Sino-foreign Equity Joint Venture Contract

EXHIBIT 10 (xxvii)


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SINO-FOREIGN EQUITY JOINT VENTURE CONTRACT


FOR


COOPER CHENGSHAN (SHANDONG) PASSENGER TIRE COMPANY LTD.


BY AND AMONG


SHANDONG CHENGSHAN TIRE COMPANY LIMITED BY SHARES


AND


COOPER TIRE INVESTMENT HOLDING (BARBADOS) LTD.


AND


JOY THRIVE INVESTMENTS LIMITED


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OCTOBER 27, 2005


TABLE OF CONTENTS CHAPTER PAGE - ---------- ---- CHAPTER 1 DEFINITIONS................................................. 1 CHAPTER 2 PARTIES TO THE CONTRACT..................................... 1 CHAPTER 3 ESTABLISHMENT OF THE JOINT VENTURE.......................... 2 CHAPTER 4 PURPOSE, BUSINESS SCOPE AND SCALE OF THE JOINT VENTURE...... 3 CHAPTER 5 TOTAL INVESTMENT AND REGISTERED CAPITAL..................... 3 CHAPTER 6 REPRESENTATIONS AND WARRANTIES.............................. 5 CHAPTER 7 RESPONSIBILITIES OF THE PARTIES............................. 7 CHAPTER 8 BOARD OF DIRECTORS.......................................... 9 CHAPTER 9 OPERATION AND MANAGEMENT.................................... 13 CHAPTER 10 LABOR MANAGEMENT............................................ 15 CHAPTER 11 FINANCIAL AFFAIRS AND ACCOUNTING............................ 16 CHAPTER 12 PROFIT DISTRIBUTION......................................... 17 CHAPTER 13 TAXATION AND INSURANCE...................................... 18 CHAPTER 14 PURCHASE OF MATERIALS AND SALE OF PRODUCTS.................. 18 CHAPTER 15 CONFIDENTIALITY AND NON-COMPETE............................. 19 CHAPTER 16 DURATION, TERMINATION AND LIQUIDATION....................... 21 CHAPTER 17 BREACH OF CONTRACT.......................................... 26 CHAPTER 18 FORCE MAJEURE............................................... 26 CHAPTER 19 DISPUTE RESOLUTION.......................................... 26 CHAPTER 20 GOVERNING LAW & CHANGE OF LAW............................... 27 CHAPTER 21 EFFECTIVE DATE OF THE CONTRACT.............................. 28


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CHAPTER 22 MISCELLANEOUS PROVISIONS.................................... 28 APPENDIX 1 DEFINITIONS AND INTERPRETATION APPENDIX 2 CAPITAL CONTRIBUTION SCHEDULE APPENDIX 3 ASSET PURCHASE AGREEMENT APPENDIX 4 AGREEMENT ON LABOR/PERSONNEL ISSUES APPENDIX 5 OFFICE, SINGLE-WORKER DORMITORY AND
EMPLOYEE CAFETERIA LEASE AGREEMENT


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EQUITY JOINT VENTURE CONTRACT


This Sino-foreign Equity Joint Venture Contract (this "CONTRACT") is made and entered into in the People's Republic of China ("CHINA" or "PRC") on this 27th. day of October, 2005, in accordance with the PRC Sino-foreign Equity Joint Venture Law (the "JOINT VENTURE LAW") and other relevant PRC laws and regulations, by and among:


(1) SHANDONG CHENGSHAN TIRE COMPANY LIMITED BY SHARES, a company limited by
shares duly organized and existing under the laws of the PRC with its
legal address at No. 98, Nanshan Road North, Rongcheng City, Shandong
Province, PRC ("PARTY A");


(2) COOPER TIRE INVESTMENT HOLDING (BARBADOS) LTD., a company duly organized
and existing under the laws of Barbados with its legal address at
Whitepark House, White Park Road, Bridgetown, Barbados ("PARTY B"); and


(3) JOY THRIVE INVESTMENTS LIMITED, a company duly organized and existing
under the laws of British Virgin Islands with its legal address at P.O.
Box 957, Offshore Incorporations Center, Road Town, Tortola, British
Virgin Islands ("PARTY C").


(Each party is hereinafter individually referred to as a "PARTY" and collectively as the "PARTIES".)


In accordance with the principles of equality and mutual benefit, the Parties have held friendly negotiations in relation to the terms and conditions for establishing a Sino-foreign equity joint venture.


NOW, THEREFORE, the Parties hereby agree as follows:


CHAPTER 1 DEFINITIONS


Unless the terms or context of this Contract provide otherwise, capitalized terms used herein without definition have the meanings assigned to them in Appendix 1 attached to this Contract.


CHAPTER 2 PARTIES TO THE CONTRACT


2.1 The Parties. The Parties to this Contract are as follows:


(1) Party A: Shandong Chengshan Tire Company Limited
by Shares


Country of Registration: PRC


Legal Address: No. 98, Nanshan Road North, Rongcheng
City, Shandong Province, PRC


Current Legal Representative: Che Hong-Zhi


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Nationality: Chinese


(2) Party B: Cooper Tire Investment Holding
(Barbados) Ltd.


Country of Registration: Barbados


Legal Address: Whitepark House, White Park Road,
Bridgetown, Barbados


Current Legal Representative: Harold C. Miller


Nationality: U.S.A


(3) Party C: Joy Thrive Investments Limited


Country of Registration: British Virgin Islands


Legal Address: P.O. Box 957, Offshore Incorporations
Center, Road Town, Tortola, British
Virgin Islands


Current Legal Representative: Nuansir Sirisuwat


Nationality: Thailand


CHAPTER 3 ESTABLISHMENT OF THE JOINT VENTURE


3.1 Establishment of the Joint Venture. In accordance with the Joint Venture
Law and other relevant PRC laws and regulations, the Parties hereby enter
into this Contract for the establishment of the Joint Venture as a
Sino-foreign equity joint venture in the form of a limited liability
company.


3.2 Joint Venture Name, Legal Address.


(1) The name of the Joint Venture in English is "Cooper Chengshan
(Shandong) Passenger Tire Company Ltd." The name of the Joint
Venture in Chinese is [CHINESE CHARACTERS]


(2) The legal address of the Joint Venture is No. 99, West Qingshan Road
, Rongcheng City, Shandong Province, PRC.


3.3 Limited Liability Company. The Joint Venture shall be organized as a
company with limited liability under PRC law, liable for its own debts
with its own assets. The liability of each Party shall be limited to the
amount of the Registered Capital expressly subscribed by such Party
according to Article 5.2 hereof. No Party shall be obligated at any time
to provide any funds to, or on behalf of, the Joint Venture by way of
capital contribution, loan, advance, guarantee or otherwise, except as
specifically provided in this Contract, or as otherwise agreed to in
writing by the Parties. The Parties shall not be liable for the debts of
the Joint Venture, unless otherwise specifically agreed in writing


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between a particular creditor and the Party or Parties concerned. Subject
to the terms and conditions of this Contract, the profits, risks and
losses of the Joint Venture shall be shared by the Parties in proportion
to their respective contributions to the Registered Capital.


3.4 PRC Law. The activities of the Joint Venture shall be governed by, and its
legal rights and operational autonomy shall be protected in accordance
with, the laws and regulations of the PRC.


CHAPTER 4 PURPOSE, BUSINESS SCOPE AND SCALE OF THE JOINT VENTURE


4.1 Purpose of Joint Venture. The purpose of the Joint Venture is to fully
initiate advantages of the Parties so as to enhance production technical
standard, to promote high quality products, to produce internationally
reputable products, to apply brand-new operation concept and management
method, to strengthen overall capacity and competitiveness in the
international market, to increase economic benefit, and to produce a
satisfactory return to all investors; meanwhile, to boost the industrial
level through an integration of the tire industry, to provide job
opportunities in the locale, to introduce more foreign capital to the
locale, and for sure to enhance the fast economic development in Rongcheng
City.


4.2 Scope of Business. The Joint Venture's scope of business shall be to
design, develop, manufacture, and sell half-steel radial passenger tires
and half-steel radial light truck tires; provide technical support and
services for such products.


4.3 Scale of Joint Venture. The tire manufacture volume of the Joint Venture
shall to the extent practicable increase by 10% per year over the next
three years. The Joint Venture shall from time to time introduce and
utilize the international modern technology and management expertise to
fully activate investment benefits.


CHAPTER 5 TOTAL INVESTMENT AND REGISTERED CAPITAL


5.1 Total Investment and Registered Capital. The Total Investment of the Joint
Venture shall be United States Dollars ninety-nine million
(US$99,000,000). The Registered Capital of the Joint Venture shall be
United States Dollars thirty-three million (US$33,000,000).


5.2 Capital Contributions. Subject to the Capital Contribution Schedule
attached as Appendix 2 hereto, each Party shall contribute to the
Registered Capital as follows:


(1) Party A shall contribute all of the land use rights and buildings
free of all liens and encumbrances to the Joint Venture, valued in
the amount of United States Dollars eleven million five hundred
fifty thousand (US$ 11,550,000), representing thirty five percent
(35%) of the Registered Capital;


(2) Party B shall contribute cash in the amount of United States Dollars
sixteen million eight hundred and thirty thousand (US$16,830,000),
representing fifty one percent (51%) of the Registered Capital; and


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(3) Party C shall contribute cash in the amount of United States Dollars
four million six hundred and twenty thousand (US$4,620,000),
representing fourteen percent (14%) of the Registered Capital.


5.3 Schedule for Capital Contributions. Subject to Article 5.4 below, the
Parties shall contribute their respective contributions to the Registered
Capital in accordance with the Capital Contribution Schedule attached as
Appendix 2 hereto.


5.4 Conditions Precedent to the Contribution of Registered Capital. The
Parties' contribution to the Registered Capital of the Joint Venture
pursuant to Article 5.2 hereof shall be conditioned on the satisfaction of
all of the following:


(1) the Examination and Approval Authority has issued a Certificate of
Approval, and any required changes to this Contract have been agreed
to in writing by the Parties; and


(2) a Business License has been granted to the Joint Venture which
authorizes the full scope of business of the Joint Venture described
in Article 4.2 or any required changes thereto have been agreed to
in writing by the Parties.


5.5 Capital Contribution Verification and Certificate. An accountant
registered in the PRC shall be engaged by the Joint Venture to verify the
respective capital contributions of each Party and provide a capital
verification report(s) accordingly. The Joint Venture, upon the receipt of
a satisfactory capital verification report, shall issue a capital
contribution certificate to the relevant Party. This certificate shall
include the following items: name of the Joint Venture; the Establishment
Date; the names of the Parties and the amount of their respective capital
contributions; the date on which the capital contributions were made; and
the date of issuance of the capital contribution certificate. Each capital
contribution certificate shall be signed by the Chairman and the
Vice-Chairman of the Joint Venture. The capital contribution certificates
shall only certify the investment of each Party and shall not be deemed as
a note or other negotiable instrument.


5.6 Financing. Subject to the terms and conditions of this Contract, to the
greatest extent permitted by relevant law, the Joint Venture may finance
its operations and capital needs by way of loans, including but not
limited to shareholder loans, loans from such banks, other financial
institutions or qualified lenders inside or outside of China and upon such
terms and subject to such conditions as may be approved by the Board.


5.7 Increase of Registered Capital. The Registered Capital of the Joint
Venture may be increased by a unanimous resolution of the Board, which
resolution shall stipulate the timing and other terms of such increase,
with such increase subject to the approval of the Examination and Approval
Authority and registration with the Registration Authority. If any Party
chooses not to participate in any such additional investment in the Joint
Venture, any other Party or Parties shall have the option to make the
additional contribution to the Joint Venture's Registered Capital and the
ownership percentages of the Parties' equity in the Joint Venture shall be
adjusted accordingly.


5.8 Failure to Make Contributions to Registered Capital.


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(1) If any Party or Parties ("BREACHING PARTY(IES)") fails to make any
contribution to the Registered Capital within the period set forth
in Article 5.3 (the amount due and owing is referred to as the
"DEFAULT CAPITAL CONTRIBUTION"), the Breaching Party(ies) shall pay
the other Parties or Party (the "NON-BREACHING Party(ies)") (in
proportion to their Percentage Interests) a default penalty of 0.05%
per day based on the Default Capital Contribution from the first day
of the breach until the day on which the Default Capital
Contribution is contributed in full by the Breaching Party(ies).


(2) Notwithstanding the foregoing, if the Breaching Party(ies) fails to
make the Default Capital Contribution for more than 30 days, the
Non-Breaching Party(ies) shall have the right to determine, in
accordance with the applicable laws and regulations, to:


(i) make the additional contribution to satisfy the amount of the
Registered Capital of the Joint Venture, so as to increase the
Percentage Interest(s) of the Non-Breaching Party(ies) and
dilute the Percentage Interest(s) of the Breaching Party(ies)
accordingly; or


(ii) terminate this Contract in accordance with Article 16.2,
subject to the approval of the Examination and Approval
Authority.


(3) The provisions of this Article 5.8 shall not prejudice any other
rights or remedies the Non-Breaching Party(ies) may have under this
Contract or under applicable laws and regulations with respect to
the failure of the Breaching Party(ies) to contribute capital.


5.9 Transfer of Equity Interests. If one Party wishes to transfer all or part
of its Percentage Interest in the Joint Venture to any third party, it
shall obtain the written consent of (including waiver of preemptive rights
by) the other Parties, and the transfer shall be presented to the
Examination and Approval Authority for approval.


5.10 Assets Transfer. On the date of this Contract, Party A and the Joint
Venture shall enter into an asset purchase agreement (the "ASSET PURCHASE
AGREEMENT") in substantially the form attached as Appendix 3 hereto for
any existing assets of Party A in respect of the business specified in
Article 4.2 hereof, as identified by the Joint Venture and Party A, to be
transferred to the Joint Venture.


CHAPTER 6 REPRESENTATIONS AND WARRANTIES


6.1 Representations and Warranties. Each Party hereby represents and warrants
that, as of the date of this Contract and as of a date on which a Party
makes a capital contribution to the Joint Venture in accordance with
Article 5.2 herein, it:


(1) has the capacity and authority to enter into this Contract and to
perform its obligations hereunder, and is duly organized and validly
existing under the laws of the PRC in the case of Party A, and under
the laws of Barbados in the case of Party B, and under the laws of
British Virgin Islands in the case of Party C;


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(2) is not a party to, bound by or subject to any contract, instrument,
charter or by-law provision, statute, regulation, order, judgment,
decree or law which would be violated, contravened or breached by,
or under which any default would occur as a result of, the execution
and delivery by such Party of this Contract or the performance by
such Party of any of the terms of this Contract, or which restricts
such Party from entering into this Contract or performing its
obligations and abiding by the terms hereunder;


(3) has duly authorized, executed and delivered this Contract and that
this Contract constitutes a legal, valid and binding obligation
enforceable in accordance with its terms;


(4) will contribute or transfer assets in a manner which does not
conflict with, violate or result in a breach of, any of the terms,
conditions or provisions of any law, regulation, order, writ,
injunction, decree, determination or award of any court,
governmental department, board, agency or instrumentality or any
arbitrator, or result in the creation or imposition of any lien,
charge, security interest or encumbrance of any nature whatsoever
upon such assets;


(5) freely enters into this Contract and has not and will not hereafter
incur any obligations or commitments of any kind which would in any
way hinder or interfere with its acceptance or performance of its
obligations hereunder; and


(6) (i) has carefully read the entire Contract including the Appendices
hereto; (ii) fully understands all of the terms, conditions,
restrictions and provisions set forth in this Contract, (iii) agrees
that the terms, conditions, restrictions and provisions herein are
necessary for the reasonable and proper protection of the business
of the Joint Venture and the other Parties, and (iv) acknowledges
that each such term, condition, restriction and provision is fair
and reasonable with respect to the subject matter thereof.


6.2 Representations and Warranties in Respect of Party A's Assets. In respect
of Party A's existing assets relating to the business specified in Article
4.2 hereof, Party A represents, warrants and undertakes to Party B and
Party C, as of the date of this Contract and as of the Closing Date (as
such term defined in the Asset Purchase Agreement), those representations,
warranties and undertakings set forth in the Asset Purchase Agreement are
true and accurate in material way.


6.3 Cure and Indemnification Obligations.


(1) In case of any breach of the Contract by any Party, it shall, in
accordance with the direction of any non-breaching Party within
thirty (30) days after receiving a notice of such non-breaching
Party concerning any breach, take all necessary actions to cure such
breach.


(2) Each Party agrees to indemnify and hold the other Parties and the
Joint Venture harmless from and against any and all claims, losses,
damages, and costs arising out of any of its breach of any of its
covenants or representations and warranties contained herein,
including reasonable attorneys' fees incurred in connection with the
enforcement of this Contract or the undertaking of any necessary
legal actions or responses involving any third parties.


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CHAPTER 7 RESPONSIBILITIES OF THE PARTIES


7.1 Party A's Responsibilities. In addition to its other obligations under
this Contract, Party A shall be responsible for the following matters:


(1) Providing capital contributions in accordance with the terms and
conditions of this Contract and the Capital Contribution Schedule
attached as Appendix 2 hereto;


(2) Using its best endeavors (acting at all times in close consultation
with Party B and Party C) to assist the Joint Venture to:


(a) obtain all necessary governmental approvals and completing all
required registrations for the establishment and operation of
the Joint Venture;


(b) liaise with PRC national, provincial, municipal or local
governmental authorities and other relevant institutions or
organizations;


(c) obtain the most preferential tax, customs, foreign exchange
and other favorable treatment that are or may become available
to the Joint Venture and/or the Parties under relevant
national and local laws and regulations of the PRC; and


(d) procure necessary equipment, materials, articles for office
use, means of transportation, telecommunications facilities
and other public utilities, in accordance with the Joint
Venture's request.


(3) Using its best endeavors (acting at all times in close consultation
with Party B and Party C) to assist the Joint Venture to register
with the relevant tax bureau, to open such foreign exchange and RMB
bank accounts, assist the Joint Venture with all required foreign
exchange approvals, and assist the Joint Venture in applying for all
approvals required to remit to Party B and Party C in foreign
exchange distributable profits and all other payments required to be
paid to Party B and/or Party C;


(4) Providing necessary assistance to the Joint Venture in recruiting
suitable management personnel, technical personnel and other
necessary employees to be employed by the Joint Venture;


(5) Assisting the Joint Venture to contact banks and other financial
institutions inside the PRC and hold discussions with them with
respect to the raising of any loans required by the Joint Venture;


(6) Assisting foreign workers, staff, and personnel (including
Directors, managers, technicians, and contractors appointed or
selected by Party B and/or Party C) in obtaining PRC visas and work
permits for travel to China directly related to the operation of the
Joint Venture if requested by Party B and/or Party C;


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(7) Causing Chengshan Group to enter into the lease agreements in
substantially the form attached as Appendix 5 hereto in respect of
the office space, single-worker dormitories and employee cafeteria
with the Joint Venture, pursuant to which Chengshan Group, at the
discretion and request of the Joint Venture, shall lease the office
space, single-worker dormitory and employee cafeteria to the Joint
Venture as necessary for normal and effective use and operation of
the Joint Venture.


(8) Executing and performing, in accordance with the terms therein, the
various Supplementary Contracts to which it is a party;


(9) Be responsible for any environmental pollution, fines, charges or
losses caused by it prior to the Establishment Date, and indemnify
the Joint Venture for any financial burden and/or losses arising out
of any contamination caused by Party A prior to the Establishment
Date; and


(10) Assisting with and carrying out other relevant matters as may be
reasonably requested by the Board from time to time.


7.2 Responsibilities of Party B. In addition to its other obligations under
this Contract, Party B shall be responsible for the following matters:


(1) Providing capital contributions in accordance with the terms and
conditions of this Contract and the Capital Contribution Schedule
attached as Appendix 2 hereto;


(2) Providing any necessary assistance to the Joint Venture's
recruitment of suitable expatriate management personnel, technical
personnel and other necessary expatriate employees to be employed by
the Joint Venture on the basis of merit;


(3) Assisting the Joint Venture to contact banks and other financial
institutions outside of the PRC and hold discussions with them with
respect to the raising of any foreign exchange loans required by the
Joint Venture;


(4) Assisting the Joint ...