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Joint Venture Agreement

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Sectors: Manufacturing
Governing Law: China
Effective Date: April 12, 2005
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EXHIBIT 10.1


MANAGEMENT OF SINO-FOREIGN JOINT VENTURE


[CHINESE CHARACTER]
UNIVERSAL SENSOR APPLICATION INC.


CONTRACT


April 12, 2005


Table of Contents


Chapter 1 General................................................................. 3


Chapter 2 Parties of the Joint Venture............................................ 3


Chapter 3 The Joint Venture....................................................... 4


Chapter 4 Objective of Joint Venture and Operation Scope ......................... 4


Chapter 5 Total Registered Capital, Investment Ratio, and Method of Investment 4


Chapter 6 Responsibilities of Each Party ......................................... 5


Chapter 7 Technology Transfer & Valuation of Technology .......................... 6


Chapter 8 Board of Directors ..................................................... 6


Chapter 9 Management Structure ................................................... 7


Chapter 10 Labor Management, the Composition of Labor Union........................ 8


Chapter 11 Equipment, Raw Material Purchase, Commodity Inspection ................. 8


Chapter 12 Tax Affairs, Finance and Allocation of Profit .......................... 9


Chapter 13 Term, Dissolution, Liquidation of the Joint Venture..................... 10


Chapter 14 Insurance .............................................................. 10


Chapter 15 The Responsibility for Breach of the Contract .......................... 11


Chapter 16 Force Majeure .......................................................... 11


Chapter 17 Dispute Solution ....................................................... 12


Chapter 18 Governing Laws.......................................................... 12


Chapter 19 The Effectiveness of the Contract and Others ........................... 12


2


MANAGEMENT OF FOREIGN JOINT VENTURE


[CHINESE CHARACTER]
UNIVERSAL SENSOR APPLICATION INC.


CONTRACT


CHAPTER ONE GENERAL


All parties agree to sign this joint venture agreement to set up "UNIVERSAL SENSOR APPLICATION INC."([CHINESE CHARACTER]) based on the principle of unanimous equality and benefit. This agreement complies with "Management of Foreign Joint Venture Enterprise Law of the People's Republic of China" and the Chinese relevant laws and regulations.


CHAPTER TWO PARTIES OF THE JOINT VENTURE


Article 2.1 Parties to the Joint Venture Party A: [CHINESE CHARACTER] (hereinafter "HX") Registration: Shanghai Business Administrative Management Bureau Address: 14 Luo Mountain Road, Suite 260, Lane1700, Pudong newly developed area, Shanghai Tel: 021-58547577 Fax: 021-58547577 Legal Representative: Hanlin Chen Position: Chairman of board Nationality: PRC


Party B: SENSOR SYSTEM SOLUTIONS, INC. (hereinafter "3S") Registration: CA, U.S.A. Address: 45 Parker, Suite A, Irvine, CA 92618, U.S.A. Tel: 001-949-855-6688 Fax: 001-949-855-6685 Legal Representative: Michael Young Position: CEO Nationality: U.S.A.


Party C: Hongkong Great Genesis Group Co., LTD (hereinafter "Genesis") Registration: Hong Kong Address: Central, HK Tel: 00852-25267572 Fax: 00852-25267572 Legal Representative: Hanlin Chen Position: Chairman of board Nationality: PRC


3


CHAPTER THREE THE JOINT VENTURE


Article 3.1 All parties agree to establish the joint venture of [CHINESE CHARACTER] (hereinafter "USAI"), EngliSH name "UNIVERSAL SENSOR APPLICATION INC.".


The join venture's legal address is: No. 1 Guanshan 1st Road, Henglong Building, Wuhan, Hubei Province, P.R.C.


USAI can establish branch offices in any cities of China or other countries if it's necessary. But it has to be discussed in the board, and report to related authorized government departments.


Article 3.2 All of activities of USAI must comply with the laws and related stipulations of People's Republic of China, and its legitimate management rights is protected by People's Republic of China.


Article 3.3 USAI is formed by three parties according to the Chinese law, and is registered in China as a limited liability company. All parties will share the profit, risk and loss proportional to the percentage of its investment.


CHAPTER FOUR THE OBJECTIVE OF JOINT VENTURE AND OPERATION SCOPE


Article 4.1 USAI's business objective: To achieve satisfactory financial returns through funding cooperation and technology transfer, and to introduce products that are competitive worldwide in terms of quality and price through advanced technology and scientific management. USAI's operation scope: Development, production and sale of sensor and related electronic products. USAI's is targeted to produce 4 million sensors annually with an annual sale of RMB300 millions.


CHAPTER FIVE TOTAL REGISTERED CAPITAL, INVESTMENT RATIO, AND METHOD OF
INVESTMENT


Article 5.1 USAI's total investment is USD 14 millions, registered capital is USD 10 millions.


All parties agree to follow amount and ratio of investment:


Part A -- HX will invest USD 1 millions (10% of the registered capital)


Part B -- 3S will invest USD 3 millions (30% of the registered capital)


Part C -- GENESIS will invest USD 6 millions (60% of the registered capital)


Method of Investment:


HX and GENESIS will invest in cash, land and building. Cash investment will be done in three installments in one year. 3S will invest with technology and technology transfer. Refer to the appended "Technology transfer contract". The exchange rate between RMB and foreign monetary is based on the foreign exchange rate announced by the National Foreign Exchange Administrative Bureau at the pay-in date.


4


Article 5.2 Each party should use its own cash, assets, industrial property and technology proprietary without collateral claims to invest in this joint venture. Any investment other than cash will need valid proof.


Article 5.3 None of the parties is allowed to, under USAI's name, take out a loan, lease equipment or other property to be accounted for its portion of investment. Any party cannot use USAI's assets or the other party's asset as guarantee for its investment.


Article 5.4 The first installment of each party's investment should be transferred to USAI's account in China within 3 months after the execution of this agreement and obtaining the business license for USAI. Any past due payment will incur a 1% per month interest penalty.


Article 5.5 All pay-in investment has to be verified by an accountant allowed to practice in China. USAI will issue proof of investment based on this account's report.


Article 5.6 If the fund is insufficient during operation, the registered capital can be increased according to original ratio or a new ratio base on unanimous agreement and with government approval.


Article 5.7 USAI cannot reduce its registration capital during the term of the joint venture.


Article 5.8 One party will have the first priority to purchase the ownership of the other party if the other party is considering selling all or part of its ownership.


Article 5.9 None of the parties can sell its ownership to any other third party at terms better than the terms offered to the other party. Any transfer is invalid if this requirement is not followed.


CHAPTER SIX RESPONSIBILITIES FOR EACH PARTY


Article 6.1 Following are responsibilities of each party:


6.1.1 Part A-HX


(1) Handle the whole approval procedures about the establishment of
USAI, and deal with all of its registration procedures before
starting business.


(2) Provide land and factory building to USAI(or assist USAI to choose
factory location).


(3) Before USAI starts business, HX is responsible for dealing with the
equipment and material import examination and approval procedure and
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