EXHIBIT 10.5
For the sake of developing good trading relationship, Xxxxxxxxx Xxxx Xx Xxxx
Company (hereafter named "Party A") together with Creative Master Ltd.
(hereafter named "Party B") set the following agreement on 18th June, 1998.
1. Responsibility of Both Parties
Party B will supply facilities for the Party A starting from 6/1998. The
total cost of these facilities is HK$3,040,000.
Party B will supply all the material, supplementary material and packaging
material while Party A will offer the corresponding plant, electricity and
labor. Under the period of agreement, Party A should take the responsibility of
process production and all the manufacturing products shmid direct to Party B
only. Moreover, Party A can ask Party B for process cost or rent, land usage
fee as well as management fee.
After delivering all the facilities to Party A, Party B must at once send
professionals to Party A in order to provide assembly and technique assistance.
All the fees like wages, travelling telephone fees, daily electricity fees and
accommodation fees spent by the technicians should be paid by Party B.
2. Total Process Fee
The total process fee of the first year should be HK$500,000. The amount
of the second should be increased based on the first year with increment rate
not less than 10%.
3. Calculation of Process Fees
i. The calculation of process fees should be decided by the consensus of
both parties. The fees should be set according to the sample production pilot.
During the production pilot period, Party B is responsible for paying
HK$600/month/worker to Party A (first batch - 30 workers, other batches - 50
workers). After the production pilot period, the process fee will be paid
according to the number of workers (each month: 26 working days, 8 hours a day),
which should not less than HK$800.
ii. Party A is responsible for letting the factory plant (total area:
3,000m/2/) and dormitory. The rental fee and usage fee of the factory plant
should be paid by Party B from the process fees. The tax of the factory plant
should be paid by Party A.
iii. The rental fee, land usage fee, management fee will increase by not
less than 8% starting from the second year.
4. Society Foundation Fee
Whenever a foreign employee is employed, the society foundation fee should
be paid.
5. Production
Party Be sends representative to Party A in examining the quality and
quantity of the products.
If it is observed that the supplementary material does not match the requirement
or there are mistakes in the production process, it should be the responsibility
of Party B. If it is required to re-produce the Produce it should also be paid
by Party B.
After this agreement is effective, the production pilot period will last for 3
month. During these 3 months, the consumption rate and defective rate should be
paid according to the actual price. After this period, such fees will be paid
according to the consensus of both parties.
6. Material and Delivery Date
Party B has to provide sufficient material and packaging material for Party
A to produce. Party B has to send the material to Party A 15 days before hand.
Party A has to deliver the product according to the date, quantity, sample, etc
of the agreement.
7. Payment
The payment of the process fee is paid after the products are delivered.
Party B will pay Party A through the Bank of China in HK If Party B cannot pay
on the due date, it has to compensate Party A according to the interest. rate of
HK (at that time). At the same time, Party A has the right to stop production.
8. Transportation
The import of material and export of product should be transported through
Shenzheu Hau" Kong Cuftm (or Man Xxx Xxx, Xxx Xxx Xxx, Xxx Ping Custom). The
transportation cost will be paid by Party B, in which, the amount that Party A
transport should meet the requirement of Party B
9. Insurance
i. It should be the responsibility of Party B to insure (comprehensive
insurance) the material and packAging material, and the export of the products.
Such
comprehensive insurance should be handled by Dongguan Insurance Company and all
premium should paid by Party B.
ii. Both parties arm to join Social Labour Insurance Scheme for the staff
and the premium is paid according to the proportion of their salary.
10. Taxation
Both paid have the responsibility to pay tax
11. Unpredictable event
Since the occurrences of earthquake, typhoon, flood and war are
unpredictable, any party (say Party A) faces these events must inform the other
party (say Party B) immediately. At the same time, Party A must inform Party B
the detail of the unpredictable event (with sufficient evident provided by the
local authority) which causes it unable to implement its responsibilities.
Party B cannot ask for compensation if the damages are caused by these
unpredictable events.
12. Arbitration
If the argument between the parties cannot be solved by
coordination/cooperation, the China Commerce and Trading Arbitration Council
will be involved. Both parties must accept the decision by this Council and the
arbitration fee should be paid by the losing party.
13. Duration of Agreement
This agreement will be effective when it is approved by an authorized
organization. The duration of this agreement is 5 years. When this agreement is
going to expire, both parties should decide whether to extend their business
relation or not.
If the instruction of this agreement is inadequate, the parties can add
some other instruction, which should then be approved by the authorized
organization.
There are 4 original copies of this agreement, Party A with 2 copies,
Commercial Representative with I copy and Party B with 1 copy. They all have
the same power. There also several supplementary copies.
1. The custom fee (i.e. 0.5% of process fee) is paid by Party B, in which
Party A is responsible for preparing the invoice
2. The employment, arrangement of duties, etc. should follow the Labour Safety
and Hygiene Management Ordinance and Fire Ordinance of the Peoples Republic of
China. These ordinances we used to protect the safety and health of the
workers.
3. Any of the following situation will be considered as the termination of one
party:
i. Party B cannot provide adequate facilities for production 6 months
after the this agreement.
ii. Both parties does not handle agreement extension procedures 6 months
after the termination of this agreement.
