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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 Xxx Xxx Xxxx, Xxxxxxx Xxxx, Xxxxxxxxx Xxxxxxxx, 000000 People's Republic of
China
(the "Company")
AND:
DR. FU XXX XXXX, professor and vice-president of the South China Construction
University, of Xx. 000 Xxxxx Xxxx Xxxxx Xxxx, Xxxxxxxxx 000000 People's Republic
of China
("Zhou")
WHEREAS:
X. Xxxx 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;
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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
X. Xxxx 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.
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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 0-0-00, Xxxxxxxxx, Xxxxxxx-xx, Xxxxx 000,
Xxxxx.
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 000-00000 Xxxxxxxxxx Xxxx, Xxxxxxxx, X.X.
Xxxxxx X0X 0X0.
Zhou means Dr. Fu Xxx Xxxx, professor and vice-president of the South China
Construction University, of Xx. 000 Xxxxx Xxxx Xxxxx Xxxx, Xxxxxxxxx 000000
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.
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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.
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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.
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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.
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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:
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(a) if to Zhou:
South China Construction University
Xx. 000 Xxxxx Xxxx Xxxxx Xxxx
Xxxxxxxxx 000000 People's Republic of China
Attention: Dr. Fu Xxx Xxxx
Professor, Civil Engineering and Earthquake Engineering
Fax: 000-00000-0000-0000
Email: xxxxx@xxxx.xx.xx
----------------
(b) if to the Company:
Shantou Vibro-Tech Industrial and Development Co Ltd.
Long Xxx Xxx Road
Shantou City, Guangdong Province, 510405 China
Tel/Fax: 000-00000-0000-0000
with a copy to:
Vibro-Tech Industries, Inc.
201-11240 Bridgeport Road
Richmond, B.C. V6X IT2
Attention: Xx. Xxxx Xxxxx, President and Xx. Xxxxxxx Xxxx, Chairman
Fax: 000-000-0000
Email: xxxxxxx@xxxxxx.xxx
------------------
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.
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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/ Xxxxxxx Xxxx
Print Name: Xxxxxxx Xxxx
Signed, Sealed and Delivered by Dr. Fu Lin )
Zhou in the presence of: )
)
/s/ illegible )
) /s/ Dr. Fu Xxx Xxxx
) DR. FU XXX XXXX
