PROCON CHINA, LLC FLURIDA GROUP INC. JOINT VENTURE CONTRACT JANUARY 8, 2014

In accordance with the laws of the People’s Republic of China (“PRC”) on Joint Ventures Using Chinese and Foreign Investment (the “Joint Venture Law”) and other relevant laws and regulations of PRC, Procon China, LLC, a Nevada limited liability company, and Flurida Group Inc., a Nevada corporation, in accordance with the principles of equality and mutual benefit, and through friendly consultations, agree to enter into this Joint Venture Contract (referred to herein as this “Agreement”), for a Chinese Foreign Joint Venture (the “Joint Venture”) in the City of Chuzhou, Anhi Province of PRC.

ARTICLE 2.1 Parties to this Joint Venture are as follows:

 

2.	Procon China, LLC, a Nevada limited liability company (“Procon” and, together with Flurida, the “Parties” and each a “Party”)   Legal representative: Name: Mark A. Wells   Position: President Nationality: United States of America Legal address: 4660 La Jolla Village Drive #1100, San Diego, CA 92122

ARTICLE 3.1

 

In accordance with the Joint Venture Law and other relevant PRC laws and regulations, the parties agree to establish a Chinese Foreign Joint Venture limited liability company. The Joint Venture will elect partnership treatment for United States tax purposes.

ARTICLE 3.2

 

The name of the Joint Venture is:

In English: Flurida-Procon Communications Technology Co., Ltd.

In Chinese: 富达博康通讯技术有限公司

Registered Office: 2118 Feng Le Nan Road, Chuzhou, Anhui, People’s Republic of China 239000

ARTICLE 3.3

 

All activities of the Joint Venture shall be governed by the laws, regulations and rules of the PRC.

ARTICLE 3.4

 

The organizational form of the Joint Venture is a limited liability company. Each Party is liable to the Joint Venture within the limit of the capital subscribed by it. The profits, risks and losses of the Joint Venture shall be shared by the parties in proportion to their contributions to the registered capital.

 

ARTICLE 4.1

 

The objectives of the Parties are to enhance economic co-operation and technical exchanges, to improve product quality, develop new products, and sharpen the Parties’ competitive edge in the world market in quality and price by adopting applicable advanced technology and scientific management methods, so as to improve economic results and ensure satisfactory economic benefits for each Party.

ARTICLE 4.2

 

The business scope of the Joint Venture is the development and manufacture of global positioning system (“GPS ”) tracking devices and providing real-time vehicle tracking and data management services for insurance companies, banks, logistics companies and government agencies.

ARTICLE 4.3

 

The production scale of the Joint Venture is 200,000 units of GPS devices (each, a “Unit”) per year and the number of Units on the market under service subscription is expected to be 300,000 Units after the first year of operation.

 

ARTICLE 5.1

 

The total amount of investment of the Joint Venture is US$1,000,000.

ARTICLE 5.2

 

The registered capital of the Joint Venture shall be US$1,000,000, of which:

 

Flurida has US$500,000, accounting for 50%, and

Procon has US$500,000, accounting for 50%.

 

Increases to registered capital shall be made in accordance with each Party’s respective proportional interest in the Joint Venture, unless agreed to otherwise by the Parties.

ARTICLE 5.3

 

The Parties shall fulfill their capital contribution requirements totaling US$500,000 each, in cash according to a schedule determined by the Board of Directors of the Joint Venture (the “Board”); provided, that each Party shall make $100,000 of its required contribution no later than 30 days after the issuance of the Joint Venture’s business license. The capital contribution of each Party shall be converted according to the current numeraire exchange rate of PRC.

 

The capital contribution of any Party shall be verified by the Chinese certified public accountants engaged by the Joint Venture and a report on the verification of capital shall be presented. The Joint Venture will present a certificate of capital contribution to the contributing Party no later than 30 days after receipt of such report.

The items listed in (2) through (4) will be provided under license (the “License”), which will automatically be revoked if less than 50,000 GPS units (the “Units”) are sold within 24 months after the issuance of the Joint Venture’s business license.

 

The date of registration of the Joint Venture shall be the date of the establishment of the Board.

ARTICLE 7.2

The Board is comprised of three directors, of which one shall be appointed by Flurida and two by Procon. The Chairman of the Board shall be appointed by Flurida, and its Vice-Chairman by Procon. The term of office for the directors, Chairman and Vice-Chairman is three years, and their term of office may be renewed if re-appointed by the relevant Party.

ARTICLE 7.3

The highest authority of the Joint Venture shall be the Board. A simple majority of the Board shall decide all issues concerning the Joint Venture. Unanimous approval shall be required for the following major issues:

 

The Board shall convene at least one meeting every quarter. The meeting shall be called and presided over by the Chairman of the Board. The Chairman may convene an interim meeting based on a proposal made by a simple majority of directors. Meetings may be attended by members of the Board in person, by proxy, or by telephone. Minutes of the meetings shall be kept in English and Chinese and placed on file.

 

The Joint Venture shall indemnify each director against all claims and liabilities incurred by reason of serving as a director of the Joint Venture; provided that such claims and liabilities do not constitute intentional misconduct, gross negligence or violations of criminal laws.

ARTICLE 8.1

 

The Parties shall appoint the key Management of the Joint Venture, subject to Board approval, which shall be responsible for the daily management of the Joint Venture. The key Management will consist of a General Manager and Deputy General Manager, each chosen by Procon. The term of office of the General Manager and Deputy General Manager shall be one year, renewable at the discretion of the respective Parties, and subject to Board approval.

ARTICLE 8.2

 

The responsibility of the General Manager is to implement the decisions of the Board of Directors, and organize and conduct the daily management of the Joint Venture. The Deputy General Manager shall assist the General Manager in his work. Several department managers may be appointed by Management, and they shall be responsible for the work in their respective departments, handle the matters delegated to them by the General Manager and Deputy General Manager, and shall report to the General Manager. The General Manager is the legal representative of the Joint Venture. Should the General Manager be unable to exercise his responsibilities for any reason, he shall authorize the Deputy General Manager or any director to represent the Joint Venture temporarily.

ARTICLE 8.3

 

The General Manager and Deputy General Manager are entrusted with the holding of all seals and/or chops of the Joint Venture. Should the holder delegate the holding of any of the seals and/or chops, the holder may immediately and without notice revoke this entrustment, and have a seal and/or chop returned to the General Manager or Deputy General Manager, without convening a Board meeting.

ARTICLE 8.4

 

In case of corruption or serious dereliction of duty on the part of the General Manager or a Deputy General Manager, the Board of Directors shall have the power to dismiss either of them at any time without notice or compensation.

ARTICLE 8.5

 

The Joint Venture shall indemnify the General Manager, the Deputy General Manager and each other member of Management against all claims and liabilities incurred by reason of acting as a member of the Joint Venture’s management; provided that such claims and liabilities do not constitute intentional misconduct, gross negligence or violations of criminal laws.

ARTICLE 9.1

 

Labor contracts covering the recruitment, employment, dismissal, resignation, wages, labor insurance, welfare, rewards, penalties and other matters concerning the staff and workers of the Joint Venture shall be newly drawn up between the Joint Venture and the trade union of the Joint Venture as a whole, or the individual employees of the Joint Venture as a whole, or individual employees in accordance with the Regulations of PRC on Labor Management in Joint Ventures Using Chinese and Foreign Investment and its Implementing Rules. The labor contracts shall, after being signed, be filed with the local labor management department.

ARTICLE 9.2

 

The appointment of key management personnel recommended by the Parties, their salaries, social insurance, welfare and the standard of traveling expenses etc. shall be subject to approval by the Board. All appointments are to be based on a combination of merit, experience, education and suitability to job description, and compensation commensurate with aforementioned.

 

ARTICLE 10.1

 

The Joint Venture shall pay taxes in accordance with the provisions of Chinese laws and other applicable regulations.

ARTICLE 10.2

 

Staff members and workers of the Joint Venture shall pay individual income tax according to the Individual Income Tax Law of the PRC.

ARTICLE 10.3

 

Allocations for reserve funds, expansion funds of the Joint Venture, and welfare funds and bonuses for staff and workers shall be set aside in accordance with the provisions of the Joint Venture Law. The annual proportion of allocations shall be decided by the Board according to the business situation of the Joint Venture.

ARTICLE 10.4

 

All routine vouchers, receipts, statistical statements and reports of the Joint Venture shall be written in Chinese and English. All monthly, quarterly and annual accounting statements, and other managerial reporting, of the Joint Venture shall be made and kept in both Chinese and English. All records and accounts shall be kept and maintained in accordance with internationally recognized accounting standards, as determined by the Board, using current accounting and reporting systems.

ARTICLE 10.5

 

Financial checking and examination of the Joint Venture shall be conducted by a recognized Chinese or international firm registered in PRC capable of producing audited statements, as selected by Procon and approved by Flurida, which approval shall not be unreasonably withheld. Such reports shall be submitted to the Board and the General Manager both in English and Chinese.

ARTICLE 10.6

 

Within the first month of each fiscal year, or in such time period as required by the Board, the General Manager shall prepare, or have prepared, both in English and Chinese, the previous fiscal year’s audited balance sheet, profit and loss statement, cash flow, and notes to the financial statements, prepared in accordance with International or United States generally accepted accounting principles and audited by a firm approved by Procon.

Within the first 45 days of each fiscal year, or in such time period as required by the Board, the General Manager shall also provide a proposal regarding the allocation of profits from the previous fiscal year, and subject the proposal to the Board for examination and approval.

 

Flurida is a public company listed in NASDAQ, in order to complete the quarterly and yearly SEC reports, the Joint Venture shall use commercial best efforts to provide the following to Flurida (with a copy provided to Procon):

 

The Joint Venture shall separately open a foreign exchange account and a Renminbi account at an authorized bank within or outside PRC approved by the State Administration of Foreign Exchange. The Joint Venture’s foreign exchange transactions shall be handled in accordance with the regulations of PRC relating to foreign exchange control including use of authorized foreign exchange adjustments centers and foreign exchange banks.

 

The Joint Venture shall likely maintain a balance in its foreign exchange receipts and expenditures account through the sale of its products and through other methods permitted under the laws of PRC. The Joint Venture shall distribute the following amounts to each Party within 30 days of the end of each month:

 

The duration of the Joint Venture is ten years. The establishment date of the Joint Venture shall be the date on which the business license of the Joint Venture is issued. An application for the extension of the duration of the Joint Venture, as proposed by one Party and approved by the Board, shall be submitted to the Ministry of Commerce (or the examination and approval authority entrusted by it) six months prior to the expiration date of the Joint Venture.

 

Upon the expiration of the Joint Venture, or termination thereof prior to the date of expiration, liquidation shall be carried out according to applicable laws. The liquidated assets shall be distributed in accordance with the proportion of investment contributed by the Parties.

 

Insurance policies of the Joint Venture on various kinds of risks shall be underwritten with a qualified insurer operating in PRC. Types, value and duration of insurance shall be decided by the Board.

 

Each of the Parties having ownership of the Joint Venture hereby grants to the other Parties owning an interest in the Joint Venture the right of first refusal to acquire its respective percentage ownership of the Joint Venture on the terms hereof. In the event that any of the Parties (each, a “Selling Party”) receives an offer to purchase all or any portion of its percentage ownership of the Joint Venture (the “Offered Interests”), then the Selling Party shall immediately notify the other Parties in writing (the “Notice”) of the offer and disclose the terms and conditions thereof, including but not limited to the offered price (the “Offered Price”). The other Parties may, but shall not be obligated to, purchase its pro rata shares of the Offered Interests at the Offered Price. Within 60 days of receipt of the Notice (the “Expiration Date”), each of the Parties desiring to purchase its pro rata portion of the Offered Interests shall notify the Selling Party of its intention to exercise this right of first refusal. If any of the Parties elects to exercise its right of first refusal, then the closing shall occur not later than 90 days after the Expiration Date. If less than all of the Parties elect to exercise the right of first refusal, the exercising Parties shall be entitled to purchase their pro rata portion of the non-exercising Parties. If none of the Parties elects to exercise its right of first refusal or all Parties fail to respond before the Expiration Date, then the Selling Party may sell the Offered Interests at the Offered Price to the offering third party. If such sale does not occur within 90 days after the Expiration Date, then the Selling Party must again offer the right of first refusal to all Parties prior to any sale.

 

Any amendment of this Agreement shall come into force only after a written amendment agreement has been signed by all Parties, and approved by the original examination and approval authority.

 

In case of a substantive inability by either Party to fulfill the terms of this Agreement, or a decision to not continue operations due to heavy losses as a result of Force Majeure, the Joint Venture shall be terminated before the date of expiration, upon such decision being unanimously agreed upon by the Board, and approved by the original examination and approval authority.

 

The formation, validity, interpretation, execution and settlement of disputes in respect to this Agreement shall be governed by the relevant laws of PRC.

 

Any disputes arising from the execution of, or in connection with, this Agreement, shall be settled through friendly consultations between the Parties. In the event of any dispute between the parties hereto arising under this Agreement that cannot be resolved through such consultations, such dispute shall be settled through binding arbitration under the auspices of the American Arbitration Association (the “AAA ”). Such arbitration shall be conducted in San Diego County, California, in accordance with the Commercial Arbitration Rules of the AAA. The decision of the arbitrator, including the determination of the amount of any damages suffered, will be exclusive, final, and binding and judgment thereon may be entered in any court of competent jurisdiction. The costs of arbitration, including administrative fees, fees for a record and transcript and the arbitrators’ fees, as well as reasonable attorneys’ fees will be awarded to the party determined by the arbitrator(s) to be the losing party.

ARTICLE 18.1

 

This Agreement shall be written in Chinese and in English. Both language versions are considered to be equally authentic. In the event of any discrepancy between the two aforementioned versions, the English version shall prevail in determining the spirit, intent, and meaning of this Agreement.

 

ARTICLE 19.1

 

Any appendices drawn up in accordance with the principles of this Agreement are considered an integral part of this Agreement.

ARTICLE 19.2

 

This Agreement shall come into force upon the date of execution thereof.

ARTICLE 19.3

 

All notices and other communications given or made pursuant to this Agreement (each, a “Notice”) shall be in writing and shall be deemed effectively given upon the earlier of actual receipt or: (i) personal delivery to the party to be notified; (ii) 1 business day after being delivered by facsimile or e-mail (with receipt of appropriate confirmation); (iii) 5 business days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (iv) 5 business days after the business day of deposit with a nationally recognized overnight courier, freight prepaid, specifying next-day delivery, with written verification of receipt. All Notices shall be sent to the respective parties at their address, email address or facsimile number set forth below their signature hereupon, or to such other address, email address, or facsimile number, as subsequently modified by Notice given in accordance with this provision.

ARTICLE 19.4

 

This Agreement shall inure to the benefit of, and be binding upon, the Parties and their respective successors and permitted assigns.

ARTICLE 19.6

 

Time and each of the terms and conditions of this Agreement shall be of the essence of this Agreement and no waiver by any Party any provision herein shall be deemed to be a waiver of any other provision herein nor to release such other Party from any such provision.

ARTICLE 19.7

 

The Parties will maintain high standards of professionalism and will at all times comply with all applicable laws, rules and regulations and refrain from any unethical conduct or any other conduct that tends to damage the reputation of either Party or the Units in promoting, selling and distributing the Units. Not by way of limitation of the foregoing, the Parties shall comply with the Foreign Corrupt Practices Act of 1977, as amended, and all applicable export and import control laws and regulations in the use and distribution of the Units. Each Party understands that the Products may contain encryption technology that requires an export license from the U.S. State Department. Each Party will defend, indemnify, and hold the other Party harmless from and against all fines, penalties, liabilities, damages, costs, and expenses (including reasonable attorneys’ fees) incurred by the other Party as a result of any violation of such laws or regulations by such Party or any of its affiliates, agents or employees. Each Party shall be responsible for the compliance of its affiliates, officers, employees, agents, consultants and sub-distributors with any applicable laws, rules and regulations as well as with the terms of this Agreement.

In accordance with the Law of the People’s Republic of China on Joint Ventures Using Chinese and Foreign Investment (the “Joint Venture Law”), the Parties identified in Article 1.3 have agreed to establish a cooperative Joint Venture Company in accordance with the provisions of the Joint Venture Contract to which these Articles of Association are attached (hereinafter referred to as the “Joint Venture Contract”). After friendly negotiation, these Articles of Association are made as the guideline of all the activities of the Joint Venture Company. All terms used in these Articles of Association shall have the same meanings as given to them in the Joint Venture Contract, except as explicitly modified herein.

 

The form of organization of the Company shall be a limited liability company. Except as otherwise provided herein, once a Party has completed in full its contribution to the registered capital and the total investment of the Company, it shall not be required to provide any further funds to or on behalf of the Company by way of capital contribution, loan, advance, guarantee or otherwise, unless otherwise agreed. Creditors of the Company shall have recourse only to the assets of the Company and shall not seek repayment from any of the Parties. Subject to the above, the profits, risks and losses of the Company shall be shared by the Parties in proportion to their respective interests in the Company in accordance with the terms of the Joint Venture Contract.

2.1 OBJECTIVES. The objectives of the Parties are to enhance economic co-operation and technical exchanges, to improve product quality, develop new products, and sharpen the Parties’ competitive edge in the world market in quality and price by adopting applicable advanced technology and scientific management methods, so as to improve economic results and ensure satisfactory economic benefits for each Party. The Company shall continue to improve the quality of its products through production enhancements, developing new value added products, expanding production to meet demand, introducing foreign expertise where appropriate to improve productivity, adopting scientific management methods, promoting international marketing efforts, and ensuring that the workplace is safe and beneficial for all employees.

 

The total investment of the Joint Venture is US$1,000,000. The total investment may be modified by the Parties as permitted by applicable People’s Republic of China regulations to meet the needs of the Company.

 

The registered capital of the Joint Venture is US$1,000,000. The registered capital may be increased by the Parties as permitted by applicable People’s Republic of China regulations to meet the needs of the Company as the Board of Directors may determine in accordance with Articles contained herein. The registered capital of the Joint Venture can be increased only after the consensus of the Parties has been obtained, and as approved by unanimous resolution of the Board of Directors. Increases to registered capital are to be made in accordance with the respective proportional interests in the Joint Venture of the two Parties, unless otherwise agreed by both Parties. Such increases shall be submitted to the Examination and Approval Authority for examination and approval. Upon receipt of the approval from the Examination and Approval Authority, the Company shall register the increase in registered capital with the appropriate governing Authority.

 

The Parties are to provide in full their respective committed capital as specified in the governing Joint Venture Contract, with any modifications to such terms requiring unanimous approval of the Board of Directors. The contributions are as follows:

After the Parties have contributed the committed capital, or at any time as requested by the Board of Directors or Party B, the Certified Professional Accountant in China that has been employed by the Joint Venture, or such other Accounting firm requested by Party B, will assess the assets and issue an asset assessment report.