi) Shantou Special Economic Zone
The manufacturing operations, and marketing and sales operations in the PRC, of
the Registrant in the PRC are located in the Shantou Special Economic Zone,
centered on the port city of Shantou some 300 miles east of the HKSAR.
Supplementary Regulations of the Shantou Special Economic Zone for Encouragement
of Foreign Investment were promulgated December 4, 1986 by the Shantou Municipal
People's Government. The following is a summary of the Regulations.
A foreign investment enterprise must implement a labor contract system for
employment with priority given to persons in the Special Zone or persons within
the Shantou household registration. Persons may be employed from outside the
urban area, but details must be filed with the Special Zone Labor Service
Company. Preferential treatment in the form of reduction of the labor service
fee is granted to exporting enterprises and technologically advance enterprises.
The monthly payment of the employee social labor insurance premium is reduced
from 25 percent of the employee labor service fee to 20 percent.
Land use fees range from RMB 0.10 yuan to RMB 14 yuan per square meter per year.
Shantou was exempt during its investment and construction period. Preferential
treatment in the form of payment of land use fees at one half the prevailing
rate is granted to exporting enterprises and technologically advance
enterprises. Shantou is also exempt from certain administrative and public
utility charges.
A Special Zone Service Center is established to provide services to foreign
investment services. The Center performs a number of tasks, including consulting
services on the feasibility of an investment project, handling the necessary
procedures for investment in, and establishment of, a factory, including the
drafting of a contract and articles of association, the submission of
applications for approval, applying for the supply of water and electricity, the
use of land and the leasing of factory buildings, assistance in the forming of a
labor applying for industrial and commercial registration, tax registration,
opening of a bank account and in matters concerning capital construction, fire
protection, customs, commodity inspection, patents and trademarks, assisting in
the expansion of supply and marketing channels, handling import and export
application procedures on behalf of an enterprise, assisting a foreign investor
or an enterprise to apply for an import or export licence and quota, assisting
an enterprise to conduct procedures for staff training and recruitment and other
services. A small fee may be charged.
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Shantou is subject to an income tax rate of 15 percent and is exempt from the
Enterprise Income Tax for its first two profit making years and payment at
one-half the prevailing rate for the next three years. After the expiry of these
periods, Shantou, as a technologically advanced enterprise, may, subject to
approval, extend for three years the period in which it pays Enterprise Income
Tax at one-half the prevailing rate. Equipment, raw materials, construction
materials, fuel and other capital goods imported by Shantou are exempt from
customs import duty. Shantou is also exempt from the Consolidated Industrial and
Commercial tax when exporting bearings.
Foreign investors investing in the Zone are exempt from paying local income tax.
Shantou also has various privileges regarding the use of foreign exchange. The
post-tax profits of foreign investors and the post-tax wages and other legal
income of foreign national personnel may be freely remitted abroad through the
Bank of China.
Shantou is accorded full right of autonomy over its business operations. it has
the right to administer its enterprise according to internationally practiced
advanced scientific management measures and to act of its own accord within its
approved scope of operations when deciding its production and operation plans,
arranging production and sales, raising and using capital, purchasing production
materials and determining its organizational structure and staffing
arrangements. The property, personal safety and investment-related legal rights
and interests of foreigners receive the protection of China's laws. If a dispute
cannot be resolved through discussion pursuant to the spirit of equality and
mutual benefit, a Chinese arbitral body may mediate or an international arbitral
body agreed on by the two parties to the dispute may arbitrate.
Shantou has the right of autonomy in choosing persons to work in factories and
it may itself determine the number of employees, wage standards, wage formats
and bonus, penalty, allowance, examination and verification systems, in line
with production requirements. Labor service fees are set at between HK$400
(US$80) and HK$600 (US$120) per month. The normal working period is an
eight-hour day and overtime is not permitted to exceed 48 hours a month.
Local autonomy is given over exit from, and entry to, Shantou and special
provisions may be granted for passing customs. The regulations also provide for
other items such as customs clearance, importation of goods, exemption of raw
materials from customs duty, exemption from export duty, vehicle ownership,
travel and the administration of investment funds. The Shantou Branch of the
People's Bank of China is the authority in charge of all investment funds in the
Zone. Finally, the procedures for dealing with funds are set out.
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Item 2. Management's Discussion and Analysis or Plan of Operation
The business of the Registrant is in the early stage of the manufacture,
marketing and selling of Bearings. A purchase of the shares of the Registrant is
speculative. The assessment of the potential of the business of the Registrant
to be successful and achieve profitability involves, among other things, the
availability of capital to the Registrant to increase its production capacity,
the continuing development of markets and sales in the PRC and Japan, the start
of marketing in Mexico, Turkey, Republic of China (Taiwan) and other
jurisdictions, competition from established manufacturers and a number of other
factors. See Item 1H "Description of Business - Risk Factors".
The Registrant owns 60 percent of Cansun, which in turn effectively owns 80% of
the requirement to contribute capital, and 60% of the equity of, Shantou and
Industries. The Registrant has been in negotiations to purchase the 40 percent
of Cansun that it does not own, but no agreement has been reached. Also,
although agreements relating to the ownership of Shantou have been made, parties
have not made application for the consent of the board of directors of Shantou
to such transfers. Applications for such consents to be in progress. The
Registrant is confident such consents will be obtained as four of the seven
members of the board of directors of Shantou are representatives of Cansun under
the Shareholders' Agreeement.
The figures discussed below reflect the percentage equity interest of the
Registrant in Shantou and Industries.
1997
In 1997, the Registrant had gross sales of Bearings of $1,052,081 before giving
effect to non-controlling interests and net income of $14,183 after giving
effect to non-controlling interests. An unrealized foreign currency gain gave
total income for the year of $29,660 to the Registrant's interest. Sales were
principally in the PRC and to Fujita. There were 3,055,000 shares outstanding at
December 31, 1997. The diluted income per share was $0.01.
In 1997, research work with Fujita continued. Fujita used the Bearings in the
construction of its Technical Research Center in Tokyo, Japan. Vi-Tech acquired
control of the Registrant.
1998
In 1998, the Registrant had gross sales of Bearings of $853,192 before giving
effect to non-controlling interests and a net loss of $60,142 after giving
effect to non-controlling interests. An unrealized foreign currency gain reduced
the loss to $44,847 to the Registrant's interest. Sales were principally in the
PRC and to Fujita. There were 5,255,000 shares outstanding at December 31, 1998.
The diluted loss per share was $(0.02).
45
<PAGE>
On April 15, 1998 the shares of the Registrant became quoted on the
Over-the-Counter Bulletin Board, United States but there was not, and has not to
date been, a market in the Registrant's shares. Research work continued with
Fujita, with the execution of the agreement of basic research on March 18, 1998.
On August 25, 1998 Dr. Fu Lin Zhou sold the Patents to the Registrant for
2,000,000 shares and 1,000,000 shares to be issued in each of 1999,2000 and
2001. The obligation to issue shares in 1999, 2000 and 2001 was cancelled by
agreement dated September 3, 1999.
The Registrant entered into a User Agreement with Shantou and Shantou entered
into a Royalty Agreement with Dr. Zhou.
1999
In 1999, the Registrant had sales of Bearings of $1,854,924 before giving effect
to non-controlling interests and, after giving effect to non-controlling
interests, net income of $150,171. After giving effect to non-controlling
interests, an unrealized foreign currency loss reduced income to September 30,
1999 to $135,756 to the Registrant's interest. Sales were principally in the PRC
and to Fujita. There was one sale to Russia. There were at the end of the period
5,723,000 shares outstanding. The diluted income per share was $0.03.
The other major events are summarized.
On January 1, 1999 the Registrant entered into a User Agreement with Industries
and Industries entered into a Royalty Agreement with Dr. Zhou.
On March 1, 1999 Fujita informed the Registrant that the Japan Seismic &
Structure Institute had found the Registrant's Bearings to be of "superior
quality" and stated Fujita was prepared to purchase more of the Registrant's
Bearings.
The management structure of the Registrant changed in August, 1999. By agreement
dated July 1, 1999 Mr. Boo Jock Chong became on August 12, 1999 president, chief
executive officer and, until December 15, 1999, treasurer with execution a
management agreement dated July 1, 1999 to June 30, 20003, renewable annually
thereafter and with the grant of an option to purchase before June 30, 2003
500,000 shares for $0.15 per share. The former president, Mr. William Chow,
became chairman of the board. On August 26, 1999 the Registrant executed a
management agreement with Mr. Joe Chung to June 30, 2003, renewable annually
thereafter, and granted Mr. Chung an option to purchase 250,000 shares for 0.15
per share before June 30, 2003. See Item 6 "Executive Compensation".
By an agreement dated July 23, 1999, amended October 20, 1999 Gary MacDonald was
retained as regulatory consultant at Cdn$120 per hour and on August 12, 1999
became secretary of the Registrant. The amendment provided that cash
compensation was limited to Cdn$7,000 each four weeks and any further time
accrued is allocated to a share purchase account for the purchase of shares at
$0.40 share. The agreement may be terminated on notice. See Item 6 "Executive
Compensation".
46
<PAGE>
On August 16, 1999 two private placements, the first to Ms. Phaik Sim Tan for
175,000 shares at $0.40 per share with 175,000 class 1 warrants, each warrant
entitling the holder to purchase an additional share for $0.40 a share before
August 16, 2000, and the second to Mrs. Puan Sri Chang Nga for 125,000 shares at
$0.40 per share with 125,000 class 1 warrants, each warrant entitling the holder
to purchase an additional share for $0.40 a share before August 16, 2000, were
completed. Ms. Tan became a member of the board of directors. See Item 7
"Certain Relationships and Related Transactions".
By agreement dated October 25, 1999 Dr. Miles Price was retained as a consultant
until December 31, 2003, renewable annually thereafter, on a non-exclusive basis
to qualify, market and sell Bearings in the Republic of Mexico.
A private placement was done on November 3, 1999 to Dr. Miles Price for 70,000
shares at $0.40 per share. Dr. Price was granted an option to purchase 30,000
shares for $0.15 per share before June 30, 2003 which was exercised forthwith.
In November, 1999 discussions began with Cimko regarding the qualification,
marketing and sale in Turkey and other countries of Central Asia of Bearings by
the Registrant directly or in some form of association with Cimko. A letter of
intent dated November 5, 1999 was signed, but negotiations for a final agreement
continue.
In November, 1999 options to acquire shares for $0.15 per share were granted to
three directors (80,000 shares each), to Dr. Fu Lin Zhou (80,000 shares) and to
Gary MacDonald (50,000 shares) before December 31, 2003 in each case. See Item 6
"Executive Compensation".
By agreement dated December 2, 1999 Ms. Kim Suksun was retained as a consultant
to advise on marketing of Bearings for Korea and Japan and granted an option to
acquire before December 31, 2003 25,000 shares for $0.15 per share.
The annual general meeting of the Registrant was held December 15, 1999 in
Vancouver, B.C. The board of directors was reelected and the shareholders
approved the reservation for the grant of incentive options of up to 20 percent
of the outstanding shares of the Registrant from time to time.
On December 15, 1999 the Registrant entered into a User Agreement with
Enterprises.
After December 31, 1999 the Registrant issued 62,500 units to Mr. Darryl Quan,
each unit comprised of one common share for $0.40 per share and one share
purchase warrant, each warrant entitling the holder to purchase an additional
share for $0.50 before December 31, 2003. The Registrant also issued 80,000
shars to Gary MacDonald under the agreements noted above.
See Item 5 "Directors, Executive Officers, Promoters and Control Persons", Item
6 "Executive Compensation" and Item 7 "Certain Relationships and Related
Transactions".
47
<PAGE>
Plan of Operations
The Registrant has several objectives in 2000:
(a) negotiate and complete an agreement with Cheerlight to purchase the minority
interest of Cheerlight in Cansun at an estimated cost of $240,000.
(b) obtain the consent of the Shantou Commission to complete the transactions
with Nandou and Shantou Wan Run described under Item 1B "Description of Business
- - Corporate Structure and History".
(c) obtain financing to advance, with the approval of the Shantou Commission, to
Shantou funds to purchase testing equipment at an estimated cost of $400,000
and, if financing of approximately $3,000,000 is available, expand or relocate
the manufacturing plant to increase production capacity by a factor of three.
(d) negotiate a new contract with Fujita for the marketing, distribution and
sale of Bearings in Japan.
(e) market the Bearings in the PRC by directing advertising to architectural
firms, construction companies and governmental offices at an estimated cost of
$50,000.
(f) conclude with Cimko or representatives of Cimko an agreement for the
qualification, marketing and sale of Bearings in Turkey at an estimated cost of
$70,000 and commence the marketing of Bearings in Turkey at an estimated cost of
$20,000.
(g) with Dr. Miles Price and possibly a third party, qualify, market and begin
the sale of Bearings in the Republic of Mexico at an estimated cost of $30,000.
(h) qualify, market and begin the sale of Bearings in Republic of China (Taiwan)
at an estimated cost of $30,000.
ITEM 3. Description of Property
The property of the Registrant is essentially comprised of the Patents and the
various models of Bearings designed on application of the Patents. The
Registrant currently produces 14 models of bearings, each model with or without
a lead core. The following table summarizes the physical characteristics of the
different models of Bearings, with the designation "L" referring to Bearings
with a lead core:
Model Diameter (mm) Core Diameter (mm) Height (mm) Weight (kg)
VP 200 205 N/A 83.8 10
VP 200-L 205 40 83.8 11
VB 250 261 N/A 83.8 16
VB 250-L 261 50 83.8 18
48
<PAGE>
Model Diameter (mm) Core Diameter (mm) Height (mm) Weight (kg)
VP 300 316 N/A 106.5 28
VP 300-L 316 60 106.5 32
VP 300J 316 N/A 159.7 58
VP 300J-L 316 60 159.7 63
VB 300 316 N/A 83.8 24
VB 300-L 316 60 83.8 27
VP 400 420 N/A 132.5 62
VP 400-L 420 80 132.5 70
VP 400J 420 N/A 132.5 81
VP 400J-L 420 80 132.5 89
VP 500 510 N/A 164.0 111
VP 500-L 510 100 164.0 125
VP 600 620 N/A 216.2 226
VP 600-L 620 120 216.2 254
VP 600J 620 N/A 340.0 363
VP 600J-L 620 120 340.0 407
VP 700J 720 N/A 363.5 563
VP 700J-L 720 140 363.5 627
VP 800J 820 N/A 393.2 856-848
VP 800J-L 820 140.0 - 160.0 393.2 925-938
VP 900J 920 N/A 376.4 983-974
VP 900J-L 920 160.0 - 180.0 376.4 1069-1083
VP 1000J 1020 N/A 392.3 1306-1285
VP 1000J-L 1020 200.0 - 220.0 392.3 1419-1454
Notes:
1. one kilogram (kg) = 2.2 pounds
2. one centimeter = 2.52 inches = 10 millimeters (mm)
3. The dimensions and weight of the connecting plate which encloses at both ends
a bearing are not included.
See Item 1H "Description of Business - Risk Factors".
Item 4. Security Ownership of Certain Beneficial Owners and Management
The following entities are known to the Registrant to beneficially own more than
five percent of the outstanding shares at March 30, 2000:
49
<PAGE>
Name and Address of Amount and Nature Percentage of
Registered Holder of Beneficial Ownership Class (undiluted)
Pioneer Wise Ltd. 2,000,000 (1) 33.52%
HKSAR
Note:
(1) Pioneer Wise Limited is beneficially owned by Dr. Fu Lin Zhou. Dr. Zhou also
owns 108,000 registered in his personal name, making the beneficial percentage
ownership of Dr. Zhou 35.33% of outstanding shares.
The members of the board of directors of the Registrant as a group hold at March
31, 1999 1,130,000 shares beneficially and senior officers, excluding the
holdings of directors who are also senior officers, hold at March 30, 2000
80,000 shares beneficially. By agreement dated December 21, 1999 Mr. Rick Lui
has agreed to sell 30,000 shares to a third party after termination of the
restrictions on transfer of shares under Rule 144 arising on filing of this
Registration Statement. See Item 6 "Executive Compensation".
Item Five - Directors, Executive Officers, Promoters and Control Persons
The names, municipality of residence, age and position held of the directors and
executive officers of the Registrant are as follows:
<TABLE>
<CAPTION>
Name and Municipality of Age Position Held No. of Shares
Residence
<S> <C> <C> <C>
Boo Jock Chong 56 Director, President & 200,000
Burnaby, B.C. Canada Chief Executive Officer
William Chow (1) 54 Director, Chairman of the 312,000
Richmond, B.C., Canada Board
Joe Chung 49 Director, Vice-President 230,000
Hong Kong Special
Administrative Region, PRC
Rick Lui (1) 44 Director 250,000
Vancouver, B.C., Canada
Phaik Sim Tan (1) 37 Director, Treasurer 175,000
Burnaby, B.C., Canada
Gary MacDonald 47 Secretary 80,000
Vancouver, B.C., Canada
</TABLE>
Note:
(1) Member of audit committee.
(2) See Item 6 - "Executive Compensation"
Mr. Chong, 55, came to Canada in 1989 from Malaysia and established Continental
Home Health Care Ltd., a medical equipment supply company. Mr. Chong had been a
successful businessman in Malaysia in areas ranging from rice milling, oil palm
plantation and real estate development to construction. Continental Home went
public in 1993. By 1998 it had 80 employees and revenues of Cdn$14,000,000.
Continental Home was voted one of the 100 fastest growing companies in Canada by
Profit Magazine from 1994 to 1996. Mr. Chong retired from the company as its CEO
in 1997. In joining, his goals are to use his wide experience to expand the
50
<PAGE>
company's operations globally and to develop core competences with other
companies in the area of seismic engineering to mitigate the effects of
earthquakes. Mr. Chong has entered into a management agreement providing for him
to stay with the company as president and chief executive officer until at least
2003. Mr. Chong became a member of the Registrant's board of directors and
president and chief executive officer on August 12, 1999.
Mr. Joe Chung was born in 1950 in Hong Kong and graduated from the Hong Kong
Polytechnic University (formerly Hong Kong Technical College) in 1973. He worked
for an architectural/design firm, construction company and furniture factory
respectively until 1988 when he immigrated to Canada. Mr. Chung started his own
project management company in Vancouver, British Columbia. He is very
experienced in product design and construction management. Mr. Chung is
currently based in Hong Kong where he manages the marketing of the Registrant's
products outside of China.
Mr. William Chow was born and raised in China. He moved to the United Kingdom in
1969 and was educated at the London University as an automotive engineer. He
immigrated to Canada in 1981 where he was employed as a Service Department
Manager for Hyundai and Honda respectively. In 1991, Mr. Chow started his own
business, Cambie Auto Centre Inc. In 1994, Mr. Chow began a joint venture with
Dr. Zhou for the development, manufacture and marketing of anti-seismic
technologies, and in 1995, with Nandou, they established Shantou Vibro-Tech
Industrial & Development Co. Ltd. in Shantou, China. Mr. Chow has a strong
business sense and has gained much invaluable experience and business
connections in China. Mr. Chow is the founder and has been instrumental in the
formation and continued success of the Registrant. Mr. Chow is the brother of
Dr. Fu Lin Zhou.
Mr. Rick Lui was born in Hong Kong and immigrated to Canada in 1973. He
graduated with a Bachelor of Business Administration in 1979 from the Simon
Fraser University in British Columbia. He was employed as an Assistant Manager
at a major Canadian financial institution until 1985, when he changed his career
focus to real estate development and marketing. In the 1990's Mr. Lui was
instrumental in marketing several real estate development projects. Mr. Lui has
been a director of a real estate company, a real estate development company and
is chief executive officer of a synthetic marble manufacturer in British
Columbia, which specializes in building supplies and bath products.
Ms. Tan was born in Malaysia and immigrated to Canada in 1994. Ms. Tan has
graduated with a Bachelor of Science in Electrical Engineering in 1984 and a
Masters of Business Administration in 1987, both from the University of
Wisconsin (Madison). Since that time, Ms. Tan has worked in Tennessee for Nissan
Motors Ltd., in Singapore marketing computer networks and in Canada running a
printing a company. Ms. Tan is responsible for monitoring the financial matters
for the Company.
A graduate of the University of British Columbia in mineral engineering (1975)
and law (1978) and holder of a degree in music (1969), Mr. MacDonald, age 48,
practiced securities, corporate and resource law in Vancouver, British Columbia
until October, 1996. As an associate at Lang Michener Lawrence and Shaw, Toronto
and Vancouver, from 1979 to 1985 and as a partner at the Vancouver law firm of
Ferguson Gifford from January 1985 to October 1992, Mr. MacDonald was involved
in tax-assisted financing and reorganizations in the forestry, oil & gas and
mining sectors and has been involved in Canadian national offerings, mining
51
<PAGE>
finance funds, various stock exchange and inter-exchange listings, including a
Vancouver/Hong Kong inter-listing, resource expropriation compensation claims,
partnership reorganizations, resource developments and sales and Canada - United
States cross-border transactions. In the United States, Mr. MacDonald has worked
in the regulatory securities, corporate and partnership areas. Mr. MacDonald is
responsible for overseeing legal and regulatory matters for the Registrant.
Dr. Fu Lin Zhou is not a member of the board of directors of the Registrant but
is the principal shareholder of the Registrant and controls 36.20% of the
outstanding shares and is an advisor to the Registrant's subsidiaries, Shantou
and Industries. Dr. Fu Lin Zhou is an international expert in seismology. As
vice-president and professor of civil engineering and earthquake engineering at
the South China Construction University (PRC), he is also a member of the
International Association of Earthquake Engineering (IAEE) and the International
Association of Bridge Structure Engineering (IABSE). Moreover, Dr. Zhou is a
Senior Consultant to the China Association of Earthquake Engineering and China
Society of Seismic Control of Structure Association respectively. He has
published several articles about earthquakes and methods of their control. In
1996, Dr. Zhou was retained by the China Engineering Construction
Standardization Association to compile the technical regulations for laminated
isolation bearings in the PRC, effectively setting the standard for the country
based on the work done by him and utilized by the Registrant. Four-time winner
of the National Science and Technology Prize, Dr. Zhou is also a consultant to
the United Nations and is involved in international research and design projects
in earthquake engineering. Dr. Zhou is the brother of the chairman and member of
the board of directors of the Registrant, Mr. William Chow.
All directors were elected at the annual general meeting of the Registrant held
December 15, 1999 and have a term of office expiring at the next annual general
meeting of the Registrant to be scheduled in June, 2000 unless re-elected or
unless a director's office is earlier vacated in accordance with the by-laws of
the Registrant or the provisions of the General Corporation Law (Delaware). All
officers have a term of office lasting until their removal or replacement by the
board of directors.
The business of the Registrant is managed and directed by the members of the
board of directors. There is not a single individual who can be said to be the
promoter of the Registrant.
Item 6. Executive Compensation
During the twelve month period ending December 31, 1999 the Registrant had three
executive officers. Boo Jock Chong, who is a director and the president and
chief executive officer of the Registrant, Joe Chung, who is a director and
vice-president of the Registrant and Gary MacDonald, who is secretary of the
Registrant.
52
<PAGE>
The Registrant has entered into two management agreements. The first dated July
1, 1999 is with Boo Jock Chong. The agreement provides for the engagement of Mr.
Chong as the president and chief executive officer of the Registrant and the
payment of a monthly fee of $3,500 to December 31, 1999, of a monthly fee of
$4,000 to June 30, 2000 and thereafter, what was paid in the previous period
plus ten percent, adjusted each June 30. Mr. Chong is also provided a car
allowance of $150 per month and medical and dental benefits. The agreement
provides for the grant of an option to acquire 500,000 shares for US$0.15 per
share before June 30, 2003. This option has been granted. The agreement does not
provide for a vacation. The agreement automatically renews each June 30 if a
party has not given notice of termination. Mr. Chong may engage in other
business activities. Mr. Chong joined the Registrant in July, 1999 and became
president on August 12, 1999. Mr. Chong was paid $21,900 in the fiscal period
ending December 31, 1999.
The second management agreement dated August 26, 1999 is with Mr. Joe Chung. The
agreement provides for the engagement of Mr. Chung as vice-president of the
China subsidiaries of the Registrant at a monthly fee of $2,500 to December 31,
1999, of $3,000 to June 30, 2000 and increasing by ten percent in each annual
period thereafter. The term of the Agreement is to July 31, 2003 and is
automatically renewed for another year if neither party gives notice of
termination. The agreement provides for the grant of an option to acquire
250,000 shares for US$0.15 per share before June 30, 2003. This option has been
granted. The agreement provides for paid two week vacation in Canada with
airfare from China. Mr. Chung may not engage in other business activities. Mr.
Chung also receives 5,000 RMB per month from, and his accommodation is paid for
by, Shantou. Mr. Chung was paid $12,137 in the fiscal period ending December 31,
1998.
Mr. Gary MacDonald entered into an agreement with the Registrant dated July 23,
1999, amended October 20, 1999 engaging Mr. MacDonald in the capacity of
regulatory and business consultant in connection with the organization,
financing and operation of the business of the Registrant. Mr. MacDonald was
appointed secretary of the Registrant on August 12, 1999. The initial
remuneration for services was a fee of Cdn$120 per hour plus GST, limited by
amendment to a cash payment of Cdn$7,000 in each four week period with any
additional fee allocated to a share purchase account with shares to be purchased
at $0.40 per share on a private placement basis. On November 10, 1999 granted an
option to acquire 50,000 shares for $0.15 per share before December 31, 2003
which may be paid for from the share purchase account. To December 31, 1999 Mr.
MacDonald has been paid fees and GST of Cdn$35,400 and had accrued Cdn$20,621.40
in the share purchase account. The account was converted to 50,000 shares and
the option exercised in March, 2000.
No long-term incentive plan awards have been made to the directors and officers
for the Registrant's most recently completed financial year or in 1999.
No other cash compensation, including salaries, fees, commissions, and bonuses,
was paid or is to be paid to the directors and officers of the Registrant for
services rendered for the financial year ended December 31, 1998 or in the
period ending March 30, 2000, nor was any remuneration paid to the
Registrant's directors in their capacity as such.
53
<PAGE>
No profit sharing, pension or retirement benefit plans have been instituted by
the Registrant and none are proposed at this time. There are no arrangements for
payments on termination of any member of management in the event of a change of
control.
By an agreement dated August 16, 1999 Ms. Phaik Sim Tan, a director and
treasurer of the Registrant, purchased 175,000 shares of the Registrant for
$0.40 per share and was granted 175,000 share purchase warrants, each warrant
entitling the holder to acquire a share for $0.40 per share before August 16,
2000. Also, by an agreement dated August 16, 1999 Puan Sri Chang Nga purchased
125,000 shares of the Registrant for $0.40 per share and was granted 125,000
share purchase warrants, each warrant entitling the holder to acquire a share
for $0.40 per share before August 16, 2000. Mrs. Nga is the mother of Ms. Tan,
treasurer and a member of the board of directors.
No member of the board of directors or senior officer exercised an option to
purchase shares of the Registrant in the fiscal year ended December 31, 1999. In
March, 2000 Gary MacDonald, the Registrant's secretary exercised an option for
30,000 shares at $0.15 per share.
The following options held by former directors were cancelled and the following
options were granted to members of the board of directors and senior officers:
Name Exercise Price No. of Options Expiry Date
Boo Jock Chong 0.15 500,000 June 30,2003
Joe Chung 0.10 436,000 Aug. 16, 1999 (1)
0.15 250,000 June 30, 2003
William Chow 0.10 438,000 Aug. 16, 1999 (1)
0.15 80,000 Dec. 31, 2003
Rick Lui 0.10 500,000 Aug. 16, 1999 (1)
0.15 80,000 Dec. 31, 2003
Fu Lin Zhou 0.10 442,000 Aug. 16, 1999 (1)
0.15 80,000 Dec. 31, 2003
Shi Kit Cheung 0.10 750,000 June 8, 1999 (2)
Wilson Tam 0.10 550,000 June 5, 1999 (2)
Cecilia Yee 0.10 750,000 June 30, 1999 (2)
Phaik Sim Tan 0.15 80,000 Dec. 31, 2003
Gary MacDonald (3) 0.15 50,000 Dec. 31, 2003
Notes:
(1) Cancelled by agreements dated August 16, 1999.
(2) Cancelled by passage of time after resignation from board of directors.
(3) Exercised in March, 2000.
An option to acquire 30,000 shares for $0.15 per share was granted on October
25,1999 to Dr. Miles Price, the consultant for the Registrant in the Republic of
Mexico. This option was exercised in November, 1999.
An option to acquire 25,000 shares for $0.15 per share before December 31, 2003
was granted on December 15, 1999 to Ms. Kim Suksun, a consultant for the
Registrant in Japan and Korea. An option to purchase 25,000 shares for $0.30 per
share before December 31, 2003 was granted to Mr. Darryl Quan on February 25,
2000.
For further details regarding Mr. MacDonald, Item 6 "Executive Compensation".
54
<PAGE>
Item 7. Certain Relationships and Related Transactions
None of the directors or officers of the Registrant nor any person who
beneficially owns, directly or indirectly, shares carrying more than ten percent
of outstanding shares of the Registrant, has any material interest, direct or
indirect, in any transaction since the commencement of the Registrant's last
completed financial year or in any proposed transaction which, in either case,
has or will materially affect the Registrant, or any subsidiaries, except as
follows:
(a) by an agreement dated August 25, 1998 Shantou retained Dr. Fu Lin Zhou as an
adviser and agreed to pay to Dr. Zhou a royalty of five percent of gross sales
of Bearings in the PRC. Dr. Zhou granted to Shantou a right of first refusal to
purchase the royalty. Shantou and Industries incurred royalty expenses to Dr.
Zhou in 1999 of $105,171 of which $61,302 was unpaid.
(b) by an agreement dated January 1, 1999 Industries retained Dr. Fu Lin Zhou as
an adviser and agreed to pay to Dr. Zhou a royalty of five percent of gross
sales of Bearings by Industries outside the PRC. Dr. Zhou granted to Shantou a
right of first refusal to purchase the royalty.
(c) Boo Jock Chong entered into a management agreement dated July 1, 1999 with
the Registrant as described in Item 6;
(d) Joe Chung entered into a management agreement dated August 26, 1999 with the
Registrant as described in Item 6;
(e) Gary MacDonald entered into the engagement agreement dated July 23, 1999,
amended October 20, 1999 as described in Item 6;
(f) various share purchase options were granted to members of the board of
directors and a senior officer as described in Item 6;
(g) the Registrant entered into an agreement dated January 1, 1999 under which
the Registrant provides management services to Industries for a fee of ten
percent of the difference between (a) the gross sales of Bearings and (b) the
Royalty any cost of insurance, shipping, freight or installation paid by
Industries in connection with the sale of the Bearings;
(h) by an agreement dated January 1, 1999 Shantou agreed to supply to Industries
from time to time Bearings at the cost of production of Shantou and any value
added tax levied in the PRC;
(i) by an agreement dated December 15, 1999 Industries agreed to supply to
Enterprises from time to time Bearings at the cost of production of Shantou and
any value added tax levied in the PRC;
(j) by an agreement dated August 16, 1999 Ms. Phaik Sim Tan, a director and
treasurer of the Registrant, purchased 175,000 shares of the Registrant for
$0.40 per share and was granted 175,000 share purchase warrants, each warrant
entitling the holder to acquire a share for $0.40 per share before August 16,
2000. Also, by an agreement dated August 16, 1999 Puan Sri Chang Nga purchased
125,000 shares of the Registrant for $0.40 per share and was granted 125,000
share purchase warrants, each warrant entitling the holder to acquire a share
for $0.40 per share before August 16, 2000. Mrs. Nga is the mother of Ms. Tan,
treasurer and a member of the board of directors; and
(i) in 1999, the Registrant accrued interest on directors' loans of $4,423.
55
<PAGE>
Item 8. Description of Securities
The authorized capital of the Company consists of 40,000,000 shares of $0.00001
par value per share. There are 5,965,500 shares outstanding (undiluted).
By an agreement dated October 3, 1997 the registrar and transfer agent of the
Registrant's shares is Interwest Transfer Co., Inc., 1918 East 4800 Street,
Suite 100, Salt Lake City, Utah 84117 (Tel: 801-272-9294, Fax: 801-277-3147,
Email: [email protected]), CUSIP No: 925591 10 9.
All shares have equal voting rights and are not assessable. Voting rights are
not cumulative and, therefore, the holders of more than 50% of the shares could,
if they chose to do so, elect all of the members of the board of directors of
the Registrant.
Upon liquidation, dissolution or winding up of the Registrant, the assets of the
Registrant, after the payment of liabilities, will be distributed pro rata to
the holders of the shares. The holders of the shares do not have preemptive
rights to subscribe for any securities of the Company and have no right to
require the Registrant to redeem or purchase their shares. The shares currently
outstanding are fully paid and non-assessable.
Holders of shares are entitled to participate equally in dividends when, as and
if declared by the board of directors, out of funds legally available therefore.
No dividend has been paid on the shares since inception, and none is
contemplated in the foreseeable future.
Shareholders of the Registrant have no preemptive rights to acquire additional
shares or other securities. The shares are not subject to redemption and carries
no subscription or conversion rights. In the event of liquidation of the
Company, the shares are entitled to share equally in corporate assets after
satisfaction of all liabilities. The shares, when issued, will be fully paid and
non-assessable.
The Registrant's shares became quoted through the facilities of the
Over-the-Counter Bulletin Board, United States under the symbol "VBTH" on April
15, 1998 but no market in the shares of the Registrant has been established.
There is no assurance that a public market will ever develop.
In general, under Reg. 144, an affiliate of the Registrant (officers, directors,
and owners of more than ten percent of the outstanding shares are affiliates of
the Registrant) may sell in ordinary market transactions through a broker or
with a market maker, within any three month period, a number of shares which
does not exceed the greater of one percent of the number of outstanding shares
or the average of the weekly trading volume of the shares during the four
calendar weeks before such sale. Sales under Reg. 144 require the filing of Form
144 with the Securities and Exchange Commission. If the shares have been held
for more than two years by a person who is not an affiliate, there is no
limitation on the manner of sale or the volume of shares that may be sold and no
Form 144 is required. Sales under Reg. 144 may have a depressive effect on the
market price of the Registrant's shares.
56
<PAGE>
Item 9. Market Price of, and Dividends on, the Registrant's Common Equity
The Registrant's shares became quoted through the facilities of the
Over-the-Counter Bulletin Board, United States under the symbol "VBTH" on April
15, 1998 but no market in the shares of the Registrant has been established.
There is no assurance that a public market will develop.
No dividends have been declared on the shares of the Registrant and the
Registrant does not anticipate declaring any dividends. The shares and business
of the Registrant are speculative in nature and there is no assurance of a
return on investment. See Item 1H "Description of Business - Risk Factors".
OTC BB quotations may reflect interdealer prices, without retail markup,
markdown or commission and may not necessarily reflect actual transactions.
Item 10. Legal Proceedings
The Registrant is a defendant in a law suit brought by Cecelia Yee, a former
director and officer, claiming about Cdn$40,000 for alleged wages and office
rent. The Registrant is defending the action and does not believe Ms. Yee will
be successful.
Item 11. Changes in, and Disagreements with, Accountants.
Telford Sadovnick, P.L.L.C., Bellingham, Washington became the auditors of the
Registrant on August 12, 1999. Before that the auditor was Mr. Keith Margetson,
C.A., Sechelt, British Columbia.
The change was effected on the assumption by Mr. Jock Chong of the office of
president and the determination that the current auditor was not qualified to
satisfy the requirement of the Registrant that financial statements be prepared
in accordance with United States generally accepted accounting principles. The
change did not arise from any disagreement on any accounting matter.
Item 12. Recent Sales of Unregistered Securities
The Registrant has issued the following number of shares for the following
prices:
57
<PAGE>
Date Number of Shares Issued Allotment Price Exemptions
June/97 2,000,000 (3) 0.0001 Section 3
Nov/97 255,000 0.10 Reg D, 504
Nov/97 1,200,000 Cdn$0.457 Reg.D, 504
Aug 25/98 2,000,000 0.0001 Reg D, 504
Aug 25/98 200,000 0.0001 Reg D, 504
Jan/99 168,000 0.50 Reg D, 504
Aug 12/99 175,000 0.40 Reg D, 504 (1)
Aug 12/99 125,000 0.40 Reg D, 504 (2)
Oct 25/99 30,000 0.15 Reg D, 504
Nov 3/99 70,000 0.40 Reg D, 504
Feb 25/99 62,500 (4) 0.40 Reg D, 504
Notes:
(1) Includes a Class 1 warrant to purchase 175,000 shares for 0.40 per share
before August 16, 2000.
(2) Includes a Class 1 warrant to purchase 125,000 shares for 0.40 per share
before August 16, 2000.
(3) Does not reflect return to treasury of 400,000 shares that were issued for
no consideration.
(4) Includes a Class 2 warrant to purchase 62,500 shares for $0.50 per share
before December 31, 2003.
The grant of various options is noted in Item 6.
Item 13. Indemnification of Directors and Officers
Section 145 of the Delaware General Corporation Law provides the Registrant may
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the corporation) by reason of the fact that he is or was a
director, officer, employee or agent of the Registrant, or is or was serving at
the request of the Registrant as a director, officer, employee of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorney's fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suits or proceedings if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Registrant, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The by-laws of the
Registrant reflect this provision.
58
<PAGE>
Item 14. Financial Statements
In this Item are included:
(a) consent of auditors dated March 30, 2000
(b) report of auditors dated February 19, 2000
(b) Audited Consolidated Balance Sheet as of December 31, 1999, 1998 and 1997
(c) Audited Consolidated Statements of Income and Comprehensive Income for the
years ended 1999, 1998 and 1997
(d) Audited Consolidated Statements of Changes in Stockholders' Equity for the
years ended December 31, 1999, 1998 and 1997
(e) Audited Consolidated Statements of Cash Flow for the years ended December
31, 1999, 1998 and 1997
(f) Notes to the Consolidated Financial Statements
(n) Consent of Auditors
We hereby consent to the use in this registration statement on Form 10-SB of our
independent auditors' report dated February 19, 2000 relating to the
consolidated financial statements of Vibro-Tech Industries, Inc. as of December
31, 1999, 1998 and 1997 containing the consolidated balance sheets as of
December 31, 1999, 1998 and 1997, and the related consolidated statements of
income and comprehensive income, changes in stockholders' equity for the years
ended December 31, 1999, 1998 and 1997, statements of cash flows for the years
ended December 31, 1999, 1998 and 1997 and the notes to the consolidated
financial statements which appear in such registration statement.
/s/ Telford Sadovnick, P.L.L.C.
Bellingham, Washington 98225
March 30, 2000
59
<PAGE>
VIBRO-TECH INDUSTRIES, INC.
Consolidated Financial Statements
December 31, 1999, 1998 and 1997
60
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of Vibro-Tech Industries, Inc.
We have audited the accompanying consolidated balance sheets of Vibro-Tech
Industries, Inc. as of December 31, 1999, 1998 and 1997 and the related
consolidated statements of income and comprehensive income, changes in
stockholders' equity and cash flows for the years ended December 31, 1999, 1998
and 1997. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
Except as discussed in the following paragraph, we conducted our audits in
accordance with generally accepted auditing standards. Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the consolidated financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
We were appointed auditors during the 1999 year and were unable to verify the
inventory as at December 31, 1998, 1997 and 1996. The Company's records do not
permit the application of other auditing procedures to inventories and we were
unable to satisfy ourselves as to the fairness of the inventory by other means.
Since opening and closing inventories enter into the determination of the
results of operations and cash flows, we were unable to determine whether
adjustments to cost of sales, net income (loss) for the years, opening and
closing deficits and cash provided from operations may be necessary for the
years ended December 31, 1999, 1998 and 1997.
In our opinion, except for the effects of such adjustments, if any, as might
have been determined to be necessary had we been able to verify the inventory as
at December 31, 1998, 1997 and 1996, the consolidated financial statements
referred to above present fairly, in all material respects, the financial
position of Vibro-Tech Industries, Inc. as of December 31, 1999, 1998 and 1997
and the results of its operations and its cash flows for the years ended
December 31, 1999, 1998 and 1997 in conformity with generally accepted
accounting principles.
CERTIFIED PUBLIC ACCOUNTANTS
/s/ Telford Sadovnick, P.L.L.C.
Bellingham, Washington
February 19, 2000
61
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
VIBRO-TECH INDUSTRIES, INC.
Consolidated Balance Sheets
- ----------------------------------------------------------------------------------------------------------------------
As of December 31, 1999 1998 1997
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets
Current
Cash and equivalents $ 334,070 $ 105,180 $ 33,175
Accounts receivable 517,339 236,830 115,314
Inventory 147,719 112,402 196,149
Prepaid expenses 1,999 18,011 24,131
Loan receivable 26,530 26,530 --
Deferred income taxes 25,827 13,627 --
----------- ----------- -----------
Total Current Assets 1,053,484 512,580 368,769
Fixed Assets 390,690 396,748 314,558
----------- ----------- -----------
Total Assets $ 1,444,174 $ 909,328 $ 683,327
=========== =========== ===========
Liabilities
Accounts payable and accrued liabilities $ 350,443 $ 251,500 $ 63,992
Income taxes payable 21,879 -- --
Loans payable 87,280 118,880 115,848
----------- ----------- -----------
Total Current Liabilities 459,602 370,380 179,840
----------- ----------- -----------
Non-Controlling Interest 543,020 299,824 273,736
----------- ----------- -----------
Commitments and Contingency
Common stock, $0.0001 par value;
40,000,000 shares authorized
(1999: 5,823,000 shares issued and outstanding
(1998: 5,255,000 shares issued and outstanding)
(1997: 3,055,000 shares issued and outstanding) 583 526 306
Additional paid-in capital 651,699 415,256 415,256
Proceeds for shares to be issued -- 54,000 --
Accumulated deficit (222,505) (261,410) (201,288)
Accumulated other comprehensive income 11,775 30,752 15,477
----------- ----------- -----------
Total Stockholders' Equity 441,552 239,124 229,751
----------- ----------- -----------
Total Liabilities and Stockholders' Equity $ 1,444,174 $ 909,328 $ 683,327
=========== =========== ===========
See accompanying notes to the consolidated financial statements
62
<PAGE>
- -----------------------------------------------------------------------------------------------------------------------
VIBRO-TECH INDUSTRIES, INC.
- -----------------------------------------------------------------------------------------------------------------------
Consolidated Statements of Income and Comprehensive Income
- -----------------------------------------------------------------------------------------------------------------------
For the years ended December 31, 1999 1998 1997
- -----------------------------------------------------------------------------------------------------------------------
Revenues
Sales $ 2,242,454 $ 853,192 $ 1,052,081
Cost of sales 1,061,555 476,026 512,226
----------- ----------- -----------
Gross margin 1,180,899 377,166 539,855
----------- ----------- -----------
Expenses
Selling 209,151 113,592 86,224
General and administrative 710,967 337,830 328,548
----------- ----------- -----------
920,118 451,422 414,772
----------- ----------- -----------
Income (loss) before income taxes and non-controlling
Interest 260,781 (74,256) 125,083
----------- ----------- -----------
Income taxes
Current 21,879 -- --
Deferred (recovery) (12,177) (13,654) --
----------- ----------- -----------
9,702 (13,654) --
----------- ----------- -----------
Income (loss) before non-controlling interest 251,079 (60,602) 125,083
Non-controlling interest 212,174 (480) 110,900
Net income (loss) for the year 38,905 (60,122) 14,183
----------- ----------- -----------
Other comprehensive income
Unrealized (loss) gain on foreign
currency translation (18,977) 15,275 15,477
=========== =========== ===========
Comprehensive income (loss) for the year $ 19,928 $ (44,847) $ 29,660
=========== =========== ===========
Basic income (loss) per share $ 0.01 $ (0.02) $ 0.01
Fully diluted income (loss) per share $ 0.01 $ (0.01) $ 0.01
=========== =========== ===========
See accompanying notes to the consolidated financial statements
63
<PAGE>
- ----------------------------------------------------------------------------------------------------------------------
VIBRO-TECH INDUSTRIES, INC.
Consolidated Statements of Changes in Stockholders' Equity
- ----------------------------------------------------------------------------------------------------------------------
For the years ended December 31, 1999 and 1998
- ----------------------------------------------------------------------------------------------------------------------
Common
Stock Accumulated
Additional Subscribed Other Total
Common Stock Paid-in but Unissued Accumulated Comprehensive Stockholders'
Capital Deficit Income Equity
Shares Amount
---------------------------------------------------------------------------------------------
Balance at Inception
June 2, 1997 - $ - $ - $ - $(215,471) $ - $(215,471)
Common stock
issued for service 1,600,000 160 160
Common stock
issued for cash at
$0.10 per share 255,000 26 25,474 25,500
Common stock
issued for
acquisition 1,200,000 120 389,782 389,902
Net income during
the year 14,183 14,183
Unrealized gain on
foreign currency
translation 15,477 15,477
- ---------------------------------------------------------------------------------------------------------------------
Balance at
December 31, 1997 3,055,000 $ 306 $415,256 $ - $(201,288) $15,477 $229,751
- ---------------------------------------------------------------------------------------------------------------------
Common stock issued
for technology 2,000,000 200 200
Common stock issued
for services 200,000 20 20
Proceeds for shares
to be issued 54,000 54,000
Net loss for the
year (60,122) (60,122)
Unrealized gain on
foreign currency
translation 15,275 15,275
- ---------------------------------------------------------------------------------------------------------------------
Balance at
December 31, 1998 5,255,000 $ 526 $ 415,256 $54,000 $(261,410) $30,752 $239,124
- ---------------------------------------------------------------------------------------------------------------------
64
<PAGE>
- ------------------------------------------------------------------------------------------------------------------------
VIBRO-TECH INDUSTRIES, INC.
Consolidated Statements of Changes in Stockholders' Equity (continued)
- ----------------------------------------------------------------------------------------------------------------------
For the years ended December 31, 1999 and 1998
- ----------------------------------------------------------------------------------------------------------------------
Common
Stock Accumulated
Additional Subscribed Other Total
Common Stock Paid-in but Unissued Accumulated Comprehensive Stockholders'
Capital Deficit Income Equity
Shares Amount
---------------------------------------------------------------------------------------------
Balance at
December 31, 1998 5,255,000 $ 526 $ 415,256 $ 54,000 $(261,410) $30,752 $ 239,124
Common stock
issued for cash at
$0.50 per share 168,000 17 83,983 (54,000) 30,000
Common stock
issued for cash at
$0.40 per share 370,000 37 147,963 148,000
Common stock
issued for cash at
$0.15 on exercise
of option 30,000 3 4,497 4,500
Net income for the
year 38,905 38,905
Unrealized (loss) on
foreign currency
translation (18,977) (18,977)
- ---------------------------------------------------------------------------------------------------------------------
Balance at December
31,1999 5,823,000 $ 583 $ 651,699 $ - $(222,505) $11,775 $ 441,552
- ---------------------------------------------------------------------------------------------------------------------
See accompanying notes to the consolidated financial statements
65
<PAGE>
- -------------------------------------------------------------------------------------------------------------
VIBRO-TECH INDUSTRIES, INC.
Consolidated Statements of Cash Flows
- -------------------------------------------------------------------------------------------------------------
For the years ended December 31, 1999 1998 1997
- -------------------------------------------------------------------------------------------------------------
Operating Activities
Net income (loss) for the year $ 38,905 $ (60,122) $ 14,183
Items not affecting cash
Depreciation 77,964 46,698 32,780
Deferred income taxes (12,177) (13,654) --
Non-controlling interest 212,174 (480) 110,900
--------- --------- ---------
316,866 (27,558) 157,863
Net changes in non-cash balances related to operations (200,871) 154,671 (284,361)
--------- --------- ---------
Net cash from (used in) operating activities 115,995 127,113 (126,498)
--------- --------- ---------
Financing Activities
(Decrease) increase in loans payable (31,600) 3,032 115,848
Increase in loan receivable -- (26,530) --
Common shares issued for cash 236,500 -- 55,324
Proceeds for shares to be issued (54,000) 54,000 --
Proceeds from non-controlling shareholders of
subsidiaries 15,250 43,416 --
--------- --------- ---------
Net cash provided by financing activities 166,150 73,918 171,172
--------- --------- ---------
Investing Activity
Purchase of fixed assets (53,255) (129,026) (52,437)
--------- --------- ---------
Net cash used in investing activity (53,255) (129,026) (52,437)
--------- --------- ---------
Net increase in cash and equivalents 228,890 72,005 (7,763)
Cash and equivalents - Beginning of year 105,180 33,175 40,938
--------- --------- ---------
Cash and equivalents - End of year $ 334,070 $ 105,180 $ 33,175
========= ========= =========
See accompanying notes to the consolidated financial statements
66
<PAGE>
- -------------------------------------------------------------------------------------------------
VIBRO-TECH INDUSTRIES, INC.
Consolidated Statements of Cash Flows (continued)
- -------------------------------------------------------------------------------------------------
For the years ended December 31, 1999 1998 1997
- -------------------------------------------------------------------------------------------------
Supplemental Cash Flows Information:
Interest $ 4,423 $ 1,837 $ -
Taxes $ 21,879 $ - $ -
Non-Cash Financing Activities:
Stock issued for services $ - $ 20 $ 160
See accompanying notes to the consolidated financial statements
67
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
VIBRO-TECH INDUSTRIES, INC.
Notes to the Consolidated Financial Statements
- --------------------------------------------------------------------------------
For the Years Ended December 31, 1999, 1998 and 1997
- --------------------------------------------------------------------------------
NOTE 1 - NATURE OF OPERATIONS AND PRINCIPLES OF CONSOLIDATION
The Company was incorporated under the laws of the State of Delaware on June 2,
1997 as Pacific Quilt Design, Inc. On November 6, 1997 the Company was acquired
by the shareholders of Vi-Tech Holdings Ltd. in a share exchange and changed its
name to Vibro-Tech Industries, Inc.
The Company's business consists of the manufacture and sale of rubber bearings
as anti-seismic devices to protect structures from earthquake damage.
Manufacturing facilities are located in China and sales are made within China,
with export sales to Japan and Russia.
The financial statements are consolidated using the pooling-of-interests method
and include Vi-Tech Holdings Ltd., owned 100%, Cansun Pacific International
Investments Corp. ("Cansun") owned 60%; Shantou Vibro-Tech Industrial
Development Co., Ltd.("Shantou"), owned as to 60% by Cansun; Vibro-Tech
Industries Limited, owned 100% by Shantou; and Vibro-Tech Enterprises Limited,
owned 100%. All material inter-corporate transactions have been eliminated.
On December 27, 1995 the Shantou Commission for Foreign Economic Relations and
Trade, a Chinese government agency, approved the formation of Shantou to be
owned as to 80% by Cansun and 20% by Nandou Construction Development Company of
the Shantou Special Economic Zone. By agreement between the shareholders in
1997, it was agreed to change the shareholdings of Shantou to 60% by Cansun, 25%
by Nandou and 15% by the general manager. Although this change has not been
formally recognized by the Chinese authorities or the board of directors and the
shareholdings of Shantou have not been altered, the financial statements have
been prepared as though Cansun only owns 60% of Shantou. Subsequent to the year
end, Nandou transferred 10% of its interest to the general manager.
The approval granted by the Shantou Commission for Foreign Economic Relations
and Trade is for a period of twelve years from December 27, 1995. This approval
also permits Shantou to have a reduced income tax rate of no corporate income
taxes payable during the first two years of profitable operations and one-half
the regular corporate rate (normal corporate rate is 15%) for the next three
years.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a) Accounting Principles and Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the fiscal year. Actual results may differ from those estimates.
b) Translation of Foreign Currencies
Local currencies are the functional currencies for the Company's foreign
subsidiaries except for Hong Kong where the U.S. dollar is used as the
functional currency. Assets and liabilities of foreign operations are
translated to U.S. dollars at current rates of exchange, and revenues and
expenses are translated using weighted average rates. Gains and losses from
foreign currency translation are included as a separate component of
stockholders' equity. Foreign currency transaction gains and losses are
included as a component of other income and expense.
68
<PAGE>
- --------------------------------------------------------------------------------
VIBRO-TECH INDUSTRIES, INC.
Notes to the Consolidated Financial Statements
- --------------------------------------------------------------------------------
For the Years Ended December 31, 1999, 1998 and 1997
- --------------------------------------------------------------------------------
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
c) Financial Instruments and Financial Risk
i) Fair value of financial instruments
The Company's financial instruments consist of cash, accounts receivable,
loan receivable and current liabilities. The fair values of the current
assets and liabilities approximate the carrying amounts due to the
short-term nature of these instruments.
ii) Credit Risk
Financial instruments which potentially subject the Company to credit risk
are accounts receivable. Sales of the Company's products in China have
individual credit evaluation as appropriate and allowances are provided for
estimated credit losses. Sales outside of China are only made upon receipt
of letters of credit. Significant cash balances maintained at banks in
China are used primarily to finance the China operations.
d) Cash and Short-term Deposits
Cash and short-term deposits include government treasury bills and bankers'
acceptances with maturities no longer than 90 days, together with accrued
interest.
e) Inventory
Inventory includes raw materials, work in progress and finished goods.
Inventory is valued at the lower of cost and market value using the
first-in, first-out method of accounting.
f) Depreciation
Fixed assets are depreciated using the straight-line basis over the
estimated useful lives of the assets, after providing for residual values,
as follows:
Plant and machinery 6 to 10 years
Office equipment and furniture 6 to 10 years
Automobiles 6 to 10 years
Leasehold improvements 5 years
Only one-half year's depreciation is recorded in the year of acquisition.
g) Income Taxes
The Company accounts for income taxes under an asset and liability approach
that requires the recognition of deferred tax assets and liabilities for
the expected future tax consequences of events that have been recognized in
the Company's financial statements or tax returns. In estimating future tax
consequences, all expected future events other than enactments of changes
in the tax laws or rates are considered.
69
<PAGE>
- --------------------------------------------------------------------------------
VIBRO-TECH INDUSTRIES, INC.
Notes to the Consolidated Financial Statements
- --------------------------------------------------------------------------------
For the Years Ended December 31, 1999, 1998 and 1997
- --------------------------------------------------------------------------------
NOTE 3 - INVENTORY
Inventory comprises the following:
1999 1998 1997
----------------------------------------
Raw material $ 69,718 $ 27,059 $ 35,604
Work in progress 58,546 16,767 23,592
Finished goods 19,455 68,576 136,953
-------- -------- --------
$147,719 $112,402 $196,149
======== ======== ========
NOTE 4 - FIXED ASSETS
Fixed assets comprise the following:
<TABLE>
<CAPTION>
Total
-----------------------------------
Accumulated
Cost Depreciation 1999 1998 1997
----------- ------------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Plant and machinery $ 374,870 $ 81,156 $ 293,714 $ 283,098 $ 184,997
Office equipment and furniture 42,744 15,123 27,621 24,486 20,588
Automobiles 35,558 8,326 27,232 30,541 33,850
Leasehold improvements 83,639 41,516 42,123 58,623 75,123
----------- ---------- ---------- --------- ----------
$ 536,811 $ 146,121 $ 390,690 $ 396,748 $ 314,558
=========== ========== ========== ========== ==========
NOTE 5 - LOANS PAYABLE
1999 1998 1997
--------------------------------------
Loans payable comprise the following:
Nandou Construction Development Company
280,000 RMB (1998 and 1997 -
280,000 RMB) - unsecured,
non-interest bearing with no set repayment terms $ 33,784 $ 33,784 $ 33,784
Nandou Construction Development Company
100,000 RMB (1998 - 140,000 RMB;
1997 560,000 RMB) - unsecured,
non-interest bearing with no set terms of repayment 12,080 16,884 67,592
Prof. Zhou
120,000 RMB (1998 and 1997 - 120,000 RMB) - unsecured,
non-interest bearing, with no set terms of repayment 14,496 14,472 14,472
Loans from various directors and former
directors A total of $42,000 Cdn
(1998 - $84,000 Cdn) - unsecured,
interest of 10.25%, due September 9, 2000 26,880 53,740 -
----------------------------------------
$ 87,280 $ 118,880 $ 115,848
========================================
70
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
VIBRO-TECH INDUSTRIES, INC.
Notes to the Consolidated Financial Statements
- --------------------------------------------------------------------------------
For the Years Ended December 31, 1999, 1998 and 1997
- --------------------------------------------------------------------------------
NOTE 6 - COMMON STOCK
a) Authorized and Issued Share Capital
The authorized share capital of the Company is 40,000,000 shares of common
stock with a par value of $0.0001 per share. At December 31,1999 there were
5,823,000 (1998 - 5,255,000; 1997 - 3,055,000) shares issued and
outstanding after giving retroactive effect to the 400,000 shares returned
to treasury and cancelled. (Note 6(a) (iii))
(i) During 1998, the Company acquired a patent and three applications for
patents from a shareholder in consideration of:
2,000,000 Common shares issued in August,1998 1,000,000 Common shares
to be issued September 1, 1999 1,000,000 Common shares to be issued
September 1, 2000 1,000,000 Common shares to be issued September 1,
2001
By an agreement dated September 3, 1999, the obligation of the Company to
issue the three million shares in 1999, 2000 and 2001 was cancelled and
voided. The value of these patents and patent applications have been
recorded at the par value of the shares, which management considers to be
fair value.
(ii) During 1998, the Company issued 200,000 common shares to a director in lieu
of payment of salary. The value of the services has been recorded at the
par value of the stock, which management considers to be fair value.
(iii)The Company settled a lawsuit with its former chief executive officer and
director calling for the payment to the Company of $25,000, forgiveness of
all amounts owing by the Company and the return of 400,000 shares to
treasury. Since this transaction of returning the shares affects the
Company's permanent capital, the financial statements have been prepared
giving retroactive effect to the transaction. The 400,000 shares issued in
the 1997 fiscal year and cancelled during the 1999 fiscal year are not
shown as issued.
(iv) The Company sold 300,000 units, comprising of one common share for $0.40
per share and a share purchase warrant to purchase, before August 16, 2000,
one common share for $0.40 per share, for total proceeds of $120,000.
(v) The Company issued 70,000 common shares for $0.40 per share to a consultant
for total proceeds of $28,000. The consultant also received a share option
package for 15,000 common shares at $0.15 which was exercised for proceeds
of $4,500.
b) Incentive Stock Options
The Company applies Accounting Principles Board Opinion No. 25: Accounting
for Stock Issued to Employees ("APB 25") to account for all stock options
granted. Further, Statement of Financial Accounting Standards No. 123:
Accounting for Stock-Based Compensation ("SFAS 123") requires additional
disclosure to reflect the results of the Company has it elected to follow
SFAS 123.
71
<PAGE>
- --------------------------------------------------------------------------------
VIBRO-TECH INDUSTRIES, INC.
Notes to the Consolidated Financial Statements
- --------------------------------------------------------------------------------
For the Years Ended December 31, 1999, 1998 and 1997
- --------------------------------------------------------------------------------
NOTE 6 - COMMON STOCK (Cont'd)
SFAS 123 requires a fair value based method of accounting for stock options
using the Black-Scholes option pricing model and other existing models.
These models were developed for use in estimating the fair value of traded
options and require the input of and are highly sensitive to subjective
assumptions including the expected stock price volatility. The stock
options granted by the Company have characteristics significantly different
from those of traded options. In the opinion of management, the existing
models do not provide a reliable single measure of the fair value of stock
options granted by the Company.
In accordance with SFAS 123, the following is a summary of the changes in
the Company's stock options for the 1999 and 1998 fiscal years.
<TABLE>
<CAPTION>
1999 1998
----------------------------------------------------------------------------
Weighted Average Weighted
Number Exercise Number of Average
Fixed Options of Shares Price Shares Exercise Price
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance at beginning of year 3,871,000 $0.10 - -
Granted 1,175,000 $0.15 3,871,000 $0.10
Exercised (30,000) $0.15 - -
Expired / cancelled (3,866,000) $0.10 - -
----------------------------------------------------------------------------
Outstanding and exercisable at end of
year 1,150,000 $0.15 3,871,000 $0.10
----------------------------------------------------------------------------
</TABLE>
There were no options issued during 1997.
As at December 31, 1998 the Company had outstanding stock options
aggregating 3,871,000 entitling the holders to purchase one common share
per stock option at $0.10 per share until October 15, 2008. Of these
options, 2,050,000 expired by June 30, 1999 due to the resignation of three
directors. 1,816,000 stock options were cancelled by agreement with the
holders on August 16, 1999.
During 1999 the Company entered into option agreements with various
management, directors and consultants for a total of 1,175,000 shares
exercisable at $0.15 per share. Management considers the option prices to
be fair value and no additional compensatory value has been added.
The following incentive stock options are outstanding as at December 31,1999:
Number of Shares Price per Share Expiry Date
---------------- --------------- -----------
5,000 $0.10 January 7, 2000
750,000 $0.15 June 30, 2003
395,000 $0.15 December 31, 2003
The options expiring on January 7, 2000 were not exercised.
72
<PAGE>
- --------------------------------------------------------------------------------
VIBRO-TECH INDUSTRIES, INC.
Notes to the Consolidated Financial Statements
- --------------------------------------------------------------------------------
For the Years Ended December 31, 1999, 1998 and 1997
- --------------------------------------------------------------------------------
NOTE 6 - COMMON STOCK (continued)
c) Share Purchase Warrants
As at December 31,1999 there were 300,000 share purchase warrants
outstanding entitling the holders to purchase one common shares of the
Company for $0.40 on or before August 16, 2000.
NOTE 7 - INCOME (LOSS) PER SHARE
Basic earnings per share ("EPS") excludes dilutive securities and is computed by
dividing income available to common stockholders by the weighted-average number
of common shares outstanding for the year. Diluted EPS reflects the potential
dilution that could occur if dilutive securities were converted into common
stock.
The weighted average number of shares outstanding during the year was 5,527,394
(1998 - 3,755,000; 1997 - 3,055,000) the fully-diluted number of shares
outstanding is 7,273,000 (1998 - 9,126,000; 1997 - 3,055,000).
NOTE 8 - INCOME TAXES
The income tax provision consists of the following:
<TABLE>
<CAPTION>
1999 1998 1997
------- ------- --------
Current
<S> <C> <C> <C>
U.S $ -- $ -- $ --
Canada -- -- --
China 21,879 -- --
Hong Kong -- -- --
------- ------- --------
$21,879 $ -- $ --
======= ======= ========
The tax effects of temporary
differences that give rise to significant portions
of deferred tax assets are as follows:
1999 1998 1997
-------- -------- --------
U.S. - net operating loss carry forwards $ 35,080 $ 9,460 $ 8,980
Canada - net operating loss carry forwards 66,600 56,500 19,500
China - differences between tax and accounting
income 25,827 13,627 --
Hong Kong -- -- --
-------- -------- --------
127,507 79,587 28,480
Less: valuation allowance 101,680 65,960 28,480
-------- -------- --------
Net deferred tax asset $ 25,827 $ 13,627 $ --
======== ======== ========
</TABLE>
At December 31,1999 the Company and its subsidiaries have available tax loss
carry forwards as follows:
U.S. $100,229 expiring 2011 to 2013
Canada $151,400 expiring 2004 to 2006
The Company's Hong Kong subsidiary is not taxable.
73
<PAGE>
- --------------------------------------------------------------------------------
VIBRO-TECH INDUSTRIES, INC.
Notes to the Consolidated Financial Statements
- --------------------------------------------------------------------------------
For the Years Ended December 31, 1999, 1998 and 1997
- --------------------------------------------------------------------------------
NOTE 9 - RELATED PARTY TRANSACTIONS
a) During the years the Company incurred royalty expenses to the
principal shareholder in the amount of $105,171 (1998 - $50,812; 1997
- $54,787). Included in accounts payable are unpaid royalties of
$61,302 (1998 - $18,357; 1997 - $6,686).
b) The Company accrued interest on directors' loans of $4,423 (1998 -
$1,837; 1997 - nil)
c) The Company paid management fees of $51,000 (1998 - $12,137; 1997 -
nil) to directors.
d) The Company incurred consulting fees of $42,019 (1998 - nil; 1997 -
nil) with an officer. Included in accounts payable is unpaid fees of
$20,788 (1998 - nil; 1997 - nil).
e) Loan receivable is from an employee, without interest, unsecured and
due November 2000.
f) The Company entered into a management agreement, effective July 1,
1999, with its chief executive officer for remuneration of $3,500 per
month until December 1999, $4,000 per month to June 30, 2000 then
increasing by ten percent in each annual period thereafter. The
agreement automatically renews each June 30 if neither party has given
notice of termination. The agreement also provides for an option to
purchase 500,000 shares up to June 30, 2003 at $0.15 per share.
g) The Company entered into a management agreement with its executive
vice-president of the China subsidiaries for remuneration of $2,500
per month until July 31, 2000, increasing by ten percent in each
annual period thereafter. The term of the agreement is until July 31,
2003 and is automatically renewed if neither party gives notice. The
agreement also provides for an option of 250,000 shares up to June 30,
2003 at $0.15 per share.
NOTE 10 - MARKET SEGMENTS
All of the Company's operations are carried on through the controlled
subsidiaries (i) Shantou, located in China, and (ii) Vibro-Tech Industries
Limited, located in Hong Kong. The Company has an effective 36% equity interest
in these subsidiaries.
The majority of the assets of the Company are located in China and Hong Kong.
Sales to a major customer amounted to $912,800 of consolidated sales in 1999
(1998 and 1997 - nil). Sales to another customer amounted to $323,500 of
consolidated sales in 1999 (1998 and 1997 - nil).
NOTE 11 - UNCERTAINTY DUE TO THE YEAR 2000 ISSUE
The Year 2000 Issue arises because many computerized systems use only two digits
rather than four to identify a year. Date-sensitive systems may recognize the
year 2000 as 1900 or some other date, resulting in errors when information using
year 2000 dates is processed. In addition, similar problems may arise in some
systems which use certain dates in 1999 to represent something other than a
date. The Company's own financial accounting functions are not technologically
dependent. Although the change in date has occurred, it is not possible to
conclude that all aspects of the Year 2000 Issue that may affect the entity,
including those related to customers, suppliers, or other third parties, have
been fully resolved.
74
<PAGE>
- --------------------------------------------------------------------------------
VIBRO-TECH INDUSTRIES, INC.
Notes to the Consolidated Financial Statements
- --------------------------------------------------------------------------------
For the Years Ended December 31, 1999, 1998 and 1997
- --------------------------------------------------------------------------------
NOTE 12 - COMMITMENTS AND CONTINGENCY
a) Lease Commitments
As at December 31, 1999 the Company had commitments for rental of factory and
office space. The minimum payments for the next five years are:
2000 $57,000
2001 19,900
2002 Nil
2003 Nil
2004 Nil
b) Acquisition of Additional Interest in Shantou
The Company entered into an agreement, dated June 8, 1999, with a Minority
Shareholder of Shantou to acquire his 15% interest of Shantou in exchange for
300,000 shares of the Company. The value of this minority interest was agreed at
$150,000. The exchange is subject to the approval of the Shantou Commission for
Foreign Economic Relations and Trade and the board of directors of Shantou.
Subsequent to the year the board of directors of Shantou approved the exchange.
c) Contingency
During the year a former director and officer sued the Company for unpaid
remuneration and accrued interest on a loan. Management believes that this
action is without merit and will not be successful.
NOTE 13 - NET CHANGES IN NON-CASH BALANCES RELATED TO OPERATIONS
<TABLE>
<CAPTION>
1999 1998 1997
--------- --------- ----------
<S> <C> <C> <C>
Accounts receivable $(280,509) $(121,516) $(107,337)
Inventory (35,317) 83,747 (66,127)
Prepaid expenses 16,012 6,120 (5,435)
Accounts payable and accrued liabilities 98,943 186,320 (105,462)
--------- --------- ---------
$(200,871) $ 154,671 $(284,361)
========= ========= =========
</TABLE>
75
<PAGE>
Item 15. Index to Exhibits
EXHIBITS
A. Agreements to which directors, officers, promoters, voting trustees or
security holders or their affiliates named in the Registration Statement are
parties other than contracts involving only the purchase or sale of current
assets having a determinable market price, at such price.
B. Material contracts not made in the ordinary course of business or which are
to be performed in whole or in part at or after the filing of the Registration
Statement or which was entered into not more than two years before filing.
The Exhibits attached to this Form 10-SB are:
EXHIBIT 3 DELAWARE CONSTATING DOCUMENTS AND BY-LAWS
EXHIBIT 10 STOCK OPTION MATERIALS
EXHIBIT 10 PRIVATE PLACEMENT MATERIALS
EXHIBIT 10 OTHER MATERIAL CONTRACTS
EXHIBIT 19 COMMUNICATIONS TO SECURITIES HOLDERS
EXHIBIT 21 MATERIAL DOCUMENTS RELATING TO SUBSIDIARIES
EXHIBIT 27 FINANCIAL DATA SCHEDULE
ALL EXHIBITS EXCEPT EXHIBIT 27 HAVE BEEN PREVIOUSLY FILED WITH THE INITIAL
FILING OF THIS FORM 10-SB.
3.1 Certificate of Incorporation of Registrant dated June 2, 1997.
3.2 Certificate of Change of Name dated November 14, 1997.
3.3 By-laws of Registrant adopted December 15, 1999.
3.4 Warrant Indenture dated August 12, 1999.
10.1 Option agreement dated July 1, 1999 with Jock Chong for 500,000 shares
10.2 Option agreement dated Aug. 26, 1999 with Joe Chung for 250,000 shares
10.3 Option agreement dated Nov. 10, 1999 with William Chow for 80,000 shares
10.4 Option agreement dated Nov. 10, 1999 with Rick Lui for 80,000 shares
10.5 Option agreement dated Nov. 10, 1999 with Fu Lin Zhou for 80,000 shares
10.6 Option agreement dated Nov. 10, 1999 with Phaik Tan for 80,000 shares
10.7 Option agreement dated Nov. 10, 1999 with Gary MacDonald for 50,000 shares
10.8 Option agreement dated Oct. 25, 1999 with Miles Price for 30,000 shares
10.9 Option and consulting agreement dated Dec. 2, 1999 with Kim Suksun
10.10 Agreement dated August 16, 1999 for sale of 175,000 units to Phaik Tan
10.11 Agreement dated August 16, 1999 for sale of 125,000 units to Puan Sri Nga
10.12 Agreement dated Nov. 3, 1999 for sale of 70,000 shares to Dr. Miles Price
10.13 Registrar and Transfer Agent agreement dated Oct. 3, 1997 with Interwest
10.14 Agreement dated August 25, 1998 with Dr. Fu Lin Zhou for 5,000,000 shares
for purchase of Patents.
10.15 Agreement dated September 3, 1999 with Dr. Fu Lin Zhou canceling
obligation to issue 3,000,000 shares.
10.16 Translation of patent application for 95 1 09348.7, August 20, 1995
10.17 Translation of patent application for 95 1 09347.8, August 20, 1995
10.18 Translation of patent application for 95 2 20019.9, August 20, 1995
10.19 Translation of issue of patent ZL 95 2 20019.8, August 20, 1995
76
<PAGE>
10.20 Management agreement dated July 1, 1999 with Boo Jock Chong
10.21 Management agreement dated August 26, 1999 with Joe Chung
10.22 Agreements with Gary MacDonald of July 23, 1999 and October 20, 1999
10.23 Consulting agreement with Dr. Miles Price of October 25, 1999 re Mexico
10.24 User agreement dated August 25, 1998 between Registrant and Shantou
10.25 User agreement dated January 1, 1999 between Registrant and Industries
10.26 User agreement dated December 15, 1999 between Registrant and Enterprises
10.27 Management agreement dated Jan. 1, 1999 between Registrant and Industries
10.28 Letter of Intent dated November 5, 1999 with Cimko
10.29 Letter of Intent dated September 20, 1999 with Taemyung Corp., Korea
10.30 Letter of Intent with Professor I. Aizenberg and Dr. V. Smirnov, Russia
10.31 Option agreement with Darryl Quan dated February 25, 2000
10.32 Unit purchase agreement with Darryl Quan dated February 25, 2000
10.33 Financial consulting agreement with Darryl Quan dated February 25, 2000
19.1 Notice to shareholders of Dec. 15, 1999 annual general meeting
19.2 Proxy form for 1999 annual general meeting.
19.3 Proxy circular for Dec. 15, 1999 annual general meeting
21.1 Shantou approval for formation, December 27, 1995
21.2 Shantou shareholders' agreement dated January 26, 1996
21.3 Shantou certificate of name reservation
21.4 Shantou foreign merchant investment enterprise approval certificate
21.5 ISO 9002 Quality recognition and approval consultation agreement, Apr 16,
1999
21.6 Cansun/Nandou/Shantou Wan Run modification agreement of July 27, 1997
21.7 Registrant/Shantou Wan Run agreement of June 8, 1999 for purchase of 15%
21.8 Royalty and advisor agreement of Shantou and Dr. Zhou dated Aug. 25, 1998
21.9 Royalty and advisor agreement of Industries and Dr. Zhou dated Jan. 1, 1999
21.10 Shantou agreement dated January 1, 1999 with Industries re Bearing
21.11 Industries agreement dated December 15, 1999 with Enterprises re Bearings
21.12 Fujita certification of March1, 1999
21.13 Fujita agreement of joint research of March 14, 1996
21.14 Fujita basic agreement of joint research of March 18, 1998
21.15 Sample Fujita order of Bearings dated March 20, 1999
21.16 Fujita supplemental agreement of October 11, 1999
27 Financial Data Schedule at December 31, 1998 and December 31, 1999.
77
<PAGE>
SIGNATURES
Pursuant to the requirements of section 12 of the Securities Exchange Act of
1934, the Registrant has caused this signature page to to this Form 10-SB
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized in Vancouver, British on March 30, 2000.
VIBRO-TECH INDUSTRIES, INC.
By: /s/ Boo Jock Chong
Boo Jock Chong, President
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints Boo Jock Chong as true and lawful attorney, with full
power of substitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments to this registration statement, and
to file the same, therewith, with the Securities and Exchange Commission, and to
make any and all state securities law or blue sky filings, granting unto said
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in or about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact and agent, or any
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this
amendment to Form 10-SB Registration Statement has been signed by the following
persons in the capacities and on the dates indicated.
Name Title Date
- ---- ----- ----
/s/ Boo Jock Chong President, Chief March 30, 2000
Boo Jock Chong Executive Officer and
member of the Board of
Directors
/s/ William Chow Chairman of the Board March 30, 2000
William Chow of Directors
/s/ Joe Chung Vice-president and March 30, 2000
Joe Chung member of the Board of
Directors
/s/ Rick Lui Member of the Board of March 30, 2000
Rick Lui Directors
/s/ Phaik Sim Tan Treasurer and member March 30, 2000
Phaik Sim Tan of the Board of Directors
/s/ Gary MacDonald Secretary March 30, 2000
Gary MacDonald
78
EXHIBIT 3.1
CERTIFICATION
I, Marie Jorczak, Notary Public for the State of Delaware and County of New
Castle, do hereby certify that the above and foregoing is a true and correct
copy of the original Certificate of Incorporation of PACIFIC QUILT DESIGN, INC.
as received and filed in the Office of the Secretary of State, the 2nd day of
June in the year of our Lord, one thousand nine hundred ninety-seven, at 9:00
A.M.
IN WITNESS WHEREOF, I have hereunto set my hand and seal of office the 2nd day
of June in the year of our Lord, one thousand nine hundred ninety seven.
/s/ Marie P. Jorczak
- --------------------
Notary Public
<PAGE>
CERTIFICATE OF INCORPORATION
OF
PACIFIC QUILT DESIGN, INC.
FIRST: The name of the corporation is PACIFIC QUILT DESIGN, INC.
SECOND: The address of its registered office in the State of Delaware is Three
Mill Road, Suite 206, Wilmington, DE 19806 in the County of New Castle. Its
registered agent at such address is The Incorporators Inc.
THIRD: The purpose of the corporation is to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of
Delaware.
FOURTH: The corporation shall have the authority to issue forty million
(40,000,000) shares of common stock at $0.0001 per value.
FIFTH: The Board of Directors is expressly authorized to adopt, amend, or repeal
the By-Laws of the corporation.
SIXTH: The stockholders and directors may hold their meetings and keep the books
and documents of the corporation outside the State of Delaware, at such places
from time to time designated by the By-Laws, except as otherwise required by the
Laws of Delaware.
SEVENTH: The corporation shall have perpetual existence.
EIGHTH: The name and mailing address of the incorporator is Marie Jorczak, Three
Mill Road, Suite 206, Wilmington, DE, 19806-2146.
NINTH: The number of directors of the corporation shall be fixed from time to
time by its By-Laws and may be increased or decreased.
TENTH: The board of directors is expressly authorized and shall have such
authority as set forth in the By-Laws to the extent such authority would be
valid under Delaware Law.
ELEVENTH: No director of the corporation shall have personal liability to the
corporation or its shareholders for monetary damages for breach of fiduciary
duty as a director, provided that this provision shall not eliminate or limit
the liability of a director (a) for any breach of the director's duty or loyalty
to the corporation or its stockholders, (b) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law, (c)
under section 174 of the Delaware Corporation Law, or (d) for any transaction
from which the director derived an improper personal benefit.
THE UNDERSIGNED Incorporator for the purpose of forming a corporation pursuant
to the laws of the State of Delaware, does make this Certificate, hereby
declaring and certifying thast the ffacts herein stated are true.
June 2, 1997 BY: /s/ Marie P. Jorczak
------------------------------------
Marie P. Jorczak-Incorporator
EXHIBIT 3.2
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCOPORATION
PACIFIC QUILT DESIGN, INC., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware (the
"Corporation")
DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of PACIFIC QUILT DESIGN, INC.
a resolution was duly adopted setting forth a proposed amendment of the
Certificate of Incorporation of said Corporation, and declaring said amendment
to be advisable. The resolution setting forth the proposed amendment is as
follows:
RESOLVED that Article 1 of the Certificate of Incorporation is hereby amended to
read in its entirety as follows:
ARTICLE 1
The name of the Corporation is VIBRO-TECH INDUSTRIES, INC.
SECOND: That in lieu of a meeting and vote of stockholders, the stockholders
have given written consent to said amendment in accordance with the provisions
of Section 228 of the General Corporation Law of the State of Delaware, and
written notice of the adoption of the amendment has been given as provided in
Section 228 of the General Corporation Law of the State of Delaware to every
stockholder entitled to such notice.
THIRD: That such amendment was duly adopted in accordance with the applicable
provisions of Sections 242 and 228 of the General Corporation Law of the State
of Delaware.
FOURTH: The capital of said corporation shall not be reduced under or by reason
of said amendment.
IN WITNESS WHEREOF, PACIFIC QUILT DESIGN, INC., has caused this Certificate of
Amendment of Certificate of Incorporation to be signed by Myrl Tapungot, its
President, and Marilyn Tapungot, its Secretary, this 6th day of November, 1997.
/s/ Myrl Tapungot
- ---------------------------
Myrl Tapungot, President
/s/ M. Tapungot
- ---------------------------
Marilyn Tapungot, Secretary
State of Delaware
Secretary of State
Division of Corporations
Filed 09:00 AM 11/14/1997
971390013-2756946
EXHIBIT 3.3
BY-LAWS
OF
VIBRO-TECH INDUSTRIES, INC.
Originally adopted on June 2, 1997.
Amendment no. one adopted October 6, 1999.
Amendment no. two replacing by-laws adopted December 15, 1999.
<PAGE>
AMENDMENTS
----------
Date of
Article/Section Effect of Amendment Amendment
- --------------- ------------------- ---------
By-Law Three Permit 1999 annual October 6, 1999
general meeting in Dec.
New By-Laws per sec. 44 By-Laws for public co. Dec. 15, 1999
-i-
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Article/
Section Provision Page
- ------- --------- ----
<S> <C> <C>
ARTICLE I. OFFICES..................................................................1
ARTICLE II. NUMBER OF DIRECTORS......................................................1
ARTICLE III. SHAREHOLDERS.............................................................1
Section 3.1 Annual Meeting.......................................................1
Section 3.2 Special Meetings.....................................................1
Section 3.3 Place of Meetings....................................................1
Section 3.4 Fixing of Record Date................................................1
Section 3.5 Voting Lists.........................................................2
Section 3.6 Notice of Meetings...................................................2
Section 3.7 Waiver of Notice.....................................................3
Section 3.8 Manner of Acting; Proxies............................................3
Section 3.9 Participation by Conference Telephone................................3
Section 3.10 Quorum..............................................................3
Section 3.11 Voting of Shares....................................................4
Section 3.12 Voting for Directors................................................4
Section 3.13 Voting of Shares by Certain Holders.................................4
Section 3.14 Action by Shareholders Without a Meeting............................5
ARTICLE IV. BOARD OF DIRECTORS.......................................................5
Section 4.1 General Powers.......................................................5
Section 4.2 Number, Tenure, and Qualification....................................5
Section 4.3 Annual and Other Regular Meetings....................................5
Section 4.4 Special Meetings.....................................................6
Section 4.5 Quorum...............................................................6
Section 4.6 Manner of Acting.....................................................6
Section 4.7 Participation by Conference Telephone................................6
Section 4.8 Presumption of Assent................................................7
Section 4.9 Action by Board Without a Meeting....................................7
Section 4.10 Board Committees....................................................7
Section 4.11 Resignation.........................................................7
Section 4.12 Removal.............................................................7
Section 4.13 Vacancies...........................................................8
Section 4.14 Compensation........................................................8
ARTICLE V. OFFICERS.................................................................8
Section 5.1 Number...............................................................8
Section 5.2 Appointment and Term of Office.......................................8
Section 5.3 Resignation..........................................................9
Section 5.4 Removal..............................................................9
Section 5.5 Chairman and Vice-Chairmen of the Board..............................9
Section 5.6 President............................................................9
Section 5.7 Vice-Presidents......................................................9
Section 5.8 Secretary...........................................................10
Section 5.9 Treasurer...........................................................10
Section 5.10 Assistant Officers.................................................10
Section 5.11 Compensation of Officers and Employees.............................10
-ii-
<PAGE>
ARTICLE VI. CONTRACTS, LOANS, CHECKS, DEPOSITS......................................11
Section 6.1 Contracts...........................................................11
Section 6.2 Loans...............................................................11
Section 6.3 Checks, Drafts, Etc.................................................11
Section 6.4 Deposits............................................................11
Section 6.5 Contracts With or Loans to Directors and Officers ..................11
ARTICLE VII. SHARES..................................................................12
Section 7.1 Certificates for Shares.............................................12
Section 7.2 Issuance of Shares..................................................12
Section 7.3 Beneficial Ownership................................................12
Section 7.4 Transfer of Shares..................................................12
Section 7.5 Lost or Destroyed Certificates......................................12
Section 7.6 Restrictions on Transfer............................................13
Section 7.7 Stock Transfer Records..............................................13
ARTICLE VIII. SEAL....................................................................13
ARTICLE IX. INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES,
AND AGENTS..............................................................13
Section 9.1 Power to Indemnify..................................................13
Section 9.2 Indemnification of Directors, Officers, Employees, and Agents ......14
Section 9.3 Insurance...........................................................15
Section 9.4 Survival of Benefits................................................16
Section 9.5 Severability........................................................16
Section 9.6 Applicable Law......................................................16
ARTICLE X. BOOKS AND RECORDS.......................................................16
ARTICLE XI. FISCAL YEAR.............................................................16
ARTICLE XII. VOTING OF SHARES OF ANOTHER CORPORATION.................................16
ARTICLE XIII. AMENDMENTS TO BY-LAWS...................................................16
-iii-
</TABLE>
<PAGE>
BY-LAWS
OF
VIBRO-TECH INDUSTRIES, INC.
ARTICLE I OFFICES
The registered office of the corporation shall be in the city of Wilmington,
Delaware and the resident agent in charge thereof shall be The Incorporators
Ltd.., Three Mill Road, Suite 206, County of New Castle, Wilmington, DE 19806
and the record books of the Company will be held and maintained at Suite 600,
1090 West Pender Street, Vancouver, British Columbia, Canada V6E 2N7.
The corporation may have such other offices within or without the state of
Delaware as the board of directors may designate or the business of the
corporation may require from time to time.
ARTICLE II NUMBER OF DIRECTORS
The board of directors of this corporation will consist of not less than three
and not more than thirteen directors.
ARTICLE III SHAREHOLDERS
Section 3.1 Annual Meeting
The annual meeting of the shareholders will be held at such date or time as may
be determined by the board of directors, for the purpose of electing directors
and for the transaction of such other business as may come before the meeting.
If the day fixed for the annual meeting will be a legal holiday in the state of
Delaware, the meeting will be held on the next succeeding business day. If the
election of directors is not held on the day designated herein for any annual
meeting of the shareholders or at any adjournment thereof, the board of
directors will cause the election to be held at a meeting of the shareholders as
soon thereafter as may be convenient.
Section 3.2 Special Meetings
Special meetings of the shareholders for any purpose or purposes unless
otherwise prescribed by statute may be called by the president, by the board of
directors, or by the written request of any director or holders of at least ten
percent of the votes entitled to be cast on each issue to be considered at the
special meeting.
Section 3.3 Place of Meetings
Meetings of the shareholders will be held at either the principal office of the
corporation or at such other place within or without the state of Delaware as
the board of directors or the president may designate.
Section 3.4 Fixing of Record Date
For the purpose of determining shareholders entitled to notice of or to vote at
any meeting of shareholders or any adjournment thereof, or shareholders entitled
to receive payment of any dividend or distribution, or in order to make a
determination of shareholders for any other proper purpose, the board of
<PAGE>
directors may fix in advance a date as the record date for any such
determination of shareholders, which date in any case will not be less than ten
or more than 60 days before the date on which the particular action requiring
such determination of shareholders is to be taken.
If no record date is fixed for the determination of shareholders entitled to
notice of or to vote at a meeting of shareholders, or shareholders entitled to
receive payment of a dividend or distribution, the day before the first notice
of a meeting is dispatched to shareholders or the date on which the resolution
of the board of directors authorizing such dividend or distribution is adopted,
as the case may be, will be the record date for such determination of
shareholders.
When a determination of shareholders entitled to notice of or to vote at any
meeting of shareholders has been made as provided in this section, such
determination will apply to any adjournment thereof unless the board of
directors fixes a new record date, which it must do if the meeting is adjourned
to a date more than 120 days after the date fixed for the original meeting.
Section 3.5 Voting Lists
At least ten days before each meeting of the shareholders, the officer or agent
having charge of the stock transfer books for shares of the corporation will
prepare an alphabetical list of all its shareholders on the record date who are
entitled to vote at the meeting or any adjournment thereof, arranged by voting
group, and within each voting group by class or series of shares, with the
address of and the number of shares held by each, which record for a period of
ten days before the meeting will be kept on file at the principal office of the
corporation or at a place identified in the meeting notice in the city where the
meeting will be held. Such record will be produced and kept open at the time and
place of the meeting and will be subject to the inspection of any shareholder,
shareholder's agent or shareholder's attorney at any time during the meeting or
any adjournment thereof. Failure to comply with the requirements of this bylaw
will not affect the validity of any action taken at the meeting.
Section 3.6 Notice of Meetings
Written , printed or email notice stating the date, time, and place of a meeting
of shareholders and, in the case of a special meeting of shareholders, the
purpose or purposes for which the meeting is called, will be given by or at the
direction of the president, the secretary, or the officer or persons calling the
meeting to each shareholder of record entitled to vote at such meeting (unless
required by law to send notice to all shareholders regardless of whether or not
such shareholders are entitled to vote), not less than ten days and not more
than 60 days before the meeting, except that notice of a meeting to act on an
amendment to the articles of incorporation, a plan of merger or share exchange,
a proposed sale, lease, exchange, or other disposition of all or substantially
all of the assets of the corporation other than in the usual course of business,
or the dissolution of the corporation will be given not less than 20 days and
not more than 60 days before the meeting. Written notice may be transmitted by
mail, private carrier, or personal delivery; telegraph or teletype; or
telephone, wire, email or wireless equipment that transmits a facsimile of the
notice. Such notice will be effective upon dispatch if sent to the shareholder's
address, telephone number, email number, or other number appearing on the
records of the corporation.
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If an annual or special shareholders' meeting is adjourned to a different date,
time or place, notice need not be given of the new date, time or place if the
new date, time or place is announced at the meeting before adjournment unless a
new record date is or must be fixed. If a new record date for the adjourned
meeting is or must be fixed, however, notice of the adjourned meeting must be
given to persons who are shareholders as of the new record date.
Section 3.7 Waiver of Notice
A shareholder may waive any notice required to be given under the provisions of
these by-laws, the articles of incorporation, or by applicable law, whether
before or after the date and time stated therein. A valid waiver is created by
any of the following three methods:
(a) in writing signed by the shareholder or receipt of an email from the
shareholder entitled to the notice and delivered to the corporation for
inclusion in its corporate records;
(b) by attendance at the meeting, unless the shareholder at the beginning
of the meeting objects to holding the meeting or transacting business at
the meeting; or
(c) by failure to object at the time of presentation of a matter not within
the purpose or purposes described in the meeting notice.
Section 3.8 Manner of Acting; Proxies
A shareholder may vote either in person or by proxy. A shareholder may vote by
proxy by means of a proxy appointment form that is executed in writing or
transmitted by email by the shareholder, his agent, or by his duly authorized
attorney-in-fact. All proxy appointment forms will be filed with the secretary
of the corporation before or at the commencement of meetings. No unrevoked proxy
appointment form will be valid after eleven months from the date of its
execution unless otherwise expressly provided in the appointment form. No proxy
appointment may be effectively revoked until notice in writing or transmission
by email of such revocation has been given to the secretary of the corporation
by the shareholder appointing the proxy.
Section 3.9 Participation by Conference Telephone
At the discretion of the board of directors, shareholders or proxies may
participate in a meeting of the shareholders by any means of communication by
which all persons participating in the meeting can hear each other during the
meeting, and participation by such means will constitute presence in person at
the meeting.
Section 3.10 Quorum
At any meeting of the shareholders, five per cent of all the shares outstanding,
represented by shareholders of record, will constitute a quorum of that voting
group for action on that matter. Once a share is represented at a meeting, other
than to object to holding the meeting or transacting business, it is deemed to
be present for purposes of a quorum for the remainder of the meeting and for any
adjournment of that meeting unless a new record date is or must be fixed for the
adjourned meeting.
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At such reconvened meeting, any business may be transacted that might have been
transacted at the adjourned meeting. If a quorum exists, action on a matter is
approved by a voting group if the votes cast within the voting group favoring
the action exceed the votes cast within the voting group opposing the action,
unless the question is one upon which a different vote is required by express
provision of law or of the articles of incorporation or of these by-laws.
Section 3.11 Voting of Shares
Each outstanding share, regardless of class, will be entitled to one vote on
each matter submitted to a vote at a meeting of shareholders, except as may be
otherwise provided in the articles of incorporation.
Section 3.12 Voting for Directors
Unless otherwise provided in the articles of incorporation, shareholders
entitled to vote at any election of directors are not entitled to cumulate
votes. Unless otherwise provided in the articles of incorporation, in any
election of directors the candidates elected are those receiving the largest
numbers of votes cast by the shares entitled to vote in the election, up to the
number of directors to be elected by such shares.
Section 3.13 Voting of Shares by Certain Holders
3.13.1 Shares standing in the name of another corporation, domestic or foreign,
may be voted by such officer, agent, or proxy as the board of directors of such
corporation may determine. A certified copy of a resolution adopted by such
directors will be conclusive as to their determination.
3.13.2 Shares held by a personal representative, administrator, executor,
guardian, or conservator may be voted by such administrator, executor, guardian,
or conservator, without a transfer of such shares into the name of such personal
representative, administrator, executor, guardian, or conservator. Shares
standing in the name of a trustee may be voted by such trustee, but no trustee
will be entitled to vote shares held in trust without a transfer of such shares
into the name of the trustee.
3.13.3 Shares standing in the name of a receiver may be voted by such receiver,
and shares held by or under the control of a receiver may be voted by the
receiver without the transfer thereof into his name if authority so to do is
contained in an appropriate order of the court by which such receiver was
appointed.
3.13.4 If shares are held jointly by three or more fiduciaries, the will of the
majority of the fiduciaries will control the manner of voting or appointment of
a proxy, unless the instrument or order appointing such fiduciaries otherwise
directs.
3.13.5 Unless the pledge agreement expressly provides otherwise, a shareholder
whose shares are pledged will be entitled to vote such shares until the shares
have been transferred into the name of the pledgee, and thereafter the pledgee
will be entitled to vote the shares so transferred.
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3.13.5 Shares held by another corporation will not be voted at any meeting or
counted in determining the total number of outstanding shares entitled to vote
at any given time if a majority of the shares entitled to vote for the election
of directors of such other corporation is held by this corporation.
3.13.6 On and after the date on which written or emailed notice of redemption of
redeemable shares has been dispatched to the holders thereof and a sum
sufficient to redeem such shares has been deposited with a bank or trust company
with irrevocable instruction and authority to pay the redemption price to the
holders thereof upon surrender of certificates therefor, such shares will not be
entitled to vote on any matter and will be deemed to be not outstanding shares.
Section 3.14 Action by Shareholders Without a Meeting
Any action that may or is required to be taken at a meeting of the shareholders
may be taken without a meeting if one or more written consents setting forth the
action so taken will be signed, either before or after the action taken, by all
the shareholders entitled to vote with respect to the subject matter thereof.
Action taken by written consent of the shareholders is effective when all
consents are in possession of the corporation, unless the consent specifies a
later effective date. Whenever any notice is required to be given to any
shareholder of the corporation pursuant to applicable law, a waiver thereof in
writing, signed by the person or persons entitled to notice, will be deemed
equivalent to the giving of notice.
ARTICLE IV BOARD OF DIRECTORS
Section 4.1 General Powers
The business and affairs of the corporation will be managed by its board of
directors.
Section 4.2 Number, Tenure, and Qualification
The number of directors set forth in Article II of these by-laws may be
increased or decreased from time to time by amendment to or in the manner
provided in these by-laws. No decrease, however, will have the effect of
shortening the term of any incumbent director unless such director resigns or is
removed in accordance with the provisions of these by-laws. Except as
classification of directors may be specified by the articles of incorporation
and unless removed in accordance with these by-laws, each director will hold
office until the next annual meeting of the shareholders and until a successor
will have been elected and qualified. Directors need not be residents of the
state of Delaware or shareholders of the corporation.
Section 4.3 Annual and Other Regular Meetings
An annual meeting of the board of directors will be held without other notice
than this bylaw, immediately after and in the same city as the annual meeting of
shareholders. The board of directors may specify by resolution the time and
place, either within or without the state of Delaware, for holding any other
regular meetings of the board of directors.
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Section 4.4 Special Meetings
Special meetings of the board of directors may be called by the board of
directors, the chairman of the board, the president, the secretary, or any
director. Notice of special meetings of the board of directors stating the date,
time, and place thereof will be given at least two days before the date set for
such meeting by the person or persons authorized to call such meeting, or by the
secretary at the direction of the person or persons authorized to call such
meeting.
The notice may be oral or written. Oral notice may be communicated in person or
by telephone, wire or wireless equipment, which does not transmit a facsimile of
the notice. Oral notice is effective when communicated. Written notice may be
transmitted by mail, private carrier, or personal delivery; telegraph or
teletype; or telephone, wire, wireless equipment that transmits a facsimile of
the notice or Email. Written notice is effective upon dispatch if such notice is
sent to the director's address, telephone number, or other number appearing on
the records of the corporation. If no place for such meeting is designated in
the notice thereof, the meeting will be held at the principal office of the
corporation or may be held by telelphone or in such other manner as the
directors determine.
Any director may waive notice of any meeting at any time. Whenever any notice is
required to be given to any director of the corporation pursuant to applicable
law, a waiver thereof in writing signed by the director, entitled to notice,
will be deemed equivalent to the giving of notice. The attendance of a director
at a meeting will constitute a waiver of notice of the meeting except where a
director attends a meeting for the express purpose of objecting to the
transaction of any business because the meeting is not lawfully convened.
Unless otherwise required by law, neither the business to be transacted at, nor
the purpose of, any regular or special meeting of the board of directors need be
specified in the notice or waiver of notice of such meeting.
Section 4.5 Quorum
A majority of the number of directors specified in or fixed in accordance with
these by-laws will constitute a quorum for the transaction of any business at
any meeting of directors. If less than a majority will attend a meeting, a
majority of the directors present may adjourn the meeting from time to time
without further notice, and those directors present at such adjourned meeting
will constitute a quorum and may transact business.
Section 4.6 Manner of Acting
If a quorum is present when a vote is taken, the affirmative vote of a majority
of directors present is the act of the board of directors.
Section 4.7 Participation by Conference Telephone
Directors may participate in a regular or special meeting of the board by, or
conduct the meeting through the use of, any means of communication by which all
directors participating can hear each other during the meeting and participation
by such means will constitute presence in person at the meeting.
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Section 4.8 Presumption of Assent
A director who is present at a meeting of the board of directors where action is
taken will be presumed to have assented to the action taken unless such
director's dissent will be entered in the minutes of the meeting or unless such
director will file his written dissent to such action with the person acting as
secretary of the meeting before the adjournment thereof or will forward such
dissent by registered mail to the secretary of the corporation immediately after
adjournment of the meeting. Such right to dissent will not apply to a director
who voted in favor of such action.
Section 4.9 Action by Board Without a Meeting
Any action permitted or required to be taken at a meeting of the board of
directors may be taken without a meeting if one or more written consents setting
forth the action so taken will be signed, either before or after the action
taken, by all the directors. Action taken by written consent is effective when
the last director signs the consent, unless the consent specifies a later
effective date.
Section 4.10 Board Committees
The board of directors may by resolution designate from among its members an
executive committee and one or more other committees, each of which must have
two or more members and will be governed by the same rules regarding meetings,
action without meetings, notice, waiver of notice, and quorum and voting
requirements as applied to the board of directors. To the extent provided in
such resolutions, each such committee will have and may exercise the authority
of the board of directors, except as limited by applicable law. The designation
of any such committee and the delegation thereto of authority will not relieve
the board of directors, or any members thereof, of any responsibility imposed by
law.
Section 4.11 Resignation
Any director may resign at any time by delivering written notice to the chairman
of the board, the president, the secretary, or the registered office of the
corporation, or by giving oral notice at any meeting of the directors or
shareholders. Any such resignation will take effect at any subsequent time
specified therein, or if the time is not specified, upon delivery thereof and,
unless otherwise specified therein, the acceptance of such resignation will not
be necessary to make it effective.
Section 4.12 Removal
At a meeting of the shareholders called expressly for that purpose, any director
or the entire board of directors may be removed from office, with or without
cause (unless the articles of incorporation provide that directors may be
removed only for cause) by a vote of the holders of a majority of the shares
then entitled to vote at an election of the director or directors whose removal
is sought. If shareholders have the right to cumulate votes in the election of
directors and if less than the entire board is to be removed, not one of the
directors may be removed if the votes cast against his removal would be
sufficient to elect him if then cumulatively voted at an election of the entire
board or the class of directors of which he is a part. If the board of directors
or any one or more directors is so removed, new directors may be elected at this
same meeting.
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Section 4.13 Vacancies
A vacancy on the board of directors may occur by the resignation, removal, or
death of an existing director, or by reason of increasing the number of
directors on the board of directors as provided in these by-laws.
Except as may be limited by the articles of incorporation, any vacancy occurring
in the board of directors may be filled by the affirmative vote of a majority of
the remaining directors though less than a quorum.
A director elected to fill a vacancy will be elected for the unexpired term of
his predecessor in office, except that a vacancy to be filled by reason of an
increase in the number of directors will be filled by the board of directors for
a term of office continuing only until the next election of directors by
shareholders.
If the vacant office was held by a director elected by holders of one or more
authorized classes or series of shares, only the holders of those classes or
series of shares are entitled to vote to fill the vacancy.
Section 4.14 Compensation
By resolution of the board of directors, the directors may be paid a fixed sum
plus their expenses, if any, for attendance at meetings of the board of
directors or committee thereof, or a stated salary as director. No such payment
will preclude any director from serving the corporation in any other capacity
and receiving compensation therefor.
ARTICLE V OFFICERS
Section 5.1 Number
The corporation will have a president, a secretary and a treasurer, and may have
one or more vice-presidents each of whom will be appointed by the board of
directors. Such other officers and assistant officers, including a chairman of
the board, as may be deemed necessary or appropriate may be appointed by the
board of directors.
By resolution, the board of directors may designate any officer as chief
executive officer, chief operating officer, chief financial officer, or any
similar designation. Any two or more offices may be held by the same person.
Section 5.2 Appointment and Term of Office
The officers of the corporation will be appointed by the board of directors for
such term as the board may deem advisable or may be appointed to serve for an
indefinite term at the pleasure of the board.
Each officer will hold office until a successor will have been appointed
regardless of such officer's term of office, except in the event of such
officer's termination of an indefinite term at the pleasure of the board or such
officer's removal in the manner herein provided.
<PAGE>
Section 5.3 Resignation
Any officer may resign at any time by delivering written notice to the chairman
of the board, the president, a vice-president, the secretary, or the board of
directors, or by giving oral notice at any meeting of the board.
Any such resignation will take effect at any subsequent time specified therein,
or if the time is not specified, upon delivery thereof and, unless otherwise
specified therein, the acceptance of such resignation will not be necessary to
make it effective.
Section 5.4 Removal
Any officer appointed by the board of directors may be removed by the board of
directors with or without cause.
The removal will be without prejudice to the contract rights, if any, of the
person so removed. Appointment of an officer or agent will not of itself create
contract rights.
Section 5.5 Chairman and Vice-Chairmen of the Board
The chairman of the board, if there be such an office, will, if present, preside
at all meetings of the board of directors, and exercise and perform such other
powers and duties as may be determined from time to time by resolution of the
board of directors. The vice-chairman of the board, if there be such an office,
or in the event there will be more than one vice-chairman, the one designated
most senior at the time of election, will perform the duties of the chairman of
the board in the chairman's absence, or in the event of the chairman's death,
disability or refusal to act. The vice-chairman of the board will exercise and
perform such other powers and duties as may be determined from time to time by
resolution of the board of directors.
Section 5.6 President
The president will be the principal executive officer of the corporation and,
subject to the control of the board of directors, will generally supervise and
control the business and affairs of the corporation. When present, the president
will preside at all meetings of the shareholders and in the absence of the
chairman of the board, or if there be none, at all meetings of the board of
directors.
The president may sign with the secretary or any other proper officer of the
corporation thereunto authorized by law, certificates for shares of the
corporation, and may sign deeds, mortgages, bonds, contracts, or other
instruments that the board of directors has authorized to be executed, except in
cases where the signing and execution thereof will be expressly delegated by the
board of directors or by these by-laws to some other officer or agent of the
corporation or will be required by law to be otherwise signed or executed. In
general, the president will perform all duties incident to the office of
president and such other duties as may be prescribed by resolution of the board
of directors from time to time.
<PAGE>
Section 5.7 Vice-Presidents
In the absence of the president or in the event of his death, disability, or
refusal to act, the vice-president, or in the event there will be more than one
vice-president, the vice-presidents, in the order designated at the time of
their election, or in the absence of any designation then in the order of their
election, if any, will perform the duties of the president. When so acting the
vice-president will have all the powers of and be subject to all the
restrictions upon the president and will perform such other duties as from time
to time may be assigned to the vice-president by resolution of the board of
directors.
Section 5.8 Secretary
The secretary will keep the minutes of the proceedings of the shareholders and
board of directors, will give notices in accordance with the provisions of these
by-laws and as required by law, will be custodian of the corporate records of
the corporation, will keep a record of the names and addresses of all
shareholders and the number and class of shares held by each, have general
charge of the stock transfer books of the corporation, may sign with the
president, or a vice-president, certificates for shares of the corporation,
deeds, mortgages, bonds, contracts, or other instruments that will have been
authorized by resolution of the board of directors, and in general will perform
all duties incident to the office of secretary and such other duties as from
time to time may be assigned to the secretary by resolution of the board of
directors.
Section 5.9 Treasurer
If required by the board of directors, the treasurer will give a bond for the
faithful discharge of his duties, in such sum and with such surety or sureties
as the board of directors will determine. The treasurer will have charge and
custody of and be responsible for keeping correct and complete books and records
of account, for all funds and securities of the corporation, receive and give
receipts for moneys due and payable to the corporation from any source
whatsoever, deposit all such moneys in the name of the corporation in the banks,
trust companies, or other depositories as will be selected in accordance with
the provisions of these by-laws, and in general perform all of the duties
incident to the office of treasurer and such other duties as from time to time
may be assigned to the treasurer by resolution of the board of directors.
Section 5.10 Assistant Officers
The assistant officers in general will perform such duties as are customary or
as will be assigned to them by resolution of the board of directors. If required
by the board of directors, the assistant treasurers will respectively give bonds
for the faithful discharge of their duties in such sums and with such sureties
as the board of directors will determine.
Section 5.11 Compensation of Officers and Employees
The board of directors will fix compensation of officers and may fix
compensation of other employees from time to time. No officer will be prevented
from receiving a salary by reason of the fact that such officer is also a
director of the corporation. If any salary payment, or portion thereof, to an
officer or other employee is not allowable as a deduction for employee
compensation under Section 162(a)(1) of the Internal Revenue Code of 1986, as
<PAGE>
may be amended from time to time, on the grounds such payment was unreasonable
in amount, then such officer or employee will promptly repay the amount
disallowed as a deduction to the corporation.
ARTICLE VI CONTRACTS, LOANS, CHECKS, DEPOSITS
Section 6.1 Contracts
The board of directors may authorize any officer or officers, agent or agents,
to enter into any contract or execute and deliver any instrument in the name of
and on behalf of the corporation, and that authority may be general or confined
to specific instances.
Section 6.2 Loans
No loans will be contracted on behalf of the corporation and no evidences of
indebtedness will be issued in its name unless authorized by a resolution of the
board of directors, which authority may be general.
Section 6.3 Checks, Drafts, Etc.
All checks, drafts, or other orders for the payment of money, notes, or other
evidences of indebtedness issued in the name of the corporation will be signed
by the officer or officers, or agent or agents, of the corporation and in the
manner as will from time to time be prescribed by resolution of the board of
directors.
Section 6.4 Deposits
All funds of the corporation not otherwise employed will be deposited from time
to time to the credit of the corporation in the banks, trust companies, or other
depositories as the board of directors may select.
Section 6.5 Contracts With or Loans to Directors and Officers
The corporation may enter into contracts and otherwise transact business as
vendor, purchaser, or otherwise, with its directors, officers, and shareholders
and with corporations, associations, firms, and entities in which they are or
may become interested as directors, officers, shareholders, members, or
otherwise, as freely as though such interest did not exist, as permitted by
applicable law. In the absence of fraud the fact that any director, officer,
shareholder, or any corporation, association, firm or other entity of which any
director, officer, or shareholder is interested, is in any way interested in any
transaction or contract will not make the transaction or contract void or
voidable, or require the director, officer, or shareholder to account to this
corporation for any profits therefrom if the transaction or contract is or will
be authorized, ratified, or approved by
(a) vote of a majority of a quorum of the board of directors excluding any
interested director or directors,
(b) the written consent of the holders of a majority of the shares entitled to
vote, or
<PAGE>
(c) a general resolution approving the acts of the directors and officers
adopted at a shareholders meeting by vote of the holders of the majority of the
shares entitled to vote.
Nothing herein contained will create or imply any liability in the circumstances
above described or prevent the authorization, ratification, or approval of such
transactions or contracts in any other manner.
ARTICLE VII SHARES
Section 7.1 Certificates for Shares
The shares of the corporation may be represented by certificates in such form as
prescribed by the board of directors. Signatures of the corporate officers on
the certificate may be facsimiles if the certificate is manually signed on
behalf of a transfer agent, or registered by a registrar, other than the
corporation itself or an employee of the corporation.
All certificates will be consecutively numbered or otherwise identified. All
certificates will bear such legend or legends as prescribed by the board of
directors or these by-laws.
Section 7.2 Issuance of Shares
Shares of the corporation will be issued only when authorized by the board of
directors, which authorization will include the consideration to be received for
each share.
Section 7.3 Beneficial Ownership
Except as otherwise permitted by these by-laws, the person in whose name shares
stand on the books of the corporation will be deemed by the corporation to be
the owner thereof for all purposes. The board of directors may adopt by
resolution a procedure whereby a shareholder of the corporation may certify in
writing to the corporation that all or a portion of the shares registered in the
name of such shareholder are held for the account of a specified person or
persons. Upon receipt by the corporation of a certification complying with such
procedure, the persons specified in the certification will be deemed, for the
purpose or purposes set forth in the certification, to be the holders of record
of the number of shares specified in place of the shareholder making the
certification.
Section 7.4 Transfer of Shares
Transfer of shares of the corporation will be made only on the stock transfer
books of the corporation by the holder of record thereof or by his legal
representative who will furnish proper evidence of authority to transfer, or by
his attorney thereunto authorized by power of attorney duly executed and filed
with the secretary of the corporation, on surrender for cancellation of the
certificate for the shares. All certificates surrendered to the corporation for
transfer will be cancelled and no new certificate will be issued until the
former certificate for a like number of shares will have been surrendered and
cancelled.
<PAGE>
Section 7.5 Lost or Destroyed Certificates
In the case of a lost, destroyed, or mutilated certificate, a new certificate
may be issued therefor upon such terms and indemnity to the corporation as the
board of directors may prescribe.
Section 7.6 Restrictions on Transfer
Except to the extent that the hold period, if any, under applicable securities
laws has expired, the corporation has obtained an opinion of counsel acceptable
to the corporation that transfer restrictions are not required under applicable
securities laws or the applicable shares of the corporation have been registered
or otherwise qualified under applicable securities laws, all certificates
representing shares of the corporation will bear a legend on the face of the
certificate or on the reverse of the certificate if a reference to the legend is
contained on the face, to the effect as follows:
These securities are not registered under state or federal securities laws
and may not be offered, sold, pledged, or otherwise transferred, nor may
these securities be transferred on the books of the company, without expiry
of the applicable hold period, without an opinion of counsel or other
assurance satisfactory to the company that no violation of such
registration provisions would result therefrom or registration or
qualification of such. shares for trading under applicable securities laws.
Section 7.8 Stock Transfer Records
The stock transfer books will be kept at the principal office of the corporation
or at the office of the corporation's transfer agent or registrar as engaged
from time to time by the corporation. The name and address of the person to whom
the shares represented by any certificate, together with the class, number of
shares, and date of issue, will be entered on the stock transfer books of the
corporation. Except as provided in these by-laws, the person in whose name
shares stand on the books of the corporation will be deemed by the corporation
to be the owner thereof for all purposes.
ARTICLE VIII SEAL
This corporation need not have a corporate seal. If the directors adopt a
corporate seal, the seal of the corporation will be circular in form and consist
of the name of the corporation, the state and year of incorporation, and the
words "Corporate Seal."
ARTICLE IX INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES, AND AGENTS
Section 9.1 Power to Indemnify
The corporation will have the following powers:
9.1.1 Power to Indemnify. The corporation may in accordance with section 145 of
the Delaware General Corporation Law indemnify and hold harmless to the full
extent permitted by applicable law each person who was or is made a party to or
is threatened to be made a party to or is involved (including, without
limitation, as a witness) in any actual or threatened action, suit or other
proceeding, whether civil, criminal, administrative, or investigative, by reason
of that fact that he or she is or was a director, officer, employee, or agent of
the corporation or, being or having been such a director, officer, employee, or
agent, he or she is or was serving at the request of the corporation as a
<PAGE>
director, officer, employee, agent, trustee, or in any other capacity of another
corporation or of a partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, whether the basis of
such proceeding is alleged action or omission in an official capacity or in any
other capacity while serving as a director, officer, employee, agent, trustee,
or in any other capacity, against all expense, liability and loss (including,
without limitation, attorneys' fees, judgments, fines, ERISA excise taxes, or
penalties and amounts to be paid in settlement) actually or reasonably incurred
or suffered by such person in connection therewith. Such indemnification may
continue as to a person who has ceased to be a director, officer, employee or
agent of the corporation and will inure to the benefit of his or her heirs and
personal representatives.
9.1.2 Power to Pay Expenses in Advance of Final Disposition. The corporation may
pay expenses incurred in defending any such proceeding in advance of the final
disposition of any such proceeding, provided, however, that the payment of such
expenses in advance of the final disposition of a proceeding will be made to or
on behalf of a director, officer, employee, or agent only upon delivery to the
corporation of an undertaking, by or on behalf of such director, officer,
employee, or agent, to repay all amounts so advanced if it will ultimately be
determined that such director, officer, employee, or agent is not entitled to be
indemnified under this Article or otherwise, which undertaking may be unsecured
and may be accepted without reference to financial ability to make repayment.
9.1.3 Power to Enter Into Contracts. The corporation may enter into contracts
with any person who is or was a director, officer, employee, and agent of the
corporation in furtherance of the provisions of this Article and may create a
trust fund, grant a security interest in property of the corporation, or use
other means (including, without limitation, a letter of credit) to ensure the
payment of such amounts as may be necessary to effect indemnification as
provided in this Article.
9.1.4 Expansion of Powers. If the Delaware Business Corporation Act is amended
in the future to expand or increase the power of the corporation to indemnify,
to pay expenses in advance of final disposition, to enter into contracts, or to
expand or increase any similar or related power, then, without any further
requirement of action by the shareholders or directors of this corporation, the
powers described in this Article will be expanded and increased to the fullest
extent permitted by the Delaware General Corporation Law, as so amended.
9.1.5 Limitation on Powers. No indemnification will be provided under this
Article to any such person if the corporation is prohibited by the nonexclusive
provisions of the Delaware General Corporation Law or other applicable law as
then in effect from paying such indemnification. For example, no indemnification
will be provided to any director in respect of any proceeding, whether or not
involving action in his or her official capacity, in which he or she will have
been finally adjudged to be liable on the basis of intentional misconduct or
knowing violation of law by the director, or that the director personally
received a benefit in money, property, or services to which the director was not
legally entitled.
Section 9.2 Indemnification of Directors, Officers, Employees, and Agents
<PAGE>
9.2.1 Directors. The corporation will indemnify and hold harmless any person who
is or was a director of this corporation, and pay expenses in advance of final
disposition of a proceeding, to the full extent to which the corporation is
empowered.
9.2.2 Officers, Employees, and Agents. The corporation may, by action of its
Board of Directors from time to time, indemnify and hold harmless any person who
is or was an officer, employee, or agent of the corporation, and pay expenses in
advance of final disposition of a proceeding, to the full extent to which the
corporation is empowered, or to any lesser extent which the Board of Directors
may determine.
9.2.3 Character of Rights. The rights to indemnification and payment of expenses
in advance of final disposition of a proceeding conferred by or pursuant to this
Article will be contract rights.
9.2.4 Enforcement. A director, officer, employee, or agent ("claimant") will be
presumed to be entitled to indemnification and/or payment of expenses under this
Article upon submission of a written claim (and, in an action brought to enforce
a claim for expenses incurred in defending any proceeding in advance of its
final disposition, where the undertaking in subsection 9.1.2 above has been
delivered to the corporation) and thereafter the corporation will have the
burden of proof to overcome the presumption that the claimant is so entitled.
If a claim under this Article is not paid in full by the corporation within
sixty (60) days after a written claim has been received by the corporation,
except in the case of a claim for expenses incurred in defending a proceeding in
advance of its final disposition, in which case the applicable period will be
twenty (20) days, the claimant may at any time thereafter bring suit against the
corporation to recover the unpaid amount of the claim and, to the extent
successful in whole or in part, the claimant will be entitled to be paid also
the expense of prosecuting such claim.
Neither the failure of the corporation (including its board of directors, its
shareholders, or independent legal counsel) to have made a determination before
the commencement of such action that indemnification of or reimbursement or
advancement of expenses to the claimant is proper in the circumstances nor an
actual determination by the corporation (including its board of directors, its
shareholders, or independent legal counsel) that the claimant is not entitled to
indemnification or to the reimbursement or advancement of expenses will be a
defense to the action or create a presumption that the claimant is not so
entitled.
9.2.5 Rights Not Exclusive. The right to indemnification and payment of expenses
in advance of final disposition of a proceeding conferred in this Article will
not be exclusive of any other right that any person may have or hereafter
acquire under any statute, provision of the articles of incorporation, by-laws,
agreement, vote of shareholders, or disinterested directors or otherwise.
Section 9.3 Insurance
The corporation may purchase and maintain insurance, at its expense, to protect
itself and any director, officer, employee, agent, or trustee of the corporation
or another corporation, partnership, joint venture, trust, or other enterprise
<PAGE>
against any expense, liability or loss, whether or not the corporation would
have the power to indemnify such person against such expense, liability or loss
under the Delaware General Corporation Law.
Section 9.4 Survival of Benefits
Any repeal or modification of this Article will not adversely affect any right
of any person existing at the time of such repeal or modification.
Section 9.5 Severability
If any provision of this Article or any application thereof will be invalid,
unenforceable, or contrary to applicable law, the remainder of this Article, or
the application of such provision to persons or circumstances other than those
as to which it is held invalid, unenforceable, or contrary to applicable law,
will not be affected thereby and will continue in full force and effect.
Section 9.6 Applicable Law
For purposes of this Article, "applicable law" will at all times be construed as
the applicable law in effect at the date indemnification may be sought, or the
law in effect at the date of the action, omission, or other event giving rise to
the situation for which indemnification may be sought, whichever is selected by
the person seeking indemnification.
ARTICLE X BOOKS AND RECORDS
The corporation will keep correct and complete books and records of account,
stock transfer books, minutes of the proceedings of its shareholders and the
board of directors, and such other records as may be necessary or advisable.
ARTICLE XI FISCAL YEAR
The fiscal year of the corporation will be determined by resolution adopted by
the board of directors. In the absence of such a resolution, the fiscal year
will be the calendar year.
ARTICLE XII VOTING OF SHARES OF ANOTHER CORPORATION
Shares of another corporation held by this corporation may be voted by the
president or vice-president, secretary or by proxy appointment form executed by
either of them, unless the directors by resolution will designate some other
person to vote the shares.
ARTICLE XIII AMENDMENTS TO BY-LAWS
These by-laws may be altered, amended, or repealed, and new by-laws may be
adopted by the board of directors or by the shareholders.
The undersigned, being the secretary of the corporation, hereby certifies that
these by-laws are the by-laws of Vibro-Tech Industries, Inc., adopted by
resolution of the directors on December 15, 1999.
<PAGE>
DATED December 15, 1999.
/s/ Gary MacDonald, Secretary
EXHIBIT 3.4
VIBROTECH INDUSTRIES INC.
Terms and conditions attached to the share purchase warrants issued from time to
time by Vibro-Tech Industries, Inc. as adopted by the board of directors of
Vibro-Tech Industries, Inc. on August 12, 1999 and dated for reference August
12, 1999.
ARTICLE ONE - INTERPRETATION
Section 1.01 - Definitions
In these terms and conditions, unless there is something in the subject matter
or context inconsistent:
Class means the Warrants of a particular class as designated by the board in the
resolution creating the Warrants of that particular class;
Company means Vibro-Tech Industries, Inc. or any successor corporation or its
successor, as provided in article 8;
Company's Auditors means an independent firm of accountants duly appointed as
auditors of the Company in which each member of the firm is a member in good
standing of the Canadian or the United States Institute of Chartered
Accountants.
Director means a director of the Company for the time being, and reference,
without more, to action by the directors of the Company as a board, or whenever
duly empowered, action by an executive committee of the board;
Person means an individual, corporation, partnership, trustee or any
unincorporated organization and words importing persons have a similar meaning;
Share or shares means the common shares of the Company as constituted at July
31, 199 and any shares resulting from any subdivision or consolidation of the
shares;
Transfer Agent means Interwest Transfer Co., Inc., 1918 East 4800 Street, Suite
100, Salt Lake City, Utah 84117
Warrants means the share purchase warrants of the Company issued and authorized,
as set out in section 2.01 and for the time being outstanding and any other
warrants made subject to these terms and conditions;
Warrant Holders or Holders means the bearers of the share purchase warrants for
the time being;
Warrant Holders' Request means an instrument signed in one or more counterparts
by Warrant Holders entitled to purchase in the aggregate not less than 25% of
the aggregate number of shares which could be purchased pursuant to all the
Warrants of all Classes outstanding for the time being, requesting the Company
to take some action or proceedings;
<PAGE>
Section 1.02 - Reference to Article
The expressions article, section, subsection, paragraph and the like followed by
a number refer to the specified article or section of these terms and
conditions;
Section 1.03 - Gender Neutral
Words importing the singular number include the plural and vice versa and words
importing the masculine gender include the feminine and neuter genders.
Section 1.04 - Interpretation Not Affected by Headings
The division of these terms and conditions into articles and sections, and the
insertion of headings are for convenience of reference only and will not affect
their construction of interpretation.
Section 1.05 - Applicable Law
The terms and conditions attached to the Warrants will be construed in
accordance with the laws of Delaware and will be treated in all respects as
Delaware contracts and any action or proceeding commenced or maintained in
respect of the warrants will be commenced and maintained in the court of
appropriate jurisdiction in the County of Vancouver, British Columbia, Canada to
which court the Holder irrevocably attorns.
ARTICLE TWO - ISSUE OF SHARE PURCHASE WARRANTS
Section 2.01 - Issue of Share Purchase Warrants
The Directors may at any time and from time to time authorize to be created and
issued by the Company classes of share purchase warrants on such conditions as
to term, price, transferability and number of shares or other securities as the
Directors consider appropriate and as are prescribed by, and not inconsistent
with, these terms and conditions.
Section 2.02 - Additional Warrants
The Company may by resolution of the Directors at any time and from time to time
do further equity or debt financing and may issue additional shares, warrants or
grant options or similar rights to purchase shares.
Section 2.03 - Issue in Substitution for Lost Warrants
(a) If a Warrant is mutilated, lost, destroyed or stolen, the Company may issue
and deliver a new Warrant of like date and tenor as the one mutilated,
lost, destroyed or stolen, in exchange for and in place of and upon
cancellation of such mutilated Warrant, or in lieu of, and in substitution
for such lost, destroyed or stolen Warrant and the substituted Warrant will
be entitled to the benefit of these terms and conditions and rank equally
in accordance with its terms with all other Warrants issued or to be issued
by the Company.
(b) The applicant for the issue of a new Warrant will bear the cost of its
issue and in case of loss, destruction or theft furnish to the Company such
evidence of ownership and of loss, destruction, or theft of the Warrant so
<PAGE>
lost, destroyed or stolen as will be satisfactory to the Company in its
discretion and such applicant may also be required to furnish indemnity in
amount and form satisfactory to the Company in its discretion, and will pay
the reasonable charges of the Company.
Section 2.04 - Warrant Holder Not a Shareholder
Ownership of a Warrant will not constitute the Holder a shareholder of the
Company, nor entitle him to any right or interest except as expressly provided
in the Warrant.
ARTICLE THREE - OWNERSHIP AND TRANSFER
Section 3.01 - Exchange of Warrants
(a) Warrants in any authorized denomination may, upon compliance with the
reasonable requirements of the Company, be exchanged for Warrants in any
other authorized denomination, of the same class and date of expiry
entitling the Holder to purchase any equal aggregate number of shares at
the same subscription price and on the same terms as the Warrants of the
class so exchanged.
(b) Warrants may be exchanged only at the office of the Transfer Agent and any
Warrants tendered for exchanged will be surrendered to the Transfer Agent
and canceled.
Section 3.02 - Charges for Exchange
On exchange of Warrants, the Transfer Agent, except as otherwise herein
provided, may charge a sum not exceeding $1.00 for each new Warrant issued, and
payment of such charges and of any transfer taxes or governmental or other
charges required to be paid will be made by the party requesting such exchange.
Section 3.03 - Ownership and Transfer of Warrants
(a) The Company and Transfer Agent may deem and treat the bearer of any Warrant
as the absolute owner of such Warrant, for all purposes, and will not be
affected by any notice or knowledge to the contrary.
(b) The bearer of any Warrant will be entitled to the rights evidenced by such
Warrant free from all equities or rights of set-off or counterclaim between
the Company and the original or any intermediate Holder and all persons may
act accordingly and the receipt of any such bearer for the shares will be a
good discharge to the Company and the Transfer Agent for the same and
neither the Company nor the Transfer Agent will be bound to enquire into
the title of any such bearer.
(c) Unless otherwise provided by the Directors, warrants will not be negotiable
and may not be assigned, set over, mortgaged, hypothecated or pledged.
Section 3.04 - Notice to Warrant Holders
Any notice to be given to Warrant Holders will be deemed to be validly given on
the date on which it has been published if such notice is published once in the
City of Vancouver, such publication to be made in a daily newspaper in the
<PAGE>
English language of general circulation in such city and if the Company has in
respect of any Class of Warrants maintained a register of the names and
addresses of Holders, the Company give notice by pre-paid first class mail.
ARTICLE FOUR - EXERCISE OF WARRANTS
Section 4.01 - Method of Exercise of Warrants
The right to purchase shares conferred by the Warrants may be exercised, before
its expiry time, by the Holder of such Warrant surrendering it, with a duly
completed and executed subscription in the form attached thereto and cash or a
certified cheque payable to, or to the order of, the Company, at par for the
purchase price applicable at the time of surrender in respect of the shares
subscribed for in lawful money of the United States to the Transfer Agent at its
principal office in Salt Lake City, Utah.
Section 4.02 - Effect of Exercise of Warrants
(a) Upon surrender and payment, the shares subscribed for will be deemed to
have been issued and such person or persons will be deemed to have become
the Holder or Holders of record of such shares on the date of such
surrender and payment, and such shares will be issued at the subscription
price in effect on the date of such surrender and payment.
(b) Within ten business days after surrender and payment, the Company will
forthwith cause to be delivered to the person or persons in whose name or
names the shares subscribed for are to be issued as specified in such
subscription or mailed to him or them at his or their respective addresses
specified in such subscription, a certificate or certificates for the
appropriate number of shares not exceeding those which the Warrant Holder
is entitled to purchase pursuant to the Warrant surrendered.
Section 4.03 - Subscription for Less than Entitlement
(a) The Holder of any Warrant may subscribe for and purchase a number of shares
less than the number which he is entitled to purchase pursuant to the
surrendered Warrant.
(b) If there is a purchase of a number of shares less than the number which can
be purchased pursuant to a Warrant, the Transfer Agent will endorse the
Warrant, note the number of Warrant exercised and return the Warrant
Certificate to the Holder or may issue a new Warrant in respect of the
balance of the shares which the Holder was entitled to purchase pursuant to
the surrendered Warrant and which were not then purchased.
Section 4.04 - Warrants for Fractions of Shares
To the extent that the Holder of any Warrant is entitled to receive on the
exercise or partial exercise a fraction of a common share, such right may be
exercised in respect of such fraction only in combination with another Warrant
or other Warrants which is the aggregate entitle the Holder to receive a whole
number of such shares.
<PAGE>
Section 4.05 - Expiration of Warrants
After the expiration of the period within which a Warrant is exercisable, all
rights will wholly cease and terminate and such Warrant will be void and of no
effect.
Section 4.06 - Exercise Price
The price per share which must be paid to exercise a Warrant is as prescribed by
resolution of the Directors and set forth on the face of the Warrant
Certificate.
Section 4.07 - Adjustment of Exercise Price
The exercise price and the number of shares deliverable upon the exercise of the
Warrants will be subject to adjustment in the events and in the manner
following:
(a) In the event of any subdivision or subdivisions of the shares of the
Company as such shares are Company as such shares are constituted on August
12, 1999, at any time while the Warrants are outstanding into a greater
number of shares, the Company will deliver at the time of purchase of
shares, in addition to the number of shares in respect of which the right
to purchase is then being exercised, such additional number of shares as
result from such subdivision or subdivisions without the bearer of the
Warrant making any additional payment or giving any other consideration.
(b) In the event of any consolidation or consolidations of the shares of the
Company as such shares are constituted on August 12, 1999, at any time
while the Warrants are outstanding, into a lesser number of shares, the
Company will deliver and the bearer will accept, at the time of purchase,
in lieu of the number of shares in respect of which the right to purchase
is then being exercised, the lesser number of shares as result from such
consolidation or consolidations.
(c) In the event of any change of the shares of the Company as such shares are
constituted on August 12,1999, at any time while the Warrants are
outstanding, the Company will deliver at the time of purchase the number of
shares of the appropriate class resulting from such change as the bearer
would have been entitled to receive in respect of the number of shares so
purchased had the right to purchase been exercised before such change.
(d) In the event of any capital reorganization, reclassification or change of
outstanding equity share, of the Company or in the event of any
consolidation, merger or amalgamation of the Company with or into any other
company or in the event of any sale of the property of the Company as or
substantially as an entirety, then the Holder of each Warrant then
outstanding will have the right to purchase and receive, in lieu of the
shares receivable upon the exercise of the rights represented by the
Warrants, the kind and amount of shares and other securities and property
receivable upon such capital reorganization, reclassification, change,
consolidation, merger, amalgamation or sale which the Holder of a number of
shares equal to the number of shares receivable upon the exercise of the
rights represented by the Warrants would have received as a result of such
event, but the subdivision or consolidation of shares at any time
<PAGE>
outstanding into greater or lesser number of shares, whether with or
without par value, will not be deemed to be a capital reorganization or a
reclassification of the capital of the Company for the purposes of this
paragraph (d).
(e) If the Company at any time while the Warrants are outstanding pays any
stock dividend or stock dividends upon the shares of the Company in respect
of which the right to purchase is then given, the Company will deliver at
the time of purchase of shares in addition to the number of shares in
respect of which the right of purchase is then being exercised, the
additional number of shares of the appropriate class as would have been
payable on the shares so purchased if they had been outstanding on the
record date for the payment of such stock dividend.
(f) The adjustments provided for in this Section in the subscription rights
pursuant to any Warrants of any Class are cumulative.
(g) The Company will not be required to issue fractional shares in satisfaction
of its obligations but, if any fractional interest in a share would, except
for the provisions of this paragraph (g), be deliverable upon the exercise
of a Warrant, the Company will, at its option, in lieu of delivering a
fractional share, satisfy the right to receive such fractional interest by
payment to the Holder of such Warrant of an amount in cash equal, computed
in the case of a fraction of a cent to the next lower cent, to the current
market value of the right to subscribe for such fractional interest,
computed on the basis of the last sale price of shares of the Company on
the principal exchange or quotation system through which the shares of the
Company are traded preceding the day on which such exercise takes place.
Section 4.08 - Determination of Adjustments
If any questions arise with respect to the exercise price, such question will be
conclusively determined by the Company's Auditors, or, if they decline to act
any other firm of chartered accountants, that the Company may designate and who
will have access to all appropriate records and such determination will be
binding upon the Company and the Holders of the Warrants.
ARTICLE FIVE - COVENANTS BY THE COMPANY
Section 5.01 - Reservation of Shares
The Company will reserve from time to time and there will remain unissued out of
its authorized capital a sufficient number of shares to satisfy the rights of
purchase in the Warrants should the Holders of all the Warrants from time to
time outstanding determine to exercise such rights in respect of all shares
which they are or may be entitled to purchase pursuant.
ARTICLE SIX - WAIVER OF CERTAIN RIGHTS
Section 6.01 - Immunity of Shareholders, etc.
The Warrant Holder waives and releases any right, cause or action or remedy now
or hereafter existing in any jurisdiction against any past, present or future
incorporator, shareholder, Director or officer, as such , of the Company for the
issue of shares pursuant to any Warrant or on any covenant, agreement,
representation or warranty by the Company.
<PAGE>
ARTICLE SEVEN - MEETING OF WARRANT HOLDERS
Section 7.01 - Right to Convene Meeting
(a) The Company may at any time and from time to time, and will on receipt of a
Warrant Holder's request and upon being indemnified to its reasonable
satisfaction by the Warrant Holders signing such Warrant Holder's request
against the costs which may be incurred in connection with the calling an
holding of such meeting, convene a meeting of the Warrant Holders.
(b) If the Company fails within 15 days after receipt of such Warrant Holder's
request and indemnity to give notice convening a meeting, such Warrant
Holders may convene such meeting.
(c) Every such meeting will be held in Vancouver, British Columbia, unless
required by law to be held elsewhere in Canada.
Section 7.02 - Notice
At least 21 days' notice of any meeting will be given to the Warrant Holders and
a copy will be sent by post to the Company unless the meeting has been called by
it, stating the time when and the place where the meeting is to be held and
stating briefly the general nature of the business to be transacted but it will
not be necessary for any such notice to set out the terms of any resolution to
be proposed or any of the provisions of this article.
Section 7.03 - Chairman
Some person nominated in writing by the Company will be chairman of the meeting
and if no person is so nominated, or if the person so nominated is not present
within fifteen minutes from the time fixed for the holding of the meeting the
Warrant Holders present in person or by proxy will choose some person present to
be chairman.
Section 7.04 - Quorum
(a) Subject to section 7.12 at any meeting of the Warrant Holders a quorum will
consist of Warrant Holders present in person or by proxy and entitled to
purchase at least 25% of the aggregate number of shares which could be
purchased pursuant to all the then outstanding Warrants of all Classes of
Warrants, provided that at least two persons entitled to vote are
personally present.
(b) If a quorum of the Warrant Holders is not present within half-an-hour from
the time fixed for holding any meeting, the meeting, if summoned by the
Warrant Holders, or on a Warrant Holder's request, will be dissolved; but
in any other case the meeting will be adjourned to the same day in the next
week (unless such day is a non-business day, in which case it will be
adjourned to the next following business day) at the same time and place.
(c) At the adjoined meeting the Warrant Holders present in person or by proxy
will form a quorum and may transact the business for which the meeting was
originally convened notwithstanding that they may not be entitled to
purchase at least 25% of the aggregate number of shares which can be
purchased pursuant to all of the then outstanding Warrants.
<PAGE>
Section 7.05 - Power to Adjourn
The chairman of any meeting at which a quorum of the Warrant Holders is present
may with the consent of the meeting adjourn any such meeting and no notice of
such adjournment need be given except such notice, if any, as the meeting may
prescribe.
Section 7.06 - Show of Hands
Every question submitted to a meeting will be decided in the first place by a
majority of the votes given on a show of hands and at any such meeting, unless a
poll is demanded, a declaration by the chairman that a resolution has been
carried or carried unanimously or by a particular majority will be conclusive
evidence of the fact.
Section 7.07 - Poll
(a) On any question submitted to a meeting and after a vote by show of hands,
when demanded by the Chairman or by one or more of the Warrant Holders,
acting in person or by proxy and entitled to purchase in the aggregate at
least five per cent of the aggregate number of shares which could be
purchased pursuant to all the Warrants for the time being outstanding, a
poll will be taken in such manner as the Chairman will direct.
(b) Questions other than extraordinary resolutions will be decided by a
majority of the votes cast on the poll.
Section 7.08 - Voting
(a) On a show of hands every person who is present and entitled to vote,
whether as a Warrant Holder or as proxy for one or more absent Warrant
Holders or both, will have one vote.
(b) On a poll each Warrant Holder present in person or represented by proxy
duly appointed by instrument in writing will be entitled to one vote in
respect of each common share which he is entitled to purchase pursuant to
the Warrant or Warrants then held by him.
(c) A proxy need not be a Warrant Holder
Section 7.09 - Regulations
The Company may from time to time make or vary such regulations as it will think
fit:
(a) for the issue of voting certificates, by any bank, trust company or other
depository certifying that specified Warrants have been deposited with it
by a named Holder and will remain on deposit until after the meeting, which
voting certificate will entitle the Holders to be present and vote at any
such meeting and at any adjournment thereof, in the same manner and with
the same effect as though the holders so named in such voting certificates
were the actual bearers of the Warrants specified therein;
<PAGE>
(b) for the deposit of voting certificates or instruments appointing proxies at
such place and time as the Company or the Warrant Holders convening the
meeting, as the case may be, may in the notice convening the meeting
direct;
(c) for the deposit of voting certificates or instruments appointing proxies at
some approved place or places other than the place at which the meeting is
to be held and enabling particulars of such voting certificates or
instruments appointing proxies to be mailed, cabled or telegraphed before
the meeting to the Company at the place where the same is to be held and
for the voting of proxies so deposited as though the instruments themselves
were produced at the meeting; and
(d) for the form of the instrument of proxy.
Any regulations so made will be binding and effective and the votes given in
accordance therewith will be valid and will be counted. Save as such regulations
may provide, the only persons who will be recognized at any meeting as the
Holder of any Warrants, or as entitled to vote or be present at the meeting in
respect thereof, will be persons who produce Warrants at the meeting.
Section 7.10 - Company May Be Represented
The Company by its officers and Directors, and the legal advisors of the Company
may attend any meeting of the Warrant Holders, but will have no vote as such.
Section 7.11 - Powers Exercisable by Extraordinary Resolution
In addition to all other powers conferred upon them by any other provisions
hereof or by law, the Warrant Holders at a meeting will have the following
powers, exercisable from time to time by extraordinary resolution:
(a) power to enforce any of the covenants on the part of the Company contained
in the Warrants or to enforce any of the rights of the Warrant Holders in
any manner specified in such extraordinary resolution or to refrain from
enforcing any such covenant or right;
(b) power to waive any default on the part of the Company in complying with any
provision hereof either conditionally or upon any conditions specified in
such extraordinary resolution; and
(c) power to consent to any amendment of the provisions of these terms and
conditions.
Section 7.12 - Meaning of "Extraordinary Resolution"
(a) The Expression "extraordinary resolution" when used herein means, subject
as hereinafter in this section and in section 7.15 provided, a resolution
proposed at a meeting of Warrant Holders duly convened for that purpose and
held in accordance with the provisions in this Article contained at which
there are present, in person or by proxy, Warrant Holders entitled to
purchase at least 25% of the aggregate number of shares which can be
purchased pursuant to all the then outstanding Warrants, and passed by the
affirmative votes of Warrant Holders entitled to purchase not less than 75%
<PAGE>
of the aggregate number of shares which can be purchased pursuant to all
the then outstanding Warrants represented at the meeting and voted upon
such resolution.
(b) If, at any such meeting called for the purpose of passing an extraordinary
resolution, Warrant Holders entitled to purchase 25% of the aggregate
number of shares which can be purchased pursuant to all the then
outstanding Warrants are not present in person or by proxy within
half-an-hour after the time appointed for the meeting, then the meeting, if
convened by Warrant Holders or on a Warrant Holder's request, will be
dissolved; but in any other case it will stand adjourned and the provisions
of section 7.04 will mutatis mutandis apply.
Section 7.13 - Powers Cumulative
Any one or more of the powers or any combination of the powers to be exercisable
by the Warrant Holders by extraordinary resolution or otherwise may be exercised
form time to time and the exercise of any one or more of such powers or any
combination of powers from time to time will not be deemed to exhaust the right
of the Warrant Holders to exercise such power or powers or combination of powers
then or any power or powers or combination of powers thereafter from time to
time.
Section 7.14 - Minutes
Minutes of all resolutions and proceedings at every such meeting will be made
and duly entered in books to be from time to time provided for that purpose by
the Company, and any such minutes, if signed by the Chairman of the meeting at
which such resolutions were passed or proceedings had, or by the Chairman of the
next succeeding meeting of the Warrant Holders, will be prima facie evidence of
the matters stated and until the contrary is proved, every such meeting, in
respect of the proceedings of which minutes will have been made, will be deemed
to have been duly convened and held and all resolutions passed or proceedings
taken, to have been duly passed and taken.
Section 7.15 - Binding Effect of Resolutions
Every resolution and every extraordinary resolution passed in accordance with
the provisions of this Article at a meeting of Warrant Holders will be binding
upon all Warrant Holders.
Section 7.16 - Status of Warrant Holders
The Holders of Warrants of a particular class will not be entitled as such to
attend or vote at a meeting of the Holders of Warrants of another class, and any
action taken at a meeting of the Holders of Warrants of a particular class will
in no way affect the rights of the Holders of the Warrants of another class.
ARTICLE EIGHT - MODIFICATION OF TERMS, MERGER, SUCCESSORS
Section 8.01 - Modification of Terms and Conditions for Certain Purposes
From time to time the Company may , and it will, when so directed by these
presents, modify these terms and conditions, for any one or more or all of the
following purposes:
<PAGE>
(a) adding such additional covenants and enforcement provisions as, in the
opinion of counsel for the Company, are necessary or advisable;
(b) giving effect to any extraordinary resolution passed as provided in article
7;
(c) making such provisions as may be necessary or desirable with respect to any
matters or questions or for the purpose of obtaining a listing or quotation
of the Warrants on any stock exchange or trading quotation system;
(d) adding to or altering these provisions in respect of the registration and
transfer of Warrants making provision for the exchange of Warrants of
different denominations; and making any modification in the form of the
Warrants which does not affect their substance;
(e) for any other purpose, including the correction or rectification of any
ambiguous, defective provisions, errors or omissions herein; and
(f) to evidence any succession of any corporation and the assumption by any
successor of the covenants of the Company and in the Warrants contained as
provided in this Article.
Section 8.02 - Extension of Expiry Date
The Directors may modify the Expiry Date of Warrants without the prior consent
of shareholders in general meeting.
Section 8.03 - Company May Consolidate, etc. on Certain Terms
Nothing will prevent any consolidation, amalgamation or merger of the Company
with or into any other corporation or corporations, or a conveyance or transfer
of all or substantially all the properties and estates of the Company as an
entirety to any corporation lawfully entitled to acquire and operate same; but
the corporation formed by such consolidation or into which such has been made or
which acquires by conveyance or transfer all or substantially all the
undertaking of the Company as an entirety will be a corporation organized and
existing under the law of Canada or of the United States of America, or any
province, state, district or territory thereof, and will , simultaneously with
such consolidation , amalgamation, merger, conveyance or transfer, assume the
due and punctual performance and observance of all the covenants and conditions
to be performed or observed by the Company.
Section 8.04 - Successor Corporation Substituted
If the Company is consolidated, amalgamated or merged with or into any other
corporation or corporations, or conveys or transfers all or substantially all of
the undertaking of the Company as an entirety to any other corporation, the
successor corporation formed by such consolidation or amalgamation, or into
which the Company has been merged or which will have received a conveyance or
transfer as aforesaid, will succeed to and be substituted for the company in all
respects and such changes in phraseology and form, but not in substance, may be
made in the Warrants as may be appropriate in view of such consolidation,
amalgamation, merger or transfer.
<PAGE>
Vibro-Tech Industries, Inc.
By: /S/ Jock Chong
--------------------
Jock Chong, CEO
30070513/1-11
<PAGE>
VOID AFTER THE CLOSE OF BUSINESS
IN VANCOUVER ON _____________-
RIGHT TO PURCHASE *[NUMBER] SHARES
SHARE PURCHASE WARRANTS TO PURCHASE SHARES OF
VIBRO-TECH INDISTRIES INC..
(Subsisting under the laws of Delaware)
THIS IS TO CERTIFY THAT, for value received, *[PLACEE] is entitled to purchase
*[number] fully paid and non-assessable shares of Vibro-Tech Industries, Inc
(the "Company") as such shares were constituted on July 31, 1999, at any time up
to the close of business at Vancouver, British Columbia, on *[date] at and for a
price of *$ per share, and at any time after *[date] up to the close of business
at Vancouver, British Columbia, on *[date] at and for a price of *$ per share,
of lawful money of Canada, upon and subject to the terms and conditions attached
hereto.
These Warrants may be exercised only at the offices of Interwest Transfer Co.,
Inc., 1918 East 4800 Street, Suite 100, Salt Lake City, Utah 84117
These Warrants are not valid until countersigned by Interwest Transfer Co. Inc.
These Warrants are not transferable.
IN WITNESS WHEREOF the Company has caused this Warrant to be executed and
Pacific Corporate Trust Services Ltd. has caused this Warrant to be
countersigned by an authorized officer.
Dated _______________, 1999
Vibro-Tech Industries, Inc. Countersigned by Interwest Transfer Co., Inc
By: ________________________
Authorized
By: ________________________ By:__________________________________________
Authorized Officer Authorized Officer
<PAGE>
SUBSCRIPTION FORM
TO: Interwest Transfer Co., Inc.
1918 East 4800 Street, Suite 100
Salt Lake City, Utah 84117
The undersigned being the registered Holder of the within Warrant, hereby
subscribes for ______________ of the *(number) shares referred to in the said
Warrant according to the conditions thereof and herewith makes payment of the
purchase price in full for the said number of shares.
The undersigned hereby directs that the shares hereby subscribed for be issued
and delivered as follows:
Name Address
- -------------------------------- --------------------------------
---------------------------------
DATED this ______________ day of __________________, 19________.
- ---------------------------------
Signature
- ---------------------------------
Print Name
TERMS AND CONDITIONS
This Warrant is issued subject to the Terms and Conditions for the time being
governing the holding of share warrants in the Company. A copy of the Terms and
Conditions may be obtained, free of charge, at the offices of Interwest Transfer
Co., Inc. as herein above state.
30070513/1-16
EXHIBIT 10.1
DIRECTOR'S INCENTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT made as of July 1, 1999
BETWEEN:
VIBRO-TECH INDUSTRIES INC., a corporation subsisting under the laws of the state
of Delaware, having a place of business at Suite 201-11240 Bridgeport Road,
Richmond, British Columbia V6X 1T2
("Vibro-Tech")
AND:
BOO JOCK CHONG, Businessman, having a place of business at Suite 201-11240
Bridgeport Road, Richmond, British Columbia V6X 1T2
("Director")
WHEREAS:
A. The Company's common shares are not traded through the facilities of any
exchange or quoted through the facilities of any service; and
B. The Company wishes to grant to the Director in his capacity as a
director of the Company an option to purchase common shares of the Company;
C. The Purchaser is, or will be, an affiliate of the Company as interpreted
under the Securities Act of 1933 by reason of becoming a member of the board of
directors of the Company; and WITNESSES that the parties mutually covenant and
agree as follows:
ARTICLE 1 DEFINITIONS AND INTERPRETATION
1.01 In this Agreement, including the recitals and schedules to this Agreement,
unless the context otherwise requires:
B.C. Act means the Securities Act (B.C.), as amended from time to time.
Director means Boo Jock Chong.
Exchange means the OTC Bulletin Board.
Exercise Price means US$0.15 per Optioned Share.
Expiry Date means 5:00 p.m., Vancouver time, on June 30, 2003.
Optioned Shares means 500,000 Shares.
Registrar means the Registrar of Securities under the Securities Act.
<PAGE>
Securities Act means the Securities Act of 1933, as amended from time to time.
Share or Shares means a common share or common shares of the Company as
constituted on July 1, 1999.
1.02 The captions, section numbers and article numbers appearing in this
Agreement are inserted for convenience of reference only and will in no way
define, limit, constrict or describe the scope or intent of this Agreement nor
in any way affect this Agreement.
1.03 This Agreement and all matters arising under this Agreement will be
governed by, construed and enforced in accordance with the laws of Delaware and
any proceeding commenced or maintained in connection with this Agreement will be
so commenced and maintained in the court of appropriate jurisdiction in the
County of Vancouver, British Columbia to which jurisdiction the parties
irrevocably attorn.
1.04 In this Agreement, wherever the context requires, words importing the
singular number will include the plural and vice versa, words importing the
masculine gender will include the feminine and neuter genders and words
importing persons will include firms and corporations and vice versa.
1.05 Unless otherwise stated, a reference in this Agreement to a numbered or
lettered article, section, paragraph or subparagraph refers to the article,
section, paragraph or subparagraph bearing that number or letter in this
Agreement.
1.06 If any covenant or other provision of this Agreement is invalid, illegal or
incapable of being enforced by reason of any rule of law or public policy such
covenant or other provision will be severed; all other terms and conditions of
this Agreement will, nevertheless, remain in full force and effect and no
covenant or provision will be deemed dependent upon any other covenant or
provision unless so expressed herein.
ARTICLE 2 GRANT OF OPTION
2.01 On condition that the management agreement dated July 1, 1999 between the
Company and the Director remains a valid and subsisting agreement until December
31, 1999, the Company grants the Director an irrevocable, non-transferable and
non-assignable option (the "Option") to purchase Optioned Shares for the
Exercise Price on the terms and other conditions of this Agreement.
2.02 It is a condition that
(a) there is available to the Director under the Securities Act an exemption
from the registration requirements and the prospectus requirements of the
Securities Act; and
(b) there is available to the Director under the B.C. Act an exemption from the
registration requirements of Part I and the prospectus requirements of Part III
of the Securities Act.
<PAGE>
ARTICLE 3 EXERCISE OF OPTION
3.01 The Director may exercise the Option from time to time with respect to all
or part of the Optioned Shares or Optioned Shares remaining unpurchased.
3.02 The Option will be exercised by the Director or his legal personal
representative by delivering to the principal business office of the Company in
Vancouver, British Columbia or such other place as is designated by the Company
from time to time:
(a) a notice stating the number of Optioned Shares being purchased; and
(b) a certified check or bank draft in favor of the Company drawn in United
States dollars for the product of the number of Optioned Shares being purchased
and the Exercise Price.
3.03 On exercise of Option, the Company will forthwith cause its transfer agent
to deliver to any of the Director, his legal representative or such other person
as the Director may otherwise direct in the notice of exercise of the Option a
certificate or certificates in the name of any of the Director, his legal
representative or such other person as the Director may otherwise direct in the
notice of exercise of the Option representing such number of Shares for which
payment has been made.
3.04 Nothing in this Agreement obligates or will obligate the Director to
purchase or pay for any Optioned Shares except those Optioned Shares in respect
of which the Director has exercised the Option in the manner prescribed.
3.05 If the Optioned Shares have not been registered under the Securities Act,
the certificate or certificates representing the Optioned Shares, will be
endorsed with a legend as follows:
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT"), THE DELAWARE STATE SECURITIES ACT OR ANY
OTHER APPLICABLE SECURITES ACT AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED
EXCEPT (1) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND
SUCH STATE SECURITIES LAWS, OR (2) AT THE OPTION OF THE COMPANY, UPON DELIVERY
TO THE COMPANY OF AN OPINION OF COUNSEL FOR THE TRANSFEROR, REASONABLY
SATISFACTORY TO COUNSEL FOR THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED.
3.06 The Director acknowledges that the Option and the Optioned Shares, if any,
are issued pursuant to the exemption from the registration requirements
contained in Regulation D of Rule 504 of the Securities Act and exemption from
the prospectus and registration requirements of the B.C. Act and that:
(a) the Shares and the Optioned Shares have not been registered under the
Securities Act or any state or provincial securities laws, and are being offered
in reliance on certain exemptions contained in the Securities Act and such state
or provincial securities laws;
(b) if the Optioned Shares have not been registered under the Securities Act,
the Optioned Shares will not be sold or transferred except pursuant to:
(i) an effective registration statement under the Securities Act and any
applicable state securities laws;
<PAGE>
(ii) Rule 144 promulgated under the Securities Act; or
(ii) an opinion of counsel satisfactory to the Company to the effect that such
registration is not required; and
(c) the Option is non-transferable regardless of whether or not there exists an
exemption under which the Option could be sold or transferred to a third party;
and
(d) no federal, state or provincial agency has made any finding or determination
as to the fairness of the investment, or any recommendation or endorsement of
the Shares or any other securities of the Company.
ARTICLE 4 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE DIRECTOR
4.01 The Director represents and warrants to, and covenants with, the Company
that:
(a) the Director is resident for securities law purposes in British Columbia;
and
(b) the grant of the Option has not been made by expectation of employment or
continued employment.
ARTICLE 5 TERMINATION OF OPTION
5.01 The Option and this Agreement will terminate on the earlier of the Expiry
Date or:
(a) six months after either the management agreement dated July 1, 1999 between
the Company and the Director is terminated or the Director ceases to be a member
of the board of directors of the Company;
(b) six months after the date of the death of the Director;
(c) the time at which any securities regulatory authority issues against the
Director a cease trade order based on a determination that trading of the
securities of the Company by the Director is not in the best interests of the
public; or
(d) the time at which the Company determines that any of the Director, his legal
representative or such other person as is designated by the Director in the
notice exercising the Option as the person to whom Optioned Shares are to be
issued is in breach of any condition in this Agreement or applicable law
relating to the sale by the Director, his legal representative or such other
person as is designated of any of the Optioned Shares.
ARTICLE 6 PROHIBITION ON DEALING WITH THE OPTION AND RESTRICTIONS ON SALE OF
OPTIONED SHARES
6.01 The Director will not pledge, mortgage, hypothecate, sell, assign or
transfer, or agree to pledge, mortgage, hypothecate, sell, assign or transfer
the Option or any interest in, or right to, the Option.
<PAGE>
6.02 A trade by the Director of an Optioned Share is deemed to be a distribution
under the B.C. Act and the Securities Rules (B.C.) unless:
(a) the Company is at the time of the trade a reporting issuer not in default of
any requirement of the B.C. Act and the Securities Rules (B. C.); and
(b) if the Director is an insider of the Company, other than a director or
senior officer of the Company, the Director has filed all records required to be
filed under sections 87 and 90 of the B.C. Act;
(c) if the Director is a director or senior officer of the Company, the Director
has filed all records required to be filed under sections 87 and 90 of the B.C.
Act and the Company has filed all records required to be filed under Part 12 of
the B.C. Act;
(d) the trade is not a distribution from the holdings of a control person;
(e) no unusual effort must be made to prepare the market or to create a demand
for the Optioned Shares; and
(f) no extraordinary commission or consideration is to be paid in respect of the
trade.
ARTICLE 7 ADJUSTMENT OF NUMBER OF OPTIONED SHARES
7.01 The number of Optioned Shares deliverable upon the exercise of the Option
will be adjusted as follows:
(a) if there is any subdivision or subdivisions of the Shares while the Option
is in effect into a greater number of Shares, the Company will deliver at the
time of purchase of Optioned Shares, in addition to the number of Optioned
Shares in respect of which the right to purchase is being exercised, such
additional number of Optioned Shares as result from such subdivision or
subdivisions without the Director making any additional payment or giving any
other consideration;
(b) if there is any consolidation or consolidations of the Shares while the
Option is in effect into a lesser number of Shares, the Company will deliver and
the Director will accept, at the time of purchase of Optioned Shares, instead of
the number of Optioned Shares in respect of which the right to purchase is being
exercised, the lesser number of Optioned Shares as a result from such
consolidation or consolidations;
(c) if there is any change of the Shares of the Company while the Option is in
effect, the Company will deliver at the time of purchase of Optioned Shares the
number of Optioned Shares of the appropriate class resulting from the such
change as the Director would have been entitled to receive in respect of the
number of Optioned Shares so purchased had the right to purchase been exercised
before such change;
(d) if there is any capital reorganization, reclassification or change of
outstanding equity shares, other than a change in the par value, of the Company
or if there is any consolidation, merger or amalgamation of the Company with or
into any other company or any sale of the property of the Company as or
substantially as an entirety at any time while the Option is in effect, the
<PAGE>
Director may purchase and receive, instead of the Optioned Shares purchasable
and receivable upon the exercise of the Option, the kind and amount of Shares
and other securities and property receivable upon such capital reorganization,
reclassification, change, consolidation, merger, amalgamation or sale which the
holder of a number of Shares equal to the number of Optioned Shares purchasable
and receivable upon the exercise of the Option would have received as a result
of such event.
The subdivision or consolidation of Shares at any time outstanding into a
greater or lesser number of Shares, whether with or without par value, will not
be deemed to be a capital reorganization or a reclassification of the capital of
the Company for the purposes of this paragraph (d).
7.02 The adjustments provided for in section 7.01 are cumulative.
7.03 The Company will not be required to issue fractional Shares in satisfaction
of its obligations and any fractional interest in a Share that would, except for
the provisions of this section, be deliverable upon the exercise of the Option
will be cancelled and not be deliverable by the Company.
7.04 If any questions at any time arise with respect to the exercise price or
number of Optioned Shares deliverable upon exercise of the Option, such
questions will be conclusively determined by the Company's auditors, or, if they
decline to so act, any other firm of chartered accountants in Vancouver, British
Columbia that the Company may designate and who will have access to all
appropriate records and such determination will be binding upon the Company and
the Director.
7.05 The Director will have no rights whatsoever as a shareholder in respect of
any of the Optioned Shares, including any right to receive dividends or other
distributions, other than in respect of Optioned Shares in respect of which the
Director has exercised its Option and which the Director has taken up and paid
for.
7.06 The Company represents and warrants to, and covenants with the Director
that:
(a) the Company will use its best efforts to proceed to have its Shares
registered under the Securities Act and the Securities Exchange Act of 1934 and
to become a reporting issuer in British Columbia; and
(b) the Company will reserve in its treasury sufficient Shares to permit the
issuance and allotment of the Optioned Shares to the Director if the Option or
any part thereof is exercised.
ARTICLE 8 GENERAL PROVISIONS
8.01 Time is of the essence of the performance of every obligation under this
Agreement, and no failure or lack of diligence by any party in proclaiming or
seeking redress for any violation of, or insisting on strict performance of, any
provision of this Agreement will prevent a subsequent violation of that
provision, or of any other provision, from giving rise to any remedy that would
be available if it were an original violation of that provision or another
provision.
<PAGE>
8.02 This Agreement will be binding upon and enure to the benefit of the
respective heirs, executors, administrators and other legal representatives and,
to the extent permitted hereunder, the respective successors and assigns, of the
parties.
8.03 Unless otherwise provided herein, any notice, payment or other
communication to a party under this Agreement may be made, given or served by
delivery or telecopy and addressed as follows:
(a) if to Chong:
Mr. Boo Jock Chon
Suite 600, 1090 West Pender Street
Vancouver, B.C. V6E 2N7
Fax: 604-683-8791
(b) if to Vibro-Tech
Vibro-Tech Industries, Inc.
201-11240 Bridgeport Road
Richmond, B.C. V6X IT2
Attention: Mr. William Chow, Chairman
Fax: 604-278-2712
8.04 Any notice, payment or other communication so delivered or telecopied will
be deemed to have been given or served at the time of delivery of transmission
by telecopy
8.05 A party may by notice change its address for service.
8.06 This Agreement constitutes the entire agreement between the parties and
supercedes all previous agreements or understandings between the parties in any
way relating to its subject matter and the Company has made not representations,
inducements, warranties or promises concerning this Agreement or the matters
referred to herein which are not embodied in this Agreement.
IN WITNESS WHERE OF this Agreement has been executed by the parties as at the
date first above written.
VIBRO-TECH INDUSTRIES, INC.
By: /s/ William Chow
William Chow, Chairman
Signed, Sealed and Delivered by Boo )
Jock Chong in the presence of: )
<PAGE>
/s/ Gary MacDonald )
Gary MacDonald )
600-1090 West Pender Street ) /s/ Boo JockChong
Vancouver, B.C. V6E 2N7 ) BOO JOCK CHONG
3007051101/1-9
EXHIBIT 10.2
DIRECTOR'S INCENTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT made as of July 1, 1999
BETWEEN:
VIBRO-TECH INDUSTRIES INC., a corporation subsisting under the laws of the state
of Delaware, having a place of business at Suite 201-11240 Bridgeport Road,
Richmond, British Columbia V6X 1T2
("Vibro-Tech")
AND:
JOE CHUNG, Businessman, having a place of business at F3 Merry Court, 10 Castle
Road, Mid-Level, Hong Kong
("Director")
WHEREAS:
A. The Company's common shares are not traded through the facilities of any
exchange or quoted through the facilities of any service; and
B. The Company wishes to grant to the Director in his capacity as a director of
the Company an option to purchase common shares of the Company;
C. The Purchaser is, or will be, an affiliate of the Company as interpreted
under the Securities Act of 1933 by reason of becoming a member of the board of
directors of the Company; and WITNESSES that the parties mutually covenant and
agree as follows:
ARTICLE 1 DEFINITIONS AND INTERPRETATION
1.01 In this Agreement, including the recitals and schedules to this Agreement,
unless the context otherwise requires:
B.C. Act means the Securities Act (B.C.), as amended from time to time.
Director means Joe Chung.
Exchange means the OTC Bulletin Board.
Exercise Price means US$0.15 per Optioned Share.
Expiry Date means 5:00 p.m., Vancouver time, on June 30, 2003.
Optioned Shares means 250,000 Shares.
<PAGE>
Registrar means the Registrar of Securities under the Securities Act.
Securities Act means the Securities Act of 1933, as amended from time to time.
Share or Shares means a common share or common shares of the Company as
constituted on July 1, 1999.
1.02 The captions, section numbers and article numbers appearing in this
Agreement are inserted for convenience of reference only and will in no way
define, limit, constrict or describe the scope or intent of this Agreement nor
in any way affect this Agreement.
1.03 This Agreement and all matters arising under this Agreement will be
governed by, construed and enforced in accordance with the laws of Delaware and
any proceeding commenced or maintained in connection with this Agreement will be
so commenced and maintained in the court of appropriate jurisdiction in the
County of Vancouver, British Columbia to which jurisdiction the parties
irrevocably attorn.
1.04 In this Agreement, wherever the context requires, words importing the
singular number will include the plural and vice versa, words importing the
masculine gender will include the feminine and neuter genders and words
importing persons will include firms and corporations and vice versa.
1.05 Unless otherwise stated, a reference in this Agreement to a numbered or
lettered article, section, paragraph or subparagraph refers to the article,
section, paragraph or subparagraph bearing that number or letter in this
Agreement.
1.06 If any covenant or other provision of this Agreement is invalid, illegal or
incapable of being enforced by reason of any rule of law or public policy such
covenant or other provision will be severed; all other terms and conditions of
this Agreement will, nevertheless, remain in full force and effect and no
covenant or provision will be deemed dependent upon any other covenant or
provision unless so expressed herein.
ARTICLE 2 GRANT OF OPTION
2.01 On condition that the management agreement dated July 1, 1999 between the
Company and the Director remains a valid and subsisting agreement until December
31, 1999, the Company grants the Director an irrevocable, non-transferable and
non-assignable option (the "Option") to purchase Optioned Shares for the
Exercise Price on the terms and other conditions of this Agreement.
2.02 It is a condition that
(a) there is available to the Director under the Securities Act an exemption
from the registration requirements and the prospectus requirements of the
Securities Act; and
(b) there is available to the Director under the B.C. Act an exemption from the
registration requirements of Part I and the prospectus requirements of Part III
of the Securities Act.
<PAGE>
ARTICLE 3 EXERCISE OF OPTION
3.01 The Director may exercise the Option from time to time with respect to all
or part of the Optioned Shares or Optioned Shares remaining unpurchased.
3.03 The Option will be exercised by the Director or his legal personal
representative by delivering to the principal business office of the
Company in Vancouver, British Columbia or such other place as is designated
by the Company from time to time:
(a) a notice stating the number of Optioned Shares being purchased; and
(b) a certified cheque or bank draft in favour of the Company drawn in United
States dollars for the product of the number of Optioned Shares being purchased
and the Exercise Price.
3.03 On exercise of Option, the Company will forthwith cause its transfer agent
to deliver to any of the Director, his legal representative or such other person
as the Director may otherwise direct in the notice of exercise of the Option a
certificate or certificates in the name of any of the Director, his legal
representative or such other person as the Director may otherwise direct in the
notice of exercise of the Option representing such number of Shares for which
payment has been made.
3.04 Nothing in this Agreement obligates or will obligate the Director to
purchase or pay for any Optioned Shares except those Optioned Shares in respect
of which the Director has exercised the Option in the manner prescribed.
3.05 If the Optioned Shares have not been registered under the Securities Act,
the certificate or certificates representing the Optioned Shares, will be
endorsed with a legend as follows:
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT"), THE DELAWARE STATE SECURITIES ACT OR ANY
OTHER APPLICABLE SECURITES ACT AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED
EXCEPT (1) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND
SUCH STATE SECURITIES LAWS, OR (2) AT THE OPTION OF THE COMPANY, UPON DELIVERY
TO THE COMPANY OF AN OPINION OF COUNSEL FOR THE TRANSFEROR, REASONABLY
SATISFACTORY TO COUNSEL FOR THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED.
3.06 The Director acknowledges that the Option and the Optioned Shares, if any,
are issued pursuant to the exemption from the registration requirements
contained in Regulation D of Rule 504 of the Securities Act and exemption from
the prospectus and registration requirements of the B.C. Act and that:
(a) the Shares and the Optioned Shares have not been registered under the
Securities Act or any state or provincial securities laws, and are being offered
in reliance on certain exemptions contained in the Securities Act and such state
or provincial securities laws;
(b) if the Optioned Shares have not been registered under the Securities Act,
the Optioned Shares will not be sold or transferred except pursuant to:
<PAGE>
(i) an effective registration statement under the Securities Act and any
applicable state securities laws;
(ii) Rule 144 promulgated under the Securities Act; or
(ii) an opinion of counsel satisfactory to the Company to the effect that such
registration is not required; and
(c) the Option is non-transferable regardless of whether or not there exists an
exemption under which the Option could be sold or transferred to a third party;
and
(d) no federal, state or provincial agency has made any finding or determination
as to the fairness of the investment, or any recommendation or endorsement of
the Shares or any other securities of the Company.
ARTICLE 4 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE DIRECTOR
4.01 The Director represents and warrants to, and covenants with, the Company
that:
(a) the Director is resident for securities law purposes in Hong Kong; and
(b) the grant of the Option has not been made by expectation of employment or
continued employment.
ARTICLE 5 TERMINATION OF OPTION
5.01 The Option and this Agreement will terminate on the earlier of the Expiry
Date or:
(a) six months after either the management agreement dated July 1, 1999 between
the Company and the Director or any renewal of the Agreement is terminated or
the Director ceases to be a member of the board of directors of the Company;
(b) six months after the date of the death of the Director;
(c) the time at which any securities regulatory authority issues against the
Director a cease trade order based on a determination that trading of the
securities of the Company by the Director is not in the best interests of the
public; or
(d) the time at which the Company determines that any of the Director, his legal
representative or such other person as is designated by the Director in the
notice exercising the Option as the person to whom Optioned Shares are to be
issued is in breach of any condition in this Agreement or applicable law
relating to the sale by the Director, his legal representative or such other
person as is designated of any of the Optioned Shares.
<PAGE>
ARTICLE 6 PROHIBITION ON DEALING WITH THE OPTION AND RESTRICTIONS ON SALE OF
OPTIONED SHARES
6.01 The Director will not pledge, mortgage, hypothecate, sell, assign or
transfer, or agree to pledge, mortgage, hypothecate, sell, assign or transfer
the Option or any interest in, or right to, the Option.
6.02 A trade by the Director of an Optioned Share is deemed to be a distribution
under the B.C. Act and the Securities Rules (B.C.) unless:
(a) the Company is at the time of the trade a reporting issuer not in default of
any requirement of the B.C. Act and the Securities Rules (B. C.); and
(b) if the Director is an insider of the Company, other than a director or
senior officer of the Company, the Director has filed all records required to be
filed under sections 87 and 90 of the B.C. Act;
(c) if the Director is a director or senior officer of the Company, the Director
has filed all records required to be filed under sections 87 and 90 of the B.C.
Act and the Company has filed all records required to be filed under Part 12 of
the B.C. Act;
(d) the trade is not a distribution from the holdings of a control person;
(e) no unusual effort must be made to prepare the market or to create a demand
for the Optioned Shares; and
(f) no extraordinary commission or consideration is to be paid in respect of the
trade.
ARTICLE 7 ADJUSTMENT OF NUMBER OF OPTIONED SHARES
7.01 The number of Optioned Shares deliverable upon the exercise of the Option
will be adjusted as follows:
(a) if there is any subdivision or subdivisions of the Shares while the Option
is in effect into a greater number of Shares, the Company will deliver at the
time of purchase of Optioned Shares, in addition to the number of Optioned
Shares in respect of which the right to purchase is being exercised, such
additional number of Optioned Shares as result from such subdivision or
subdivisions without the Director making any additional payment or giving any
other consideration;
(b) if there is any consolidation or consolidations of the Shares while the
Option is in effect into a lesser number of Shares, the Company will deliver and
the Director will accept, at the time of purchase of Optioned Shares, instead of
the number of Optioned Shares in respect of which the right to purchase is being
exercised, the lesser number of Optioned Shares as a result from such
consolidation or consolidations;
(c) if there is any change of the Shares of the Company while the Option is in
effect, the Company will deliver at the time of purchase of Optioned Shares the
number of Optioned Shares of the appropriate class resulting from the such
change as the Director would have been entitled to receive in respect of the
number of Optioned Shares so purchased had the right to purchase been exercised
before such change;
(d) if there is any capital reorganization, reclassification or change of
outstanding equity shares, other than a change in the par value, of the Company
<PAGE>
or if there is any consolidation, merger or amalgamation of the Company with or
into any other company or any sale of the property of the Company as or
substantially as an entirety at any time while the Option is in effect, the
Director may purchase and receive, instead of the Optioned Shares purchasable
and receivable upon the exercise of the Option, the kind and amount of Shares
and other securities and property receivable upon such capital reorganization,
reclassification, change, consolidation, merger, amalgamation or sale which the
holder of a number of Shares equal to the number of Optioned Shares purchasable
and receivable upon the exercise of the Option would have received as a result
of such event.
The subdivision or consolidation of Shares at any time outstanding into a
greater or lesser number of Shares, whether with or without par value, will not
be deemed to be a capital reorganization or a reclassification of the capital of
the Company for the purposes of this paragraph (d).
7.02 The adjustments provided for in section 7.01 are cumulative.
7.03 The Company will not be required to issue fractional Shares in satisfaction
of its obligations and any fractional interest in a Share that would, except for
the provisions of this section, be deliverable upon the exercise of the Option
will be cancelled and not be deliverable by the Company.
7.04 If any questions at any time arise with respect to the exercise price or
number of Optioned Shares deliverable upon exercise of the Option, such
questions will be conclusively determined by the Company's auditors, or, if they
decline to so act, any other firm of chartered accountants in Vancouver, British
Columbia that the Company may designate and who will have access to all
appropriate records and such determination will be binding upon the Company and
the Director.
7.05 The Director will have no rights whatsoever as a shareholder in respect of
any of the Optioned Shares, including any right to receive dividends or other
distributions, other than in respect of Optioned Shares in respect of which the
Director has exercised its Option and which the Director has taken up and paid
for.
7.06 The Company represents and warrants to, and covenants with the Director
that:
(a) the Company will use its best efforts to proceed to have its Shares
registered under the Securities Act and the Securities Exchange Act of 1934 and
to become a reporting issuer in British Columbia; and
(b) the Company will reserve in its treasury sufficient Shares to permit the
issuance and allotment of the Optioned Shares to the Director if the Option or
any part thereof is exercised.
ARTICLE 8 GENERAL PROVISIONS
8.01 Time is of the essence of the performance of every obligation under this
Agreement, and no failure or lack of diligence by any party in proclaiming or
seeking redress for any violation of, or insisting on strict performance of, any
provision of this Agreement will prevent a subsequent violation of that
provision, or of any other provision, from giving rise to any remedy that would
be available if it were an original violation of that provision or another
provision.
<PAGE>
8.02 This Agreement will be binding upon and enure to the benefit of the
respective heirs, executors, administrators and other legal representatives and,
to the extent permitted hereunder, the respective successors and assigns, of the
parties.
8.03 Unless otherwise provided herein, any notice, payment or other
communication to a party under this Agreement may be made, given or served by
delivery or telecopy and addressed as follows:
(a) if to Chung:
Mr. Joe Chung
F3 Merry Court
10 Castle Road
Mid-Level
Hong Kong
Fax: 011-852-2461-8160
(b) if to Vibro-Tech
Vibro-Tech Industries, Inc.
201-11240 Bridgeport Road
Richmond, B.C. V6X IT2
Attention: Mr. William Chow, Chairman
Fax: 604-278-2712
<PAGE>
8.04 Any notice, payment or other communication so delivered or telecopied will
be deemed to have been given or served at the time of delivery of transmission
by telecopy
8.05 A party may by notice change its address for service.
8.06 This Agreement constitutes the entire agreement between the parties and
supercedes all previous agreements or understandings between the parties in any
way relating to its subject matter and the Company has made not representations,
inducements, warranties or promises concerning this Agreement or the matters
referred to herein which are not embodied in this Agreement.
IN WITNESS WHERE OF this Agreement has been executed by the parties as at the
date first above written.
VIBRO-TECH INDUSTRIES, INC.
By: /s/ William Chow
William Chow, Chairman
By: /s/ Gary MacDonald
Gary MacDonald, Secretary
Signed, Sealed and Delivered by Joe )
Chung in the presence of: )
)
/s/ illegible /s/ Joe Chung
JOE CHUNG
3007051102/1-9
EXHIBIT 10.3
DIRECTOR'S INCENTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT made as of November 10, 1999
BETWEEN:
VIBRO-TECH INDUSTRIES INC., a corporation subsisting under the laws of the state
of Delaware, having a place of business at Suite 201-11240 Bridgeport Road,
Richmond, British Columbia V6X 1T2
("Vibro-Tech")
AND:
WILLIAM CHOW, Businessman, having a place of business at 125-8231 Cambie Street,
Richmond, B. C. V6X 1J8
("Director")
WHEREAS:
C. The Company's common shares are not traded through the facilities of any
exchange or quoted through the facilities of any service; and
B. The Company wishes to grant to the Director in his capacity as a director of
the Company an option to purchase common shares of the Company;
C. The Director is, or will be, an affiliate of the Company as interpreted under
the Securities Act of 1933 by reason of becoming a member of the board of
directors of the Company; and WITNESSES that the parties mutually covenant and
agree as follows:
ARTICLE 1 DEFINITIONS AND INTERPRETATION
1.01 In this Agreement, including the recitals and schedules to this Agreement,
unless the context otherwise requires:
B.C. Act means the Securities Act (B.C.), as amended from time to time.
Director means William Chow.
Exchange means the OTC Bulletin Board.
Exercise Price means US$0.15 per Optioned Share.
Expiry Date means 5:00 p.m., Vancouver time, on December 31, 2003.
Optioned Shares means 80,000 Shares.
Registrar means the Registrar of Securities under the Securities Act.
Rule 504 means Rule 504 of Regulation D under the Securities Act, as amended
from time to time.
<PAGE>
Securities Act means the Securities Act of 1933, as amended from time to time.
Share or Shares means a common share or common shares of the Company as
constituted on July 1, 1999.
1.02 The captions, section numbers and article numbers appearing in this
Agreement are inserted for convenience of reference only and will in no way
define, limit, constrict or describe the scope or intent of this Agreement nor
in any way affect this Agreement.
1.03 This Agreement and all matters arising under this Agreement will be
governed by, construed and enforced in accordance with the laws of Delaware and
any proceeding commenced or maintained in connection with this Agreement will be
so commenced and maintained in the court of appropriate jurisdiction in the
County of Vancouver, British Columbia to which jurisdiction the parties
irrevocably attorn.
1.04 In this Agreement, wherever the context requires, words importing the
singular number will include the plural and vice versa, words importing the
masculine gender will include the feminine and neuter genders and words
importing persons will include firms and corporations and vice versa.
1.05 Unless otherwise stated, a reference in this Agreement to a numbered or
lettered article, section, paragraph or subparagraph refers to the article,
section, paragraph or subparagraph bearing that number or letter in this
Agreement.
1.06 If any covenant or other provision of this Agreement is invalid, illegal or
incapable of being enforced by reason of any rule of law or public policy such
covenant or other provision will be severed; all other terms and conditions of
this Agreement will, nevertheless, remain in full force and effect and no
covenant or provision will be deemed dependent upon any other covenant or
provision unless so expressed herein.
ARTICLE 2 GRANT OF OPTION
2.01 The Company grants the Director an irrevocable, non-transferable and
non-assignable option (the "Option") to purchase Optioned Shares for the
Exercise Price on the terms and other conditions of this Agreement.
2.02 It is a condition that
(a) there is available to the Director under the Securities Act an exemption
from the registration requirements and the prospectus requirements of the
Securities Act under Rule 504; and
(b) there is available to the Director under the B.C. Act an exemption from the
registration requirements of Part I and the prospectus requirements of Part III
of the B.C. Act under paragraphs 45(2)(10) and 74(2)(9) respectively.
ARTICLE 3 EXERCISE OF OPTION
3.01 The Director may exercise the Option from time to time with respect to all
or part of the Optioned Shares or Optioned Shares remaining unpurchased.
3.05 The Option will be exercised by the Director or his legal personal
representative by delivering to the principal business office of the
Company in Vancouver, British Columbia or such other place as is designated
by the Company from time to time:
(a) a notice stating the number of Optioned Shares being purchased; and
(b) a certified check or bank draft in favor of the Company drawn in United
States dollars for the product of the number of Optioned Shares being purchased
and the Exercise Price.
<PAGE>
3.03 On exercise of Option, the Company will forthwith cause its transfer agent
to deliver to any of the Director, his legal representative or such other person
as the Director may otherwise direct in the notice of exercise of the Option a
certificate or certificates in the name of any of the Director, his legal
representative or such other person as the Director may otherwise direct in the
notice of exercise of the Option representing such number of Shares for which
payment has been made.
3.04 Nothing in this Agreement obligates or will obligate the Director to
purchase or pay for any Optioned Shares except those Optioned Shares in respect
of which the Director has exercised the Option in the manner prescribed.
3.05 If the Optioned Shares have not been registered under the Securities Act,
the certificate or certificates representing the Optioned Shares, will be
endorsed with a legend as follows:
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT"), THE DELAWARE STATE SECURITIES ACT OR ANY
OTHER APPLICABLE SECURITES ACT AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED
EXCEPT (1) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND
SUCH STATE SECURITIES LAWS, OR (2) AT THE OPTION OF THE COMPANY, UPON DELIVERY
TO THE COMPANY OF AN OPINION OF COUNSEL FOR THE TRANSFEROR, REASONABLY
SATISFACTORY TO COUNSEL FOR THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED.
3.06 The Director acknowledges that the Option and the Optioned Shares, if any,
are issued pursuant to the exemption from the registration requirements
contained in Regulation D of Rule 504 of the Securities Act and exemption from
the prospectus and registration requirements of the B.C. Act contained in
paragraphs 45(2)(10) and 74(2)(9) respectively and that:
(a) the Shares and the Optioned Shares have not been registered under the
Securities Act or any state or provincial securities laws, and are being offered
in reliance on certain exemptions contained in the Securities Act and such state
or provincial securities laws;
(b) if the Optioned Shares have not been registered under the Securities Act,
the Optioned Shares will not be sold or transferred except pursuant to:
(i) an effective registration statement under the Securities Act and any
applicable state securities laws;
(ii) Rule 144 promulgated under the Securities Act; or
(ii) an opinion of counsel satisfactory to the Company to the effect that such
registration is not required; and
<PAGE>
(c) the Option is non-transferable regardless of whether or not there exists an
exemption under which the Option could be sold or transferred to a third party;
(d) no federal, state or provincial agency has made any finding or determination
as to the fairness of the investment, or any recommendation or endorsement of
the Shares or any other securities of the Company; and
(e) the Company may not because of the current policies of British Columbia
Securities administrators become a reporting issuer in British Columbia and
compliance with the law of British Columbia on any sale of the Optioned Shares
is the obligation of the Director.
ARTICLE 4 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE DIRECTOR
4.01 The Director represents and warrants to, and covenants with, the Company
that:
(a) the Director is resident for securities law purposes in British Columbia;
and
(b) the grant of the Option has not been made by expectation of employment or
continued employment.
ARTICLE 5 TERMINATION OF OPTION
5.01 The Option and this Agreement will terminate on the earlier of the Expiry
Date or:
(a) six months after the Director ceases to be a member of the board of
directors of the Company;
(b) six months after the date of the death of the Director;
(c) the time at which any securities regulatory authority issues against the
Director a cease trade order based on a determination that trading of the
securities of the Company by the Director is not in the best interests of the
public; or
<PAGE>
(d) the time at which the Company determines that any of the Director, his legal
representative or such other person as is designated by the Director in the
notice exercising the Option as the person to whom Optioned Shares are to be
issued is in breach of any condition in this Agreement or applicable law
relating to the sale by the Director, his legal representative or such other
person as is designated of any of the Optioned Shares.
ARTICLE 6 PROHIBITION ON DEALING WITH THE OPTION AND RESTRICTIONS ON SALE OF
OPTIONED SHARES
6.01 The Director will not pledge, mortgage, hypothecate, sell, assign or
transfer, or agree to pledge, mortgage, hypothecate, sell, assign or transfer
the Option or any interest in, or right to, the Option.
6.02 A trade by the Director of an Optioned Share is deemed to be a distribution
under the B.C. Act and the Securities Rules (B.C.) unless:
(a) the Company is at the time of the trade a reporting issuer not in default of
any requirement of the B.C. Act and the Securities Rules (B. C.); and
(b) if the Director is an insider of the Company, other than a director or
senior officer of the Company, the Director has filed all records required to be
filed under sections 87 and 90 of the B.C. Act;
(c) if the Director is a director or senior officer of the Company, the Director
has filed all records required to be filed under sections 87 and 90 of the B.C.
Act and the Company has filed all records required to be filed under Part 12 of
the B.C. Act;
(d) the trade is not a distribution from the holdings of a control person;
(e) no unusual effort must be made to prepare the market or to create a demand
for the Optioned Shares; and
(f) no extraordinary commission or consideration is to be paid in respect of the
trade.
ARTICLE 7 ADJUSTMENT OF NUMBER OF OPTIONED SHARES
7.01 The number of Optioned Shares deliverable upon the exercise of the Option
will be adjusted as follows:
(a) if there is any subdivision or subdivisions of the Shares while the Option
is in effect into a greater number of Shares, the Company will deliver at the
time of purchase of Optioned Shares, in addition to the number of Optioned
Shares in respect of which the right to purchase is being exercised, such
additional number of Optioned Shares as result from such subdivision or
subdivisions without the Director making any additional payment or giving any
other consideration;
(b) if there is any consolidation or consolidations of the Shares while the
Option is in effect into a lesser number of Shares, the Company will deliver and
the Director will accept, at the time of purchase of Optioned Shares, instead of
the number of Optioned Shares in respect of which the right to purchase is being
exercised, the lesser number of Optioned Shares as a result from such
consolidation or consolidations;
<PAGE>
(c) if there is any change of the Shares of the Company while the Option is in
effect, the Company will deliver at the time of purchase of Optioned Shares the
number of Optioned Shares of the appropriate class resulting from the such
change as the Director would have been entitled to receive in respect of the
number of Optioned Shares so purchased had the right to purchase been exercised
before such change;
(d) if there is any capital reorganization, reclassification or change of
outstanding equity shares, other than a change in the par value, of the Company
or if there is any consolidation, merger or amalgamation of the Company with or
into any other company or any sale of the property of the Company as or
substantially as an entirety at any time while the Option is in effect, the
Director may purchase and receive, instead of the Optioned Shares purchasable
and receivable upon the exercise of the Option, the kind and amount of Shares
and other securities and property receivable upon such capital reorganization,
reclassification, change, consolidation, merger, amalgamation or sale which the
holder of a number of Shares equal to the number of Optioned Shares purchasable
and receivable upon the exercise of the Option would have received as a result
of such event.
The subdivision or consolidation of Shares at any time outstanding into a
greater or lesser number of Shares, whether with or without par value, will not
be deemed to be a capital reorganization or a reclassification of the capital of
the Company for the purposes of this paragraph (d).
7.02 The adjustments provided for in section 7.01 are cumulative.
7.03 The Company will not be required to issue fractional Shares in satisfaction
of its obligations and any fractional interest in a Share that would, except for
the provisions of this section, be deliverable upon the exercise of the Option
will be cancelled and not be deliverable by the Company.
7.04 If any questions at any time arise with respect to the exercise price or
number of Optioned Shares deliverable upon exercise of the Option, such
questions will be conclusively determined by the Company's auditors, or, if they
decline to so act, any other firm of chartered accountants in Vancouver, British
Columbia that the Company may designate and who will have access to all
appropriate records and such determination will be binding upon the Company and
the Director.
7.05 The Director will have no rights whatsoever as a shareholder in respect of
any of the Optioned Shares, including any right to receive dividends or other
distributions, other than in respect of Optioned Shares in respect of which the
Director has exercised its Option and which the Director has taken up and paid
for.
7.06 The Company represents and warrants to, and covenants with the Director
that:
(a) the Company will use its best efforts to proceed to have its Shares
registered under the Securities Exchange Act of 1934 and if the policies of
applicable securities administrators change to become a reporting issuer in
British Columbia; and
<PAGE>
(b) the Company will reserve in its treasury sufficient Shares to permit the
issuance and allotment of the Optioned Shares to the Director if the Option or
any part thereof is exercised.
ARTICLE 8 GENERAL PROVISIONS
8.01 Time is of the essence of the performance of every obligation under this
Agreement, and no failure or lack of diligence by any party in proclaiming or
seeking redress for any violation of, or insisting on strict performance of, any
provision of this Agreement will prevent a subsequent violation of that
provision, or of any other provision, from giving rise to any remedy that would
be available if it were an original violation of that provision or another
provision.
8.02 This Agreement will be binding upon and enure to the benefit of the
respective heirs, executors, administrators and other legal representatives and,
to the extent permitted hereunder, the respective successors and assigns, of the
parties.
8.03 Unless otherwise provided herein, any notice, payment or other
communication to a party under this Agreement may be made, given or served by
delivery, telecopy or email and addressed as follows:
(a) if to Chow:
Mr. William Chow
c/o Chow: Cambie Auto
125-8231 Cambie Street
Richmond, B. C. V6X 1J8
Tel/Fax: 273-6662
(b) if to Vibro-Tech
Vibro-Tech Industries, Inc.
201-11240 Bridgeport Road
Richmond, B.C. V6X IT2
Attention: Mr. Jock Chong, President
Fax: 604-278-2712
Email: [email protected]
------------------
8.04 Any notice, payment or other communication so delivered, telecopied or
emailed will be deemed to have been given or served at the time of delivery or
transmission by telecopy or email.
8.05 A party may by notice change its address for service.
8.06 This Agreement constitutes the entire agreement between the parties and
supercedes all previous agreements or understandings between the parties in any
way relating to its subject matter and the Company has made not representations,
inducements, warranties or promises concerning this Agreement or the matters
referred to herein which are not embodied in this Agreement.
<PAGE>
IN WITNESS WHERE OF this Agreement has been executed by the parties as at the
date first above written.
VIBRO-TECH INDUSTRIES, INC.
By: /s/ Gary MacDonald
Gary MacDonald, Secretary
Signed, Sealed and Delivered by William )
Chow in the presence of: )
)
/s/ Gary MacDonald )
Gary MacDonald )
600-1090 West Pender Street ) /s/ William Chow
Vancouver, B.C. V6E 2N7 ) WILLIAM CHOW
3007051107/1-8
EXHIBIT 10.4
DIRECTOR'S INCENTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT made as of November 10, 1999
BETWEEN:
VIBRO-TECH INDUSTRIES INC., a corporation subsisting under the laws of the state
of Delaware, having a place of business at Suite 201-11240 Bridgeport Road,
Richmond, British Columbia V6X 1T2
("Vibro-Tech")
AND:
RICK LUI, Businessman, having a place of business at 15th Floor, 1075 W. Georgia
Street, Vancouver, B.C. V6E 3C9
("Director")
WHEREAS:
A. The Company's common shares are not traded through the facilities of any
exchange or quoted through the facilities of any service; and
B. The Company wishes to grant to the Director in his capacity as a director of
the Company an option to purchase common shares of the Company;
C. The Director is, or will be, an affiliate of the Company as interpreted under
the Securities Act of 1933 by reason of becoming a member of the board of
directors of the Company; and WITNESSES that the parties mutually covenant and
agree as follows:
ARTICLE 1 DEFINITIONS AND INTERPRETATION
1.01 In this Agreement, including the recitals and schedules to this Agreement,
unless the context otherwise requires:
B.C. Act means the Securities Act (B.C.), as amended from time to time.
Director means Rick Lui.
Exchange means the OTC Bulletin Board.
Exercise Price means US$0.15 per Optioned Share.
Expiry Date means 5:00 p.m., Vancouver time, on December 31, 2003.
Optioned Shares means 80,000 Shares.
Registrar means the Registrar of Securities under the Securities Act.
Rule 504 means Rule 504 of Regulation D under the Securities Act, as amended
from time to time.
<PAGE>
Securities Act means the Securities Act of 1933, as amended from time to time.
Share or Shares means a common share or common shares of the Company as
constituted on July 1, 1999.
1.02 The captions, section numbers and article numbers appearing in this
Agreement are inserted for convenience of reference only and will in no way
define, limit, constrict or describe the scope or intent of this Agreement nor
in any way affect this Agreement.
1.03 This Agreement and all matters arising under this Agreement will be
governed by, construed and enforced in accordance with the laws of Delaware and
any proceeding commenced or maintained in connection with this Agreement will be
so commenced and maintained in the court of appropriate jurisdiction in the
County of Vancouver, British Columbia to which jurisdiction the parties
irrevocably attorn.
1.04 In this Agreement, wherever the context requires, words importing the
singular number will include the plural and vice versa, words importing the
masculine gender will include the feminine and neuter genders and words
importing persons will include firms and corporations and vice versa.
1.05 Unless otherwise stated, a reference in this Agreement to a numbered or
lettered article, section, paragraph or subparagraph refers to the article,
section, paragraph or subparagraph bearing that number or letter in this
Agreement.
1.06 If any covenant or other provision of this Agreement is invalid, illegal or
incapable of being enforced by reason of any rule of law or public policy such
covenant or other provision will be severed; all other terms and conditions of
this Agreement will, nevertheless, remain in full force and effect and no
covenant or provision will be deemed dependent upon any other covenant or
provision unless so expressed herein.
ARTICLE 2 GRANT OF OPTION
2.01 The Company grants the Director an irrevocable, non-transferable and
non-assignable option (the "Option") to purchase Optioned Shares for the
Exercise Price on the terms and other conditions of this Agreement.
2.02 It is a condition that
(a) there is available to the Director under the Securities Act an exemption
from the registration requirements and the prospectus requirements of the
Securities Act under Rule 504; and
(b) there is available to the Director under the B.C. Act an exemption from the
registration requirements of Part I and the prospectus requirements of Part III
of the B.C. Act under paragraphs 45(2)(10) and 74(2)(9) respectively.
ARTICLE 3 EXERCISE OF OPTION
3.01 The Director may exercise the Option from time to time with respect to all
or part of the Optioned Shares or Optioned Shares remaining unpurchased.
<PAGE>
3.06 The Option will be exercised by the Director or his legal personal
representative by delivering to the principal business office of the
Company in Vancouver, British Columbia or such other place as is designated
by the Company from time to time:
(a) a notice stating the number of Optioned Shares being purchased; and
(b) a certified check or bank draft in favor of the Company drawn in United
States dollars for the product of the number of Optioned Shares being purchased
and the Exercise Price.
3.03 On exercise of Option, the Company will forthwith cause its transfer agent
to deliver to any of the Director, his legal representative or such other person
as the Director may otherwise direct in the notice of exercise of the Option a
certificate or certificates in the name of any of the Director, his legal
representative or such other person as the Director may otherwise direct in the
notice of exercise of the Option representing such number of Shares for which
payment has been made.
3.04 Nothing in this Agreement obligates or will obligate the Director to
purchase or pay for any Optioned Shares except those Optioned Shares in respect
of which the Director has exercised the Option in the manner prescribed.
3.05 If the Optioned Shares have not been registered under the Securities Act,
the certificate or certificates representing the Optioned Shares, will be
endorsed with a legend as follows:
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT"), THE DELAWARE STATE SECURITIES ACT OR ANY
OTHER APPLICABLE SECURITES ACT AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED
EXCEPT (1) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND
SUCH STATE SECURITIES LAWS, OR (2) AT THE OPTION OF THE COMPANY, UPON DELIVERY
TO THE COMPANY OF AN OPINION OF COUNSEL FOR THE TRANSFEROR, REASONABLY
SATISFACTORY TO COUNSEL FOR THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED.
3.06 The Director acknowledges that the Option and the Optioned Shares, if any,
are issued pursuant to the exemption from the registration requirements
contained in Regulation D of Rule 504 of the Securities Act and exemption from
the prospectus and registration requirements of the B.C. Act contained in
paragraphs 45(2)(10) and 74(2)(9) respectively and that:
(a) the Shares and the Optioned Shares have not been registered under the
Securities Act or any state or provincial securities laws, and are being offered
in reliance on certain exemptions contained in the Securities Act and such state
or provincial securities laws;
(b) if the Optioned Shares have not been registered under the Securities Act,
the Optioned Shares will not be sold or transferred except pursuant to:
(i) an effective registration statement under the Securities Act and any
applicable state securities laws;
(ii) Rule 144 promulgated under the Securities Act; or
(ii) an opinion of counsel satisfactory to the Company to the effect that such
registration is not required; and
<PAGE>
(c) the Option is non-transferable regardless of whether or not there exists an
exemption under which the Option could be sold or transferred to a third party;
(d) no federal, state or provincial agency has made any finding or determination
as to the fairness of the investment, or any recommendation or endorsement of
the Shares or any other securities of the Company; and
(e) the Company may not because of the current policies of British Columbia
Securities administrators become a reporting issuer in British Columbia and
compliance with the law of British Columbia on any sale of the Optioned Shares
is the obligation of the Director.
ARTICLE 4 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE DIRECTOR
4.01 The Director represents and warrants to, and covenants with, the Company
that:
(a) the Director is resident for securities law purposes in British Columbia;
and
(b) the grant of the Option has not been made by expectation of employment or
continued employment.
ARTICLE 5 TERMINATION OF OPTION
5.01 The Option and this Agreement will terminate on the earlier of the Expiry
Date or:
(a) six months after the Director ceases to be a member of the board of
directors of the Company;
(b) six months after the date of the death of the Director;
(c) the time at which any securities regulatory authority issues against the
Director a cease trade order based on a determination that trading of the
securities of the Company by the Director is not in the best interests of the
public; or
(d) the time at which the Company determines that any of the Director, his legal
representative or such other person as is designated by the Director in the
notice exercising the Option as the person to whom Optioned Shares are to be
issued is in breach of any condition in this Agreement or applicable law
relating to the sale by the Director, his legal representative or such other
person as is designated of any of the Optioned Shares.
ARTICLE 6 PROHIBITION ON DEALING WITH THE OPTION AND RESTRICTIONS ON SALE OF
OPTIONED SHARES
6.01 The Director will not pledge, mortgage, hypothecate, sell, assign or
transfer, or agree to pledge, mortgage, hypothecate, sell, assign or transfer
the Option or any interest in, or right to, the Option.
<PAGE>
6.02 A trade by the Director of an Optioned Share is deemed to be a distribution
under the B.C. Act and the Securities Rules (B.C.) unless:
(a) the Company is at the time of the trade a reporting issuer not in default of
any requirement of the B.C. Act and the Securities Rules (B. C.); and
(b) if the Director is an insider of the Company, other than a director or
senior officer of the Company, the Director has filed all records required to be
filed under sections 87 and 90 of the B.C. Act;
(c) if the Director is a director or senior officer of the Company, the Director
has filed all records required to be filed under sections 87 and 90 of the B.C.
Act and the Company has filed all records required to be filed under Part 12 of
the B.C. Act;
(d) the trade is not a distribution from the holdings of a control person;
(e) no unusual effort must be made to prepare the market or to create a demand
for the Optioned Shares; and
(f) no extraordinary commission or consideration is to be paid in respect of the
trade.
ARTICLE 7 ADJUSTMENT OF NUMBER OF OPTIONED SHARES
7.01 The number of Optioned Shares deliverable upon the exercise of the Option
will be adjusted as follows:
(a) if there is any subdivision or subdivisions of the Shares while the Option
is in effect into a greater number of Shares, the Company will deliver at the
time of purchase of Optioned Shares, in addition to the number of Optioned
Shares in respect of which the right to purchase is being exercised, such
additional number of Optioned Shares as result from such subdivision or
subdivisions without the Director making any additional payment or giving any
other consideration;
(b) if there is any consolidation or consolidations of the Shares while the
Option is in effect into a lesser number of Shares, the Company will deliver and
the Director will accept, at the time of purchase of Optioned Shares, instead of
the number of Optioned Shares in respect of which the right to purchase is being
exercised, the lesser number of Optioned Shares as a result from such
consolidation or consolidations;
(c) if there is any change of the Shares of the Company while the Option is in
effect, the Company will deliver at the time of purchase of Optioned Shares the
number of Optioned Shares of the appropriate class resulting from the such
change as the Director would have been entitled to receive in respect of the
number of Optioned Shares so purchased had the right to purchase been exercised
before such change;
(d) if there is any capital reorganization, reclassification or change of
outstanding equity shares, other than a change in the par value, of the Company
or if there is any consolidation, merger or amalgamation of the Company with or
into any other company or any sale of the property of the Company as or
substantially as an entirety at any time while the Option is in effect, the
Director may purchase and receive, instead of the Optioned Shares purchasable
and receivable upon the exercise of the Option, the kind and amount of Shares
and other securities and property receivable upon such capital reorganization,
reclassification, change, consolidation, merger, amalgamation or sale which the
holder of a number of Shares equal to the number of Optioned Shares purchasable
and receivable upon the exercise of the Option would have received as a result
of such event.
<PAGE>
The subdivision or consolidation of Shares at any time outstanding into a
greater or lesser number of Shares, whether with or without par value, will not
be deemed to be a capital reorganization or a reclassification of the capital of
the Company for the purposes of this paragraph (d).
7.02 The adjustments provided for in section 7.01 are cumulative.
7.03 The Company will not be required to issue fractional Shares in satisfaction
of its obligations and any fractional interest in a Share that would, except for
the provisions of this section, be deliverable upon the exercise of the Option
will be cancelled and not be deliverable by the Company.
7.04 If any questions at any time arise with respect to the exercise price or
number of Optioned Shares deliverable upon exercise of the Option, such
questions will be conclusively determined by the Company's auditors, or, if they
decline to so act, any other firm of chartered accountants in Vancouver, British
Columbia that the Company may designate and who will have access to all
appropriate records and such determination will be binding upon the Company and
the Director.
7.05 The Director will have no rights whatsoever as a shareholder in respect of
any of the Optioned Shares, including any right to receive dividends or other
distributions, other than in respect of Optioned Shares in respect of which the
Director has exercised its Option and which the Director has taken up and paid
for.
7.06 The Company represents and warrants to, and covenants with the Director
that:
(a) the Company will use its best efforts to proceed to have its Shares
registered under the Securities Exchange Act of 1934 and if the policies of
applicable securities administrators change to become a reporting issuer in
British Columbia; and
(b) the Company will reserve in its treasury sufficient Shares to permit the
issuance and allotment of the Optioned Shares to the Director if the Option or
any part thereof is exercised.
ARTICLE 8 GENERAL PROVISIONS
8.01 Time is of the essence of the performance of every obligation under this
Agreement, and no failure or lack of diligence by any party in proclaiming or
seeking redress for any violation of, or insisting on strict performance of, any
provision of this Agreement will prevent a subsequent violation of that
provision, or of any other provision, from giving rise to any remedy that would
be available if it were an original violation of that provision or another
provision.
8.02 This Agreement will be binding upon and enure to the benefit of the
respective heirs, executors, administrators and other legal representatives and,
to the extent permitted hereunder, the respective successors and assigns, of the
parties.
8.03 Unless otherwise provided herein, any notice, payment or other
communication to a party under this Agreement may be made, given or served by
delivery, telecopy or email and addressed as follows:
(a) if to Lui:
Mr. Rick Lui
15th Floor, 1075 W. Georgia Street
Vancouver, B.C. V6E 3C9
Fax: 604-691-6688
(b) if to Vibro-Tech
Vibro-Tech Industries, Inc.
201-11240 Bridgeport Road
Richmond, B.C. V6X IT2
Attention: Mr. Jock Chong, President
Fax: 604-278-2712
Email: [email protected]
------------------
<PAGE>
8.04 Any notice, payment or other communication so delivered, telecopied or
emailed will be deemed to have been given or served at the time of delivery or
transmission by telecopy or email.
8.05 A party may by notice change its address for service.
8.06 This Agreement constitutes the entire agreement between the parties and
supercedes all previous agreements or understandings between the parties in any
way relating to its subject matter and the Company has made not representations,
inducements, warranties or promises concerning this Agreement or the matters
referred to herein which are not embodied in this Agreement.
<PAGE>
IN WITNESS WHERE OF this Agreement has been executed by the parties as at the
date first above written.
VIBRO-TECH INDUSTRIES, INC.
By: /s/ Gary MacDonald
Gary MacDonald, Secretary
Signed, Sealed and Delivered by Rick )
Lui in the presence of: )
)
/s/ Gary MacDonald )
Gary MacDonald )
600-1090 West Pender Street ) /s/ Rick Lui
Vancouver, B.C. V6E 2N7 ) RICK LUI
3007051106/1-8
EXHIBIT 10.5
DIRECTOR'S INCENTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT made as of November 10, 1999
BETWEEN:
VIBRO-TECH INDUSTRIES INC., a corporation subsisting under the laws of the state
of Delaware, having a place of business at Suite 201-11240 Bridgeport Road,
Richmond, British Columbia V6X 1T2
("Vibro-Tech")
AND:
DR. FU LIN ZHOU, professor and vice-president of the South China Construction
University, of No. 248 Guang Yuan Zhong Road, Guangzhou 510405 People's Republic
of China
("Director")
WHEREAS:
D. The Company's common shares are not traded through the facilities of any
exchange or quoted through the facilities of any service; and
B. The Company wishes to grant to the Director in his capacity as a director of
a subsidiary of the Company an option to purchase common shares of the Company;
and
C. The Purchaser is, or will be, an affiliate of the Company as interpreted
under the Securities Act of 1933 (U.S.) by reason of becoming a member of the
board of directors of the subsidiary of the Company and by reason of being a
"control person" of the Company as defined in applicable securities legislation;
WITNESSES that the parties mutually covenant and agree as follows:
ARTICLE 1 DEFINITIONS AND INTERPRETATION
1.01 In this Agreement, including the recitals and schedules to this Agreement,
unless the context otherwise requires:
Director means Dr. Fu Lin Zhou.
Exchange means the OTC Bulletin Board.
Exercise Price means US$0.15 per Optioned Share.
Expiry Date means 5:00 p.m., Vancouver time, on December 31, 2003.
Optioned Shares means 80,000 Shares.
Registrar means the Registrar of Securities under the Securities Act.
<PAGE>
Rule 504 means Rule 504 of Regulation D under the Securities Act, as amended
from time to time.
Securities Act means the Securities Act of 1933 (U.S.), as amended from time to
time.
Share or Shares means a common share or common shares of the Company as
constituted on July 1, 1999.
1.02 The captions, section numbers and article numbers appearing in this
Agreement are inserted for convenience of reference only and will in no way
define, limit, constrict or describe the scope or intent of this Agreement nor
in any way affect this Agreement.
1.03 This Agreement and all matters arising under this Agreement will be
governed by, construed and enforced in accordance with the laws of Delaware and
any proceeding commenced or maintained in connection with this Agreement will be
so commenced and maintained in the court of appropriate jurisdiction in the
County of Vancouver, British Columbia to which jurisdiction the parties
irrevocably attorn.
1.04 In this Agreement, wherever the context requires, words importing the
singular number will include the plural and vice versa, words importing the
masculine gender will include the feminine and neuter genders and words
importing persons will include firms and corporations and vice versa.
1.05 Unless otherwise stated, a reference in this Agreement to a numbered or
lettered article, section, paragraph or subparagraph refers to the article,
section, paragraph or subparagraph bearing that number or letter in this
Agreement.
1.06 If any covenant or other provision of this Agreement is invalid, illegal or
incapable of being enforced by reason of any rule of law or public policy such
covenant or other provision will be severed; all other terms and conditions of
this Agreement will, nevertheless, remain in full force and effect and no
covenant or provision will be deemed dependent upon any other covenant or
provision unless so expressed herein.
ARTICLE 2 GRANT OF OPTION
2.01 The Company grants the Director an irrevocable, non-transferable and
non-assignable option (the "Option") to purchase Optioned Shares for the
Exercise Price on the terms and other conditions of this Agreement.
2.02 It is a condition that there is available to the Director under the
Securities Act an exemption from the registration requirements and the
prospectus requirements of the Securities Act under Rule 504.
ARTICLE 3 EXERCISE OF OPTION
3.01 The Director may exercise the Option from time to time with respect to all
or part of the Optioned Shares or Optioned Shares remaining unpurchased.
3.07 The Option will be exercised by the Director or his legal personal
representative by delivering to the principal business office of the
Company in Vancouver, British Columbia or such other place as is designated
by the Company from time to time:
<PAGE>
(a) a notice stating the number of Optioned Shares being purchased; and
(b) a certified check or bank draft in favor of the Company drawn in United
States dollars for the product of the number of Optioned Shares being purchased
and the Exercise Price.
3.03 On exercise of Option, the Company will forthwith cause its transfer agent
to deliver to any of the Director, his legal representative or such other person
as the Director may otherwise direct in the notice of exercise of the Option a
certificate or certificates in the name of any of the Director, his legal
representative or such other person as the Director may otherwise direct in the
notice of exercise of the Option representing such number of Optioned Shares for
which payment has been made
3.04 Nothing in this Agreement obligates or will obligate the Director to
purchase or pay for any Optioned Shares except those Shares in respect of which
the Director has exercised the Option in the manner prescribed.
3.05 If the Optioned Shares have not been registered under the Securities Act,
the certificate or certificates representing the Optioned Shares, will be
endorsed with a legend as follows:
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT"), THE DELAWARE STATE SECURITIES ACT OR ANY
OTHER APPLICABLE SECURITES ACT AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED
EXCEPT (1) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND
SUCH STATE SECURITIES LAWS, OR (2) AT THE OPTION OF THE COMPANY, UPON DELIVERY
TO THE COMPANY OF AN OPINION OF COUNSEL FOR THE TRANSFEROR, REASONABLY
SATISFACTORY TO COUNSEL FOR THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED.
3.06 The Director acknowledges that the Option and the Optioned Shares, if any,
are issued pursuant to the exemption from the registration requirements
contained in Regulation D of Rule 504 of the Securities Act and that:
(a) the Shares and the Optioned Shares have not been registered under the
Securities Act or any state or provincial securities laws, and are being offered
in reliance on certain exemptions contained in the Securities Act and such state
or provincial securities laws;
(b) if the Optioned Shares have not been registered under the Securities Act,
the Optioned Shares will not be sold or transferred except pursuant to:
(i) an effective registration statement under the Securities Act and any
applicable state securities laws;
(ii) Rule 144 promulgated under the Securities Act; or
(ii) an opinion of counsel satisfactory to the Company to the effect that such
registration is not required; and
(c) the Option is non-transferable regardless of whether or not there exists an
exemption under which the Option could be sold or transferred to a third party;
and
<PAGE>
(d) no federal, state or provincial agency has made any finding or determination
as to the fairness of the investment, or any recommendation or endorsement of
the Shares or any other securities of the Company.
ARTICLE 4 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE DIRECTOR
4.01 The Director represents and warrants to, and covenants with, the Company
that:
(a) the Director is resident for securities law purposes in China; and
(b) the grant of the Option has not been made by expectation of employment or
continued employment.
ARTICLE 5 TERMINATION OF OPTION
5.01 The Option and this Agreement will terminate on the earlier of the Expiry
Date or:
(a) six months after the Director ceases to be a member of the board of
directors of the Company;
(b) six months after the date of the death of the Director;
(c) the time at which any securities regulatory authority issues against the
Director a cease trade order based on a determination that trading of the
securities of the Company by the Director is not in the best interests of the
public; or
(d) the time at which the Company determines that any of the Director, his legal
representative or such other person as is designated by the Director in the
notice exercising the Option as the person to whom Optioned Shares are to be
issued is in breach of any condition in this Agreement or applicable law
relating to the sale by the Director, his legal representative or such other
person as is designated of any of the Optioned Shares.
ARTICLE 6 PROHIBITION ON DEALING WITH THE OPTION AND RESTRICTIONS ON SALE OF
OPTIONED SHARES
6.01 The Director will not pledge, mortgage, hypothecate, sell, assign or
transfer, or agree to pledge, mortgage, hypothecate, sell, assign or transfer
the Option or any interest in, or right to, the Option.
ARTICLE 7 ADJUSTMENT OF NUMBER OF OPTIONED SHARES
7.01 The number of Optioned Shares deliverable upon the exercise of the Option
will be adjusted as follows:
(a) if there is any subdivision or subdivisions of the Shares while the Option
is in effect into a greater number of Shares, the Company will deliver at the
time of purchase of Optioned Shares, in addition to the number of Optioned
Shares in respect of which the right to purchase is being exercised, such
additional number of Optioned Shares as result from such subdivision or
subdivisions without the Director making any additional payment or giving any
other consideration;
(b) if there is any consolidation or consolidations of the Shares while the
Option is in effect into a lesser number of Shares, the Company will deliver and
the Director will accept, at the time of purchase of Optioned Shares, instead of
<PAGE>
the number of Optioned Shares in respect of which the right to purchase is being
exercised, the lesser number of Optioned Shares as a result from such
consolidation or consolidations;
(c) if there is any change of the Shares of the Company while the Option is in
effect, the Company will deliver at the time of purchase of Optioned Shares the
number of Optioned Shares of the appropriate class resulting from the such
change as the Director would have been entitled to receive in respect of the
number of Optioned Shares so purchased had the right to purchase been exercised
before such change;
(d) if there is any capital reorganization, reclassification or change of
outstanding equity shares, other than a change in the par value, of the Company
or if there is any consolidation, merger or amalgamation of the Company with or
into any other company or any sale of the property of the Company as or
substantially as an entirety at any time while the Option is in effect, the
Director may purchase and receive, instead of the Optioned Shares purchasable
and receivable upon the exercise of the Option, the kind and amount of Shares
and other securities and property receivable upon such capital reorganization,
reclassification, change, consolidation, merger, amalgamation or sale which the
holder of a number of Shares equal to the number of Optioned Shares purchasable
and receivable upon the exercise of the Option would have received as a result
of such event.
The subdivision or consolidation of Shares at any time outstanding into a
greater or lesser number of Shares, whether with or without par value, will not
be deemed to be a capital reorganization or a reclassification of the capital of
the Company for the purposes of this paragraph (d).
7.02 The adjustments provided for in section 7.01 are cumulative.
7.03 The Company will not be required to issue fractional Shares in satisfaction
of its obligations and any fractional interest in a Share that would, except for
the provisions of this section, be deliverable upon the exercise of the Option
will be cancelled and not be deliverable by the Company.
7.04 If any questions at any time arise with respect to the exercise price or
number of Optioned Shares deliverable upon exercise of the Option, such
questions will be conclusively determined by the Company's auditors, or, if they
decline to so act, any other firm of chartered accountants in Vancouver, British
Columbia that the Company may designate and who will have access to all
appropriate records and such determination will be binding upon the Company and
the Director.
7.05 The Director will have no rights whatsoever as a shareholder in respect of
any of the Optioned Shares, including any right to receive dividends or other
distributions, other than in respect of Optioned Shares in respect of which the
Director has exercised its Option and which the Director has taken up and paid
for.
7.06 The Company represents and warrants to, and covenants with the Director
that:
<PAGE>
(a) the Company will use its best efforts to proceed to have its Shares
registered under the Securities Exchange Act of 1934; and
(b) the Company will reserve in its treasury sufficient Shares to permit the
issuance and allotment of the Optioned Shares to the Director if the Option or
any part thereof is exercised.
ARTICLE 8 GENERAL PROVISIONS
8.01 Time is of the essence of the performance of every obligation under this
Agreement, and no failure or lack of diligence by any party in proclaiming or
seeking redress for any violation of, or insisting on strict performance of, any
provision of this Agreement will prevent a subsequent violation of that
provision, or of any other provision, from giving rise to any remedy that would
be available if it were an original violation of that provision or another
provision.
8.02 This Agreement will be binding upon and enure to the benefit of the
respective heirs, executors, administrators and other legal representatives and,
to the extent permitted hereunder, the respective successors and assigns, of the
parties.
8.03 Unless otherwise provided herein, any notice, payment or other
communication to a party under this Agreement may be made, given or served by
delivery, telecopy or email and addressed as follows:
(a) if to the Director:
Dr. Fu Lin Zhou
c/o South China Construction University,
No. 248 Guang Yuan Zhong Road, Guangzhou 510405
People's Republic of China
Tel/Fax: 011-8620-8382-8917
Email: [email protected]
----------------
(b) if to Vibro-Tech
Vibro-Tech Industries, Inc.
201-11240 Bridgeport Road
Richmond, B.C. V6X IT2
Attention: Mr. Jock Chong, President
Fax: 604-278-2712
Email: [email protected]
------------------
8.04 Any notice, payment or other communication so delivered, telecopied or
emailed will be deemed to have been given or served at the time of delivery or
transmission by telecopy or email.
8.05 A party may by notice change its address for service.
8.06 This Agreement constitutes the entire agreement between the parties and
supercedes all previous agreements or understandings between the parties in any
way relating to its subject matter and the Company has made not representations,
inducements, warranties or promises concerning this Agreement or the matters
referred to herein which are not embodied in this Agreement.
<PAGE>
IN WITNESS WHERE OF this Agreement has been executed by the parties as at the
date first above written.
VIBRO-TECH INDUSTRIES, INC.
By: /s/ Gary MacDonald
Gary MacDonald, Secretary
Signed, Sealed and Delivered by Dr. Fu Lin )
Zhou in the presence of: )
)
/s/ illegible )
) /s/ Dr. Fu Lin Zhou
) DR. FU LIN ZHOU
3007051109/1-7
EXHIBIT 10.6
DIRECTOR'S INCENTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT made as of November 10, 1999
BETWEEN:
VIBRO-TECH INDUSTRIES INC., a corporation subsisting under the laws of the state
of Delaware, having a place of business at Suite 201-11240 Bridgeport Road,
Richmond, British Columbia V6X 1T2
("Vibro-Tech")
AND: PHAIK SIM TAN, Businesswoman, having a place of business at 1830, 4825
Hazel St., Burnaby, B.C. V5H 4N4
("Director")
WHEREAS:
E. The Company's common shares are not traded through the facilities of
any exchange or quoted through the facilities of any service; and
B. The Company wishes to grant to the Director in his capacity as a director of
the Company an option to purchase common shares of the Company;
C. The Director is, or will be, an affiliate of the Company as interpreted under
the Securities Act of 1933 by reason of becoming a member of the board of
directors of the Company; and WITNESSES that the parties mutually covenant and
agree as follows:
ARTICLE 1 DEFINITIONS AND INTERPRETATION
1.01 In this Agreement, including the recitals and schedules to this Agreement,
unless the context otherwise requires:
B.C. Act means the Securities Act (B.C.), as amended from time to time.
Director means Phail Sim Tan.
Exchange means the OTC Bulletin Board.
Exercise Price means US$0.15 per Optioned Share.
Expiry Date means 5:00 p.m., Vancouver time, on December 31, 2003.
Optioned Shares means 80,000 Shares.
Registrar means the Registrar of Securities under the Securities Act.
Rule 504 means Rule 504 of Regulation D under the Securities Act, as amended
from time to time.
<PAGE>
Securities Act means the Securities Act of 1933, as amended from time to time.
Share or Shares means a common share or common shares of the Company as
constituted on July 1, 1999.
1.02 The captions, section numbers and article numbers appearing in this
Agreement are inserted for convenience of reference only and will in no way
define, limit, constrict or describe the scope or intent of this Agreement nor
in any way affect this Agreement.
1.03 This Agreement and all matters arising under this Agreement will be
governed by, construed and enforced in accordance with the laws of Delaware and
any proceeding commenced or maintained in connection with this Agreement will be
so commenced and maintained in the court of appropriate jurisdiction in the
County of Vancouver, British Columbia to which jurisdiction the parties
irrevocably attorn.
1.04 In this Agreement, wherever the context requires, words importing the
singular number will include the plural and vice versa, words importing the
masculine gender will include the feminine and neuter genders and words
importing persons will include firms and corporations and vice versa.
1.05 Unless otherwise stated, a reference in this Agreement to a numbered or
lettered article, section, paragraph or subparagraph refers to the article,
section, paragraph or subparagraph bearing that number or letter in this
Agreement.
1.06 If any covenant or other provision of this Agreement is invalid, illegal or
incapable of being enforced by reason of any rule of law or public policy such
covenant or other provision will be severed; all other terms and conditions of
this Agreement will, nevertheless, remain in full force and effect and no
covenant or provision will be deemed dependent upon any other covenant or
provision unless so expressed herein.
ARTICLE 2 GRANT OF OPTION
2.01 The Company grants the Director an irrevocable, non-transferable and
non-assignable option (the "Option") to purchase Optioned Shares for the
Exercise Price on the terms and other conditions of this Agreement.
2.02 It is a condition that
(a) there is available to the Director under the Securities Act an exemption
from the registration requirements and the prospectus requirements of the
Securities Act under Rule 504; and
(b) there is available to the Director under the B.C. Act an exemption from the
registration requirements of Part I and the prospectus requirements of Part III
of the B.C. Act under paragraphs 45(2)(10) and 74(2)(9) respectively.
ARTICLE 3 EXERCISE OF OPTION
3.01 The Director may exercise the Option from time to time with respect to all
or part of the Optioned Shares or Optioned Shares remaining unpurchased.
<PAGE>
3.08 The Option will be exercised by the Director or his legal personal
representative by delivering to the principal business office of the
Company in Vancouver, British Columbia or such other place as is designated
by the Company from time to time:
(a) a notice stating the number of Optioned Shares being purchased; and
(b) a certified check or bank draft in favor of the Company drawn in United
States dollars for the product of the number of Optioned Shares being purchased
and the Exercise Price.
3.03 On exercise of Option, the Company will forthwith cause its transfer agent
to deliver to any of the Director, his legal representative or such other person
as the Director may otherwise direct in the notice of exercise of the Option a
certificate or certificates in the name of any of the Director, his legal
representative or such other person as the Director may otherwise direct in the
notice of exercise of the Option representing such number of Shares for which
payment has been made.
3.04 Nothing in this Agreement obligates or will obligate the Director to
purchase or pay for any Optioned Shares except those Optioned Shares in respect
of which the Director has exercised the Option in the manner prescribed.
3.05 If the Optioned Shares have not been registered under the Securities Act,
the certificate or certificates representing the Optioned Shares, will be
endorsed with a legend as follows:
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT"), THE DELAWARE STATE SECURITIES ACT OR ANY
OTHER APPLICABLE SECURITES ACT AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED
EXCEPT (1) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND
SUCH STATE SECURITIES LAWS, OR (2) AT THE OPTION OF THE COMPANY, UPON DELIVERY
TO THE COMPANY OF AN OPINION OF COUNSEL FOR THE TRANSFEROR, REASONABLY
SATISFACTORY TO COUNSEL FOR THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED.
3.06 The Director acknowledges that the Option and the Optioned Shares, if any,
are issued pursuant to the exemption from the registration requirements
contained in Regulation D of Rule 504 of the Securities Act and exemption from
the prospectus and registration requirements of the B.C. Act contained in
paragraphs 45(2)(10) and 74(2)(9) respectively and that:
(a) the Shares and the Optioned Shares have not been registered under the
Securities Act or any state or provincial securities laws, and are being offered
in reliance on certain exemptions contained in the Securities Act and such state
or provincial securities laws;
(b) if the Optioned Shares have not been registered under the Securities Act,
the Optioned Shares will not be sold or transferred except pursuant to:
(i) an effective registration statement under the Securities Act and any
applicable state securities laws;
(ii) Rule 144 promulgated under the Securities Act; or
(ii) an opinion of counsel satisfactory to the Company to the effect that such
registration is not required; and
<PAGE>
(c) the Option is non-transferable regardless of whether or not there exists an
exemption under which the Option could be sold or transferred to a third party;
(d) no federal, state or provincial agency has made any finding or determination
as to the fairness of the investment, or any recommendation or endorsement of
the Shares or any other securities of the Company; and
(e) the Company may not because of the current policies of British Columbia
Securities administrators become a reporting issuer in British Columbia and
compliance with the law of British Columbia on any sale of the Optioned Shares
is the obligation of the Director.
ARTICLE 4 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE DIRECTOR
4.01 The Director represents and warrants to, and covenants with, the Company
that:
(a) the Director is resident for securities law purposes in British Columbia;
and
(b) the grant of the Option has not been made by expectation of employment or
continued employment.
ARTICLE 5 TERMINATION OF OPTION
5.01 The Option and this Agreement will terminate on the earlier of the Expiry
Date or:
(a) six months after the Director ceases to be a member of the board of
directors of the Company;
(b) six months after the date of the death of the Director;
(c) the time at which any securities regulatory authority issues against the
Director a cease trade order based on a determination that trading of the
securities of the Company by the Director is not in the best interests of the
public; or
(d) the time at which the Company determines that any of the Director, his legal
representative or such other person as is designated by the Director in the
notice exercising the Option as the person to whom Optioned Shares are to be
issued is in breach of any condition in this Agreement or applicable law
relating to the sale by the Director, his legal representative or such other
person as is designated of any of the Optioned Shares.
ARTICLE 6 PROHIBITION ON DEALING WITH THE OPTION AND RESTRICTIONS ON SALE OF
OPTIONED SHARES
6.01 The Director will not pledge, mortgage, hypothecate, sell, assign or
transfer, or agree to pledge, mortgage, hypothecate, sell, assign or transfer
the Option or any interest in, or right to, the Option.
6.02 A trade by the Director of an Optioned Share is deemed to be a distribution
under the B.C. Act and the Securities Rules (B.C.) unless:
<PAGE>
(a) the Company is at the time of the trade a reporting issuer not in default of
any requirement of the B.C. Act and the Securities Rules (B. C.); and
(b) if the Director is an insider of the Company, other than a director or
senior officer of the Company, the Director has filed all records required to be
filed under sections 87 and 90 of the B.C. Act;
(c) if the Director is a director or senior officer of the Company, the Director
has filed all records required to be filed under sections 87 and 90 of the B.C.
Act and the Company has filed all records required to be filed under Part 12 of
the B.C. Act;
(d) the trade is not a distribution from the holdings of a control person;
(e) no unusual effort must be made to prepare the market or to create a demand
for the Optioned Shares; and
(f) no extraordinary commission or consideration is to be paid in respect of the
trade.
ARTICLE 7 ADJUSTMENT OF NUMBER OF OPTIONED SHARES
7.01 The number of Optioned Shares deliverable upon the exercise of the Option
will be adjusted as follows:
(a) if there is any subdivision or subdivisions of the Shares while the Option
is in effect into a greater number of Shares, the Company will deliver at the
time of purchase of Optioned Shares, in addition to the number of Optioned
Shares in respect of which the right to purchase is being exercised, such
additional number of Optioned Shares as result from such subdivision or
subdivisions without the Director making any additional payment or giving any
other consideration;
(b) if there is any consolidation or consolidations of the Shares while the
Option is in effect into a lesser number of Shares, the Company will deliver and
the Director will accept, at the time of purchase of Optioned Shares, instead of
the number of Optioned Shares in respect of which the right to purchase is being
exercised, the lesser number of Optioned Shares as a result from such
consolidation or consolidations;
(c) if there is any change of the Shares of the Company while the Option is in
effect, the Company will deliver at the time of purchase of Optioned Shares the
number of Optioned Shares of the appropriate class resulting from the such
change as the Director would have been entitled to receive in respect of the
number of Optioned Shares so purchased had the right to purchase been exercised
before such change;
(d) if there is any capital reorganization, reclassification or change of
outstanding equity shares, other than a change in the par value, of the Company
or if there is any consolidation, merger or amalgamation of the Company with or
into any other company or any sale of the property of the Company as or
substantially as an entirety at any time while the Option is in effect, the
Director may purchase and receive, instead of the Optioned Shares purchasable
and receivable upon the exercise of the Option, the kind and amount of Shares
and other securities and property receivable upon such capital reorganization,
reclassification, change, consolidation, merger, amalgamation or sale which the
holder of a number of Shares equal to the number of Optioned Shares purchasable
and receivable upon the exercise of the Option would have received as a result
of such event.
<PAGE>
The subdivision or consolidation of Shares at any time outstanding into a
greater or lesser number of Shares, whether with or without par value, will not
be deemed to be a capital reorganization or a reclassification of the capital of
the Company for the purposes of this paragraph (d).
7.02 The adjustments provided for in section 7.01 are cumulative.
7.03 The Company will not be required to issue fractional Shares in satisfaction
of its obligations and any fractional interest in a Share that would, except for
the provisions of this section, be deliverable upon the exercise of the Option
will be cancelled and not be deliverable by the Company.
7.04 If any questions at any time arise with respect to the exercise price or
number of Optioned Shares deliverable upon exercise of the Option, such
questions will be conclusively determined by the Company's auditors, or, if they
decline to so act, any other firm of chartered accountants in Vancouver, British
Columbia that the Company may designate and who will have access to all
appropriate records and such determination will be binding upon the Company and
the Director.
7.05 The Director will have no rights whatsoever as a shareholder in respect of
any of the Optioned Shares, including any right to receive dividends or other
distributions, other than in respect of Optioned Shares in respect of which the
Director has exercised its Option and which the Director has taken up and paid
for.
7.06 The Company represents and warrants to, and covenants with the Director
that:
(a) the Company will use its best efforts to proceed to have its Shares
registered under the Securities Exchange Act of 1934 and if the policies of
applicable securities administrators change to become a reporting issuer in
British Columbia; and
(b) the Company will reserve in its treasury sufficient Shares to permit the
issuance and allotment of the Optioned Shares to the Director if the Option or
any part thereof is exercised.
ARTICLE 8 GENERAL PROVISIONS
8.01 Time is of the essence of the performance of every obligation under this
Agreement, and no failure or lack of diligence by any party in proclaiming or
seeking redress for any violation of, or insisting on strict performance of, any
provision of this Agreement will prevent a subsequent violation of that
provision, or of any other provision, from giving rise to any remedy that would
be available if it were an original violation of that provision or another
provision.
<PAGE>
8.02 This Agreement will be binding upon and enure to the benefit of the
respective heirs, executors, administrators and other legal representatives and,
to the extent permitted hereunder, the respective successors and assigns, of the
parties.
8.03 Unless otherwise provided herein, any notice, payment or other
communication to a party under this Agreement may be made, given or served by
delivery, telecopy or email and addressed as follows:
(a) if to the Director:
Ms. Phaik Sim Tan
1830, 4825 Hazel St.
Burnaby, B.C. V5H 4N4
Tel/Fax: 430-0252
(b) if to Vibro-Tech
Vibro-Tech Industries, Inc.
201-11240 Bridgeport Road
Richmond, B.C. V6X IT2
Attention: Mr. Jock Chong, President
Fax: 604-278-2712
Email: [email protected]
------------------
8.04 Any notice, payment or other communication so delivered, telecopied or
emailed will be deemed to have been given or served at the time of delivery or
transmission by telecopy or email.
8.05 A party may by notice change its address for service.
8.06 This Agreement constitutes the entire agreement between the parties and
supercedes all previous agreements or understandings between the parties in any
way relating to its subject matter and the Company has made not representations,
inducements, warranties or promises concerning this Agreement or the matters
referred to herein which are not embodied in this Agreement.
IN WITNESS WHERE OF this Agreement has been executed by the parties as at the
date first above written.
VIBRO-TECH INDUSTRIES, INC.
By: /s/ Gary MacDonald
Gary MacDonald, Secretary
Signed, Sealed and Delivered by Phaik )
Sim Tan in the presence of: )
)
/s/ Gary MacDonald )
Gary MacDonald )
600-1090 West Pender Street ) /s/ Phaik Sim Tan
Vancouver, B.C. V6E 2N7 ) PHAIK SIM TAN
3007051109/1-8
EXHIBIT 10.7
OFFICER'S INCENTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT made as of November 10, 1999
BETWEEN:
VIBRO-TECH INDUSTRIES INC., a corporation subsisting under the laws of the state
of Delaware, having a place of business at Suite 201-11240 Bridgeport Road,
Richmond, British Columbia V6X 1T2
("Vibro-Tech")
AND:
GARY MAC DONALD, Businessman, having a place of business at Suite 600, 1090 West
Pender Street, Vancouver, B.C. Canada V6E 2N7
("Officer")
WHEREAS:
F. The Company's common shares are not traded through the facilities of any
exchange or quoted through the facilities of any service; and
B. The Company wishes to grant to the Officer in his capacity as an officer of
the Company an option to purchase common shares of the Company; and
C. The Officer is, or will be, an affiliate of the Company as interpreted under
the Securities Act of 1933 by reason of being a an officer of the Company;
WITNESSES that the parties mutually covenant and agree as follows:
ARTICLE 1 DEFINITIONS AND INTERPRETATION
1.01 In this Agreement, including the recitals and schedules to this Agreement,
unless the context otherwise requires:
B.C. Act means the Securities Act (B.C.), as amended from time to time.
Officer means Gary MacDonald.
Exchange means the OTC Bulletin Board.
Exercise Price means US$0.15 per Optioned Share.
Expiry Date means 5:00 p.m., Vancouver time, on December 31, 2003.
Optioned Shares means 50,000 Shares.
Registrar means the Registrar of Securities under the Securities Act.
Rule 504 means Rule 504 of Regulation D under the Securities Act, as amended
from time to time.
<PAGE>
Securities Act means the Securities Act of 1933, as amended from time to time.
Share or Shares means a common share or common shares of the Company as
constituted on July 1, 1999.
1.02 The captions, section numbers and article numbers appearing in this
Agreement are inserted for convenience of reference only and will in no way
define, limit, constrict or describe the scope or intent of this Agreement nor
in any way affect this Agreement.
1.03 This Agreement and all matters arising under this Agreement will be
governed by, construed and enforced in accordance with the laws of Delaware and
any proceeding commenced or maintained in connection with this Agreement will be
so commenced and maintained in the court of appropriate jurisdiction in the
County of Vancouver, British Columbia to which jurisdiction the parties
irrevocably attorn.
1.04 In this Agreement, wherever the context requires, words importing the
singular number will include the plural and vice versa, words importing the
masculine gender will include the feminine and neuter genders and words
importing persons will include firms and corporations and vice versa.
1.05 Unless otherwise stated, a reference in this Agreement to a numbered or
lettered article, section, paragraph or subparagraph refers to the article,
section, paragraph or subparagraph bearing that number or letter in this
Agreement.
1.06 If any covenant or other provision of this Agreement is invalid, illegal or
incapable of being enforced by reason of any rule of law or public policy such
covenant or other provision will be severed; all other terms and conditions of
this Agreement will, nevertheless, remain in full force and effect and no
covenant or provision will be deemed dependent upon any other covenant or
provision unless so expressed herein.
ARTICLE 2 GRANT OF OPTION
2.01 The Company grants the Officer an irrevocable, non-transferable and
non-assignable option (the "Option") to purchase Optioned Shares for the
Exercise Price on the terms and other conditions of this Agreement.
2.02 It is a condition that
(a) there is available to the Officer under the Securities Act an exemption from
the registration requirements and the prospectus requirements of the Securities
Act under Rule 504; and
(b) there is available to the Officer under the B.C. Act an exemption from the
registration requirements of Part I and the prospectus requirements of Part III
of the B.C. Act under paragraphs 45(2)(10) and 74(2)(9) respectively.
<PAGE>
ARTICLE 3 EXERCISE OF OPTION
3.01 The Officer may exercise the Option from time to time with respect to all
or part of the Optioned Shares or Optioned Shares remaining unpurchased.
3.09 The Option will be exercised by the Officer or his legal personal
representative by delivering to the principal business office of the
Company in Vancouver, British Columbia or such other place as is designated
by the Company from time to time:
(a) a notice stating the number of Optioned Shares being purchased; and
(b) a certified check or bank draft in favor of the Company drawn in United
States dollars for the product of the number of Optioned Shares being purchased
and the Exercise Price; or
(c) a statement that the Optioned Shares are paid for by offsetting all or part
of the amount accrued in the share purchase account established under the
retainer agreement of July 23, 1999 as amended October 20, 1999.
3.03 On exercise of Option, the Company will forthwith cause its transfer agent
to deliver to any of the Officer, his legal representative or such other person
as the Officer may otherwise direct in the notice of exercise of the Option a
certificate or certificates in the name of any of the Officer, his legal
representative or such other person as the Officer may otherwise direct in the
notice of exercise of the Option representing such number of Shares for which
payment has been made.
3.04 Nothing in this Agreement obligates or will obligate the Officer to
purchase or pay for any Optioned Shares except those Optioned Shares in respect
of which the Officer has exercised the Option in the manner prescribed.
3.05 If the Optioned Shares have not been registered under the Securities Act,
the certificate or certificates representing the Optioned Shares, will be
endorsed with a legend as follows:
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT"), THE DELAWARE STATE SECURITIES ACT OR ANY
OTHER APPLICABLE SECURITES ACT AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED
EXCEPT (1) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND
SUCH STATE SECURITIES LAWS, OR (2) AT THE OPTION OF THE COMPANY, UPON DELIVERY
TO THE COMPANY OF AN OPINION OF COUNSEL FOR THE TRANSFEROR, REASONABLY
SATISFACTORY TO COUNSEL FOR THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED.
3.06 The Officer acknowledges that the Option and the Optioned Shares, if any,
are issued pursuant to the exemption from the registration requirements
contained in Regulation D of Rule 504 of the Securities Act and exemption from
the prospectus and registration requirements of the B.C. Act contained in
paragraphs 45(2)(10) and 74(2)(9) respectively and that:
(a) the Shares and the Optioned Shares have not been registered under the
Securities Act or any state or provincial securities laws, and are being offered
in reliance on certain exemptions contained in the Securities Act and such state
or provincial securities laws;
(b) if the Optioned Shares have not been registered under the Securities Act,
the Optioned Shares will not be sold or transferred except pursuant to:
(i) an effective registration statement under the Securities Act and any
applicable state securities laws;
(ii) Rule 144 promulgated under the Securities Act; or
(ii) an opinion of counsel satisfactory to the Company to the effect that such
registration is not required; and
<PAGE>
(c) the Option is non-transferable regardless of whether or not there exists an
exemption under which the Option could be sold or transferred to a third party;
(d) no federal, state or provincial agency has made any finding or determination
as to the fairness of the investment, or any recommendation or endorsement of
the Shares or any other securities of the Company; and
(e) the Company may not because of the current policies of British Columbia
Securities administrators become a reporting issuer in British Columbia and
compliance with the law of British Columbia on any sale of the Optioned Shares
is the obligation of the Officer.
ARTICLE 4 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE OFFICER
4.01 The Officer represents and warrants to, and covenants with, the Company
that:
(a) the Officer is resident for securities law purposes in British Columbia; and
(b) the grant of the Option has not been made by expectation of employment or
continued employment.
ARTICLE 5 TERMINATION OF OPTION
5.01 The Option and this Agreement will terminate on the earlier of the Expiry
Date or:
(a) six months after the Officer ceases to be an officer of the Company;
(b) six months after the date of the death of the Officer;
(c) the time at which any securities regulatory authority issues against the
Officer a cease trade order based on a determination that trading of the
securities of the Company by the Officer is not in the best interests of the
public; or
(d) the time at which the Company determines that any of the Officer, his legal
representative or such other person as is designated by the Officer in the
notice exercising the Option as the person to whom Optioned Shares are to be
issued is in breach of any condition in this Agreement or applicable law
relating to the sale by the Officer, his legal representative or such other
person as is designated of any of the Optioned Shares.
ARTICLE 6 PROHIBITION ON DEALING WITH THE OPTION AND RESTRICTIONS ON SALE OF
OPTIONED SHARES
6.01 The Officer will not pledge, mortgage, hypothecate, sell, assign or
transfer, or agree to pledge, mortgage, hypothecate, sell, assign or transfer
the Option or any interest in, or right to, the Option.
6.02 A trade by the Officer of an Optioned Share is deemed to be a distribution
under the B.C. Act and the Securities Rules (B.C.) unless:
(a) the Company is at the time of the trade a reporting issuer not in default of
any requirement of the B.C. Act and the Securities Rules (B. C.); and
<PAGE>
(b) if the Officer is an insider of the Company, other than a Officer or senior
officer of the Company, the Officer has filed all records required to be filed
under sections 87 and 90 of the B.C. Act;
(c) if the Officer is a Officer or senior officer of the Company, the Officer
has filed all records required to be filed under sections 87 and 90 of the B.C.
Act and the Company has filed all records required to be filed under Part 12 of
the B.C. Act;
(d) the trade is not a distribution from the holdings of a control person;
(e) no unusual effort must be made to prepare the market or to create a demand
for the Optioned Shares; and
(f) no extraordinary commission or consideration is to be paid in respect of the
trade.
ARTICLE 7 ADJUSTMENT OF NUMBER OF OPTIONED SHARES
7.01 The number of Optioned Shares deliverable upon the exercise of the Option
will be adjusted as follows:
(a) if there is any subdivision or subdivisions of the Shares while the Option
is in effect into a greater number of Shares, the Company will deliver at the
time of purchase of Optioned Shares, in addition to the number of Optioned
Shares in respect of which the right to purchase is being exercised, such
additional number of Optioned Shares as result from such subdivision or
subdivisions without the Officer making any additional payment or giving any
other consideration;
(b) if there is any consolidation or consolidations of the Shares while the
Option is in effect into a lesser number of Shares, the Company will deliver and
the Officer will accept, at the time of purchase of Optioned Shares, instead of
the number of Optioned Shares in respect of which the right to purchase is being
exercised, the lesser number of Optioned Shares as a result from such
consolidation or consolidations;
(c) if there is any change of the Shares of the Company while the Option is in
effect, the Company will deliver at the time of purchase of Optioned Shares the
number of Optioned Shares of the appropriate class resulting from the such
change as the Officer would have been entitled to receive in respect of the
number of Optioned Shares so purchased had the right to purchase been exercised
before such change;
(d) if there is any capital reorganization, reclassification or change of
outstanding equity shares, other than a change in the par value, of the Company
or if there is any consolidation, merger or amalgamation of the Company with or
into any other company or any sale of the property of the Company as or
substantially as an entirety at any time while the Option is in effect, the
Officer may purchase and receive, instead of the Optioned Shares purchasable and
receivable upon the exercise of the Option, the kind and amount of Shares and
other securities and property receivable upon such capital reorganization,
reclassification, change, consolidation, merger, amalgamation or sale which the
holder of a number of Shares equal to the number of Optioned Shares purchasable
and receivable upon the exercise of the Option would have received as a result
of such event.
<PAGE>
The subdivision or consolidation of Shares at any time outstanding into a
greater or lesser number of Shares, whether with or without par value, will not
be deemed to be a capital reorganization or a reclassification of the capital of
the Company for the purposes of this paragraph (d).
7.02 The adjustments provided for in section 7.01 are cumulative.
7.03 The Company will not be required to issue fractional Shares in satisfaction
of its obligations and any fractional interest in a Share that would, except for
the provisions of this section, be deliverable upon the exercise of the Option
will be cancelled and not be deliverable by the Company.
7.04 If any questions at any time arise with respect to the exercise price or
number of Optioned Shares deliverable upon exercise of the Option, such
questions will be conclusively determined by the Company's auditors, or, if they
decline to so act, any other firm of chartered accountants in Vancouver, British
Columbia that the Company may designate and who will have access to all
appropriate records and such determination will be binding upon the Company and
the Officer.
7.05 The Officer will have no rights whatsoever as a shareholder in respect of
any of the Optioned Shares, including any right to receive dividends or other
distributions, other than in respect of Optioned Shares in respect of which the
Officer has exercised its Option and which the Officer has taken up and paid
for.
7.06 The Company represents and warrants to, and covenants with the Officer
that:
(a) the Company will use its best efforts to proceed to have its Shares
registered under the Securities Exchange Act of 1934 and if the policies of
applicable securities administrators change to become a reporting issuer in
British Columbia; and
(b) the Company will reserve in its treasury sufficient Shares to permit the
issuance and allotment of the Optioned Shares to the Officer if the Option or
any part thereof is exercised.
ARTICLE 8 GENERAL PROVISIONS
8.01 Time is of the essence of the performance of every obligation under this
Agreement, and no failure or lack of diligence by any party in proclaiming or
seeking redress for any violation of, or insisting on strict performance of, any
provision of this Agreement will prevent a subsequent violation of that
provision, or of any other provision, from giving rise to any remedy that would
be available if it were an original violation of that provision or another
provision.
8.02 This Agreement will be binding upon and enure to the benefit of the
respective heirs, executors, administrators and other legal representatives and,
to the extent permitted hereunder, the respective successors and assigns, of the
parties.
<PAGE>
8.03 Unless otherwise provided herein, any notice, payment or other
communication to a party under this Agreement may be made, given or served by
delivery, telecopy or email and addressed as follows:
(a) if to the Officer:
Mr. Gary Mac Donald
Suite 600, 1090 West Pender Street
Vancouver, B.C. V5E 2N7
Fax: 604-683-8791
Email: [email protected]
------------------
(b) if to Vibro-Tech
Vibro-Tech Industries, Inc.
201-11240 Bridgeport Road
Richmond, B.C. V6X IT2
Attention: Mr. Jock Chong, President
Fax: 604-278-2712
Email: [email protected]
------------------
8.04 Any notice, payment or other communication so delivered, telecopied or
emailed will be deemed to have been given or served at the time of delivery or
transmission by telecopy or email.
8.05 A party may by notice change its address for service.
8.06 This Agreement constitutes the entire agreement between the parties and
supercedes all previous agreements or understandings between the parties in any
way relating to its subject matter and the Company has made not representations,
inducements, warranties or promises concerning this Agreement or the matters
referred to herein which are not embodied in this Agreement.
IN WITNESS WHERE OF this Agreement has been executed by the parties as at the
date first above written.
VIBRO-TECH INDUSTRIES, INC.
By: /s/ Gary MacDonald
Gary MacDonald, Secretary
Signed, Sealed and Delivered by Gary )
MacDonald in the presence of: )
)
/s/ Susan Dubeau )
Susan Dubeau )
600-1090 West Pender Street ) /s/ Gary MacDonald
Vancouver, B.C. V6E 2N7 ) GARY MACDONALD
30070511010/1-8
EXHIBIT 10.8
CONSULTANT'S INCENTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT made as of October 25, 1999
BETWEEN:
VIBRO-TECH INDUSTRIES INC., a corporation subsisting under the laws of the state
of Delaware, having a place of business at Suite 201-11240 Bridgeport Road,
Richmond, British Columbia V6X 1T2
("Vibro-Tech")
AND:
DR. MILES PRICE, Businessman, having a place of business at 3643 Marine Drive,
West Vancouver, B. C. V7V IN3
(the "Consultant")
WHEREAS:
A. The Company's common shares are not traded through the facilities of any
exchange or quoted through the facilities of any service; and
B. The Company wishes to grant to the Consultant in his capacity as a Consultant
of the Company as engaged by an agreement dated October 25, 1999 an option to
purchase common shares of the Company; and
C. The Purchaser is not, or not will be, an affiliate of the Company as
interpreted under the Securities Act of 1933 (U.S.)
WITNESSES that the parties mutually covenant and agree as follows:
ARTICLE 1 DEFINITIONS AND INTERPRETATION
1.01 In this Agreement, including the recitals and schedules to this Agreement,
unless the context otherwise requires:
B.C. Act means the Securities Act (B.C.), as amended from time to time.
Consultant means Dr. Miles Price.
Exchange means the OTC Bulletin Board.
Exercise Price means US$0.15 per Optioned Share.
Expiry Date means 5:00 p.m., Vancouver time, on June 30, 2003.
Optioned Shares means 30,000 Shares.
Registrar means the Registrar of Securities under the Securities Act.
<PAGE>
Securities Act means the Securities Act of 1933 (U.S.), as amended from time to
time.
Securities Exchange Act means the Securities Exchange Act of 1934 (U.S.), as
amended from time to time.
Share or Shares means a common share or common shares of the Company as
constituted on July 1, 1999.
1.02 The captions, section numbers and article numbers appearing in this
Agreement are inserted for convenience of reference only and will in no way
define, limit, constrict or describe the scope or intent of this Agreement nor
in any way affect this Agreement.
1.03 This Agreement and all matters arising under this Agreement will be
governed by, construed and enforced in accordance with the laws of Delaware and
any proceeding commenced or maintained in connection with this Agreement will be
so commenced and maintained in the court of appropriate jurisdiction in the City
of Wilmington, Delaware to which jurisdiction the parties irrevocably attorn.
1.04 In this Agreement, wherever the context requires, words importing the
singular number will include the plural and vice versa, words importing the
masculine gender will include the feminine and neuter genders and words
importing persons will include firms and corporations and vice versa.
1.05 Unless otherwise stated, a reference in this Agreement to a numbered or
lettered article, section, paragraph or subparagraph refers to the article,
section, paragraph or subparagraph bearing that number or letter in this
Agreement.
1.06 If any covenant or other provision of this Agreement is invalid, illegal or
incapable of being enforced by reason of any rule of law or public policy such
covenant or other provision will be severed; all other terms and conditions of
this Agreement will, nevertheless, remain in full force and effect and no
covenant or provision will be deemed dependent upon any other covenant or
provision unless so expressed herein.
ARTICLE 2 GRANT OF OPTION
2.01 On condition that the consulting agreement dated October 25, 1999 between
the Company and the Consultant remains a valid and subsisting agreement until
December 31, 1999, the Company grants the Consultant an irrevocable,
non-transferable and non-assignable option (the "Option") to purchase Optioned
Shares for the Exercise Price on the terms and other conditions of this
Agreement.
2.02 It is a condition that
(a) there is available to the Consultant under the Securities Act an exemption
from the registration exemption found under Rule 504 of Regulation D of the
requirements and the prospectus requirements of the Securities Act; and
<PAGE>
(b) there is available to the Consultant under the B.C. Act an exemption from
the registration requirements of Part I and the prospectus requirements of Part
III of the B.C. Act as contained in paragraphs 45(2)(10) and 74(2)(9)
respectively or rule 128(g) of the Rules to the Securities Act (British
Columbia).
ARTICLE 3 EXERCISE OF OPTION
3.01 The Consultant may exercise the Option from time to time with respect to
all or part of the Optioned Shares or Optioned Shares remaining unpurchased.
3.10 The Option will be exercised by the Consultant or his legal personal
representative by delivering to the principal business office of the
Company in Richmond, British Columbia or such other place as is designated
by the Company from time to time:
(a) a notice stating the number of Optioned Shares being purchased; and
(b) a certified check or bank draft in favor of the Company drawn in United
States dollars for the product of the number of Optioned Shares being purchased
and the Exercise Price.
3.03 On exercise of Option, the Company will forthwith cause its transfer agent
to deliver to any of the Consultant, his legal representative or such other
person as the Consultant may otherwise direct in the notice of exercise of the
Option a certificate or certificates in the name of any of the Consultant, his
legal representative or such other person as the Consultant may otherwise direct
in the notice of exercise of the Option representing such number of Shares for
which payment has been made.
3.04 Nothing in this Agreement obligates or will obligate the Consultant to
purchase or pay for any Optioned Shares except those Optioned Shares in respect
of which the Consultant has exercised the Option in the manner prescribed.
3.05 If the Optioned Shares have not been registered under the Securities Act,
the certificate or certificates representing the Optioned Shares, will be
endorsed with a legend as follows:
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT"), THE DELAWARE STATE SECURITIES ACT OR ANY
OTHER APPLICABLE SECURITES ACT AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED
EXCEPT (1) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND
SUCH STATE SECURITIES LAWS, OR (2) AT THE OPTION OF THE COMPANY, UPON DELIVERY
TO THE COMPANY OF AN OPINION OF COUNSEL FOR THE TRANSFEROR, REASONABLY
SATISFACTORY TO COUNSEL FOR THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED
PURSUANT TO THE PROVISIONS OF RULE 144 AND THE RESTRICTION CONTAINED THEREUNDER.
<PAGE>
3.06 The Consultant acknowledges that the Option and the Optioned Shares, if
any, are issued pursuant to the exemption from the registration requirements
contained in Rule 504 of Regulation D of the Securities Act and exemption from
the prospectus and registration requirements of the B.C. Act and that:
(a) the Shares and the Optioned Shares have not been registered under the
Securities Act or any state or provincial securities laws, and are being offered
in reliance on Rule 504 of Regulation D contained in the Securities Act and
certain other exemptions in state or provincial securities laws;
(b) if the Optioned Shares have not been registered under the Securities Act,
the Optioned Shares will not be sold or transferred except pursuant to:
(i) an effective registration statement under the Securities Act and any
applicable state securities laws;
(ii) Rule 144 promulgated under the Securities Act; or
(iii) an opinion of counsel satisfactory to the Company to the effect that such
registration is not required; and
(c) the Option is non-transferable regardless of whether or not there exists an
exemption under which the Option could be sold or transferred to a third party;
(d) no federal, state or provincial agency has made any finding or determination
as to the fairness of the investment, or any recommendation or endorsement of
the Shares or any other securities of the Company; and
(e) the Company is not a reporting issuer, and does not expect to become, a
reporting issuer in British Columbia and the onus is on the Purchaser to comply
with the laws of British Columbia in selling the Optioned Shares.
ARTICLE 4 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE CONSULTANT
4.01 The Consultant represents and warrants to, and covenants with, the Company
that:
(a) the Consultant is resident for securities law purposes in British Columbia;
and
(b) the grant of the Option has not been made by expectation of employment or
engagement, or of continued employment or engagement.
ARTICLE 5 TERMINATION OF OPTION
5.01 The Option and this Agreement will terminate on the earlier of the Expiry
Date or:
(a) six months after the consulting agreement dated October 25, 1999 between the
Company and the Consultant relating to the engagement of the Consultant for the
Company in Mexico or any renewal of the Agreement is terminated;
(b) six months after the date of the death of the Consultant;
<PAGE>
(c) the time at which any securities regulatory authority issues against the
Consultant a cease trade order based on a determination that trading of the
securities of the Company by the Consultant is not in the best interests of the
public; or
(d) the time at which the Company determines that any of the Consultant, his
legal representative or such other person as is designated by the Consultant in
the notice exercising the Option as the person to whom Optioned Shares are to be
issued is in breach of any condition in this Agreement or applicable law
relating to the sale by the Consultant, his legal representative or such other
person as is designated of any of the Optioned Shares.
ARTICLE 6 PROHIBITION ON DEALING WITH THE OPTION AND RESTRICTIONS ON SALE OF
OPTIONED SHARES
6.01 The Consultant will not pledge, mortgage, hypothecate, sell, assign or
transfer, or agree to pledge, mortgage, hypothecate, sell, assign or transfer
the Option or any interest in, or right to, the Option.
6.02 A trade by the Consultant of an Optioned Share is deemed to be a
distribution under the B.C. Act and the Securities Rules (B.C.) unless:
(a) the Company is at the time of the trade a reporting issuer not in default of
any requirement of the B.C. Act and the Securities Rules (B. C.); and
(b) if the Consultant is an insider of the Company, other than a director or
senior officer of the Company, the Consultant has filed all records required to
be filed under sections 87 and 90 of the B.C. Act;
(c) if the Consultant is a Consultant or senior officer of the Company, the
Consultant has filed all records required to be filed under sections 87 and 90
of the B.C. Act and the Company has filed all records required to be filed under
Part 12 of the B.C. Act;
(d) the trade is not a distribution from the holdings of a control person;
(e) no unusual effort must be made to prepare the market or to create a demand
for the Optioned Shares; and
(f) no extraordinary commission or consideration is to be paid in respect of the
trade.
6.03 The Consultant acknowledges that it the current policy of the British
Columbia Securities Commission, contrary to that of other Canadian securities
administrators, that a receipt for a prospectus of the Company will not, under
any circumstances, be issued, if the shares of the Company are quoted through
the services of the OTCBB, United States and the risk of complying with, or
being subject to the provisions of the B.C. Act, lie entirely with the
Consultant.
ARTICLE 7 ADJUSTMENT OF NUMBER OF OPTIONED SHARES
7.01 The number of Optioned Shares deliverable upon the exercise of the Option
will be adjusted as follows:
<PAGE>
(a) if there is any subdivision or subdivisions of the Shares while the Option
is in effect into a greater number of Shares, the Company will deliver at the
time of purchase of Optioned Shares, in addition to the number of Optioned
Shares in respect of which the right to purchase is being exercised, such
additional number of Optioned Shares as result from such subdivision or
subdivisions without the Consultant making any additional payment or giving any
other consideration;
(b) if there is any consolidation or consolidations of the
Shares while the Option is in effect into a lesser number of Shares, the Company
will deliver and the Consultant will accept, at the time of purchase of Optioned
Shares, instead of the number of Optioned Shares in respect of which the right
to purchase is being exercised, the lesser number of Optioned Shares as a result
from such consolidation or consolidations;
(c) if there is any change of the Shares of the Company while the Option is in
effect, the Company will deliver at the time of purchase of Optioned Shares the
number of Optioned Shares of the appropriate class resulting from the such
change as the Consultant would have been entitled to receive in respect of the
number of Optioned Shares so purchased had the right to purchase been exercised
before such change;
(d) if there is any capital reorganization, reclassification or change of
outstanding equity shares, other than a change in the par value, of the Company
or if there is any consolidation, merger or amalgamation of the Company with or
into any other company or any sale of the property of the Company as or
substantially as an entirety at any time while the Option is in effect, the
Consultant may purchase and receive, instead of the Optioned Shares purchasable
and receivable upon the exercise of the Option, the kind and amount of Shares
and other securities and property receivable upon such capital reorganization,
reclassification, change, consolidation, merger, amalgamation or sale which the
holder of a number of Shares equal to the number of Optioned Shares purchasable
and receivable upon the exercise of the Option would have received as a result
of such event.
The subdivision or consolidation of Shares at any time outstanding into a
greater or lesser number of Shares, whether with or without par value, will not
be deemed to be a capital reorganization or a reclassification of the capital of
the Company for the purposes of this paragraph (d).
7.02 The adjustments provided for in section 7.01 are cumulative.
7.03 The Company will not be required to issue fractional Shares in satisfaction
of its obligations and any fractional interest in a Share that would, except for
the provisions of this section, be deliverable upon the exercise of the Option
will be cancelled and not be deliverable by the Company.
7.04 If any questions at any time arise with respect to the Exercise Price or
number of Optioned Shares deliverable upon exercise of the Option, such
questions will be conclusively determined by the Company's auditors, or, if they
decline to so act, any other firm of chartered accountants in Vancouver, British
Columbia that the Company may designate and who will have access to all
appropriate records and such determination will be binding upon the Company and
the Consultant.
<PAGE>
7.05 The Consultant will have no rights whatsoever as a shareholder in respect
of any of the Optioned Shares, including any right to receive dividends or other
distributions, other than in respect of Optioned Shares in respect of which the
Consultant has exercised its Option and which the Consultant has taken up and
paid for.
7.06 The Company represents and warrants to, and covenants with the Consultant
that:
(a) the Company will use its best efforts to proceed to have its Shares
registered under the Securities Act and the Securities Exchange Act of 1934
within one year from the date of this Agreement subject to the policies of
applicable securities administrators as they might be from time to time; and
(b) the Company will reserve in its treasury sufficient Shares to permit the
issuance and allotment of the Optioned Shares to the Consultant if the Option or
any part thereof is exercised.
ARTICLE 8 GENERAL PROVISIONS
8.01 Time is of the essence of the performance of every obligation under this
Agreement, and no failure or lack of diligence by any party in proclaiming or
seeking redress for any violation of, or insisting on strict performance of, any
provision of this Agreement will prevent a subsequent violation of that
provision, or of any other provision, from giving rise to any remedy that would
be available if it were an original violation of that provision or another
provision.
8.02 This Agreement will be binding upon and enure to the benefit of the
respective heirs, executors, administrators and other legal representatives and,
to the extent permitted hereunder, the respective successors and assigns, of the
parties.
8.03 Unless otherwise provided herein, any notice, payment or other
communication to a party under this Agreement may be made, given or served by
delivery, telecopy or email and addressed as follows:
(a) if to Price:
Dr. Miles Price
Dr. Miles Price
3643 Marine Drive
West Vancouver, B. C. V7V IN3
Fax: 604-926-4411
Email: [email protected]
------------------
(b) if to Vibro-Tech
Vibro-Tech Industries, Inc.
201-11240 Bridgeport Road
Richmond, B.C. V6X IT2
Attention: Mr. William Chow, Chairman
Fax: 604-278-2712
Email: [email protected]
----------------------
<PAGE>
8.04 Any notice, payment or other communication so delivered, telecopied or
emailed will be deemed to have been given or served at the time of delivery of
transmission by telecopy or email.
8.05 A party may by notice change its address for service.
8.06 This Agreement constitutes the entire agreement between the parties and
supercedes all previous agreements or understandings between the parties in any
way relating to its subject matter and the Company has made not representations,
inducements, warranties or promises concerning this Agreement or the matters
referred to herein which are not embodied in this Agreement.
IN WITNESS WHERE OF this Agreement has been executed by the parties as at the
date first above written.
VIBRO-TECH INDUSTRIES, INC.
By: /s/ Gary MacDonald
Gary MacDonald, Secretary
/s/ Dr. Miles Price
DR. MILES PRICE
3007051105/1-8
EXHIBIT 10.9
CONSULTING AND STOCK OPTION AGREEMENT
THIS AGREEMENT made as of December 1, 1999
BETWEEN:
VIBRO-TECH INDUSTRIES INC., a corporation subsisting under the laws of the state
of Delaware, having a place of business at Suite 201-11240 Bridgeport Road,
Richmond, British Columbia V6X 1T2
("Vibro-Tech")
AND:
KIM SUKSUN, of 4-2-14-106 Okada, Atsugi City, Japan 342-0021
("Consultant")
WHEREAS:
G. The Company's common shares are quoted through the facilities of the
Over-The-Counter Bulletin Board, United States; and
B. The Company wishes to engage the Conssultant to advise on certain matters in
Japan and to grant to the Consultant in her capacity as a Consultant an option
to purchase shares of the Company; and
C. The Purchaser is, or will be, not be an affiliate of the Company as
interpreted under the Securities Act of 1933 (U.S.);
WITNESSES that the parties mutually covenant and agree as follows:
ARTICLE 1 DEFINITIONS AND INTERPRETATION
1.01 In this Agreement, including the recitals and schedules to this Agreement,
unless the context otherwise requires:
Consultant means Ms. Kim Suksun
Exchange means the OTC Bulletin Board.
Exercise Price means US$0.15 per Optioned Share.
Expiry Date means 5:00 p.m., Vancouver time, on December 31, 2003.
Optioned Shares means 25,000 Shares.
Registrar means the Registrar of Securities under the Securities Act.
Rule 504 means Rule 504 of Regulation D under the Securities Act, as amended
from time to time.
Securities Act means the Securities Act of 1933 (U.S.), as amended from time to
time.
<PAGE>
Share or Shares means a common share or common shares of the Company as
constituted on July 1, 1999.
1.02 This Agreement and all matters arising under this Agreement will be
governed by, construed and enforced in accordance with the laws of Delaware and
any proceeding commenced or maintained in connection with this Agreement will be
so commenced and maintained in the forum of appropriate jurisdiction in the
County of Vancouver, British Columbia to which jurisdiction the parties
irrevocably attorn.
ARTICLE 2 ENGAGEMENT OF CONSULTANT
2.01 Vibro-Tech appoints and engages the Consultant as a non-exclusive
consultant to act for and on behalf of Vibro-Tech and its affiliates in Japan
and the Consultant accepts such appointment, on the terms and other conditions
of this Agreement.2.02 As consultant for Vibro-Tech, the Consultant will be
responsible for advising on the qualification with any governmental body for the
use of the seismic rubber isolation bearings as manufactured by Vibro-Tech, for
conducting market analysis in Japan and Korea and for seeking sales
opportunities for Vibro-Tech in Japan under the direction from time to time of
the president of Vibro-Tech.
ARTICLE 3 GRANT OF OPTION
3.01 The Company grants the Consultant an irrevocable, non-transferable and
non-assignable option (the "Option") to purchase Optioned Shares for the
Exercise Price on the terms and other conditions of this Agreement.
3.02 It is a condition that there is available to the Consultant under the
Securities Act an exemption from the registration requirements and the
prospectus requirements of the Securities Act under Regulation D of Rule 504.
ARTICLE 4 EXERCISE OF OPTION
4.01 The Consultant may exercise the Option from time to time with respect to
all or part of the Optioned Shares or Optioned Shares remaining unpurchased.
4.02 The Option will be exercised by the Consultant or her legal personal
representative by delivering to the principal business office of the Company in
Vancouver, British Columbia or such other place as is designated by the Company
from time to time:
(a) a notice stating the number of Optioned Shares being purchased; and
(b) a certified check or bank draft in favor of the Company drawn in United
States dollars for the product of the number of Optioned Shares being purchased
and the Exercise Price.
4.03 On exercise of Option, the Company will forthwith cause its transfer agent
to deliver to any of the Consultant, his legal representative or such other
person as the Consultant may otherwise direct in the notice of exercise of the
Option a certificate or certificates in the name of any of the Consultant, his
legal representative or such other person as the Consultant may otherwise direct
in the notice of exercise of the Option representing such number of Optioned
Shares for which payment has been made.
<PAGE>
4.04 Nothing in this Agreement obligates or will obligate the Consultant to
purchase or pay for any Optioned Shares except those Shares in respect of which
the Consultant has exercised the Option in the manner prescribed.
4.05 If the Optioned Shares have not been registered under the Securities Act,
the certificate or certificates representing the Optioned Shares, will be
endorsed with a legend as follows:
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT"), THE DELAWARE STATE SECURITIES ACT OR ANY
OTHER APPLICABLE SECURITES ACT AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED
EXCEPT (1) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND
SUCH STATE SECURITIES LAWS, OR (2) AT THE OPTION OF THE COMPANY, UPON DELIVERY
TO THE COMPANY OF AN OPINION OF COUNSEL FOR THE TRANSFEROR, REASONABLY
SATISFACTORY TO COUNSEL FOR THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED.
4.06 The Consultant acknowledges that the Option and the Optioned Shares, if
any, are issued pursuant to the exemption from the registration requirements
contained in Regulation D of Rule 504 of the Securities Act and that:
(a) the Shares and the Optioned Shares have not been registered under the
Securities Act or any state or provincial securities laws, and are being offered
in reliance on certain exemptions contained in the Securities Act and such state
or provincial securities laws;
(b) if the Optioned Shares have not been registered under the Securities Act,
the Optioned Shares will not be sold or transferred except pursuant to:
(i) an effective registration statement under the Securities Act and any
applicable state securities laws;
(ii) Rule 144 promulgated under the Securities Act; or
(ii) an opinion of counsel satisfactory to the Company to the effect that such
registration is not required; and
(c) the Option is non-transferable regardless of whether or not there exists an
exemption under which the Option could be sold or transferred to a third party;
and
(d) no federal, state or provincial agency has made any finding or determination
as to the fairness of the investment, or any recommendation or endorsement of
the Shares or any other securities of the Company.
ARTICLE 5 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE CONSULTANT
5.01 The Consultant represents and warrants to, and covenants with, the Company
that:
(a) the Consultant is resident for securities law purposes in Japan; and
(b) the grant of the Option has not been made by expectation of employment or
continued employment.
<PAGE>
ARTICLE 6 TERMINATION OF OPTION
6.01 The Option and this Agreement will terminate on the earlier of the Expiry
Date or:
(a) six months after the Consultant ceases to be a consultant of the Company;
(b) six months after the date of the death of the Consultant;
(c) the time at which any securities regulatory authority issues against the
Consultant a cease trade order based on a determination that trading of the
securities of the Company by the Consultant is not in the best interests of the
public; or
(d) the time at which the Company determines that any of the Consultant, her
legal representative or such other person as is designated by the Consultant in
the notice exercising the Option as the person to whom Optioned Shares are to be
issued is in breach of any condition in this Agreement or applicable law
relating to the sale by the Consultant, his legal representative or such other
person as is designated of any of the Optioned Shares.
ARTICLE 7 PROHIBITION ON DEALING WITH THE OPTION AND RESTRICTIONS ON SALE OF
OPTIONED SHARES
7.01 The Consultant will not pledge, mortgage, hypothecate, sell, assign or
transfer, or agree to pledge, mortgage, hypothecate, sell, assign or transfer
the Option or any interest in, or right to, the Option.
ARTICLE 8 ADJUSTMENT OF NUMBER OF OPTIONED SHARES
8.01 The number of Optioned Shares deliverable upon the exercise of the Option
will be adjusted as follows:
(a) if there is any subdivision or subdivisions of the Shares while the Option
is in effect into a greater number of Shares, the Company will deliver at the
time of purchase of Optioned Shares, in addition to the number of Optioned
Shares in respect of which the right to purchase is being exercised, such
additional number of Optioned Shares as result from such subdivision or
subdivisions without the Consultant making any additional payment or giving any
other consideration;
(b) if there is any consolidation or consolidations of the Shares while the
Option is in effect into a lesser number of Shares, the Company will deliver and
the Consultant will accept, at the time of purchase of Optioned Shares, instead
of the number of Optioned Shares in respect of which the right to purchase is
being exercised, the lesser number of Optioned Shares as a result from such
consolidation or consolidations;
(c) if there is any change of the Shares of the Company while the Option is in
effect, the Company will deliver at the time of purchase of Optioned Shares the
number of Optioned Shares of the appropriate class resulting from the such
change as the Consultant would have been entitled to receive in respect of the
number of Optioned Shares so purchased had the right to purchase been exercised
before such change;
(d) if there is any capital reorganization, reclassification or change of
outstanding equity shares, other than a change in the par value, of the Company
or if there is any consolidation, merger or amalgamation of the Company with or
<PAGE>
into any other company or any sale of the property of the Company as or
substantially as an entirety at any time while the Option is in effect, the
Consultant may purchase and receive, instead of the Optioned Shares purchasable
and receivable upon the exercise of the Option, the kind and amount of Shares
and other securities and property receivable upon such capital reorganization,
reclassification, change, consolidation, merger, amalgamation or sale which the
holder of a number of Shares equal to the number of Optioned Shares purchasable
and receivable upon the exercise of the Option would have received as a result
of such event.
The subdivision or consolidation of Shares at any time outstanding into a
greater or lesser number of Shares, whether with or without par value, will not
be deemed to be a capital reorganization or a reclassification of the capital of
the Company for the purposes of this paragraph (d).
8.02 The adjustments provided for in section 8.01 are cumulative.
8.03 The Company will not be required to issue fractional Shares in satisfaction
of its obligations and any fractional interest in a Share that would, except for
the provisions of this section, be deliverable upon the exercise of the Option
will be cancelled and not be deliverable by the Company.
8.04 If any questions at any time arise with respect to the exercise price or
number of Optioned Shares deliverable upon exercise of the Option, such
questions will be conclusively determined by the Company's auditors, or, if they
decline to so act, any other firm of chartered accountants in Vancouver, British
Columbia that the Company may designate and who will have access to all
appropriate records and such determination will be binding upon the Company and
the Consultant.
8.05 The Consultant will have no rights whatsoever as a shareholder in respect
of any of the Optioned Shares, including any right to receive dividends or other
distributions, other than in respect of Optioned Shares in respect of which the
Consultant has exercised its Option and which the Consultant has taken up and
paid for.
8.06 The Company represents and warrants to, and covenants with the Consultant
that:
(a) the Company will use its best efforts to proceed to have its Shares
registered under the Securities Exchange Act of 1934; and
(b) the Company will reserve in its treasury sufficient Shares to permit the
issuance and allotment of the Optioned Shares to the Consultant if the Option or
any part thereof is exercised.
ARTICLE 9 GENERAL PROVISIONS
9.01 Time is of the essence of the performance of every obligation under this
Agreement, and no failure or lack of diligence by any party in proclaiming or
seeking redress for any violation of, or insisting on strict performance of, any
provision of this Agreement will prevent a subsequent violation of that
provision, or of any other provision, from giving rise to any remedy that would
be available if it were an original violation of that provision or another
provision.
<PAGE>
9.02 This Agreement will be binding upon and enure to the benefit of the
respective heirs, executors, administrators and other legal representatives and,
to the extent permitted hereunder, the respective successors and assigns, of the
parties.
10.03 Unless otherwise provided herein, any notice, payment or other
communication to a party under this Agreement may be made, given or served by
delivery, telecopy or email and addressed as follows:
(a) if to the Consultant:
Ms. Kim Suksun
4-1-14-106 Okada
Atsugi City, Japan 243-0021
Fax: 011-0462-28-8682
(b) if to Vibro-Tech
Vibro-Tech Industries, Inc.
201-11240 Bridgeport Road
Richmond, B.C. V6X IT2
Attention: Mr. Jock Chong, President
Fax: 604-278-2712
Email: [email protected]
------------------
with a copy to:
Vibro-Tech Industries, Inc.
Suite 600, 1090 West Pender Street
Vancouver, B. C. V6E 2N7
Attention: Mr. Gary MacDonald, Secretary
Fax: 604-683-8791
Email: [email protected]
------------------
8.04 Any notice, payment or other communication so delivered, telecopied or
emailed will be deemed to have been given or served at the time of delivery or
transmission by telecopy or email.
8.05 A party may by notice change its address for service.
8.06 This Agreement constitutes the entire agreement between the parties and
supercedes all previous agreements or understandings between the parties in any
way relating to its subject matter and the Company has made not representations,
inducements, warranties or promises concerning this Agreement or the matters
referred to herein which are not embodied in this Agreement.
IN WITNESS WHERE OF this Agreement has been executed by the parties as at the
date first above written.
VIBRO-TECH INDUSTRIES, INC.
By: /s/ Jock Chong
Boo Jock Chong, President
Signed, Sealed and Delivered by Ms. Kim )
Suksun in the presence of: )
)
/s/ illegible )
) /s/ Kim Suksun
) KIM SUKSUN
3007051111/1-7
EXHIBIT 10.10
SHARE PURCHASE AGREEMENT
THIS AGREEMENT made as of August 16, 1999
AMONG:
VIBRO-TECH INDUSTRIES INC., a body corporate subsisting under the laws of
Delaware, with a place of business at Suite 201-11240 Bridgeport Road, Richmond,
B.C. V6X IT2
(the "Company")
OF THE FIRST PART
AND:
Tan Phaik Sim., Businesswoman, with a place of business at Suite 1830, 4825
Hazel Street, Vancouver, B. C. V5H 4N4
(the "Purchaser")
OF THE SECOND PART
WHEREAS:
A. The Company is not a distributing company under the Securities Exchange Act
of 1934 or a reporting issuer under any provincial securities legislation of
Canada;
B. The Purchaser is, or will be, an affiliate of the Company as interpreted
under the Securities Act of 1933 by reason of becoming a member of the board of
directors of the Company; and
C. The Company wishes to sell to the Purchaser 175,000 units, each unit
comprised of one share for US$0.40 per share and a share purchase warrant to
acquire before August 16, 2001 a share for $0.40 per share; and
<PAGE>
WITNESSES that the parties mutually covenant and agree as follows:
ARTICLE 1 DEFINITIONS AND INTERPRETATION
1.01 In this Agreement, including the recitals and schedules to this Agreement,
unless the context otherwise requires:
Closing means the procedure for the issue of Shares on the Closing Date.
Closing Date means the earlier of August, 1999 or such other date designated by
the Company when the date on which the Company will issue, and the Purchaser
will pay for, the Units.
Company means Vibro-Tech Industries Inc..
Exchange means the OTC Bulletin Board.
Exchange Act means the Securities Exchange Act of 1934 (U.S.), as amended from
time to time.
Exercise Price means US$0.40 per Warrant Share.
Expiry Date means the earlier of 5:00 p.m., Delaware time, on July 31, 2000 or
thirty business days after the Purchaser ceases to be a member of the board of
directors of the Company.
Purchaser means Ms. Tan Phaik Sim.
Rule 504, Regulation D means Rule 504, Regulation D under the Securities Act.
Shares means 175,000 shares of the Company to by Purchased by the Purchaser for
US$0.40 per share.
Share Purchase Warrant means the right granted by this Agreement to acquire the
Warrant Shares.
Securities Act means the Securities Act of 1933 (U.S.), as amended from time to
time.
Share or Shares means a common share or common shares of the Company as
constituted on August 12, 1999.
Unit means the unit purchased by the purchaser comprised of one share for
US$0.40 per share and a non-transferable share purchase warrant to acquire
before August 16, 2001 a share for $0.40 per share;
<PAGE>
Warrant Shares means 175,000 shares to be acquired, if at all, before August 16,
2001 for US$0.40 per share.
1.02 The captions, section numbers and article numbers appearing in this
Agreement are inserted for convenience of reference only and will in no way
define, limit, constrict or describe the scope or intent of this Agreement nor
in any way affect this Agreement.
1.03 This Agreement and all matters arising under this Agreement will be
governed by, construed and enforced in accordance with the laws of Delaware and
any proceeding commenced or maintained in connection with this Agreement will be
so commenced and maintained in the court of appropriate jurisdiction in the City
of Wilmington, Delaware to which jurisdiction the parties irrevocably attorn.
1.04 In this Agreement, wherever the context requires, words importing the
singular number will include the plural and vice versa, words importing the
masculine gender will include the feminine and neuter genders and words
importing persons will include firms and corporations and vice versa.
1.05 Unless otherwise stated, a reference in this Agreement to a numbered or
lettered article, section, paragraph or subparagraph refers to the article,
section, paragraph or subparagraph bearing that number or letter in this
Agreement.
1.06 If any covenant or other provision of this Agreement is invalid, illegal or
incapable of being enforced by reason of any rule of law or public policy such
covenant or other provision will be severed; all other terms and conditions of
this Agreement will, nevertheless, remain in full force and effect and no
covenant or provision will be deemed dependent upon any other covenant or
provision unless so expressed herein.
ARTICLE 2 SUBSCRIPTION FOR UNITS
Subscription
2.01 The Purchaser subscribes for, and agrees to pay on the Closing Date for,
175,000 Units at the subscription price of US$0.40 per Unit on the terms and
other conditions of this Agreement.
<PAGE>
Acceptance
2.02 The Company accepts the Purchaser's subscription and agrees to allot and
issue to the Purchaser on the Closing Date 175 000 Units comprising 175,000
Shares and 175,000 Share Purchase Warrants on the terms and other conditions of
this Agreement and to cause a certificate or certificates representing the
Shares and the Share Purchase Warrants to be issued to the Purchaser.
2.03 It is a condition of the acceptance of the Purchaser that the Purchaser is
appointed a member of the board of directors of the Company forthwith on
execution of this contract and is one of management's nominees for election to
the board of directors of the Company at the first annual meeting of the
shareholders of the Company for which the board of directors are required to
solicit proxies for the election of their nominees to the board of directors.
Certificate Legend
2.04 The certificate or certificates representing the Shares, the Share Purchase
Warrants and any Warrant Shares acquired on exercise of the Share Purchase
Warrants will be endorsed with a legend as follows:
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT"), THE DELAWARE STATE SECURITIES ACT OR ANY
OTHER APPLICABLE SECURITES ACT AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED
EXCEPT (1) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND
SUCH STATE SECURITIES LAWS, OR (2) AT THE OPTION OF THE COMPANY, UPON DELIVERY
TO THE COMPANY OF AN OPINION OF COUNSEL FOR THE TRANSFEROR, REASONABLY
SATISFACTORY TO COUNSEL FOR THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED.
Securities Considerations
2.05 Purchaser acknowledges that the Units are issued pursuant to the exemption
from the registration requirements contained in Rule 504, Regulation D of the
Securities Act an exemption form the prospectus and registration requirements of
the Securities Act (British Columbia) and that:
(a) the Shares, Share Purchase Warrants and Warrant Shares have not been
registered under the Securities Act or any state or provincial securities laws,
are being offered in reliance on certain exemptions contained in the Securities
Act and such state or provincial securities laws and that the Company will use
its best efforts to register the Shares and the Warrant Shares before December
31, 1999;
(b) the Shares will not be sold or transferred except pursuant to:
(i) an effective registration statement under the Securities Act and any
applicable state securities laws;
(ii) Rule 144 promulgated under the Securities Act; or
(ii) an opinion of counsel satisfactory to the Company to the effect that such
registration is not required; and
<PAGE>
(c) the Share Purchase Warrants are non-transferable regardless of whether or
not there exists an exemption under which the Share Purchase Warrants could be
sold or transferred to a third party; and
(d) no federal, state or provincial agency has made any finding or determination
as to the fairness of the investment, or any recommendation or endorsement of
the Shares or any other securities of the Company.
ARTICLE 3 REPRESENTATIONS, WARRANTIES AND COVENANTS
Representations, Warranties and Covenants of the Company
3.01 The Company represents and warrants to, and covenants with, the Purchaser
that:
(a) the Company is a body corporate subsisting under the laws of Delaware,
validly exists and is in good standing with respect to all applicable law, and
is duly registered to carry on business in all jurisdictions in which it carries
on business;
(b) the Units for which certificates are delivered to the Purchaser pursuant to
this Agreement will, at the time of such delivery, be duly authorized, validly
issued, fully paid and non-assessable;
(c) the authorized capital of the Company is 100,000,000 common shares without
par value and the Company will allot and conditionally reserve for issuance
sufficient number of common shares to issue the Shares;
(d) the Company is not a distributing corporation under the Securities Exchange
Act of 1934 or a reporting issuer under any other applicable legislation but
will use its best efforts to become a distributing corporation under the
Securities Exchange Act of 1934 before December 31, 1999; and
(e) the execution and delivery of this Agreement has been duly authorized by all
necessary corporate proceedings and the completion of the transactions
contemplated in this Agreement does not conflict with or result in the breach or
acceleration of any indebtedness under, or constitute default under, the
constating documents of the Company or any indenture, mortgage, agreement,
lease, license or other instrument to which the Company is a party or by which
it is bound, or any judgment or order of any Court or administrative body by
which the Company is bound; and
3.02 The representations, warranties, covenants and agreements of the Company
contained in this Agreement will be true at and as of the Closing as though such
representations, warranties, covenants and agreements were made at and as of the
Closing and except for the waiver of any condition by the Purchaser, the
representations, warranties, covenants and agreements of the Company will
survive the Closing and notwithstanding the closing of the issuance of the Units
under this Agreement, will continue in full force and effect.
<PAGE>
Representations, Warranties and Covenants of the Purchaser
3.03 The Purchaser represents and warrants to and covenants with the Company
that:
(a) the Purchaser is a resident of British Columbia and is aware that the Units
are being, and the securities comprising the Units will be, issued pursuant to
the exemption from registration contained in Regulation S of the Securities Act;
(b) the Purchaser is purchasing the Shares for investment purposes as principal
for its own account and not for the benefit of any other person;
(c) the Purchaser has the legal capacity and competence to execute this
Agreement and that all necessary approvals by directors and shareholders of the
Purchaser have been, or will in the ordinary course be, given to authorize the
execution and delivery of this Agreement by the Purchaser;
(d) the Purchaser is not purchasing the Shares as a result of having any
material information about the Company's affairs which has not been generally
disclosed as at the date of the announcement of the purchase;
(e) the Purchaser acknowledges that any interest accruing on Subscription Funds
will accrue to the sole benefit of the Company and may be applied by the Company
for general corporate purposes; and
(f) the Purchaser is, or will be, an affiliate of the Company as interpreted
under the Securities Act;
(g) the Purchaser understands that the Shares have not been registered under the
Securities Act or the securities laws of any states of the United States or of
the provinces of Canada;
(h) the Purchaser has such knowledge and experience in financial and business
matters that it is capable of seeking out and evaluating the information
relevant to evaluating the Company, the proposed activities thereof, and the
merits and risks of the prospective investment, and to make an informed
investment decision in connection therewith;
(i) the Purchaser realizes that, since the Shares are restricted and cannot be
readily sold, that the Purchaser may not be able to sell or dispose of any of
the Shares and, therefore, that Purchaser must not purchase the Shares unless
Purchaser has liquid assets sufficient to assure that such purchase will cause
no undue financial difficulties;
(j) the Purchaser is aware of the provisions of Rule 144 promulgated under the
Securities Act ("Rule 144") which permit limited resale of shares purchased in a
private placement subject to the satisfaction of certain conditions, including,
among other things, the existence of a public market for the Shares or
conversion stock, the availability of certain current public information about
the Company, the resale occurring not less than one year after a party has
purchased and paid for the security to be sold, the sale being effected through
a "broker's transaction" or in transactions directly with a "market maker" and
the number of shares being sold during any three-month period not exceeding
specified limitations;
<PAGE>
(k) the Purchaser understands that all information which Purchaser has provided
to the Company concerning the Purchaser, the Purchaser's financial position and
knowledge of financial and business matters is correct and complete as of this
Agreement and, if there should be any material change in such information before
the acceptance of this subscription, the Purchaser promptly notify the Company;
(l) the Purchaser is an "accredited investor" within the meaning of Rule 501(a)
of Regulation D promulgated by the Securities and Exchange Commission and a
sophisticated purchaser with the meaning of that expression under the Securities
Act (B.C.);
(m) the Purchaser has been provided with all materials and information
requested, to the extent possessed or obtainable by the Company without
unreasonable effort and expense, including any information requested to verify
information furnished and has been provided the opportunity to ask questions of,
and receive answers from, the Company and the officers, employees, and
representatives of the Company concerning the terms and conditions of this
offering; and
(n) no party has made any representations to the Purchaser as to the
profitability, if any, of the Company, nor has the Purchaser relied on any
statements made by any persons concerning the value of the investment in the
Shares or the risks associated therewith and the Purchaser has made such
inquiries as deemed necessary to make an informed decision, independent of any
representations by any persons connected in any way with the Company.
3.04 The Purchaser will execute and complete Form 20(IP) attached to this
agreement as schedule A.
3.05 The representations, warranties, covenants and agreements of the Purchaser
contained in this Agreement will be true at and as of the Closing as though such
representations, warranties, covenants and agreements were made at and as of the
Closing and except for the waiver of any condition by the Company, the
representations, warranties, covenants and agreements of the Purchaser will
survive the Closing and notwithstanding the closing of the issuance of the
Shares under this Agreement, will continue in full force and effect.
ARTICLE 4 CLOSING
4.01 Closing will occur at the principal business office of the Company at 10:00
a.m. on the Closing Date as designated by the Company.
4.02 At the Closing, the issuance of the Shares will be completed by the tabling
and delivery:
(a) by the Company of:
(i) a certificate representing the Shares;
(ii) a certificate representing the Share Purchase Warrants; and
(iii) a certified copy of a resolution of the board of directors of the Company
appointing the Purchaser as a member of the board of directors of the Company;
and
<PAGE>
(b) by the Purchaser of:
(i) a certified cheque or bank draft drawn in United States dollars and payable
to the Company for the Subscription Funds; and
(ii) a written consent to act as a director of the Company.
ARTICLE 5 GENERAL PROVISIONS
Time
5.01 Time is of the essence of the performance of every obligation under this
Agreement, and no failure or lack of diligence by any party in proclaiming or
seeking redress for any violation of, or insisting on strict performance of, any
provision of this Agreement will prevent a subsequent violation of that
provision, or of any other provision, from giving rise to any remedy that would
be available if it were an original violation of that provision or another
provision.
5.02 This Agreement will be binding upon and enure to the benefit of the
respective heirs, executors, administrators and other legal representatives and,
to the extent permitted hereunder, the respective successors and assigns, of the
parties.
Notices
5.03 Unless otherwise provided herein, any notice, payment or other
communication to a party under this Agreement may be made, given or served by
delivery or telecopy and addressed as follows:
(a) if to the Company:
Vibro-Tech Industries Ltd.
201-11240 Bridgeport Road
Richmond, B.C. V6X IT2
Attention: Mr. Boo Jock Chong, Chief Executive Officer
Attention: Mr. William Chow, President
Fax: 604-278-2712
(b) if to the Purchaser:
Ms. Tan, Phaik Sim
Suite 1830, 4825 Hazel Street
Burnaby, B. C. V5H 4N4
5.04 Any notice, payment or other communication so delivered or telecopied will
be deemed to have been given or served at the time of delivery of transmission
by telecopy
5.05 A party may by notice change its address for service.
Entire Agreement
5.06 This Agreement constitutes the entire agreement between the parties and
supercedes all previous agreements or understandings between the parties in any
way relating to its subject matter and the Company has made not representations,
inducements, warranties or promises concerning this Agreement or the matters
referred to herein which are not embodied in this Agreement.
<PAGE>
Binding Agreement
5.07 This Agreement will enure to the benefit of and will be binding upon the
parties hereto and their respective heirs, executors, administrators, personal
representatives and successors.
IN WITNESS WHERE OF this Agreement has been executed by the Company and the
Purchaser as at the date first set forth above.
VIBRO-TECH INDUSTRIES INC.
By: /s/ Boo Jock Chong
Boo Jock Chong, Chief Executive Officer
Signed, Sealed and Delivered by Tan )
Phaik Sim in the presence of: )
/s/ Gary MacDonald /s/ Tan, Phaik Sim
Gary MacDonald TAN, PHAIK SIM
600-1090 West Pender Street
Vancouver, B. C. V6E 2N7
30072001/1-10
<PAGE>
SCHEDULE A
FORM 20A (IP) - Securities Act (B.C.) - ONLY B.C. RESIDENTS
Acknowledgement of Individual Purchaser
1. I have agreed to purchase from Vibro-Tech Industries Inc. (the "Company")
175,000 units at US$0.40 per unit (the "Securities") of the Company, each unit
comprised on one share (a "Share") and one non-transferable share purchase
warrant (a "Warrant") of the Company. One Warrant entitles the holder to
purchase an additional share of the Company for US$0.40 per share up to one
years after the closing date in respect of that unit.
2. I am purchasing the Securities as principal and, on closing of the agreement
of purchase and sale, I will be the beneficial owner of the Securities.
3. I [circle one] have/have not received an offering memorandum describing the
Company and the Securities.
4. I acknowledge that:
(a) no securities commission or similar regulatory authority has reviewed or
passed on the merits of the Securities, AND
(b) there is no government or other insurance covering the Securities, AND
(c) I may lose all of my investment, AND
(d) there are restrictions on my ability to resell the Securities and it is my
responsibility to find out what those restrictions are and to comply with them
before selling the Securities, AND
(e) I will not receive a prospectus that the British Columbia Securities Act
(the "Act") would otherwise require be given to me because the Company has
advised me that it is relying on a prospectus exemption, AND
(f) because I am not purchasing the Securities under a prospectus, I will not
have the civil remedies that would otherwise be available to me, AND
(g) the Company has advised me that it is using an exemption from the
requirement to sell through a dealer registered under the Act, except purchases
referred to in paragraph 5(g), and as a result I do not have the benefit of any
protection that might have been available to me by having a dealer act on my
behalf.
5. I also acknowledge that: [circle one]
(a) the Investor is purchasing as principal and has the investment acumen to
assess the offering as a result of his net worth and previous business or
investment experience, or advice he received relating to the investment that was
independent advice on the offering obtained from a registered advisor or an
advisor exempted from registration under one of the Act applicable in the
Jurisdiction in which the subscriber is resident and not obtained from a
promoter of the Company; or
<PAGE>
(b) the Investor is purchasing as principal and is able, on the basis of
information about the investment provided by the Company, to evaluate the risks
and merits of the prospective investment because of:
(i) the Investor's financial, business or investment experience;
(ii) advice the Investor receives from a person that is registered to advise, or
is exempt from the requirement to be registered to advise, in respect of the
Shares and that is not an insider of, or in a special relationship with, the
Company; or
(c) the Investor is one of the following:
(i) a person who is registered under the B. C. Act; or
(ii) an individual resident in British Columbia who:
(A) has a net worth, or net worth jointly with the individual's spouse, at the
Closing date, of not less than Cdn $400,000; or (B) has had in each of the two
most recent calendar years, and reasonably expects to have in the current
calendar year:
(I) an annual net income before tax of not less than Cdn $75,000; or
(II) and annual net income before tax, jointly with the individual's spouse, of
not less than Cdn $125,000; or (iii) a corporation, partnership or trust
resident in British Columbia that:
(A) has assets of not less than Cdn $400,000; or
(B) has had in each of the two most recent calendar years, and reasonably
expects to have in the current calendar year, net income before tax of not less
than Cdn $125,000; or
(C) in B.C., a corporation in which all of the voting shares are beneficially
owned by sophisticated purchasers or of which the majority of the directors are
sophisticated purchasers;
(D) in B.C., a general partnership in which all of the partners are
sophisticated purchasers;
(E) in B. C., a limited partnership in which the majority of the general
partners are sophisticated purchasers; or
(F) in B. C., a trust in which all of the beneficiaries are sophisticated
purchasers or the majority of the trustees are sophisticated purchasers; or
(d) the Investor is purchasing as principal and is a spouse, parent, brother,
sister or child of a senior officer or director of the Company, or of an
affiliate of the Company, or is a company, all the voting securities of which
are owned beneficially by one or more of a spouse, parent, brother, sister or
child of a senior officer or director of the Company, or of an affiliate of the
Company; or
(e) the Investor is a director or senior officer of the Company, or an affiliate
of the Company, or is a company, all the voting securities of which are owned
beneficially by one or more of a director or senior officer of the Company, or
of an affiliate of the Company; or
<PAGE>
6. If I am an individual referred to in paragraph 5(b), 5(c), or 5(d), I
acknowledge that, on the basis of information about the Securities furnished by
the Company, I am able to evaluate the risks and merits of the Securities
because: [circle one]
(a) of my financial, business or investment experience, OR
(b) I have received advice from a person [Name of adviser: ____________________
(the "Adviser")] who has advised me that the Adviser is:
(i) registered to advise, or exempted from the requirement to be registered to
advise, in respect of the Securities, and
(ii) not an insider of, or in a special relationship with, the Company.
The statements made in this report are true.
DATED __________________________, 1999.
----------------------------------
Signature of Purchaser
----------------------------------
Name of Purchaser
----------------------------------
----------------------------------
Address of Purchaser
RHS\RHS07280\7\
EXHIBIT 10.11
SHARE PURCHASE AGREEMENT
THIS AGREEMENT made as of August 16, 1999
BETWEEN:
VIBRO-TECH INDUSTRIES INC., a body corporate subsisting under the laws of
Delaware, with a place of business at Suite 201-11240 Bridgeport Road, Richmond,
B.C. V6X IT2
(the "Company")
OF THE FIRST PART
AND:
PUAN SRI CHANG NGA., Businesswoman, with a place of business at 77 Meyer Road,
#03-02, Singapore 437903
(the "Purchaser")
OF THE SECOND PART
AND:
William Chow, Businessman, with a place of business at 201-11240 Bridgeport Road
Richmond, B.C. V6X IT2
(the "Vendor")
OF THE THIRD PART
WHEREAS:
A. The Company is not a distributing corporation under the Securities Act of
1933 or a reporting issuer under any provincial securities legislation of
Canada;
B. The Purchaser is not, nor will be, an affiliate of the Company as interpreted
under the Securities Act of 1933 or an associate of an affiliate of a member of
the board of directors; and
C. The Company wishes to sell to the Purchaser 125,000 units, each unit
comprised of one share for US$0.40 per share and a share purchase warrant to
acquire before August 16, 2001 a share for $0.40 per share;
D. William Chow has the authority to transfer to the Purchaser 200,000 shares
for US$0.15 in the name of Fin Lin Zhou;
WITNESSES that the parties mutually covenant and agree as follows:
<PAGE>
ARTICLE 1 DEFINITIONS AND INTERPRETATION
1.01 In this Agreement, including the recitals and schedules to this Agreement,
unless the context otherwise requires:
Closing means the procedure for the issue of Shares on the Closing Date.
Closing Date means the earlier of August 16, 1999 or such other date designated
by the Company when the date on which the Company will issue, and the Purchaser
will pay for, the Units.
Company means Vibro-Tech Industries Inc..
Exchange means the OTC Bulletin Board.
Exchange Act means the Securities Exchange Act of 1934 (U.S.), as amended from
time to time.
Exercise Price means US$0.40 per Warrant Share.
Expiry Date means 5:00 p.m., Delaware time, on August 16, 2001.
Purchaser means Mrs. Puan Sri Chang Nga.
Rule 504, Regulation D means Rule 504, Regulation D under the Securities Act.
Shares means 125,000 shares of the Company to by Purchased by the Purchaser for
US$0.40 per share.
Share Purchase Warrant means the right granted by this Agreement to acquire the
Warrant Shares.
Securities Act means the Securities Act of 1933 (U.S.), as amended from time to
time.
Share or Shares means a common share or common shares of the Company as
constituted on August 12, 1999.
Unit means the unit purchased by the purchaser comprised of one share for
US$0.40 per share and a non-transferable share purchase warrant to acquire
before August 16, 2001 a share for $0.40 per share;
Warrant Shares means 125,000 shares to be acquired, if at all, before August 16,
2001 for US$0.40 per share.
Zhou Shares means 200,000 outstanding shares registered in the name of Foo Lin
Zhou and with which William Chow has the authority to deal.
1.02 The captions, section numbers and article numbers appearing in this
Agreement are inserted for convenience of reference only and will in no way
define, limit, constrict or describe the scope or intent of this Agreement nor
in any way affect this Agreement.
<PAGE>
1.03 This Agreement and all matters arising under this Agreement will be
governed by, construed and enforced in accordance with the laws of Delaware and
any proceeding commenced or maintained in connection with this Agreement will be
so commenced and maintained in the court of appropriate jurisdiction in the City
of Wilmington, Delaware to which jurisdiction the parties irrevocably attorn.
1.04 In this Agreement, wherever the context requires, words importing the
singular number will include the plural and vice versa, words importing the
masculine gender will include the feminine and neuter genders and words
importing persons will include firms and corporations and vice versa.
1.05 Unless otherwise stated, a reference in this Agreement to a numbered or
lettered article, section, paragraph or subparagraph refers to the article,
section, paragraph or subparagraph bearing that number or letter in this
Agreement.
1.06 If any covenant or other provision of this Agreement is invalid, illegal or
incapable of being enforced by reason of any rule of law or public policy such
covenant or other provision will be severed; all other terms and conditions of
this Agreement will, nevertheless, remain in full force and effect and no
covenant or provision will be deemed dependent upon any other covenant or
provision unless so expressed herein.
ARTICLE 2 SUBSCRIPTION FOR UNITS
Subscription
2.01 The Purchaser subscribes for, and agrees to pay on the Closing Date for,
125,000 Units at the subscription price of US$0.40 per Unit on the terms and
other conditions of this Agreement.
2.02 The Vendor agrees to sell the Zhou Shares to the Purchaser for US$0.15 per
Share on the terms and other conditions of this Agreement.
<PAGE>
Acceptance
2.03 The Company accepts the Purchaser's subscription and agrees to allot and
issue to the Purchaser on the Closing Date 125 000 Units comprising 125,000
Shares and 125,000 Share Purchase Warrants on the terms and other conditions of
this Agreement and to cause a certificate or certificates representing the
Shares and the Share Purchase Warrants to be issued to the Purchaser.
Certificate Legend
2.04 The certificate or certificates representing the Shares, the Share Purchase
Warrants and any Warrant Shares acquired on exercise of the Share Purchase
Warrants will be endorsed with a legend as follows:
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT"), THE DELAWARE STATE SECURITIES ACT OR ANY
OTHER APPLICABLE SECURITES ACT AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED
EXCEPT (1) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND
SUCH STATE SECURITIES LAWS, OR (2) AT THE OPTION OF THE COMPANY, UPON DELIVERY
TO THE COMPANY OF AN OPINION OF COUNSEL FOR THE TRANSFEROR, REASONABLY
SATISFACTORY TO COUNSEL FOR THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED.
Securities Considerations
2.05 Purchaser acknowledges that the Units are issued pursuant to the exemption
from the registration requirements contained in Rule 504 of Regulation D of the
Securities Act an exemption form the prospectus and registration requirements of
the Securities Act (British Columbia) and that:
(a) the Shares, Share Purchase Warrants and Warrant Shares have not been
registered under the Securities Act or any state or provincial securities laws,
are being offered in reliance on certain exemptions contained in the Securities
Act and such state or provincial securities laws and that the Company will use
its best efforts to register the Shares and the Warrant Shares before December
31, 1999 ;
(b) the Shares will not be sold or transferred except pursuant to:
(i) an effective registration statement under the Securities Act and any
applicable state securities laws;
(ii) Rule 144 promulgated under the Securities Act; or
(ii) an opinion of counsel satisfactory to the Company to the effect that such
registration is not required; and
(c) the Share Purchase Warrants are non-transferable regardless of whether or
not there exists an exemption under which the Share Purchase Warrants could be
sold or transferred to a third party; and
<PAGE>
(d) no federal, state or provincial agency has made any finding or determination
as to the fairness of the investment, or any recommendation or endorsement of
the Shares or any other securities of the Company.
ARTICLE 3 REPRESENTATIONS, WARRANTIES AND COVENANTS
Representations, Warranties and Covenants of the Company
3.01 The Company represents and warrants to, and covenants with, the Purchaser
that:
(a) the Company is a body corporate subsisting under the laws of Delaware,
validly exists and is in good standing with respect to all applicable law, and
is duly registered to carry on business in all jurisdictions in which it carries
on business;
(b) the Units for which certificates are delivered to the Purchaser pursuant to
this Agreement will, at the time of such delivery, be duly authorized, validly
issued, fully paid and non-assessable;
(c) the authorized capital of the Company is 100,000,000 common shares without
par value and the Company will allot and conditionally reserve for issuance
sufficient number of common shares to issue the Shares;
(d) the Company is not a distributing corporation under the Exchange Act or a
reporting issuer under any other applicable legislation but will use its best
efforts to register its Shares under the Exchange Act before December 31, 1999;
and
(e) the execution and delivery of this Agreement has been duly authorized by all
necessary corporate proceedings and the completion of the transactions
contemplated in this Agreement does not conflict with or result in the breach or
acceleration of any indebtedness under, or constitute default under, the
constating documents of the Company or any indenture, mortgage, agreement,
lease, license or other instrument to which the Company is a party or by which
it is bound, or any judgment or order of any Court or administrative body by
which the Company is bound; and
3.02 The representations, warranties, covenants and agreements of the Company
contained in this Agreement will be true at and as of the Closing as though such
representations, warranties, covenants and agreements were made at and as of the
Closing and except for the waiver of any condition by the Purchaser, the
representations, warranties, covenants and agreements of the Company will
survive the Closing and notwithstanding the closing of the issuance of the Units
under this Agreement, will continue in full force and effect.
<PAGE>
Representations, Warranties and Covenants of the Purchaser
3.03 The Purchaser represents and warrants to and covenants with the Company
that:
(a) the Purchaser is a resident of British Columbia and is aware that the Units
are being, and the securities comprising the Units will be, issued pursuant to
the exemption from registration contained in Regulation S of the Securities Act;
(b) the Purchaser is purchasing the Shares for investment purposes as principal
for its own account and not for the benefit of any other person;
(c) the Purchaser has the legal capacity and competence to execute this
Agreement and that all necessary approvals by directors and shareholders of the
Purchaser have been, or will in the ordinary course be, given to authorize the
execution and delivery of this Agreement by the Purchaser;
(d) the Purchaser is not purchasing the Shares as a result of having any
material information about the Company's affairs which has not been generally
disclosed as at the date of the announcement of the purchase;
(e) the Purchaser acknowledges that any interest accruing on Subscription Funds
will accrue to the sole benefit of the Company and may be applied by the Company
for general corporate purposes; and
(f) the Purchaser is, or will be, an affiliate of the Company as interpreted
under the Securities Act;
(g) the Purchaser understands that the Shares have not been registered under the
Securities Act or the securities laws of any states of the United States or of
the provinces of Canada;
(h) the Purchaser has such knowledge and experience in financial and business
matters that it is capable of seeking out and evaluating the information
relevant to evaluating the Company, the proposed activities thereof, and the
merits and risks of the prospective investment, and to make an informed
investment decision in connection therewith;
(i) the Purchaser realizes that, since the Shares are restricted and cannot be
readily sold, that the Purchaser may not be able to sell or dispose of any of
the Shares and, therefore, that Purchaser must not purchase the Shares unless
Purchaser has liquid assets sufficient to assure that such purchase will cause
no undue financial difficulties;
(j) the Purchaser is aware of the provisions of Rule 144 promulgated under the
Securities Act ("Rule 144") which permit limited resale of shares purchased in a
private placement subject to the satisfaction of certain conditions, including,
among other things, the existence of a public market for the Shares or
conversion stock, the availability of certain current public information about
the Company, the resale occurring not less than one year after a party has
purchased and paid for the security to be sold, the sale being effected through
a "broker's transaction" or in transactions directly with a "market maker" and
the number of shares being sold during any three-month period not exceeding
specified limitations;
<PAGE>
(k) the Purchaser understands that all information which Purchaser has provided
to the Company concerning the Purchaser, the Purchaser's financial position and
knowledge of financial and business matters is correct and complete as of this
Agreement and, if there should be any material change in such information before
the acceptance of this subscription, the Purchaser promptly notify the Company;
(l) the Purchaser is an "accredited investor" within the meaning of Rule 501(a)
of Regulation D promulgated by the Securities and Exchange Commission and a
sophisticated purchaser with the meaning of that expression under the Securities
Act (B.C.);
(m) the Purchaser has been provided with all materials and information
requested, to the extent possessed or obtainable by the Company without
unreasonable effort and expense, including any information requested to verify
information furnished and has been provided the opportunity to ask questions of,
and receive answers from, the Company and the officers, employees, and
representatives of the Company concerning the terms and conditions of this
offering; and
(n) no party has made any representations to the Purchaser as to the
profitability, if any, of the Company, nor has the Purchaser relied on any
statements made by any persons concerning the value of the investment in the
Shares or the risks associated therewith and the Purchaser has made such
inquiries as deemed necessary to make an informed decision, independent of any
representations by any persons connected in any way with the Company.
3.04 The representations, warranties, covenants and agreements of the Purchaser
contained in this Agreement will be true at and as of the Closing as though such
representations, warranties, covenants and agreements were made at and as of the
Closing and except for the waiver of any condition by the Company, the
representations, warranties, covenants and agreements of the Purchaser will
survive the Closing and notwithstanding the closing of the issuance of the
Shares under this Agreement, will continue in full force and effect.
ARTICLE 4 CLOSING
4.01 Closing will occur at the principal business office of the Company at 10:00
a.m. on the Closing Date as designated by the Company.
4.2 At the Closing, the issuance of the Shares will be completed by the tabling
and delivery:
(a) by the Company of:
(i) a certificate representing the Shares;
(ii) a certificate representing the Share Purchase Warrants;
(b) by the Purchaser of:
<PAGE>
(i) a certified cheque or bank draft drawn in United States dollars and payable
to the Company for the Subscription Funds.
(iii) a certified cheque payable to William Chow for US$30,000 in payment of the
Zhou Shares; and
(c) by the Vendor of a certificate or certificate representing in the aggregate
the number of Zhou Shares endorsed for transfer to the Purchaser in a manner
acceptable to the registrar and transfer agent of the Company or accompanied by
a stock power of attorney endorsed for transfer to the Purchaser in a manner
acceptable to the registrar and transfeer agenet of the Comapny:
ARTICLE 5 GENERAL PROVISIONS
Time
5.01 Time is of the essence of the performance of every obligation under this
Agreement, and no failure or lack of diligence by any party in proclaiming or
seeking redress for any violation of, or insisting on strict performance of, any
provision of this Agreement will prevent a subsequent violation of that
provision, or of any other provision, from giving rise to any remedy that would
be available if it were an original violation of that provision or another
provision.
5.02 This Agreement will be binding upon and enure to the benefit of the
respective heirs, executors, administrators and other legal representatives and,
to the extent permitted hereunder, the respective successors and assigns, of the
parties.
Notices
5.03 Unless otherwise provided herein, any notice, payment or other
communication to a party under this Agreement may be made, given or served by
delivery or telecopy and addressed as follows:
(a) if to the Company or Chow:
Vibro-Tech Industries Ltd.
201-11240 Bridgeport Road
Richmond, B.C. V6X IT2
Attention: Mr. Boo Jock Chong, Chief Executive Officer
Attention: Mr. William Chow, President
Fax: 604-278-2712
(b) if to the Purchaser:
Mrs. Puan Sri Chang Nga
77 Meyer Road
#03-02 Singapore 437903
with a copy to:
Ms. Tan, Phaik Sim
Siuite 1830, 4825 Hazel Street
Burnaby, B. C. V5H 4N4
<PAGE>
5.04 Any notice, payment or other communication so delivered or telecopied will
be deemed to have been given or served at the time of delivery of transmission
by telecopy
5.05 A party may by notice change its address for service.
Entire Agreement
5.06 This Agreement constitutes the entire agreement between the parties and
supercedes all previous agreements or understandings between the parties in any
way relating to its subject matter and the Company has made not representations,
inducements, warranties or promises concerning this Agreement or the matters
referred to herein which are not embodied in this Agreement.
Binding Agreement
5.07 This Agreement will enure to the benefit of and will be binding upon the
parties hereto and their respective heirs, executors, administrators, personal
representatives and successors.
IN WITNESS WHERE OF this Agreement has been executed by the Company and the
Purchaser as at the date first set forth above.
VIBRO-TECH INDUSTRIES INC.
By: /s/ Boo Jock Chong
Boo Jock Chong, Chief Executive Officer
Signed, Sealed and Delivered by Puan Sri )
Chang Nga in the presence of: )
/s/ William Chow /s/ Puan Sri Chang Nga
125-8231 Cambie Road PUAN SRI CHANG NGA
Richmond, B. C. V7C 1J8
Signed, Sealed and Delivered by William )
Chow in the presence of: )
/s/ Gary MacDonald
GaryMacDonald /s/ William Chow
600-1090 West Pender Street WILLIAM CHOW
Vancouver, B. C. V6E 2N7
30072002/1-10
EXHIBIT 10.12
SHARE PURCHASE AGREEMENT
THIS AGREEMENT made as of November 3, 1999
BETWEEN:
VIBRO-TECH INDUSTRIES, INC., a body corporate subsisting under the laws of
Delaware, with a place of business at Suite 201-11240 Bridgeport Road, Richmond,
B.C. V6X IT2
(the "Company")
AND:
DR. MILES PRICE., Businessman, with a place of business at 3643 Marine Drive,
West Vancouver, B.C. V7V IN3
(the "Purchaser")
WHEREAS:
A. The Company is not a distributing corporation under the Securities Act of
1933 or a reporting issuer under any provincial securities legislation of
Canada;
B. The Purchaser is not, nor will be, an affiliate of the Company as interpreted
under the Securities Act of 1933 or an associate of an affiliate or a member of
the board of directors; and
C. The Company wishes to sell to the Purchaser 70,000 share for US$0.40 per
share and the Purchaser has been engaged as a management consultant by the
Company under an agreement dated October 25, 1999;
WITNESSES that the parties mutually covenant and agree as follows:
ARTICLE 1 DEFINITIONS AND INTERPRETATION
1.01 In this Agreement, including the recitals and schedules to this Agreement,
unless the context otherwise requires:
Closing means the procedure for the issue of Shares on the Closing Date.
Closing Date means the earlier of November 10, 1999 or such other date
designated by the Company when the date on which the Company will issue, and the
Purchaser will pay for, the Shares.
Company means Vibro-Tech Industries, Inc..
Exchange means the OTC Bulletin Board.
Exchange Act means the Securities Exchange Act of 1934 (U.S.), as amended from
time to time.
<PAGE>
Exercise Price means US$0.40 per Share.
Purchaser means Dr. Miles Price.
Shares means 70,000 shares of the Company to be purchased by the Purchaser for
US$0.40 per share.
Securities Act means the Securities Act of 1933 (U.S.), as amended from time to
time.
Securities Exchange Act means the Securities Exchange Act of 1934 (U.S.), as
amended from time to time.
Share or Shares means a common share or common shares of the Company as
constituted on August 12, 1999.
1.02 The captions, section numbers and article numbers appearing in this
Agreement are inserted for convenience of reference only and will in no way
define, limit, constrict or describe the scope or intent of this Agreement nor
in any way affect this Agreement.
1.03 This Agreement and all matters arising under this Agreement will be
governed by, construed and enforced in accordance with the laws of Delaware and
any proceeding commenced or maintained in connection with this Agreement will be
so commenced and maintained in the court of appropriate jurisdiction in the City
of Wilmington, Delaware to which jurisdiction the parties irrevocably attorn.
1.04 In this Agreement, wherever the context requires, words importing the
singular number will include the plural and vice versa, words importing the
masculine gender will include the feminine and neuter genders and words
importing persons will include firms and corporations and vice versa.
1.05 Unless otherwise stated, a reference in this Agreement to a numbered or
lettered article, section, paragraph or subparagraph refers to the article,
section, paragraph or subparagraph bearing that number or letter in this
Agreement.
1.06 If any covenant or other provision of this Agreement is invalid, illegal or
incapable of being enforced by reason of any rule of law or public policy such
covenant or other provision will be severed; all other terms and conditions of
this Agreement will, nevertheless, remain in full force and effect and no
covenant or provision will be deemed dependent upon any other covenant or
provision unless so expressed herein.
<PAGE>
ARTICLE 2 SUBSCRIPTION FOR SHARES
Subscription
2.01 The Purchaser subscribes for, and agrees to pay on the Closing Date for,
70,000 shares at the subscription price of US$0.40 per share on the terms and
other conditions of this Agreement.
Acceptance
2.03 The Company accepts the Purchaser's subscription and agrees to allot and
issue to the Purchaser on the Closing Date the Shares on the terms and other
conditions of this Agreement and to cause a certificate or certificates
representing the Shares to be issued to the Purchaser.
Certificate Legend
2.04 The certificate or certificates representing the Shares will be endorsed
with a legend as follows:
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT"), THE DELAWARE STATE SECURITIES ACT OR ANY
OTHER APPLICABLE SECURITES ACT AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED
EXCEPT (1) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND
SUCH STATE SECURITIES LAWS, OR (2) AT THE OPTION OF THE COMPANY, UPON DELIVERY
TO THE COMPANY OF AN OPINION OF COUNSEL FOR THE TRANSFEROR, REASONABLY
SATISFACTORY TO COUNSEL FOR THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED.
Securities Considerations
2.05 Purchaser acknowledges that the Shares are issued pursuant to the exemption
from the registration requirements contained in Rule 504 of Regulation D of the
Securities Act and the exemption from the registration requirements of Part I
and the prospectus requirements of Part III of the B.C. Act as contained in
paragraphs 45(2)(10) and 74(2)(9) respectively or rule 128(g) of the Rules to
the Securities Act (British Columbia)and that:
(a) the Shares have not been registered under the Securities Act or any state or
provincial securities laws, are being offered in reliance on certain exemptions
contained in the Securities Act and such state or provincial securities laws and
that the Company will use its best efforts to register the Shares within one
year of the date of this Agreement;
(b) the Shares will not be sold or transferred except pursuant to:
(i) an effective registration statement under the Securities Exchange Act and
any applicable state securities laws;
(ii) Rule 144 promulgated under the Securities Act; or
(ii) an opinion of counsel satisfactory to the Company to the effect that such
registration is not required;
<PAGE>
(c) no federal, state or provincial agency has made any finding or determination
as to the fairness of the investment, or any recommendation or endorsement of
the Shares or any other securities of the Company; and
(d) the Company is not a reporting issuer, and does not expect to become, a
reporting issuer in British Columbia and the onus is on the Purchaser to comply
with the laws of British Columbia in selling the Shares.
2.06 A trade by the Purchaser of the Shares is deemed to be a distribution under
the B.C. Act and the Securities Rules (B.C.) unless:
(a) the Company is at the time of the trade a reporting issuer not in default of
any requirement of the B.C. Act and the Securities Rules (B. C.); and
(b) if the Purchaser is an insider of the Company, other than a director or
senior officer of the Company, the Consultant has filed all records required to
be filed under sections 87 and 90 of the B.C. Act;
(c) if the Purchaser is a director or senior officer of the Company, the
Purchaser has filed all records required to be filed under sections 87 and 90 of
the B.C. Act and the Company has filed all records required to be filed under
Part 12 of the B.C. Act;
(d) the trade is not a distribution from the holdings of a control person;
(e) no unusual effort must be made to prepare the market or to create a demand
for the Shares; and
(f) no extraordinary commission or consideration is to be paid in respect of the
trade.
2.07 The Purchaser acknowledges that it the current policy of the British
Columbia Securities Commission, contrary to that of other Canadian securities
administrators, that a receipt for a prospectus of the Company will not, under
any circumstances, be issued, if the shares of the Company are quoted through
the services of the OTCBB, United States and the risk of complying with, or
being subject to the provisions of the B.C. Act on sale of the Shares, lies
entirely with the Purchaser.
<PAGE>
ARTICLE 3 REPRESENTATIONS, WARRANTIES AND COVENANTS
Representations, Warranties and Covenants of the Company
3.01 The Company represents and warrants to, and covenants with, the Purchaser
that:
(a) the Company is a body corporate subsisting under the laws of Delaware,
validly exists and is in good standing with respect to all applicable law, and
is duly registered to carry on business in all jurisdictions in which it carries
on business;
(b) the Shares for which certificates are delivered to the Purchaser pursuant to
this Agreement will, at the time of such delivery, be duly authorized, validly
issued, fully paid and non-assessable;
(c) the authorized capital of the Company is 100,000,000 common shares with a
par value of US$0.001 per share and the Company will allot and conditionally
reserve for issuance sufficient number of common shares to issue the Shares;
(d) the Company is not a distributing corporation under the Exchange Act or a
reporting issuer under any other applicable legislation but will use its best
efforts to register its Shares under the Securities Exchange Act within one year
of the date of this Agreement;
(e) the execution and delivery of this Agreement has been duly authorized by all
necessary corporate proceedings and the completion of the transactions
contemplated in this Agreement does not conflict with or result in the breach or
acceleration of any indebtedness under, or constitute default under, the
constating documents of the Company or any indenture, mortgage, agreement,
lease, license or other instrument to which the Company is a party or by which
it is bound, or any judgment or order of any Court or administrative body by
which the Company is bound; and
(f) the Company has engaged the Purchaser as a management consultant for the
country of Mexico under an agreement dated October 25, 1999 and the sale of the
Shares is not made with the expectation that such agreement will be continued or
confirmed.
3.02 The representations, warranties, covenants and agreements of the Company
contained in this Agreement will be true at and as of the Closing as though such
representations, warranties, covenants and agreements were made at and as of the
Closing and except for the waiver of any condition by the Purchaser, the
representations, warranties, covenants and agreements of the Company will
survive the Closing and notwithstanding the closing of the issuance of the
Shares under this Agreement, will continue in full force and effect.
<PAGE>
Representations, Warranties and Covenants of the Purchaser
3.03 The Purchaser represents and warrants to and covenants with the Company
that:
(a) the Purchaser is a resident of British Columbia, is a management consultant
of the Company under an agreement dated October 25, 1999 and is aware that the
Shares are being issued pursuant to the exemption from registration contained in
section 3 of the Securities Act and pursuant to rule 128(g) of the Rules to the
Securities Act (British Columbia);
(b) the Purchaser is purchasing the Shares for investment purposes as principal
for its own account and not for the benefit of any other person;
(c) the Purchaser has the legal capacity and competence to execute this
Agreement and that all necessary approvals by directors and shareholders of the
Purchaser have been, or will in the ordinary course be, given to authorize the
execution and delivery of this Agreement by the Purchaser;
(d) the Purchaser is not purchasing the Shares as a result of having any
material information about the Company's affairs which has not been generally
disclosed as at the date of the announcement of the purchase;
(e) the Purchaser acknowledges that any interest accruing on Subscription Funds
will accrue to the sole benefit of the Company and may be applied by the Company
for general corporate purposes; and
(f) the Purchaser is not, or will not be, an affiliate of the Company as
interpreted under the Securities Act;
(g) the Purchaser understands that the Shares have not been registered under the
Securities Act or the securities laws of any states of the United States or of
the provinces of Canada;
(h) the Purchaser has such knowledge and experience in financial and business
matters that it is capable of seeking out and evaluating the information
relevant to evaluating the Company, the proposed activities thereof, and the
merits and risks of the prospective investment, and to make an informed
investment decision in connection therewith;
(i) the Purchaser realizes that, since the Shares are restricted and cannot be
readily sold, that the Purchaser may not be able to sell or dispose of any of
the Shares and, therefore, that Purchaser must not purchase the Shares unless
Purchaser has liquid assets sufficient to assure that such purchase will cause
no undue financial difficulties;
(j) the Purchaser is aware of the provisions of Rule 144 promulgated under the
Securities Act ("Rule 144") which permit limited resale of shares purchased in a
private placement subject to the satisfaction of certain conditions, including,
among other things, the existence of a public market for the Shares or
conversion stock, the availability of certain current public information about
the Company, the resale occurring not less than one year after a party has
purchased and paid for the security to be sold, the sale being effected through
a "broker's transaction" or in transactions directly with a "market maker" and
the number of shares being sold during any three-month period not exceeding
specified limitations;
<PAGE>
(k) the Purchaser understands that all information which Purchaser has provided
to the Company concerning the Purchaser, the Purchaser's financial position and
knowledge of financial and business matters is correct and complete as of this
Agreement and, if there should be any material change in such information before
the acceptance of this subscription, the Purchaser promptly notify the Company;
(l) the Purchaser has been provided with all materials and information
requested, to the extent possessed or obtainable by the Company without
unreasonable effort and expense, including any information requested to verify
information furnished and has been provided the opportunity to ask questions of,
and receive answers from, the Company and the officers, employees, and
representatives of the Company concerning the terms and conditions of this
offering; and
(m) no party has made any representations to the Purchaser as to the
profitability, if any, of the Company, nor has the Purchaser relied on any
statements made by any persons concerning the value of the investment in the
Shares or the risks associated therewith and the Purchaser has made such
inquiries as deemed necessary to make an informed decision, independent of any
representations by any persons connected in any way with the Company.
3.04 The representations, warranties, covenants and agreements of the Purchaser
contained in this Agreement will be true at and as of the Closing as though such
representations, warranties, covenants and agreements were made at and as of the
Closing and except for the waiver of any condition by the Company, the
representations, warranties, covenants and agreements of the Purchaser will
survive the Closing and notwithstanding the closing of the issuance of the
Shares under this Agreement, will continue in full force and effect.
ARTICLE 4 CLOSING
4.01 Closing will occur at the principal business office of the Company at 10:00
a.m. on the Closing Date as designated by the Company.
4.2 At the Closing, the issuance of the Shares will be completed by the tabling
and delivery:
(a) by the Company of:
(i) a certificate representing the Shares; and
(b) by the Purchaser of:
(i) a certified cheque or bank draft drawn in United States dollars and payable
to the Company for the Subscription Funds.
<PAGE>
ARTICLE 5 GENERAL PROVISIONS
Time
5.01 Time is of the essence of the performance of every obligation under this
Agreement, and no failure or lack of diligence by any party in proclaiming or
seeking redress for any violation of, or insisting on strict performance of, any
provision of this Agreement will prevent a subsequent violation of that
provision, or of any other provision, from giving rise to any remedy that would
be available if it were an original violation of that provision or another
provision.
5.02 This Agreement will be binding upon and enure to the benefit of the
respective heirs, executors, administrators and other legal representatives and,
to the extent permitted hereunder, the respective successors and assigns, of the
parties.
Notices
5.03 Unless otherwise provided herein, any notice, payment or other
communication to a party under this Agreement may be made, given or served by
delivery, telecopy or email and addressed as follows:
(a) if to the Company or Chow:
Vibro-Tech Industries, Inc.
201-11240 Bridgeport Road
Richmond, B.C. V6X IT2
Attention: Mr. Boo Jock Chong, Chief Executive Officer
Attention: Mr. William Chow, Chairman
Fax: 604-278-2712
Email: [email protected]
----------------------
(b) if to the Purchaser:
Dr. Miles Price
3643 Marine Drive
West Vancouver, B.C. V7V IN3
Fax: 604-926-4411
Email: [email protected]
------------------
5.04 Any notice, payment or other communication so delivered, telecopied or
emailed will be deemed to have been given or served at the time of delivery of
transmission by telecopy or email
5.05 A party may by notice change its address for service.
Entire Agreement
5.06 This Agreement constitutes the entire agreement between the parties and
supercedes all previous agreements or understandings between the parties in any
way relating to its subject matter and the Company has made not representations,
inducements, warranties or promises concerning this Agreement or the matters
referred to herein which are not embodied in this Agreement.
<PAGE>
Binding Agreement
5.07 This Agreement will enure to the benefit of and will be binding upon the
parties hereto and their respective heirs, executors, administrators, personal
representatives and successors.
IN WITNESS WHERE OF this Agreement has been executed by the Company and the
Purchaser as at the date first set forth above.
VIBRO-TECH INDUSTRIES, INC.
By: /s/ Gary MacDonald
Gary MacDonald, Secretary
/s/ Dr. Miles Price
Dr. Miles Price
30072003/1-9
EXHIBIT 10.13
AGREEMENT
THIS AGREEMENT made and entered into this 3 day of October, 1997 by and between
INTERWEST TRANSFER CO., INC.., hereinafter referred to as the "Agent", and
Pacific Quilt Design Inc., hereinafter referred to as the "Company".
WITNESSETH:
1. The Agent shall and is appointed transfer agent, warrant agent and registrar
for the common stock of the Company.
2. The secretary of the Company will file with the Agent before the Agent begins
to act as transfer agent:
A. a copy of the Articles of Incorporation of the Company;
B. Specimens of all outstanding certificates of shares of the Company in
the form approved by the Board of Directors;
C. A list of all outstanding securities together with a statement that
future transfers may be made without restriction on all securities
except as noted by the secretary and except shares subject to a
restriction noted on the face of said shares and in the corporate
stock records;
D. A list of all persons considered "insiders" or "control persons" as
defined in the Securities Acts 1933, 1934 and other acts of congress
and rules and regulations of the United States Securities and Exchange
Commission, or any State Securrities Division when applicable;
E. The names and specimen signatures of all officers who are and have
been authorized to sign certificates for shares on behalf of the
Company and the names and addresses of any other transfer agents or
registrars of shares of the Company;
F. A copy of the resolution of the Board of Directors of the Company
authorizing the execution of the Agreement and approving the terms and
conditions, certified by the Secretary of the Company;
G. in the event of any further amendment or change in respect of any of
the foregoing, prompt written notification of such change, together
with copies of all relevant resolutions, instruments or other
documents, specimen signatures, certificates, opinionss or the like,
as the agent may deem necessary or appropriate.
9. Agent shall not be liable for any error of judgment or for any act done or
step taken or omitted by it in good faith, except its own willful misconduct.
Company does hereby agree to indemnify and hold harmless Agent, and each and all
of its officers, directors, employees and agents from and against any loss,
damage or expense which may arise directly or indirectly from any actions,
suits, threats of suit, or claims of any kind or nature, other than any such
resulting from the willful misconduct of Agent.
<PAGE>
10. Company agrees to reimburse agent for any and all expenses resulting from
the serving upon the Agent of a ssubpoena by a Federal or State agency or a
request from one of the sid agencies, requiring or requesting that agent produce
information and documents to sid agency. Said expenses shall include but not be
limited to travel expenses, copying charges, computer time, employee times, etc.
11. Company agrees to pay all amounts due to agent under this contract within 70
days of billing. Company specifically agrees that Agent shall have a lien
against all Company records to secure amounts owing to the agent. In addition,
Company specificaaly agrees that Agent may, at its option, refuse to make any
transfers of Company's securities until past due accounts have been paid.
12. This agreement may not be assigned by Agent without express prior written
consent of Company.
AGREED AND ENTERED INTO the day and year first above written.
INTERWEST TRANSFER CO., INC.
By: /s/ Illegible
PACIFIC QUILY DESIGN, INC..
By: /s/ M. Tapunget
RHS\RHS07280\7\
EXHIBIT 10.14
ASSIGNMENT OF PATENTS AND RELATED TECHNOLOGY
Date: August 25th, 1998
BETWEEN: FOO LIN ZHOU ("Assignor")
AND: VIBRO-TECH Industries, Inc., a Delaware corporation ("Assignee")
1.0 RECITALS
1.1 Assignor owns the rights to a patent and the related development of a
seismic isolator which is installed into the body of buildings to reduce the
damages caused by earthquakes. Assignor owns the rights and interests to patents
and technology development listed on exhibit A, herein incorporated into this
Agreement. Certain of these inventions are registered in the Patent and Trade
Mark Office of the Republic of China, registration numbers ZL952200198,
95109348.7 (950820), 95109347.9 (950820), copies of the filings with the Patent
and Trade Mark Offices of the Republic of China is herein attached and
incorporated into this Agreement.
1.2 Assignee desires to acquire the entire interest of the Assignor in the
patents and the technology and inventions described in exhibit A as well as any
prior and future development related to the items listed on exhibit A.
2.0 ASSIGNMENT OF PATENT AND FUTURE DEVELOPMENT
2.1 Assignor hereby sells, assigns, conveys and transfers to Assignee, and
Assignee's assigns, all of Assignor's right, title and interest in the patents
and inventions as listed on Exhibit A together with any prior and future
developments by Assignor on the related to the technology and in the patent
registrations thereof.
2.2 As consideration for the rights assigned herein, Assignee agrees to issue
five million shares of its common stock to Assignor to be issued according to
the following schedule. All rights to these shares vest at the time of the
scheduled issuance.
a. Two million (2,000,000) shares to be issued and vested at the execution of
this Agreement or immediately thereafter; b. One million (1,000,000) shares to
be issued and vested on September 1, 1999; c. One million (1,000,000) shares to
be issued and vested on September 1, 2000; d. One million (1,000,000) shares to
be issued and vested on September 1, 2001.
2.3 As further consideration for the shares issued, Assignor agrees to remain a
consultant of the Assignee and continue t5o zealously develop the seismic
isolator and related technology described in exhibit A for the benefit of the
Assignee.
<PAGE>
2.4 Assignor will deliver and/or execute the various certificates, instruments
and documents necessary to fully complete the assignment of patent and all
rights to prior and future developments of the patents as contemplated in this
Agreement.
2.5 Assignor hereby grants Assignee the exclusive rights to grant licences to
third parties for the use of patent rights and the related technology listed in
exhibit A.
3.0 REPRESENTATIONS OF THE ASSIGNOR
3.1 Assignor represents and warrants to the Assignee that the statements
contained herein are correct and complete as of the date of this Agreement.
3.2 Assignor is the sole owner of patents and developments described in exhibit
A and has full authority to grant, transfer and/or assign the rights and
interests as contemplated by this Agreement.
3.3 Assignor has full power and authority to execute and deliver this Agreement
and to perform its obligations. This Agreement constitutes the valid and legally
binding obligation of Assignor, enforceable in accordance with its terms.
3.4 Neither the execution and delivery of this Agreement, not the consummation
of the transactions contemplated will violate any statute, regulation, rule,
judgment, order, decree, stipulation, injunction, charge or other restriction of
any governmental agency, or court to which Assignor is subject.
3.5 Neither the execution and the delivery of this Agreement, not the
consummation of the transactions contemplated will result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any contract, lease, sublease, license, sublicense, franchise, permit,
indenture, agreement, mortgage for borrowed money, instrument or indebtedness,
security interest, or other arrangement to which Assignor is a party or by which
it is bound or to which any of its assets is subject.
4.0 MISCELLANEOUS
4.1 This Agreement may not be amended, modified or changed, nor shall a
provision of the Agreement be deemed waived, except only by an instrument in
writing signed by both parties.
4.2 This Agreement is governed under the laws of British Columbia, Canada.
Exclusive venue for any dispute in connection with this transaction shall be in
Vancouver, British Columbia, Canada, with the exception of where the legal issue
involves the corporate structure or its authority where the state laws of
Delaware of the United States will be applicable.
<PAGE>
4.3 If any term or provision of this Agreement or the application to any person
or circumstances shall to any extent be invalid or unenforceable in any
jurisdiction, the remainder of this Agreement and application of such term or
provision to persons or circumstances other than those to which it is held
invalid and unenforceable or in any other jurisdiction shall not be affected and
each term or provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
4.4 Each of the parties shall pay their own expenses and costs including without
limitation, all attorneys' fees and expenses incurred in connection with this
Agreement and the transaction contemplated except as otherwise provided in this
Agreement.
4.5 The exhibits and schedules identified in this Agreement are incorporated by
reference and made part of this Agreement.
4.6 The parties agree that they shall cooperate to complete the transactions set
forth in this Agreement and shall timely execute such additional documents and
take such additional actions as may be necessary or desirable to fully
effectuate this Agreement.
4.7 This Agreement may be signed in as many counterparts as is necessary each of
which will be considered an original.
5.0 EXECUTING SIGNATURES
IN WITNESS WHEREOF the parties have signed this Agreement.
ASSIGNOR ASSIGNEE
/s/ Foo Lin Zhou VIBRO-TECH Industries, Inc.
Foo Lin Zhou a Delaware corporation
/s/ Wai Lam Chou
Wai Lam Chou
3007051104A/1-3
<PAGE>
Exhibit A
Patent/Right Registration
1. Application No. 95 2 20019.8
2. Patent/Right Registration ZL 95 22 200198 (2 pages)
3. Application No. 95 1 09348.7
4. Application No. 95 1 09347.9
EXHIBIT 10.15
THIS AGREEMENT made as of September 3, 1999
BETWEEN:
VIBRO-TECH INDUSTRIES INC., a corporation subsisting under the laws of the state
of Delaware, having a place of business at Suite 201-11240 Bridgeport Road,
Richmond, British Columbia V6X 1T2
(the "Company")
AND:
DR. FOO. LIN ZHOU, of Shantou City, Guangdong Province, China
("Zhou")
WHEREAS:
A. By an agreement dated August 25, 1998 Zhou assigned certain patents and
related technology to the Company in consideration that the Company issue to
Zhou or his nominee:
(a) 2,000,000 shares on execution of the agreement of August 25, 1998;
(b) 1,000,000 shares on September 1, 1999;
(c) 1,000,000 shares on September 2000; and
(d) 1,000,000 shares on September 1, 2001;
B. The Company is proceeding to register with the Securities & Exchange
Commission of the United States;
WITNESSES THAT the parties mutually covenant and agree as follows:
1.0 The Company covenants that it has issued in the name of Pioneer Wise, and
Zhou acknowledges the issuance of, the 2,000,000 shares issued on execution of
the agreement of August 25, 1998.
2.0 The obligation of the Company to issue the remaining 3,00,000 share to Zhou
is cancelled and voided without the payment of any amount to Zhou.
3.0 As Zhou modifies products that are the subject of patents, or develops new
products that are the subject of patents, the Company will agree from time to
time with Zhou about the consideration to be paid for such modifications of new
products.
<PAGE>
4.0 The agreement of August 25, 1998 is in all other respects acknowledged and
confirmed as an agreement between Zhou and the Company.
IN WITNESS WHEREOF this Agreement has been executed by the parties hereto on the
day and year first above written.
VIBRO-TECH INDUSTRIES, INC.
By: /s/ William ChowWilliam Chow, Chairman of the Board
Signed, Sealed and Delivered by Foo )
Lin Zhou in the presence of: )
/s/ Chinese Character /s/ Foo Lin Zhou
) FOO LIN ZHOU
3007051104
EXHIBIT 10.16
NOTICE OF ACCEPTANCE
APPLICANT: Fu- Lin, ZHOU
The application submitted on August 20, 1995 to obtain patent of invention named
'RUBBER SHOCK ABSORBER CUSHION' satisfies requirements of patent application.
According to section twenty-eight of the Patent Act and section thirty-nine in
Details and Regulations of the Patent Act, this application has been accepted.
The application number and application date are assigned as followings:
APPLICATION NUMBER : 95 2 20019.7
APPLICATION DATE : 950820
FEE : 1 - 80% Reduced
Explanation in Brief:
This notice is a proof indicating that the Department of Patent of China has
accepted the applicant's application for a patent.
The Application number is the file number assigned by the Department of Patent
of China. Nine digits or characters compose the application number. The third
digit counting from the left represents the type of the application. Digit "1"
stands for invention; Digit "2" stands for practical new model type; Digit
"3"stands for apparent design. If the applicant finds that the application
number does not correctly stands for his/her application type, he/she should ask
the Department of Patent to make correction within 15 days from the date when
this notice is received by the applicant.
According to the twenty-eighth regulation stated in the Patent Act, if the
application is submitted by mail, the date of the postmark on the application
documents is assigned as the application date. If the applicant finds the
application date assigned different from the mailing date, he/ she can ask the
Department of Patent to change the application date provided with proof of the
mail register within one month from the date when this notice is received by the
applicant.
This notice has very important instructions printed on the back. It is the
applicants' responsibilities to read those instructions carefully.
EXHIBIT 10.17
NOTICE OF ACCEPTANCE
APPLICANT: Fu- Lin, ZHOU
The application submitted on August 20, 1995 to obtain patent of invention named
'LINER RUBBER ABSORBER CUSHION' satisfies requirements of patent application.
According to section twenty-eight of the Patent Act and section thirty-nine in
Details and Regulations of the Patent Act, this application has been accepted.
The application number and application date are assigned as followings :
APPLICATION NUMBER : 95 2 20019.8
APPLICATION DATE : 950820
FEE : 1 - 80% Reduced
Explanation in Brief:
This notice is a proof indicating that the Department of Patent of China has
accepted the applicant's application for a patent.
The Application number is the file number assigned by the Department of Patent
of China. Nine digits or characters compose the application number. The third
digit counting from the left represents the type of the application. Digit "1"
stands for invention; Digit "2" stands for practical new model type; Digit
"3"stands for apparent design. If the applicant finds that the application
number does not correctly stands for his/her application type, he/she should ask
the Department of Patent to make correction within 15 days from the date when
this notice is received by the applicant.
According to the twenty-eighth regulation stated in the Patent Act, if the
application is submitted by mail, the date of the postmark on the application
documents is assigned as the application date. If the applicant finds the
application date assigned different from the mailing date, he/ she can ask the
Department of Patent to change the application date provided with proof of the
mail register within one month from the date when this notice is received by the
applicant.
This notice has very important instructions printed on the back. It is the
applicants' responsibilities to read those instructions carefully.
EXHIBIT 10.18
NOTICE OF ACCEPTANCE
APPLICANT: Fu- Lin, ZHOU
The application submitted on August 20, 1995 to obtain patent of invention named
A BUILDING ADDITION SHOCK REDUCING METHOD satisfies requirements of patent
application. According to section twenty-eight of the Patent Act and section
thirty-nine in Details and Regulations of the Patent Act, this application has
been accepted. The application number and application date are assigned as
followings :
APPLICATION NUMBER : 95 1 09347.9
APPLICATION DATE : 950820
FEE : 1 - 80% Reduced
Explanation in Brief:
This notice is a proof indicating that the Department of Patent of China has
accepted the applicant's application for a patent.
The Application number is the file number assigned by the Department of Patent
of China. Nine digits or characters compose the application number. The third
digit counting from the left represents the type of the application. Digit "1"
stands for invention; Digit "2" stands for practical new model type; Digit
"3"stands for apparent design. If the applicant finds that the application
number does not correctly stands for his/her application type, he/she should ask
the Department of Patent to make correction within 15 days from the date when
this notice is received by the applicant.
According to the twenty-eighth regulation stated in the Patent Act, if the
application is submitted by mail, the date of the postmark on the application
documents is assigned as the application date. If the applicant finds the
application date assigned different from the mailing date, he/ she can ask the
Department of Patent to change the application date provided with proof of the
mail register within one month from the date when this notice is received by the
applicant.
This notice has very important instructions printed on the back. It is the
applicants' responsibilities to read those instructions carefully.
EXHIBIT 10.19
NO. 236654
PAGE 2
PATENT CERTIFICATE OF PRACTICAL NEW MODEL TYPE
Practical New Model Name: LINER RUBBER ABSORBER CUSHION
Designer: Fu-Lin, Zhou
Patent Number: ZL 95 2 20019.8
Patent Application Date: August 20, 1995
Patent Holder : Fu-Lin, Zhou
The Department of Patent of China according to the Patent Act of the People's
Republic of China has initially examined this practical new model. The
Department of Patent of China issues this Patent Certificate.
Department Chief Executive:
Signature
NO. 236654
The Department of Patent according to the Patent Act has initially examined this
practical new model. The patent and certificate are issued on July 26, 1996 and
it is recorded in the patent register. The patent is effective from the date
this certificate is issued.
The duration of this patent is ten years from the date of application. The
patent holder should make annual payment according to details and regulations of
the Patent Act. The annual payment should be made within the previous month of
August 20 each year. The patent will be terminated from the year in which the
annual payment is not paid.
The patent certificate states the legal situation when the patent is registered.
Transfer, inheritance, rescission, inefficacy, and termination of the patent and
changes of applicant's name or title, nationality and address are recorded in
the patent register.
EXHIBIT 10.20
MANAGEMENT AGREEMENT
THIS AGREEMENT made as of July 1, 1999
BETWEEN:
VIBRO-TECH INDUSTRIES, INC., a corporation subsisting under the laws of the
state of Delaware, having a place of business at Suite 201-11240 Bridgeport
Road, Richmond, British Columbia V6X 1T2
("Vibro-Tech")
AND:
BOO JOCK CHONG, Businessman, having a place of business at Suite 201-11240
Bridgeport Road, Richmond, British Columbia V6X 1T2
("Chong")
WHEREAS:
A. Vibro-Tech and its subsidiaries, Vitech Industries Inc, Cansun Management
Ltd., Vibro-Tech Industries Inc. (China), Vibro-Tech Holdings Ltd. (Hong Kong)
and Vibro-Tech Industries Ltd. (Hong Kong) (collectively, the "Subsidiaries")
are engaged in the business of the design, manufacture, marketing and sales of
vibration bearings for use in the construction industry
B. Vibro-Tech wishes to engage, and Chong has agreed to be, a member of the
board of directors, president and chief executive officer of Vibro-Tech on the
terms and conditions of this Agreement;
WITNESSES THAT the parties mutually covenant and agree as follows:
ARTICLE I APPOINTMENT AND DECLARATION
1.01 Vibro-Tech appoints and engages on the terms and other conditions of the
Agreement Chong as chief executive officer of Vibro-Tech and as the sole and
exclusive manager and administrator of the business and affairs of Vibro-Tech
and Chong accepts such appointment, on the terms and other conditions of this
Agreement.1.02 Vibro-Tech will cause Chong to become a member of the board of
directors of Vibro-Tech and of such of the Subsidiaries as are from time to time
designated by Chong.
1.03 The relationship of Chong with Vibro-Tech is that of an independent
contractor and nothing in the Agreement will be interpreted to establish and
form of partnership, relationship of employment or other contract of service.
<PAGE>
1.04 Vibro-Tech will contract in compliance with applicable local laws, with
such persons, firms and corporations qualified under applicable local laws as
Chong may select to provide management services, accounting services, advice,
analysis and recommendations, and may, at the cost and expense of Vibro-Tech and
its Subsidiaries, employ, retain or contract with such qualified persons, firms
or corporations as Chong may select with respect to any of the duties of the
manger to be performed under this Agreement including, but not limited to, the
management of the business and assets of Vibro-Tech and the Subsidiaries, the
corporate structure and taxation of Vibro-Tech and the Subsidiaries, the making
of business and management decisions for Vibro-Tech and the Subsidiaries, the
design and development of the products of Vibro-Tech and the Subsidiaries, the
purchase and sale of the inventory of products of Vibro-Tech and the
Subsidiaries, the business and office arrangements for Vibro-Tech and the
Subsidiaries, the custodianship of Vibro-Tech's and the Subsidiaries' assets and
securities, subject to applicable laws and policies, and registry and transfer
agency matters relating to securities of Vibro-Tech.
1.05 Vibro-Tech will be, and will cause the Subsidiaries to be, fully and solely
liable and responsible for the activities and remuneration of the persons, firms
and corporations to whom the duties of Vibro-Tech are delegated by Chong under
section 1.04 on behalf of Vibro-Tech and its Subsidiaries and Vibro-Tech will,
and will cause the Subsidiaries to, indemnify and save Chong harmless from and
against any cost, expense, liability or damage to Chong in connection with the
activities of such persons, firms or corporations and the activities of Chong in
accordance with applicable law.
1.06 Chong will cause Vibro-Tech and the Subsidiaries to keep at all times
proper books of account and records relating to their operations, which books of
account and records will be accessible for inspection by Chong or any person
designated by Chong at any time during ordinary business hours.ARTICLE II
MANAGEMENT OF BUSINESS BY CHONG2.01 Without limiting the generality of the
provisions of article one, at and with the direction of Chong, Vibro-Tech will
subject to paragraph 2.02:
(a) contract with persons to serve as officers, managers and employees as are
agreeable to Chong that are qualified under applicable legislation to plan and
operate the business and affairs of Vibro-Tech and its Subsidiaries and to do
all such other things which the shareholders of Vibro-Tech in general meeting
resolve from time to time is desirable for Vibro-Tech and its Subsidiaries to do
or refrain from doing;
(b) take, on behalf of Vibro-Tech and its Subsidiaries, all such action as Chong
may deem desirable or expedient to give effect to any investment or business
decision of Chong;
(c) ensure that at all times the business activities of Vibro-Tech comply with
the requirements of the regulatory authorities of the states of the U.S.A. and
other jurisdictions where the business of Vibro-Tech and its Subsidiaries is
carried on or where shares of Vibro-Tech may be qualified for sale to the
public;
<PAGE>
(d) use its best efforts to present and recommend a continuing and suitable
business program consistent with the business policies, objectives and
restrictions of Vibro-Tech and its Subsidiaries to operate their business and to
dividend from time to time net profits, if any, to Vibro-Tech's shareholders,
and in accordance with the analysis, advice and recommendations of persons
qualified under applicable legislation, to provide advice with respect to its
business and changes in such business policies, objectives and restrictions and
to present business opportunities of a character consistent with the business
program adopted by Chong for Vibro-Tech and its Subsidiaries from time to
time;(e) generally advise Vibro-Tech about any matter which Vibro-Tech considers
relevant or material in connection with the administration, business or
investments of Vibro-Tech and its Subsidiaries.
2.02 Subject to direction from the board of directors of Vibro-Tech, Chong will
exclusively select such persons, firms or corporations as Chong considers
appropriate to provide services required in connection with the operation of the
business of Vibro-Tech.
2.03 Chong represents and warrants to, and covenants with, Vibro-Tec that Chong
has reviewed the business objectives, policies and restrictions of Chong as set
out in the offering memorandum of Vibro-Tech, will act in accordance with such
objectives, policies and restrictions as amended from time to time by the board
of directors of Vibro-Tech and will not suffer or permit Vibro-Tech to engage in
or operate any other business other than the design, manufacture, marketing and
sale of vibration protection devices unless such change has been approved by not
less than two-thirds of the shares of Vibro-Tech outstanding at the time.
2.04 (a) Chong will forthwith provide Vibro-Tech with information concerning any
change in the business objectives, policies of, or restrictions on, Vibro-Tech
and its Subsidiaries and with such further information concerning the affairs of
Vibro-Tech and its Subsidiaries as Chong may from time to time request.
(b) Any material change in the business objectives, policies or
restrictions of Vibro-Tech or in any term of a material contract or of any
officer or of the auditors of Vibro-Tech will require the prior approval of
Chong and the consent of applicable securities administrators, if applicable.
ARTICLE III ADMINISTRATION OF VIBRO-TECH
3.01 Chong will, as president and chief executive officer of Vibro-Tech:
(a) determine the business plan and strategy of Vibro-Tech and its Subsidiaries
as Chong considers appropriate from time to time with the concurrence, and at
the direction of, the boards of directors of Vibro-Tech and its Subsidiaries;
(b) maintain at the respective registered offices of Vibro-Tech and its
Subsidiaries the corporate records which Vibro-Tech and its Subsidiaries are
required to maintain pursuant to applicable law;
<PAGE>
(c) provide to the shareholders of Vibro-Tech and its Subsidiaries quarterly and
annual financial statements in compliance with applicable securities laws and
quarterly and annual reports on the operations and business activities of
Vibro-Tech and its Subsidiaries, including the details of the business
activities of Vibro-Tech and its Subsidiaries;
(d) arrange for the performance of all accounting, clerical and administrative
services necessary to the proper and efficient management of Vibro-Tech and its
Subsidiaries;
(e) provide to the boards of directors of Vibro-Tech any information which the
members of such boards may from time to time reasonably request in connection
with the day to day business operations of Vibro-Tech; and
(f) continue for at least one year in the offices of president and chief
executive officer.
ARTICLE IV STANDARD OF CARE
4.01 Chong will exercise the powers and perform the duties assumed hereunder
honestly, in good faith and in the best interests of Vibro-Tech and will
exercise the degree of care, diligence and skill that a reasonably prudent
person would exercise in comparable circumstances.
ARTICLE V MANAGEMENT FEE AND OTHER COMPENSATION
5.01 From July 1, 1999 to December 31, 1999 Chong will charge to, and collect
from, Vibro-Tech a monthly management fee of US$3,500 plus applicable taxes
under the Excise Tax Act (Canada) in connection with the management of business
and affairs of Vibro-Tech.
5.02 From January 1, 2000 to June 30, 2000 Chong will charge to, and collect
from, Vibro-Tech a monthly management fee of US$4,000 plus applicable taxes
under the Excise Tax Act (Canada) in connection with the management of business
and affairs of Vibro-Tech.
5.03 On June 30, 2000 and on each June 30 thereafter the Company will pay the
amount paid in the previous twelve month period plus ten percent and applicable
taxes.
5.04 The management fee in respect of each calendar month will be paid by
Vibro-Tech to Vibro-Tech on the first business day of the calendar month.
5.05 Vibro-Tech will also pay on the first business day of each calendar month a
car allowance of US$150 per calendar month and will provide extended health and
dental benefits from Blue Cross or a comparable firm to Chong and to his
dependents.
5.06 Chong will furnish to Vibro-Tech not later than the fifth business day
after the beginning of each calendar month a statement of the management fee
payable under this Article 5 in respect of that calendar month.
<PAGE>
5.07 On condition that this Agreement remains a valid and subsisting agreement
until December 31, 1999, Vibro-Tech grants to, and vests in, Chong an option to
purchase 500,000 shares of Vibro-Tech on or before the earlier of six months
after the termination of this Agreement or June 30, 2003 for US$0.15 per share
and will execute and deliver a form of agreement acceptable to Chong evidencing
the grant of such share purchase option.
5.08 Any change in the management fee or in the basis of calculating the
management fee or other expenses which would result in increased charges to
Chong may be made only after approval of such matter by the board of directors
of Vibro-Tech.
ARTICLE VI EXPENSES OF CHONG
6.01 The expenses and disbursements of Chong incurred from time to time in
directing and managing the business of Vibro-Tech and its Subsidiaries will be
paid by Vibro-Tech.
ARTICLE VII OTHER ACTIVITIES OF CHONG
7.01 Chong may have other business interests and may engage in other activities
similar or in addition to those relating to the activities to be performed for
Vibro-Tech and its Subsidiaries, including the rendering of services and advice
to other persons, the ownership, development and management of investments, and
any other business in which Chong decides to become involved in except a
business which is, or may be, in competition with that of Vibro-Tech and its
Subsidiaries.
ARTICLE VIII RELATIONSHIP OF PARTIES
8.01 Chong will perform his duties as an independent contractor and none of
Vibro-Tech, its Subsidiaries, their respective directors, officers or employees
are for the purposes of this Agreement employees or agents of or co-venturers
with Chong and nothing in this agreement will be construed so as to make them
employees, agents or co-venturers of Chong or to impose any liability on Chong
as an employer, principal or co-venturer.
8.02 Vibro-Tech will bear the sole and complete responsibility and liability for
the employment, conduct and control of its employees, agents and contractors and
for the injury of such persons or injury to others through the actions or
omissions of such persons.
ARTICLE IX INDEMNITY
9.01 Vibro-Tech agrees to indemnify and save harmless Chong for any loss (other
than loss of profits), liability, claim, damages or expense, including the
reasonable cost of investigating, settling or defending any alleged loss,
<PAGE>
liability , claim, damages or expense and reasonable counsel fees incurred in
connection therewith, incurred as a result of or in connection with the
execution of his office and duties under this Agreement or otherwise in respect
of the affairs of Vibro-Tech and its Subsidiaries, provided that Chong has
exercised his powers and performed his duties in accordance with the standard of
care stipulated in Article IV.
ARTICLE X TERM AND TERMINATION
10.01 This Agreement will be effective on July 1, 1999 and will continue in
force until May 31, 2000.
10.02 This Agreement will be automatically renewed for an additional term of one
year on the terms and other conditions of this Agreement, including this
condition.
10.03 This Agreement may be terminated by Chong on not less than 90 days'
written notice to Vibro-Tech in the event of:
(a) the commission by Vibro-Tech of any material fraudulent act in performing
any of its obligations or any material deliberate misrepresentation to Chong or
to its directors, officers or shareholders;
(b) failure of Vibro-Tech to perform its duties and discharge its obligations;
(c) the malfeasance of misfeasance of Vibro-Tech, in the performance of its
duties; or
(d) the failure of Vibro-Tech or Chong to obtain or maintain any necessary
registration or qualification in any jurisdiction required to effect the
purposes of this agreement.
10.04 This agreement may be terminated by Vibro-Tech and its Subsidiaries on not
less than 90 days' written notice to Chong in the event of:
(a) the commission by Chong of any material fraudulent act in performing any of
its obligations or any material deliberate misrepresentation to Chong or to its
directors, officers or shareholders;
(b) failure of Chong to perform his duties and discharge its obligations;
(c) the malfeasance of misfeasance of Chong in the performance of his duties; or
(d) the failure of Vibro-Tech or Chong to obtain or maintain any necessary
registration or qualification in any jurisdiction required to effect the
purposes of this Agreement.
<PAGE>
10.05 The agreement will terminate forthwith with respect to Chong if he becomes
or acknowledges that he is insolvent or makes a voluntary assignment or proposal
under the Bankruptcy Act (Canada) or if a bankruptcy petition is filed or
presented against Chong.
10.05 After December 31, 2000, this agreement may be terminated by Vibro-Tech or
by Chong at any time upon not less that 90 days' written notice.
10.07 From and after the effective date of termination of this agreement, Chong
will not be entitled to compensation for any further services but will be paid
all compensation accruing to such date and the amount required to be paid under
section 10.08.
10.08 On condition that this Agreement has been performed for at least twelve
months, regardless of the reason for termination of this Agreement, Vibro-Tech
will pay to Chong on termination of this Agreement the amount that is the
aggregate of all amounts paid to Chong for remuneration in the ten months before
the month in which this Agreement is terminated in settlement of any and all
claims that either may have in respect of the things done or not done by Chong
in the course of being chief executive officer of Vibro-Tech.
10.09 Upon the termination of this agreement, Chong will:
(a) pay over to Vibro-Tech and its Subsidiaries all moneys which may be held by
Chong for the account of Vibro-Tech and its Subsidiaries pursuant to this
Agreement after deducting any accrued compensation to which Chong is then
entitled;
(b) deliver to Vibro-Tech and its Subsidiaries a full accounting, including a
statement of all moneys collected by Chong, a statement of all moneys held by
Chong, and a statement of all moneys paid by Chong, covering the period
following the date of the last accounting furnished to Vibro-Tech and its
Subsidiaries; and
(c) deliver to and, where applicable, transfer into the name of Vibro-Tech and
its Subsidiaries ( or as it may direct in writing ) all property and documents
of Vibro-Tech and its Subsidiaries held in the name or custody of Chong.
10.07 Upon termination of this Agreement, Vibro-Tech will:
(a) assume all contracts and obligations entered into or undertaken by Chong
(other than with any affiliate of Chong) within the scope of its authority and
indemnify Chong against any liability by reason of anything done or required to
be done under any such contract or obligation after the date of termination of
this Agreement; and
(b) reimburse or pay for, indemnify and save harmless Chong from, the costs and
expenses of all services which may have been arranged by the manager or as a
result of this agreement and which may not have been paid at the time of
termination.
10.08 On condition that this Agreement has been a valid and subsisting agreement
for twelve calendar months, Vibro-Tech will pay to Chong as at the date of
termination of this Agreement, regardless of the reason the Agreement is
terminated, the equivalent of what Chong was paid in the ten months immediately
preceding such termination, including benefits and any applicable taxes as, and
not on account of, liquidated damages.
<PAGE>
ARTICLE XI AMENDMENTS
11.01 This Agreement may not be modified or amended except by an instrument in
writing signed by the parties to this Agreement or, where applicable, by their
successors or permitted assigns, but no material provision in this Agreement may
be amended unless approved by ordinary resolution of the board of directors of
Vibro-Tech with Chong abstaining and receipt, where necessary, of approvals of
applicable regulatory authorities.
ARTICLE XII WAIVER
12.01 No condoning, excusing or waiver by any party of any default, breach or
non-observance by any other party at any time or times in respect of any
covenant, proviso or condition will operate as a waiver of that party's rights
in respect of any continuing or subsequent default, breach or non-observance,
and no waiver will be inferred from or implied by anything done or omitted to be
done by the party having those rights.
ARTICLE XIII NOTICE
13.01 Any notice to be given by any party to any other party will be deemed to
be given when in writing and delivered or communicated by telex or telecopier on
any business day to the address for notice of the intended recipient.
13.02 The address for notice of each of the parties will, until changed, be:
(a) Chong:
Mr. Jock Chong
Suite 600, 1090 West Pender Street
Vancouver, B.C. V6E 2N7
Fax: 604-683-8791
(b) Vibro-Tech
Vibro-Tech Industries, Inc.
201-11240 Bridgeport Road
Richmond, B.C. V6X IT2
Attention: Mr. William Chow, Chairman
Fax: 604-278-2712
13.03 A party may by notice to the other party change its address for notice to
some other address and shall so change its address for notice whenever the
existing address for notice ceases to be adequate for delivery by hand or
communication by telex or telecopier.
<PAGE>
ARTICLE XIV HEADINGS
14.01 The headings appearing in this agreement have been inserted for reference
and as a matter of convenience only, and in no way define, limit or enlarge the
scope or meaning of this agreement or any of its provisions.
ARTICLE XV GOVERNING LAW
15.01 This agreement shall be governed by and construed in accordance with the
laws of British Columbia and any proceeding commenced or maintained in respect
of this Agreement will be so commenced or maintained in the court of appropriate
jurisdiction in the County of Vancouver to which jurisdiction the parties
irrevocable attorn..
ARTICLE XVI ENTIRE AGREEMENT
16.01 The provisions of this Agreement and the share purchase option agreement
to be entered into by the parties constitute the entire agreements between the
parties and supersede all previous communications, representations and
agreements, whether verbal or written, between the parties with respect to the
subject matter hereof.
ARTICLE XVII ASSIGNMENT
17.01 This agreement may not be assigned in whole or in part by any party
without the written consent of the other party.
ARTICLE XVIII ENUREMENT
18.01 This Agreement will enure to the benefit of and be binding upon the
parties and their respective successors and permitted assigns.
IN WITNESS WHEREOF this Agreement has been executed by the parties hereto on the
day and year first above written.
VIBRO-TECH INDUSTRIES, INC.
By: /s/ Willaim Chow
William Chow, Chairman of the Board
Signed, Sealed and Delivered by Boo )
Jock Chong in the presence of: )
<PAGE>
)
/s/ Gary MacDonald )
Name )
___________________________________ ) /s/ Boo Jock Chong
Address ) BOO JOCK CHONG
- ----------------------------------- )
)
- ----------------------------------- )
Occupation )
30071001/1-10
EXHIBIT 10.21
MANAGEMENT AGREEMENT
THIS AGREEMENT made as of July 1, 1999
BETWEEN:
VIBRO-TECH INDUSTRIES, INC., a corporation subsisting under the laws of the
state of Delaware, having a place of business at Suite 201-11240 Bridgeport
Road, Richmond, British Columbia V6X 1T2 ("Vibro-Tech") on its own behalf and on
behalf of Shantou Vibro-Tech Industries Inc. (China), Vibro-Tech Holdings Ltd.
(Hong Kong) and Vibro-Tech Industries Ltd. (Hong Kong) (collectively, the "China
Subsidiaries")
AND:
JOE CHUNG, Businessman, having a place of business at F3 Merry Court, 10 Castle
Road, Mid-Level, Hong Kong
("Chung")
WHEREAS:
A. Vibro-Tech and its subsidiaries, Vitech Industries Inc, Cansun Management
Ltd., Shantou Vibro-Tech Industries Inc. (China), Vibro-Tech Holdings Ltd. (Hong
Kong) and Vibro-Tech Industries Ltd. (Hong Kong) (collectively, the
"Subsidiaries") are engaged in the business of the design, manufacture,
marketing and sales of seismic vibration bearings for use in the construction
industry;
B. Vibro-Tech wishes to engage Chung as, and Chung has agreed to be, executive
vice-president in charge of the manufacture, operations, product development,
marketing, sales and management of Shantou Vibro-Tech Industries Inc. (China),
Vibro-Tech Holdings Ltd. (Hong Kong) and Vibro-Tech Industries Ltd. (Hong Kong)
(collectively, the "China Subsidiaries") on the terms and conditions of this
Agreement;
WITNESSES THAT the parties mutually covenant and agree as follows:
ARTICLE I APPOINTMENT AND DECLARATION
1.01 The China Subsidiaries appoint and engage Chung as executive vice-president
of the China Subsidiaries and Chung accepts such appointment, on the terms and
other conditions of this Agreement.1.02 During the term of this Agreement, Chung
will be a member of the board of directors of such of the China Subsidiaries as
are from time to time designated by the president of Vibro-Tech.
1.03 As executive vice-president of the China Subsidiaries, Chung will be
responsible for the manufacturing, operations, product development, marketing,
sales and management of the China Subsidiaries in China and in such other Asian
countries as are designated from time to time by the president of Vibro-Tech and
in ensuring that the China Subsidiaries are, and continue to be, in compliance
with the laws of China and such other Asian countries in which the China
Subsidiaries carry on business.
<PAGE>
1.04 Chung will work with, assist and in all ways cooperate with Foo Lin Zhou in
the design, modification, patenting and any other activity connected with the
development of seismic vibration bearings for use in the construction industry.
1.05 The China Subsidiaries will contract in compliance with applicable local
laws with such persons, firms and corporations qualified under applicable local
laws as Chung may select to provide personnel and office services, accounting
services, legal and accounting advice and such other activities as Chung, in
consultation with the president of Vibro-Tech, considers should be done by third
parties but Chung will continue to make the day-to day business and management
decisions for the China Subsidiaries..
1.06 Except for the liability for the payment of the monthly fees of Chung, the
China Subsidiaries will be fully and solely liable and responsible for the
activities and remuneration of the persons, firms and corporations employed by,
or contracting with, the China Subsidiaries and Chung will ensure that all
contracts are made between any person, firm or corporation with the China
Subsidiary involved.
ARTICLE II MANAGEMENT OF BUSINESS BY CHUNG
2.01 Without limiting the generality of the provisions of article one, at and
with the direction of, and in consultation from time to time with, the president
of Vibro-Tech, Chung will subject to paragraph 2.02:
(a) take, on behalf of the China Subsidiaries, all such action to give effect to
any investment or business decision of the president of Vibro-Tech;
(b) use his best efforts to present and recommend from time to time a continuing
and suitable business program consistent with the business policies, objectives
and restrictions of Vibro-Tech to establish and expand the business of the China
Subsidiaries in accordance with the analysis, advice and recommendations of
persons qualified under applicable legislation, and to present business
opportunities of a character consistent with the business program adopted by the
president of Vibro-Tech; and
(c) generally advise Vibro-Tech about any matter which Chung considers relevant
or material in connection with the administration, business or investments of
Vibro-Tech and its Subsidiaries.
2.02 Subject to direction from the president of Vibro-Tech, Chung will select
such persons, firms or corporations as Chung considers appropriate to provide
services required in connection with the operation of the business of the China
Subsidiaries.
2.03 Chung will forthwith provide Vibro-Tech with information concerning any
change in the business objectives, policies of, or restrictions on, the China
Subsidiaries and with such further information concerning the affairs of the
China Subsidiaries as the president of Vibro-Tech may from time to time request.
<PAGE>
ARTICLE III ADMINISTRATION OF THE CHINA SUBSIDIARIES
3.01 Chung will, as executive vice-president of the China Subsidiaries, in
consultation with the president of Vibro-Tech:
(a) determine the business plan and strategy of the China Subsidiaries from time
to time;
(b) retain qualified and appropriate legal, accounting and business advisers for
the China Subsidiaries as are required to maintain the China Subsidiaries
pursuant to applicable law and to ensure that Vibro-Tech is able to comply with
the securities laws of the United States of America; and
(c) provide to the board of directors of Vibro-Tech any information which the
members of such board may from time to time reasonably request in connection
with the day to day business operations of Vibro-Tech or its Subsidiaries.
ARTICLE IV STANDARD OF CARE
4.01 Chung will exercise the powers and perform the duties assumed hereunder
honestly, in good faith and in the best interests of Vibro-Tech and its
Subsidiaries and will exercise the degree of care, diligence and skill that a
reasonably prudent person would exercise in comparable circumstances.
ARTICLE V MANAGEMENT FEE, OTHER COMPENSATION AND VACATIONS
5.01 To July 31, 2000 Chung will charge to, and collect from, the China
Subsidiaries in such proportions from each of the China Subsidiaries as the
president of Vibro-Tech considers appropriate a monthly management fee of
US$2,500.
5.03 On July 31, 2001 and on July 31 in each subsequent year of this Agreement
and during any renewal of the term of this Agreement, the monthly management fee
to be paid to Chung will be increased by ten percent of the monthly management
fee paid in the previous period.
5.04 The management fee in respect of each calendar month will be paid to Chung
on the first business day of each calendar month.
5.05 Chung will be entitled in each year to a paid, two week holiday to Canada
with all travel expenses from China to Canada, including air line tickets on an
airline and in a class of seat approved by the president of Vibro-Tech, to be
paid by the China Subsidiaries.
5.06 Vibro-Tech grants to, and vests in, Chung an option to purchase 250,000
shares of Vibro-Tech on or before the earlier of six months after the
termination of this Agreement or June 30, 2003 for US$0.15 per share and will
execute and deliver a form of agreement acceptable to Chung evidencing the grant
of such share purchase option.
<PAGE>
5.07 Chung will be paid from time to time a annual discretionary bonus
determined by the president of Vibro-Tech based on operations at the factory and
from operations in China and other Asian countries.5.08 Any change in the
management fee or in the basis of calculating the management fee or other
expenses which would result in increased charges to the China Subsidiaries may
be made only after approval of such matter by the president of Vibro-Tech.
ARTICLE VI EXPENSES OF CHUNG
6.01 The expenses and disbursements of Chung incurred from time to time in
directing and managing the business of the China Subsidiaries will be paid from
time to time by the China Subsidiary designated by the president of
Vibro-Tech.
ARTICLE VII NO OTHER ACTIVITIES OF CHUNG
7.01 Chung may have no other business interests and may engage in no other
activities similar or in addition to those relating to the activities to be
performed for the China Subsidiaries.
ARTICLE VIII RELATIONSHIP OF PARTIES
8.01 Chung will perform his duties as an independent contractor and none of
Vibro-Tech, its Subsidiaries, their respective directors, officers or employees
is for the purposes of this Agreement employees or agents of or co-venturers
with Chung and nothing in this Agreement will be construed so as to make them
employees, agents or co-venturers of Chung or to impose any liability on Chung
as an employer, principal or co-venturer.
8.02 Each of the China Subsidiaries will bear the sole and complete
responsibility and liability for the employment, conduct and control of its
employees, agents and contractors and for the injury of such persons or injury
to others through the actions or omissions of such persons.
ARTICLE IX INDEMNITY
9.01 Each of the China Subsidiaries agrees to indemnify and save harmless Chung
for any loss (other than loss of profits), liability, claim, damages or expense,
including the reasonable cost of investigating, settling or defending any
alleged loss, liability , claim, damages or expense and reasonable counsel fees
incurred in connection therewith, incurred as a result of or in connection with
the execution of his office and duties under this Agreement or otherwise in
respect of the affairs of each of the China Subsidiaries if Chung has exercised
his powers and performed his duties in accordance with the standard of care
stipulated in Article IV.
<PAGE>
ARTICLE X TERM AND TERMINATION
10.01 This Agreement will be effective on July 1, 1999 and will continue in
force until July 31, 2003.
10.02 After July 31, 2003, this Agreement will be automatically renewed for an
additional term of one year on the terms and other conditions of this Agreement,
including this condition.
10.03 This Agreement may be terminated by Chung on not less than 90 days'
written notice to any of the China Subsidiaries in the event of:
(a) the commission by ant of the China Subsidiaries of any material fraudulent
act in performing any of its obligations or any material deliberate
misrepresentation to Chung or to its directors, officers or shareholders; or
(b) the malfeasance of misfeasance of any of the China Subsidiaries in the
performance of its duties.
10.04 This Agreement may be terminated by Vibro-Tech and the Subsidiaries on not
less than 30 days' written notice to Chung in the event of:
(a) the commission by Chung of any material fraudulent act in performing any of
his obligations or any material deliberate misrepresentation to any of
Vibro-Tech, its Subsidiaries or to their respective directors, officers or
shareholders;
(b) failure of Chung to perform his duties and discharge its obligations; or
(c) the malfeasance of misfeasance of Chung in the performance of his duties.
10.05 The Agreement will terminate forthwith with respect to Chung if he becomes
or acknowledges that he is insolvent or makes a voluntary assignment or proposal
under any bankruptcy laws or applicable legislation or if a bankruptcy petition
is filed or presented against Chung.
10.06 From and after the effective date of termination of this agreement, Chung
will not be entitled to compensation for any further services but will be paid
all compensation accruing to such date.
10.09 Upon the termination of this agreement, Chung will: (a) pay over to
Vibro-Tech and its Subsidiaries all moneys which may be held by Chung for the
account of Vibro-Tech and its Subsidiaries pursuant to this Agreement after
deducting any accrued compensation to which Chung is then entitled;
(b) deliver to Vibro-Tech and its Subsidiaries a full accounting, including a
statement of all moneys collected by Chung, a statement of all moneys held by
Chung, and a statement of all moneys paid by Chung, covering the period
following the date of the last accounting furnished to Vibro-Tech and its
Subsidiaries; and
<PAGE>
(c) deliver to and, where applicable, transfer into the name of Vibro-Tech and
its Subsidiaries ( or as it may direct in writing ) all property and documents
of Vibro-Tech and its Subsidiaries held in the name or custody of Chung.
10.07 Upon termination of this Agreement, Vibro-Tech will assume all contracts
and obligations entered into or undertaken by Chung (other than with any
affiliate of Chung) within the scope of its authority and indemnify Chung
against any liability by reason of anything done or required to be done under
any such contract or obligation after the date of termination of this Agreement.
ARTICLE XI AMENDMENTS
11.01 This Agreement may not be modified or amended except by an instrument in
writing signed by the parties to this Agreement or, where applicable, by their
successors or permitted assigns, but no material provision in this Agreement may
be amended unless approved by resolution of the boards of directors of
Vibro-Tech and each of the China Subsidiaries and receipt, where necessary, of
approvals of applicable regulatory authorities.
ARTICLE XII WAIVER
12.01 No condoning, excusing or waiver by any party of any default, breach or
non-observance by any other party at any time or times in respect of any
covenant, proviso or condition will operate as a waiver of that party's rights
in respect of any continuing or subsequent default, breach or non-observance,
and no waiver will be inferred from or implied by anything done or omitted to be
done by the party having those rights.
ARTICLE XIII NOTICE
13.01 Any notice to be given by any party to any other party will be deemed to
be given when in writing and delivered or communicated by telex or telecopier on
any business day to the address for notice of the intended recipient.
13.02 The address for notice of each of the parties will, until changed, be:
(a) Chung:
Mr. Joe Chung
F3 Merry Court
10 Castle Road
Mid-Level
Hong Kong
(b) Vibro-Tech
Vibro-Tech Industries, Inc.
201-11240 Bridgeport Road
Richmond, B.C. V6X IT2
Attention: Mr. William Chow, Chairman
Fax: 604-278-2712
<PAGE>
13.03 A party may by notice to the other party change its address for notice to
some other address and shall so change its address for notice whenever the
existing address for notice ceases to be adequate for delivery by hand or
communication by telex or telecopier.
ARTICLE XIV HEADINGS
14.01 The headings appearing in this agreement have been inserted for reference
and as a matter of convenience only, and in no way define, limit or enlarge the
scope or meaning of this agreement or any of its provisions.
ARTICLE XV GOVERNING LAW
15.01 This agreement will be governed by and construed in accordance with the
laws of British Columbia and any proceeding commenced or maintained in respect
of this Agreement will be so commenced or maintained in the court of appropriate
jurisdiction in the County of Vancouver to which jurisdiction the parties
irrevocable attorn..
ARTICLE XVI ENTIRE AGREEMENT
16.01 The provisions of this Agreement and the share purchase option agreement
to be entered into by the parties constitute the entire agreements between the
parties and supersede all previous communications, representations and
agreements, whether verbal or written, between the parties with respect to the
subject matter hereof.
ARTICLE XVII ASSIGNMENT
17.01 This agreement may not be assigned in whole or in part by any party
without the written consent of the other party.
ARTICLE XVIII ENUREMENT
18.01 This Agreement will enure to the benefit of and be binding upon the
parties and their respective successors and permitted assigns.
IN WITNESS WHEREOF this Agreement has been executed by the parties hereto on the
day and year first above written. VIBRO-TECH INDUSTRIES, INC. on its own behalf
and on behalf of the China Subsidiaries
By: /s/ William Chow
William Chow, Chairman of the Board
<PAGE>
Signed, Sealed and Delivered by Joe )
Chung in the presence of: )
/s/ In Chinese Characters /s/ Joe Chung
JOE CHUNG
30071002/1-7
EXHIBIT 10.22
Gary MacDonald
Suite 600-1090 West Pender Street
Vancouver, B. C. V6E 2N7
Direct Line: 604-609-3770; Email: [email protected]
Reception: 604-683-5866, Facsimile: 604-683-8791
July 23, 1999
Vibro-Tech Industries, Inc. Fax: 278-2712
201-11240 Bridgeport Road
Richmond, B.C.
Attention: Mr. Jock Chong, Chief Executive Officer
Dear Mr. Chong:
Re: Engagement of Gary MacDonald
I am pleased to be engaged in the capacity of regulatory and business
consultant and secretary in connection the organization, financing and operation
of the business of Vibrotech Industries Ltd. (the "Company"). My work will
relate primarily to the preparation and filing of a US Form 10 for the Company
and such other companies as you may direct. I summarize details of my engagement
and request the acceptance of the terms and conditions by signing and returning
a signed copy of this letter.
The initial remuneration for services rendered is a fee of Cdn$120 per hour
plus Canadian Goods and Services tax. As matters progress, I am amenable to
alteration of the remuneration for services, including remuneration by way of
shares or rights to purchase shares should a company enter the public market
place. Should the remuneration be altered, the alteration will be evidenced by a
written amendment to this letter. The engagement may be terminated by Jock Chong
on notice. I will be instructed from time to time by Jock Chong and William
Chow.
Bills for fees will be submitted every two weeks to the Company and are
payable when received. Bills will itemize services performs and time incurred
during the billing period. Allocation of fees among the various companies will
be a matter of determination by you. If a separate statement of account is to be
set up for a company other than theCompany, you will give a direction from time
to time. Minor disbursements such as long distance telephone calls, delivery
charges and photocopying may be incurred from time to time and will be
reimbursed as recorded on statements of account. Photocopy charges are $0.10 per
page, which is my cost. Other disbursements will be approved from time to time
before being incurred.
I request you forward an initial retainer of Cdn$2,000.
2.
<PAGE>
Part of the services rendered will involve the collection of corporate
materials and the initial preparation of written materials relating to
regulatory matters and the organization and operation of the business of the
Company for registration with the Securities and Exchange Commission. I confirm
my estimate of the fee for doing this if between Cdn$20,000 and Cdn$25,000.
You acknowledge that the writer is not currently licensed to practice law
in any jurisdiction and there will be instances in the course of the engagement
where the services of firms qualified to practise law in various jurisdictions
will be required. Part of my engagement will be to collect and prepare materials
for legal review and to coordinate and deal with the various professional
advisors, including legal and accounting firms, that will be required in the
course of the organization and operation of the business of the Company and
associated companies. The fees of any professional firm required in any
jurisdiction will be to the account of the Company or such other associated
company as you may direct. Such company which will enter into separate
engagements with such firms.
Should the writer be qualified in the course of this engagement to practise
law in any jurisdiction, the remuneration will be altered to include the payment
of additional taxes arising from such qualification.
If the above is acceptable, please sign and return the enclosed copy of
this letter.
Yours truly,
/s/ Gary A. MacDonald
Gary A. MacDonald
Direct Line: 604-609-3360, Direct Fax: 604-609-3363, Email: [email protected]
cc. Mr. Ken Telford, Fax: 688-7880
Accepted and agreed on July 23, 1999.
Vibro-Tech Industries, Inc.
By: /s/ Jock Chong
Jock Chong, CEO
Gary MacDonald
Suite 600-1090 West Pender Street
Vancouver, B. C. V6E 2N7
Direct Line: 604-609-3770; Email: [email protected]
Reception: 604-683-5866, Facsimile: 604-683-8791
<PAGE>
October 20, 1999
Vibro-Tech Industries, Inc. Fax: 278-2712
201-11240 Bridgeport Road
Richmond, B.C.
Attention: Mr. Jock Chong, President and Chief Executive Officer
Dear Mr. Chong:
Re: Amendment of Engagement of July 23, 1999 of Gary MacDonald
I wish to confirm the conditions on which the engagement letter of July 23, 1999
is to be amended.
For the next three months, as Vibro-Tech puts together and files its Form 10-SB,
my fees will not exceed in each month $7,000 plus GST. I hope to have the Form
10-SB filed before Christmas, 1999. I will still record my time and any time at
the rate of Cdn$120 per hour that exceeds $7,000 per month will go to a share
purchase account with shares to be purchased at a later date at US$0.40 per
share.
I expect the preparation of the Form 10SB and supporting documents will take
most, if not all, of my time for at least the next two, and possibly three,
months and after the Form 10SB is filed the work required to be done as
secretary of Vibro-Tech will be much less.
I note I am also doing other items as the annual meeting of Vibro-Tech,
contracts as necessary and items with the subsidiaries of Vibro-Tech. The
compensation arrangement will be reviewed in three months.
Vibro-Tech should be aware that after my work is finished, the Form 10SB, the
audited financial statements and the exhibits required have to be converted into
ASTI, which is the SEC EDGAR computer language. This will be done by another
firm. Mr. George Roth is sending me the details of a Colorado firm that will do
the conversion for US$5.00 per page, but Mr. Roth noted his last Form 10SB
filing cost him US$7,000 just to convert and file. Vibro-Tech should be prepared
for this.
If the above is acceptable, please sign and return the enclosed copy of
this letter.
Yours truly,
/s/ Gary A. MacDonald
Direct Line: 604-609-3360, Direct Fax: 604-609-3363, Email: [email protected]
cc. Mr. Ken Telford, Lucy Liang Fax: 688-7880, Mr. William Chow, Fax: 273-6662
2.
<PAGE>
Accepted and agreed on October 22, 1999.
Vibro-Tech Industries, Inc.
By: /s/ Jock Chong
Jock Chong, CEO
30070701/3-4
EXHIBIT 10.23
CONSULTING AGREEMENT
THIS AGREEMENT made as of October 25, 1999
BETWEEN:
VIBRO-TECH INDUSTRIES, INC., a corporation subsisting under the laws of the
state of Delaware, having a place of business at Suite 201-11240 Bridgeport
Road, Richmond, British Columbia V6X 1T
("Vibro-Tech")
AND:
DR. MILES PRICE, Businessman, having a place of business at 3643 Marine Drive,
West Vancouver, B. C. V7V IN3
("Price")
WHEREAS:
A. Vibro-Tech is engaged in the business of the design, manufacture, marketing
and sales of seismic rubber vibration bearings for use in the construction
industry;
B. Price has agreed to be a consultant for Vibro-Tech in charge on a
non-exclusive basis of the government qualification, marketing and sales of
seismic rubber vibration bearings in the Republic of Mexico on the terms and
conditions of this Agreement;
WITNESSES THAT the parties mutually covenant and agree as follows:
ARTICLE I APPOINTMENT AND DECLARATION
1.01 Vibro-Tech appoints and engages Price as a non-exclusive consultant to act
for and on behalf of Vibro-Tech in the Republic of Mexico and Price accepts such
appointment, on the terms and other conditions of this Agreement.1.02 As
consultant for Vibro-Tech, Price will be responsible for the qualification for
use with any governmental body of the seismic rubber isolation bearings, for
product development in Mexico, and for marketing, sales and management of
operations in Mexico under the direction from time to time of the president of
Vibro-Tech.
1.04 Price will work with, assist and in all ways cooperate with the Vibro-Tech
subsidiary Shantou Vibro-Tech Industrial and Development Co Ltd. in the design,
modification, patenting and any other activity connected with the development of
seismic rubber vibration bearings for use in the construction industry in
Mexico.
1.05 Price will ensure that all contracts are made between any person, firm or
corporation with Vibro-Tech.
<PAGE>
ARTICLE II OBLIGATIONS OF PRICE
2.01 At and with the direction of, and in consultation, from time to time with,
the president of Vibro-Tech, Price:
(a) ensure any governmental registration or qualification necessary to be
obtained in Mexico to market and sell the seismic rubber isolation bearings of
Vibro-Tech is obtained;
(b) use his best efforts to present and recommend from
time to time a continuing and suitable business program consistent with the
business policies, objectives and restrictions of Vibro-Tech to establish and
expand the business of Vibro-Tech, and to present business opportunities of a
character consistent with the business program adopted by the president of
Vibro-Tech; and
(c) generally advise Vibro-Tech about any matter which Price considers relevant
or material in connection with the administration or business of Vibro-Tech in
Mexico.
2.02 Subject to direction from the president of Vibro-Tech, Price will select
such persons, firms or corporations as Price considers appropriate to provide
services required in connection with the operation of the business of
Vibro-Tech.
2.03 Price will forthwith provide Vibro-Tech with information concerning any
change in the business objectives, policies of, or restrictions on, the business
of Vibro-Tech in Mexico and with such further information concerning the affairs
of Vibro-Tech as the president may from time to time request.
ARTICLE III ADMINISTRATION OF THE BUSINESS OF VIBRO-TECH IN MEXICO
3.01 Price will, as consultant to Vibro-Tech, in consultation with the president
of Vibro-Tech:
a) determine the business plan and strategy of Vibro-Tech in Mexico from time to
time;
(b) retain qualified and appropriate legal, accounting and business advisers for
Vibro-Tech in Mexico as are required to maintain Vibro-Tech pursuant to
applicable law and to ensure that Vibro-Tech is able to comply with the laws of
Mexico; and
(c) provide to the board of directors of Vibro-Tech any information which the
members of such board may from time to time reasonably request in connection
with the day to day business operations of Vibro-Tech in Mexico and the
prospects of Vibro-Tech in Mexico.
<PAGE>
ARTICLE IV STANDARD OF CARE
4.01 Price will exercise the powers and perform the duties assumed hereunder
honestly, in good faith and in the best interests of Vibro-Tech and its
Subsidiaries and will exercise the degree of care, diligence and skill that a
reasonably prudent person would exercise in comparable circumstances.
ARTICLE V COMPENSATION AND DISBURSEMENTS
5.01 Price will be reimbursed from time to time for disbursements reasonably
incurred with the approval of the president of Vibro-Tech in connection with
Price's activities in Mexico.
5.02 On receipt of payment by Vibro-Tech for the sale in Mexico of product of
Vibro-Tech or any if its subsidiaries, Vibro-Tech will pay to Price a commission
of between three and five per cent of the dollar amount sold, before taxes,
duties and other imposts, such percentage determined in each case by the
president of Vibro-Tech having due regard to all of the circumstances.
5.03 Vibro-Tech grants to, and vests in, Price an option to purchase 30,000
shares of Vibro-Tech on or before the earlier of six months after the
termination of this Agreement or June 30, 2003 for US$0.15 per share and will
execute and deliver a form of agreement acceptable to Price evidencing the grant
of such share purchase option.
5.04 Vibro-Tech may from time to time engage such other persons, firms or
corporations as it wishes to do such things as Vibro-Tech might direct in Mexico
without affecting the validity of this Agreement.
ARTICLE VI OTHER ACTIVITIES OF PRICE
6.01 Price may have such other business interests and may engage in such other
activities he might wish from time to time, but will not engage in a business,
proprietorship, partnership, or other enterprise, or invest in a business,
proprietorship, partnership, or other enterprise, similar to, or in competition
with, those relating to the activities to be performed for Vibro-Tech in
Mexico.
ARTICLE VII RELATIONSHIP OF PARTIES
7.01 Price will perform his duties as an independent contractor and none of
Vibro-Tech, its subsidiaries, their respective directors, officers or employees
is for the purposes of this Agreement employees or agents of, or co-venturers
with, Price and nothing in this Agreement will be construed so as to make them
employees, agents or co-venturers of Price or to impose any liability on Price
as an employer, principal or co- venturer.
7.02 Vibro-Tech will bear the sole and complete responsibility and liability for
the employment, conduct and control of its employees, agents and contractors and
for the injury of such persons or injury to others through the actions or
omissions of such persons.
<PAGE>
ARTICLE VIII INDEMNITY
8.01 Vibro-Tech will indemnify and save harmless Price for any loss (other than
loss of profits), liability, claim, damages or expense, including the reasonable
cost of investigating, settling or defending any alleged loss, liability ,
claim, damages or expense and reasonable counsel fees incurred in connection
therewith, incurred as a result of or in connection with the execution of his
duties under this Agreement or otherwise in respect of the affairs of Vibro-Tech
if Price has exercised his powers and performed his duties in accordance with
the standard of care stipulated in Article IV.
ARTICLE IX TERM AND TERMINATION
9.01 This Agreement will be effective on October 31, 1999 and will continue in
force until December 31, 2003.
9.02 After December 31, 2003, this Agreement will be automatically renewed for
an additional term of one year on the terms and other conditions of this
Agreement, including this condition.
9.03 This Agreement may be terminated by Price on not less than 90 days' written
notice to Vibro-Tech in the event of:
(a) the commission by Vibro-Tech of any material fraudulent act in
performing any of its obligations or any material deliberate
misrepresentation to Price; or
(b) the malfeasance of misfeasance of any of Vibro-Tech in the performance
of its duties.
9.04 This Agreement may be terminated by Vibro-Tech on not less than 30 days'
written notice to Price in the event of:
(a) the commission by Price of any material fraudulent act in performing
any of his obligations or any material deliberate misrepresentation to
Vibro-Tech or to its respective directors, officers or shareholders;
(b) failure of Price to perform his duties and discharge its obligations;
or
(c) the malfeasance of misfeasance of Price in the performance of his
duties.
9.05 The Agreement will terminate forthwith with respect to Price if he becomes
or acknowledges that he is insolvent or makes a voluntary assignment or proposal
under any bankruptcy laws or applicable legislation or if a bankruptcy petition
is filed or presented against Price.
<PAGE>
9.06 From and after the effective date of termination of this agreement, Price
will not be entitled to compensation for any further services but will be paid
all compensation accruing to such date.
9.09 Upon the termination of this agreement, Price will:
(a) pay over to Vibro-Tech all moneys which may be held by Price for the account
of Vibro-Tech pursuant to this Agreement after deducting any accrued
compensation to which Price is then entitled;
(b) deliver to Vibro-Tech a full accounting, including a statement of all moneys
collected by Price, a statement of all moneys held by Price, and a statement of
all moneys paid by Price, covering the period following the date of the last
accounting furnished to Vibro-Tech; and
(c) deliver to and, where applicable, transfer into the name of Vibro-Tech ( or
as it may direct in writing ) all property and documents of Vibro-Tech held in
the name or custody of Price and all information held in whatever form relating
to the dealings of Price with persons, firms, corporations or governmental
bodies in Mexico.
9.07 Upon termination of this Agreement, Vibro-Tech will assume all contracts
and obligations entered into or undertaken by Price (other than with any
affiliate of Price) within the scope of its authority and indemnify Price
against any liability by reason of anything done or required to be done under
any such contract or obligation after the date of termination of this Agreement.
ARTICLE X NOTICE
10.01 Any notice to be given by any party to any other party will be deemed to
be given when in writing and delivered or communicated by pre-paid mail,
telecopier or email on any business day to the address for notice of the
intended recipient.
10.02 The address for notice of each of the parties will, until changed, be:
(a) Price:
Dr. Miles Price
3643 Marine Drive
West Vancouver, B. C. V7V IN3
Fax: 604-926-4411
Email: [email protected]
------------------
(b) Vibro-Tech
Vibro-Tech Industries, Inc.
201-11240 Bridgeport Road
Richmond, B.C. V6X IT2
Attention: Mr. William Chow, Chairman and Mr. Jock Chong, President
Fax: 604-278-2712
Email: [email protected]
----------------------
<PAGE>
10.03 A party may by notice to the other party change its address for notice to
some other address and shall so change its address for notice whenever the
existing address for notice ceases to be adequate for delivery by hand or
communication by telex or telecopier.
ARTICLE X1 GOVERNING LAW
11.01 This agreement will be governed by and construed in accordance with the
laws of British Columbia and any proceeding commenced or maintained in respect
of this Agreement will be so commenced or maintained in the court of appropriate
jurisdiction in the County of Vancouver to which jurisdiction the parties
irrevocable attorn..
ARTICLE XII ENTIRE AGREEMENT
12.01 The provisions of this Agreement and the share purchase option agreement
to be entered into by the parties constitute the entire agreements between the
parties and supersede all previous communications, representations and
agreements, whether verbal or written, between the parties with respect to the
subject matter hereof.
ARTICLE XIII ASSIGNMENT
13.01 This agreement may not be assigned in whole or in part by any party
without the written consent of the other party, which consent may be
unreasonably withheld.
IN WITNESS WHEREOF this Agreement has been executed by the parties hereto on the
day and year first above written.
VIBRO-TECH INDUSTRIES, INC.
By: /s/ Gary MacDonald
Gary MacDonald, Secretary
/s/ Dr. Miles Price
DR. MILES PRICE
EXHIBIT 10.24
USER AGREEMENT
THIS AGREEMENT made as of August 25, 1998
BETWEEN:
VIBRO-TECH INDUSTRIES, INC., a body corporate subsisting under the laws of
Delaware, with a place of business at Suite 201-11240 Bridgeport Road, Richmond,
B.C. V6X IT2
("VTI")
AND:
SHANTOU VIBRO-TECH INDUSTRIAL AND DEVELOPMENT CO. LTD., a corporation subsisting
under the laws of the People's Republic of China, having a place of business at
Long Yan Nan Road, Shantou City, Guangdong Province, 510405 People's Republic of
China
(the "Company")
WHEREAS:
A. Pursuant to an agreement dated August 25, 1998 between VTI and Zhou, Zhou set
over, assigned and sold to VTI all right title and interest in and to a patent
and certain applications for patents under the Paten Law of the People's
Republic of China described by numbers patent right registration ZL 95 22
200198, application no. 95 1 09348.7, 1. application no. 95 2 20019.8 and
application no. 95 1 09347.9 and any improvements and modifications to such
rights relating to the design, manufacture and use of Bearings for consideration
paid by VTI;
B. The Company wishes to obtain a license to use such patent and applications
for patents for the purposes of manufacturing, and marketing and selling in the
People's Republic of China, Bearings on the terms and conditions of this
Agreement;
C. By an agreement dated March 18, 1998 among Zhou, Fujita Corp. and the
Company, the Company, Zhou and Fujita Corp. agreed to provide for the continuing
research and development of a type of bearing suitable for use in Japan and in
particular to test and improve the 300 and 600 type rubber bearings and agreed
that the rights in Japan to such bearings and any improvements and modifications
to such bearings is held one-third each by the Company, Zhou and Fujita Corp;
and
D. Zhou wishes to be engaged as an advisor to the Company;
WITNESSES that the parties mutually covenant and agree as follows:
ARTICLE 1 DEFINITIONS AND INTERPRETATION
1.01 In this Agreement, including the recitals and schedules to this Agreement,
unless the context otherwise requires:
<PAGE>
Bearings means the patent right registration ZL 95 22 200198 and applications
for patents no. 95 1 09348.7, 1. no. 95 2 20019.8 and no. 95 1 09347.9 under the
Patent Law (China) related to the invention, manufacture, sale and use, in the
People's Republic of China, either on VTI's own behalf or on behalf of, or
through, third parties with which VTI or any affiliate of VTI has contracted, of
isolated seismic rubber bearings invented by Zhou, assigned to VTI and used
under license granted by VTI to the Company and includes all related
Enhancements and Documentation.
Company means Shantou Vibro-Tech Industrial and Development Co Ltd.
Confidential Information means all information relating to the Bearings,
Enhancements and the Documentation and any other data and information now or
hereafter existing during the date of this Agreement relating to the invention,
design, modification, improvement, manufacture and installation of the Bearings
done or caused to be done by the Company or done on advice given by Zhou
relating to the Bearings but does not include any data or information which:
(a) is or becomes generally known or to the public, without breach or violation
of any confidentiality or other obligation;
(b) was known by VTI or the Company at the time of disclosure by Zhou, and was
not subject to any obligation of confidence; or
(c) is rightfully communicated to the Company by another person, free of any
obligations of confidence.
Documentation means the user manuals and other written materials relating to the
Bearings and the Enhancements that are provided to, the Company by, or on the
advice of, Zhou or developed by the Company, as modified from time to time.
Enhancements means any modifications, improvements or additions to the Bearings
and the Documentation done by the Company or by, or on the advice of, Zhou.
Fujita Agreement means the agreement dated March 18, 1998 among Zhou, Fujita and
the Company providing for the continuing research and development of a type of
isolated seismic rubber bearing suitable for use in Japan and in particular
relates to the 300 and 600 type rubber bearings and to the rights in Japan to
such bearings and any improvements and modifications to such bearings.
Fujita means Fujita Corporation of 4-6-15, Sendagaya, Shibuya-ku, Tokyo 151,
Japan.
Fujita Property means the one-third interest of each of Fujita, Zhou and the
Company to all right title and interest in and to the continuing research and
development of a type of isoalted seismic rubber bearing suitable for use in
Japan and in particular relates to the 300 and 600 type rubber bearings and to
the rights in Japan to such bearings and any improvements and modifications to
such bearings.
<PAGE>
People's Republic of China means the mainland of the People's Republic of China
and does not include the Hong Kong Special Administrative Region.
Royalty means the amount to be paid from time to time by the Company to Zhou
from the sale of Bearings in the People's Republic of China.
VTI Property means all right title and interest under the Patent Law (China) in
and to a patent and certain applications for patents in the Republic of China
described by numbers patent right registration ZL 95 22 200198, application no.
95 1 09348.7, 1. application no. 95 2 20019.8 and application No. 95 1 09347.9
and any improvements and modifications to such rights owned by VTI.
VTI means Vibro-Tech Industries, Inc., a corporation subsisting under the laws
of Delaware, with an office at of 201-11240 Bridgeport Road, Richmond, B.C.
Canada V6X 1T2.
Zhou means Dr. Fu Lin Zhou, professor and vice-president of the South China
Construction University, of No. 248 Guang Yuan Zhong Road, Guangzhou 510405
People's Republic of China.
1.02 This Agreement and all matters arising under this Agreement will be
governed by, construed and enforced in accordance with the laws of the People's
Republic of China and any proceeding commenced or maintained in connection with
this Agreement will be so commenced and maintained in the City of Shantou,
Guangdong Province, China to which jurisdiction the parties irrevocably attorn.
1.03 All amounts determined under, or referred to in, this Agreement will be in
renminbi and any conversion is necessary such conversion will be done at the
rate or rates published by the Bank of China from time to time.
ARTICLE 2 GRANT OF LICENSE
2.01 VTI grants to the Company on the terms and other conditions of this
Agreement a non-exclusive license to use the VTI Property in the People's
Republic of China to manufacture, and to market and to sell in the People's
Republic of China, Bearings.
2.02 The Company acknowledges that all dealings with, agreements entered into,
and proprietary rights acquired under the Fujita Agreement in dealing with
Fujita are done or acquired for and on behalf of VTI.
2.03 At the request of VTI, the Company will from time to time execute such
documents and obtain such consents as are necessary to set over, assign and
transfer absolutely to VTI the Fujita Property in accordance with the terms and
conditions of the Fujita Agreement.
2.04 It is a condition of this Agreement that the Company enter into an
agreement with Zhou providing for the engagement of Zhou as an advisor and the
payment to Zhou of a royalty of five percent of gross sales of the Company in
the People's Republic of China, to be paid in reminbi according to Chinese law,
as defined in the agreement between the Company and Zhou and that the Company
pay the Royalty to Zhou from time to time in accordance with the conditions of
such agreement.
<PAGE>
2.05 If considered required, the Company will at its own cost translate and file
under the Patent Law (China) either this Agreement or such other documentation
as is required under the Patent Law (China) to record the grant of this license
and its ownership by the Company.
ARTICLE 3 CONFIDENTIALITY AND THIRD PARTIES
3.01 The Company will provide, and will continue to provide, all Confidential
Information relating to the Bearings, the Enhancements and the Documentation to
VTI.
3.02 All right, title and interest in and to the Confidential Information is
will remain, the exclusive worldwide property of VTI held for and on behalf of
VTI and will be held in trust and confidence by the Company for VTI and no
immunity, license or right respecting the Confidential Information is granted to
the Comapny under this Agreement by implication or otherwise to deal with the
Confidential Information with any party except as expressly provided in this
Agreement.
3.03 Except for the dealings with Fujita, the Company will not without the prior
written consent of VTI directly or indirectly, other than through or with VTI,
deal with or contact any other person, firm or corporation regarding the
Confidential Information and will not except through the acquisition of rights
on constitution of a venture with the Company or its successors directly or
indirectly acquire any proprietary interest in or to, use, distribute, license
or otherwise disclose the Confidential Information or any other matter
containing or based, in whole or in part, on the Confidential Information and in
particular will not use the Confidential Information, or suffer or permit any
associate or affiliate to use the Confidential Information, in any way except in
the constitution of a venture with the Company.
3.04 The Company will use its best efforts, and will use its best efforts to
cause its directors officers, employees and agents, to keep confidential and
protect the Confidential Information and the interests of the Company in and to
the Confidential Information and the standard of best efforts will be no less
than the degree of care that VTI would be reasonably expected to employ for its
own trade secret, proprietary or confidential information.
3.05 Nothing will prevent the Company from disclosing Confidential Information
if required under any agreement to which the Company is a party providing for
the sale of Bearings or by applicable securities laws to which the Company or
any parent or affiliate of the Company is subject.
ARTICLE 4 DEALINGS WITH AFFILIATES OF VTI AND ACCOUNTING
4.01 The Company will from time to time at the request of VTI manufacture
Bearings for affiliates of VTI for sale outside of the People's Republic of
China in such quantity and of such type and dimensions as are specified by such
affiliate.
<PAGE>
4.02 The Company will establish and maintain books of account in accordance with
local and United States generally accepted accounting principles and will on
request provide to VTI access to such books of account at such places and such
times as VTI may designate.
4.03 The Company will adopt and maintain a fiscal year ending on December 31.
4.04 Within two months of the end of each fiscal year, the Company will prepare
or cause to be prepared, and provide to VTI, an audited balance sheet, a
statements of income and comprehensive income, statements of cash flow, a
statement of changes in stockholders' equity and such other statements and
information as is requested by VTI, all prepared in accordance with United
States generally accepted accounting principles.
ARTICLE 5 ASSIGNMENT NOT PERMITTED
5.01 Except for dealings with Fujita done for and on behalf of VTI and such
agreements with affiliates of VTI as are from time to time designated by VTI,
the Company may not set over, assign or transfer, in all or in part, the right
to use the VTI Property to manufacture or sell Bearings.
ARTICLE 6 TERMINATION OF AGREEMENT
6.01 This Agreement will terminate on the earlier of December 31, 2050 or:
(a) on the liquidation of the Company under the Foreign Investment Enterprises
Liquidation Procedures of the People's Republic of China;
(b) if the Company fails to enter into an agreement as described with Zhou and
maintain that agreement in good standing;
(c) if the Company should do any act which may result in the set over,
assignment or transfer to a third party not designated by VTI of the VTI
Property licensed to be used under this Agreement;
(d) if the Company should become insolvent, make under applicable law an
assignment for the benefit of its creditors or petition a court in bankruptcy
for relief from its creditors or the appointment of a receiver, trustee or other
such person to manage the affairs of the Company or liquidate the affairs of the
Company for the benefit of its creditors; or
(b) the time at which VTI determines that any of the Comapny or its legal
representative is in breach of any condition in this Agreement.
ARTICLE 7 ARBITRATION
7.01 All disputes under this Agreement will be settled by the parties in the
spirit of equality and cooperation and if not agreed between the parties will be
settled by reference to a single arbitrator under the Supplementary Regulations
of the Shantou Special Economic Zone for Encouragement of Foreign Investment as
agreed upon by the parties, or if not agreed upon within four weeks of either
party giving notice of a dispute, then as designated by VTI.
<PAGE>
ARTICLE 8 GENERAL PROVISIONS
8.01 Time is of the essence of the performance of every obligation under this
Agreement, and no failure or lack of diligence by any party in proclaiming or
seeking redress for any violation of, or insisting on strict performance of, any
provision of this Agreement will prevent a subsequent violation of that
provision, or of any other provision, from giving rise to any remedy that would
be available if it were an original violation of that provision or another
provision.
8.02 This Agreement will be binding upon and enure to the benefit of the
respective heirs, executors, administrators and other legal representatives and,
to the extent permitted hereunder, the respective successors and assigns, of the
parties.
8.03 Unless otherwise provided herein, any notice, payment or other
communication to a party under this Agreement may be made, given or served by
delivery, telecopy or email and addressed as follows:
(a) if to VTI:
Vibro-Tech Industries, Inc.
201-11240 Bridgeport Road
Richmond, B.C. V6X IT2
Attention: Mr. William Chow, President
Fax: 604-278-2712
Email: [email protected]
----------------------
(b) if to the Company:
Shantou Vibro-Tech Industrial and Development Co Ltd.
Long Yan Nan Road
Shantou City, Guangdong Province, 510405 China
Tel/Fax: 011-86020-8382-8917
8.04 Any notice, payment or other communication so delivered, telecopied or
emailed will be deemed to have been given or served at the time of delivery or
transmission by telecopy or email.
8.05 A party may by notice change its address for service.
8.06 This Agreement constitutes the entire agreement between the parties and
supercedes all previous agreements or understandings between the parties in any
way relating to its subject matter and the Company has made not representations,
inducements, warranties or promises concerning this Agreement or the matters
referred to herein which are not embodied in this Agreement.
<PAGE>
IN WITNESS WHERE OF this Agreement has been executed by the parties as at the
date first above written.
VIBRO-TECH INDUSTRIES, INC.
By: /S/ William Chow
Print Name: William Chow
SHANTOU VIBRO-TECH INDUSTRIAL AND DEVELOPMENT CO. LTD.
By: /s/ Joe Chung
Print Name: Joe Chung
30071108/1-6
EXHIBIT 10.25
USER AGREEMENT
THIS AGREEMENT made as of January 1, 1999
BETWEEN:
VIBRO-TECH INDUSTRIES, INC., a body corporate subsisting under the laws of
Delaware, with a place of business a Suite 201-11240 Bridgeport Road, Richmond,
B.C. V6X 1T2
AND:
VIBRO-TECH INDUSTRIES LIMITED, a corporation subsisting under the laws of the
Hong Kong Special Administrative Region, People's Republic of China, having a
place of business at Rooms 2001-4, Hang Seng Building, 7 Des Voeux Road Central,
Hong Kong Special Administrative Region, People's Republic of China
(the "Company")
WHEREAS:
A. Pursuant to an agreement dated August 25, 1998 between VTI and Zhou, Zhou set
over, assigned and sold to VTI all right title and interest in and to a patent
and certain applications for patents under the Paten Law of the People's
Republic of China described by numbers patent right registration ZL 95 22
200198, application no. 95 1 09348.7, 1. application no. 95 2 20019.8 and
application no. 95 1 09347.9 and any improvements and modifications to such
rights relating to the design, manufacture and use of Bearings for consideration
paid by VTI;
B. VTI has granted a non-exclusive license to Shantou to manufacture Bearings
and to sell such Bearings to affiliates of VTI as designated by VTI;
C. The Company wishes to obtain a license to use such patent and applications
for patents for the purposes of manufacturing and marketing and selling in the
HKSAR and Japan, Bearings on the terms and conditions of this Agreement; and
D. Zhou wishes to be engaged as an advisor to the Company;
WITNESSES that the parties mutually covenant and agree as follows:
ARTICLE 1 DEFINITIONS AND INTERPRETATION
1.01 In this Agreement, including the recitals and schedules to this Agreement,
unless the context otherwise requires:
Bearings means the patent right registration ZL 95 22 200198 and applications
for patents no. 95 1 09348.7, 1. no. 95 2 20019.8 and no. 95 1 09347.9 under the
Patent Law (China) related to the invention, manufacture, sale and use, in the
People's Republic of China, either on VTI's own behalf or on behalf of, or
through, third parties with which VTI or any affiliate of VTI has contracted, of
isolated seismic rubber bearings invented by Zhou, assigned to VTI and used
under license granted by VTI to the Company and includes all related
Enhancements and Documentation.
<PAGE>
Company means Vibro-Tech Industries Limited.
Confidential Information means all information relating to the Bearings,
Enhancements and the Documentation and any other data and information now or
hereafter existing during the date of this Agreement relating to the invention,
design, modification, improvement, manufacture and installation of the Bearings
done or caused to be done by VTI or done on advice given by Zhou relating to the
Bearings but does not include any data or information which:
(a) is or becomes generally known or to the public, without breach or violation
of any confidentiality or other obligation;
(b) was known by VTI or the Company at the time of disclosure by Zhou, and was
not subject to any obligation of confidence; or
(c) is rightfully communicated to the Company by another person, free of any
obligations of confidence.
Documentation means the user manuals and other written materials relating to the
Bearings and the Enhancements that are provided to, the Company by Shantou, or
on the advice of, Zhou or developed by the Company, as modified from time to
time.
Enhancements means any modifications, improvements or additions to the Bearings
and the Documentation done by Shantou or the Company or by, or on the advice of,
Zhou.
Fujita Agreement means the agreement dated March 18, 1998 among Zhou, Fujita and
the Company providing for the continuing research and development of a type of
isolated seismic rubber bearing suitable for use in Japan and in particular
relates to the 300 and 600 type rubber bearings and to the rights in Japan to
such bearings and any improvements and modifications to such bearings.
Fujita means Fujita Corporation of 4-6-15, Sendagaya, Shibuya-ku, Tokyo 151,
Japan.
HKSAR means the Hong Kong Special Administrative Region of the People's Republic
of China.
People's Republic of China means the mainland of the People's Republic of China
and does not include the Hong Kong Special Administrative Region.
Royalty means the amount to be paid from time to time by the Company to Zhou
from the sale of Bearings in the HKSAR and Japan.
Shantou means Shantou Vibro-Tech Industrial and Development Co Ltd. of Long Yan
Nan Road, Shantou City, Guangdong Province, 510405 People's Republic of China.
<PAGE>
VTI Property means all right title and interest under the Patent Law (China) in
and to a patent and certain applications for patents in the Republic of China
described by numbers patent right registration ZL 95 22 200198, application no.
95 1 09348.7, 1. application no. 95 2 20019.8 and application No. 95 1 09347.9
and any improvements and modifications to such rights owned by VTI.
VTI means Vibro-Tech Industries, Inc., a corporation subsisting under the laws
of Delaware, with an office at of 201-11240 Bridgeport Road, Richmond, B.C.
Canada V6X 1T2.
Zhou means Dr. Fu Lin Zhou, professor and vice-president of the South China
Construction University, of No. 248 Guang Yuan Zhong Road, Guangzhou 510405
People's Republic of China.
1.02 This Agreement and all matters arising under this Agreement will be
governed by, construed and enforced in accordance with the laws of the HKSAR
except matter relating to the VTI Property which will be governed by the laws of
the People's Republic of China and any proceeding commenced or maintained in
connection with this Agreement will be so commenced and maintained in the HKSAR
to which jurisdiction the parties irrevocably attorn.
1.03 All amounts determined under, or referred to in, this Agreement will be in
United States dollars and any conversion is necessary such conversion will be
done at the rate or rates published by the United States Federal Bank of
Reserve, New York from time to time.
ARTICLE 2 GRANT OF LICENSE
2.01 VTI grants to the Company on the terms and other conditions of this
Agreement a non-exclusive license to use the VTI Property in the HKSAR and in
Japan to manufacture, and to market and to sell in the HKSAR and Japan,
Bearings.
2.02 The Company acknowledges that all sales to, or dealings in, Japan will be
to, or with or in conjunction with, Fujita unless otherwise directed by VTI.
2.03 It is a condition of this Agreement that the Company enter into an
agreement with Zhou providing for the engagement of Zhou as an advisor and the
payment to Zhou of a royalty in the HKSAR of five percent of gross sales of the
Company in the HKSAR and Japan, to be paid in United States dollars, as provided
in the agreement between the Company and Zhou and that the Company pay the
Royalty to Zhou from time to time in accordance with the conditions of such
agreement.
2.05 If considered required, the Company will at its own cost translate and file
under the Patent Law (HKSAR) and similar legislation in Japan either this
Agreement or such other documentation as is required under the Patent Law
(HKSAR) and similar legislation in Japan to record the grant of this license and
its ownership by the Company.
<PAGE>
2.06 The Company will purchase for sale in the HKSAR and Japan Bearings from
Shantou and enter into an agreement with Shantou providing for such purchases
from time to time and the provision of all Documentation and Enhancements but
VTI may direct and require the Company to purchase Bearings from such other
entity as is designated from time to time by VTI.
ARTICLE 3 CONFIDENTIALITY AND THIRD PARTIES
3.01 VTI will cause to be provided, and will continue cause to be provided, all
Confidential Information relating to the Bearings, the Enhancements and the
Documentation to the Company.
3.02 All right, title and interest in and to the Confidential Information is
will remain, the exclusive worldwide property of VTI held for and on behalf of
VTI and will be held in trust and confidence by the Company for VTI and no
immunity, license or right respecting the Confidential Information is granted to
the Company under this Agreement by implication or otherwise to deal with the
Confidential Information with any party except as expressly provided in this
Agreement.
3.03 Except for the dealings with Fujita, the Company will not without the prior
written consent of VTI directly or indirectly, other than through or with VTI,
deal with or contact any other person, firm or corporation regarding the
Confidential Information and will not except through the acquisition of rights
on constitution of a venture with the Company or its successors directly or
indirectly acquire any proprietary interest in or to, use, distribute, license
or otherwise disclose the Confidential Information or any other matter
containing or based, in whole or in part, on the Confidential Information and in
particular will not use the Confidential Information, or suffer or permit any
associate or affiliate to use the Confidential Information, in any way except in
the constitution of a venture with the Company.
3.04 The Company will use its best efforts, and will use its best efforts to
cause its directors officers, employees and agents, to keep confidential and
protect the Confidential Information and the interests of the Company in and to
the Confidential Information and the standard of best efforts will be no less
than the degree of care that VTI would be reasonably expected to employ for its
own trade secret, proprietary or confidential information.
3.05 Nothing will prevent the Company from disclosing Confidential Information
if required under any agreement to which the Company is a party providing for
the sale of Bearings or by applicable securities laws to which the Company or
any parent or affiliate of the Company is subject.
ARTICLE 4 DEALINGS WITH AFFILIATES OF VTI
4.01 The Company will from time to time at the request of VTI manufacture
Bearings for affiliates of VTI for sale outside of the People's Republic of
China in such quantity and of ssuch type and dimensions as are specified by such
affiliate.
<PAGE>
4.02 The Company will establish and maintain books of account in accordance with
local and United States generally accepted accounting principles and will on
request provide to VTI access to such books of account at such places and such
times as VTI may designate.
4.03 The Company will adopt and maintain a fiscal year ending on December 31.
4.04 Within two months of the end of each fiscal year, the Company will prepare
or cause to be prepared, and provide to VTI, an audited balance sheet, a
statements of income and comprehensive income, statements of cash flow, a
statement of changes in stockholders' equity and such other statements and
information as is requested by VTI, all prepared in accordance with United
States generally accepted accounting principles.
ARTICLE 5 ASSIGNMENT NOT PERMITTED
5.01 Except for dealings with Fujita done for and on behalf of VTI and such
agreements with affiliates of VTI as are from time to time designated by VTI,
the Company may not set over, assign or transfer, in all or in part, the right
to use the VTI Property to manufacture or sell Bearings.
ARTICLE 6 TERMINATION OF AGREEMENT
6.01 This Agreement will terminate on the earlier of December 31, 2050 or:
(a) if applicable, on the liquidation of the Company under the Foreign
Investment Enterprises Liquidation Procedures of the People's Republic of China;
(b) if the Company fails to enter into an agreement as described with Zhou and
maintain that agreement in good standing;
(c) if the Company should do any act which may result in the set over,
assignment or transfer to a third party not designated by VTI of the VTI
Property licensed to be used under this Agreement;
(d) if the Company should become insolvent, make under applicable law an
assignment for the benefit of its creditors or petition a court in bankruptcy
for relief from its creditors or the appointment of a receiver, trustee or other
such person to manage the affairs of the Company or liquidate the affairs of the
Company for the benefit of its creditors; or
(b) the time at which VTI determines that any of the Company or its legal
representative is in breach of any condition in this Agreement.
ARTICLE 7 ARBITRATION
7.01 All disputes under this Agreement will be settled by the parties in the
spirit of equality and cooperation and if not agreed between the parties will be
settled under the applicable law in the HKSAR by reference to a single
arbitrator as agreed upon by the parties, or if not agreed upon within four
weeks of either party giving notice of a dispute, then as designated by VTI.
<PAGE>
ARTICLE 8 GENERAL PROVISIONS
8.01 Time is of the essence of the performance of every obligation under this
Agreement, and no failure or lack of diligence by any party in proclaiming or
seeking redress for any violation of, or insisting on strict performance of, any
provision of this Agreement will prevent a subsequent violation of that
provision, or of any other provision, from giving rise to any remedy that would
be available if it were an original violation of that provision or another
provision.
8.02 This Agreement will be binding upon and enure to the benefit of the
respective heirs, executors, administrators and other legal representatives and,
to the extent permitted hereunder, the respective successors and assigns, of the
parties.
9.03 Unless otherwise provided herein, any notice, payment or other
communication to a party under this Agreement may be made, given or served by
delivery, telecopy or email and addressed as follows:
(a) if to VTI:
Vibro-Tech Industries, Inc.
201-11240 Bridgeport Road
Richmond, B.C. V6X IT2
Attention: Mr. William Chow, President
Fax: 604-278-2712
Email: [email protected]
-----------------------
(b) if to the Company:
Vibro-Tech Industries Limited
Rooms 2001-4, Hang Seng Building
77 Des Voeux Road Central, HKSAR
Attention: Mr. Joe Chung
Tel/Fax: 011-852-2877-6608
8.04 Any notice, payment or other communication so delivered, telecopied or
emailed will be deemed to have been given or served at the time of delivery or
transmission by telecopy or email.
8.05 A party may by notice change its address for service.
8.06 This Agreement constitutes the entire agreement between the parties and
supercedes all previous agreements or understandings between the parties in any
way relating to its subject matter and the Company has made not representations,
inducements, warranties or promises concerning this Agreement or the matters
referred to herein which are not embodied in this Agreement.
<PAGE>
IN WITNESS WHERE OF this Agreement has been executed by the parties as at the
date first above written.
VIBRO-TECH INDUSTRIES, INC.
By: /s/ William Chow
Print Name: William Chow
VIBRO-TECH INDUSTRIES LIMITED
By: /s/ Joe Chung
Print Name: Joe Chung
EXHIBIT 10.26
USER AGREEMENT
THIS AGREEMENT made as of December 15, 1999
BETWEEN:
VIBRO-TECH INDUSTRIES, INC., a body corporate subsisting under the laws of
Delaware, with a place of business at Suite 201-11240 Bridgeport Road, Richmond,
B.C. V6X IT2
("VTI")
AND:
VIBRO-TECH ENTERPRISES LIMITED, a corporation subsisting under the laws of the
Hong Kong Special Administrative Region, People's Republic of China, having a
place of business at Rooms 2001-4, Hang Seng Building, 7 Des Voeux Road Central,
Hong Kong Special Administrative Region, People's Republic of China
(the "Company")
WHEREAS:
A. Pursuant to an agreement dated August 25, 1998 between VTI and Zhou, Zhou set
over, assigned and sold to VTI all right title and interest in and to a patent
and certain applications for patents under the Paten Law of the People's
Republic of China described by numbers patent right registration ZL 95 22
200198, application no. 95 1 09348.7, 1. application no. 95 2 20019.8 and
application no. 95 1 09347.9 and any improvements and modifications to such
rights relating to the design, manufacture and use of Bearings for consideration
paid by VTI;
B. VTI has granted a non-exclusive license to Shantou to manufacture Bearings
and to sell such Bearings to affiliates of VTI as designated by VTI;
C. The Company wishes to obtain a license to use such patent and applications
for patents for the purposes of manufacturing, and marketing and selling in all
jurisdictions of the world except the People's Republic of China, the HKSAR and
Japan, Bearings on the terms and conditions of this Agreement; and
D. Zhou wishes to be engaged as an advisor to the Company;
WITNESSES that the parties mutually covenant and agree as follows:
ARTICLE 1 DEFINITIONS AND INTERPRETATION
1.01 In this Agreement, including the recitals and schedules to this Agreement,
unless the context otherwise requires:
<PAGE>
Bearings means the patent right registration ZL 95 22 200198 and applications
for patents no. 95 1 09348.7, 1. no. 95 2 20019.8 and no. 95 1 09347.9 under the
Patent Law (China) related to the invention, manufacture, sale and use, in the
People's Republic of China, either on VTI's own behalf or on behalf of, or
through, third parties with which VTI or any affiliate of VTI has contracted, of
isolated seismic rubber bearings invented by Zhou, assigned to VTI and used
under license granted by VTI to the Company and includes all related
Enhancements and Documentation.
Company means Vibro-Tech Enterprises Limited.
Confidential Information means all information relating to the Bearings,
Enhancements and the Documentation and any other data and information now or
hereafter existing during the date of this Agreement relating to the invention,
design, modification, improvement, manufacture and installation of the Bearings
done or caused to be done by VTI or done on advice given by Zhou relating to the
Bearings but does not include any data or information which:
(a) is or becomes generally known or to the public, without breach or violation
of any confidentiality or other obligation;
(b) was known by VTI or the Company at the time of disclosure by Zhou, and was
not subject to any obligation of confidence; or
(c) is rightfully communicated to the Company by another person, free of any
obligations of confidence.
Documentation means the user manuals and other written materials relating to the
Bearings and the Enhancements that are provided to, the Company by Shantou, or
on the advice of, Zhou or developed by the Company, as modified from time to
time.
Enhancements means any modifications, improvements or additions to the Bearings
and the Documentation done by Shantou or the Company or by, or on the advice of,
Zhou.
HKSAR means the Hong Kong Special Administrative Region of the People's Republic
of China.
People's Republic of China means the mainland of the People's Republic of China
and does not include the Hong Kong Special Administrative Region.
Royalty means the amount to be paid from time to time by the Company to Zhou
from the sale of Bearings in all jurisdictions of the world except the People's
Republic of China, the HKSAR and Japan.
Shantou means Shantou Vibro-Tech Industrial and Development Co Ltd. of Long Yan
Nan Road, Shantou City, Guangdong Province, 510405 People's Republic of China
VTI Property means all right title and interest under the Patent Law (China) in
and to a patent and certain applications for patents in the Republic of China
described by numbers patent right registration ZL 95 22 200198, application no.
95 1 09348.7, 1. application no. 95 2 20019.8 and application No. 95 1 09347.9
and any improvements and modifications to such rights owned by VTI.
<PAGE>
VTI means Vibro-Tech Industries, Inc., a corporation subsisting under the laws
of Delaware, with an office at of 201-11240 Bridgeport Road, Richmond, B.C.
Canada V6X 1T2.
Zhou means Dr. Fu Lin Zhou, professor and vice-president of the South China
Construction University, of No. 248 Guang Yuan Zhong Road, Guangzhou 510405
People's Republic of China.
1.02 This Agreement and all matters arising under this Agreement will be
governed by, construed and enforced in accordance with the laws of the HKSAR
except matter relating to the VTI Property which will be governed by the laws of
the People's Republic of China, and any proceeding commenced or maintained in
connection with this Agreement will be so commenced and maintained in the HKSAR
to which jurisdiction the parties irrevocably attorn.
1.03 All amounts determined under, or referred to in, this Agreement will be in
United States dollars and any conversion is necessary such conversion will be
done at the rate or rates published by the United States Federal Bank of
Reserve, New York from time to time.
ARTICLE 2 GRANT OF LICENSE
2.01 VTI grants to the Company on the terms and other conditions of this
Agreement a non-exclusive license to use the VTI Property in all jurisdictions
of the world, except the People's Republic of China, the HKSAR and Japan, to
manufacture, and to market and to sell in all jurisdictions of the world except
the People's Republic of China, the HKSAR and Japan, Bearings.
2.02 The Company may with the consent of VTI enter into joint ventures,
partnerships or other entities, or become a shareholder with third parties in
corporations in jurisdictions other than the People's Republic of China, the
HKSAR and Japan for the purposes of manufacturing, marketing or selling Bearings
on such terms and conditions as may be approved by VTI.
2.03 It is a condition of this Agreement that the Company enter into an
agreement with Zhou providing for the engagement of Zhou as an advisor and the
payment to Zhou of a royalty in the HKSAR of five percent of gross sales of the
Company in the HKSAR and Japan, to be paid in United States dollars, as provided
in the agreement between the Company and Zhou and that the Company pay the
Royalty to Zhou from time to time in accordance with the conditions of such
agreement.
2.05 If considered required, the Company will at its own cost translate and file
under patent legislation in such jurisdictions as it is carrying on business or
considers appropriate for the protection of the VTI Property either this
Agreement or such other documentation as is required under such local
legislation or international conventions to record the grant of this license and
its ownership by the Company.
<PAGE>
2.06 The Company will purchase Bearings from Shantou and enter into an agreement
with Shantou providing for such purchases from time to time and the provision of
all Documentation and Enhancements but VTI may direct and require the Company to
commence the manufacture of Bearings in such jurisdiction or jurisdictions as
VTI may designate or to purchase Bearings from such other entity as is
designated from time to time by VTI.
ARTICLE 3 CONFIDENTIALITY AND THIRD PARTIES
3.01 VTI will cause to be provided, and will continue cause to be provided, all
Confidential Information relating to the Bearings, the Enhancements and the
Documentation to the Company.
3.02 All right, title and interest in and to the Confidential Information is
will remain, the exclusive worldwide property of VTI held for and on behalf of
VTI and will be held in trust and confidence by the Company for VTI and no
immunity, license or right respecting the Confidential Information is granted to
the Company under this Agreement by implication or otherwise to deal with the
Confidential Information with any party except as expressly provided in this
Agreement.
3.03 The Company will not without the prior written consent of VTI directly or
indirectly, other than through or with VTI, deal with or contact any other
person, firm or corporation regarding the Confidential Information and will not
except through the acquisition of rights on constitution of a venture with the
Company or its successors directly or indirectly acquire any proprietary
interest in or to, use, distribute, license or otherwise disclose the
Confidential Information or any other matter containing or based, in whole or in
part, on the Confidential Information and in particular will not use the
Confidential Information, or suffer or permit any associate or affiliate to use
the Confidential Information, in any way except in the constitution of a venture
with the Company.
3.04 The Company will use its best efforts, and will use its best efforts to
cause its directors officers, employees and agents, to keep confidential and
protect the Confidential Information and the interests of the Company in and to
the Confidential Information and the standard of best efforts will be no less
than the degree of care that VTI would be reasonably expected to employ for its
own trade secret, proprietary or confidential information.
3.05 Nothing will prevent the Company from disclosing Confidential Information
if required under any agreement to which the Company is a party providing for
the sale of Bearings or by applicable securities laws to which the Company or
any parent or affiliate of the Company is subject.
ARTICLE 4 DEALINGS WITH AFFILIATES OF VTI AND ACCOUNTING
4.01 The Company will from time to time at the request of VTI manufacture
Bearings for affiliates of VTI in such quantity and of such type and dimensions
as are specified by such affiliate.
<PAGE>
4.02 The Company will establish and maintain books of account in accordance with
local and United States generally accepted accounting principles and will on
request provide to VTI access to such books of account at such places and such
times as VTI may designate.
4.03 The Company will adopt and maintain a fiscal year ending on December 31.
4.04 Within two months of the end of each fiscal year, the Company will prepare
or cause to be prepared, and provide to VTI, an audited balance sheet, a
statements of income and comprehensive income, statements of cash flow, a
statement of changes in stockholders' equity and such other statements and
information as is requested by VTI, all prepared in accordance with United
States generally accepted accounting principles.
ARTICLE 5 ASSIGNMENT NOT PERMITTED
5.01 Except for such agreements with affiliates of VTI or the establishment of
joint ventures, partnerships, corporations in which VTI or the Company is a
shareholder or other entities as are from time to time designated and approved
by VTI, the Company may not set over, assign or transfer, in all or in part, the
right to use the VTI Property to manufacture or sell Bearings.
ARTICLE 6 TERMINATION OF AGREEMENT
6.01 This Agreement will terminate on the earlier of December 31, 2050 or:
(a) if applicable, on the liquidation of the Company under the Foreign
Investment Enterprises Liquidation Procedures of the People's Republic of China;
(b) if the Company fails to enter into an agreement as described with Zhou and
maintain that agreement in good standing;
(c) if the Company should do any act which may result in the set over,
assignment or transfer to a third party not designated by VTI of the VTI
Property licensed to be used under this Agreement;
(d) if the Company should become insolvent, make under applicable law an
assignment for the benefit of its creditors or petition a court in bankruptcy
for relief from its creditors or the appointment of a receiver, trustee or other
such person to manage the affairs of the Company or liquidate the affairs of the
Company for the benefit of its creditors; or
(b) the time at which VTI determines that any of the Company or its legal
representative is in breach of any condition in this Agreement.
<PAGE>
ARTICLE 7 ARBITRATION
7.01 All disputes under this Agreement will be settled by the parties in the
spirit of equality and cooperation and if not agreed between the parties will be
settled under the applicable law in the HKSAR by reference to a single
arbitrator as agreed upon by the parties, or if not agreed upon within four
weeks of either party giving notice of a dispute, then as designated by VTI.
ARTICLE 8 GENERAL PROVISIONS
8.01 Time is of the essence of the performance of every obligation under this
Agreement, and no failure or lack of diligence by any party in proclaiming or
seeking redress for any violation of, or insisting on strict performance of, any
provision of this Agreement will prevent a subsequent violation of that
provision, or of any other provision, from giving rise to any remedy that would
be available if it were an original violation of that provision or another
provision.
8.02 This Agreement will be binding upon and enure to the benefit of the
respective heirs, executors, administrators and other legal representatives and,
to the extent permitted hereunder, the respective successors and assigns, of the
parties.
9.03 Unless otherwise provided herein, any notice, payment or other
communication to a party under this Agreement may be made, given or served by
delivery, telecopy or email and addressed as follows:
(a) if to VTI:
Vibro-Tech Industries, Inc.
201-11240 Bridgeport Road
Richmond, B.C. V6X IT2
Attention: Mr. William Chow, Chairman and Mr. Jock Chong, President
Fax: 604-278-2712
Email: [email protected]
----------------------
(b) if to the Company:
Vibro-Tech Enterprises Limited
Rooms 2001-4, Hang Seng Building
77 Des Voeux Road Central, HKSAR
Attention: Mr. Joe Chung
Tel/Fax: 011-852-2877-6608
8.04 Any notice, payment or other communication so delivered, telecopied or
emailed will be deemed to have been given or served at the time of delivery or
transmission by telecopy or email.
8.05 A party may by notice change its address for service.
8.06 This Agreement constitutes the entire agreement between the parties and
supercedes all previous agreements or understandings between the parties in any
way relating to its subject matter and the Company has made not representations,
inducements, warranties or promises concerning this Agreement or the matters
referred to herein which are not embodied in this Agreement.
<PAGE>
IN WITNESS WHERE OF this Agreement has been executed by the parties as at the
date first above written.
VIBRO-TECH INDUSTRIES, INC.
By: /s/ William Chow
Print Name: William Chow
VIBRO-TECH ENTERPRISES LIMITED
By: /s/ Joe Chung
Print Name: Joe Chung
30071110/1-6
EXHIBIT 10.27
MANAGEMENT AND FEE AGREEMENT
THIS AGREEMENT made as of January 1, 1999
BETWEEN:
VIBRO-TECH INDUSTRIES LIMITED, a corporation subsisting under the laws of Hong
Kong, having a place of business at Rooms 2001-4, Hang Seng Building, 7 Des
Voeux Road Central, Hong Kong
(the "Company")
AND:
VIBRO-TECH INDUSTRIES, INC., a body corporate subsisting under the laws of
Delaware, with a place of business at Suite 201-11240 Bridgeport Road, Richmond,
B.C. V6X IT2
("VTI")
WHEREAS:
A. The Company has been granted the right to sell Bearings in the Hong Kong
Special Administrative Region of the People's Republic of China and Japan and to
enter into agency arrangements, partnerships, companies and joint ventures with
third parties for the sale of the Bearings;
B. VTI provides, and will continue to provide, management services and business
opportunities to the Company; WITNESSES that the parties mutually covenant and
agree as follows:
ARTICLE 1 DEFINITIONS AND INTERPRETATION
1.01 In this Agreement, including the recitals and schedules to this Agreement,
unless the context otherwise requires:
Bearings means the isolated seismic rubber bearings purchased from Shantou or
manufactured by either the Company or an affiliate of VTI for resale by the
Company either on its own behalf or on behalf of, or through, third parties with
which the Company or any affiliate of the Company has contracted.
HKSAR means the Hong Kong Special Administrative Region of the People's Republic
of China.
People's Republic of China means the mainland of the People's Republic of China
and does not include the HKSAR.
Shantou means Shantou Vibro-Tech Industrial and Development Co Ltd. of Long Yan
Nan Road, Shantou City, Guangdong Province, 510405 China
Zhou Royalty means the amount paid from time to time to Dr. Fu Lin Zhou under an
agreement dated January 1, 1999 between the Company and Dr. Fu Lin Zhou.
<PAGE>
1.02 This Agreement and all matters arising under this Agreement will be
governed by, construed and enforced in accordance with the laws of the HKSAR and
any proceeding commenced or maintained in connection with this Agreement will be
so commenced and maintained in HKSAR to which jurisdiction the parties
irrevocably attorn.
1.03 All amounts determined under, or referred to in, this Agreement will be in
US dollars and if any conversion is necessary such conversion will be done at
the rate or rates published by the Federal Reserve Bank, New York from time to
time.
ARTICLE 2 ENGAGEMENT OF VTI FOR MANAGEMENT SERVICES
2.01 The Company engages VTI, on an exclusive basis, to provide to the Company
management services on the terms and other conditions of this Agreement,
including publicity, banking, accounting, development of sales opportunities,
financing on terms to be determined by VTI, public relations and communications,
advertisement and development, conduct of information seminars to advertise the
quality and availability of the Bearings, negotiation and finalization of agency
arrangements, partnerships, companies and joint ventures in the HKSAR and Japan
and all other things necessary for the organization, conduct and financial
success of the business of the Company.
ARTICLE 3 MANAGEMENT FEE
3.01 The Company will pay to VTI a fee from time to time of ten percent of the
difference between:
(a) the amount received from the gross sales of Bearings or received by way of
dividend or distribution from a partnership, company or joint venture that is
selling Bearings, by the Company before payment of any income taxes; less
(b) the sum of the Zhou Royalty and any cost of insurance, shipping, freight or
installation paid by the Company in connection with the sale of the Bearings.
3.03 If the tax laws of the HKSAR change in such a manner that the amount
received annually by VTI is reduced, the parties will renegotiate section 3.01
with a view to maintaining the fee of the Company as if the tax laws had not
adversely changed.
3.04 The management fee will be paid from time to time during the calendar year
as the Company receives monies, directly or indirectly, from the sale of
Bearings.
3.05 After the end of each calendar year commencing with 1999, the accounts of
the Company related directly or indirectly to the sale of Bearings will be
audited by the auditors of VTI, and the statement of operations, which will
include the statement of gross sales for the year last completed less any costs
of insurance, shipping, freight or installation paid by the Company will be
furnished to VTI not later than April 30 in each year.
<PAGE>
3.06 VTI may within 45 days of receipt of such statements question the accuracy
of such statements in writing and, failing such objection, the statements will
be deemed to be correct and unimpeachable.
3.07 If the audited financial statements furnished under section 3.05 disclose
any overpayment of management fee by the Company during the year, the amount of
overpayment will be debited against future installments of the fee or will, if
requested by the Company, be refunded by VTI forthwith.
3.08 If the audited financial statements furnished under section 3.05 disclose
any underpayment of fee by the Company during the year, the deficiency will be
paid forthwith to VTI.
3.09 Any dispute regarding the calculation of the amount of management fee to be
paid to VTI will be determined conclusively by the auditors of VTI and the
Company.
ARTICLE 4 REPRESENTATION, WARRANTY AND COVENANT OF THE COMPANY
4.01 The Company represents and warrants to, and covenants with, VTI that the
Company has been granted the right to sell the Bearings in the HKSAR and Japan
and may enter into agency arrangements, partnerships, companies, joint ventures
or other forms of associations with third parties in such jurisdictions on such
terms and conditions as they may from time to time agree for the sale of
Bearings and for the establishment of facilities for the manufacture of Bearings
on conditions acceptable to VTI
ARTICLE 5 TERMINATION OF AGREEMENT
5.01 This Agreement will terminate on the earlier of December 31, 2050 or:
(a) six months after the Company has failed to make a payment of management fee
that it is required to make and VTI has accepted such breach; or
(b) if applicable, on the liquidation of the Company under the Foreign
Investment Enterprises Liquidation Procedures of the People's Republic of China;
(c) if the Company should do any act which may result in the set over,
assignment or transfer to a third party not designated by VTI of the functions
to be performed by VTI under this Agreement;
(d) if the Company should become insolvent, make under applicable law an
assignment for the benefit of its creditors or petition a court in bankruptcy
for relief from its creditors or the appointment of a receiver, trustee or other
such person to manage the affairs of the Company or liquidate the affairs of the
Company for the benefit of its creditors; or
<PAGE>
(e) the time at which VTI determines that any of the Company or its legal
representative is in breach of any condition in this Agreement.
ARTICLE 6 ARBITRATION
6.01 Except as provided in section 3.09 with respect to the calculation of the
amount of management fee, all disputes under this Agreement will be settled by
the parties by reference to a single arbitrator under the laws of the HKSAR
agreed upon by the parties, or if not agreed upon within four weeks of either
party giving notice of a dispute, then as designated by VTI.
ARTICLE 7 NO ASSIGNMENT
7.01 The Company may not agree with any third party, or undertake to agree with
any third party, to set over, transfer or assign any of the functions performed
or to be performed by VTI without the prior written consent of VTI, which
consent may be unreasonably withheld.
ARTICLE 8 GENERAL PROVISIONS
8.01 Time is of the essence of the performance of every obligation under this
Agreement, and no failure or lack of diligence by any party in proclaiming or
seeking redress for any violation of, or insisting on strict performance of, any
provision of this Agreement will prevent a subsequent violation of that
provision, or of any other provision, from giving rise to any remedy that would
be available if it were an original violation of that provision or another
provision.
8.02 This Agreement will be binding upon and enure to the benefit of the
respective heirs, executors, administrators and other legal representatives and,
to the extent permitted hereunder, the respective successors and assigns, of the
parties.
8.03 Unless otherwise provided herein, any notice, payment or other
communication to a party under this Agreement may be made, given or served by
delivery, telecopy or email and addressed as follows:
(a) if to VTI:
Vibro-Tech Industries, Inc.
201-11240 Bridgeport Road
Richmond, B.C. V6X IT2
Attention: Mr. Jock Chong, President and Mr. William Chow, Chairman
Fax: 604-278-2712
Email: [email protected]
------------------
<PAGE>
(b) if to the Company:
Vibro-Tech Industries Limited
Rooms 2001-4, Hang Seng Building
77 Des Voeux Road Central, HKSAR
Attention: Mr. Joe Chung
Tel/Fax: 011-852-2877-6608
8.04 Any notice, payment or other communication so delivered, telecopied or
emailed will be deemed to have been given or served at the time of delivery or
transmission by telecopy or email.
8.05 A party may by notice change its address for service.
8.06 This Agreement constitutes the entire agreement between the parties and
supercedes all previous agreements or understandings between the parties in any
way relating to its subject matter and neither has made any representations,
inducements, warranties or promises concerning this Agreement or the matters
referred to herein which are not embodied in this Agreement.
IN WITNESS WHERE OF this Agreement has been executed by the parties as at the
date first above written.
VIBRO-TECH INDUSTRIES LIMITED
By: /s/ William Chow
Print Name: William Chow
VIBRO-TECH INDUSTRIES, INC.
By: /s/ Joe Chung
Print Name: Joe Chung
EXHIBIT 10.28
LETTER OF INTENT
November 5, 1999
From:
Vibro-Tech Industries, Inc. ("VTI")
201-11240 Bridgeport Road
Richmond, B.C. Canada V6X 1T2
Attention: Mr. Jock Chong, President and Chief Executive Officer
Tel: 604-278-3337
Fax: 604-278-2712
Email: [email protected]
----------------------
To:
Cimko Technological Installations Engineering Consulting Industry Trade Ltd.
("Cimko") Istanbul, Turkey
Attention: Mr. Ertugrul Kasaci
Web site: www.cimko.com.tr
Re: Proposal for Turkish Joint Venture Through Corporation to be Incorporated
Called Vibro-Tech Eurasia Ltd.
Whereas:
A. VTI through its subsidiaries in China and Hong Kong has available to it the
design capabilities of Dr. Fu Lin Zhou and through such subsidiaries
manufactures, markets and sells seismic rubber isolated bearings the
("Bearings") in China, Japan, Korea and other countries;
B. Cimko wishes to enter into a joint venture with VTI for Turkey, certain
countries in the Europe, the Middle East and Central Asia named on a schedule A
to this letter of intent by incorporating a Turkish company to be called
Vibro-Tech Eurasia Ltd. ("VEL");
C. It is proposed that VEL operate in Turkey and the countries of Europe, the
Middle East and Central Asia.
WITNESESS THE PARTIES COVENANT AND AGREE AS FOLLOWS:
1. VTI and Cimko will proceed under the law of Turkey to incorporate and
organize in accordance with Turkish law VEL at the cost of Cimko and VEL will
maintain its office and books of account in Istanbul, Turkey at an address to be
agreed by VTI and Cimko.
<PAGE>
2. The association of VTI and Cimko is as independent contractors and none of
VTI, Cimko or their respective subsidiaries, directors, officers or employees is
for the purposes of this Agreement employees or agents of, or co-venturers with,
VEL and nothing in this Agreement will be construed so as to make them
employees, agents or co-venturers of VEL or to impose any liability on VEL as an
employer, principal or co-venturer.
3. The shareholders of VEL will be VTI, which will hold 51% of the outstanding
shares of VEL, and Cimko, which will hold 49% of the outstanding shares of VEL.
4. As part of the ownership of 49% of the outstanding shares of VEL, Cimko will
advance from time to time up to US$50,000 for the initial expenses of VEL to get
the business of VEL started and will be repaid from profits, non-interest
bearing.
5. The board of directors of VEL will be comprised of Mr. Boo Jock Chong, Mr.
Ertugrul Kasaci and Dr. Zhou Fu Lin. Officers of VEL will initially be Mr.
Kasaci in the position of managing director and such other officers as are from
time to time appointed by the board of directors.
6. The financial year end of VEL will be December 31 and VEL engage an
accounting firm acceptable to VTI that can produce in accordance with U.S.A.
generally accepted accounting principles quarterly unaudited financial
statements and an annual audited financial statement.
7. The purpose of forming and organizing VEL is to:
(a) obtain government qualification of, and market and sell, Bearings in Turkey;
(b) procure projects in Turkey that require equipment seismic product including
retrofitting of structures and infrastructures with Bearings; (c) make VEL
responsible for government qualification, and marketing and sales in the
countries in Europe, the Middle East and Central Asia listed in Schedule A.
8. All Bearings and any future new design of Bearings owned and sold by VTI and
its subsidiaries will be sold by the appropriate subsidiary of VTI, which may be
Shantou Vibro-Tech Industrial and Development Ltd., Shantou City, Guangdong
Province, China, or Vibro-Tech Industries Ltd. of Hong Kong or such other
corporation designated from time to time by VTI.
9. VEL will engage Mr. Erugul Kasaci as the managing director of VEL with a
management contract for at least three years, renewable from year to year
thereafter. The management contract will also contain a non-competition clause
to operate for two years if Mr. Kasaci leaves VEL for a reason not acceptable to
VTI. Mr. Kasaci will receive no salary from VEL but will be compensated by
receiving bonuses and commissions determined from time to time by the board of
directors and by receiving options to purchase shares of VTI as determined from
time to time by the board of directors of VTI. Mr. Kasaci will have all the
powers of a managing director as are customary and usual under Turkish law.
<PAGE>
10. This letter of intent and the formation of the agreement contained in it is
subject to:
(a) approval by resolution of the board of directors of VTI;
(b) acceptance by VTI of the agreement after having made due inquiry of the
corporate and other laws of Turkey as they relate to VEL and the proposed
operations of VEL.
VTI will use its best efforts to satisfy these subjects within one month of the
date of this Agreement.
11. This is a letter of intent only and does not constitute a binding contract
between VTI and Cimko. This letter of intent will be replaced with a binding
contract setting out all the features of the joint venture between VTI and
Cimko.
12. All intellectual property rights, and any modifications or alterations to
intellectual property rights, remain the property of VTI and its subsidiaries,
but VEL may be registered as the user of such intellectual property in countries
where such registration is from time to time deemed appropriate.
13. When a binding agreement is made between the parties, any dispute not
settled between the parties will be determined under the procedures applying to
the arbitration of private disputes under the law of the Geneva convention.
13. Before a binding agreement is made, the parties will agree upon, and include
in the binding agreement, their understanding of the following matters:
(a) warranties to be given by VTI and its subsidiaries relating to the sale and
use of Bearings;
(b) provision of important information from time to time by VEL in order that
VTI remains in compliance with applicable U.S.A. securities laws;
(c) budgets for VEL and the contribution off VI and Cimko to the budgets of VEL;
(d) grant to VTI of right of first refusal to buy the shares of VEL owned by
Cimko and the right of VTI to refuse to give a consent to a purchaser of shares
of VEL owned by Cimko if such purchaser is not acceptable to VTI;
(e) agreement of VTI not to issue more shares or other securities without the
prior consent of VEL;
(f) termination of relationship; and
(g) such other subjects as may be raised by VTI or Cimko before the finalization
and signing of the binding agreement forming the joint venture for the operation
of VEL.
If you are in agreement with this letter of intent, please sign below to
indicate your approval and we will proceed as set out in the letter of intent to
form, and start the business of VEL, and negotiate, finish and sign the formal
agreement to govern the joint venture.
<PAGE>
VIBRO-TECH INDUSTRIES, INC. CIMKO TECHNOLOGICAL INSTALLATIONS
ENGINEERING CONSULTING INDUSTRY TRADE LTD.
By: /s/ Jock Chong By: /s/ Ertugrul Kosaci
Jock Chong, President Ertugrul Kosaci, President
EXHIBIT 10.29
TAEMYUNG CORPORATION
C.P.O. Box 10802
3rd Floor Buum Building
917-1 Bangbae-Dong, Seochoku
Seoul, Korea
Mailing Address: Tel: 02-588-3751
C.P.O. Box 10802 Fax: 02-588-1895
Seoul, Korea
To Vibro-Tech Industrie, Inc. Sept. 14, 1999
Ref. no. F9090836
Page 1 of 3
Attention: B.J. Chong, President
Thanks for your attention to our company.
We would like to introduce Taemyung Corporation and our corporation as follows:
1. Taemyung Corporation was founded in 1986, and its organization is as follows:
a. Civil Engineering Section:
- - Sales, Engineering and Installation Services for bridge bearings, expansion
joint and seismic devices in cooperation with FIP in Italy.
- - Sales and Services for Launching Girder to install PC box on the Piers in
cooperation with Paolo De Nicola in Italy, and b. Harbour Equipment
Section:
- - Sales and Services for mobile harrbour crrane in cooperation with Liebherr,
Austria
- - Sales and Services for RoRo truck/trailer in cooperation with Mafi in
Germany and Liftec in Finlang
2. Taemyung Corporation sold approx. US$10-15 million value off eqipment for the
above annually, and started sales, engineering and installation of bridge
bearings from 1998 after obtained Installation License and registered as a
member of Korea Specialty Contractors Association.
Taemyung ssold approx. KRN 5 billion of bridge bearings, only large sized pot
bearings, and spherical bearings imported from FIP, expansion joint bought from
local manufacurers in this year only.
We have sold the bearings and expansion joints for the following projects:
- -Korea Highspeed Highway: Dongbu Construction
- -Bang Hwa Bridge: Lotte Construction
- -Seo Hae Bridge: Daemlin Bridge
- -Sikae-Bondeux Highway: Hyundai Construction
- -Korea Highspeeed Railway: Daewoo
<PAGE>
3. As you may know that Korean Government strongly recommended that most of
important bridges must use seismic bridges recently, and specially Unison (the
largest bearing manufacturer in Korea) strongly advertised to to use LRB system
instead of seismic devices to contractors and designers since 1977, and many
projects, specially Korea Highway projects, designed with LRB system. We
estimate that annual requirement for the LRB in this market is approx. KRN 50
billion, while LRB marketing in Korea is started noww. Current competition for
the LRB is as follows:
- - Unison: manufacturing at their Korean factory in technical cooperation with
DIS in USA
- - Hyunsung: imported from Oilless in Japan
- - KR: manufacturing at their Korean shop in technical cooperation with Alga
in Italy.
Note: FIP in Italy did not produce LRB devices.
4. We would like to cooperate with you as follows:
a. Firstly, Taemyung will provide you with detailed inquiry, such as size, load,
and quantity etc to you and you shall provide detailed design and quotation etc.
b. Your quotation shall be net to Taemyung, as Taemyung shall be responsible to
sell the LRB as well as to install the bearings and guarantee etc. to
contractors.
c. We expect that the sales of your LRB would face very strong competition due
to local manufacturing.
d. After quite volume of our sales of your bearings, we shall consider to
receive your design program of Taemyung's design, and your supply of the
bearings based on our design etc. e. However, all cooperation method shall be
discussed with you in detail after basic agreement with you.
We believe that the above would be satisfactory to your requirement. If there is
anything required, please advise.
Sincerely Yours,
/s/ J.Jung
J.Jung, President, Taemyung Corpotation
<PAGE>
VIBRO-TECH INDUSTRIES ,INC.
September 20, 1999
Mr. J. Jung, President Fax: 011-02-588-1895
Taemyung Corporation
Seoul, South Korea
Dear Mr. Jung:
Re: Strategic Alliance
Thank you for the introduction of your company as requested.
We are impressed with Taemyung Corporation's achievements and successes in the
development of good relationships with foreign companies. You certainly have a
long track record working with European companies.
We are also encouraged by the fact that the Korean Government strongly
recommends the use of anti-seismic devices for your country's highway and bridge
infrastructure. Furthermore, we are encouraged by your company's goal to become
a major supplier of anti-seismic devvices.
As you are aware, Vibro-Tech Industries Inc. is the largest manufacturer and
marketer of seismic bearings in China with many years of experience in
large-scale projects. We have also begun the exports of our products to Japan.
Your proposal for a business cooperation is acceptable to us. Your company will
be our designated agent in Korea initially. We request that you kindly provide
us with a detailed enquiry of your requirements. We shall quote to you net to
Taemyung, FOB Hong Kong. Payment terms will be by Letter of Credit at sight.
Further details will be provided to you by our trading subsidiary based in Hong
Kong.
You are assured that the prices we quote you will be competitive. More
importantly is the fact is the fact that our products meet or exceed
International Standards including those of Japan.
Once your company has achieved sufficient sales volume and acceptability, we
will then consider other means of co-operation as suggested by you so that we
may foster equitable and mutually beneficial relationships between our
companies.
We look forward to your detailed enquiry and your productt requirements as
stated.
Best regaards,
/s/ Boo Jock Chong, M.Sc.
Boo Jock Chong, M.Sc.
President and CEO
EXHIBIT 10.30
AGREEMENT
MADE BETWEEN:
VIBRO-TECH INDUSTRIES, INC. (hereinafter referred to as "Vibro") the Party of
the First Part
And Professor I. Aizenberg and Dr. V. Smirnov the Party of the Second Part
IT IS HEREBY AGREED:
1. THAT Vibro shall extend to the Party of the Second Part the right to act as
Vibro's exclusive agent to market Vibro's products and designs in the
region of Russia for a period of two (2) years from the date of execution
of this agreement.
2 THAT Vibro will pay to the Party of the Second Part a commission of five
(5%) percent of the net price of each contract completed under this
agreement.
3. THAT the commission will be paid within twenty-one (21) days of Vibro's
receipt of the full payment of the contract price.
4. THAT the Party of the Second Part has a duty and an obligation to assist
Vibro in following up on the progress of each project referred to by the
Party of the Second Part.
5. THAT if, for any reason, a project referred under this agreement by the
Party of the Second Part is completed by Vibro but is not paid for in full,
the Party of the Second Party will not receive the commission for that
project.
6. THAT upon its expiration, this agreement may be renewed by the parties
hereto under such terms and conditions as may be deemed to be for their
mutual benefit.
Dated the 10th day of October, 1998 in the City of Guangzhou in the Guangdong
Province of China and signed in the presence of:
/s/ Lily Zeng Vibro-Tech Industries Inc.
Lily Zeng For: /s/ Joe Chung
Joe Chungt
/s/ I. Aizenberg
I. Aizenberg
/s/ V. Smirnov
V. Smirnov
Exhibit 10.31
CONSULTANT'S INCENTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT made as of February 25, 2000
BETWEEN:
VIBRO-TECH INDUSTRIES, INC., a corporation subsisting under the laws of the
state of Delaware, having a place of business at Suite 2000 Cathedral Place, 925
West Georgia Street, Vancouver, B.C. V6C 2C2
("Vibro-Tech")
AND:
MR. DARRYL QUAN, Businessman, having a residence at 1090 Moreno Avenue, Palo
Alto, Ca 94303
("Quan")
WHEREAS:
A. Vibro-Tech and its affiliates are engaged in the business of the design,
manufacture, marketing and sales of seismic rubber vibration bearings for use in
the construction industry; B. Quan has agreed to be a financial consultant for
Vibro-Tech in charge on a non-exclusive basis of advising Vibro-Tech of the
financial matters relating to the government qualification, marketing and sales
of seismic rubber vibration bearings on the terms and conditions of an Agreement
dated February 25, 2000;
WITNESSES THAT the parties mutually covenant and agree as follows:
ARTICLE 1 DEFINITIONS AND INTERPRETATION
1.01 In this Agreement, including the recitals and schedules to this Agreement,
unless the context otherwise requires:
Exchange means the OTC Bulletin Board.
Exercise Price means US$0.30 per Optioned Share.
Expiry Date means 5:00 p.m., Vancouver time, on December 31, 2003.
Optioned Shares means 25,000 Shares.
Registrar means the Registrar of Securities under the Securities Act.
Rule 504 means Rule 504 of Regulation D under the Securities Act, as amended
from time to time.
Rule 701 means Rule 701 as promulgated under the Securities Act as amended from
time to time.
<PAGE>
Securities Act means the Securities Act of 1933, as amended from time to time.
Share or Shares means a common share or common shares of the Company as
constituted on July 1, 1999.
1.02 The captions, section numbers and article numbers appearing in this
Agreement are inserted for convenience of reference only and will in no way
define, limit, constrict or describe the scope or intent of this Agreement nor
in any way affect this Agreement.
1.03 This Agreement and all matters arising under this Agreement will be
governed by, construed and enforced in accordance with the laws of Delaware and
any proceeding commenced or maintained in connection with this Agreement will be
so commenced and maintained in the forum of appropriate jurisdiction in the
County of Vancouver, British Columbia to which jurisdiction the parties
irrevocably attorn.
1.04 In this Agreement, wherever the context requires, words importing the
singular number will include the plural and vice versa, words importing the
masculine gender will include the feminine and neuter genders and words
importing persons will include firms and corporations and vice versa.
1.05 Unless otherwise stated, a reference in this Agreement to a numbered or
lettered article, section, paragraph or subparagraph refers to the article,
section, paragraph or subparagraph bearing that number or letter in this
Agreement.
1.06 If any covenant or other provision of this Agreement is invalid, illegal or
incapable of being enforced by reason of any rule of law or public policy such
covenant or other provision will be severed; all other terms and conditions of
this Agreement will, nevertheless, remain in full force and effect and no
covenant or provision will be deemed dependent upon any other covenant or
provision unless so expressed herein.
ARTICLE 2 GRANT OF OPTION
2.01 The Company grants Quan an irrevocable, non-transferable and non-assignable
option (the "Option") to purchase Optioned Shares for the Exercise Price on the
terms and other conditions of this Agreement.
2.02 It is a condition that
(a) there is available to Quan under the Securities Act an exemption from the
registration requirements and the prospectus requirements of the Securities Act
under Rule 504; and
(c) no action is required to be taken by the Company under Rule 701 or
applicable law of the State of California.
ARTICLE 3 EXERCISE OF OPTION
3.01 Quan may exercise the Option from time to time with respect to all or part
of the Optioned Shares or Optioned Shares remaining unpurchased.
<PAGE>
3.02 The Option will be exercised by Quan or his legal personal representative
by delivering to the principal business office of the Company in Vancouver,
British Columbia or such other place as is designated by the Company from time
to time:
(a) a notice stating the number of Optioned Shares being purchased; and
(b) a certified check or bank draft in favor of the Company drawn in United
States dollars for the product of the number of Optioned Shares being purchased
and the Exercise Price.
3.03 On exercise of Option, the Company will forthwith cause its transfer agent
to deliver to any of the Quan, his legal representative or such other person as
Quan may otherwise direct in the notice of exercise of the Option a certificate
or certificates in the name of any of the Quan, his legal representative or such
other person as Quan may otherwise direct in the notice of exercise of the
Option representing such number of Shares for which payment has been made.
3.04 Nothing in this Agreement obligates or will obligate Quan to purchase or
pay for any Optioned Shares except those Optioned Shares in respect of which
Quan has exercised the Option in the manner prescribed.
3.05 If the Optioned Shares have not been registered under the Securities Act,
the certificate or certificates representing the Optioned Shares, will be
endorsed with a legend as follows:
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT"), THE DELAWARE STATE SECURITIES ACT OR ANY
OTHER APPLICABLE SECURITES ACT AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED
EXCEPT (1) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND
SUCH STATE SECURITIES LAWS, OR (2) AT THE OPTION OF THE COMPANY, UPON DELIVERY
TO THE COMPANY OF AN OPINION OF COUNSEL FOR THE TRANSFEROR, REASONABLY
SATISFACTORY TO COUNSEL FOR THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED.
3.06 Quan acknowledges that the Option and the Optioned Shares, if any, are
issued pursuant to the exemption from the registration requirements contained in
Regulation D of Rule 504 of the Securities Act and that:
(a) the Shares and the Optioned Shares have not been registered under the
Securities Act or any state or provincial securities laws, and are being offered
in reliance on certain exemptions contained in the Securities Act and such state
or provincial securities laws;
(b) if the Optioned Shares have not been registered under the Securities Act,
the Optioned Shares will not be sold or transferred except pursuant to:
(i) an effective registration statement under the Securities Act and any
applicable state securities laws;
(ii) Rule 144 promulgated under the Securities Act; or
(ii) an opinion of counsel satisfactory to the Company to the effect that such
registration is not required; and
<PAGE>
(c) the Option is non-transferable regardless of whether or not there exists an
exemption under which the Option could be sold or transferred to a third party;
and
(d) no federal, state or provincial agency has made any finding or determination
as to the fairness of the investment, or any recommendation or endorsement of
the Shares or any other securities of the Company
ARTICLE 4 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE QUAN
4.01 Quan represents and warrants to, and covenants with, the Company that:
(a) Quan is resident for securities law purposes in California; and
(b) the grant of the Option has not been made by expectation of employment or
continued employment.
ARTICLE 5 TERMINATION OF OPTION
5.01 The Option and this Agreement will terminate on the earlier of the Expiry
Date or:
(a) when Quan ceases to be a financial consultant of the Company;
(b) six months after the date of the death of the Quan;
(c) the time at which any securities regulatory authority issues against Quan a
cease trade order based on a determination that trading of the securities of the
Company by Quan is not in the best interests of the public; or
(d) the time at which the Company determines that any of the Quan, his legal
representative or such other person as is designated by Quan in the notice
exercising the Option as the person to whom Optioned Shares are to be issued is
in breach of any condition in this Agreement or applicable law relating to the
sale by the Quan, his legal representative or such other person as is designated
of any of the Optioned Shares.
ARTICLE 6 PROHIBITION ON DEALING WITH THE OPTION AND RESTRICTIONS ON SALE OF
OPTIONED SHARES
6.01 Quan will not pledge, mortgage, hypothecate, sell, assign or transfer, or
agree to pledge, mortgage, hypothecate, sell, assign or transfer the Option or
any interest in, or right to, the Option.
6.02 The Optioned Shares will be sold in accordance with Rule 144 form time to
time.
ARTICLE 7 ADJUSTMENT OF NUMBER OF OPTIONED SHARES
7.01 The number of Optioned Shares deliverable upon the exercise of the Option
will be adjusted as follows:
<PAGE>
(a) if there is any subdivision or subdivisions of the Shares while the Option
is in effect into a greater number of Shares, the Company will deliver at the
time of purchase of Optioned Shares, in addition to the number of Optioned
Shares in respect of which the right to purchase is being exercised, such
additional number of Optioned Shares as result from such subdivision or
subdivisions without Quan making any additional payment or giving any other
consideration;
(b) if there is any consolidation or consolidations of the Shares while the
Option is in effect into a lesser number of Shares, the Company will deliver and
Quan will accept, at the time of purchase of Optioned Shares, instead of the
number of Optioned Shares in respect of which the right to purchase is being
exercised, the lesser number of Optioned Shares as a result from such
consolidation or consolidations;
(c) if there is any change of the Shares of the Company while the Option is in
effect, the Company will deliver at the time of purchase of Optioned Shares the
number of Optioned Shares of the appropriate class resulting from the such
change as Quan would have been entitled to receive in respect of the number of
Optioned Shares so purchased had the right to purchase been exercised before
such change;
(d) if there is any capital reorganization, reclassification or change of
outstanding equity shares, other than a change in the par value, of the Company
or if there is any consolidation, merger or amalgamation of the Company with or
into any other company or any sale of the property of the Company as or
substantially as an entirety at any time while the Option is in effect, Quanmay
purchase and receive, instead of the Optioned Shares purchasable and receivable
upon the exercise of the Option, the kind and amount of Shares and other
securities and property receivable upon such capital reorganization,
reclassification, change, consolidation, merger, amalgamation or sale which the
holder of a number of Shares equal to the number of Optioned Shares purchasable
and receivable upon the exercise of the Option would have received as a result
of such event.
The subdivision or consolidation of Shares at any time outstanding into a
greater or lesser number of Shares, whether with or without par value, will not
be deemed to be a capital reorganization or a reclassification of the capital of
the Company for the purposes of this paragraph (d).
7.02 The adjustments provided for in section 7.01 are cumulative.
7.03 The Company will not be required to issue fractional Shares in satisfaction
of its obligations and any fractional interest in a Share that would, except for
the provisions of this section, be deliverable upon the exercise of the Option
will be cancelled and not be deliverable by the Company.
7.04 If any questions at any time arise with respect to the exercise price or
number of Optioned Shares deliverable upon exercise of the Option, such
questions will be conclusively determined by the Company's auditors, or, if they
decline to so act, any other firm of chartered accountants in Vancouver, British
Columbia that the Company may designate and who will have access to all
appropriate records and such determination will be binding upon the Company and
the Quan.
<PAGE>
7.05 Quan will have no rights whatsoever as a shareholder in respect of any of
the Optioned Shares, including any right to receive dividends or other
distributions, other than in respect of Optioned Shares in respect of which Quan
has exercised its Option and which Quan has taken up and paid for.
7.06 The Company represents and warrants to, and covenants with Quan that:
(a) the Company will use its best efforts to proceed to have its Shares
registered under the Securities Exchange Act of 1934 and if the policies of
applicable securities administrators change to become a reporting issuer in
British Columbia; and
(b) the Company will reserve in its treasury sufficient Shares to permit the
issuance and allotment of the Optioned Shares to Quan if the Option or any part
thereof is exercised.
ARTICLE 8 GENERAL PROVISIONS
8.01 Time is of the essence of the performance of every obligation under this
Agreement, and no failure or lack of diligence by any party in proclaiming or
seeking redress for any violation of, or insisting on strict performance of, any
provision of this Agreement will prevent a subsequent violation of that
provision, or of any other provision, from giving rise to any remedy that would
be available if it were an original violation of that provision or another
provision.
8.02 This Agreement will be binding upon and enure to the benefit of the
respective heirs, executors, administrators and other legal representatives and,
to the extent permitted hereunder, the respective successors and assigns, of the
parties.
8.03 Unless otherwise provided herein, any notice, payment or other
communication to a party under this Agreement may be made, given or served by
delivery, telecopy or email and addressed as follows:
(a) Quan:
Mr. Darryl Quan
1090 Moreno Avenue, Palo Alto, Ca 94303
Fax: 650-813-2960
Email: [email protected]
(b) Vibro-Tech
Vibro-Tech Industries, Inc.
2000 Cathedral Place
925 West Georgia Street
Vancouver, B.C. V6C 2C2
Attention: Mr. Jock Chong, President and Chief Executive Officer
Fax: 604-687-7588
Email: [email protected]
<PAGE>
with a copy to:
Vibro-Tech Industries, Inc.
Suite 600, 1090 West Pender Street
Vancouver, B. C. V6E 2N7
Attention: Mr. Gary MacDonald, Secretary
Fax: 604-683-8791
Email: [email protected]
8.04 Any notice, payment or other communication so delivered, telecopied or
emailed will be deemed to have been given or served at the time of delivery or
transmission by telecopy or email.
8.05 A party may by notice change its address for service.
8.06 This Agreement constitutes the entire agreement between the parties and
supercedes all previous agreements or understandings between the parties in any
way relating to its subject matter and the Company has made not representations,
inducements, warranties or promises concerning this Agreement or the matters
referred to herein which are not embodied in this Agreement.
ARTICLE IX ARBITRATION
9.01 If any difference or dispute will arises between the Parties that cannot be
resolved between the Parties by negotiation with regard to mutual benefit and
equality then in respect to any matter, such difference or dispute will be
arbitrated or submitted to arbitration under and pursuant to the Commercial
Arbitration Act (British Columbia).
9.02 Such dispute will be referred by the Party affected to an arbitrator who
will be agreed upon by such Participants and, failing such agreement within four
weeks after notice by any such Party, then an arbitrator may be named as
provided in the Commercial Arbitration Act but in all cases the arbitration will
be conducted by a sole arbitrator who may be a member of the firms of auditors
of Vibro-Tech.
9.03 The arbitrator so appointed will sit in Vancouver, British Columbia, unless
there is unanimous agreement of such Parties that he will sit at another place,
and will hear and dispose of such dispute in such manner as the arbitrator, in
his discretion, will determine, but in so doing will be required to receive the
submissions of such Parties.
9.04 The decision of the arbitrator will be rendered in writing with all
reasonable speed and will be final and binding upon such Participants.
9.05 If the Parties to the arbitration cannot agree on the respective shares of
the costs of arbitration to be borne by them, the arbitrator will determine what
part of the costs and expenses incurred in any such proceeding will be borne by
each of them.
ARTICLE X ASSIGNMENT
10.01 This agreement may not be assigned, set over, transferred, in whole or in
part by any party without the written consent of the other party, which consent
may be unreasonably withheld.
<PAGE>
ARTICLE XI GENERAL
11.01 The provisions of this Agreement constitute the entire agreement between
the parties and supersede all previous communications, representations and
agreements, whether verbal or written, between the parties with respect to the
subject matter hereof.
11.02 The captions, section numbers and article numbers appearing in this
Agreement are inserted for convenience of reference only and will in no way
define, limit, constrict or describe the scope or intent of this Agreement nor
in any way affect this Agreement.
11.03 In this Agreement, wherever the context requires, words importing the
singular number will include the plural and vice versa, words importing the
masculine gender will include the feminine and neuter genders and words
importing persons will include firms and corporations and vice versa.
11.04 Unless otherwise stated, a reference in this Agreement to a numbered or
lettered article, section, paragraph or subparagraph refers to the article,
section, paragraph or subparagraph bearing that number or letter in this
Agreement.
11.04 If any covenant or other provision of this Agreement is invalid, illegal
or incapable of being enforced by reason of any rule of law or public policy
such covenant or other provision will be severed; all other terms and conditions
of this Agreement will, nevertheless, remain in full force and effect and no
covenant or provision will be deemed dependent upon any other covenant or
provision unless so expressed herein.
IN WITNESS WHEREOF this Agreement has been executed by the parties hereto on the
day and year first above written.
VIBRO-TECH INDUSTRIES, INC.
By: /s/ Gary MacDonald, Secretary
/s/ DARRYL QUAN
Exhibit 10.32
SHARE AND CLASS 2 WARRANT PURCHASE AGREEMENT
THIS AGREEMENT made as of February 25, 2000 BETWEEN:
VIBRO-TECH INDUSTRIES, INC., a body corporate subsisting under the laws of
Delaware, with a place of business at Suite 2000 Cathedral Place, 925 West
Georgia Street, Vancouver, B.C. V6C 2C2
(the "Company")
AND:
MR. DARRYL QUAN, Businessman, having a residence at 1090 Moreno Avenue, Palo
Alto, Ca. 94303
(the "Purchaser")
WHEREAS:
A. The Company is not a distributing corporation under the Securities Act of
1933 or a reporting issuer under any provincial securities legislation of
Canada;
B. The Purchaser is not, nor will be, an affiliate of the Company as interpreted
under the Securities Act of 1933 or an associate of an affiliate or a member of
the board of directors; and C. The Company wishes to sell to the Purchaser
62,500 shares for US$0.40 per share and issue to the Purchaser 62,500 Class 2
Warrants, each Warrant entitling the Purchaser to purchase before December 31,
2002 one share for $0.50 per share, and the Purchaser has been engaged as a
financial consultant by the Company under an agreement dated February 25, 2000;
WITNESSES that the parties mutually covenant and agree as follows:
ARTICLE 1 DEFINITIONS AND INTERPRETATION
1.01 In this Agreement, including the recitals and schedules to this Agreement,
unless the context otherwise requires:
Closing means the procedure for the issue of Shares and Warrants on the Closing
Date.
Closing Date means the earlier of March 1, 2000 or such other date designated by
the Company when the date on which the Company will issue, and the Purchaser
will pay for, the Units.
Company means Vibro-Tech Industries, Inc.
<PAGE>
Exchange means the OTC Bulletin Board.
Exchange Act means the Securities Exchange Act of 1934 (U.S.), as amended from
time to time.
Exercise Price means US$0.50 per Warrant.
Expiry Date means the earlier of 5:00 p.m., Delaware time, on December 31, 2002
or thirty business days after the Purchaser ceases to be a member of the board
of directors of the Company.
Purchaser means Mr. Darryl Quan.
Rule 504, Regulation D means Rule 504, Regulation D under the Securities Act.
Shares means 62,500 shares of the Company to by purchased by the Purchaser for
US$0.40 per share.
Securities Act means the Securities Act of 1933 (U.S.), as amended from time to
time.
Share or Shares means a common share or common shares of the Company as
constituted on February 25, 2000.
Unit means the unit purchased by the purchaser comprised of one share for
US$0.40 per share and a non-transferable Class 2 share purchase warrant to
acquire before December 31, 2002 a share for $0.50 per share.
Warrants means 62,500 Class 2 share purchase warrants, each warrant entitling
the holder to purchase before December 31, 2002 one share for US$0.50 per share.
1.02 The captions, section numbers and article numbers appearing in this
Agreement are inserted for convenience of reference only and will in no way
define, limit, constrict or describe the scope or intent of this Agreement nor
in any way affect this Agreement.
1.03 This Agreement and all matters arising under this Agreement will be
governed by, construed and enforced in accordance with the laws of Delaware and
any proceeding commenced or maintained in connection with this Agreement will be
so commenced and maintained in the court of appropriate jurisdiction in the City
of Wilmington, Delaware to which jurisdiction the parties irrevocably attorn.
1.04 In this Agreement, wherever the context requires, words importing the
singular number will include the plural and vice versa, words importing the
masculine gender will include the feminine and neuter genders and words
importing persons will include firms and corporations and vice versa.
1.05 Unless otherwise stated, a reference in this Agreement to a numbered or
lettered article, section, paragraph or subparagraph refers to the article,
section, paragraph or subparagraph bearing that number or letter in this
Agreement.
1.06 If any covenant or other provision of this Agreement is invalid, illegal or
incapable of being enforced by reason of any rule of law or public policy such
covenant or other provision will be severed; all other terms and conditions of
this Agreement will, nevertheless, remain in full force and effect and no
covenant or provision will be deemed dependent upon any other covenant or
provision unless so expressed herein.
<PAGE>
ARTICLE 2 SUBSCRIPTION FOR UNITS
Subscription
2.01 The Purchaser subscribes for, and agrees to pay on the Closing Date for,
62,500 Units at the subscription price of US$0.40 per Unit on the terms and
other conditions of this Agreement.
Acceptance
2.02 The Company accepts the Purchaser's subscription and agrees to allot and
issue to the Purchaser on the Closing Date 62,500 Units comprising 62,500 Shares
and 62,500 Warrants on the terms and other conditions of this Agreement and to
cause a certificate or certificates representing the Shares and the Warrants to
be issued to the Purchaser.
2.03 It is a condition of the acceptance of the Purchaser that the Purchaser is
appointed a financial consultant of the Company forthwith on execution of this
contract.
Certificate Legend
2.04 The certificate or certificates representing the Shares, the Warrants and
any shares acquired on exercise of the Warrants will be endorsed with a legend
as follows:
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT"), THE DELAWARE STATE SECURITIES ACT OR ANY
OTHER APPLICABLE SECURITES ACT AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED
EXCEPT PURSUANT TO RULE 144 (2) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT AND SUCH STATE SECURITIES LAWS, OR (3) AT THE OPTION OF THE
COMPANY, UPON DELIVERY TO THE COMPANY OF AN OPINION OF COUNSEL FOR THE
TRANSFEROR, REASONABLY SATISFACTORY TO COUNSEL FOR THE COMPANY, THAT SUCH
REGISTRATION IS NOT REQUIRED.
Securities Considerations
2.05 Purchaser acknowledges that the Units are issued pursuant to the exemption
from the registration requirements contained in Rule 504, Regulation D of the
Securities Act an exemption form the prospectus and registration requirements of
the Securities Act and that:
(a) the Shares, Warrants and shares to be acquired on exercise of the Warrants
have not been registered under the Securities Act or any state or provincial
securities laws, are being offered in reliance on certain exemptions contained
in the Securities Act and such state or provincial securities laws;
(b) the Shares and Warrants will not be sold or transferred except pursuant to:
<PAGE>
(i) an effective registration statement under the Securities Act and any
applicable state securities laws;
(ii) Rule 144 promulgated under the Securities Act; or
(ii) an opinion of counsel satisfactory to the Company to the effect that such
registration is not required; and
(c) the Share Purchase Warrants are non-transferable regardless of whether or
not there exists an exemption under which the Warrants could be sold or
transferred to a third party; and
(d) no federal, state or provincial agency has made any finding or determination
as to the fairness of the investment, or any recommendation or endorsement of
the Shares or any other securities of the Company.
ARTICLE 3 REPRESENTATIONS, WARRANTIES AND COVENANTS
Representations, Warranties and Covenants of the Company
3.01 The Company represents and warrants to, and covenants with, the Purchaser
that:
(a) the Company is a body corporate subsisting under the laws of Delaware,
validly exists and is in good standing with respect to all applicable law, and
is duly registered to carry on business in all jurisdictions in which it carries
on business;
(b) the Units for which certificates are delivered to the Purchaser pursuant to
this Agreement will, at the time of such delivery, be duly authorized, validly
issued, fully paid and non-assessable;
(c) the authorized capital of the Company is 100,000,000 common shares with a
par value of $0.001 per share and the Company will allot and conditionally
reserve for issuance sufficient number of common shares to issue the Shares and
the share to be acquired on exercise of the Warrants;
(d) the Company is not a distributing corporation under the Securities Exchange
Act of 1934 or a reporting issuer under any other applicable legislation; and
(e) the execution and delivery of this Agreement has been duly authorized by all
necessary corporate proceedings and the completion of the transactions
contemplated in this Agreement does not conflict with or result in the breach or
acceleration of any indebtedness under, or constitute default under, the
constating documents of the Company or any indenture, mortgage, agreement,
lease, license or other instrument to which the Company is a party or by which
it is bound, or any judgment or order of any Court or administrative body by
which the Company is bound; and
3.02 The representations, warranties, covenants and agreements of the Company
contained in this Agreement will be true at and as of the Closing as though such
representations, warranties, covenants and agreements were made at and as of the
Closing and except for the waiver of any condition by the Purchaser, the
representations, warranties, covenants and agreements of the Company will
survive the Closing and notwithstanding the closing of the issuance of the Units
under this Agreement, will continue in full force and effect.
<PAGE>
Representations, Warranties and Covenants of the Purchaser
3.03 The Purchaser represents and warrants to and covenants with the Company
that:
(a) the Purchaser is a resident of California and is aware that the Units are
being, and the securities comprising the Units will be, issued pursuant to the
exemption from registration contained in Rule 504 of Regulation D of the
Securities Act;
(b) the Purchaser is purchasing the Shares for investment purposes as principal
for its own account and not for the benefit of any other person;
(c) the Purchaser has the legal capacity and competence to execute this
Agreement and that all necessary approvals by directors and shareholders of the
Purchaser have been, or will in the ordinary course be, given to authorize the
execution and delivery of this Agreement by the Purchaser;
(d) the Purchaser is not purchasing the Shares as a result of having any
material information about the Company's affairs which has not been generally
disclosed as at the date of the announcement of the purchase;
(e) the Purchaser acknowledges that any interest accruing on Subscription Funds
will accrue to the sole benefit of the Company and may be applied by the Company
for general corporate purposes; and
(f) the Purchaser is, or will be, an affiliate of the Company as interpreted
under the Securities Act;
(g) the Purchaser understands that the Shares have not been registered under the
Securities Act or the securities laws of any states of the United States or of
the provinces of Canada;
(h) the Purchaser has such knowledge and experience in financial and business
matters that it is capable of seeking out and evaluating the information
relevant to evaluating the Company, the proposed activities thereof, and the
merits and risks of the prospective investment, and to make an informed
investment decision in connection therewith;
(i) the Purchaser realizes that, since the Shares are restricted and cannot be
readily sold, that the Purchaser may not be able to sell or dispose of any of
the Shares and, therefore, that Purchaser must not purchase the Shares unless
Purchaser has liquid assets sufficient to assure that such purchase will cause
no undue financial difficulties;
(j) the Purchaser is aware of the provisions of Rule 144 promulgated under the
Securities Act ("Rule 144") which permit limited resale of shares purchased in a
private placement subject to the satisfaction of certain conditions, including,
among other things, the existence of a public market for the Shares or
<PAGE>
conversion stock, the availability of certain current public information about
the Company, the resale occurring not less than one year after a party has
purchased and paid for the security to be sold, the sale being effected through
a "broker's transaction" or in transactions directly with a "market maker" and
the number of shares being sold during any three-month period not exceeding
specified limitations;
(k) the Purchaser understands that all information which Purchaser has provided
to the Company concerning the Purchaser, the Purchaser's financial position and
knowledge of financial and business matters is correct and complete as of this
Agreement and, if there should be any material change in such information before
the acceptance of this subscription, the Purchaser promptly notify the Company;
(l) the Purchaser is an "accredited investor" within the meaning of Rule 501(a)
of Regulation D promulgated by the Securities and Exchange Commission;
(m) the Purchaser has been provided with all materials and information
requested, to the extent possessed or obtainable by the Company without
unreasonable effort and expense, including any information requested to verify
information furnished and the Form 10-SB of the Company and has been provided
the opportunity to ask questions of, and receive answers from, the Company and
the officers, employees, and representatives of the Company concerning the terms
and conditions of this offering;
(n) no party has made any representations to the Purchaser as to the
profitability, if any, of the Company, nor has the Purchaser relied on any
statements made by any persons concerning the value of the investment in the
Shares or the risks associated therewith and the Purchaser has made such
inquiries as deemed necessary to make an informed decision, independent of any
representations by any persons connected in any way with the Company.
3.04 The representations, warranties, covenants and agreements of the Purchaser
contained in this Agreement will be true at and as of the Closing as though such
representations, warranties, covenants and agreements were made at and as of the
Closing and except for the waiver of any condition by the Company, the
representations, warranties, covenants and agreements of the Purchaser will
survive the Closing and notwithstanding the closing of the issuance of the
Shares under this Agreement, will continue in full force and effect.
ARTICLE 4 CLOSING
4.01 Closing will occur at the principal business office of the Company at 10:00
a.m. on the Closing Date as designated by the Company.
4.02 At the Closing, the issuance of the Shares will be completed by the tabling
and delivery:
(a) by the Company of:
(i) a certificate representing the Shares; and
<PAGE>
(ii) a certificate representing the Warrants; and
(b) by the Purchaser of:
(i) a certified cheque or bank draft drawn in United States dollars and payable
to the Company for the Subscription Funds.
ARTICLE 5 GENERAL PROVISIONS
Time
5.01 Time is of the essence of the performance of every obligation under this
Agreement, and no failure or lack of diligence by any party in proclaiming or
seeking redress for any violation of, or insisting on strict performance of, any
provision of this Agreement will prevent a subsequent violation of that
provision, or of any other provision, from giving rise to any remedy that would
be available if it were an original violation of that provision or another
provision.
5.02 This Agreement will be binding upon and enure to the benefit of the
respective heirs, executors, administrators and other legal representatives and,
to the extent permitted hereunder, the respective successors and assigns, of the
parties.
Notices
5.03 Unless otherwise provided herein, any notice, payment or other
communication to a party under this Agreement may be made, given or served by
delivery, telecopy or email and addressed as follows:
(a) the Purchaser:
Mr. Darryl Quan
1090 Moreno Avenue, Palo Alto, Ca 94303
Fax: 650-813-2960
Email: [email protected]
(b) the Company
Vibro-Tech Industries, Inc.
2000 Cathedral Place
925 West Georgia Street
Vancouver, B.C. V6C 2C2
Attention: Mr. Jock Chong, President and Chief Executive Officer
Fax: 604-687-7588
Email: [email protected]
with a copy to:
Vibro-Tech Industries, Inc.
Suite 600, 1090 West Pender Street
Vancouver, B. C. V6E 2N7
Attention: Mr. Gary MacDonald, Secretary
Fax: 604-683-8791
Email: [email protected]
<PAGE>
5.04 Any notice, payment or other communication so delivered, telecopied or
emailed will be deemed to have been given or served at the time of delivery of
transmission by telecopy or email.
5.05 A party may by notice change its address for service.
Entire Agreement
5.06 This Agreement constitutes the entire agreement between the parties and
supercedes all previous agreements or understandings between the parties in any
way relating to its subject matter and the Company has made not representations,
inducements, warranties or promises concerning this Agreement or the matters
referred to herein which are not embodied in this Agreement.
Binding Agreement
5.07 This Agreement will enure to the benefit of and will be binding upon the
parties hereto and their respective heirs, executors, administrators, personal
representatives and successors.
IN WITNESS WHERE OF this Agreement has been executed by the Company and the
Purchaser as at the date first set forth above.
VIBRO-TECH INDUSTRIES INC.
By: /s/ Boo Jock Chong, Chief Executive Officer
/s/ DARRYL QUAN
Exhibit 10.33
CONSULTING AGREEMENT
THIS AGREEMENT made as of February 25, 1999
BETWEEN:
VIBRO-TECH INDUSTRIES, INC., a corporation subsisting under the laws of the
state of Delaware, having a place of business at Suite 2000 Cathedral Place, 925
West Georgia Street, Vancouver, B.C. V6C 2C2
("Vibro-Tech")
AND:
MR. DARRYL QUAN, Businessman, having a residence at 1090 Moreno Avenue, Palo
Alto, Ca. 94303
("Quan")
WHEREAS:
A. Vibro-Tech and its affiliates are engaged in the business of the design,
manufacture, marketing and sales of seismic rubber vibration bearings for use in
the construction industry; B. Quan has agreed to be a financial consultant for
Vibro-Tech in charge on a non-exclusive basis of advising Vibro-Tech of the
financial matters relating to the government qualification, marketing and sales
of seismic rubber vibration bearings on the terms and conditions of this
Agreement;
WITNESSES THAT the parties mutually covenant and agree as follows:
ARTICLE I APPOINTMENT AND DECLARATION
1.01 Vibro-Tech appoints and engages Quan as a non-exclusive financial
consultant to act for and on behalf of Vibro-Tech and its affiliates in advising
on all financial matters related to Vibro-Tech and its affiliates, including
funding, plant expansion, marketing, sales, advertising, public market relations
and the financial aspects of all other matters and Quan accepts such
appointment, on the terms and other conditions of this Agreement.1.02 As
consultant for Vibro-Tech, Quan will give advice from time to time as requested
by the president of Vibro-Tech under the direction from time to time of the
president of Vibro-Tech.
1.04 Quan will work with, assist and in all ways cooperate with the Vibro-Tech
subsidiary, Shantou Vibro-Tech Industrial and Development Co Ltd., in the
provision of financial advice and will keep himself appraised of material
changes in the affairs of Vibro-Tech and its affiliates that would affect his
advice.
1.05 Quan will familiarize himself with the tax laws of the Republic of China,
with the Shantou Special Economic Zone of the Republic of China and with the
Hong Kong Special Administrative regions of the Republic of China as they are
amended from time to time.
<PAGE>
ARTICLE II OBLIGATIONS OF QUAN
2.01 At and with the direction of, and in consultation, from time to time with,
the president of Vibro-Tech, Quan will: (a) advise on the financial consequences
of any governmental registration or qualification necessary to be obtained
market and sell the seismic rubber isolation bearings of Vibro-Tech;(b) use his
best efforts to present and recommend from time to time a continuing and
suitable financial program consistent with the business policies, objectives and
restrictions of Vibro-Tech to establish and expand the business of Vibro-Tech,
and to present business opportunities of a character consistent with the
business program adopted by the president of Vibro-Tech; and(c) generally advise
Vibro-Tech about any matter which Quan considers relevant or material in
connection with the administration or business of Vibro-Tech in any jurisdiction
2.02 Subject to direction from the president of Vibro-Tech, Quan will select
such persons, firms or corporations as Quan considers appropriate to provide
services required in connection with the operation of the business of
Vibro-Tech.
2.03 Quan will forthwith provide Vibro-Tech with information concerning any
change in the business objectives, policies of, or restrictions on, the business
of Vibro-Tech financial matters material to the business of Vibro-Tech and with
such further information concerning the affairs of Vibro-Tech as the president
may from time to time request.
ARTICLE III ADMINISTRATION OF THE BUSINESS OF VIBRO-TECH
3.01 Quan will, as financial consultant to Vibro-Tech, in consultation with the
president of Vibro-Tech:
(a) determine the financial plan and strategy of Vibro-Tech from time to time;
(b) retain qualified and appropriate legal, accounting, financial and business
advisers for, and acceptable to, Vibro-Tech as are required to maintain
Vibro-Tech pursuant to applicable law and to ensure that Vibro-Tech is able to
comply with the laws of all jurisdictions in which Vibro-Tech and its affiliates
carry on business; and
(c provide to the board of directors of Vibro-Tech on a timely basis any
information which the members of such board may from time to time reasonably
request in connection with the day to day business operations of Vibro-Tech, the
prospects of Vibro-Tech in Taiwan and any material changes in the business of
Vibro-Tech.
ARTICLE IV STANDARD OF CARE
4.01 Quan will exercise the powers and perform the duties assumed hereunder
honestly, in good faith and in the best interests of Vibro-Tech and its
affiliates and will exercise the degree of care, diligence and skill that a
reasonably prudent person would exercise in comparable circumstances.
<PAGE>
ARTICLE V COMPENSATION AND DISBURSEMENTS
5.01 Quan will be reimbursed from time to time for disbursements reasonably
incurred with the prior approval of the president of Vibro-Tech in connection
with Quan's activities.5.02 In consideration of providing financial advice to
Vibro-Tech and its affiliates, Vibro-Tech will grant to Quan an irrevocable
option to purchase up to 25,000 shares of Vibro-Tech for $0.30 per share before
December 31, 2003.
5.03 Vibro-Tech may from time to time engage such other persons, firms or
corporations as it wishes to do such things as Vibro-Tech might direct and do
such other things as may be determined to be in the best interests of Vibro-Tech
without affecting the validity of this Agreement.
ARTICLE VI OTHER ACTIVITIES OF QUAN
6.01 Quan may have such other business interests and may engage in such other
activities he might wish from time to time, but will not engage in a business,
proprietorship, partnership, or other enterprise, or invest in a business,
proprietorship, partnership, or other enterprise, similar to, or in competition
with, those relating to the activities to be performed for Vibro-Tech any
jurisdiction.
ARTICLE VII RELATIONSHIP OF PARTIES
7.01 Quan will perform his duties as an independent contractor and none of
Vibro-Tech, its affiliates, or their respective directors, officers or employees
is for the purposes of this Agreement employees or agents of, or co-venturers
with, Quan and nothing in this Agreement will be construed so as to make them
employees, agents or co-venturers of Quan or to impose any liability on Quan as
an employer, principal or co-venturer.
7.02 Vibro-Tech will bear the sole and complete responsibility and liability for
the employment, conduct and control of its employees, agents and contractors and
for the injury of such persons or injury to others through the actions or
omissions of such persons.
ARTICLE VIII INDEMNITY
8.01 Vibro-Tech will indemnify and save harmless Quan for any loss (other than
loss of profits), liability, claim, damages or expense, including the reasonable
cost of investigating, settling or defending any alleged loss, liability ,
claim, damages or expense and reasonable counsel fees incurred in connection
therewith, incurred as a result of or in connection with the execution of his
duties under this Agreement or otherwise in respect of the affairs of Vibro-Tech
if Quan has exercised his powers and performed his duties in accordance with the
standard of care stipulated in Article IV.
<PAGE>
ARTICLE IX TERM AND TERMINATION
9.01 This Agreement will be effective on February 25, 2000 and will continue in
force until December 31, 2000.
9.02 After December 31, 2000, if either party has not before October 31 before
the end of the term of the Agreement, this Agreement will be automatically
renewed for an additional term of one year on the terms and other conditions of
this Agreement, including this condition.
9.03 This Agreement may be terminated by Quan on not less than 90 days' written
notice to Vibro-Tech in the event of:
(a) the commission by Vibro-Tech of any material fraudulent act in performing
any of its obligations or any material deliberate misrepresentation, as that
expression is defined in United States securities laws, to Quan; or
(b) the malfeasance of misfeasance of any of Vibro-Tech in the performance of
its duties.
9.04 This Agreement may be terminated by Vibro-Tech on not less than 30 days'
written notice to Quan in the event of:
(a) the commission by Quan of any material fraudulent act in performing any of
his obligations or any material deliberate misrepresentation, as that expression
is defined in United States securities laws, to Vibro-Tech or to its respective
directors, officers or shareholders;
(b) failure of Quan to perform his duties and discharge its obligations; or
<PAGE>
(c) the malfeasance of misfeasance of Quan in the performance of his duties.
9.05 The Agreement will terminate forthwith with respect to Quan if he becomes
or acknowledges that he is insolvent or makes a voluntary assignment or proposal
under any bankruptcy laws or applicable legislation or if a bankruptcy petition
is filed or presented against Quan.
9.06 From and after the effective date of termination of this Agreement, Quan
will not be entitled to compensation for any further services but will be paid
all compensation accruing to such date.
9.09 Upon the termination of this agreement, Quan will:
(a) pay over to Vibro-Tech all moneys which may be held by Quan for the account
of Vibro-Tech pursuant to this Agreement after deducting any accrued
compensation to which Quan is then entitled;
(b) deliver to Vibro-Tech a full accounting, including a statement of all moneys
collected by Quan, a statement of all moneys held by Quan, and a statement of
all moneys paid by Quan, covering the period following the date of the last
accounting furnished to Vibro-Tech; and
(c) deliver to and, where applicable, transfer into the name of Vibro-Tech ( or
as it may direct in writing ) all property and documents of Vibro-Tech held in
the name or custody of Quan and all information held in whatever form relating
to the dealings of Quan with persons, firms, corporations or governmental bodies
in Taiwan.
9.07 Upon termination of this Agreement, Vibro-Tech will assume all contracts
and obligations entered into or undertaken by Quan (other than with any
affiliate of Quan) within the scope of its authority and indemnify Quan against
any liability by reason of anything done or required to be done under any such
contract or obligation after the date of termination of this Agreement.
ARTICLE X NOTICE
10.01 Any notice to be given by any party to any other party will be deemed to
be given when in writing and delivered or communicated by telecopier or email on
any business day to the address for notice of the intended recipient.
10.02 The address for notice of each of the parties will, until changed, be:
(a) Quan:
Mr. Darryl Quan
1090 Moreno Avenue, Palo Alto, Ca 94303
Fax: 650-813-2960
Email: [email protected]
(b) Vibro-Tech
Vibro-Tech Industries, Inc.
2000 Cathedral Place
925 West Georgia Street
Vancouver, B.C. V6C 2C2
Attention: Mr. Jock Chong, President and Chief Executive Officer
Fax: 604-687-7588
Email: [email protected]
with a copy to:
Vibro-Tech Industries, Inc.
Suite 600, 1090 West Pender Street
Vancouver, B. C. V6E 2N7
Attention: Mr. Gary MacDonald, Secretary
Fax: 604-683-8791
Email: [email protected]
10.03 A party may by notice to the other party change its address for notice to
some other address and shall so change its address for notice whenever the
existing address for notice ceases to be adequate for delivery by hand or
communication by telecopier or email.
<PAGE>
ARTICLE X1 GOVERNING LAW
11.01 This agreement will be governed by and construed in accordance with the
laws of British Columbia and any proceeding commenced or maintained in respect
of this Agreement will be so commenced or maintained in the forum of appropriate
jurisdiction in the County of Vancouver to which jurisdiction the parties
irrevocable attorn.
ARTICLE X11 ARBITRATION
12.01 If any difference or dispute will arises between the Parties that cannot
be resolved between the Parties by negotiation with regard to mutual benefit and
equality then in respect to any matter, such difference or dispute will be
arbitrated or submitted to arbitration under and pursuant to the Commercial
Arbitration Act (British Columbia).
12.02 Such dispute will be referred by the Party affected to an arbitrator who
will be agreed upon by such Participants and, failing such agreement within four
weeks after notice by any such Party, then an arbitrator may be named as
provided in the Commercial Arbitration Act but in all cases the arbitration will
be conducted by a sole arbitrator who may be a member of the firms of auditors
of Vibro-Tech.
12.03 The arbitrator so appointed will sit in Vancouver, British Columbia,
unless there is unanimous agreement of such Parties that he will sit at another
place, and will hear and dispose of such dispute in such manner as the
arbitrator, in his discretion, will determine, but in so doing will be required
to receive the submissions of such Parties.
12.04 The decision of the arbitrator will be rendered in writing with all
reasonable speed and will be final and binding upon such Participants. 12.05 If
the Parties to the arbitration cannot agree on the respective shares of the
costs of arbitration to be borne by them, the arbitrator will determine what
part of the costs and expenses incurred in any such proceeding will be borne by
each of them.
ARTICLE XIII ASSIGNMENT
13.01 This agreement may not be assigned, set over, transferred, in whole or in
part by any party without the written consent of the other party, which consent
may be unreasonably withheld.
ARTICLE XIV GENERAL
14.01 The provisions of this Agreement constitute the entire agreement between
the parties and supersede all previous communications, representations and
agreements, whether verbal or written, between the parties with respect to the
subject matter hereof.
14.02 The captions, section numbers and article numbers appearing in this
Agreement are inserted for convenience of reference only and will in no way
define, limit, constrict or describe the scope or intent of this Agreement nor
in any way affect this Agreement.
<PAGE>
14.03 In this Agreement, wherever the context requires, words importing the
singular number will include the plural and vice versa, words importing the
masculine gender will include the feminine and neuter genders and words
importing persons will include firms and corporations and vice versa.
14.04 Unless otherwise stated, a reference in this Agreement to a numbered or
lettered article, section, paragraph or subparagraph refers to the article,
section, paragraph or subparagraph bearing that number or letter in this
Agreement.
14.04 If any covenant or other provision of this Agreement is invalid, illegal
or incapable of being enforced by reason of any rule of law or public policy
such covenant or other provision will be severed; all other terms and conditions
of this Agreement will, nevertheless, remain in full force and effect and no
covenant or provision will be deemed dependent upon any other covenant or
provision unless so expressed herein.
IN WITNESS WHEREOF this Agreement has been executed by the parties hereto on the
day and year first above written.
VIBRO-TECH INDUSTRIES, INC.
By: /s Gary MacDonald, Secretary
/s/ DARRYL QUAN
EXHIBIT 19.1
VIBRO-TECH INDUSTRIES, INC.
Suite 201-11240 Bridgeport Road
Richmond, B.C. Canada V6X 1T2
NOTICE OF ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN that the annual general meeting of the shareholders of
Vibro-Tech Industries, Inc. (the "Company") will be held at 11:00 A.M. on
Wednesday, December 15, 1999 in the board room at Suite 600 - 1090 West Pender
Street, Vancouver, British Columbia, Canada V6E 2N7 for the following purposes:
1. to receive and consider the annual report and to receive and consider
the audited financial statements for the year ending December 31, 1998
together with the auditors' reports thereon;
2. to appoint Jorgensson Telford & Sadovnick, P.L.L.C., Bellingham,
Washington as auditors of the Company for the ensuing year and to
authorize the board of directors to fix their remuneration;
3. to elect directors for the ensuing year;
4. to consider, and, if thought advisable, approve by ordinary resolution
the reservation of the number of shares that is 20 percent of the
outstanding shares from time to time for the grant of directors',
employees', and consultants' stock options on terms and conditions to
be determined by the directors;
5. to consider any permitted amendment to, or variation of, any matter
identified in this notice; and
6. to transact such other business as may properly be transacted at the
meeting.
Copies of the consolidated financial statements and auditors' report to be
placed before the meeting will be mailed later and separate from this notice and
information circular. The board of directors has fixed the close of business on
December 1, 1999 as the record date for determination of shareholders entitled
to notice of, and to vote at, the meeting. If you are unable to attend the
annual general meeting in person, please read the notes accompanying the
instrument of proxy and complete and return the proxy to the address and within
the time set out in the notes. The enclosed proxy is solicited by management,
but you may amend it, if you so desire, by striking out the names listed in the
form and inserting in the space provided, the name of the person you wish to
represent you at the meeting.
DATED at Vancouver, British Columbia, Canada as at November 2, 1999.
BY ORDER OF THE BOARD
(signed) Gary MacDonald
EXHIBIT 19.2
VIBRO-TECH INDUSTRIES, INC.
INSTRUMENT OF PROXY FOR THE ANNUAL GENERAL MEETING
To be held on Wednesday, December 15, 1999
I, ______________________________________________, the undersigned, a
shareholder of VIBRO-TECH INDUSTRIES, INC. (the "Company"), hereby appoint Boo
Jock Chong, president and a director of the Company, or failing him, Gary
MacDonald, secretary of the Company, or instead of either of the foregoing,
__________________________ as my proxy, to vote for me at the annual general
meeting of the Company to be held on Wednesday, December 15, 1999 and at any
adjournment, and to vote the shares of the Company registered in the name of the
undersigned with respect to the matters set forth below.
1. to appoint Jorgensson Telford and Sadovnick, P.L.L.C. as auditors for the
ensuing year and to authorize the board of directors to fix their remuneration:
IN FAVOUR _________WITHHOLD_________
2. to elect members of the board of directors for the ensuing year as follows:
IN FAVOUR WITHHOLD
BOO JOCK CHONG _________ _________
WILLIAM CHOW _________ _________
RICK LUI _________ _________
JOE CHUNG _________ _________
PHAIK SIM TAN _________ _________
3. to consider, and, if thought advisable, approve by ordinary resolution the
reservation of the number of shares that is 20 percent of the outstanding shares
from time to time for the grant of directors', employees' and consultants' stock
options on terms and conditions to be determined by the directors;
IN FAVOUR _________ AGAINST_________
4. in his or her discretion, to vote upon amendments to, or variations of,
matters identified in the notice of meeting and upon such other business as may
properly come before the meeting.
DISCRETION GRANTED ________ DISCRETION WITHHELD ________
THE SECURITIES REPRESENTED BY THIS PROXY WILL BE VOTED OR WITHHELD FROM VOTING
IN ACCORDANCE WITH THE INSTRUCTIONS OF THE SECURITY HOLDER ON ANY BALLOT THAT
MAY BE HELD AND, IF THE SHAREHOLDER SPECIFIES A CHOICE WITH RESPECT TO ANY
MATTER TO BE ACTED UPON BY MARKING AN "X" IN THE SPACES PROVIDED FOR THAT
PURPOSE, THE SECURITIES WILL BE VOTED ACCORDINGLY. IF NO CHOICE IS SPECIFIED,
THE SHARES WILL BE VOTED AS IF THE SHAREHOLDER HAD SPECIFIED AN AFFIRMATIVE
VOTE. WITH RESPECT TO ANY AMENDMENTS OR VARIATIONS IN ANY OF THE PROPOSALS SET
OUT ABOVE OR OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING, THE
SHARES WILL BE VOTED BY THE NOMINEE HEREBY APPOINTED AS HE OR SHE IN HIS OR HER
SOLE DISCRETION SEES FIT.
THE TEXT OF THIS PROXY CONTINUES ON THE REVERSE SIDE OF THIS PAGE.
SHAREHOLDERS GRANTING A PROXY MUST SIGN THE REVERSE SIDE OF THIS PAGE.
<PAGE>
The undersigned hereby revokes any instrument of proxy previously given with
reference to the meeting or any adjournment and acknowledges receipt of the
notice of annual general meeting and the information circular furnished
therewith dated as at November 1, 1999.
PLEASE DATE THIS PROXY AND SIGN AS YOUR NAME APPEARS HEREIN.
- ------------------------------ ----------------------------------------
Signature Name (Please Print)
- ------------------------------ ----------------------------------------
Date (If no date inserted, proxy Address
is deemed to be dated December 1,
1999) ----------------------------------------
(Name and Address as registered - Please notify the Company of any change in
your address).
NOTES:
1. SHAREHOLDERS HAVE THE RIGHT TO APPOINT A PERSON WHO NEED NOT BE A SHAREHOLDER
TO REPRESENT THEM AT THE MEETING. If a shareholder desires to designate as proxy
holder a person other than the management nominees, the shareholder should
strike out the names of the management nominees and insert in the space provided
the name of the person the shareholder desires to designate as proxy.
2. The instrument of proxy, to be valid, must be dated and signed by the
shareholder or the shareholder's attorney authorized in writing, or, where a
shareholder is a corporation, by a duly authorized officer or attorney of the
corporation. If the proxy is executed by an attorney for an individual
shareholder or by an officer or attorney of a corporate shareholder, the
instrument so empowering the officer or the attorney, as the case may be, or a
notarial copy thereof must accompany the proxy instrument.
3. The instrument of proxy, to be effective, must be deposited at Suite
201-11240 Bridgeport Road, Richmond, B.C. Canada V6X IT2, at least 48 hours,
excluding Saturdays and holidays, before the time of the meeting.
4. Shareholders wishing a copy of this material by email should contact the
Company, Attention: Mr. Norman Wong at 604-278-3337, Fax: 604-278-2712, Email:
[email protected].
EXHIBIT 19.3
VIBRO-TECH INDUSTRIES, INC.
Suite 201-11240 Bridgeport Road
Richmond, B.C. Canada V6X 1T2
INFORMATION CIRCULAR AT NOVEMBER 2, 1999
SOLICITATION OF PROXIES
This Information Circular is furnished in connection with the solicitation of
proxies by the management of Vibro-Tech Industries, Inc. (the "Company") for use
at the annual general meeting of the shareholders of the Company, to be held at
the time and place and for the purposes set forth in the accompanying notice of
meeting and at any adjournment. The cost of the solicitation will be borne by
the Company.
COPIES OF THIS MATERIAL MAY BE OBTAINED BY EMAIL FROM THE COMPANY, ATTENTION:
NORMAN WONG AT SUITE 201-11240 BRIDGEPORT ROAD, RICHMOND, BRITISH COLUMBIA
CANADA V6X IT2, TEL: 604-278-3337, FAX: 604-278-2712, EMAIL:
[email protected].
APPOINTMENT AND REVOCATION OF PROXIES
The persons named in the accompanying form of proxy are the president and the
secretary of the Company. A SHAREHOLDER HAS THE RIGHT TO APPOINT A PERSON TO
ATTEND AND ACT FOR HIM OR HER ON HIS OR HER BEHALF AT THE MEETING OTHER THAN THE
PERSONS NAMED IN THE INSTRUMENT OF PROXY. TO EXERCISE THIS RIGHT, A SHAREHOLDER
MUST STRIKE OUT THE NAMES OF THE PERSONS NAMED IN THE INSTRUMENT OF PROXY AND
INSERT THE NAME OF HIS OR HER NOMINEE IN THE BLANK SPACE PROVIDED OR COMPLETE
ANOTHER INSTRUMENT OF PROXY. THE COMPLETED PROXY MUST BE DEPOSITED WITH THE
COMPANY AT SUITE 201-11240 BRIDGEPORT ROAD, RICHMOND, BRITISH COLUMBIA CANADA
V6X IT2 BY DELIVERY, FAX OR EMAIL, BEFORE 11:00 A.M., PACIFIC TIME ON MONDAY,
DECEMBER 13, 1999.
The instrument of proxy must be signed by the shareholder or by his or her
attorney in writing, or, if the shareholder is a corporation, signed by an
officer, or attorney of the corporation. If the proxy is executed by an attorney
for an individual shareholder or by an officer or attorney of a corporate
shareholder, the instrument so empowering the officer or the attorney, as the
case may be, or a notarial copy of the instrument, must accompany the proxy
instrument.
A shareholder who has given a proxy may revoke it at any time before it is
exercised. A proxy may be revoked by instrument in writing executed by the
shareholder, or by his or her attorney authorized in writing, or, if the
shareholder is a corporation, by an officer or an authorized attorney and
deposited with the Company at Suite 201-11240 Bridgeport Road, Richmond, British
Columbia Canada V6X IT2 by delivery, fax or email, at any time up to and
including the last business day before the day of the meeting, or any
adjournment, or to the chairman of the meeting on the day of the meeting, or any
adjournment.
VOTING OF SHARES AND EXERCISE OF DISCRETION OF PROXIES
<PAGE>
On any poll, the persons named in the enclosed instrument of proxy will vote the
shares in respect of which they are appointed and where directions are given by
the shareholder in respect of voting for, against or withholding a favorable
vote on any resolution and the proxy holder will do so in accordance with such
direction.
IN THE ABSENCE OF ANY DIRECTION IN THE PROXY, IT IS INTENDED THAT SUCH SHARES
WILL BE VOTED IN FAVOUR OF THE MOTIONS PROPOSED TO BE MADE AT THE MEETING AS
STATED UNDER THE HEADINGS IN THIS INFORMATION CIRCULAR. The instrument of proxy,
when properly signed, confers discretionary authority with respect to amendments
to, or variation of, the matters identified in this circular and other matters
which may properly be brought before the meeting.
Management of the Company is not aware of any such amendments, variations or
other matters that are to be presented for action at the meeting. However, if
any other matters which are not known to management should properly come before
the meeting, proxies will be exercised on such matters in accordance with the
best judgment of the persons voting the proxy.
VOTING SHARES AND PRINCIPAL HOLDERS OF VOTING SHARES
On November 14, 1997 the name of the Company was changed from Pacific Quilt
Design, Inc. to its current name of Vibro-Tech Industries, Inc. The Company has
5,823,000 common shares outstanding, each share carrying the right to one vote.
Shareholders of record at the close of business on December 1, 1999 are entitled
to vote at the meeting or any adjournment.
To the knowledge of the directors and senior officers of the Company, the
following shareholders are recorded as, or own shares, directly or indirectly,
carrying more than ten percent of the voting rights attached to outstanding
shares of the Company:
Name and Municipality of Percentage
Residence Number of Shares of Outstanding Shares
Pioneer Wise Limited (1) 2,000,000 34.95% (3)
Kowloon, Hong Kong, China
Vi-Tech Holdings Ltd. (2)(3) 648,000 11.32%
Richmond, B. C. Canada
Notes:
(1) These shares are registered in the name of Pioneer Wise Limited. Pursuant to
an agreement dated August 25, 1998 and amended September 3, 1999, the Company
purchased from Dr. Fu Lin Zhou certain applications for patents and a Chinese
patent for isolated seismic rubber bearings for 2,000,000 shares at US$0.001 per
share. Dr. Zhou directed the shares to be registered in the name of Pioneer Wise
Limited.
(2) Vi-Tech Holdings Ltd. is a wholly-owned subsidiary of the Company. These
shares are not beneficially owned by Vi-Tech Holdings Ltd. which is in the
process of distributing the shares to the beneficial owners.
<PAGE>
(3) The number of shares includes 108,000 shares beneficially owned by Dr. Fu
Lin Zhou, making the benefical holdings of Dr. Fu Lin Zhou, including the
holdings of Pioneer Wise Limited, 2,108,000 shares or 36.20% of outstanding
shares of the Company.
FINANCIAL STATEMENTS
The audited consolidated financial statements of the Company for the year ending
December 31, 1998 together with the auditors' report thereon and the unaudited
consolidated financial statements of the Company for the period ended August 31,
1999 with the accountants' review were not at the date of mailing of this
information circular available for inclusion and mailing to the shareholders of
the Company. The auditors, Telford Sadovnick, P.L.L.C. are in the process of
preparing such financial statements which will be provided to shareholders
before and at the annual general meeting.
Shareholders will be asked to consider such financial statements. The Company
will inform shareholders of when such financial statements are available from
the Company.
ELECTION OF DIRECTORS
The persons named in the enclosed instrument of proxy intend to vote for the
election of a board of directors comprised of five persons. The names of further
nominees for election may come from the floor at the meeting.
Each director elected will hold office until the next annual general meeting or
until his or her successor is duly elected, unless his or her office is earlier
vacated, in accordance with the by-laws of the Company.
INFORMATION CONCERNING NOMINEES SUBMITTED BY MANAGEMENT
<TABLE>
<CAPTION>
No. of Shares
Date of Election or Beneficially Owned or
Name and Municipality of Residence Appointment to Board Current Position Controlled
- ---------------------------------- ----------- -------- ---------------- ----------
<S> <C> <C> <C>
Boo Jock Chong (1)(2) August 12, 1999 Director, Chief 200,000
Burnaby, British Columbia Executive Officer
President & Treas
William Chow (1)(5) Dec. 3, 1997 Director, 312,000
Richmond, British Columbia Chairman of the
Board
Joe Chung (3) May 6, 1998 Vice-President 230,000
Hong Kong, China
Rick Lui (5) Dec. 3, 1997 Vice-President 250,000
Vancouver, British Columbia
Phaik Sim Tan (1)(4)
Burnaby, British Columbia Aug. 12, 1999 175,000
</TABLE>
<PAGE>
Notes:
(1) Member of audit committee. The board of directors does not have an executive
committee.
(2) Mr. Chong was granted on July 1, 1999 an option to purchase up to 500,000
shares for US$0.15 per share before June 30, 2003.
(3) Mr. Chung was granted on July 1, 1999 an option to purchase up to 250,000
shares for US$0.15 per share before June 30, 2003. By agreement dated August 16,
1999 Mr. Chung cancelled an option granted October 15, 1998 to acquire 436,000
shares for US$0.10 per share.
(4) By an agreement dated August 16, 1999 Ms. Tan purchased 175,000 shares for
US$0.40 per share and was granted a share purchase warrant to purchase a further
175,000 shares for US$0.40 per share before August 16, 2000.
(5) By agreements dated August 16, 1999 Mr. Chow cancelled an option granted
October 15, 1998 to purchase 438,000 shares for US$0.10 per share and Mr. Lui
cancelled an option granted October 15, 1998 to purchase 500,000 shares for
US$0.10 per share.
The following information about management's nominees for election to the board
of directors has been supplied by the respective nominees:
Mr. Chong, 55, came to Canada in 1989 from Malaysia and established Canadian
Medical Legacy Inc., a medical equipment supply company. Mr. Chong had been a
successful businessman in Malaysia in areas ranging from rice milling, oil palm
plantation and real estate development to construction. Canadian Medical went
public in 1993. By 1998 it had 80 employees and revenues of Cdn$14,000,000.
Canadian Medical was voted one of the 100 fastest growing companies in Canada by
Profit Magazine from 1994 to 1996. Mr. Chong retired from the company as its CEO
in 1997. In joining, his goals are to use his wide experience to expand the
Company's operations globally and to develop core competences with other
companies in the area of seismic engineering to mitigate the effects of
earthquakes. Mr. Chong has entered into a management agreement providing for him
to stay with the Company as president and chief executive officer until at least
2003.
Mr. Joe Chung born in 1950 in Hong Kong, graduated from the Hong Kong
Polytechnic University (formerly Hong Kong Technical College) in 1973. He worked
for an architectural/design firm, construction company and furniture factory
respectively until 1988 when he immigrated to Canada. Mr. Chung started his own
project management company in Vancouver, British Columbia. He is very
experienced in product design and construction management. Mr. Chung is
currently based in Hong Kong where he manages the marketing of the Company's
products outside of China.
<PAGE>
Mr. William Chow was born and raised in China. He moved to the United Kingdom in
1969 and was educated at the London University as an automotive engineer. He
immigrated to Canada in 1981 where he was employed as a Service Department
Manager for Hyundai and Honda respectively. In 1991, Mr. Chow started his own
business, Cambie Auto Centre Inc., which has been very successful. In 1994, Mr.
Chow began a joint venture with Dr. Zhou for the development, manufacture and
marketing of anti-seismic technologies, and in 1995, they established Shantou
Vibro-Tech Industrial & Development Co. Ltd. in Shantou, China. Mr. Chow has a
strong business sense and has gained much invaluable experience and business
connections in China. Mr. Chow is the founder and has been instrumental in the
formation and continued success of the Company. Mr. Chow is the brother of Dr.
Fu Lin Zhou.
Mr. Rick Lui was born in Hong Kong and immigrated to Canada in 1973. He
graduated with a Bachelor of Business Administration in 1979 from the Simon
Fraser University in British Columbia. He was employed as an Assistant Manager
at a major Canadian financial institution until 1985, when he changed his career
focus to real estate development and marketing. In the 1990's Mr. Lui was
instrumental in marketing several real estate development projects. Mr. Lui has
been a director of a real estate company, a real estate development company and
is chief executive officer of a synthetic marble manufacturer in British
Columbia, which specializes in building supplies and bath products.
Ms. Tan was born in Malaysia and immigrated to Canada in 1994. Ms. Tan has
graduated with a Bachelor of Science in Electrical Engineering in 1984 and a
Masters of Business Administration in 1987, both from the University of
Wisconsin (Madison). Since that time, Ms. Tan has worked in Tennessee for Nissan
Motors Ltd., in Singapore marketing computer networks and in Canada running a
printing a company. Ms. Tan is responsible for monitoring the financial matters
for the Company.
Dr. Fu Lin Zhou is not a member of the board of directors of the Company but is
an integral part of the operation of the Company's subsidiary, Shantou
Vibro-Tech Industrial & Development Co. Ltd. The principal shareholder of the
Company, Dr. Fu Lin Zhou is an international expert in seismology. As
vice-president of the South China Construction University (China), he is a
member of the International Association of Earthquake Engineering (IAEE) and the
International Association of Bridge Structure Engineering (IABSE). Moreover, Dr.
Zhou is a Senior Consultant to the China Association of Earthquake Engineering
and China Society of Seismic Control of Structure Association respectively. He
has published several and many articles about earthquakes and methods of their
control. Dr. Zhou holds the patent rights in China to a number of advanced
anti-seismic technologies. Four-time winner of the National Science and
Technology Prize, Dr. Zhou is also a consultant to the United Nations and is
involved in international research and design projects in earthquake
engineering. Dr. Zhou is the brother of the chairman, Mr. William Chow.
<PAGE>
EXECUTIVE COMPENSATION
A. Interpretation
Applicable securities legislation defines "Executive Officer" to mean the
chairman and any vice-chairman of the board of directors of the Company, where
the functions of the office are performed on a full-time basis, the president,
any vice-president in charge of a principal business unit, division or function
such as sales, finance or production and any officer of the Company or its
subsidiaries or any other person who performed a policy-making function in
respect of the Company, whether or not the individual is also a director of the
Company or its subsidiaries.
Furthermore, applicable securities legislation defines "Named Executive Officer"
to mean each chief executive officer, despite the amount of compensation, each
of the Company's four highest compensated executive officers, other than the
chief executive officer, provided disclosure is not required for an executive
officer whose total salary and bonus does not exceed $100,000, and any
individual for whom disclosure would have been provided but for the fact that
the individual was not serving as an Executive Officer at the end of the most
recently completed financial year end. All dollar amounts are in US dollars.
B. Summary of Compensation
In 1999, the Company had four Executive Officers: the chairman of the board of
directors, William Chow; the president and chief executive officer of the
Company, Boo Jock Chong; the vice-president and a member of the board of
directors, Joe Chung; and the principal shareholder of the Company, Dr. Zhou Fu
Lin. In 1998, the Company had three Named Executive Officer: the president and
chief executive officer of the Company, William Chow, the vice-president and a
member of the board of directors, Joe Chung; and the principal shareholder of
the Company, Dr. Fu Lin Zhou. During the three most recently completed financial
years compensation paid to the Named Executive Officer was:
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
------------------- ----------------------
Name and Principal Other Annual No of Securities All Other
Position - Year Salary ($) Bonus ($) Compensation Under Option Compensation ($)
1999
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
William Chow 1999 (1) Nil Nil Nil Nil Nil
1998 Nil Nil Nil 438,000 (6) Nil
1997 Nil Nil Nil Nil Nil
Boo Jock Chong (2) 1999 (1) $7,000 (3) Nil Nil 500,000 (2) Nil
Joe Chung 1999 (1) $20,000 (4) Nil Nil 250,000 (5) Nil
436,000 (6)
1998 $12,137 Nil Nil 436,000 Nil
1997 Nil Nil Nil Nil Nil
Nil
Fu Lin Zhou (9) 1999 (1) Nil Nil Nil 442,000 (6) $36,000 (9)
1998 Nil Nil 200,000 shs (7) 442,000 $50,812 (9)
2,000,000 shs (8)
1997 Nil Nil Nil Nil $54,787 (9)
</TABLE>
<PAGE>
Notes:
(1) For the fiscal period ended August 31, 1999.
(2) Mr. Chong joined the Company on August 12, 1999. An option was granted July
1, 1999 to acquire up to 500,000 shares for US$0.15 per share before June
30, 2003.
(3) Pursuant to a management agreement dated July 1, 1999.
(4) Mr. Chung also receives 5,000 remimbi per month from, and his accommodation
is paid for by, Shantou Vibro-Tech Industrial & Development Co. Ltd., the
Chinese subsidiary of the Company.
(5) An option was granted July 1, 1999 to acquire up to 250,000 shares for
US$0.15 per share before June 30, 2003.
(6) Options to purchase the number of shares shown were granted October 15,
1998 and cancelled August 16, 1999.
(7) In August, 1998 Dr. Zhou was issued 200,000 shares of the Company at a par
value of US$0.0001 per share as compensation for work done.
(8) By an agreement dated August 25, 1998 Dr. Zhou sold to the Company for
2,000,000 shares with a par value of US$0.001 per share certain Chinese
applications for patents and a Chinese patent. The Company was obligated to
issue a further 3,000,000 shares. The agreement was amended by agreement
dated September 3, 1999 canceling the obligation of the Company to issue
any further shares.
(9) By an agreement dated as of January 1, 1999 between Dr. Zhou and the
Company's subsidiary, Shantou Vibro-Tech Industrial & Development Co. Ltd.,
Dr. Zhou assigned current technology relating to isolated seismic rubber
bearings for a royalty of five percent of gross sales in China before value
added tax. By an agreement dated as of January 1, 1999 between Dr, Zhou and
Vibro-Tech Industries Ltd. (Hong Kong), Dr. Zhou granted the right to sell
products outside of China for a royalty of five percent of the gross sales
price less applicable taxes.
C. Long-Term Incentive Plan Awards
The Company does not have any, and did not grant any, long-term incentive plan
awards during the most recently completed financial year.
<PAGE>
D. Options Granted During the Most Recently Completed Financial Year to the
Named Executive Officer
By agreements dated July 1, 1999 Boo Jock Chong was granted an option to acquire
up to 500,000 shares for US$0.15 per share before June 30, 2003 and Joe Chung
was granted an option to acquire up to 250,000 shares for US$0.15 per share
before June 30, 2003.
E. Options Exercised and Outstanding for the Named Executive Officer
There were no options exercised by the Named Executive Officer during the
financial year ended December 31, 1998 or in the period ended October 31, 1999.
The value at October 31, 1999 of any unexercised in-the-money options held by
the Named Executive Officer was:
<TABLE>
<CAPTION>
Value of Unexercised
Shares Acquired Aggregate Value Unexercised In-the-Money Options
Name On Exercise Realized Options at Oct. 31, 99 At Oct. 31, 1999
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Boo Jock Chong Nil Nil 500,000 Nil
Joe Chung Nil Nil 250,000 Nil
</TABLE>
Section 1.1 F. Repricing of Options
There was no repricing of options in the fiscal period ending December 31, 1998
or in the period ended October 31, 1999.
G. Other By an agreement dated August 16, 1999 Ms. Phaik Sim Tan purchased
175,000 shares of the Company for US$0.40 per share and was granted 175,000
share purchase warrants, each warrant entitling the holder to acquire a share
for US$0.40 per share before August 16, 2000.
The management agreement dated July 1, 1999 with Boo Jock Chong provides that if
the agreement is terminated after July 1, 2000 Mr. Chong will be paid on
termination the same amount as was paid by the Company to him in the previous
ten months.
There is no arrangement for compensation with respect to termination of
executive officers if a change of control of the Company occurs. No pension or
retirement benefit plans have been instituted by the Company and none is
proposed.
<PAGE>
Section 1.2 H. Options and Share Purchase Warrants Exercised and Outstanding
The following table sets forth information concerning the exercise of options
during the financial year ended December 31, 1998 and the period ended October
31, 1999 and the number of options outstanding at October 31, 1999:
<TABLE>
<CAPTION>
Number of Options
No. Shares Acquired Outstanding at
Name On Exercise of Option Exercise Price November 3, 1999 Expiry Date
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Boo Jock Chong Nil US$0.15 500,000 June 30, 2003
Joe Chung Nil 0.15 250,000 June 30, 2003
William Chow Nil 0.10 438,000 Aug. 16, 1999 (1)
Joe Chung Nil 0.10 436,000 Aug. 16, 1999 (1)
Rick Lui Nil 0.10 500,000 Aug. 16, 1999 (1)
Zhou Fu Lin Nil 0.10 442,000 Aug. 16, 1999 (1)
Shi Kit Cheung Nil 0.10 750,000 June 8, 1999 (2)
Dr. Wilson Tam Nil 0.10 550,000 June 5, 1999 (2)
Cecilia Yee Nil 0.10 750,000 June 5, 1999 (2)
Dr. Miles Price (3) 30,000 0.15 Nil June 30, 2003
</TABLE>
Notes:
(1) Cancelled by agreements dated August 16, 1999.
(2) Cancelled by passage of time after resignation from board of directors.
(3) Dr. Miles Price is the consultant for the Company in the Republic of Mexico.
The following table sets forth information concerning the exercise of share
purchase warrants during the financial year ended December 31, 1998 and for the
period ended October 31, 1999 and the number of share purchase warrants
outstanding at December 31, 1998 and for the period ended October 31, 1999:
<PAGE>
<TABLE>
<CAPTION>
Number of Warrants
No. Shares Acquired on Outstanding at
Name Exercise of Warrants Exercise Price December 31, 1997 Expiry Date
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Paik Sim Tan Nil US$0.40 175,000 August 16, 2000
Puan Sri Chang Nga Nil US$0.40 125,000 August 16, 2000
</TABLE>
COMPENSATION OF DIRECTORSDirectors were not compensated by the Company in their
capacities as directors during the most recently completed financial year,
except for payment of disbursements and as noted in the above section entitled
"Executive Compensation".
INDEBTEDNESS OF DIRECTORS AND SENIOR OFFICERS
At the December 31, 1998 and at October 31, 1999 there were no monies owing by
directors or senior officers to the Company.
MANAGEMENT CONTRACTS
The business of the Company is managed by the members of its board of directors
and officers.
The Company has entered into two management agreements. The first dated July 1,
1999 is with Boo Jock Chong. The agreement provides for the engagement of Mr.
Chong as the president and chief executive officer of the Company and the
payment of a monthly fee of US$3,500 to December 31, 1999, of a monthly fee of
US$4,000 to June 30, 2000 and thereafter, what was paid in the previous period
plus ten percent, adjusted each June 30. Mr. Chong is also provided a car
allowance of US$150 per month and medical and dental benefits. The agreement
provides for the grant of an option to acquire 500,000 shares for US$0.15 per
share. This option has been granted. The agreement automatically renews each
June 30 if a party has not given notice of termination. Mr. Chong may engage in
other business activities.
The second management agreement dated August 26, 1999 is with Mr. Joe Chung. The
agreement provides for the engagement of Mr. Chung as executive vice-president
of the China subsidiaries of the Company at a monthly fee of US$2,500 to
December 31, 2000, of US$3,000 to June 30, 2000 and increasing by ten percent in
each annual period thereafter. The term of the Agreement is to July 31, 2003 and
is automatically renewed if neither party gives notice of termination. The
agreement provides for the grant of an option to acquire 250,000 shares for
US$0.15 per share. This option has been granted. Mr. Chung may not engage in
other business activities.
By an agreement dated July 23, 1999 Gary MacDonald was engaged as secretary and
regulatory consultant for the Company. The agreement was amended October 20,
1999 to provide for a monthly limit of compensation of Cdn$7,000 with any extra
hourly compensation at Cdn$120 per hour going to a share purchase account to
purchase shares of the Company for US$0.40 per share. To November 2, 1999 Mr.
MacDonald has been paid Cdn$19,900. Mr. MacDonald, age 47, is graduate of the
University of British Columbia in mineral engineering (1975) and law (1978) and
holder of a degree in music (1969). He practiced securities, corporate and
<PAGE>
resource law in Vancouver, British Columbia until October 1996. As an associate
at Lang Michener Lawrence and Shaw from 1979 to 1985 and as a partner at the
Vancouver law firm of Ferguson Gifford from January 1985 to October 1992, Mr.
MacDonald has been involved in tax-assisted financings and reorganizations in
the forestry, oil & gas and mining sectors and has been involved in Canadian
national offerings, various stock exchange and inter-exchange listings,
including a Vancouver/Hong Kong inter-listing, resource expropriation
compensation claims, partnership reorganizations, resource developments and
sales and Canada - United States cross-border transactions. In the United
States, Mr. MacDonald has worked in the regulatory securities, corporate and
partnership areas. Mr. MacDonald is responsible for overseeing legal and
regulatory matters.
INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS
None of the directors or officers of the Company, nor any person who has held
such a position since the beginning of the last completed financial year of the
Company or the ten month period ended October 31, 1999, nor any proposed nominee
for election as a director of the Company, nor any associate or affiliate of the
foregoing persons, has any substantial or material interest, direct or indirect,
by way of beneficial ownership of securities or otherwise, in any matter to be
acted on at the meeting other than the election of directors and approval of the
general authority to grant share purchase options. See "Approval of General
Authority to Grant Incentive Options".
None of the directors or officers of the Company, nor any proposed nominee for
election as a director of the Company, nor any person who beneficially owns,
directly or indirectly, shares carrying more than ten percent of outstanding
shares of the Company, has any material interest, direct or indirect, in any
transaction since the commencement of the Company's last completed financial
year or in any proposed transaction which, in either case, has or will
materially affect the Company, or any subsidiaries, except as disclosed
elsewhere in this information circular and as follows:
(a) by agreement dated August 25, 1998 Dr. Fu Lin Zhou assigned to the Company
three applications for Chinese patents and one Chinese patent in consideration
that the Company issue 2,000,000 shares to Dr. Zhou for US$0.0001 per share;
(b) by an agreement dated as of January 1, 1999 between Dr. Zhou and the
Company's subsidiary, Shantou Vibro-Tech Industrial & Development Co. Ltd., Dr.
Zhou assigned current technology for and agreed to act as an advisor to the
company a royalty of five percent of gross sales in China before value added
tax;
(c) by an agreement dated as of January 1, 1999 between Dr, Zhou and Vibro-Tech
Industries Ltd. (Hong Kong), Dr. Zhou granted the right to sell products outside
of China and act as an advicsor to the company for a royalty of five percent of
the gross sales price less the purchase price of product and applicable taxes.
(d) by agreement dated July 1, 1999 Boo Jock Chong was engaged as the president
and chief executive officer of the Company and granted an option to acquire up
to 500,000 shares for US$0.15 per share before June 30, 2003; and
<PAGE>
(e) by agreement dated July 1, 1999 Joe Chung was engaged as the executive
vice-president of the Chinese subsidiaries of the Company and granted an option
to acquire up to 250,000 shares for US$0.15 per share before June 30, 2003.
APPOINTMENT AND REMUNERATION OF AUDITORS
The initial auditor of the Company was Mr. Keith Margetson, C.A., Vancouver, B.
C. Canada. By resolution dated August 12, 1999 the firm of Telford Sadovnick,
P.L.L.C., Chartered Accountants, Bellingham, Washington was engaged. The persons
named in the enclosed instrument of proxy will vote in favour of the appointment
of Telford Sadovnick, P.L.L.C., Chartered Accountants, as auditors for the
Company, to hold office until the next annual general meeting of the
shareholders, at a remuneration to be fixed by the board of directors.
PARTICULARS OF OTHER MATTERS TO BE ACTED UPON
A. General Authority to Grant Stock Options
Shareholders will be asked to approve an ordinary resolution providing that
general authority be given to the board of directors to grant directors,
officers and employees of the Company and its subsidiaries, until the next
annual general meeting of the Company, incentive stock options to purchase up to
20% of the shares in the Company outstanding from time to time, and to amend any
such options, for such periods, in such amounts and at such prices per share as
agreed upon and determined at the discretion of the board of directors. The
board of directors has not determined the identity of persons, if any, to be
granted share purchase options or the price at which such options may be
granted.
The persons named in the enclosed instrument of proxy will vote in favor of the
grant of this general authority to the board of directors.
B. Other Matters
The management of the Company knows of no other matters to come before the
meeting other than those referred to in the notice of meeting. Should any other
matters properly come before the meeting the shares represented by the proxy
solicited hereby will be voted on such matters in accordance with the best
judgment of the persons voting the proxy.
The content and mailing of this information circular has been approved and
authorized by the board of directors.
DATED at Vancouver, British Columbia as of November 2, 1999.
BY ORDER OF THE BOARD
(signed) Gary MacDonald, Secretary
EXHIBIT 21.1
SHANTOU COMMISSION FOR FOREIGN ECONOMIC RELATIONS AND TRADE
SHAN-JING-MAO-ZI-PI (1995) 404
Re: Reply to the Approval Request for the Joint Venture of Shantou Vibrotech
Industrial and Development co. Ltd.
To: Nandou Construction Development Company (Headquarters) of Shantou Special
Economic Zone
We have received your request and the pertinent information.. Our reply your
approval request is as follows:
1. We approve that Cansun Pacific International Investments Corp. (referred to
Party A hereafter) and you company (referred to as Party B hereafter) may
operate the joint venture enterprise SHANTOU VIBROTECH INDUSTRIAL AND
DEVELOPMENT CO. LTD. (referred to the Company hereafter) in the City of Shantou.
2. The total amount of the investment of the Company is 12 million RMB. The
registered capital is 8.4 million RMB. Party A shall put in an equivalent of
6,72 million RMB in foreign currency and shall have a 80% share of the
registered capital. Party B shall put in 1.68 million RMB and shall have a 20%
share of the registered capital. Both parties shall put in 15% of the amount
they pledge to invest within three months as of the month in which the Company's
business license is issued. The remainder of the funds shall be put in within a
year and a half. In addition, the capital has to be verified by a Chinese
registered accountant and a capital verification report has to be submitted to
this commission.
3. The scope of operation includes the production and sale of shock proof rubber
bearings, shock proof equipment and rubber products which do not involve and
export/import permit and product accessories. 70% of the rubber products will be
for the foreign market and 30% for the domestic market. The Company itself will
be responsible for resolving issues related to the balance of foreign exchange.
4. The legally designated address of the Company is Suite 301, Adjacent to Fei
Xia Elementary School, Longyan Road South, Shantou. The production plant is
located at Block A, 1st Floor, Zhu Zhang Industrial Park, Shantou.
5. All matters related to industry and commerce, taxation, environmental
protection, labor management, unions, customs, product inspection, foreign
exchange and banking will be handled according to the pertinent laws and
regulations of the State and of the Special Economic Zone.
Please proceed with the business registration procedures with the appropriate
authorities.
December 27, 1995.
<PAGE>
cc. Provincial Commission for Foreign Economic Relations and Trade, Municipal
Government
Duplicate sent to: City Planning Commission, Industry and Commerce
Administrative Bureau, Financial Bureau, State Taxation Bureau, Property Tax
Bureau, Environmental Protection Bureau, Labor Bureau, Shantou Customs (Customs
Bond Office, Customs Inspection Office), Business Audit Bureau, Foreign Exchange
Bureau, Insurance Company, Foreign Merchant Association, Joint Venture Party A,
Foreign Investment Approval Division of this Commission, Management Division
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 - 8231 Cambie Road,
Richmond, B.C. V6X 1J8, Canada
Legal representative: Wai Lam Chow
Designation: Chairman of the Board of Directors
Nationality: Canadian
Party B: Head Office of Shantou Special Economic Zone Nandu
Construction Development Company
Legal address: No. 1 Gong Yuan Lu Kou, Shantou City
Legal representative: Xie Han Rui
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 Fei Xia
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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).
<PAGE>
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.
<PAGE>
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]
<PAGE>
Party B: Shantou Economic Zone Nandu Representative:
Construction Development
Headquarters
[the Company's chop]
Dated this 25th day of January, 1996.
EXHIBIT 21.3
SHANTOU INDUSTRY AND COMMERCE ADMINISTRATIVE BUREAU
CERTIFICATE OF NAME REGISTRATION FOR FOREIGN MERCHANT INVESTMENT ENTERPRISE
Number: 940406
Name of Enterprise::
(Chinese) SHANTOU HETAI GEZHEN QICAI YOUXIAN GONGSI
(English) SHANTOU VIBROTECH INDUSTRIAL AND DEVELOPMENT CO. LTD.
Chinese Party: Nandou Construction Development Company
(Headquarters) of Shantou Special Economic Zone
Foreign Party: Cansun Pacific International Investments Corp.
Reserve Period: From December 22, 1995 to December 21, 1996
(Please use all the above names on all contract and bylaws.)
Issuing Department: Shantou Industry and Commerce Administrative Bureau
Date of Issuance: December 22, 1995 [Stamp] Shantou Industry and
Commerce Administrative Bureau
EXHIBIT 21.4
PEOPLE'S REPUBLIC OF CHINA
FOREIGN MERCHANT INVESTMENT ENTERPRISE CERTIFICATE OF APPROVAL
Approval Number: Wai-jing-mao-shan-fu-he-zi-zheng-zi (1995) 0099
Approval Date: December 28, 1995
[Stamp] People's Government of Shantou, December 287, 1995
Duplicate Copy 1: No. 0290054
Name of Enterprise:
(Chinese) SHANTOU HETAI GEZHEN QICAI YOUXIAN GONGSI
(English) SHANTOU VIBROTECH INDUSTRIAL AND DEVELOPMENT CO. LTD.
Address: Suite 301-Adjacent to Fei Xia Elementary
School-Longyan Road South, Shantou
Type of Enterprise: Chinese and Foreign Joint Venture
Maximum Period of Operation: 12 years
Total Amount of Investment: 12 million RMB
Registered Capital: 8.4 million RMB
Name of Investors Registered In Amount of Investment
EXHIBIT 21.5
QUALITY STANDARD TEST DEPARTMENT OF GUANGDONG PROVINCE
QUALITY RECOGNITION AND APPROVAL CONSULTATION AGREEMENT
First Party: Shantou Vibro Tech Industrial and Development Company Inc.
Second Party: Quality Standard Test Department of Guangdong Province
The First Party and the Second Party have reached the agreement as the
followings:
CONTENT
According to the First Party's request, the Second Party is responsible for
guiding and helping the First Party to set up a comprehensive quality system on
the basis of GB/T9002, ISO9002-94 standard and to obtain certification issued by
the Quality Recognition and Approval Board of China (Recognition and Approval
Organization ).
The scope of business includes liner shock absorbing cushions' production, sales
and service.
TIME
The Second Party has to complete recognition and approval consultation within
six months from the date on which both parties sign this agreement, which is by
the end of November 1999. Both parties prepare consultation plan.
Recommendation of consultation service provided by Second Party is as follows:
Process quality testing system; Provide test reports and consultation plan.
Provide training on knowledge of ISO9000 standard and qualification.
Provide training on writing qualification documents. Modify, check and approve
qualification documents.
Guide quality system operation.
Guide examining and verifying inner quality system.
Guide application for recognition and approval.
The First Party should prepare well for the following work:
Setup quality recognition and approval leadership group.
Appoint representatives to be in charge of.
Setup quality recognition and approval workshops.
Collect management documents, technology documents and other resource relating
to writing quality system documents.
Collect and confirm the standard of all related products.
Others.
<PAGE>
The First Party pays the Second Party $ 105,000 in RMB Dollars for consultation
cost.
Method of Payment:
First payment of $35,000 in RMB Dollars is due within 10 days from the date this
agreement is signed.
Second payment of $35,000 in RMB Dollars is due at the time when application is
submitted to the recognition and approval organization.
Note: (3). Third payment of $35,000 in RMB Dollars is due at the time when the
application is approved by the recognition and approval organization and
certificate is obtained.
Both the First and the Second Party are responsible for confidentiality and
preventing any reference on management, recognition and approval, and technology
from being compromised.
To make it convenient for consultation process, the First Party will provide
help for the Second Party in the aspect of transportation in the city of Shantou
during the consultation period. Living and Food expenses of the Second Party are
excluded from the responsibility of the First Party.
In principal, Consultation must be held according to the content stated in the
agreement signed by both parties. To ensure that the consultation process is
smooth, the First Party should pay serious attention and positively coordinate
to fulfill the Second Party's mission. On the other hand, the Second Party
should be patient, careful and go all out. If either party is unable to
accomplish the task assigned to according to the consultation plan, that party
must obtain the agreement from the other party.
There are two copies of this agreement. Each party holds one copy. Both copies
are effective from the date they are signed by both parties.
(Other details not being mentioned in this agreement are discussed and decided
by both parties.)
The First Party: The Second Party:
(Company Official Stamp and Name) (Company Official Stamp)
Quality Standard Test Department of GuangDong Province
First Party Representative Second Party Representative
Date : April 16, 1999 Date : April 16, 1999
Bank:Development Bank of GuangDongProvince, JianglanXiBranch
<PAGE>
Contact Person of the First Party:
Telephone : Facsimile :
Address of the First Party: Postal Code :
EXHIBIT 21.6
Shantou Vibro-Tech Industrial and Development Company , Inc.
Transfer of Shares Contract
Cansun Pacific International Investments Corporation Canada (hereinafter called
"the First Party") and Shantou Nandou Construction Development Headquarters
(hereinafter called "the Second Party") signed the "Shantou Vibro Tech
Industrial and Development Company, Inc. Contract" on January 25, 1996. In
accordance with Article 2, Section 9 it states that the investment proportions
of the First and Second Parties is 8:2. According to both Parties' specific
conditions and requirements, after thorough discussions, the First Party agreed
to transfer 5% of Shantou Vibro Tech Industrial and Development Company, Inc. to
the Second Party and 15% shares to Shantou Wan Run Trade Development Ltd.
(hereinafter called the "Third Party").
After transferring the shares, the new shareholding percentages among the three
parties is as follows: 60% shares are owned by the First Party; 25% shares are
owned by the Second Party; 15% shares are owned by the Third Party. The
investment capital and registered capital as set out in the executed contract
would remain unchanged. The various parties should inject the investment capital
and the distribution of the Company's profits and any risks would be borne
according to this new proportion.
First Party: Cansun Pacific International Investments Corporation Canada
Company Stamp /s/ Chinese signature
Second Party: Shantou Nandou Construction Development Headquarters
Company Stamp /s/ Chinese signature
Third Party: Shantou Wan Run Trade Development Ltd.
Company Stamp /s/ Chinese signature
EXHIBIT 21.7
SHARES EXCHANGE AGREEMENT
Between:
Shantou Wan Run Trade Development Ltd. (or ZHEN, Bin Huei )
Address: NO. 34, 2/F, N. JinXin Road
City of Shantou, GuangDong Province, CHINA
( Here in called the First Party)
And
VIBRO-TECH INDUSTRIES INC.
A CORPORATION UNDER AND BY VITUE OF THE STATE OF DELAWARE. U.S.A
(Here in called the Second Party)
WITNESSETH That:
According to the agreement reached by both the First Party and the Second Party,
15% shares of Shantou Vibro Tech Industrial and Development Company Inc. owned
by the First Party will be exchanged for the shares of VIBRO-TECH owned by
Second Party, given the following conditions and calculation:
The market price of 15% shares of Shantou Vibro Tech Industrial and Development
Company Inc. owned by the First Party is estimated to be $150,000.00 in US
Dollars. ( One Hundred and Fifty Thousand US Dollars )
Shares owned by the Second Party, which is $0.50 US Dollars per share as listed
in the US stock exchange market, are exchanged for 15% shares of Shantou Vibro
Tech Industrial and Development Company Inc. owned by the First Party. Total
number of shares needed by the Second Party for this exchange is 300,000 shares.
<PAGE>
The exchange of shares will take place as soon as the First Party completes all
the necessary procedures to confirm holding shares of Shantou Vibro Tech
Industrial and Development Company Inc.
The Second Party agrees that regardless of the market change, they will remain
use the value of $0.50 US Dollar per share to exchange with the First Party's
shares.
First Party Second Party
Shantou Wan Run Trade Development Ltd. Vibro-Tech Industries, Inc
By:/s/ ZHEN, Bin Huei By: /s/ William Chow
Zhen Bin Huei William Chow
June 8, 1999
EXHIBIT 21.8
ADVISOR AND ROYALTY AGREEMENT
THIS AGREEMENT made as of August 25, 1998
BETWEEN:
SHANTOU VIBRO-TECH INDUSTRIAL AND DEVELOPMENT CO. LTD., a corporation subsisting
under the laws of the People's Republic of China, having a place of business at
Long Yan Nan Road, Shantou City, Guangdong Province, 510405 People's Republic of
China
(the "Company")
AND:
DR. FU LIN ZHOU, professor and vice-president of the South China Construction
University, of No. 248 Guang Yuan Zhong Road, Guangzhou 510405 People's Republic
of China
("Zhou")
WHEREAS:
A. Zhou has invented and designed various isolated seismic rubber bearings and
will continue to modify and improve such isolated seismic rubber bearings;
B. Pursuant to an agreement dated August 25, 1998 with VTI, Zhou set over,
assigned and sold to VTI all right title and interest in and to a patent and
certain applications for patents in the Republic of China described by numbers
patent right registration ZL 95 22 200198, application no. 95 1 09348.7, 1.
application no. 95 2 20019.8 and application no. 95 1 09347.9 and any
improvements and modifications to such rights for 2,000,000 shares of Vibro-Tech
Industries, Inc. and a license to use such patent and applications for patents
in the People's Republic of China has been granted by VTI to the Company;
C. The Company has commenced, and wishes to continue, to manufacture and sell
such isolated seismic rubber bearings in the People's Republic of China under
license from VTI;
<PAGE>
D. Pursuant to an agreement dated March 18, 1998 as amended by an agreement
dated October 11, 1999 among Zhou, Fujita Corp. and the Company, the Company,
Zhou and Fujita Corp. agreed to provide for the continuing research and
development of a type of bearing suitable for use in Japan and in particular to
test and improve the 300 and 600 type rubber bearings and agreed that the rights
in Japan to such bearings and any improvements and modifications to such
bearings is held one-third each by the Company, Zhou and Fujita Corp; and
E. Zhou continues, and will continue, to design, modify and provide advice on
the improvement of the technology, manufacture and use of isolated seismic
rubber bearings and the Company wishes to continue under license to manufacture
and sell such isolated seismic rubber bearings;
WITNESSES that the parties mutually covenant and agree as follows:
ARTICLE 1 DEFINITIONS AND INTERPRETATION
1.01 In this Agreement, including the recitals and schedules to this Agreement,
unless the context otherwise requires:
Bearings means the patent right registration ZL 95 22 200198 and applications
for patents no. 95 1 09348.7, 1. no. 95 2 20019.8 and no. 95 1 09347.9 under the
Patent Law (China) related to the invention, manufacture, sale and use, in the
People's Republic of China, either on the Company's own behalf or on behalf of,
or through, third parties with which the Company or any affiliate of the Company
has contracted, of isolated seismic rubber bearings invented by Zhou, assigned
to VTI and used under license granted by VTI to the Company and includes all
related Enhancements and Documentation.
Company means Shantou Vibro-Tech Industrial and Development Co Ltd.
Confidential Information means all information relating to the Bearings,
Enhancements and the Documentation and any other data and information now or
hereafter existing during the date of this Agreement relating to the invention,
design, modification, improvement, manufacture and installation of the Bearings
done or caused to be done by Zhou or the Company and advice given by Zhou
relating to the Bearings but does not include any data or information which:
(a) is or becomes generally known or to the public, without breach or violation
of any confidentiality or other obligation;
(b) was known by the Company at the time of disclosure by Zhou, and was not
subject to any obligation of confidence; or
(c) is rightfully communicated to the Company by another person, free of any
obligations of confidence.
Documentation means the user manuals and other written materials relating to the
Bearings and the Enhancements that are provided to the Company by, or on the
advice of, Zhou or developed by the Company, as modified from time to time.
<PAGE>
Enhancements means any modifications, improvements or additions to the Bearings
and the Documentation done by the Company or by, or on the advice of, Zhou.
Fujita Agreements means the agreement dated March 18, 1998 as amended by an
agreement dated October 11, 1999 among Zhou, Fujita and Shantou Vibro-Tech
Industrial and Development Co Ltd. which provides for the continuing research
and development of a type of isolated seismic rubber bearing suitable for use in
Japan and in particular relates to the 300 and 600 type rubber bearings and to
the rights in Japan to such bearings and any improvements and modifications to
such bearings.
Fujita means Fujita Corporation of 4-6-15, Sendagaya, Shibuya-ku, Tokyo 151,
Japan.
Fujita Property means the one-third interest of each of Fujita, Zhou and the
Company to all right title and interest in and to the continuing research and
development of a type of isoalted seismic rubber bearing suitable for use in
Japan and in particular relates to the 300 and 600 type rubber bearings and to
the rights in Japan to such bearings and any improvements and modifications to
such bearings.
People's Republic of China means the mainland of the People's Republic of China
and does not include the Hong Kong Special Administrative Region.
Royalty means the amount to be paid from time to time by the Company to Zhou
from the sale of Product in the People's Republic of China as provided in
Article 4.
VTI Property means all right title and interest under the Patent Law (China) in
and to a patent and certain applications for patents in the Republic of China
described by numbers patent right registration ZL 95 22 200198, application no.
95 1 09348.7, 1. application no. 95 2 20019.8 and application No. 95 1 09347.9
and any improvements and modifications to such rights owned by VTI. and licensed
to be used by the Company by agreement dated August 25, 1998.
VTI means Vibro-Tech Industries, Inc., a corporation subsisting under the laws
of Delaware, with an office at of 201-11240 Bridgeport Road, Richmond, B.C.
Canada V6X 1T2.
Zhou means Dr. Fu Lin Zhou, professor and vice-president of the South China
Construction University, of No. 248 Guang Yuan Zhong Road, Guangzhou 510405
People's Republic of China.
1.02 This Agreement and all matters arising under this Agreement will be
governed by, construed and enforced in accordance with the laws of the Republic
of China and any proceeding commenced or maintained in connection with this
Agreement will be so commenced and maintained in the City of Shantou, Guangdong
Province, China to which jurisdiction the parties irrevocably attorn.
1.03 All amounts determined under, or referred to in, this Agreement will be in
renminbi and any conversion is necessary such conversion will be done at the
rate or rates published by the Bank of China in Shantou City as designated by
Zhou from time to time.
<PAGE>
ARTICLE 2 APPOINTMENT AS ADVISOR
2.01 The Company engages Zhou as, and Zhou agrees to be, an advisor to the
Company and advise during the term of this Agreement on all matters relating to
the VTI Property in consideration that the Company pays to Zhou the Royalty.
2.02 At the request of VTI, the Company and Zhou will set over, assign and
transfer absolutely to VTI the Fujita Property in accordance with the terms and
conditions of the Fujita Agreements.
ARTICLE 3 CONFIDENTIALITY AND THIRD PARTIES
3.01 Zhou will provide, and will continue to provide, all Confidential
Information relating to the Bearings, the Enhancements and the Documentation to
the Company for the benefit of VTI.
3.02 All right, title and interest in and to the Confidential Information is
will remain, the exclusive worldwide property of VTI held by the Company for and
on behalf of VTI and will be held in trust and confidence by Zhou for the
Company on behalf of VTI and no immunity, license or right respecting the
Confidential Information is granted to Zhou under this Agreement by implication
or otherwise to deal with the Confidential Information with any party except the
Company on behalf of VTI.
3.03 Zhou will not without the prior written consent of the Company directly or
indirectly, other than through or with the Company, deal with or contact any
other person, firm or corporation regarding the Confidential Information and
will not except through the acquisition of rights on constitution of a venture
with the Company or its successors directly or indirectly acquire any
proprietary interest in or to, use, distribute, license or otherwise disclose
the Confidential Information or any other matter containing or based, in whole
or in part, on the Confidential Information and in particular will not use the
Confidential Information, or suffer or permit any associate or affiliate to use
the Confidential Information, in any way except in the constitution of a venture
with the Company.
3.04 The Company will use its best efforts, and will use its best efforts to
cause its directors officers, employees and agents, to keep confidential and
protect the Confidential Information and the interests of the Company in and to
the Confidential Information and the standard of best efforts will be no less
than the degree of care that Zhou would be reasonably expected to employ for his
own trade secret, proprietary or confidential information.
3.05 Nothing will prevent the Company from disclosing Confidential Information
if required under any agreement to which the Company is a party providing for
the sale of Bearings or by applicable securities laws to which the Company or
any parent or affiliate of the Company is subject.
<PAGE>
ARTICLE 4 ROYALTY
4.01 The Company will pay to Zhou a royalty of five percent of the gross sale
price of Products sold and installed in the People's Republic of China before
the calculation of any value added tax and excluding any cost of insurance,
shipping, freight or installation.
4.02 Installments of Royalty will be paid as follows:
(a) within 30 days after the end of each of the first three calendar quarters in
each year and within 45 days of the end of the last calendar quarter in each
year, the Company will pay to Zhou an amount equal to 25 % of the estimated
Royalty, if any, for the year, adjusted if necessary after the first quarter of
any year to reflect any change during the year in the estimated Royalty; and
(b) on or before April 30 in each year the balance, if any, of Royalty payable
in respect of the year last completed.
4.03 After the end of each calendar year commencing with 1999, the accounts of
the Company related to the sale of Bearings will be audited by the auditors of
the Company, and the statement of operations, which will include the statement
of gross sales for the year last completed less any value added tax and the
costs of insurance, shipping, freight or installation will be furnished to Zhou
not later than April 30 in each year.
4.04 Zhou may within 45 days of receipt of such statements question the accuracy
of such statements in writing and, failing such objection, the statements will
be deemed to be correct and unimpeachable.
4.05 If the audited financial statements furnished under section 4.03 disclose
any overpayment of Royalty by the Company during the year, the amount of
overpayment will be debited against future installments of Royalty or will, if
requested by the Company, be refunded by Zhou forthwith.
4.06 If the audited financial statements furnished under section 4.03 disclose
any underpayment of Royalty by the Company during the year, the deficiency will
be paid forthwith to Zhou.
4.07 Any dispute regarding the calculation of the amount of Royalty to be paid
to Zhou will be determined conclusively by the auditors of the Company.
5.0 SALE OF ROYALTY
5.01 If Zhou receives a bona fide offer which he intends to accept from an
independent third party (the "Proposed Purchaser") dealing at arm's length with
Zhou to purchase all or substantially all of the Royalty, or if Zhou intends to
sell all or substantially all of his interest in the Royalty, Zhou will first
offer (the "Offer") such interest in writing to the Company upon terms no less
favorable than those offered by the Proposed Purchaser or intended to be offered
by Zhou.
<PAGE>
5.02 The Offer will specify the terms and conditions of such sale, name the
Proposed Purchaser, if known, and, if the offer contains consideration payable
to Zhou other than cash, the Offer will include Zhou's estimate of the cash
equivalent of the non-cash consideration.
5.03 If within a period of 30 days of the receipt of the Offer, the Company
notifies Zhou in writing that it will accept the Offer, Zhou will be bound to
sell such interest to the Company on the terms and conditions of the Offer and
this Agreement.
5.04 If the Offer accepted by the Company contains Zhou's best estimate of the
non-cash consideration, and if the Company disagrees with such best estimate,
the Company will so notify Zhou, at the time of acceptance and will, in such
notice, specify what it considers the fair cash equivalent to be and the
resulting total purchase price.
5.05 If the Company so notifies Zhou, the acceptance by the Company will be
effective and binding upon Zhou, and the Company and the cash equivalent of any
such non-cash consideration will, if not otherwise agreed, be determined by
binding arbitration under the laws of China and will be payable within 60 days
of arbitral determination regardless of whether a party decides to appeal the
arbitral decision on any grounds.
5.06 The Company will in such case pay to Zhou, against receipt of an absolute
transfer of clear and unencumbered title to the interest of Zhou being sold, the
total purchase price specified in its notice to Zhou and such amount will be
credited to the amount, if any, determined to be the cash equivalent of any
non-cash consideration.
5.07 If the Company fails to notify Zhou before the expiration of the time
specified that it will purchase the interest offered, Zhou may sell and transfer
such interest in the Royalty to the Proposed Purchaser on the terms and
conditions specified in the Offer for a period of 60 days, but the terms and
conditions of this Agreement will apply to such interest if the sale to the
Proposed Purchaser is not completed within such 60 days.
5.08 Any sale of an interest of Zhou will be conditional upon the Proposed
Purchaser delivering a written undertaking to the Company, in a form and of a
content satisfactory to counsel or consultant for the Company, to be bound by
the terms and conditions of this Agreement.
ARTICLE 6 REPRESENTATIONS, WARRANTIES AND COVENANTS OF ZHOU
6.01 Zhou represents and warrants to, and covenants with, the Company that:
(a) except as noted regarding the Fujita Property and the VTI Property, Zhou
will continue to advise the Company with respect to the Bearings, Technology,
Documentation and Enhancements; and
(b) Zhou will not agree with any other person, firm or corporation except an
affiliate of the Company to develop, sell, alter or modify any technology with
respect to isolated seismic rubber bearings as long as the Company maintains the
payment of the Royalty.
<PAGE>
ARTICLE 7 TERMINATION OF AGREEMENT
7.01 This Agreement will terminate on the earlier of December 31, 2050 or:
(a) if applicable, on the liquidation of the Company under the Foreign
Investment Enterprises Liquidation Procedures of the People's Republic of China;
(b) six months after delivery by Zhou to the Company of a notice that the
Company has failed to make a payment of Royalty that it is required to make and
the Company has not made such required payment or taken reasonable steps to
determine if such payment is required to be made;
(c) if the Company should become insolvent, make under applicable law an
assignment for the benefit of its creditors or petition a court in bankruptcy
for relief from its creditors or the appointment of a receiver, trustee or other
such person to manage the affairs of the Company or liquidate the affairs of the
Company for the benefit of its creditors; or
(d) the time at which the Company determines that any of Zhou or his legal
representative is in breach of any condition in this Agreement.
ARTICLE 8 ARBITRATION
8.01 All disputes under this Agreement will be settled by the parties in the
spirit of equality and cooperation and if not agreed between the parties will be
settled by reference to a single arbitrator under the Supplementary Regulations
of the Shantou Special Economic Zone for Encouragement of Foreign Investment as
agreed upon by the parties, or if not agreed upon within four weeks of either
party giving notice of a dispute, then as designated by the Company.
ARTICLE 9 GENERAL PROVISIONS
9.01 Time is of the essence of the performance of every obligation under this
Agreement, and no failure or lack of diligence by any party in proclaiming or
seeking redress for any violation of, or insisting on strict performance of, any
provision of this Agreement will prevent a subsequent violation of that
provision, or of any other provision, from giving rise to any remedy that would
be available if it were an original violation of that provision or another
provision.
9.02 This Agreement will be binding upon and enure to the benefit of the
respective heirs, executors, administrators and other legal representatives and,
to the extent permitted hereunder, the respective successors and assigns, of the
parties.
9.03 Unless otherwise provided herein, any notice, payment or other
communication to a party under this Agreement may be made, given or served by
delivery, telecopy or email and addressed as follows:
<PAGE>
(a) if to Zhou:
South China Construction University
No. 248 Guang Yuan Zhong Road
Guangzhou 510405 People's Republic of China
Attention: Dr. Fu Lin Zhou
Professor, Civil Engineering and Earthquake Engineering
Fax: 011-86020-8659-3137
Email: [email protected]
----------------
(b) if to the Company:
Shantou Vibro-Tech Industrial and Development Co Ltd.
Long Yan Nan Road
Shantou City, Guangdong Province, 510405 China
Tel/Fax: 011-86020-8382-8917
with a copy to:
Vibro-Tech Industries, Inc.
201-11240 Bridgeport Road
Richmond, B.C. V6X IT2
Attention: Mr. Jock Chong, President and Mr. William Chow, Chairman
Fax: 604-278-2712
Email: [email protected]
------------------
9.04 Any notice, payment or other communication so delivered, telecopied or
emailed will be deemed to have been given or served at the time of delivery or
transmission by telecopy or email.
9.05 A party may by notice change its address for service.
9.06 This Agreement constitutes the entire agreement between the parties and
supercedes all previous agreements or understandings between the parties in any
way relating to its subject matter and the Company has made not representations,
inducements, warranties or promises concerning this Agreement or the matters
referred to herein which are not embodied in this Agreement.
<PAGE>
IN WITNESS WHERE OF this Agreement has been executed by the parties as at the
date first above written.
SHANTOU VIBRO-TECH INDUSTRIAL AND DEVELOPMENT CO. LTD.
By: /s/ William Chow
Print Name: Willaim Chow
Signed, Sealed and Delivered by Dr. Fu Lin )
Zhou in the presence of: )
)
/s/ illegible )
) /s/ Dr. Fu Lin Zhou
) DR. FU LIN ZHOU
EXHIBIT 21.9
ADVISOR AND ROYALTY AGREEMENT
THIS AGREEMENT made as of January 1, 1999
BETWEEN:
VIBRO-TECH INDUSTRIES LIMITED, a corporation subsisting under the laws of the
Hong Kong Special Administrative Region, People's Republic of China, having a
place of business at Rooms 2001-4, Hang Seng Building, 7 Des Voeux Road Central,
Hong Kong Special Administrative Region, People's Republic of China
(the "Company")
AND:
DR. FU LIN ZHOU, professor and vice-president of the South China Construction
University, of No. 248 Guang Yuan Zhong Road, Guangzhou 510405 People's Republic
of China
("Zhou")
WHEREAS:
A. Zhou has invented and designed various isolated seismic rubber bearings and
will continue to modify and improve such isolated seismic rubber bearings;
B. Pursuant to an agreement dated August 25, 1998 with VTI, Zhou set over,
assigned and sold to VTI all right title and interest in and to a patent and
certain applications for patents in the Republic of China described by numbers
patent right registration ZL 95 22 200198, application no. 95 1 09348.7, 1.
application no. 95 2 20019.8 and application no. 95 1 09347.9 and any
improvements and modifications to such rights for 2,000,000 shares of Vibro-Tech
Industries, Inc. and a license to use such patent and applications for patents
in the HKSAR of the People's Republic of China and Japan has been granted by VTI
to the Company;
C. The Company has commenced, and wishes to continue, to sell such isolated
seismic rubber bearings in Japan and the HKSAR of the People's Republic of China
under license from VTI;
D. Zhou continues, and will continue, to design, modify and provide advice on
the improvement of the technology, manufacture and use of isolated seismic
rubber bearings and the Company wishes to continue under license to manufacture
and sell such isolated seismic rubber bearings;
WITNESSES that the parties mutually covenant and agree as follows:
<PAGE>
ARTICLE 1 DEFINITIONS AND INTERPRETATION
1.01 In this Agreement, including the recitals and schedules to this Agreement,
unless the context otherwise requires:
Bearings means the patent right registration ZL 95 22 200198 and applications
for patents no. 95 1 09348.7, 1. no. 95 2 20019.8 and no. 95 1 09347.9 under the
Patent Law (China) related to the invention, manufacture, sale and use, in the
People's Republic of China, either on the Company's own behalf or on behalf of,
or through, third parties with which the Company or any affiliate of the Company
has contracted, of isolated seismic rubber bearings invented by Zhou, assigned
to VTI and used under license granted by VTI to the Company and includes all
related Enhancements and Documentation.
Company means Vibro-Tech Industries Limited.
Confidential Information means all information relating to the Bearings,
Enhancements and the Documentation and any other data and information now or
hereafter existing during the date of this Agreement relating to the invention,
design, modification, improvement, manufacture and installation of the Bearings
done or caused to be done by Zhou or the Company and advice given by Zhou
relating to the Bearings but does not include any data or information which:
(a) is or becomes generally known or to the public, without breach or violation
of any confidentiality or other obligation;
(b) was known by the Company at the time of disclosure by Zhou, and was not
subject to any obligation of confidence; or
(c) is rightfully communicated to the Company by another person, free of any
obligations of confidence.
Documentation means the user manuals and other written materials relating to the
Bearings and the Enhancements that are provided to the Company by, or on the
advice of, Zhou or developed by the Company, as modified from time to time.
Enhancements means any modifications, improvements or additions to the Bearings
and the Documentation done by the Company or by, or on the advice of, Zhou.
HKSAR means the Hong Kong Special Administrative Region of the People's Republic
of China.
People's Republic of China means the mainland of the People's Republic of China
and does not include the HKSAR.
Royalty means the amount to be paid from time to time by the Company to Zhou
from the sale of Product in Japan and in the HKSAR as provided in Article 4.
VTI Property means all right title and interest under the Patent Law (China) in
and to a patent and certain applications for patents in the Republic of China
described by numbers patent right registration ZL 95 22 200198, application no.
95 1 09348.7, 1. application no. 95 2 20019.8 and application No. 95 1 09347.9
and any improvements and modifications to such rights owned by VTI. and licensed
to be used by the Company by agreement dated January 1, 1999.
<PAGE>
VTI means Vibro-Tech Industries, Inc., a corporation subsisting under the laws
of Delaware, with an office at of 201-11240 Bridgeport Road, Richmond, B.C.
Canada V6X 1T2.
Zhou means Dr. Fu Lin Zhou, professor and vice-president of the South China
Construction University, of No. 248 Guang Yuan Zhong Road, Guangzhou 510405
People's Republic of China.
1.02 This Agreement and all matters arising under this Agreement will be
governed by, construed and enforced in accordance with the laws of the HKSAR
except matter relating to the VTI Property which will be governed by the laws of
the People's Republic of China, and any proceeding commenced or maintained in
connection with this Agreement will be so commenced and maintained in the HKSAR
to which jurisdiction the parties irrevocably attorn.
1.03 All amounts determined under, or referred to in, this Agreement will be in
United States dollars and any conversion is necessary such conversion will be
done at the rate or rates published by the United States Federal Bank of
Reserve, New York from time to time.
ARTICLE 2 APPOINTMENT AS ADVISOR
2.01 The Company engages Zhou as, and Zhou agrees to be, an advisor to the
Company and advise during the term of this Agreement on all matters relating to
the VTI Property in consideration that the Company pays to Zhou the Royalty.
ARTICLE 3 CONFIDENTIALITY AND THIRD PARTIES
3.01 Zhou will provide, and will continue to provide, all Confidential
Information relating to the Bearings, the Enhancements and the Documentation to
the Company for the benefit of VTI.
3.02 All right, title and interest in and to the Confidential Information is
will remain, the exclusive worldwide property of VTI held by the Company for and
on behalf of VTI and will be held in trust and confidence by Zhou for the
Company on behalf of VTI and no immunity, license or right respecting the
Confidential Information is granted to Zhou under this Agreement by implication
or otherwise to deal with the Confidential Information with any party except the
Company on behalf of VTI.
3.03 Zhou will not without the prior written consent of the Company directly or
indirectly, other than through or with the Company, deal with or contact any
other person, firm or corporation regarding the Confidential Information and
will not except through the acquisition of rights on constitution of a venture
with the Company or its successors directly or indirectly acquire any
proprietary interest in or to, use, distribute, license or otherwise disclose
the Confidential Information or any other matter containing or based, in whole
or in part, on the Confidential Information and in particular will not use the
<PAGE>
Confidential Information, or suffer or permit any associate or affiliate to use
the Confidential Information, in any way except in the constitution of a venture
with the Company.
3.04 The Company will use its best efforts, and will use its best efforts to
cause its directors officers, employees and agents, to keep confidential and
protect the Confidential Information and the interests of the Company in and to
the Confidential Information and the standard of best efforts will be no less
than the degree of care that Zhou would be reasonably expected to employ for his
own trade secret, proprietary or confidential information.
3.05 Nothing will prevent the Company from disclosing Confidential Information
if required under any agreement to which the Company is a party providing for
the sale of Bearings or by applicable securities laws to which the Company or
any parent or affiliate of the Company is subject.
ARTICLE 4 ROYALTY
4.01 The Company will pay to Zhou a royalty of five percent of the gross sale
price of Products sold and installed in the HKSAR of the People's Republic of
China and in Japan before the calculation of any value added tax and excluding
any cost of insurance, shipping, freight or installation.
4.02 Installments of Royalty will be paid as follows:
(a) within 30 days after the end of each of the first three calendar quarters in
each year and within 45 days of the end of the last calendar quarter in each
year, the Company will pay to Zhou an amount equal to 25 % of the estimated
Royalty, if any, for the year, adjusted if necessary after the first quarter of
any year to reflect any change during the year in the estimated Royalty; and
(b) on or before April 30 in each year the balance, if any, of Royalty payable
in respect of the year last completed.
4.03 After the end of each calendar year commencing with 1999, the accounts of
the Company related to the sale of Bearings will be audited by the auditors of
the Company, and the statement of operations, which will include the statement
of gross sales for the year last completed less any value added tax and the
costs of insurance, shipping, freight or installation will be furnished to Zhou
not later than April 30 in each year.
4.04 Zhou may within 45 days of receipt of such statements question the accuracy
of such statements in writing and, failing such objection, the statements will
be deemed to be correct and unimpeachable.
<PAGE>
4.05 If the audited financial statements furnished under section 4.03 disclose
any overpayment of Royalty by the Company during the year, the amount of
overpayment will be debited against future installments of Royalty or will, if
requested by the Company, be refunded by Zhou forthwith.
4.06 If the audited financial statements furnished under section 4.03 disclose
any underpayment of Royalty by the Company during the year, the deficiency will
be paid forthwith to Zhou.
4.07 Any dispute regarding the calculation of the amount of Royalty to be paid
to Zhou will be determined conclusively by the auditors of the Company.
5.0 SALE OF ROYALTY
5.01 If Zhou receives a bona fide offer which he intends to accept from an
independent third party (the "Proposed Purchaser") dealing at arm's length with
Zhou to purchase all or substantially all of the Royalty, or if Zhou intends to
sell all or substantially all of his interest in the Royalty, Zhou will first
offer (the "Offer") such interest in writing to the Company upon terms no less
favorable than those offered by the Proposed Purchaser or intended to be offered
by Zhou.
5.02 The Offer will specify the terms and conditions of such sale, name the
Proposed Purchaser, if known, and, if the offer contains consideration payable
to Zhou other than cash, the Offer will include Zhou's estimate of the cash
equivalent of the non-cash consideration.
5.03 If within a period of 30 days of the receipt of the Offer, the Company
notifies Zhou in writing that it will accept the Offer, Zhou will be bound to
sell such interest to the Company on the terms and conditions of the Offer and
this Agreement.
5.04 If the Offer accepted by the Company contains Zhou's best estimate of the
non-cash consideration, and if the Company disagrees with such best estimate,
the Company will so notify Zhou, at the time of acceptance and will, in such
notice, specify what it considers the fair cash equivalent to be and the
resulting total purchase price.
5.05 If the Company so notifies Zhou, the acceptance by the Company will be
effective and binding upon Zhou, and the Company and the cash equivalent of any
such non-cash consideration will, if not otherwise agreed, be determined by
binding arbitration under the laws of China and will be payable within 60 days
of arbitral determination regardless of whether a party decides to appeal the
arbitral decision on any grounds.
5.06 The Company will in such case pay to Zhou, against receipt of an absolute
transfer of clear and unencumbered title to the interest of Zhou being sold, the
total purchase price specified in its notice to Zhou and such amount will be
credited to the amount, if any, determined to be the cash equivalent of any
non-cash consideration.
5.07 If the Company fails to notify Zhou before the expiration of the time
specified that it will purchase the interest offered, Zhou may sell and transfer
such interest in the Royalty to the Proposed Purchaser on the terms and
conditions specified in the Offer for a period of 60 days, but the terms and
conditions of this Agreement will apply to such interest if the sale to the
Proposed Purchaser is not completed within such 60 days.
<PAGE>
5.08 Any sale of an interest of Zhou will be conditional upon the Proposed
Purchaser delivering a written undertaking to the Company, in a form and of a
content satisfactory to counsel or consultant for the Company, to be bound by
the terms and conditions of this Agreement.
ARTICLE 6 REPRESENTATIONS, WARRANTIES AND COVENANTS OF ZHOU
6.01 Zhou represents and warrants to, and covenants with, the Company that:
(a) Zhou will continue to advise the Company with respect to the Bearings,
Technology, Documentation and Enhancements; and
(b) Zhou will not agree with any other person, firm or corporation except an
affiliate of the Company to develop, sell, alter or modify any technology with
respect to isolated seismic rubber bearings as long as the Company maintains the
payment of the Royalty.
ARTICLE 7 TERMINATION OF AGREEMENT
7.01 This Agreement will terminate on the earlier of December 31, 2050 or:
(a) if applicable, on the liquidation of the Company under the Foreign
Investment Enterprises Liquidation Procedures of the People's Republic of China;
(b) six months after delivery by Zhou to the Company of a notice that the
Company has failed to make a payment of Royalty that it is required to make and
the Company has not made such required payment or taken reasonable steps to
determine if such payment is required to be made;
(c) if the Company should become insolvent, make under applicable law an
assignment for the benefit of its creditors or petition a court in bankruptcy
for relief from its creditors or the appointment of a receiver, trustee or other
such person to manage the affairs of the Company or liquidate the affairs of the
Company for the benefit of its creditors; or
(d) the time at which the Company determines that Zhou or his legal
representative is in breach of any condition in this Agreement.
ARTICLE 8 ARBITRATION
8.01 All disputes under this Agreement will be settled by the parties in the
spirit of equality and cooperation and if not agreed between the parties will be
settled under the applicable law in the HKSAR by reference to a single
arbitrator as agreed upon by the parties, or if not agreed upon within four
weeks of either party giving notice of a dispute, then as designated by the
Company.
<PAGE>
ARTICLE 9 GENERAL PROVISIONS
9.01 Time is of the essence of the performance of every obligation under this
Agreement, and no failure or lack of diligence by any party in proclaiming or
seeking redress for any violation of, or insisting on strict performance of, any
provision of this Agreement will prevent a subsequent violation of that
provision, or of any other provision, from giving rise to any remedy that would
be available if it were an original violation of that provision or another
provision.
9.02 This Agreement will be binding upon and enure to the benefit of the
respective heirs, executors, administrators and other legal representatives and,
to the extent permitted hereunder, the respective successors and assigns, of the
parties.
9.03 Unless otherwise provided herein, any notice, payment or other
communication to a party under this Agreement may be made, given or served by
delivery, telecopy or email and addressed as follows:
(a) if to Zhou:
South China Construction University
No. 248 Guang Yuan Zhong Road
Guangzhou 510405 People's Republic of China
Attention: Dr. Fu Lin Zhou
Professor, Civil Engineering and Earthquake Engineering
Fax: 011-86020-8659-3137
Email: [email protected]
----------------
(b) if to the Company:
Vibro-Tech Industries Limited
Rooms 2001-4, Hang Seng Building
77 Des Voeux Road Central, HKSAR
Attention: Mr. Joe Chung
Tel/Fax: 011-852-2877-6608
with a copy to:
Vibro-Tech Industries, Inc.
201-11240 Bridgeport Road
Richmond, B.C. V6X IT2
Attention: Mr. Jock Chong, President and Mr. William Chow, Chairman
Fax: 604-278-2712
Email: [email protected]
------------------
<PAGE>
9.04 Any notice, payment or other communication so delivered, telecopied or
emailed will be deemed to have been given or served at the time of delivery or
transmission by telecopy or email.
9.05 A party may by notice change its address for service.
9.06 This Agreement constitutes the entire agreement between the parties and
supercedes all previous agreements or understandings between the parties in any
way relating to its subject matter and the Company has made not representations,
inducements, warranties or promises concerning this Agreement or the matters
referred to herein which are not embodied in this Agreement.
IN WITNESS WHERE OF this Agreement has been executed by the parties as at the
date first above written.
VIBRO-TECH INDUSTRIES LIMITED
By: /s/ Willaim Chow
Print Name: William Chow
Signed, Sealed and Delivered by Dr. Fu Lin )
Zhou in the presence of: )
)
/s/ illegible )
) /s/ Dr. Fu Lin Zhou
) DR. FU LIN ZHOU
EXHIBIT 21.10
SUPPLY AGREEMENT
THIS AGREEMENT made as of January 1, 1999
BETWEEN:
SHANTOU VIBRO-TECH INDUSTRIAL AND DEVELOPMENT CO. LTD., a corporation subsisting
under the laws of the People's Republic of China, having a place of business at
Long Yan Nan Road, Shantou City, Guangdong Province, 510405 People's Republic of
China
("Shantou")
AND: VIBRO-TECH INDUSTRIES LIMITED, a corporation subsisting under the laws of
the Hong Kong Special Administrative Region of the People's Republic of China,
having a place of business at Rooms 2001-4, Hang Seng Building, 7 Des Voeux Road
Central, Hong Kong Special Administrative Region of the People's Republic of
China
("VTI (HKSAR)")
WHEREAS:
A. Under license granted August 25, 1998 Shantou has commenced, and wishes to
continue, to manufacture, and to sell in the People's Republic of China,
Bearings; B. VTI (HKSAR) has been licensed by agreement dated January 1, 1999 to
market and sell Bearings in all other jurisdictions of the world; and
C. VTI (HKSAR) wishes to avail itself of the facilities of Shantou to
manufacture Bearings and to obtain Documentation and Enhancements;
WITNESSES that the parties mutually covenant and agree as follows:
ARTICLE 1 DEFINITIONS AND INTERPRETATION
1.01 In this Agreement, including the recitals and schedules to this Agreement,
unless the context otherwise requires:
Bearings means the isolated seismic rubber bearings, the incorporeal rights to
which are owned by Vibro-Tech, Industries, Inc. and all related Documentation
and Enhancements.
Documentation means the user manuals and other written materials relating to the
Bearings and relating to the installation, use and testing of the Bearings
developed or modified from time to time by Shantou and provided to VTI (HKSAR).
Enhancements means any modifications, improvements or additions to the Bearings
done by Shantou.
<PAGE>
Fujita means Fujita Corporation of 4-6-15, Sendagaya, Shibuya-ku, Tokyo 151,
Japan.
HKSAR means the Hong Kong Special Administrative Region of the People's Republic
of China.
People's Republic of China means the mainland of the People's Republic of China
and does not include Hong Kong.
VTI Property means all right title and interest in and to a patent and certain
applications for patents in the People's Republic of China described by numbers
patent right registration ZL 95 22 200198, application no. 95 1 09348.7,
application no. 95 2 20019.8 and application No. 95 1 09347.9 and any
improvements and modifications to such rights owned by Vibro-Tech Industries,
Inc. and licensed to be used by Shantou and by VTI (HKSAR).
1.02 This Agreement and all matters arising under this Agreement will be
governed by, construed and enforced in accordance with the laws of the People's
Republic of China and any proceeding commenced or maintained in connection with
this Agreement will be so commenced and maintained in the City of Shantou,
Guangdong Province, China to which jurisdiction the parties irrevocably attorn.
1.03 All amounts determined under, or referred to in, this Agreement will be in
renminbi and any conversion is necessary such conversion will be done at the
rate or rates published by the Bank of China from time to time.
ARTICLE 2 AGREEMENT TO MANUFACTURE
2.01 Shantou will from time to time accept from VTI (HKSAR) orders to
manufacture Bearings, and will provide in the English language from time to time
all supporting Documentation and incorporate Enhancements for the marketing,
sale and installation of Bearings by VTI (HKSAR) in the HKSAR and Japan and VTI
(HKSAR) may contract with any other affiliate of Shantou to manufacture, market
and sell bearings in any other jurisdictions of the world..
2.02 Each of Shantou and VTI(HKSAR) will communicate with each other and
cooperate in the spirit of communication and equality should Shantou or VTI
(HKSAR) receive advice from time to time on any aspect of, or change to, the
Bearings or the Documentation.
2.03 In Japan, VTI (HKSAR) will deal only with, or in cooperation with, Fujita
unless the written consent of Fujita permitting VTI (HKSAR) to deal with any
third party is received.
2.04 In the HKSAR, VTI (HKSAR) may sale Bearings directly or may enter into
agency arrangements, partnerships, companies, joint ventures or other forms of
associations with third parties on such terms and conditions as may from time to
time be agreed for the sale of Bearings in the HKSAR and for the establishment
of facilities for the manufacture of Bearings on conditions acceptable to
Vibro-Tech Industries, Inc..
<PAGE>
ARTICLE 3 PURCHASE OF BEARINGS
3.01 Shantou will from time to time receive from VTI (HKSAR) orders to
manufacture Bearings and will sell to VTI (HKSAR) at the cost of production of
Shantou plus any value added tax levied under the law of the People's Republic
of China Product as modified by the Supplementary Regulations of the Shantou
Special Economic Zone for Encouragement of Investment at the order of VTI
(HKSAR) plus the any cost of cargo, insurance and freight or installation, if
such amounts are to be paid by Shantou.
3.02 Shantou represents, warrants and covenants to and with VTI (HKSAR) that the
Bearings will be of merchantable quality and fit for the purpose for which they
are intended.
3.03 Shantou will provide from time to time any additional warranty, covenant or
guarantee regarding the quality or life of the Bearings as is appropriate as
Enhancements occur.
ARTICLE 4 TERMINATION OF AGREEMENT
4.01 This Agreement will terminate on the earlier of December 31, 2050 or:
(a) on the liquidation of the Company under the Foreign Investment Enterprises
Liquidation Procedures of the People's Republic of China;
(b) if VTI (HKSAR) fails within six months to make any payment to Shantou after
notice has been given by Shantou that any such amount is due and owing to
Shantou;
(c) three months after receipt by Shantou from VTI (HKSAR) that this Agreement
is terminated, but any orders placed by VTI (HKSAR) before the delivery of such
notice will be completed by Shantou and paid for by VTI (HKSAR);
(d) if VTI (HKSAR) should become insolvent, make under applicable law an
assignment for the benefit of its creditors or petition a court in bankruptcy
for relief from its creditors or the appointment of a receiver, trustee or other
such person to manage the affairs of VTI (HKSAR) or liquidate the affairs of VTI
(HKSAR) for the benefit of its creditors; or
(e) the time at which Shantou determines that any of VTI (HKSAR) or its legal
representative is in breach of any condition in this Agreement.
ARTICLE 5 ARBITRATION
5.01 All disputes under this Agreement will be settled by the parties in the
spirit of equality and cooperation and if not agreed between the parties will be
settled by reference to a single arbitrator under the Supplementary Regulations
of the Shantou Special Economic Zone for Encouragement of Foreign Investment as
agreed upon by the parties, or if not agreed upon within four weeks of either
party giving notice of a dispute, then as designated by VTI (HKSAR).
<PAGE>
ARTICLE 6 GENERAL PROVISIONS
6.01 Time is of the essence of the performance of every obligation under this
Agreement, and no failure or lack of diligence by any party in proclaiming or
seeking redress for any violation of, or insisting on strict performance of, any
provision of this Agreement will prevent a subsequent violation of that
provision, or of any other provision, from giving rise to any remedy that would
be available if it were an original violation of that provision or another
provision.
6.02 This Agreement will be binding upon and enure to the benefit of the
respective heirs, executors, administrators and other legal representatives and,
to the extent permitted hereunder, the respective successors and assigns, of the
parties.
6.03 Unless otherwise provided herein, any notice, payment or other
communication to a party under this Agreement may be made, given or served by
delivery, telecopy or email and addressed as follows:
(a) if to VTI (HKSAR):
Vibro-Tech Industries Limited
Rooms 2001-4, Hang Seng Building
77 Des Voeux Road Central, HKSAR
Attention: Mr. Joe Chung
Tel/Fax: 011-852-2877-6608
with a copy to:
Vibro-Tech Industries, Inc.
201-11240 Bridgeport Road
Richmond, B.C. V6X IT2
Attention: Mr. Jock Chong, President and Mr. William Chow, Chairman
Fax: 604-278-2712
Email: [email protected]
------------------
(b) if to the Company:
Shantou Vibro-Tech Industrial and Development Co Ltd.
Long Yan Nan Road
Shantou City, Guangdong Province, 510405 China
Tel/Fax: 011-8620-8382-8917
with a copy to:
Vibro-Tech Industries, Inc.
201-11240 Bridgeport Road
Richmond, B.C. V6X IT2
Attention: Mr. Jock Chong, President and Mr. William Chow, Chairman
Fax: 604-278-2712
Email: [email protected]
------------------
<PAGE>
6.04 Any notice, payment or other communication so delivered, telecopied or
emailed will be deemed to have been given or served at the time of delivery or
transmission by telecopy or email.
6.05 A party may by notice change its address for service.
7.06 This Agreement constitutes the entire agreement between the parties and
supercedes all previous agreements or understandings between the parties in any
way relating to its subject matter and the Company has made not representations,
inducements, warranties or promises concerning this Agreement or the matters
referred to herein which are not embodied in this Agreement.
IN WITNESS WHERE OF this Agreement has been executed by the parties as at the
date first above written.
SHANTOU VIBRO-TECH INDUSTRIAL AND DEVELOPMENT CO. LTD.
By: /s/ William Chow
Print Name: William Chow
VIBRO-TECH INDUSTRIES LIMITED
By: /s/ Joe Chung
Print Name: Joe Chung
EXHIBIT 21.11
SUPPLY AGREEMENT
THIS AGREEMENT made as of December 15, 1999
BETWEEN:
VIBRO-TECH INDUSTRIES LIMITED, a corporation subsisting under the laws of the
Hong Kong Special Administrative Region, People's Republic of China, having a
place of business at Rooms 2001-4, Hang Seng Building, 7 Des Voeux Road Central,
Hong Kong Special Administrative Region, People's Republic of China
(the "Company")
AND: VIBRO-TECH ENTERPRISES LIMITED, a corporation subsisting under the laws of
the Hong Kong Special Administrative Region of the People's Republic of China,
having a place of business at Rooms 2001-4, Hang Seng Building, 7 Des Voeux Road
Central, Hong Kong Special Administrative Region of the People's Republic of
China
("Enterprises")
WHEREAS:
A. Under license granted August 25, 1998 Shantou has commenced, and wishes to
continue, to manufacture, and to sell in the People's Republic of China,
Bearings;
B. Enterprises has been licensed by agreement dated December 15, 1999 to market
and sell Bearings in all jurisdictions of the world except the HKSAR, the
People's Republicc of China and Japan; and
C. Enterprises wishes to avail itself of the facilities of Shantou to
manufacture Bearings and to obtain Documentation and Enhancements;
WITNESSES that the parties mutually covenant and agree as follows:
ARTICLE 1 DEFINITIONS AND INTERPRETATION
1.01 In this Agreement, including the recitals and schedules to this Agreement,
unless the context otherwise requires:
Bearings means the isolated seismic rubber bearings, the incorporeal rights to
which are owned by Vibro-Tech, Industries, Inc. and all related Documentation
and Enhancements.
Documentation means the user manuals and other written materials relating to the
Bearings and relating to the installation, use and testing of the Bearings
developed or modified from time to time by Shantou and provided to Enterprises.
<PAGE>
Enhancements means any modifications, improvements or additions to the Bearings
done by Shantou.
HKSAR means the Hong Kong Special Administrative Region of the People's Republic
of China.
People's Republic of China means the mainland of the People's Republic of China
and does not include Hong Kong.
VTI Property means all right title and interest in and to a patent and certain
applications for patents in the People's Republic of China described by numbers
patent right registration ZL 95 22 200198, application no. 95 1 09348.7,
application no. 95 2 20019.8 and application No. 95 1 09347.9 and any
improvements and modifications to such rights owned by Vibro-Tech Industries,
Inc. and licensed to be used by Shantou and by Enterprises.
1.02 This Agreement and all matters arising under this Agreement will be
governed by, construed and enforced in accordance with the laws of the People's
Republic of China and any proceeding commenced or maintained in connection with
this Agreement will be so commenced and maintained in the City of Shantou,
Guangdong Province, China to which jurisdiction the parties irrevocably attorn.
1.03 All amounts determined under, or referred to in, this Agreement will be in
renminbi and any conversion is necessary such conversion will be done at the
rate or rates published by the Bank of China from time to time.
ARTICLE 2 AGREEMENT TO MANUFACTURE
2.01 Shantou will from time to time accept from Enterprises orders to
manufacture Bearings, and will provide in the English language from time to time
all supporting Documentation and incorporate Enhancements for the marketing,
sale and installation of Bearings by Enterprises in all jurisdictions of the
world except the HKSAR, the People's Republic of China and Japan.
2.02 Each of Shantou and Enterprises will communicate with each other and
cooperate in the spirit of communication and equality should Shantou or
Enterprises receive advice from time to time on any aspect of, or change to, the
Bearings or the Documentation.
2.03 Enterprises may sale Bearings directly or may enter into agency
arrangements, partnerships, companies, joint ventures or other forms of
associations with third parties on such terms and conditions as may from time to
time be agreed for the sale of Bearings and for the establishment of facilities
for the manufacture of Bearings on conditions acceptable to Vibro-Tech
Industries, Inc..
ARTICLE 3 PURCHASE OF BEARINGS
3.01 Shantou will from time to time receive from Enterprises orders to
manufacture Bearings and will sell to Enterprises at the cost of production of
Shantou plus any value added tax levied under the law of the People's Republic
of China Product as modified by the Supplementary Regulations of the Shantou
Special Economic Zone for Encouragement of Investment at the order of
Enterprises plus the any cost of cargo, insurance and freight or installation,
if such amounts are to be paid by Shantou.
<PAGE>
3.02 Shantou represents, warrants and covenants to and with Enterprises that the
Bearings will be of merchantable quality and fit for the purpose for which they
are intended.
3.03 Shantou will provide from time to time any additional warranty, covenant or
guarantee regarding the quality or life of the Bearings as is appropriate as
Enhancements occur.
ARTICLE 4 TERMINATION OF AGREEMENT
4.01 This Agreement will terminate on the earlier of December 31, 2050 or:
(a) on the liquidation of the Company under the Foreign Investment Enterprises
Liquidation Procedures of the People's Republic of China;
(b) if Enterprises fails within six months to make any payment to Shantou after
notice has been given by Shantou that any such amount is due and owing to
Shantou;
(c) three months after receipt by Shantou from Enterprises that this Agreement
is terminated, but any orders placed by Enterprises before the delivery of such
notice will be completed by Shantou and paid for by Enterprises;
(d) if Enterprises should become insolvent, make under applicable law an
assignment for the benefit of its creditors or petition a court in bankruptcy
for relief from its creditors or the appointment of a receiver, trustee or other
such person to manage the affairs of Enterprises or liquidate the affairs of
Enterprises for the benefit of its creditors; or
(e) the time at which Shantou determines that any of Enterprises or its legal
representative is in breach of any condition in this Agreement.
ARTICLE 5 ARBITRATION
5.01 All disputes under this Agreement will be settled by the parties in the
spirit of equality and cooperation and if not agreed between the parties will be
settled by reference to a single arbitrator under the Supplementary Regulations
of the Shantou Special Economic Zone for Encouragement of Foreign Investment as
agreed upon by the parties, or if not agreed upon within four weeks of either
party giving notice of a dispute, then as designated by Enterprises.
ARTICLE 6 GENERAL PROVISIONS
6.01 Time is of the essence of the performance of every obligation under this
Agreement, and no failure or lack of diligence by any party in proclaiming or
seeking redress for any violation of, or insisting on strict performance of, any
provision of this Agreement will prevent a subsequent violation of that
provision, or of any other provision, from giving rise to any remedy that would
be available if it were an original violation of that provision or another
provision.
<PAGE>
6.02 This Agreement will be binding upon and enure to the benefit of the
respective heirs, executors, administrators and other legal representatives and,
to the extent permitted hereunder, the respective successors and assigns, of the
parties.
6.03 Unless otherwise provided herein, any notice, payment or other
communication to a party under this Agreement may be made, given or served by
delivery, telecopy or email and addressed as follows:
(a) if to Enterprises:
Vibro-Tech Enterprises Limited
Rooms 2001-4, Hang Seng Building
77 Des Voeux Road Central, HKSAR
Attention: Mr. Joe Chung
Tel/Fax: 011-852-2877-6608
with a copy to:
Vibro-Tech Industries, Inc.
201-11240 Bridgeport Road
Richmond, B.C. V6X IT2
Attention: Mr. Jock Chong, President and Mr. William Chow, Chairman
Fax: 604-278-2712
Email: [email protected]
------------------
(b) if to the Company:
Shantou Vibro-Tech Industrial and Development Co Ltd.
Long Yan Nan Road
Shantou City, Guangdong Province, 510405 China
Tel/Fax: 011-8620-8382-8917
with a copy to:
Vibro-Tech Industries, Inc.
201-11240 Bridgeport Road
Richmond, B.C. V6X IT2
Attention: Mr. Jock Chong, President and Mr. William Chow, Chairman
Fax: 604-278-2712
Email: [email protected]
------------------
<PAGE>
6.04 Any notice, payment or other communication so delivered, telecopied or
emailed will be deemed to have been given or served at the time of delivery or
transmission by telecopy or email.
6.05 A party may by notice change its address for service.
7.06 This Agreement constitutes the entire agreement between the parties and
supercedes all previous agreements or understandings between the parties in any
way relating to its subject matter and the Company has made not representations,
inducements, warranties or promises concerning this Agreement or the matters
referred to herein which are not embodied in this Agreement.
IN WITNESS WHERE OF this Agreement has been executed by the parties as at the
date first above written.
SHANTOU VIBRO-TECH INDUSTRIAL AND DEVELOPMENT CO. LTD.
By: /s/ William Chow
Print Name: Willaim Chow
VIBRO-TECH ENTERPRISES LIMITED
By: /s/ Joe Chung
Print Name: Joe Chung
EXHIBIT 21.12
FUJITA
Fujita Corporation 4-6-15, Sendagaya, Shibuya-ku, Tokyo 151 Japan
Telephone: 03-3402-1911
To whom it may concern:
I hereby verify that Fujita Corp. of Japan had used the base isolator rubber
bearings manufactured by Vibro-Tech Industries Inc. for some of its construction
projects in Japan. The quality of the products has been tested and proven to be
of superior quality by JSSI (Japan Seismic & Structure Institute). Our company
will continue to use this company's products wherever possible.
March 1, 1999
Yours Sincerely,
Fujita Corp.
/s/ Haruhito Gomi
Haruhito Gomi, Vice-President
EXHIBIT 21.13
Agreement of Joint Research
The parties to this agreement are Fujita Corporation, having its principal
office at 6-15, Sendagaya 4-chome, Shibuya-ku, Tokyo 151, Japan (hereinafter
referred to as "Party A"), Shantou Vibro-Tech Industrial and Development Co.
Ltd., having its principal office at Gong Yuan Road, Shantou, China (hereinafter
referred to as "Party B"), South China Construction University, Guangyuan Zhong
Road, Guangzhou 510405, China (hereinafter referred to as "Party C").
All parties shall undertake collaboration on joint research for rubber bearings
applicable to Japan on the basis of equality and mutual benefit, and have agreed
on the following aspect.
Article 1: Definitions
The following definitions are hereby agreed to for the purposes of this
Agreement:
1. Joint Research means the joint research concerning rubber bearings applicable
to Japan.
2. Joint Research Results means any and all results including but not limited to
information which relate to inventions, concepts, designs, know-how and written
or oral materials etc. resulting from this Joint Research.
3. Intellectual Property Rights means any and all patents, utility models and
any other intellectual property rights pertaining to the Joint Research Results.
Article 2: Objective of the Joint Research
All Parties are looking forward to cooperating in the research of rubber
bearings applicable to Japan.
Article 3: Contents, Apportionment and Schedule of the Joint Research
The contents and apportionment of the Joint Research are as follows. The detail
shall be determined under the mutual agreement through consultation among all
Parties and stipulated in the Implementation Agreement.
1. Contents
Research on the rubber bearings which will be used in the office building at
Technical Research Institute of Party A.
2. Apportionment
Planning of the Joint Research Party A
Determining the property and detail of the rubber bearings Party A
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Manufacturing and improvement of the bearings Party B and Party C
Performance test on the rubber bearings Party A and Party C
Determining and testing test pieces of materials
used in the rubber bearings Party A
Manufacturing and testing the test pieces Party B
3. Schedule
Party B shall manufacture 6 pieces of 200 type rubber bearing and deliver the
rubber bearings to Party C before March 31, 1996.
Party B shall manufacture 2 pieces of 600 type rubber bearing and deliver the
rubber bearings to Party C before April 30, 1996.
Party B shall manufacture test pieces of materials used in the rubber bearings
before March 31, 1996.
Party C shall conduct the dynamic tests of 200 type rubber bearing during April
1-15, 1996. Accelerated aging tests shall be conducted before May 15, 1996.
Creep test shall be completed before June 15, 1996.
Party C shall conduct the tests of 600 type rubber bearing during May 1-15,
1996.
All Parties shall complete the report to Japan Building Center for the
examination tests of rubber bearings before June 15, 1996.
Article 4: Expenses for Joint Research
All Parties bear the expenses themselves for Joint Research according to the
apportionment in Article 3 in principle. If the expenses borne by one Party are
extremely large, the expenses should be determined through consultation among
all Parties. Party A and Party B shall share the expenses with Party C as
follows:
1. Party A shall pay USD 12000 to Party C before May 1, 1996.
2. Party B shall pay USD 12000 to Party C.
Article 5: Possession of the Joint Research Results
All Parties shall jointly own the Joint Research Results which can be used for
further research by all the Parties.
Article 6: Implementation of Joint Research Results
Party A is in charge of sending the rubber bearings made by Party B to be
examined by Japan Building Center. If the rubber bearings can pass the Japan
Building Center's examination, Party A shall buy more than 13 rubber bearings
from Party B. The price of the rubber bearings is USD 4000 every one. This is
the price C&F Yokohama harbor, Japan price. It also includes the fees of
products and material and products checking. Party A shall pay USD 12000 to
Party B for deposit before 20 May, 1996.
Article 7: Improvement of the Joint Research Results
After one Party improved the Joint Research Results, the Party shall notify the
other Parties immediately. Its belonging and handling shall bee determined under
the mutual agreement through consultation among all Parties.
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Article 8: Transfer of the Joint Research Results
One Party shall obtain a prior written agreement of the other Parties before
transferring the Joint Research Results to a third party.
Article 9: Applications for and Maintenance and Management of the Intellectual
Property Rights
1. All Parties shall jointly own the Intellectual Property Rights which does not
include:
(1) Each Party maintains his rights on the technical stuff which was owned by
the Party before the Joint Research.
(2) The Intellectual Property Rights of the 200 and 600 type rubber bearings
referred to in this Agreement belong to Party B and Party C.
2. Important matters such as the submission of documents and the maintenance of
the Intellectual Property Rights shall be dealt with on the basis of prior
consultations among the Parties.
Article 10: Disclosure of Documentation and Information
All Parties shall disclose to the other Parties any documentation, information
and/or know-how that is essential to the Joint Research. This requirement does
not apply to items that are covered by confidentiality obligations under
contracts with third parties.
Article 11: Publication of the Joint Research Results
Approval or disapproval of the publication of the Joint Research Results, and
the contents, timing and method of such publication, shall be determined on the
basis of prior consultation among all Parties. In reports and publications which
contain the data and the findings of the tests, the contributions of all Parties
shall be noted. The report presented to Japan Building Center is not limited by
this Article. The report shall be sent to other Parties after presenting to
Japan Building Center within one week.
Article 12: Confidentiality
All Parties shall take proper care to maintain the confidentiality of all
technical matters that are requested to keep by the other Party. The period and
the contents requested to keep confidential shall be stipulated in the
Implementation Agreement or determined through consultation among all Parties.
Article 13: Reporting of Progress and Results
All Parties shall report to other Parties about the progress and results of the
Joint Research and shall consult about future methods and problems to be solved.
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Article 14: Term of Validity
The effective term of this Agreement shall be valid until March 31, 1997 after
the execution hereof. The effective term of this Agreement may be changed under
the mutual agreement through consultation among the Parties.
Article 15: Consultation
If questions arise regarding the interpretation or operation of thiss Agreement,
all Parties shall settle such questions harmoniously through sincere
consultations.
Article 16: Others
Other related matters which are not covered in this Agreement may be discussed
through consultation among all Parties.
Three copies each of English versions of this Agreement shall be drawn up as
proof of the establishment of this Agreement, with one copy of each to be signed
and sealed and held by all Parties.
(for Party A)
Fujita Corporation
/s/ Hirasawa Mitsuharu
Hirasawa Mitsuharu
(General Manager of Technical Research Institute)
(for Party B)
Shantou Vibro-Tech Industrial and Development Co. Ltd.
By: /s/ Zheng Binghui
Zheng Binghui
(General Manager)
(for Party C)
South China Construction University
By: /s/ Zhou Fulin
Zhou Fulin (Vice-President)
EXHIBIT 21.14
Basic Agreement of Joint Research
The parties to this agreement are Fujita Corporation, having its principal
office at 6-15, Sendagaya 4-chome, Shibuya-ku, Tokyo 151, Japan (hereinafter
referred to as "Party A"), Shantou Vibro-Tech Industrial and Development Co.
Ltd., Long Yan Nan Road, Shantou, China (hereinafter referred to as "Party B"),
ZHOU Fu Lin of South China Construction University, Guangyuan Zhong Road,
Guangzhou 510405, China (hereinafter referred to as "Party C").
Agreement of Joint Research dated by March 14, 1996, Supplement Agreement-I
dated August 1, 1996, Supplement Agreement-II dated March 15, 1997, Supplement
Agreement-III dated may 10, 1997 and Supplement Agreement-IV dated July 27, 1997
made among Party A, Party B and Party C become annulled.
All Parties shall undertake collaboration on joint research for rubber bearings
applicable to Japan on the basis of equality and mutual benefit, and have agreed
on the following aspect.
Article 1: Definitions
The following definitions are hereby agreed to for the purposes of this
Agreement:
1. Joint Research means the joint research concerning rubber bearings applicable
to Japan.
2. Joint Research Results means any and all results including but not limited to
information which relate to inventions, concepts, designs, know-how and written
or oral materials etc. resulting from this Joint Research.
3. Intellectual Property Rights means any and all patents, utility models and
any other intellectual property rights pertaining to the Joint Research Results.
Article 2: Objective of the Joint Research
All Parties are looking forward to cooperating in the research and development
on:
1. Base isolation system and its application: such as, larger size, softer
elastomer rubber bearings.
2. Passive and active seismic control and its application.
The details shall be determined under mutual agreement through consultation
among all parties and stipulated in the Implementation Agreement.
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Article 3: Apportionment Research, Research Period and Research Organization
The apportionment of the Joint Research, the Joint Research Period and the Joint
Research Organization shall be determined under the mutual agreement through
consultation among all Parties and stipulated in the Implementation Agreement.
Article 4: Expenses for Joint Research
All Parties bear the expenses themselves for Joint Research according the
apportionment in Article 3 in principle. If the expenses borne by one Party are
extremely large, the expenses shall be determined through consultation among all
Parties.
Article 5: Possession of the Joint Research Results
All Parties shall jointly own the Joint Research Results which ccan be used for
further research by all Parties.
Article 6: Implementation of the Joint Research Results
In regard to Article 2(1), following agreements are reached:
1. Party A and Party C give permission to Party B to sell her products
independently.
2. Party B shall sell her products at a special discount price which shall be
60% of the listed price sold products used in Japan to other companies at the
same period. Party B shall notify the price sold to those other companies to
Party A.
3. Except products sold to Party A, Party B shall pay loyalty fee (1% of the
price) to Party A on every product sold in Japan. The details shall be
determined between Party A and Party B and stipulated in the Implementation
Agreement.
4. Party B shall provide her products to Party A prior to other customers.
5. Party A shall assist Party B to explore and expand the market in Japan and
suggest a listed price.
In regard to Article 2(2), the details shall be determined under the mutual
agreement through consultation among all Parties and stipulated in the
Implementation Agreement.
Article 7: Improvement of the Joint Research Results
After one Party improved the Joint Research Results, the Party shall notify the
other Parties immediately. Its belonging and handling shall be determined under
the mutual agreement through consultation among all Parties.
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Article 8: Transfer of the Joint Research Results
One Party shall obtain a prior written agreement of the other Parties before
transferring the Joint Research Results to a third party.
Article 9: Applications for and Maintenance and Management of Intellectual
Property Rights
1. All Parties Shall Jointly own the Intellectual Property Rights.
2. Important matters such as the submission of documents and maintenance of the
Intellectual Property Rights shall be dealt with on the basis of prior
consultations among all Parties. All parties shall bear the fee equally needed
for the applications, maintenance and management of the Intellectual Property
Rights. The details shall be determined under the mutual agreement through
consultation among all Parties and stipulated in the Implementation Agreement.
Article 10: Disclosure of Documentation and Information
All Parties shall each disclose to the other Parties any documentation,
information and/or know-how that is essential to the Joint Research. This
requirement does not apply to items that are covered by confidentiality
obligations under contracts with third parties.
Article 11: Publication of Joint Research Results
Approval or disapproval of the publication of the Joint Research Results, and
the contents, timing and method of such publication, shall be determined on the
basis of prior consultation among all Parties. In all reports and publications
which contain the data and findings of the tests, the contributions of all
Parties shall be noted.
Article 12: Confidentiality
All Parties shall take proper care to maintain the confidentiality of all
technical matters that are requested to keep by the other Party. The period and
the contents requested to keep confidential shall be stipulated in the
Implementation Agreement or determined through consultation among all Parties.
Article 13: Reporting of Progress and Results
All Parties shall report to other Parties about the progress and results of the
Joint Research and shall consult about future methods and problems to be solved.
Article 14: Term of Validity
The effective term of this Agreement shall be until March 31,2000 after the
execution hereof. The effective term of this Agreement may be changed under the
mutual agreement through consultation among the Parties.
Article 5,6,8 and 12 shall be valid for 15 years after expiration of the
Agreement.
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Article 15: Consultation
If questions arise regarding the interpretation or operation of this Agreement,
all Parties shall settle such questions harmoniously through sincere
consultations.
Three copies each of English versions of this Agreement shall be drawn up as
proof of the establishment of this Agreement, with one copy of each to be signed
and sealed and held by all Parties.
March 18, 1998
(for Party A)
Fujita Corporation
/s/ Haruhito Gomi
Haruhito Gomi
(General Manager of Technical Research Institute)
(for Party B)
Shantou Vibro-Tech Industrial and Development Co. Ltd.
By: /s/ Wu Shiyuan
Wu Shiyuan
(Vice General Manager)
(for Party C)
Zhou Fu Lin of South China Construction University
By: /s/ Zhou Fulin
Zhou Fulin (Vice-President)
EXHIBIT 21.15
CONTRACT
FJT-VT-9802
Contract No. FJT-VT-9802 (This number must be quoted in all your communications
and shipping documents.)
Japanese text
The Buyers: FJT (HK) Trading Ltd.
Unit 701, 7th Floor, Ocean Centre, 5 Canton Road, T.S.T., Hong Kong
Japanese text
The Sellers: Vibro-Tech Industries Ltd.
2001-2004 20/Fl. Hang Seng Bldg.
77 Des Voeux Road, Central, Hong Kong
Japanese text
The Contract is made by and between the Buyers and the Sellers, whereby the
Buyers agree to buy and the Sellers agree to sell the following commodity on the
terms and conditions stipulated below:
Japanese text
Commodity and Specifications Quantity Unit Price Total Amount
1. VP800JC-LB Rubber Bearing 39 PCS US$6380.00 US$248820.00
2. VP700JD-LB Rubber Bearing 19 PCS US$4768.00 US$905592.00
3. VP300 Rubber Bearing 1 PC US960.00 US$960.00
4. Special Initial Fee US$15,000.00
FOB SHANTOU US355,372.00
(5) Japanese text
Country of Origin an Manufacturers
Japanese text
Shantou Vibro-Tech Industrial and Development Co., Ltd., China
(6) Japanese text Time of Shipment Japanese text Before March 20, 1999
(7) Japanese text Port of Shipment Japanese text Shantou, China
(8) Japanese text Port of Destination Japanese text Tokyo, Japan
(9) Japanese text Insurance Japanese text To be purchased by the Buyers to cover
110% of invoice value.
(10) Japanese text Packing
Japanese text
To be packed in new strong wooden case(s) suitable for long distance ocean
transportation and well protected against dampness, moisture, shock, rust and
rough handling. And the package should be checked and signatured by the Buyers.
(11) Japanese text Shipping Mark
Japanese text
On the surface of each package, the package number, measurements, gross weight,
net weight, the lifting positions, warnings such as "THIS SIDE UP", "HANDLE WITH
CARE". "KEEP AWAY FROM MOISTURE" AND FJT-9802 should be marked. The shipping
mark shall be stenciled legibly in fadeless paint by the Sellers.
<PAGE>
(12) Japanese text Terms of Payment
Japanese text
Within ten working days of signing this contract, the Buyers shall give the
advance payment, US$80,000 (say US dollars eighty thousand only) to the Sellers.
The rest of 30% of the value of this contract, US$26,611.60 (say US dollars
twenty-six thousand six hundred eleven and cents sixty) shall be paid to the
Sellers by the Buyers before the end of February 1999. The other 70% of the
total value US$248,760.40 (say US dollars two hundred forty eight thousand seven
hundred sixty and cents forty) will be available against the shipping documents
stipulated in Clause 14 hereof, within 10 working days to the Sellers after the
goods arrive at the destination port.
(13) Japanese text Special Conditions
Japanese text
These shall prevail over all other printed terms in case of any conflict.
Japanese text
The Sellers should send one original B/L by express mail to the Consignee
directly within three working days after the shipment date.
(14) Japanese text Documents
Japanese text
The Sellers shall present the following documents to the paying bank for
negotiation/collection, or to the Buyers in the case of payment by T/T or M/T:
1. Full set of Negotiable Clean on Board Ocean Bills of Lading marked "FREIGHT
PREPAID" and made out to order, blank endorsed, and endorsed, and notifying the
Notify Party at the port of destination.
2. Parcel Post Receipt, indicating postage/Air Waybill.
3. Invoice in quintuplicate, indicating contract number and shipping mark.
4. Packing List in duplicate with indication of both gross and net weights,
measurements and quantity of each item packed.
5. Certificate of Quality and Quantity and Testing Report, each in duplicate,
issued by the Sellers as specified in Item (a) of Clause 19 hereof.
6. A true copy of fax to advise the Buyers of shipment immediately the goods are
loaded on ship as specified in clause 16 hereof.
7. An inspection report of goods issued by the Buyers.
(15) Japanese text Technical Documents
Japanese text
One complete set of the following technical documents written in English shall
be packed and dispatched together with each consignment:
1. Japanese text Certificate of Quality as stipulated in Item (a) of Clause 19
hereof.
2. Japanese text Specifications of rubber bearing.
3. Japanese text Installation, operation and maintenance manual.
<PAGE>
(16) Japanese text Terms of Shipment
I Japanese text In case of F.O.B. by sea:
Japanese text
a. The Buyers shall entrust the Sellers to book shipping space for them. The
Sellers shall supply the information of booking shipping space to the Buyers and
get confirmation back from the Buyers as least 5 days before the shipment.
Japanese text
b. The Sellers shall be liable for any dead freight or demurrage consequent upon
their failure to have the goods ready after the carrying vessel has arrived at
the port of loading in time.
Japanese text
c. The Sellers shall bear all expenses and risks involved in the handling of the
goods before they pass over the vessel's rail and are released from the tackle,
whereas all expenses and risks involved in the handling of the goods after they
have been passed over the vessel's rail and have been released from the vessel's
tackle shall be for the Buyer's account.
(17) Japanese text Shipping Advice
Japanese text
Immediately after the goods are completely loaded, the Sellers shall notify the
Buyers of the contract number, name of commodity, quantity, gross weight,
invoiced value, name of the carrying vessel and the date of departure. If any
package is over 9 metric tons in weight, or over 3400 mm in width, or over 2350
mm on both sides in height, the Sellers shall advise the Buyers of the weight
and measurements of such package. In case the goods are not insured in time due
to the Sellers having failed to give sufficient advance notice to the Buyers,
any and all consequent loss shall be borne by the Sellers. In case of dangerous
goods, the Seller shall notify the Buyers and notify party at port of
destination of their nature and the method of handling.
(18) Japanese text Guarantee of Quality
Japanese text
The Sellers shall guarantee that the goods are new, made of best materials, with
first class workmanship, and comply to the specifications and requirements as
stipulated in this contract. The Sellers shall also guarantee that the goods,
when correctly mounted and properly operated and maintained, will give
satisfactory performance for a period of ten years starting from the date on
which the goods arrive at the port of destination, except for force majeure.
(19) Japanese text Inspection and Claims
Japanese text
Japanese text Checking List of Main Dimension
Japanese text Checking List of Main Steel Material
Japanese text Checking List of Lead Material
Japanese text Checking List of Rubber Material
Japanese text Checking List of Rubber Bearing's performance
Japanese text Photo Record of Completed Product
a. Before making delivery, the Sellers shall make a precise and comprehensive
inspection of the goods for their quality specification, performance and
quantity, and issue certificates certifying that the goods are in conformity
with the stipulations of this contract. The certificates shall form an integral
part of the documents to be presented and results of the tests carried out by
the manufacturers must be shown in a statement to be attached to the said
Quality Certificate.
<PAGE>
Japanese text
b.After arrival of the goods at port of destination, the Buyers shall have an
inspection of the goods in respect of their quality, specifications and
quantity. If any discrepancies are found by the Buyers regarding the
specifications or the quantity are incurred by the Sellers, except those for
which either the insurance company or the shipping company is responsible, the
Buyers shall, within 30 days after discharge of the goods at the port of
destination, have the right either to reject the goods or to claim against the
Sellers.
Japanese text
c. Within the guarantee period stipulated in Clause 18 hereof, should the
quality and/or the specifications of the goods been found not in conformity with
the contract or should the goods prove defective for any reasons including
latent defect or the use of unsuitable materials except for transportation, the
Buyers shall have the right to claim against the Sellers.
Japanese text
d. Any and all claims deem to be accepted if the Sellers fail to reply within 30
days after receipt of the Buyer's claim.
Japanese text
e. Before the shipment, the Buyers or their representatives shall make an
inspection of the goods and issue the inspection report. The report shall form
an integral part of the documents to be presented to the Buyers for T/T payment.
(20) Japanese text Settlement of Claims
Japanese text
In case the Sellers are liable for the discrepancies and a claim is made by the
Buyers within the period of claim or quality claim guarantee period as
stipulated in clauses 18 and 19 of this Contract, the Sellers shall settle the
claim upon the agreement of the Buyers in the following ways: Japanese text a.
Agree to rejection of the goods and refund to the Buyers the value of the goods
so rejected in the same currency as contracted herein, and to bear all direct
losses and expenses in connection therewith including interest, bank charges and
all other necessary expenses required for the custody and protection of the
rejected goods.
Japanese text
b. Devaluated the goods according to the degree of inferiority, extent of damage
and amount of losses suffered by the Buyers.
Japanese text
c. Replace the defective goods by new ones which should be conformed to the
specifications, quality and performance requirements as stipulated in this
Contract, and bear all expenses and losses sustained by the Buyers which
directly related to the defective product. The Sellers shall, at the same time,
guarantee the quality of the replacement goods for ten years as specified in
clause 18 of this Contract.
<PAGE>
(21) Japanese text Force Majeure
Japanese text
The Sellers shall not be held responsible for any delay in delivery or
non-delivery of the goods due to Force Majeure such as war, earthquake or other
causes agreed upon between the Buyers and the Sellers. However, the Sellers
shall inform the Buyers immediately of such occurrence, and within fourteen days
thereafter shall send by airmail to the Buyers for their acceptance a
certificate issued by the competent government authorities of the place where
the accident occurs as evidence. Under such circumstances, the Sellers, however,
are still under the obligation to take all necessary measures to hasten the
delivery of the goods. In case the accident lasts more than ten weeks, the
Buyers shall have the right to cancel this Contract and take back the advance
payment.
(22) Japanese text Late Delivery and Penalty
Japanese text
In case of delayed delivery, except for Force Majeure cases and accepted by the
Buyers, the Sellers shall pay to the Buyers for every week of delay a penalty
amounting up to 0.5% of the total value of the goods whose delivery has been
delayed. Any fractional part of a week is to be considered a whole week. The
total amount of penalty, however, shall not exceed 0.5% of the total value of
the goods involved in late delivery and is to be deducted from the amount due to
the Sellers by the paying bank at the time of negotiation, or by the Buyers
directly at the time of payment. In case the period of delay exceeds ten weeks
of the stipulated delivery date, the Buyers have the right to terminate this
Contract and take back the advance payment, and the Sellers still liable to the
payment of penalty.
(23) Japanese text Arbitration
Japanese text
All disputes in connection with this Contract shall be settled between two
parties through friendly negotiation. In case no settlement can be reached, then
the case should be submitted for arbitration through the China International
Economic and Trade Arbitration Commission. In accordance with the rules of the
China International Economic and Trade Arbitration Commission. The arbitration
shall take place and the decision rendered by the said Commission shall be final
and binding upon both the parties, neither party shall seek recourse to a law
court or other authorities for revising the decision. The arbitration fee shall
be borne by the losing party.
Japanese text
This Contract is made out in four original copies, two copies to be held by each
side.
Japanese text Japanese text
The Sellers: Vibro-Tech Industries Ltd. The Buyers: FJT (HK) Trading Ltd.
By: /s/ Rick Lui By: /s/ Fujio Tazawa
Rick Lui Fujio Tazawa
EXHIBIT 21.16
Supplemental Agreement
The parties to this agreement are Fujita Corporation, having its principal
office at 6-15, Sendagaya 4-chome, Shibuya-ku, Tokyo 151, Japan (hereinafter
referred to as "Party A"), Shantou Vibro-Tech Industrial and Development Co.
Ltd., having its principal office at Long Yan Nan Road, Shantou, China
(hereinafter referred to as "Party B").
Based on all the terms and conditions of "Basic Agreement of Joint Research"
dated March 18, 1999. The following agreements have been made between Party A
and Party B only.
Article 1: Objective of Joint Research
All parties are looking forward to cooperating in the research and development
of low elastic (G4) type (lead) rubber bearings.
Article 2: Contents, Apportionment and Schedule of the Joint Research
All parties are looking forward to study the detailed fundamental dynamic
hysteresis characteristics of the 300 and 600 type (lead) rubber bearings.
The contents, apportionment and schedule of the Joint research are as follows:
1. Contents
Research on the G4 type (lead) rubber bearings that will be applicable to the
China and Japan market.
2. Apportionment
Determining the property and detail of the (lead) bearings: All parties.
Manufacturing of the (lead) rubber bearings: Party B.
Performance test on the (lead) rubber bearings: Party B.
Party A may conduct the raw material test and performance test of the (lead)
rubber bearings if necessary.
3. Schedule
Party B shall finish fundamental dynamic hysteresis characteristics of a 300
type rubber bearing and a 300 lead rubber bearing satisfying the draft standard
determined by all Parties and present the report on or before January 31, 2000.
Party B shall finish fundamental dynamic hysteresis characteristics of a 600
type rubber bearing and a 600 lead rubber bearing satisfying the draft standard
determined by all Parties and present the report on or before March 31, 2000.
<PAGE>
Article 3: Expenses for the Joint Venture
All Parties bear the expenses themselves for Joint Research according to the
apportionment in Article 2.
Article 4: Publication of the Joint Research Results
Approval or disapproval of the Joint Research Results, and the contents, timing
and method of such publication, shall be determined on the basis of prior
consultation among all Parties. In all reports and publications which contain
the data and findings of the tests, the contributions of all Parties shall be
noted.
Article 5: Term of Validity
The effective term of this Agreement shall be valid until March 31, 2000 after
the execution hereof. The effective term of this Agreement may be changed under
the mutual agreement through consultation among all Parties.
Two copies each of English versions of this Agreement shall be drawn up as proof
of the establishment of this Agreement, with one copy to be signed and sealed
and held by all Parties.
October 11, 1999
(for Party A)
Fujita Corporation
By: /s/ Hirasawa Mitsuharu
Hirasawa Mitsuharu
(General Manager of Technical Research Institute)
(for Party B)
Shantou Vibro-Tech Industrial and Development Co. Ltd.
By: /s/ Zheng Binghui
Zheng Binghui
(General Manager)
<PAGE>
ATTORNMENT TO SUPPLEMENTAL AGREEMENT
WHEREAS:
A. A Basic Agreement of Joint Research was made March 18, 1998 among Fujita
Corporation, having its principal office at 6-15, Sendagaya 4-chome, Shibuya-ku,
Tokyo 151, Japan (hereinafter referred to as "Party A"), Shantou Vibro-Tech
Industrial and Development Co. Ltd., Long Yan Nan Road, Shantou, China
(hereinafter referred to as "Party B"), ZHOU Fu Lin of Long Yan Nan Road,
Shantou City, Guangdong Province, China (hereinafter referred to as "Party C").
B Under the Basic Agreement of Joint Research, the Agreement of Joint Research
dated by March 14, 1996, Supplement Agreement-I dated August 1, 1996, Supplement
Agreement-II dated March 15, 1997, Supplement Agreement-III dated may 10, 1997
and Supplement Agreement-IV dated July 27, 1997 made among Party A, Party B and
Party C were annulled.
C. A Supplemental Agreement to the Basic Agreement of Joint Research was made
October 11, 1999 between Party A and Party B, but omitted inadvertently to
include Party C.
WITNESSES THAT the parties mutually covenant and agree as follows:
Party A and Party B agree that Party C is, and when the Supplemental Agreement
was signed and delivered Party C should have been, a party to the Supplemental
Agreement.
This Agreement makes Party C a party to the Supplemental Agreement in all
respects as if Party C had been an original signatory to the Supplemental
Agreement dated October 11, 1999.
Party A and Party B agree that Party C is in all respects a party to the
Supplemental Agreement in his individual capacity and not in his capacity as
vice-president of South China Construction University.
Party C attorns to, and agrees to comply in all respects with, the Supplemental
Agreement as if Party C had been an original signatory to the Supplemental
Agreement.
Three copies each of English versions of this Agreement shall be drawn up as
proof of the establishment of this Agreement, with one copy to be signed and
sealed and held by all Parties.
October 29, 1999
(for Party A)
Fujita Corporation
By: /s/ Hirasawa Mitsuharu
Hirasawa Mitsuharu
(General Manager of Technical Research Institute)
(for Party B)
Shantou Vibro-Tech Industrial and Development Co. Ltd.
By: /s/ Zheng Binghui
Zheng Binghui
(General Manager)
(for Party C)
/S/ Zhou Fu Lin
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Financial information extracted from the Consolidated Statements of Financial
Condition as at December 31, 1998 (audited) and for the year ended
December 31, 1999 (unaudited) and the Consolidated Statements of Income as at
December 31, 1998 (audited) and for the nine months ended December 31, 1999
(unaudited) and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1998
<PERIOD-END> DEC-31-1998 DEC-31-1999
<CASH> 105,180 334,070
<SECURITIES> 0 0
<RECEIVABLES> 236,830 517,339
<ALLOWANCES> 0 0
<INVENTORY> 112,402 147,719
<CURRENT-ASSETS> 512,530 1,053,484
<PP&E> 483,556 536,811
<DEPRECIATION> 86,808 146,121
<TOTAL-ASSETS> 909,328 1,444,174
<CURRENT-LIABILITIES> 370,380 459,602
<BONDS> 0 0
0 0
0 0
<COMMON> 5,260,000 5,823,000
<OTHER-SE> 239,124 0
<TOTAL-LIABILITY-AND-EQUITY> 909,328 1,444,174
<SALES> 853,192 2,242,454
<TOTAL-REVENUES> 853,192 2,242,454
<CGS> 476,026 1,061,555
<TOTAL-COSTS> 476,026 1,061,555
<OTHER-EXPENSES> 451,422 920,118
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> (359,702) (327,984)
<INCOME-PRETAX> (74,256) 260,781
<INCOME-TAX> 13,654 29,078
<INCOME-CONTINUING> (60,602) 150,171
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (60,122) 38,905
<EPS-BASIC> (0.02) 0.01
<EPS-DILUTED> (0.02) 0.01
</TABLE>
