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Exhibit 10.1
AGREEMENT
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Shen Bao Qing Yio Zi (86) No. 507
Party A: Baoan County Foreign Trade Company, Shenzhen
Concord Electronic Factory, Henggang, Baoan County
Party B: Concord Camera Enterprises Company Ltd.
Under the prerequisite that the two Parties shall abide by the laws and
pertinent regulations of the People's Republic of China, both Parties have, in
accordance with the principle of mutual benefit and after full consultation,
unanimously reach the following agreement regarding the processing of security
systems, and electronic products etc:
1. Responsibilities of the two Parties
(1) Party A's responsibilities:
(i) Party A's factory shall provide 2,000 square meters of factory
plant with roof, ____ square meters of land site without roof,
and a production team of 300-500 workers. Within the effective
period of the Agreement, Party A's factory shall process and
manufacture the above products for Party B. The processed
products shall be returned to Party B for reshipment to Hong
Kong.
(ii) Party A's factory shall provide the existing water and
electricity equipment for processing and production use. In
the event that new water and electricity facilities need to be
installed, Party B shall be responsible for the relevant
charges pertaining to the purchase price and installation
costs of these facilities.
(iii) To assist Party B to handle the import and export formalities
relating to the processing business.
(iv) To appoint the factory manager, the financial accountant and
the warehouse personnel, and to be responsible for the
administration and financial management of the factory.
(2) Party B's responsibilities:
(i) To provide at no cost the necessary equipment (see attached
detailed list) that are needed for the
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processing and manufacturing of the products. The equipment
shall be delivered in different batches to Party A's factory,
and shall have a value of 8,500,000 Hong Kong Dollars
approximately. The ownership of such property shall belong to
Party B.
(ii) To provide at no cost the necessary raw materials, auxiliary
materials and packing goods and materials that are needed for
the processing and manufacturing purposes. The quantity and
specifications of such raw materials, auxiliary materials and
packing goods and materials shall be specified in the specific
production contract.
(iii) Should the workers be inefficient and, after being educated
show no improvement, Party B shall have the right to propose
to Party A to replace such workers, but shall not dismiss the
workers at its own accord.
2. Processing Amount
During the first year, the processing fee charged by Party A for the
processing of about 4,000,000 cameras and security systems supplied by Party
B, shall be 2,000,000 Hong Kong Dollars approximately. Starting from the
second year, the total number of products to be processed each year shall
increase over the number of products processed in the previous year. The
specific amount and specifications shall be stipulated in the production
contract.
3. Processing and Valuation Principles and Processing Fee
(1) The trial production (training) period shall last for three months.
During the trial production period, the workers shall each receive a
monthly processing fee provisionally set at 450 Hong Kong Dollars (based
on twenty-five and a half working days per month and eight hours per day
per worker). If it is necessary for the workers to work overtime, Party B
must obtain the consent of Party A. The workers' overtime pay shall be
calculated in accordance with the workers' normal pay plus extra
compensation.
(2) After the trial production period is over, the workers shall be paid
according to the actual number of products processed. The two Parties
shall, in adherence to the principle of mutual benefit, fix the fee in
accordance with the type, specification, model and working procedures
involved for the product to be processed, and stipulate the amount of
fees to be charged in the relevant processing and
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production contract in respect of each and every lot of goods. The
monthly processing fee shall not be less the 550 Hong Kong Dollars per
worker on the average in order to ensure the workers will receive a
reasonable income. Should the processing fee calculated in the above
manner be less than 550 Hong Kong Dollars, Party B shall make up the
deficient amount and pay the worker the above amount.
(3) Party B shall be responsible to pay the relevant charges pertaining to
the water and electricity consumed by Party A's factory in the course of
production.
(4) Each month Party B shall pay Party A a fixed processing fee of 10,000
Hong Kong Dollars for the use of the factory plant and the land for
production that was provided by Party A. The settlement shall be made
through the Bank of China.
(5) The processing fee payable by Party B shall be paid to Party A through
the Bank of China and shall be handled by Party A according to
pertinent provisions of the State. Such processing fee must not be paid
directly to the workers in Rensinbi.
4. Scrappage Rate
(1) Within the trial production period, the scrapped products of the factory
shall be written off according to the actual amount of scrapped products.
(2) After the trial production period, both Parties shall determine the
factory's scrappage rate of products through negotiation and stipulate
such rate in detail in the production contract.
5. Material Supply and Product Delivery Dates
(1) Party B shall, on a monthly basis, supply sufficient amounts of raw and
auxiliary materials and packing goods and materials in accordance with
the processing amount stipulated in this Agreement. To ensure that Party
A's factory can function in the normal production mode, Party B must,
ten days before the commencement of production of each lot of products,
deliver the necessary raw and auxiliary materials and packing goods and
materials to Party A's factory. Except for force majeure, if at any time
Party B has supplied an insufficient amount of materials to Party A, thus
causing the number of production days of Party A's factory to be less
than 25 days per month, Party B shall pay Party A's workers a living
subsidy of 10 Hong Kong Dollars per day per worker, according to the
number of workers employed by the factory and the number of days without
work.
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(2) Party A's factory shall deliver the goods to Party B in
accordance with the delivery dates, quality and quantity as
agreed between both Parties. If due to reasons other than force
majeure, Party A fails to meet the delivery date, quality or
quantity, which resulted in Party B suffering an economic loss,
Party A shall be responsible to compensate Party B. The amount of
compensation may be separately stipulated in the specific
production contract.
(3) The machinery, ventilation and lighting equipment, raw and
auxiliary materials, packing goods and materials supplied by
Party B shall be shipped by Party B and handed over to Party A at
Party A's factory. Party A shall not be responsible for the
shortage of, or the re-processing of, processed finished products
that have already passed the acceptance test conducted by Party B
at Party A's factory which was designated for shipment. Should
Party B request for the re-processing of the products, the
re-processing expenses shall be borne by Party B.
6. Settlement Methods
The processing fee charged by Party A's factory shall be settled once
per month. Payments shall be made by D/P at sight or by cheque, and
shall be arranged by Party A's factory and Baoan County Foreign Trade
Company, Shenzhen, through the Bank of China, Baoan County Branch,
with Party B's bank account at Hongkong Bank, Hong Kong (a/c no.:
195012836-001). Should Party B fail to make the relevant payments to
Party A within 30 days after the due date, Party B shall make an
additional interest payment to Party A based on the number of days of
delay at the prevailing interest rate charged by Hong Kong banks,
which shall be payable together with the original amount due. In the
event that Party B fails to make settlements within 30 days, Party A
shall have the right to suspend the delivery of goods or adopt any
other measures as they see fit.
7. Transportation and Insurance
(1) Party B shall be responsible for all transportation costs and
relevant expenses incurred in relation to the machinery,
equipment, raw and auxillary materials, packing goods and
materials supplied by Party B as well as the products after being
processed by Party A's factory.
(2) Party B shall obtian insurance coverage with the People's
Insurance Company of China to cover the transportation of raw and
auxiliary materials and packing goods and materials into China,
the transportation of the products out of China, as well as the
machinery, equipment, raw materials and packing goods and
materials that are kept in the factory
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during the processing period. Party A shall be responsible for
the insurance of the labor force, the factory plant and the
compensated equipment.
8. Exchange of Technology
After Party B's machinery and equipment have been delivered to Party
A's factory, Party B shall dispatch its personnel as soon as possible
to carry out installation work with the assistance of Party A's
personnel. Starting from the trial production period, Party B shall
dispatch technical personnel to provide technical training to the
workers of Party A's factory, until such time when the said workers
can basically master the production techniques and to carry out normal
production. Party B shall be responsible for the salary and wages and
all relevant expenses of its technical personnel. Party A shall
provide the living facilities and conditions for Party B's technical
personnel.
9. Term of Agreement
This Agreement shall enter into effect after receiving relevant
approval and upon execution by both Parties, and shall be valid for a
term of five years starting from October 28, 1986 to October 28, 1991.
Should either Party desire to terminate in advance or extend this
Agreement, it shall inform the other Party three months prior to such
early termination or extension. Matters relating to the termination or
extension of the Agreement shall be handled through mutual
consultation, and shall be subject to the approval of the original
approving authority. Either Party which by itself terminates the
Agreement in advance shall be responsible for the compensation of the
economic losses suffered by the other Party. The compensation shall be
in the form of _______ month(s)' total processing fee based on the
average monthly processing fee during the last six months prior to the
termination of the Agreement.
Upon expiration of the Agreement, the immovable assets (such as
factory, living quarters) and the machinery and equipment which Party
B has charged a price for shall be owned by Party A. The movable
assets supplied by Party B at no cost (such as machinery, vehicles and
ventilation equipment) shall be owned by Party B, and shall after
verification be deregistered and handled according to the Customs and
other pertinent regulations.
If within two months after this Agreement has entered into effect, either
one of the party's fails to perform according to the provisions of the
Agreement, then the other party shall have the right to propose the
termination of this Agreement. Such termination shall be effective upon the
approval of the original approving authority.
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This Agreement shall consist of six original copies with two copies to
be held by Party A and one copy to be held by Party B. All copies shall be
equally authentic. The Agreement shall also have several duplicate copies.
Party A : Baoan County Foreign Trade Company
(corporate seal)
Represented by : He Qiyin
Address : Xinhua Hotel, Wenjin Road, Shenzhen
Tel. No. : 22358
Party A's Factory : Concord Electronic Factory, Henggang
(corporate seal)
Represented by : Chen Shengxing
Address : No. 118 Industrial Zone, Henggang Qu
Tel. No. : 118
Party B : Concord Camera Enterprises Company Ltd.
(company chop)
Represented by : Morris Benun
Address : 1483 Pinewood Street, Rahway, NJ 07065, USA
Tel. No. :
Signed on October 28, 1986
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Filing Certificate for Joint Ventures, Cooperative Ventures,
Compensation Trade and Foreign-related Processing and
Assembly Agreements (Contracts)
Shen Bao Wai Yin Zi (86) No. 677
Please be informed that the (85) Shen Bao Qing Agreement (Contract) (ref.
no.:507) and its attachments (totaling 15 pages) concluded between Concord
Electronic Factory, Henggang, and Concord Camera Corporation, Hong Kong, which
was submitted to this Office by Concord Electronic Factory, Henggang, was, upon
examination, found to be in conformity with the approval requirements stipulated
in the Circular, Bao Wai Yin Zi No. 677, issued by this Office (Commission) on
November 1, 1986 and accordingly shall be allowed to be filed with this Office.
The Agreement (Contract) shall enter into effect on November 1, 1986 for a term
of five years.
(seal of issuing unit)
Foreign Economic Relations Office
People's Government of Baoan County
November 1, 1986
Issued to: Customs, Bank of China, Foreign Trade Bureau
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Approval of Project Introduction Notice
Zhen Bao Wai Yin Zi (86) No. 677
Following the provisions guidelines set forth by the municipal government
on the approval of introduction of projects, it is approved the agreement
(contract) signed between Concord H.G. Electronic Factory and Concord Camera
H.K. Ltd to form a Theft Prevention Apparatus, Cameras and other Electronic
Products project using the Work Processing method of management.
Shen Zhen Municipal Bao An County External Economics Office
(Seal: Bao An County External Economics Committee,
specialized seal for contract)
1 November 1986
To: Heng Gang District, Concord H.G. Electronic Factory,
County Industrial Bureau
